UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended October 31, 2009
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ______________ to ______________
Commission File Number 333-152754
QUARTZ VENTURES INC.
(Exact name of registrant as specified in its charter)
Nevada 71-1029846
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
29115 North 144th Street, Scottsdale, AZ 85262
(Address of principal executive offices) (Zip Code)
480-229-3668
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
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. [X] YES [ ] NO
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Website, if any, every Interactive Data File required to
be submitted and posted pursuant to Rule 405 of Regulation S-K (ss.229.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). [ ] YES [ ] NO
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a small reporting company. See
the definitions of "large accelerated filer", "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]
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act [X] YES [ ] NO
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant has filed all documents and reports required to be
filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. [ ] YES [ ] NO
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
5,440,000 common shares issued and outstanding as of December 21, 2009
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Our unaudited interim financial statements for the six month period ended
October 31, 2009 form part of this quarterly report. They are stated in United
States Dollars (US$) and are prepared in accordance with United States generally
accepted accounting principles.
2
QUARTZ VENTURES, INC.
(AN EXPLORATION STAGE COMPANY)
FINANCIAL STATEMENTS
OCTOBER 31, 2009
(UNAUDITED)
Page Number
-----------
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Condensed Balance Sheets - October 31, 2009 (Unaudited)
and April 30, 2009 4
Unaudited Condensed Statements of Losses - Three and Six Months
Ended October 31, 2009 and October 31, 2008 and from the period
July 22, 2005 (date of inception) to October 31, 2009 5
Unaudited Condensed Statements of Stockholders Deficit for the
period from July 22, 2005 (date of inception) to October 31, 2009 6
Unaudited Condensed Statements of Cash Flows - Six Months Ended
October 31, 2009, and October 31, 2008 and from the period
July 22, 2005 (date of inception) to October 31, 2009 7
Notes to Unaudited Condensed Financial Statements 8
3
QUARTZ VENTURES, INC.
(An Exploration Stage Company)
Condensed Balance Sheet
(Unaudited)
- --------------------------------------------------------------------------------
October 31, April 30,
2009 2009
-------- --------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash $ 5,306 $ --
-------- --------
TOTAL ASSETS $ 5,306 $ --
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Bank overdraft $ -- $ 2,695
Loans payable 33,000 23,500
-------- --------
TOTAL CURRENT LIABILITIES 33,000 26,195
-------- --------
STOCKHOLDERS' DEFICIENCY
Capital stock
Authorized:
75,000,000 common shares with a par value of $0.001
Issued and outstanding:
5,440,000 common shares as of Oct 31, 2009 and April 30, 2009 5,440 5,440
Additional paid-in-capital 49,560 27,560
Deficit accumulated during the exploration stage (82,694) (59,195)
-------- --------
TOTAL STOCKHOLDERS' DEFICIENCY (27,694) (26,195)
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ 5,306 $ --
======== ========
The accompanying notes are an integral part of these
unaudited condensed financial statements
4
QUARTZ VENTURES, INC.
(An Exploration Stage Company)
Condensed Statements of Losses
(Unaudited)
- --------------------------------------------------------------------------------
Cumulative from
July 22, 2005
Six Months Six Months Three Months Three Months (Date of
Ended Ended Ended Ended Inception) to
October 31, October 31, October 31, October 31, October 31,
2009 2008 2009 2008 2009
---------- ---------- ---------- ---------- ----------
COSTS AND EXPENSES:
Bank charges and interest $ 150 $ 212 $ 75 $ 103 $ 695
Filing and transfer agent fees 160 4,268 160 3,028 5,500
Mineral property 2,736 3,589 1,824 270 16,149
Office expenses 503 104 425 -- 1,123
Professional fees 19,950 18,950 16,500 9,000 59,227
---------- ---------- ---------- ---------- ----------
Total operating expenses 23,499 27,123 18,984 12,401 82,694
---------- ---------- ---------- ---------- ----------
Net loss from operations (23,499) (27,123) (18,984) (12,401) (82,694)
---------- ---------- ---------- ---------- ----------
Net loss before provision for income taxes (23,499) (27,123) (18,984) (12,401) (82,694)
Income taxes (benefit) -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Net loss $ (23,499) $ (27,123) $ (18,984) $ (12,401) $ (82,694)
========== ========== ========== ========== ==========
LOSS PER SHARE - BASIC AND DILUTED $ (0.00) $ (0.00) $ (0.00) $ (0.00)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING (BASIC AND FULLY DILUTED) 5,440,000 5,440,000 5,440,000 5,440,000
========== ========== ========== ==========
The accompanying notes are an integral part of these
unaudited condensed financial statements
5
QUARTZ VENTURES, INC.
(An Exploration Stage Company)
Condensed Statement of Stockholders' Equity
From July 22, 2005 (Date of Inception) to October 31, 2009
(Unaudited)
- --------------------------------------------------------------------------------
Deficit
Accumulated
Number of Additional During the
Common Par Paid-in Development
Shares Value Capital Stage Total
------ ----- ------- ----- -----
August 3, 2005
Subscribed for cash at $0.001 3,000,000 $ 3,000 $ -- $ -- $ 3,000
August 31, 2005
Subscribed for cash at $0.01 400,000 400 3,600 -- 4,000
September 20, 2005
Subscribed for cash at $0.01 700,000 700 6,300 -- 7,000
October 11, 2005
Subscribed for cash at $0.01 600,000 600 5,400 -- 6,000
November 30, 2005
Subscribed for cash at $0.01 600,000 600 5,400 -- 6,000
December 15, 2005
Subscribed for cash at $0.05 140,000 140 6,860 -- 7,000
Net Loss -- -- -- (568) (568)
---------- ------- -------- --------- --------
Balance, April 30, 2006 5,440,000 5,440 27,560 (568) 32,432
Net loss -- -- -- (8,100) (8,100)
---------- ------- -------- --------- --------
Balance, April 30, 2007 5,440,000 5,440 27,560 (8,668) 24,332
Net loss -- -- -- (6,145) (6,145)
---------- ------- -------- --------- --------
Balance, April 30, 2008 5,440,000 5,440 27,560 (14,813) 18,187
Net loss -- -- -- (44,382) (44,382)
---------- ------- -------- --------- --------
Balance, April 30, 2009 5,440,000 5,440 27,560 (59,195) (26,195)
Cancellation of shares (3,000,000) (3,000) -- -- (3,000)
Sale of Shares 3,000,000 3,000 22,000 -- 25,000
Net loss -- -- -- (23,499) (23,499)
---------- ------- -------- --------- --------
Balance, October 31, 2009 5,440,000 $ 5,440 $ 49,560 $ (82,694) $(27,694)
========== ======= ======== ========= ========
The accompanying notes are an integral part of these
unaudited condensed financial statements
6
QUARTZ VENTURES, INC.
(An Exploration Stage Company)
Condensed Statements of Cash Flows
(Unaudited)
- --------------------------------------------------------------------------------
Cumulative from
July 22, 2005
Six Months Six Months (Date of
Ended Ended Inception) to
October 31, October 31, October 31,
2009 2008 2009
-------- -------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(23,499) $(27,123) $(82,694)
-------- -------- --------
Net cash used in operations (23,499) (27,123) (82,694)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceed from related party loan 9,500 12,000 33,000
Shares subscribed for cash, net 22,000 -- 55,000
-------- -------- --------
Net cash provided by financing activities 31,500 12,000 88,000
-------- -------- --------
Net increase (decrease) in cash and equivalents 8,001 (15,123) 5,306
(Bank overdraft)/cash at the beginning of the period (2,695) 18,187 --
-------- -------- --------
Cash at the end of the period $ 5,306 $ 3,064 $ 5,306
======== ======== ========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for:
Interest $ -- $ -- $ --
======== ======== ========
Taxes $ -- $ -- $ --
======== ======== ========
The accompanying notes are an integral part of these
unaudited condensed financial statements
7
QUARTZ VENTURES, INC.
(An Exploration Stage Company)
Notes To The Condensed Financial Statements
October 31, 2009
(Unaudited)
- --------------------------------------------------------------------------------
1. BUSINESS AND BASIS OF PRESENTATION
Quartz Ventures, Inc. ("the Company") was incorporated on July 22, 2005
under the laws of State of Nevada, U.S. with an authorized capital of
75,000,000 common shares with a par value of $0.001. The Company's has a
April 30, year end. The Company is in the exploration stage of its resource
business. The Company commenced operations in 2006 by issuing shares and
acquiring a mineral property located in the Province of British Columbia,
Canada. The Company has not yet determined whether this property contains
reserves that are economically recoverable. The recoverability of costs
incurred for acquisition and exploration of the property will be dependent
upon the discovery of economically recoverable reserves, confirmation of
the Company's interest in the underlying property, the ability of the
Company to obtain necessary financing to satisfy the expenditure
requirements under the property agreement and to complete the development
of the property and upon future profitable production or proceeds for the
sale thereof.
These financial statements have been prepared on a 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 has incurred losses since inception resulting in an
accumulated deficit of $82,694 as at October 31, 2009 and further losses
are anticipated 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 and loans from directors and or private placement of
common stock.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The financial statements of the Company have been prepared in accordance
with generally accepted accounting principles in the United States of
America and are presented in US dollars.
Cash and Cash Equivalents
The Company considers all highly liquid investments with the original
maturities of three months or less to be cash equivalents.
Exploration Stage Company
The Company complies with the FASB ACS 915, its characterization of the
Company as an exploration stage enterprise
Mineral Interests
Mineral property acquisition, exploration and development costs are
expensed as incurred until such time as economic reserves are quantified.
To date the Company has not established any proven or probable reserves on
its mineral properties. The Company has adopted the provisions of FASB ACS
410-20"Accounting for Asset Retirement Obligations" which establishes
standards for the initial measurement and subsequent accounting for
obligations associated with the sale, abandonment, or other disposal of
long-lived tangible assets arising from the acquisition, construction or
development and for normal operations of such assets. As at October 31,
2009, any potential costs relating to the retirement of the Company's
mineral property interest has not yet been determined.
8
QUARTZ VENTURES, INC.
(An Exploration Stage Company)
Notes To The Condensed Financial Statements
October 31, 2009
(Unaudited)
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Use of Estimates and Assumptions
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the balance sheet. Actual
results could differ from those estimates.
Foreign Currency Translation
The financial statements are presented in United States dollars. In
accordance with ASC 830-10, "Foreign Currency Translation", foreign
denominated monetary assets and liabilities are translated into their
United States dollar equivalents using foreign exchange rates which
prevailed at the balance sheet date. Non monetary assets and liabilities
are translated at the exchange rates prevailing on the transaction date.
Revenue and expenses are translated at average rates of exchange during the
year. Gains or losses resulting from foreign currency transactions are
included in results of operations.
Fair Value of Financial Instruments
The carrying value of cash and accounts payable and accrued liabilities
approximates their fair value because of the short maturity of these
instruments. Unless otherwise noted, it is management's opinion the Company
is not exposed to significant interest, currency or credit risks arising
from these financial instruments.
Environmental Costs
Environmental expenditures that relate to current operations are expensed
or capitalized as appropriate. Expenditures that relate to an existing
condition caused by past operations, and which do not contribute to current
or future revenue generation, are expensed. Liabilities are recorded when
environmental assessments and/or remedial efforts are probable, and the
cost can be reasonably estimated. Generally, the timing of these accruals
coincides with the earlier of completion of a feasibility study or the
Company's commitments to plan of action based on the then known facts.
Income Taxes
The Company follows the liability method of accounting for income taxes.
Under this method, deferred income tax assets and liabilities are
recognized for the estimated tax consequences attributable to differences
between the financial statement carrying values and their respective income
tax basis (temporary differences). The effect on deferred income tax assets
and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
At October 31, 2009, full deferred tax asset valuation allowance has been
provided and no deferred tax asset has been recorded.
Basic and Diluted Loss Per Share
The Company computes loss per share in accordance with FASB ASC 260,
"Earnings per Share" which requires presentation of both basic and diluted
earnings per share on the face of the statement of operations. Basic loss
per share is computed by dividing net loss available to common shareholders
by the weighted average number of outstanding common shares during the
period. Diluted loss per share gives effect to all dilutive potential
common shares outstanding during the period. Dilutive loss per share
excludes all potential common shares if their effect is anti-dilutive.
9
QUARTZ VENTURES, INC.
(An Exploration Stage Company)
Notes To The Condensed Financial Statements
October 31, 2009
(Unaudited)
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Research and Development
The Company accounts for research and development costs in accordance with
the FASB ACS 730, "Accounting for Research and Development Costs". Under
ACS 730, all research and development costs must be charged to expense as
incurred. Accordingly, internal research and development costs are expensed
as incurred. Third-party research and developments costs are expensed when
the contracted work has been performed or as milestone results have been
achieved. Company-sponsored research and development costs related to both
present and future products are expensed in the period incurred. The
Company incurred expenditures $0 for the period from July 22, 2005 (date of
inception) to October 31, 2009.
Revenue Recognition
The Company will recognize revenue in accordance with Accounting Standards
Codification subtopic 605-10, Revenue Recognition ("ASC 605-10") which
requires that four basic criteria must be met before revenue can be
recognized: (1) persuasive evidence of an arrangement exists; (2) delivery
has occurred; (3) the selling price is fixed and determinable; and (4)
collectibility is reasonably assured. Determination of criteria (3) and (4)
are based on management's judgments regarding the fixed nature of the
selling prices of the products delivered and the collectibility of those
amounts. Provisions for discounts and rebates to customers, estimated
returns and allowances, and other adjustments are provided for in the same
period the related sales are recorded. The Company will defer any revenue
for which the product has not been delivered or is subject to refund until
such time that the Company and the customer jointly determine that the
product has been delivered or no refund will be required.
ASC 605-10 incorporates Accounting Standards Codification subtopic 605-25,
Multiple-Element Arraignments ("ASC 605-25"). ASC 605-25 addresses
accounting for arrangements that may involve the delivery or performance of
multiple products, services and/or rights to use assets.
The effect of implementing ASC 605-25 on the Company's financial position
and results of operations was not significant.
From the date of inception through October 31, 2009, the Company has not
generated any revenue to date.
Advertising
The Company follows the policy of charging the costs of advertising to
expenses incurred. The Company incurred $0 in advertising costs during the
period ended October 31, 2009 and 2008
Liquidity
The Company has incurred net losses of $ 82,694 from its inception on July
22, 2005 through October 31, 2009. As of October 31, 2009, the Company's
has excess of current liabilities over its current assets by $27,694.
10
QUARTZ VENTURES, INC.
(An Exploration Stage Company)
Notes To The Condensed Financial Statements
October 31, 2009
(Unaudited)
- --------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recently Adopted Accounting Standards
Effective September 15, 2009, the Company adopted the Financial Accounting
Standards Board ("FASB") Accounting Standards Codification ("ASC") 105-10,
"Generally Accepted Accounting Principles." ASC 105-10 establishes the FASB
Accounting Standards Codification(TM) ("Codification") as the source of
authoritative accounting principles recognized by the FASB to be applied by
nongovernmental entities in the preparation of financial statements in
conformity with GAAP for SEC registrants. All guidance contained in the
Codification carries an equal level of authority. The Codification
supersedes all existing non-SEC accounting and reporting standards. The
FASB will now issue new standards in the form of Accounting Standards
Updates ("ASUs"). The FASB will not consider ASUs as authoritative in their
own right. ASUs will serve only to update the Codification, provide
background information about the guidance and provide the bases for
conclusions on the changes in the Codification. References made to FASB
guidance have been updated for the Codification throughout this document.
Effective June 30, 2009, the Company adopted guidance issued by the FASB
and included in ASC 855-10, "Subsequent Events," which establishes general
standards of accounting for and disclosures of events that occur after the
balance sheet date but before the financial statements are issued or are
available to be issued. It requires the disclosure of the date through
which an entity has evaluated subsequent events.
Effective April 1, 2009, the Company adopted guidance issued by the FASB
that requires disclosure about the fair value of financial instruments for
interim financial statements of publicly traded companies, which is
included in the Codification in ASC 825-10-65, "Financial Instruments." The
adoption of ASC 825-10-65 did not have an impact on our consolidated
results of operations or financial condition. Our adoption of the standard
had no impact on our financial results.
Effective January 1, 2009, the Company adopted guidance issued by the FASB
that requires enhanced disclosures regarding derivative instruments and
hedging activities, enabling a better understanding of their effects on an
entity's financial position, financial performance and cash flows. The
guidance is included in the Codification in ASC 815-10, "Derivatives and
Hedging." The adoption of the standard had no impact on our financial
results.
Effective January 1, 2008, the Company adopted ASC 820-10, "Fair Value
Measurements and Disclosures," with respect to recurring financial assets
and liabilities. The Company adopted ASC 820-10 on January 1, 2009, as it
relates to nonrecurring fair value measurement requirements for
nonfinancial assets and liabilities. ASC 820-10 defines fair value,
establishes a framework for measuring fair value in generally accepted
accounting principles, and expands disclosures about fair value
measurements. The adoption of the standard had no impact on our financial
results.
11
QUARTZ VENTURES, INC.
(An Exploration Stage Company)
Notes To The Condensed Financial Statements
October 31, 2009
(Unaudited)
- --------------------------------------------------------------------------------
3. MINERAL INTERESTS
On January 15, 2007, the Company entered into a purchase and sale agreement
to acquire a 100% interest in two mineral claims located in the Alberni
Mining Division, BC for total consideration of $8,000.
The mineral interest is held in trust for the Company by the vendor of the
property. Upon request from the Company the title will be recorded in the
name of the Company with the appropriate mining recorder. The property is
good standing as at October 31, 2009.
4. COMMON STOCK
The total number of common shares authorized that may be issued by the
Company is 75,000,000 shares with a par value of one tenth of one cent
($0.001) per share and no other class of shares is authorized. As of
October 31, 2009 and April 30, 2009 the company has issued and outstanding
5,440,000 shares of common stock.
During the year ended April 30, 2006, the Company issued 5,440,000 shares
of common stock for total cash proceeds of $33,000.
Effective on June 4, 2009, there was a change in control of the Company. In
accordance with a verbal arrangement, one record holder of an aggregate of
3,000,000 shares of restricted common stock (55.1% of the total issued and
outstanding), returned to the Company the 3,000,000 shares of common stock.
The share certificate was cancelled and the 3,000,000 shares of common
stock were returned to treasury which later was acquired in consideration
of $25,000.00. At October 31, 2009, there were no outstanding stock options
or warrants.
5. LOANS PAYABLE
As at October 31, 2009, the Company has received loans of $33,000 from
related party, bearing no interest and with no specific terms of
repayments.
6. INCOME TAXES
As of October 31, 2009, the Company had net operating loss carry forwards
of approximately $83,000 that may be available to reduce future years'
taxable income through 2027. Future tax benefits which may arise as a
result of these losses have not been recognized in these financial
statements, as their realization is determined not likely to occur and
accordingly, the Company has recorded a valuation allowance for the
deferred tax asset relating to these tax loss carry-forwards. Components of
deferred tax assets as of October 31, 2009 are as follows: Non current:
Net operating loss carryforward $ 21,580
Valuation allowance (21,580)
--------
Net deferred tax asset $ --
========
The Company has adopted Accounting Standards Codification subtopic 740-10,
Income Taxes ("ASC 740-10") which requires the recognition of deferred tax
liabilities and assets for the expected future tax consequences of events
that have been included in the financial statement or tax returns. Under
this method, deferred tax liabilities and assets are determined based on
the difference between financial statements and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse. Temporary differences between taxable
income reported for financial reporting purposes and income tax purposes
are insignificant.
12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This quarterly report contains forward-looking statements. These statements
relate to future events or our future financial performance. In some cases, you
can identify forward-looking statements by terminology such as "may", "should",
"expects", "plans", "anticipates", "believes", "estimates", "predicts",
"potential" or "continue" or the negative of these terms or other comparable
terminology. These statements are only predictions and involve known and unknown
risks, uncertainties and other factors, including the risks in the section
entitled "Risk Factors", that may cause our or our industry's actual results,
levels of activity, performance or achievements to be materially different from
any future results, levels of activity, performance or achievements expressed or
implied by these forward-looking statements. Although we believe that the
expectations reflected in the forward-looking statements are reasonable, we
cannot guarantee future results, levels of activity, performance or
achievements. Except as required by applicable law, including the securities
laws of the United States, we do not intend to update any of the forward-looking
statements to conform these statements to actual results.
Our unaudited financial statements are stated in United States Dollars (US$) and
are prepared in accordance with United States Generally Accepted Accounting
Principles. The following discussion should be read in conjunction with our
financial statements and the related notes that appear elsewhere in this
quarterly report. The following discussion contains forward-looking statements
that reflect our plans, estimates and beliefs. Our actual results could differ
materially from those discussed in the forward looking statements. Factors that
could cause or contribute to such differences include, but are not limited to,
those discussed below and elsewhere in this quarterly report, particularly in
the section entitled "Risk Factors".
In this quarterly report, unless otherwise specified, all dollar amounts are
expressed in United States dollars. All references to "common shares" refer to
the common shares in our capital stock.
As used in this quarterly report and unless otherwise indicated, the terms "we",
"us", "our" and "Quartz" mean Quartz Ventures Inc.
CORPORATE HISTORY
We were incorporated in the State of Nevada, USA, on July 22, 2005. We are an
exploration stage company engaged in the acquisition, and exploration of mineral
properties with a view to exploiting any mineral deposits we discover that
demonstrate economic feasibility.
On the date of our incorporation, July 22, 2005, Mr. Glenn Ennis was our sole
officer and director. On July 15, 2008, Mr. Ennis resigned as president, chief
executive officer, chief financial officer, treasurer and secretary, but
continued to remain a member of the board of directors. As a result of Mr.
Ennis' resignation, we appointed Mr. Richard Goodhart as president, chief
executive officer, chief financial officer, treasurer, secretary and a member of
our board of directors.
On January 15, 2007, we entered into a purchase and sale agreement with David
Heyman to acquire a100% interest in two mineral claims located in the Alberni
Mining Division, British Columbia, Canada for total consideration of $8,000.00.
As of the date of this Quarterly Report, the claims are in good standing and
held in trust for us by the vendor of the property, David Heyman. Upon our
request, Mr. Heyman will have the claims recorded in our name with the
appropriate mining recorder. We had paid $5,000 to a geologist for analysis of
the property underlying our claims.
On September 25, 2008, we appointed Mr. Fred DaSilva to our board of directors.
Effective January 20, 2009, Mr. Richard Goodhard resigned as our president,
chief executive officer, chief financial officer, treasurer, secretary and a
director of our company. Also on January 20, 2009, Mr. Glenn Ennis resigned as a
director of our company. As a result of the resignations of Mr. Goodhard and Mr.
13
Ennis, we appointed Mr. Fred DaSilva as our president, chief executive officer,
chief financial officer, treasurer and secretary. We also appointed Mr. Rick
Shykora as a director of our company.
On June 4, 2009, certain shareholders of our company, pursuant to a written
consent resolution of the shareholders, removed Mr. Rick Shykora as a director
of our company and Mr. DeSilva as our president, chief executive officer, chief
financial officer, treasurer, secretary and as a director of our company. As a
result of the removal of Mr. DeSilva and Mr. Shykora on June 4, 2009, we
appointed Mr. Georgios Polyhronopoulos as our president, chief executive
officer, chief financial officer, treasurer, secretary and a director of our
company. As of the date of this Quarterly report, Mr. Polyhronopoulos is our
sole director and officer.
Effective June 4, 2009, there was a change in control of our company. In
accordance with a verbal arrangement between our company and Mr. Glenn Ennis, a
former director and officer of our company, Mr. Ennis returned an aggregate of
3,000,000 restricted shares of our common stock for cancellation. Also effective
June 4, 2009, Mr. Polyhronopoulos, our sole director and officer, acquired an
aggregate of 3,000,000 restricted shares of our common stock in consideration of
$25,000.00. The shares were issued to one (1) U.S. person, as that term is
defined in Regulation S of the Securities Act of 1933, relying on Section 4(2)
of the Securities Act and/or Rule 506 of Regulation D, promulgated under the
United States Securities Act of 1933, as amended.
OUR CURRENT BUSINESS
We are an exploration stage mining company engaged in the exploration of
minerals on a property located in British Columbia, Canada.
Our current operational focus is to conduct exploration activities on our
property in British Columbia.
ALBERNI MINING CLAIM
GEOLOGICAL REPORT
We had obtained a geological report on the property underlying our Claim. The
geology report dated February 19, 2007 recommended renewed work in the project
area with the objective being to delineate viable targets for diamond drilling.
The first priority should be a comprehensive review of reports and maps
pertaining to all past exploration work, including surface surveys, drilling,
trenching and underground exploration followed by a field examination of the
subject area. The review will include preparation of compilations of all
available maps and sections pertaining to the property adjusted to common scales
to permit accurate comparisons of data from different projects. The geophysical
data, in particular the chargeability surveys previously carried out, should be
professionally re-evaluated and an effort should be made to re-locate the survey
grids. Their positions along with those of all known mineral occurrences,
trenches, drill holes, adits and geographical features should be established
with the aid of GPS instruments. Completion of this phase is expected to
identify gaps in data and areas where additional effort is needed and to permit
design of an appropriate program of additional work.
The nature and extent of any follow-up work will be contingent on the results of
the review but it is recommended that provision be made for a preliminary
program of geological mapping, fill-in soil sampling and possibly trenching
particularly in the areas of the chargeability anomalies. Consideration should
be given to the application of mobile metal ion geochemistry as an approach to
overcoming apparent difficulties with heavy overburden in parts of the property.
An estimate of the cost of the proposed initial review and field examination is
$13,000. Provision of an additional budget of $71,000 is recommended for the
contingent exploration work that would be required to complete the follow-up
surveys.
PROPERTY DESCRIPTION
The property consists of two contiguous claims listed in the table below:
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CLAIM NUMBER AND NAME AREA (IN HECTARES) EXPIRY DATE
--------------------- ------------------ -----------
548275 - Horse's Wither 442.845 December 30, 2008
549813-Fetlock 42.176 January 18, 2009
TOTAL AREA: 485.021 --
EXPLORATION PROGRAM
We will engage a geologist to provide a further analysis of the property and
potential for minerals. Our initial program should subsequently be to prospect
the property locating all signs of unreported previous work and record the
results by global positioning system (GPS) coordinates. After all previous work
areas have been accurately located, a geologist can rapidly produce a detailed
geological map of the property delineating the favourable areas. Samples should
be carefully collected from all exposure of the formation and analyses
performed.
The requirement to raise further funding for exploration beyond that obtained
for the next six month period continues to depend on the outcome of geological
and engineering testing occurring over this interval. If results provide the
basis to continue development and geological studies indicate high probabilities
of sufficient production quantities, we will attempt to raise capital to further
our mining program, build production infrastructure, and raise additional
capital for further land acquisitions. This includes the following activity:
* Review all available information and studies.
* Digitize all available factual information.
* Complete an NI 43-101 Compliant Report with a qualified geologist
familiar with mineralization.
* Determine feasibility and amenability of extracting the minerals via
an ISL operation.
* Create investor communications materials, corporate identity.
* Raise funding for mineral development.
* Target further leases for exploration potential and obtain further
funding to acquire new development targets.
For the three month period ended October 31, 2009, we incurred $0 in exploration
costs.
CASH REQUIREMENTS
There is limited historical financial information about us upon which to base an
evaluation of our performance. We are an exploration stage corporation and have
not generated any revenues from activities. We cannot guarantee we will be
successful in our business activities. Our business is subject to risks inherent
in the establishment of a new business enterprise, including limited capital
resources, possible delays in the exploration of our properties, and possible
cost overruns due to price and cost increases in services.
Over the next twelve months we intend to use any funds that we may have
available to fund our operations and conduct further analysis of the property
and potential for minerals. We expect to review other potential exploration
projects from time to time as they are presented to us.
Not accounting for our working capital deficit of $27,694, we require additional
funds of approximately $250,000 at a minimum to proceed with our plan of
operation over the next twelve months, exclusive of any acquisition or
exploration costs. As we do not have the funds necessary to cover our projected
operating expenses for the next twelve month period, we will be required to
raise additional funds through the issuance of equity securities, through loans
or through debt financing. There can be no assurance that we will be successful
15
in raising the required capital or that actual cash requirements will not exceed
our estimates. We intend to fulfill any additional cash requirement through the
sale of our equity securities.
Our auditors have issued a going concern opinion for our year ended April 30,
2009. This means that there is substantial doubt that we can continue as an
on-going business for the next twelve months unless we obtain additional capital
to pay our bills. This is because we have not generated any revenues and no
revenues are anticipated until we begin removing and selling minerals. As we had
cash in the amount of $5,306 and a working capital deficit in the amount of
$27,694 as of October 31, 2009, we do not have sufficient working capital to
enable us to carry out our stated plan of operation for the next twelve months.
We plan to complete debt financings and/or private placement sales of our common
stock in order to raise the funds necessary to pursue our plan of operation and
to fund our working capital deficit in order to enable us to pay our accounts
payable and accrued liabilities. We currently do not have any arrangements in
place for the completion of any debt financings or private placement financings
and there is no assurance that we will be successful in completing any debt
financing or private placement financing. Our success or failure will be
determined by what we find under the ground.
At the present time, we have not made any arrangements to raise additional cash.
If we need additional cash and can't raise it, we will either have to suspend
activities until we do raise the cash, or cease activities entirely. Other than
as described in this paragraph, we have no other financing plans.
Over the next twelve months we intend to use any funds that we may have
available funds to fund our operations and conduct exploration on our Alberni
Mining Claim as follows:
ESTIMATED NET EXPENDITURES DURING THE NEXT TWELVE MONTHS
General, Administrative $ 15,000
Exploration Expenses 175,000
Professional fees 25,000
Additional Working Capital 35,000
--------
TOTAL $250,000
========
The continuation of our business is dependent upon obtaining further financing,
a successful program of exploration and/or development, and, finally, achieving
a profitable level of operations. The issuance of additional equity securities
by us could result in a significant dilution in the equity interests of our
current stockholders. Obtaining commercial loans, assuming those loans would be
available, will increase our liabilities and future cash commitments.
There are no assurances that we will be able to obtain further funds required
for our continued operations. As noted herein, we are pursuing various financing
alternatives to meet our immediate and long-term financial requirements. There
can be no assurance that additional financing will be available to us when
needed or, if available, that it can be obtained on commercially reasonable
terms. If we are not able to obtain the additional financing on a timely basis,
we will be unable to conduct our operations as planned, and we will not be able
to meet our other obligations as they become due. In such event, we will be
forced to scale down or perhaps even cease our operations.
PURCHASE OF SIGNIFICANT EQUIPMENT
We do not intend to purchase mineral ore processing equipment over the twelve
months ending October 31, 2010.
CORPORATE OFFICES
We do not own any real property. Our executive office is located at 29115 North
144th Street, Scottsdale, AZ 85262. We are provided with 250 square feet for our
offices at no cost. We believe that our office arrangements provide adequate
space for our foreseeable future needs.
16
EMPLOYEES
Currently our only employee is our sole director and officer. We do not expect
any material changes in the number of employees over the next 12 month period.
We do and will continue to outsource contract employment as needed.
CRITICAL ACCOUNTING POLICIES
Our financial statements and accompanying notes are prepared in accordance with
generally accepted accounting principles used in the United States. Preparing
financial statements requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenue, and expenses. These
estimates and assumptions are affected by management's application of accounting
policies. We believe that understanding the basis and nature of the estimates
and assumptions involved with the following aspects of our financial statements
is critical to an understanding of our financials.
EXPLORATION STAGE COMPANY
Our company complies with the FASB ACS 915, our characterization of our company
as an exploration stage enterprise.
MINERAL INTERESTS
Mineral property acquisition, exploration and development costs are expensed as
incurred until such time as economic reserves are quantified. To date our
company has not established any proven or probable reserves on our mineral
properties. Our company has adopted the provisions of FASB ACS 410-20"Accounting
for Asset Retirement Obligations" which establishes standards for the initial
measurement and subsequent accounting for obligations associated with the sale,
abandonment, or other disposal of long-lived tangible assets arising from the
acquisition, construction or development and for normal operations of such
assets. As at October 31, 2009, any potential costs relating to the retirement
of our company's mineral property interest has not yet been determined.
USE OF ESTIMATES AND ASSUMPTIONS
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the balance sheet. Actual results could differ from
those estimates.
FOREIGN CURRENCY TRANSLATION
The financial statements are presented in United States dollars. In accordance
with ASC 830-10, "Foreign Currency Translation", foreign denominated monetary
assets and liabilities are translated into their United States dollar
equivalents using foreign exchange rates which prevailed at the balance sheet
date. Non monetary assets and liabilities are translated at the exchange rates
prevailing on the transaction date. Revenue and expenses are translated at
average rates of exchange during the year. Gains or losses resulting from
foreign currency transactions are included in results of operations.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of cash and accounts payable and accrued liabilities
approximates their fair value because of the short maturity of these
instruments. Unless otherwise noted, it is management's opinion our company is
not exposed to significant interest, currency or credit risks arising from these
financial instruments.
ENVIRONMENTAL COSTS
Environmental expenditures that relate to current operations are expensed or
capitalized as appropriate. Expenditures that relate to an existing condition
caused by past operations, and which do not contribute to current or future
17
revenue generation, are expensed. Liabilities are recorded when environmental
assessments and/or remedial efforts are probable, and the cost can be reasonably
estimated. Generally, the timing of these accruals coincides with the earlier of
completion of a feasibility study or our company's commitments to plan of action
based on the then known facts.
INCOME TAXES
Our company follows the liability method of accounting for income taxes. Under
this method, deferred income tax assets and liabilities are recognized for the
estimated tax consequences attributable to differences between the financial
statement carrying values and their respective income tax basis (temporary
differences). The effect on deferred income tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
At October 31, 2009, full deferred tax asset valuation allowance has been
provided and no deferred tax asset has been recorded.
BASIC AND DILUTED LOSS PER SHARE
Our company computes loss per share in accordance with FASB ASC 260, "Earnings
per Share" which requires presentation of both basic and diluted earnings per
share on the face of the statement of operations. Basic loss per share is
computed by dividing net loss available to common shareholders by the weighted
average number of outstanding common shares during the period. Diluted loss per
share gives effect to all dilutive potential common shares outstanding during
the period. Dilutive loss per share excludes all potential common shares if
their effect is anti-dilutive.
Our company has no potential dilutive instruments and accordingly basic loss and
diluted loss per share are equal.
RESEARCH AND DEVELOPMENT
Our company accounts for research and development costs in accordance with the
FASB ACS 730, "Accounting for Research and Development Costs". Under ACS 730,
all research and development costs must be charged to expense as incurred.
Accordingly, internal research and development costs are expensed as incurred.
Third-party research and developments costs are expensed when the contracted
work has been performed or as milestone results have been achieved.
Company-sponsored research and development costs related to both present and
future products are expensed in the period incurred. Our company incurred
expenditures $0 for the period from July 22, 2005 (date of inception) to October
31, 2009.
REVENUE RECOGNITION
Our company will recognize revenue in accordance with Accounting Standards
Codification subtopic 605-10, Revenue Recognition ("ASC 605-10") which requires
that four basic criteria must be met before revenue can be recognized: (1)
persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the
selling price is fixed and determinable; and (4) collectibility is reasonably
assured. Determination of criteria (3) and (4) are based on management's
judgments regarding the fixed nature of the selling prices of the products
delivered and the collectibility of those amounts. Provisions for discounts and
rebates to customers, estimated returns and allowances, and other adjustments
are provided for in the same period the related sales are recorded. Our company
will defer any revenue for which the product has not been delivered or is
subject to refund until such time that our company and the customer jointly
determine that the product has been delivered or no refund will be required.
ASC 605-10 incorporates Accounting Standards Codification subtopic 605-25,
Multiple-Element Arraignments ("ASC 605-25"). ASC 605-25 addresses accounting
for arrangements that may involve the delivery or performance of multiple
products, services and/or rights to use assets. The effect of implementing
605-25 on our company's financial position and results of operations was not
significant.
18
From the date of inception through October 31, 2009, our company has not
generated any revenue to date.
ADVERTISING
Our company follows the policy of charging the costs of advertising to expenses
incurred. Our company incurred $0 in advertising costs during the period ended
October 31, 2009 and 2008
LIQUIDITY
Our company has incurred net losses of $ 82,694 from our inception on July 22,
2005 through October 31, 2009. As of October 31, 2009, our company has excess of
current liabilities over our current assets by $ 27,694.
GOING CONCERN
We have suffered recurring losses from operations. The continuation of our
company as a going concern is dependent upon our company attaining and
maintaining profitable operations and raising additional capital. The financial
statements do not include any adjustment relating to the recovery and
classification of recorded asset amounts or the amount and classification of
liabilities that might be necessary should our company discontinue operations.
Due to the uncertainty of our ability to meet our current operating expenses and
the capital expenses noted above, in
The continuation of our business is dependent upon us raising additional
financial support. The issuance of additional equity securities by us could
result in a significant dilution in the equity interests of our current
stockholders. Obtaining commercial loans, assuming those loans would be
available, will increase our liabilities and future cash commitments.
RESULTS OF OPERATIONS
THREE MONTHS ENDED OCTOBER 31, 2009 AND 2008
The following summary of our results of operations should be read in conjunction
with our financial statements for the quarter ended October 31, 2009 which are
included herein.
THREE MONTH SUMMARY ENDING OCTOBER 31, 2009 AND 2008
Three Months Ended
October 31,
2009 2008
-------- --------
Revenue $ Nil $ Nil
Operating Expenses $ 18,984 $ 12,401
Net Loss $(18,984) $(12,401)
EXPENSES
Our operating expenses for the three month periods ended October 31, 2009 and
2008 are outlined in the table below:
Three Months Ended
October 31,
2009 2008
-------- --------
Bank charges and interest $ 75 $ 103
Filing and transfer agent fees $ 160 $ 3,028
Mineral property $ 1,824 $ 270
Office expenses $ 425 $ Nil
Professional fees $ 16,500 $ 9,000
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Operating expenses for the three months ended October 31, 2009, increased by 53%
as compared to the comparative period in 2008 primarily as a result of a
increase in mineral exploration costs and increase in professional fees..
SIX MONTHS ENDED OCTOBER 31, 2009 AND 2008
The following summary of our results of operations should be read in conjunction
with our financial statements for the quarter ended October 31, 2009 which are
included herein.
SIX MONTH SUMMARY ENDING OCTOBER 31, 2009 AND 2008
Six Months Ended
October 31,
2009 2008
-------- --------
Revenue $ Nil $ Nil
Operating Expenses $ 23,499 $ 27,123
Net Loss $(23,499) $(27,123)
EXPENSES
Our operating expenses for the six month periods ended October 31, 2009 and 2008
are outlined in the table below:
Six Months Ended
October 31,
2009 2008
-------- --------
Bank charges and interest $ 150 $ 212
Filing and transfer agent fees $ 160 $ 4,268
Mineral property $ 2,736 $ 3,589
Office expenses $ 503 $ 104
Professional fees $ 19,950 $ 18,950
Operating expenses for the six months ended October 31, 2009, increase by 5% as
compared to the comparative period in 2008 primarily as a result of a increase
in professional fees.
REVENUE
We have not earned any revenues since our inception and we do not anticipate
earning revenues in the upcoming quarter.
LIQUIDITY AND FINANCIAL CONDITION
WORKING CAPITAL
At At
October 31, April 31
2009 2009
-------- --------
Current assets $ 5,306 $ Nil
Current liabilities 33,000 26,195
-------- --------
Working capital deficit $(27,694) $(26,195)
======== ========
20
CASH FLOWS
Six Months Ended
October 31, October 31,
2009 2008
-------- --------
Net Cash Used in Operating Activities $ 23,499 $ 27,123
Net Cash Used in Investing Activities Nil Nil
Net Cash Provided by Financing Activities 31,500 12,000
-------- --------
Net Increase /(decrease) in cash during
period $ 8,001 $(15,123)
======== ========
OPERATING ACTIVITIES
Net cash used in operating activities was $23,499 in the six months ended
October 31, 2009 compared with net cash used in operating activities of $27,123
in the same period in 2008.
INVESTING ACTIVITIES
Net cash used in investing activities was $Nil in the six months ended October
31, 2009 compared to net cash used in investing activities of $Nil in the same
period in 2008.
FINANCING ACTIVITIES
Net cash provided by financing activities was $31,500 in the six months ended
October 31, 2009 compared to $12,000 in the same period in 2008.
CONTRACTUAL OBLIGATIONS
As a "smaller reporting company", we are not required to provide tabular
disclosure obligations.
OFF-BALANCE SHEET ARRANGEMENTS
We have no significant off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that are material to
stockholders.
RECENTLY ISSUED ACCOUNTING STANDARDS
Effective September 15, 2009, our company adopted the Financial Accounting
Standards Board ("FASB") Accounting Standards Codification ("ASC") 105-10,
"Generally Accepted Accounting Principles." ASC 105-10 establishes the FASB
Accounting Standards Codification(TM) ("Codification") as the source of
authoritative accounting principles recognized by the FASB to be applied by
nongovernmental entities in the preparation of financial statements in
conformity with GAAP for SEC registrants. All guidance contained in the
Codification carries an equal level of authority. The Codification supersedes
all existing non-SEC accounting and reporting standards. The FASB will now issue
new standards in the form of Accounting Standards Updates ("ASUs"). The FASB
will not consider ASUs as authoritative in their own right. ASUs will serve only
to update the Codification, provide background information about the guidance
and provide the bases for conclusions on the changes in the Codification.
References made to FASB guidance have been updated for the Codification
throughout this document.
Effective June 30, 2009, our company adopted guidance issued by the FASB and
included in ASC 855-10, "Subsequent Events," which establishes general standards
of accounting for and disclosures of events that occur after the balance sheet
date but before the financial statements are issued or are available to be
issued. It requires the disclosure of the date through which an entity has
evaluated subsequent events.
21
Effective April 1, 2009, our company adopted guidance issued by the FASB that
requires disclosure about the fair value of financial instruments for interim
financial statements of publicly traded companies, which is included in the
Codification in ASC 825-10-65, "Financial Instruments." The adoption of ASC
825-10-65 did not have an impact on our consolidated results of operations or
financial condition. Our adoption of the standard had no impact on our financial
results.
Effective January 1, 2009, our company adopted guidance issued by the FASB that
requires enhanced disclosures regarding derivative instruments and hedging
activities, enabling a better understanding of their effects on an entity's
financial position, financial performance and cash flows. The guidance is
included in the Codification in ASC 815-10, "Derivatives and Hedging." The
adoption of the standard had no impact on our financial results.
Effective January 1, 2008, our company adopted ASC 820-10, "Fair Value
Measurements and Disclosures," with respect to recurring financial assets and
liabilities. Our company adopted ASC 820-10 on January 1, 2009, as it relates to
nonrecurring fair value measurement requirements for nonfinancial assets and
liabilities. ASC 820-10 defines fair value, establishes a framework for
measuring fair value in generally accepted accounting principles, and expands
disclosures about fair value measurements. The adoption of the standard had no
impact on our financial results.
ITEM 4T. CONTROLS AND PROCEDURES
MANAGEMENT'S REPORT ON DISCLOSURE CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our reports filed under the SECURITIES
EXCHANGE ACT OF 1934, as amended, is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission's rules and forms, and that such information is accumulated and
communicated to our management, including our president and chief executive
officer (our principal executive officer and our principal financial officer and
principle accounting officer) to allow for timely decisions regarding required
disclosure.
As of October 31, 2009, the end of our second quarter covered by this report, we
carried out an evaluation, under the supervision and with the participation of
our president and chief executive officer (our principal executive officer and
our principal financial officer and principle accounting officer), of the
effectiveness of the design and operation of our disclosure controls and
procedures. Based on the foregoing, our president and chief executive officer
(our principal executive officer and our principal financial officer and
principle accounting officer) concluded that our disclosure controls and
procedures were effective as of the end of the period covered by this quarterly
report.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There have been no changes in our internal controls over financial reporting
that occurred during the quarter ended October 31, 2009 that have materially or
are reasonably likely to materially affect, our internal controls over financial
reporting.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We know of no material, existing or pending legal proceedings against us, nor
are we involved as a plaintiff in any material proceeding or pending litigation.
There are no proceedings in which any of our directors, officers or affiliates,
or any registered or beneficial shareholder, is an adverse party or has a
material interest adverse to our company.
22
ITEM 1A. RISK FACTORS
Much of the information included in this quarterly report includes or is based
upon estimates, projections or other "forward looking statements". Such forward
looking statements include any projections and estimates made by us and our
management in connection with our business operations. While these
forward-looking statements, and any assumptions upon which they are based, are
made in good faith and reflect our current judgment regarding the direction of
our business, actual results will almost always vary, sometimes materially, from
any estimates, predictions, projections, assumptions or other future performance
suggested herein.
Such estimates, projections or other "forward looking statements" involve
various risks and uncertainties as outlined below. We caution the reader that
important factors in some cases have affected and, in the future, could
materially affect actual results and cause actual results to differ materially
from the results expressed in any such estimates, projections or other "forward
looking statements".
RISKS ASSOCIATED WITH MINING
OUR PROPERTY IS IN THE EXPLORATION STAGE. THERE IS NO ASSURANCE THAT WE CAN
ESTABLISH THE EXISTENCE OF ANY MINERAL RESOURCE ON OUR PROPERTY IN COMMERCIALLY
EXPLOITABLE QUANTITIES. UNTIL WE CAN DO SO, WE CANNOT EARN ANY REVENUES FROM
OPERATIONS AND IF WE DO NOT DO SO WE WILL LOSE ALL OF THE FUNDS THAT WE EXPEND
ON EXPLORATION. IF WE DO NOT DISCOVER ANY MINERAL RESOURCE IN A COMMERCIALLY
EXPLOITABLE QUANTITY, OUR BUSINESS COULD FAIL.
Despite exploration work on our mineral property, we have not established that
it contains any mineral reserve, nor can there be any assurance that we will be
able to do so. If we do not, our business could fail.
A mineral reserve is defined by the Securities and Exchange Commission in its
Industry Guide 7 (which can be viewed over the Internet at
http://www.sec.gov/divisions/corpfin/forms/industry.htm#secguide7) as that part
of a mineral deposit which could be economically and legally extracted or
produced at the time of the reserve determination. The probability of an
individual prospect ever having a "reserve" that meets the requirements of the
Securities and Exchange Commission's Industry Guide 7 is extremely remote; in
all probability our mineral resource property does not contain any 'reserve' and
any funds that we spend on exploration will probably be lost.
Even if we do eventually discover a mineral reserve on our property, there can
be no assurance that we will be able to develop our property into a producing
mine and extract those resources. Both mineral exploration and development
involve a high degree of risk and few properties which are explored are
ultimately developed into producing mines.
The commercial viability of an established mineral deposit will depend on a
number of factors including, by way of example, the size, grade and other
attributes of the mineral deposit, the proximity of the resource to
infrastructure such as a smelter, roads and a point for shipping, government
regulation and market prices. Most of these factors will be beyond our control,
and any of them could increase costs and make extraction of any identified
mineral resource unprofitable.
MINERAL OPERATIONS ARE SUBJECT TO APPLICABLE LAW AND GOVERNMENT REGULATION. EVEN
IF WE DISCOVER A MINERAL RESOURCE IN A COMMERCIALLY EXPLOITABLE QUANTITY, THESE
LAWS AND REGULATIONS COULD RESTRICT OR PROHIBIT THE EXPLOITATION OF THAT MINERAL
RESOURCE. IF WE CANNOT EXPLOIT ANY MINERAL RESOURCE THAT WE MIGHT DISCOVER ON
OUR PROPERTIES, OUR BUSINESS MAY FAIL.
Both mineral exploration and extraction require permits from various foreign,
federal, state, provincial and local governmental authorities and are governed
by laws and regulations, including those with respect to prospecting, mine
development, mineral production, transport, export, taxation, labour standards,
occupational health, waste disposal, toxic substances, land use, environmental
protection, mine safety and other matters. There can be no assurance that we
will be able to obtain or maintain any of the permits required for the continued
exploration of our mineral property or for the construction and operation of a
mine on our property at economically viable costs. If we cannot accomplish these
objectives, our business could fail.
23
We believe that we are in compliance with all material laws and regulations that
currently apply to our activities but there can be no assurance that we can
continue to remain in compliance. Current laws and regulations could be amended
and we might not be able to comply with them, as amended. Further, there can be
no assurance that we will be able to obtain or maintain all permits necessary
for our future operations, or that we will be able to obtain them on reasonable
terms. To the extent such approvals are required and are not obtained, we may be
delayed or prohibited from proceeding with planned exploration or development of
our mineral property.
IF WE ESTABLISH THE EXISTENCE OF A MINERAL RESOURCE ON OUR PROPERTY IN A
COMMERCIALLY EXPLOITABLE QUANTITY, WE WILL REQUIRE ADDITIONAL CAPITAL IN ORDER
TO DEVELOP THE PROPERTY INTO A PRODUCING MINE. IF WE CANNOT RAISE THIS
ADDITIONAL CAPITAL, WE WILL NOT BE ABLE TO EXPLOIT THE RESOURCE, AND OUR
BUSINESS COULD FAIL.
If we do discover mineral resources in commercially exploitable quantities on
our property, we will be required to expend substantial sums of money to
establish the extent of the resource, develop processes to extract it and
develop extraction and processing facilities and infrastructure. Although we may
derive substantial benefits from the discovery of a major deposit, there can be
no assurance that such a resource will be large enough to justify commercial
operations, nor can there be any assurance that we will be able to raise the
funds required for development on a timely basis. If we cannot raise the
necessary capital or complete the necessary facilities and infrastructure, our
business may fail.
MINERAL EXPLORATION AND DEVELOPMENT IS SUBJECT TO EXTRAORDINARY OPERATING RISKS.
WE DO NOT CURRENTLY INSURE AGAINST THESE RISKS. IN THE EVENT OF A CAVE-IN OR
SIMILAR OCCURRENCE, OUR LIABILITY MAY EXCEED OUR RESOURCES, WHICH WOULD HAVE AN
ADVERSE IMPACT ON OUR COMPANY.
Mineral exploration, development and production involves many risks which even a
combination of experience, knowledge and careful evaluation may not be able to
overcome. Our operations will be subject to all the hazards and risks inherent
in the exploration for mineral resources and, if we discover a mineral resource
in commercially exploitable quantity, our operations could be subject to all of
the hazards and risks inherent in the development and production of resources,
including liability for pollution, cave-ins or similar hazards against which we
cannot insure or against which we may elect not to insure. Any such event could
result in work stoppages and damage to property, including damage to the
environment. We do not currently maintain any insurance coverage against these
operating hazards. The payment of any liabilities that arise from any such
occurrence would have a material adverse impact on our company.
MINERAL PRICES ARE SUBJECT TO DRAMATIC AND UNPREDICTABLE FLUCTUATIONS.
We expect to derive revenues, if any, either from the sale of our mineral
resource property or from the extraction and sale of metals such as lithium. The
price of those commodities has fluctuated widely in recent years, and is
affected by numerous factors beyond our control, including international,
economic and political trends, expectations of inflation, currency exchange
fluctuations, interest rates, global or regional consumptive patterns,
speculative activities and increased production due to new extraction
developments and improved extraction and production methods. The effect of these
factors on the price of metals, and therefore the economic viability of any of
our exploration properties and projects, cannot accurately be predicted.
THE MINING INDUSTRY IS HIGHLY COMPETITIVE AND THERE IS NO ASSURANCE THAT WE WILL
CONTINUE TO BE SUCCESSFUL IN ACQUIRING MINERAL CLAIMS. IF WE CANNOT CONTINUE TO
ACQUIRE PROPERTIES TO EXPLORE FOR MINERAL RESOURCES, WE MAY BE REQUIRED TO
REDUCE OR CEASE OPERATIONS.
The mineral exploration, development, and production industry is largely
un-integrated. We compete with other exploration companies looking for mineral
resource properties. While we compete with other exploration companies in the
effort to locate and acquire mineral resource properties, we will not compete
with them for the removal or sales of mineral products from our property if we
should eventually discover the presence of them in quantities sufficient to make
production economically feasible. Readily available markets exist worldwide for
the sale of mineral products. Therefore, we will likely be able to sell any
mineral products that we identify and produce.
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In identifying and acquiring mineral resource properties, we compete with many
companies possessing greater financial resources and technical facilities. This
competition could adversely affect our ability to acquire suitable prospects for
exploration in the future. Accordingly, there can be no assurance that we will
acquire any interest in additional mineral resource properties that might yield
reserves or result in commercial mining operations.
RISKS RELATED TO OUR COMPANY
WE HAVE A LIMITED OPERATING HISTORY ON WHICH TO BASE AN EVALUATION OF OUR
BUSINESS AND PROSPECTS.
We have been in the business of exploring mineral resource properties since 2007
and we have not yet located any mineral reserve. As a result, we have never had
any revenues from our operations. In addition, our operating history has been
restricted to the acquisition and exploration of our mineral properties and this
does not provide a meaningful basis for an evaluation of our prospects if we
ever determine that we have a mineral reserve and commence the construction and
operation of a mine. We have no way to evaluate the likelihood of whether our
mineral property contains any mineral reserve or, if it does that we will be
able to build or operate a mine successfully. We anticipate that we will
continue to incur operating costs without realizing any revenues during the
period when we are exploring our properties. We therefore expect to continue to
incur significant losses into the foreseeable future. We recognize that if we
are unable to generate significant revenues from mining operations and any
disposition of our property, we will not be able to earn profits or continue
operations. At this early stage of our operation, we also expect to face the
risks, uncertainties, expenses and difficulties frequently encountered by
companies at the start up stage of their business development. We cannot be sure
that we will be successful in addressing these risks and uncertainties and our
failure to do so could have a materially adverse effect on our financial
condition. There is no history upon which to base any assumption as to the
likelihood that we will prove successful and we can provide investors with no
assurance that we will generate any operating revenues or ever achieve
profitable operations.
THE FACT THAT WE HAVE NOT EARNED ANY OPERATING REVENUES SINCE OUR INCORPORATION
RAISES SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE TO EXPLORE OUR MINERAL
PROPERTIES AS A GOING CONCERN.
We have not generated any revenue from operations since our incorporation and we
anticipate that we will continue to incur operating expenses without revenues
unless and until we are able to identify a mineral resource in a commercially
exploitable quantity on our mineral property and build and operate a mine. We
had cash in the amount of $ 5,306 as of October 31, 2009. At October 31, 2009,
we had a working capital deficit of $27,694. We incurred a net loss of $23,499
for six month ended October 31, 2009 and $82,694 since inception. We will have
to raise additional funds to meet our currently budgeted operating requirements
for the next 12 months. As we cannot assure a lender that we will be able to
successfully explore and develop our mineral property, we will probably find it
difficult to raise debt financing from traditional lending sources. We have
traditionally raised our operating capital from sales of equity and debt
securities, but there can be no assurance that we will continue to be able to do
so. If we cannot raise the money that we need to continue exploration of our
mineral property, we may be forced to delay, scale back, or eliminate our
exploration activities. If any of these were to occur, there is a substantial
risk that our business would fail.
These circumstances lead our independent registered public accounting firm, in
their report dated August 07, 2009, to comment about our company's ability to
continue as a going concern. Management has plans to seek additional capital
through a private placement of our capital stock. These conditions raise
substantial doubt about our company's ability to continue as a going concern.
Although there are no assurances that management's plans will be realized,
management believes that our company will be able to continue operations in the
future.
RISKS ASSOCIATED WITH OUR COMMON STOCK
WITHOUT A PUBLIC MARKET THERE IS NO LIQUIDITY FOR OUR SHARES AND OUR
SHAREHOLDERS MAY NEVER BE ABLE TO SELL THEIR SHARES WHICH WOULD RESULT IN A
TOTAL LOSS OF THEIR INVESTMENT.
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Our common shares are not listed on any exchange or quotation system and we do
not have a market maker who will assist us in having our shares quoted on the
OTCBB. At the present, time none of our selling security holders are able to
sell their shares other than through private transactions. Selling shares
privately might result in our selling security holders not receiving the price
per share that they might have obtained if the shares were quoted on the OTCBB.
Management intends to seek out a market maker. This will occur as follows:
* We will have to identify a market maker who will file a Form 211 for
us which will start the process with the FINRA and hopefully
eventually obtaining a quotation on the OTCBB; and
* We will have to be current in our financial statements to be quoted on
the OTCBB and hence we will be responsible for filing Forms 10-K and
10-Q on a periodic basis as required.
We do not know how long this process will take, but we estimate a period of
between six to twelve months. There is the distinct possibility that our company
will never be quoted on the OTCBB.
WE MIGHT IN THE FUTURE HAVE TO SELL SHARES BY WAY OF PRIVATE PLACEMENTS OR
THROUGH A PUBLIC OFFERING WHICH WILL HAVE THE EFFECT OF DILUTING OUR
SHAREHOLDERS' CURRENT PERCENTAGE OWNERSHIP IN OUR COMPANY.
If, in the future, we decide to sell shares to raise additional capital for
operations, our shareholders current percentage ownership in our company will be
diluted unless they participate in the purchase of shares equivalent to their
present ownership in our company. If they do not participate in either a future
private placement or public offering their percentage interest in our company
will be diluted.
OTHER RISKS
TRENDS, RISKS AND UNCERTAINTIES
We have sought to identify what we believe to be the most significant risks to
our business, but we cannot predict whether, or to what extent, any of such
risks may be realized nor can we guarantee that we have identified all possible
risks that might arise. Investors should carefully consider all of such risk
factors before making an investment decision with respect to our common stock.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
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ITEM 6. EXHIBITS
Exhibit
Number Description
- ------ -----------
(3) ARTICLES OF INCORPORATION AND BY-LAWS
3.1 Articles of Incorporation (incorporated by reference from our
Registration Statement on Form S-1 filed on August 4, 2008)
3.2 Bylaws (incorporated by reference from our Registration Statement on
Form S-1 filed on August 4, 2008)
(10) MATERIAL CONTRACTS
10.1 Purchase and Sale Agreement dated January 15, 2007 (incorporated by
reference from our Registration Statement on Form S-1 filed on August
4, 2008)
10.2 Form of Private Placement Subscription Agreement (incorporated by
reference from our Registration Statement on Form S-1 filed on August
4, 2008)
(31) RULE 13A-14(D)/15D-14(D) CERTIFICATIONS
31.1* Section 302 Certification
(32) SECTION 1350 CERTIFICATIONS
32.1* Section 906 Certification
- ----------
* Filed herewith.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
QUARTZ VENTURES INC.
Date: December 21, 2009 /s/ Georgios Polyhronopoulos
---------------------------------------------------
Georgios Polyhronopoulos
President, Chief Executive Officer, Secretary,
Treasurer, Chief Financial Officer and Director
(Principal Executive Officer, Principal
Financial Officer and Principal Accounting Officer)
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