UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED AUGUST 31, 2009
Commission file number 333-145443
CINNABAR VENTURES INC.
(Exact name of registrant as specified in its charter)
NEVADA
(State or other jurisdiction of incorporation or organization)
360 Main Street
Washington, VA 22747
(Address of principal executive offices, including zip code)
540-675-3149
(telephone number, including area code)
Joseph Meuse, President
360 Main Street
Washington, VA 22747
(Name and Address of Agent for Service)
#291 - 38 Pearson Street
Saint Johns, Newfoundland A1A 3R1
(Former address of principal executive offices)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 last 90 days.
YES [X] NO [ ]
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,"
"non-accelerated filer," and "smaller reporting company" in Rule 12b-2 of the
Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). YES [X] NO [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 6,340,000 shares as of October 6,
2009.
ITEM 1. FINANCIAL STATEMENTS.
The unaudited quarterly financial statements for the period ended August 31,
2009, prepared by the company, immediately follow.
2
CINNABAR VENTURES INC.
(An Exploration Stage Company)
Balance Sheets
August 31, May 31,
2009 2009
--------- ---------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash $ 329 $ 45
--------- ---------
TOTAL ASSETS $ 329 $ 45
========= =========
LIABILITIES & STOCKHOLDERS' DEFICIT
LIABILITIES
Accounts Payable $ -- $ 315
Shareholder Advances 30,194 22,469
--------- ---------
TOTAL LIABILITIES 30,194 22,784
--------- ---------
STOCKHOLDERS' DEFICIT
75,000,000 shares Common Stock
Authorized at $0.001/par value
6,340,000 shares issued and outstanding at
August 31, 2009 and May 31, 2009, respectively 6,340 6,340
Additional Paid-in Capital 79,560 75,060
Deficit accumulated during the exploration stage (115,765) (104,139)
--------- ---------
TOTAL STOCKHOLDERS' DEFICIT (29,865) (22,739)
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 329 $ 45
========= =========
The accompanying footnotes are an integral part of these financial statements.
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CINNABAR VENTURES INC.
(An Exploration Stage Company)
Statements of Operations
Inception
Three Months Three Months (May 24, 2006)
Ending Ending Through
August 31, August 31, August 31,
2009 2008 2009
---------- ---------- ----------
EXPENSES
General & Administrative $ 11,626 $ 13,085 $ 115,765
---------- ---------- ----------
NET (LOSS) $ (11,626) $ (13,085) $ (115,765)
========== ========== ==========
Basic earnings per share $ (0.00) $ (0.00)
========== ==========
Weighted average number of
common shares outstanding 6,340,000 6,340,000
---------- ----------
The accompanying footnotes are an integral part of these financial statements.
4
CINNABAR VENTURES INC.
(An Exploration Stage Company)
Statements of Cash Flows
Inception
Three Months Three Months (May 24, 2006)
Ending Ending Through
August 31, August 31, August 31,
2009 2008 2009
--------- --------- ---------
CASH FLOW FROM OPERATING ACTIVITIES
Net loss $ (11,626) $ (13,085) $(115,765)
Accrued Liabilities (315) -- --
Non cash contribution of services 4,500 4,500 58,500
--------- --------- ---------
Total cash provided by (used in) operating activities (7,441) (8,585) (57,265)
--------- --------- ---------
CASH FLOW FROM INVESTING ACTIVITIES
Net cash provided by (used in) investing activities -- -- --
--------- --------- ---------
Total cash provided by (used in) investing activities -- -- --
--------- --------- ---------
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock -- -- 27,400
Proceeds from shareholder advances 7,725 6,500 30,194
--------- --------- ---------
Total cash provided by financing activities 7,725 6,500 57,594
--------- --------- ---------
Net increase (decrease) in cash 284 (2,085) 329
Cash at beginning of period 45 2,271 --
--------- --------- ---------
Cash at end of period $ 329 $ 186 $ 329
========= ========= =========
Supplemental Cash Flow Information:
Interest Paid -- -- --
========= ========= =========
Taxes Paid -- -- --
========= ========= =========
The accompanying footnotes are an integral part of these financial statements.
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CINNABAR VENTURES INC.
(An Exploration Stage Company)
Notes to Financial Statements
Period from Inception (May 24, 2006) to August 31, 2009
(Unaudited)
Note 1. Basis of Presentation
The accompanying unaudited interim financial statements of Cinnabar Ventures
Inc. ("Cinnabar" or the "Company") have been prepared in accordance with
accounting principles generally accepted in the United States of America and the
rules of the Securities and Exchange Commission ("SEC") and should be read in
conjunction with the audited financial statements and notes thereto contained in
the Company's Annual Report filed with the SEC on Form 10-K. In the opinion of
management, all adjustments, consisting of normal recurring adjustments,
necessary for a fair presentation of financial position and the results of
operations for the interim periods presented have been reflected herein. The
results of operations for our interim periods are not necessarily indicative of
the results to be expected for the full year. Notes to the financial statements
that would substantially duplicate the disclosure contained in the audited
financial statements for fiscal 2009, as reported in the Form 10-K, have been
omitted.
These financial statements have been prepared on an on going concern basis which
assumes the Company will be able to realize its assets and discharge its
liabilities in the normal course of business for the foreseeable future. The
Company anticipates future losses in the development of its business, raising
substantial doubt about the Company's ability to continue as a going concern.
The ability to continue as a going concern is dependent upon the Company
generating profitable operations in the future and/or to obtain the necessary
financing to meet its obligations and repay its liabilities arising from normal
business operations when they come due. Management intends to finance operating
costs over the next twelve months with existing cash on hand, loans from
directors and/or issuance of common shares.
Note 2. Subsequent Events
On September 9, 2009, Cinnabar Ventures Inc., (the "Company") entered into a
material definitive agreement with Belmont Partners, LLC by which Belmont
acquired five million (5,000,000) shares of the Company's common stock.
Following the transaction, Belmont Partners, LLC controls approximately 78.86%
of the Company's outstanding capital stock.
On September 9, 2009, Joseph Meuse was appointed as sole Director as well as
President of the Company. On the same date, Stephanie Wood and Barry Anderson
resigned from all positions held in the Company.
On September 22, 2009, Stephanie Wood, a former director, agreed to cancel all
debts and liabilities owed to her by Cinnabar Ventures Inc., including but not
limited to a shareholder advance given to the Company in the amount of $22,469
for working capital purposes, the debt being satisfied in full with a payment of
one U.S. Dollar ($1.00).
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
FORWARD LOOKING STATEMENTS
This quarterly report contains forward-looking statements that involve risks and
uncertainties. We use words such as anticipate, believe, plan, expect, future,
intend and similar expressions to identify such forward-looking statements. You
should not place too much reliance on these forward-looking statements. Our
actual results may differ materially from those anticipated in these
forward-looking statements.
BUSINESS
Cinnabar Ventures Inc. was incorporated in Nevada on May 24, 2006 to engage in
the acquisition, exploration and development of natural resource properties. We
are an exploration stage company with no revenues and limited operating history.
The principal executive offices are located at 360 Main Street, Washington, VA
22747. The telephone number is 540-675-3149.
Our mineral claim has been acquired per Quebec government requirements and we
hired a professional geologist to prepare a geological report. Based on the
following factors it is concluded by our geologist in his report that the claims
are prospective for diamond mineralization:
1. The Barou property is located in the Otish Mountains diamond camp.
2. The Barou property is located 10 km north of the Tichegamie kimberlite
cluster
3. The presence of anomalously high counts of small lakes makes this 10
km2 property prospective for the presence of kimberlite pipes.
We have not yet commenced any exploration activities on the claim. Our property,
known as the Barou Claims may not contain any mineral 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 to bring our claim to production.
RESULTS OF OPERATIONS
We are an exploration stage company and have generated no revenues.
Our net losses for the three months ended August 31, 2009 and 2008 were $11,626
and $13,085, respectively. Our net loss from inception (May 24, 2006) through
August 31, 2009 was $115,765. 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.
In their report on our audited financial statements as at May 31, 2009, our
auditors raised substantial doubt about our ability to continue as a going
concern unless we are able to raise additional capital and ultimately to
generate profitable operations.
The following table provides selected financial data about our company for the
period ended August 31, 2009.
Balance Sheet Data: 08/31/09
------------------- --------
Cash $ 329
Total assets $ 329
Total liabilities $ 30,194
Shareholders' deficit $(29,865)
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LIQUIDITY AND CAPITAL RESOURCES
Our cash in the bank at August 31, 2009 was $329.
Our director has agreed to advance funds to pay the cost of reclamation of the
property should exploitable minerals not be found and we abandon 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.
We received our initial funding of $5,000 through the sale of common stock to
our directors in June 2006 (5,000,000 shares at $0.001) and $22,400 from sales
of common stock to investors from the period of August 2006 through November
2006. In August 2006 we offered and sold 240,000 common stock shares at $0.01
per share to 6 non-affiliated private investors for proceeds of $2,400. In
September 2006 we offered and sold 1,000,000 common stock shares at $0.01 per
share to 12 non-affiliated private investors for proceeds of $10,000. In
November 2006 we offered and sold 100,000 common stock shares at $0.10 per share
to 20 non-affiliated private investors for proceeds of $10,000.
PLAN OF OPERATION
Our plan of operation for the next twelve months is to complete the first of the
three phases of the exploration program on our claim. In addition to the $13,000
we anticipate spending for Phase 1 of the exploration program as outlined below,
we anticipate spending an additional $3,000 on professional fees, including fees
payable in connection with compliance with reporting obligations and general
administrative costs. Total expenditures over the next 12 months are therefore
expected to be approximately $16,000. If we experience a shortage of funds prior
to funding we may utilize funds from our director, however he has no formal
commitment, arrangement or legal obligation to advance or loan funds to the
company.
The following three phase exploration proposal and cost estimate is offered with
the understanding that consecutive phases are contingent upon positive
(encouraging) results being obtained from each preceding phase and our ability
to raise additional capital after the first phase:
Phase 1 DATA EVALUATION AND PROSPECTING: A team of two prospectors will
systematically cover the area to prospect for kimberlite rocks in float or in
outcrop (approximately 8 days). Aeromagnetic data for the claim area should be
scrutinized for kimberlite signatures. Priority areas for prospecting will be
any aeromagnetic anomalies. Any kimberlite found will be sampled and analyzed
for diamonds and diamond indicator minerals.
Phase 2 GEOCHEMICAL SAMPLING: All kimberlite targets found will be prospected in
detail and systematic soil sampling will be done along lines spaced no more than
100 meters apart and with samples at 50 or 25 meter intervals. Aeromagnetic
targets totally covered by overburden should also be sampled. Sampling methods
should follow the MMI protocol and samples need to be analyzed at a specialized
MMI laboratory. Positive results will be the outline of kimberlite bodies,
through indicator element signatures. Total duration of the field campaign
depends on the number of targets present. Duration will be 1 to 2 days per
target for a 2 person prospecting-sampling crew. Processing of samples during
summer can be up to 6 weeks.
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Phase 3 DRILLING: Positive targets will need to be drill tested, first with
shallow (<100 meter) holes. Tentatively 5 drill holes are contemplated.
BUDGET
C $ US $
------ ------
PHASE 1 PROSPECTING
Mobilization and travel costs to Chibougamau 2,000
Prospector 8 days @ $350/day 2,800
Assistant 8 days @ $250/day 2,000
Camping equipment/food 2,300
Floatplane (shared) 3,000
Organization, planning 900
Total 13,000 13,000
------ ------
PHASE 2 GEOCHEMICAL SAMPLING
Mobilization and travel to Chibougamua 3,000
Technician 15 days @ $400/day 6,000
Assistant 15 days @ $250/day 3,750
Camping equipment and food 3,500
Floatplane charter 4,000
Sampling materials and equipment 600
MiM analysis 250 samples @ $35 8,750
Sample shipping 500
Drafting, Interpretation and Report 7,000
Assessment fees 1,980
Planning, Organization 2,000
Total 41,080 41,624
------ ------
PHASE 3 DIAMOND DRILLING
500 m, 4 drill holes @ $110/m 45,000
Supervision, organization and logging, sampling 16,000
Helicopter support 30 hrs @ $1,100 33,000
Mobe and Demobe 60,000
Report, Drafting 6,000
Camping , travel costs, food 25,000
185,000 187,478
-------
242,102
=======
Subject to financing, we plan to commence Phase 1 of the exploration program on
the claim in the first quarter 2010. We expect this phase to take eight days to
complete and an additional one to two months for the geologist to prepare his
report.
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. To date, we have not commenced exploration.
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Following phase one of the exploration program, if it proves successful in
identifying mineral deposits, we intend to proceed with phase two of our
exploration program. Subject to financing and the results of phase 1, we
anticipate commencing with phase 2 and 3 in summer or fall 2010. We have a
verbal agreement with Andre Pauwels, the professional geologist who prepared the
geology report on the Balou Claims, to retain his services for our planned
exploration program. We will require additional funding to proceed with any
subsequent work on the claim; we have no current plans on how to raise the
additional funding. We cannot provide any assurance that we will be able to
raise sufficient funds to proceed with any phase of the exploration program.
We do not have any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on the small business issuer's
financial condition, changes in financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital resources that
are material to investors.
ITEM 4. 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 accumulated and communicated to our management, including our
principal executive and financial officer, 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.
CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
There have been no changes in our internal control over financial reporting that
occurred during the last fiscal quarter ended August 31, 2009 that have
materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION.
SUBSEQUENT EVENTS
ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On September 9, 2009, Cinnabar Ventures Inc., (the "Company") entered into a
material definitive agreement with Belmont Partners, LLC by which Belmont
acquired five million (5,000,000) shares of the Company's common stock.
Following the transaction, Belmont Partners, LLC controls approximately 78.86%
of the Company's outstanding capital stock.
DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT
OF PRINCIPAL OFFICERS.
On September 9, 2009, Joseph Meuse was appointed as sole Director as well as
President of the Company. On the same date, Stephanie Wood and Barry Anderson
resigned from all positions held in the Company.
Set forth below is certain biographical information regarding the New Director
and Officer:
APPOINTMENT OF JOSEPH MEUSE: SOLE DIRECTOR AND PRESIDENT OF THE COMPANY.
Joseph Meuse, age 39, resides in Warrenton, VA. Mr. Meuse has been involved with
corporate restructuring since 1995. He is the Managing Member of Belmont
Partners, LLC and was previously a Managing Partner of Castle Capital Partners.
Additionally, Mr. Meuse maintains a position as a Board Member of numerous
public companies. Mr. Meuse attended the College of William and Mary.
DEBT CANCELLATION AGREEMENT
On September 22, 2009, Stephanie Wood, a former director, agreed to cancel all
debts and liabilities owed to her by Cinnabar Ventures Inc., including but not
limited to a shareholder advance given to the Company in the amount of $22,469
for working capital purposes, the debt being satisfied in full with a payment of
one U.S. Dollar ($1.00).
ITEM 6. EXHIBITS.
The following exhibits are included with this filing:
Exhibit No. Description
----------- -----------
3.1 Articles of Incorporation*
3.2 Bylaws*
31.1 Sec. 302 Certification of Chief Executive Officer
31.2 Sec. 302 Certification of Chief Financial Officer
32.1 Sec. 906 Certification of Chief Executive Officer
32.2 Sec. 906 Certification of Chief Financial Officer
- ----------
* Incorporated by reference and can be found in our original Form SB-2
Registration Statement, filed under SEC File Number 333-145443, at the SEC
website at www.sec.gov.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
October 6, 2009 Cinnabar Ventures Inc., Registrant
By: /s/ Joseph Meuse
-------------------------------------------------
Joseph Meuse, President, Chief Executive Officer,
Chief Financial Officer, Principal Accounting
Officer and Director
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