As Filed With the Securities and Exchange Commission on June 2, 2010
Registration Number 333-_______
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
DEER BAY RESOURCES INC.
(Exact name of registrant as specified in its charter)
Nevada 1090
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
2366 Wall Street, Suite 407, Vancouver, British Columbia Canada V5L 4Y1
Telephone: (604) 734-2605
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
Garry E. Wong
President, Chief Executive Officer, Chief Financial Officer,
Secretary, Treasurer and a Director
2366 Wall Street, Suite 407, Vancouver, British Columbia Canada V5L 4Y1
Telephone: (604) 734-2605
With a copy to:
Boughton Law Corporation (Attention: Claudia Losie)
595 Burrard Street, Suite 700, Vancouver, BC, Canada V7X 1S8
Telephone (604) 647-4149
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
From time to time after this Registration Statement is declared effective.
(Approximate date of commencement of proposed sale to the public)
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act, check
the following box: [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registrations statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
the definitions of "large accelerated filer", "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
[ ] Large accelerated filer [ ] Accelerated filer
[ ] Non-accelerated filer [X] Smaller reporting company
(Do not check if a smaller reporting company)
CALCULATION OF REGISTRATION FEE
====================================================================================================
Title of Each Proposed Maximum Proposed Maximum Amount of
Class of Securities Amount to be Offering Price Aggregate Registration
to be Registered Registered(1),(2) Per Share(3) Offering Price(3) Fee
- ----------------------------------------------------------------------------------------------------
Common stock, par value
$0.001 per share(4) 41,610,000 shares $0.02 $832,200.00 $59.34
====================================================================================================
(1) Amount to be registered represents: (i) 2,800,000 shares of common stock
issued in connection with a private placement completed by the registrant
on October 13, 2004 at a price of $0.001 per share; (ii) 1,050,000 shares
of common stock issued in connection with a private placement completed by
the registrant on October 28, 2004 at a price of $0.01 per share; (iii)
260,000 shares of common stock issued in connection with a private
placement completed by the registrant on December 24, 2004 at a price of
$0.05 per share; (iv) 32,500,000 shares of common stock issued in
connection with a private placement completed by the registrant on May 1,
2008 at a price of $0.001 per shares; and (v) 5,000,000 shares of common
stock issued in connection with a private placement completed on October
24, 2008 at a price of $0.001 per share..
(2) In the event of a stock split, stock dividend or similar transaction
involving the common shares of the registrant, in order to prevent
dilution, the number of shares of common stock registered shall be
automatically increased to cover additional shares in accordance with Rule
416(a) under the United States Securities Act of 1933, as amended (the
"Securities Act").
(3) The proposed maximum offering price per share is calculated in accordance
with Rule 457 of the Securities Act based on the most recent sale price of
the registrant's shares.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
SUBJECT TO COMPLETION
PROSPECTUS
DEER BAY RESOURCES INC.
A NEVADA CORPORATION
41,610,000 SHARES OF COMMON STOCK
This prospectus relates to the resale of up to 41,610,000 shares of our common
stock that may be sold, from time to time, by the selling stockholders named in
this prospectus for their own account consisting of: (i) 2,800,000 shares issued
in connection with a private placement transaction we completed on October 13,
2004; (ii) 1,050,000 shares issued in connection with a private placement
transaction we completed on October 28, 2004; (iii) 260,000 shares issued in
connection with a private placement transaction we completed on December 24,
2004; (iv) 32,500,000 shares issued in connection with a private placement
transaction we completed on May 1, 2008; and (v) 5,000,000 shares issued in
connection with a private placement transaction we completed on October 24,
2008..
OUR COMMON STOCK IS TRADED IN THE OVER-THE-COUNTER MARKET AND PRICES ARE QUOTED
ON THE OTC BULLETIN BOARD UNDER THE SYMBOL "DBAY.OB". ON JUNE 1, 2010, THERE IS
NO BID PRICE OR ASK PRICE.
THE SELLING STOCKHOLDERS MAY, FROM TIME TO TIME, SELL, TRANSFER OR OTHERWISE
DISPOSE OF ANY OR ALL OF THEIR SHARES OF COMMON STOCK ON ANY EXCHANGE, MARKET OR
TRADING FACILITY ON WHICH SHARES ARE TRADED OR IN PRIVATE TRANSACTIONS AND IN
OTHER WAYS DESCRIBED IN THE "PLAN OF DISTRIBUTION". THESE DISPOSITIONS MAY BE AT
FIXED PRICES, AT THE PREVAILING MARKET PRICE AT THE TIME OF SALE, AT PRICES
RELATED TO THE PREVAILING MARKET PRICE, AT VARYING PRICES DETERMINED AT THE TIME
OF SALE, OR AT NEGOTIATED PRICES.
We will not receive any proceeds from the sales of any of our shares of common
stock by the selling stockholders.
THE PURCHASE OF THE SECURITIES OFFERED THROUGH THIS PROSPECTUS INVOLVES A HIGH
DEGREE OF RISK. YOU SHOULD INVEST IN OUR COMMON STOCK ONLY IF YOU CAN AFFORD TO
LOSE YOUR ENTIRE INVESTMENT. YOU SHOULD CAREFULLY READ AND CONSIDER THE SECTION
OF THIS PROSPECTUS TITLED "RISK FACTORS" BEGINNING ON PAGE 4 BEFORE BUYING ANY
OF OUR SHARES OF COMMON STOCK.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC") NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED
UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENCE.
The information in this prospectus is not complete and may be changed. The
selling stockholders may not sell or offer these securities until the
registration statement of which this prospectus forms a part is declared
effective by the SEC. This prospectus is not an offer to sell these securities
and it is not soliciting an offer to buy these securities in any state where the
offer or sale is not permitted.
THE DATE OF THIS PROSPECTUS IS JUNE 1, 2010.
THE FOLLOWING TABLE OF CONTENTS HAS BEEN DESIGNED TO HELP YOU FIND IMPORTANT
INFORMATION CONTAINED IN THIS PROSPECTUS. WE ENCOURAGE YOU TO READ THE ENTIRE
PROSPECTUS.
TABLE OF CONTENTS
ITEM Page No.
- ---- --------
SUMMARY ................................................................. 3
RISK FACTORS ............................................................ 4
USE OF PROCEEDS ......................................................... 11
DETERMINATION OF OFFERING PRICE ......................................... 11
DILUTION ................................................................ 11
SELLING STOCKHOLDERS .................................................... 12
PLAN OF DISTRIBUTION .................................................... 14
INTERESTS OF NAMED EXPERTS AND COUNSEL .................................. 16
DESCRIPTION OF SECURITIES TO BE REGISTERED .............................. 16
LEGAL PROCEEDINGS ....................................................... 21
MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS ......................................... 21
FINANCIAL STATEMENTS .................................................... 22
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS ............................................... 23
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE ................................................ 25
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS ............ 25
EXECUTIVE COMPENSATION .................................................. 26
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT .......... 27
TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND CERTAIN
CONTROL PERSONS ......................................................... 27
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES .............................................. 28
2
SUMMARY
THE FOLLOWING SUMMARY HIGHLIGHTS SELECTED INFORMATION CONTAINED IN THIS
PROSPECTUS. THIS SUMMARY DOES NOT CONTAIN ALL THE INFORMATION YOU SHOULD
CONSIDER BEFORE INVESTING IN THE SECURITIES. BEFORE MAKING AN INVESTMENT
DECISION, YOU SHOULD READ THE ENTIRE PROSPECTUS CAREFULLY, INCLUDING THE "RISK
FACTORS" SECTION, THE FINANCIAL STATEMENTS AND THE NOTES TO THE FINANCIAL
STATEMENTS.
OUR BUSINESS
We are a natural resource exploration company currently engaged in the
exploration, acquisition and development of mineral properties in Canada.
We have no revenues, have incurred losses since our incorporation on August 25,
2004, and have relied upon the sale of our securities in unregistered private
placement transactions and loans from an officer and a shareholder to fund our
operations. For the foreseeable future, we will continue to be dependent on
additional financing in order to maintain our operations and to pursue our
exploration activities.
We were incorporated under the laws of Nevada effective August 25, 2004. Our
principal offices are located at 2366 Wall Street, Suite 407, Vancouver, British
Columbia, Canada V5L 4Y1. Our telephone number is (604) 734-2605.
THE OFFERING
The Issuer: Deer Bay Resources Inc.
The Selling Stockholders: We sold an aggregate of 41,610,000 shares to
the selling stockholders named in this
prospectus in connection with private placement
transactions. All of the common stock to be
sold under this prospectus will be sold by
existing shareholders.
Shares Offered by the Selling
Stockholders: The selling stockholders may from time to time
offer for resale up to 41,610,000 shares of our
common stock.
Offering Price: The selling stockholders may sell their shares
offered under this prospectus at prevailing
market prices, privately negotiated prices or
otherwise as set forth under "Plan of
Distribution" in this prospectus.
Terms of the Offering: The selling stockholders will determine when
and how they will sell the common stock offered
in this prospectus. Refer to "Plan of
Distribution".
Termination of the Offering: The offering will conclude when all of the
41,610,000 shares of common stock have been
sold, the shares no longer need to be
registered to be sold or we decide to terminate
the registration of shares.
Use of Proceeds: We will not receive any proceeds from this
offering.
Outstanding Shares of
Common Stock: There are 130,110,000 shares of our common
stock issued and outstanding as at the date of
this prospectus.
Risk Factors: See "Risk Factors" and the other information in
this prospectus for a discussion of the factors
you should consider before deciding to invest
in our common shares.
3
SUMMARY OF FINANCIAL DATA
All financial information is stated in United States dollars unless otherwise
specified. Our financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America.
The following financial data has been derived from and should be read in
conjunction with our audited financial statements from inception (August 25,
2004) to February 28, 2010 together with the notes thereto; and (iii) the
section of this prospectus entitled "Management's Discussion and Analysis of
Financial Condition and Results of Operations".
BALANCE SHEET DATA
As at As at
February 28, February 28,
2010 2009
-------- --------
(Audited) (Audited)
ASSETS
Cash $ 96 $ 37
-------- --------
Total assets $ 96 $ 37
-------- --------
CURRENT LIABILITIES
Accounts payable $ 3,000 $ 0
Related party loans $ 10,500 $ 1,000
-------- --------
Total Current Liabilities $ 13,500 $ 1,000
-------- --------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) $(13,404) $ (963)
-------- --------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIT) $ 96 $ 37
======== ========
STATEMENT OF OPERATIONS DATA
Inception
For the Year For the Year (August 25, 2004)
Ended Ended to
Febraury 28, February 28, February 28,
2010 2009 2010
-------- -------- --------
(Audited) (Audited) (Audited)
REVENUES $ -- $ -- $ --
-------- -------- --------
EXPENSES
Bank charges $ 115 $ 158 $ 668
Mineral property costs $ 500 $ 8,000 $ 16,000
Office expenses $ 80 $ 534 $ 1,725
Professional fees $ 10,500 $ 25,889 $ 55,580
Transfer agent and filing fees $ 1,246 $ 12,106 $ 15,231
-------- -------- --------
Total Operating Expenses $ 12,441 $ 46,687 $ 89,204
-------- -------- --------
NET LOSS $(12,441) $(46,687) $(89,204)
======== ======== ========
RISK FACTORS
An investment in our common stock involves a high degree of risk. You should
carefully consider the risks described below and the other information in this
prospectus before investing in our shares of common stock. If any of the
following risks occur, our business, operating results and financial condition
could be seriously harmed. The risks and uncertainties described below are not
the only ones we face. Additional risks and uncertainties, including those that
we do not know about or that we currently deem immaterial, also may adversely
affect our business. The trading price of our shares of common stock, when and
if we trade at a later date, could decline due to any of these risks, and you
may lose all or part of your investment.
4
RISKS RELATED TO OUR BUSINESS
WE WILL NEED TO SECURE ADDITIONAL FINANCING TO COMPLETE FURTHER EXPLORATION.
We were incorporated on August 25, 2004, and to date have been involved
primarily in organizational activities, evaluating resource projects and
acquiring certain mineral claims located in Canada. Therefore, our ability to
operate our business successfully remains untested. If we are successful in
developing the property underlying our mineral claims, we anticipate that we
will retain future earnings, if any, and other cash resources for the future
operation and development of our business as appropriate. We do not currently
anticipate declaring or paying any cash dividends in the foreseeable future.
Payment of any future dividends is solely at the discretion of our Board of
Directors, which will take into account many factors including our operating
results, financial condition and anticipated cash needs. For these reasons, we
may never achieve profitability or pay dividends.
We will require significant additional financing in order to continue our
exploration activities and our assessment of the commercial viability of our
mineral claim. Furthermore, if the costs of our planned exploration program are
greater than anticipated, we may have to seek additional funds through public or
private share offerings or arrangements with corporate partners. There can be no
assurance that we will be successful in our efforts to raise these require
funds, or on terms satisfactory to us. The continued exploration of current and
future mineral properties and the development of our business will depend upon
our ability to establish the commercial viability of our mineral properties and
to ultimately develop cash flow from operations and reach profitable operations.
We currently are in the exploration stage and we have no revenue from operations
and we are experiencing significant negative cash flow. Accordingly, the only
other sources of funds presently available to us are through the sale of equity
and loans from an officer and a shareholder. We presently believe that debt
financing will not be an alternative to us as our mineral property is in the
exploration stage. Alternatively, we may finance our business by offering an
interest in any of our future mineral properties to be earned by another party
or parties carrying out further exploration and development thereof or to obtain
project or operating financing from financial institutions, neither of which is
presently intended. If we are unable to obtain this additional financing, we
will not be able to continue our exploration activities and our assessment of
the commercial viability of our mineral property. Further, if we are able to
establish that development of our mineral property is commercially viable, our
inability to raise additional financing at this stage would result in our
inability to place our mineral property into production and recover our
investment. We may not discover commercially exploitable quantities of mineral
on our property that would enable us to enter into commercial production, and
achieve revenues and recover the money we spend on exploration.
Our mineral property does not contain reserves in accordance with the
definitions adopted by the Securities and Exchange Commission, and there is no
assurance that any exploration program that we undertake will establish
reserves. Our mineral property is in the exploration stage as opposed to the
development stage and has no known body of economic mineralization. The known
mineralization of this mineral property has not yet been determined, and may
never be determined to be economic. We plan to conduct further exploration
activities on our mineral property, which future exploration may include the
completion of feasibility studies necessary to evaluate whether commercial
mineable mineral exists on our property. There is a substantial risk that these
exploration activities will not result in discoveries of commercially
recoverable quantities of mineral. Any determination that our property contains
commercially recoverable quantities of minerals may not be reached until such
time that final comprehensive feasibility studies have been concluded that
establish that a potential mine is likely to be economical. There is a
substantial risk that any preliminary or final feasibility studies carried out
by us will not result in a positive determination that our mineral property can
be commercially developed.
WE DO NOT HAVE SUFFICIENT FINANCIAL RESOURCES TO COMPLETE OUR RECOMMENDED
EXPLORATION PROGRAM AND TO CONTINUE OPERATIONS BEYOND THE NEXT TWELVE MONTHS.
We have incurred a comprehensive loss of $57,110 for the period from August 25,
2004 (inception) to February 28, 2010, and we have no revenues to date. At
February 28, 2010, we had cash of $96 and a working capital deficit of $13,404,
which is not sufficient to maintain our administrative costs or to commence
phase one of the exploration program recommended by our consulting geologist,
and to meet our planned business objectives during the next twelve months.
Management recognizes that we need to generate additional financial resources in
order to complete our planned business objectives and to meet administrative
costs as they come due over the next twelve months. If we are unable to obtain
adequate additional financing, we will be prevented from engaging in operations
and exploration activities and our business will fail.
5
BECAUSE OF THE SPECULATIVE NATURE OF EXPLORATION OF MINING PROPERTIES, THERE IS
SUBSTANTIAL RISK THAT NO COMMERCIALLY EXPLOITABLE MINERALS WILL BE FOUND ON THE
PROPERTY UNDERLYING OUR MINERAL CLAIMS AND THAT OUR BUSINESS WILL FAIL.
We have not begun the recommended exploration program on the property underlying
our mineral claim and thus have no way to evaluate the likelihood that we will
be successful in establishing commercially exploitable reserves of minerals on
the property. You should be aware of the difficulties normally encountered by
new mineral exploration companies and the high rate of failure of such
enterprises. The search for valuable minerals as a business is extremely risky.
We may not find commercially exploitable reserves of minerals on the property
underlying our mineral claims. Exploration for minerals is a speculative venture
necessarily involving substantial risk. The expenditures to be made by us on our
exploration program may not result in the discovery of commercial quantities of
minerals. The likelihood of success must be considered in light of the problems,
expenses, difficulties, complications and delays encountered in connection with
the exploration of the property underlying our mineral claim that we plan to
undertake. Problems such as unusual or unexpected formations, the inability to
obtain suitable or adequate machinery, equipment or labour, and other risks
involved in mineral exploration, often result in unsuccessful exploration
efforts. In such a case, we would be unable to complete our business plan. In
addition, any determination that the property underlying our mineral claim
contains commercially recoverable quantities of minerals may not be reached
until such time that final comprehensive feasibility studies have been concluded
that establish that a potential mine is likely to be economically viable. There
is a substantial risk that any preliminary or final feasibility studies carried
out by us will not result in a positive determination that the property
underlying our mineral claim can be commercially developed.
AS PART OF OUR GROWTH STRATEGY, WE INTEND TO ACQUIRE ADDITIONAL MINERAL
EXPLORATION PROPERTIES.
Such acquisitions may pose substantial risks to our business, financial
condition, and results of operations. In pursuing acquisitions, we will compete
with other companies, many of which have greater financial and other resources
to acquire attractive properties. Even if we are successful in acquiring
additional properties, some of the properties may not produce positive results
of exploration, or we may not complete exploration of such prospects within
specified time periods may cause the forfeiture of the lease in that prospect.
There can be no assurance that we will be able to successfully integrate
acquired properties, which could result in substantial costs and delays or other
operational, technical, or financial problems. Further, acquisitions could
disrupt ongoing business operations. If any of these events occur, it would have
a material adverse effect upon our operations and results from operations.
WE ARE RELATIVELY A NEW ENTRANT INTO THE MINERAL EXPLORATION AND DEVELOPMENT
INDUSTRY WITHOUT PROFITABLE OPERATING HISTORY.
Since inception, our activities have been limited to organizational efforts and
obtaining working capital. It has only been since 2005 that our business
operations and focus is on acquiring and developing a very limited number of
properties. As a result, there is limited information regarding production or
revenue generation. As a result, our future revenues may be limited. The
business of mineral exploration and development is subject to many risks and if
mineral is found in economic production quantities, the potential profitability
of future possible mining ventures depends upon factors beyond our control. The
potential profitability of mining mineral properties if economic quantities of
mineral is found is dependent upon many factors and risks beyond our control,
including, but not limited to: (i) unanticipated ground and water conditions and
adverse claims to water rights; (ii) geological problems; (iii) metallurgical
and other processing problems; (iv) the occurrence of unusual weather or
operating conditions and other force majeure events; (v) lower than expected
grades of mineral; (vi) accidents; (vii) delays in the receipt of or failure to
receive necessary government permits; (viii) delays in transportation; (ix)
labor disputes; (x) government permit restrictions and regulation restrictions;
(xi) unavailability of materials and equipment; and (xii) the failure of
equipment or processes to operate in accordance with specifications or
expectations.
THE RISKS ASSOCIATED WITH EXPLORATION AND DEVELOPMENT AND, IF APPLICABLE, MINING
COULD CAUSE PERSONAL INJURY OR DEATH, ENVIRONMENTAL DAMAGE, DELAYS IN MINING,
MONETARY LOSSES AND POSSIBLE LEGAL LIABILITY.
We are not currently engaged in mining operations because we are in the
exploration phase and have not yet any proved mineral reserves. We do not
presently carry property and liability insurance. Cost effective insurance
contains exclusions and limitations on coverage and may be unavailable in some
circumstances.
6
MINERAL PRICES MAY NOT SUPPORT CORPORATE PROFIT.
Mineral prices have been highly volatile, and are affected by numerous
international economic and political factors which we have no control. The price
of minerals is affected by numerous factors beyond our control, including the
demand, increased supplies from both existing and new mineral mines, sales of
minerals from existing government stockpiles, and political and economic
conditions. Our long-term success is highly dependent upon the price of
minerals, as the economic feasibility of any ore body discovered on our property
would in large part be determined by the prevailing market price of that
mineral. If a profitable market does not exist, we could have to cease
operations.
OUR EXPLORATION ACTIVITIES MAY NOT BE COMMERCIALLY SUCCESSFUL, WHICH COULD LEAD
US TO ABANDON OUR INVESTMENTS IN EXPLORATION.
Our long-term success depends on our ability to establish commercially
recoverable quantities of minerals on the property underlying our mineral claim
and any other property that we may acquire. Mineral exploration is highly
speculative in nature, involves many risks and is frequently non-productive.
Substantial expenditures are required to establish proven and probable reserves
through drilling and analysis, to develop metallurgical processes to extract
metal, and to develop the mining and processing facilities and infrastructure at
any site chosen for mining. Whether a mineral deposit will be commercially
viable depends on a number of factors, which include, without limitation, the
particular attributes of the deposit, such as size, grade and proximity to
infrastructure; metal prices, which fluctuate widely; and government
regulations, including, without limitation, regulations relating to prices,
taxes, royalties, land tenure, land use, importing and exporting of minerals and
environmental protection. We may invest significant capital and resources in
exploration activities and abandon such investments if we are unable to identify
commercially exploitable mineral reserves. The decision to abandon a project may
reduce the trading price of our common stock and impair our ability to raise
future financing. We cannot provide any assurance to investors that we will
discover or acquire any mineralized material in sufficient quantities on the
property underlying our mineral claims or any property we may acquire. Further,
we will not be able to recover the funds that we spend on exploration if we are
not able to establish commercially recoverable quantities of minerals on any
such properties.
AS WE UNDERTAKE EXPLORATION OF THE PROPERTY UNDERLYING OUR MINERAL CLAIMS, WE
WILL BE SUBJECT TO COMPLIANCE WITH GOVERNMENT REGULATION THAT MAY INCREASE THE
ANTICIPATED TIME AND COST OF OUR EXPLORATION PROGRAM.
There are several governmental regulations that materially restrict the
exploration of minerals. We will be subject to the mining laws and regulations
of British Columbia as we carry out our exploration program. We may be required
to obtain work permits, post bonds and perform remediation work for any physical
disturbance to the land in order to comply with these regulations. While our
planned exploration program budgets for regulatory compliance, there is a risk
that new regulations could increase our time and costs of doing business and
prevent us from carrying out our exploration program.
IF THERE IS A DEFECT WITH RESPECT TO TITLE OF OUR MINERAL CLAIMS, OUR BUSINESS
MAY FAIL.
We own a mineral claim in British Columbia, Canada. The mining claim located in
Ontario, Canada expired. Although we believe that we have taken all appropriate
steps to determine that we have title to this claim, there is no guarantee that
there are no defects with respect to title of the mineral claims. The property
may be subject to prior unregistered agreements or transfers or native land
claims, and title may be affected by undetected defects. If we do not have clear
title to our mineral claims, our business may fail and you may lose your entire
investment in our common stock.
IF WE ARE UNABLE TO MAINTAIN OUR MINERAL CLAIMS, THEN OUR BUSINESS WILL FAIL.
We own a mineral claim in British Columbia, Canada. British Columbia's Mineral
Tenure Act requires that a holder of title to mineral claims must spend at least
CDN$0.40 per hectare per year (in the form of expenditures or payment of a fee
in lieu thereof) in order to keep claims in good standing. Our mineral claim
covers a total area of approximately 418 hectares. Thus, the annual cost of
compliance with the Mineral Tenure Act with respect to our mineral claim is
currently approximately CDN $167 per year. The claim is in good standing with
the Province of British Columbia. As such, exploration work with a minimum value
of approximately CDN $167 (or payment of a fee in lieu thereof) is required
before February 4, 2011 in order to maintain the claim in good standing for an
additional year. If we fail to meet these requirements on a timely basis, our
mineral claim will lapse. Accordingly, you could lose all or part of your
investment in our common stock.
7
WE ARE SUBJECT TO RISKS INHERENT IN THE MINING INDUSTRY, AND AT PRESENT WE DO
NOT HAVE ANY INSURANCE AGAINST SUCH RISKS. ANY LOSSES WE MAY INCUR THAT ARE
ASSOCIATED WITH SUCH RISKS MAY CAUSE US TO INCUR SUBSTANTIAL COSTS WHICH WILL
HAVE A MATERIAL ADVERSE EFFECT UPON OUR RESULTS OF OPERATIONS.
Any mining operations that we may undertake in the future will be subject to
risks normally encountered in the mining business. Mining for valuable minerals
is generally subject to a number of risks and hazards, including environmental
hazards, industrial accidents, labour disputes, unusual or unexpected geological
conditions, pressures, cave-ins, changes in the regulatory environment and
natural phenomena such as inclement weather conditions, floods, blizzards and
earthquakes. At the present we do not intend to obtain insurance coverage and
even if we were to do so, such insurance may not be available to us at
economically feasible premiums or at all. Insurance coverage may not continue to
be available or may not be adequate to cover any resulting liability. Moreover,
insurance against risks such as environmental pollution or other hazards as a
result of exploration and production is not generally available to companies in
the mining industry on acceptable terms. We might also become subject to
liability for pollution or other hazards which may not be insured against or
which we may elect not to insure against because of premium costs or other
reasons. Losses from these events may cause us to incur significant costs that
could have a material adverse effect upon our financial performance and results
of operations. Such costs could potentially exceed our asset value and cause us
to liquidate all of our assets, resulting in the loss of your entire investment
in our common stock.
IF WE DO NOT FIND A JOINT VENTURE PARTICIPANT FOR THE CONTINUED EXPLORATION OF
THE PROPERTY UNDERLYING OUR MINERAL CLAIM, WE MAY NOT BE ABLE TO ADVANCE THE
EXPLORATION WORK.
If the initial results of our mineral exploration program are successful, we may
try to enter into a joint venture agreement with a third party for the further
exploration and possible production of the property underlying our mineral
claim. We would face competition from other junior mineral resource exploration
companies if we attempt to enter into a joint venture agreement with a third
party. A prospective joint venture participant could have a limited ability to
enter into joint venture agreements with junior exploration companies, and will
seek the junior exploration companies who have the properties that it deems to
be the most attractive in terms of potential return and investment cost. In
addition, if we entered into a joint venture agreement, we would likely assign a
percentage of our interest in our mineral claim to the joint venture
participant. If we are unable to enter into a joint venture agreement with a
third party, we may fail and you will lose your entire investment in our common
stock.
BECAUSE OF THE FIERCELY COMPETITIVE NATURE OF THE MINING INDUSTRY, WE MAY BE
UNABLE TO MAINTAIN OR ACQUIRE ATTRACTIVE MINING PROPERTIES ON ACCEPTABLE TERMS,
WHICH WILL MATERIALLY AFFECT OUR FINANCIAL CONDITION.
The mining industry is competitive in all of its phases. We face strong
competition from other mining companies in connection with the acquisition of
properties producing, or capable of producing, precious and base metals. Many of
these companies have greater financial resources, operational experience and
technical capabilities. As a result of this competition, we may be unable to
maintain or acquire attractive mining properties on terms we consider acceptable
or at all. Consequently, our revenues, operations and financial condition could
be materially adversely affected.
WE RELY ON KEY MEMBERS OF MANAGEMENT, THE LOSS OF WHOSE SERVICES WOULD HAVE A
MATERIAL ADVERSE EFFECT ON OUR SUCCESS AND DEVELOPMENT.
Our success depends to a certain degree upon Garry E. Wong, our sole officer and
director. Garry E. Wong is a significant factor in our growth and success. The
loss of the service of Mr. Wong could have a material adverse effect on us.
BECAUSE OUR SOLE OFFICER HAS OTHER BUSINESS INTERESTS, HE MAY NOT BE ABLE OR
WILLING TO DEVOTE A SUFFICIENT AMOUNT OF TIME TO OUR BUSINESS OPERATION, CAUSING
OUR BUSINESS TO FAIL.
Our sole officer, Garry E. Wong, who serves as our President, Chief Executive
Officer, Chief Financial Officer, Secretary, Treasurer, and as our sole
director, is spending only approximately 20% of his business time on providing
management services to us. While we believe that Mr. Wong presently possesses
adequate time to attend to our interests, it is possible that the demands on him
from his other obligations could increase with the result that he would no
longer be able to devote sufficient time to the management of our business. This
could negatively impact our business development.
8
NEVADA LAW AND OUR ARTICLES OF INCORPORATION MAY PROTECT OUR DIRECTORS FROM
CERTAIN TYPES OF LAWSUITS.
Nevada law provides that our officers and directors will not be liable to us or
our stockholders for monetary damages for all but certain types of conduct as
officers and directors. Our Bylaws permit us broad indemnification powers to all
persons against all damages incurred in connection with our business to the
fullest extent provided or allowed by law. The exculpation provisions may have
the effect of preventing stockholders from recovering damages against our
officers and directors caused by their negligence, poor judgment or other
circumstances. The indemnification provisions may require us to use our limited
assets to defend our officers and directors against claims, including claims
arising out of their negligence, poor judgment, or other circumstances.
RISKS RELATED TO OUR COMMON STOCK
THERE IS NO ACTIVE TRADING MARKET FOR OUR COMMON STOCK, AND IF A MARKET FOR OUR
COMMON STOCK DOES NOT DEVELOP, OUR INVESTORS WILL BE UNABLE TO SELL THEIR
SHARES.
There is currently no active trading market for our common stock, and such a
market may not develop or be sustained. We currently have our common stock
quoted on the Financial Industry Regulatory Authority's (FINRA) OTC Bulletin
Board. In order to do this, we must attract more market makers. At the date
hereof we are not aware that any market maker has any such intention. We cannot
provide our investors with any assurance that our common stock will be traded on
the OTC Bulletin Board or, if traded, that a public market will materialize.
Further, the OTC Bulletin Board is not a listing service or exchange, but is
instead a dealer quotation service for subscribing members. If a public market
for our common stock does not develop, then investors may not be able to resell
the shares of our common stock that they have purchased and may lose all of
their investment. If we establish a trading market for our common stock, the
market price of our common stock may be significantly affected by factors such
as actual or anticipated fluctuations in our operation results, general market
conditions and other factors. In addition, the stock market has from time to
time experienced significant price and volume fluctuations that have
particularly affected the market prices for the shares of exploration stage
companies, which may materially adversely affect the market price of our common
stock.
SALES OF A SUBSTANTIAL NUMBER OF SHARES OF OUR COMMON STOCK INTO THE PUBLIC
MARKET BY THE SELLING STOCKHOLDERS MAY RESULT IN SIGNIFICANT DOWNWARD PRESSURE
ON THE PRICE OF OUR COMMON STOCK AND COULD AFFECT THE ABILITY OF OUR
STOCKHOLDERS TO REALIZE ANY CURRENT TRADING PRICE OF OUR COMMON STOCK.
Sales of a substantial number of shares of our common stock in the public market
could cause a reduction in the market price of our common stock, when and if
such market develops. When the registration statement of which this prospectus
forms a part is declared effective, the selling stockholders may be reselling up
to 32% of the issued and outstanding shares of our common stock. As a result of
such registration statement, a substantial number of our shares of common stock
which have been issued may be available for immediate resale when and if a
market develops for our common stock, which could have an adverse effect on the
price of our common stock. As a result of any such decreases in price of our
common stock, purchasers who acquire shares from the selling stockholders may
lose some or all of their investment.
Any significant downward pressure on the price of our common stock as the
selling stockholders sell the shares of our common stock could encourage short
sales by the selling stockholders or others. Any such short sales could place
further downward pressure on the price of our common stock.
RESALE RESTRICTIONS FOR BRITISH COLUMBIA RESIDENTS MAY LIMIT THE ABILITY OF SUCH
RESIDENTS TO RESELL THEIR SHARES IN THE U.S., WHICH WILL AFFECT THE PRICE AT
WHICH THEIR SHARES MAY BE SOLD.
Selling stockholders that are residents of British Columbia, and that acquired
their shares of our common stock on or after September 15, 2008 and before our
ticker-symbol date, have to rely on an exemption from prospectus and
registration requirements of British Columbia securities laws to sell their
shares that are being registered for resale by this prospectus. Such selling
stockholders have to comply with the British Columbia Securities Commission's
B.C. Instrument 51-509 "Issuers Quoted in the U.S. Over-the-Counter Markets" to
resell their shares. B.C. Instrument 51-509 requires, among other conditions,
that such British Columbia stockholders trade their shares of our common stock
through an investment dealer from an account at that investment dealer in the
name of the selling stockholder, and that the investment dealer executes the
trade through the OTC Bulletin Board or Pink Sheets. These restrictions will
limit the ability of such British Columbia selling stockholders to resell the
securities in the United States and, therefore, may materially affect the market
value of your shares.
9
OUR STOCK IS A PENNY STOCK. TRADING OF OUR STOCK MAY BE RESTRICTED BY THE SEC'S
PENNY STOCK REGULATIONS AND FINRA'S SALES PRACTICE REQUIREMENTS, WHICH MAY LIMIT
A STOCKHOLDER'S ABILITY TO BUY AND SELL OUR STOCK.
Our common stock is subject to the "Penny Stock" Rules of the SEC, which will
make transactions in our common stock cumbersome and may reduce the value of an
investment in our common stock.
We currently have our common stock quoted on FINRA's OTC Bulletin Board, which
is generally considered to be a less efficient market than markets such as
NASDAQ or the national exchanges, and which may cause difficulty in conducting
trades and difficulty in obtaining future financing. Further, our securities are
currently subject to the "penny stock rules" adopted pursuant to Section 15(g)
of the SECURITIES EXCHANGE ACT OF 1934, as amended. The penny stock rules apply
generally to companies whose common stock trades at less than $5.00 per share,
subject to certain limited exemptions. Such rules require, among other things,
that brokers who trade "penny stock" to persons other than "established
customers" complete certain documentation, make suitability inquiries of
investors and provide investors with certain information concerning trading in
the security, including a risk disclosure document and quote information under
certain circumstances. Many brokers have decided not to trade "penny stock"
because of the requirements of the "penny stock rules" and, as a result, the
number of broker-dealers willing to act as market makers in such securities is
limited. In the event that we remain subject to the "penny stock rules" for any
significant period, there may develop an adverse impact on the market, if any,
for our securities. Because our securities are subject to the "penny stock
rules", investors will find it more difficult to dispose of our securities.
Further, it is more difficult: (i) to obtain accurate quotations, (ii) to obtain
coverage for significant news events because major wire services, such as the
Dow Jones News Service, generally do not publish press releases about such
companies, and (iii) to obtain needed capital.
In addition to the "penny stock" rules promulgated by the SEC, FINRA has adopted
rules that require that in recommending an investment to a customer, a
broker-dealer must have reasonable grounds for believing that the investment is
suitable for that customer. Prior to recommending speculative low-priced
securities to their non-institutional customers, broker-dealers must make
reasonable efforts to obtain information about the customer's financial status,
tax status, investment objectives and other information. Under interpretations
of these rules, FINRA believes that there is a high probability that speculative
low priced securities will not be suitable for at least some customers. FINRA
requirements make it more difficult for broker-dealers to recommend that their
customers buy our common stock, which may limit your ability to buy and sell our
stock and have an adverse effect on the market for our shares.
OUR SOLE DIRECTOR IS OUTSIDE THE UNITED STATES, WITH THE RESULT THAT IT MAY BE
DIFFICULT FOR INVESTORS TO ENFORCE WITHIN THE UNITED STATES ANY JUDGMENTS
OBTAINED AGAINST US OR OUR DIRECTOR OR OFFICER.
Our sole director is a national and/or resident of a country other than the
United States, and all or a substantial portion of such person's assets are
located outside the United States. As a result, it may be difficult for
investors to effect service of process on our directors or officers, or enforce
within the United States or Canada any judgments obtained against us or our
officers or directors, including judgments predicated upon the civil liability
provisions of the securities laws of the United States or any state thereof.
Consequently, you may be effectively prevented from pursuing remedies under U.S.
federal securities laws against them. In addition, investors may not be able to
commence an action in a Canadian court predicated upon the civil liability
provisions of the securities laws of the United States.
PLEASE READ THIS PROSPECTUS CAREFULLY. YOU SHOULD RELY ONLY ON THE INFORMATION
CONTAINED IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
DIFFERENT INFORMATION. YOU SHOULD NOT ASSUME THAT THE INFORMATION PROVIDED BY
THE PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF
THIS PROSPECTUS.
10
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that involve risks and
uncertainties, including statements regarding our capital needs, business plans
and expectations. Such forward-looking statements involve risks and
uncertainties regarding the market price of valuable minerals, availability of
funds, government regulations, operating costs, exploration costs, outcomes of
exploration programs and other factors. Forward-looking statements are made,
without limitation, in relation to operating plans, property exploration and
development, availability of funds, environmental reclamation, operating costs
and permit acquisition. Any statements contained herein that are not statements
of historical facts may be deemed to be forward-looking statements. In some
cases, you can identify forward-looking statements by terminology such as "may",
"will", "should", "expect", "plan", "intend", "anticipate", "believe",
"estimate", "predict", "potential" or "continue", the negative of such terms or
other comparable terminology. Actual events or results may differ materially
from any forward-looking statement. In evaluating these statements, you should
consider various factors, including the risks outlined in this prospectus. These
factors may cause our actual results to differ materially from any
forward-looking statement. While these forward-looking statements, and any
assumptions upon which they are based, are made in good faith and reflect our
current judgment regarding our business plans, our actual results will almost
always vary, sometimes materially, from any estimates, predictions, projections,
assumptions or other future performance suggested herein. We do not intend to
update any of the forward-looking statements to conform these statements to
actual results, except as required by applicable law, including the securities
laws of the United States.
The safe harbour for forward-looking statements provided in the PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995 does not apply to the offering made in
this prospectus.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares of common stock
offered through this prospectus by the selling stockholders. All proceeds from
the sale of the shares will be for the account of the selling stockholders, as
described below in the sections of this prospectus entitled "Selling
Stockholders" and "Plan of Distribution". We will, however, incur all costs
associated with this prospectus and the registration statement of which this
prospectus forms a part.
DETERMINATION OF OFFERING PRICE
Our common stock is currently listed on FINRA's OTC Bulletin Board but our
common shares do not presently trade nor have a bid or ask price. Accordingly,
we have fixed the benchmark offering price by reference to our most recent
offering of our shares, which was effected at $0.02 per share. The selling
stockholders will sell their common stock at the price of $0.02 per share until
our common stock has a bid/ask and is quoted on the OTC Bulletin Board and
thereafter, at prevailing market prices or at privately negotiated prices. There
is no relationship whatsoever between the offering price and our assets,
earnings, book value or any other objective criteria of value.
If a market for our common stock develops, the actual offering price of the
shares that are the subject of this prospectus will be determined by prevailing
market prices at the time of sale or by private transactions negotiated by the
selling stockholders named in this prospectus. The offering price would thus be
determined by market factors and the independent decisions of the selling
stockholders named in this prospectus.
DILUTION
The common stock to be sold by the selling stockholders is common stock that is
currently issued and outstanding. Accordingly, there will be no dilution to our
existing stockholders.
11
SELLING STOCKHOLDERS
The selling stockholders named in this prospectus are offering all of the
41,610,000 shares of common stock covered by this prospectus, consisting of
shares issued in the private placement transactions. We completed the offering
of our shares in offshore transactions pursuant to Rule 903 of Regulation S
under the Securities Act.
The following table provides, as of the date of this prospectus, information
regarding the beneficial ownership of our common stock by each of the selling
stockholders, including:
1. the number of shares owned by each selling stockholder prior to this
offering;
2. the total number of shares that are to be offered by each selling
stockholder;
3. the total number of shares that will be owned by each selling
stockholder upon completion of the offering; and
4. the percentage owned by each selling stockholder upon completion of
this offering.
Information with respect to beneficial ownership is based upon information
obtained from the selling stockholders. Information with respect to "Total
shares to be owned upon completion of this offering" assumes the sale of all of
the shares offered by this prospectus and no other purchases or sales of our
common stock by the selling stockholders. Except as described below and to our
knowledge, the named selling stockholder beneficially owns and has sole voting
and investment power over all shares or rights to these shares. Other than any
relationships described below, none of the selling stockholders had or have any
material relationship with us. To our knowledge, none of the selling
stockholders is a broker-dealer or an affiliate of a broker-dealer.
Total number of
shares to be
offered for Total shares to
Shares owned selling be owned upon Percent owned
prior to this shareholders completion of upon completion of
Name of Selling Shareholder offering(1) account this offering this offering(2)
- --------------------------- ----------- ------- ------------- ----------------
PRIVATE PLACEMENT COMPLETED ON OCTOBER 13, 2004 AT A PRICE OF $0.001 PER SHARE
Brenda Wong 400,000 400,000 -0- -0-
Bay Van Than 400,000 400,000 -0- -0-
Dylan Ji 400,000 400,000 -0- -0-
Alice Fong 400,000 400,000 -0- -0-
A. Ranson Parker 400,000 400,000 -0- -0-
Sonja Vergettini 400,000 400,000 -0- -0-
Grace Ling 400,000 400,000 -0- -0-
PRIVATE PLACEMENT COMPLETED ON OCTOBER 28, 2004 AT A PRICE OF $0.01 PER SHARE
Chris Prentice 150,000 150,000 -0- -0-
Shannon Prentice 150,000 150,000 -0- -0-
Bart Brooks 150,000 150,000 -0- -0-
Deborah Bucar 150,000 150,000 -0- -0-
Marquis Consulting Group 150,000 150,000 -0- -0-
Henry Gonie 150,000 150,00 -0- -0-
Dennis Shikaze 150,000 150,000 -0- -0-
12
Total number of
shares to be
offered for Total shares to
Shares owned selling be owned upon Percent owned
prior to this shareholders completion of upon completion of
Name of Selling Shareholder offering(1) account this offering this offering(2)
- --------------------------- ----------- ------- ------------- ----------------
PRIVATE PLACEMENT COMPLETED ON DECEMBER 24, 2004 AT A PRICE OF $0.05 PER SHARE
Lien Huong Tran 20,000 20,000 -0- -0-
Ross Porter 20,000 20,000 -0- -0-
Brian Newlands 20,000 20,000 -0- -0-
Beverly Thacker 20,000 20,000 -0- -0-
Giovanni Dirosa 20,000 20,000 -0- -0-
May Y Chou 20,000 20,000 -0- -0-
Wilfre Dirks 20,000 20,000 -0- -0-
Maurice Lee 20,000 20,000 -0- -0-
Tippy Mah 20,000 20,000 -0- -0-
Greg Forrester 20,000 20,000 -0- -0-
Carrie Hui 20,000 20,000 -0- -0-
Fred Cashman 20,000 20,000 -0- -0-
Alvin Hui 20,000 20,000 -0- -0-
PRIVATE PLACEMENT COMPLETED ON MAY 1, 2008 AT A PRICE OF $0.001 PER SHARE
Ye Bin 6,500,000 6,500,000 -0- 4.9%
Sun Suzhuan 6,500,000 6,500,000 -0- 4.9%
Zhao Heng 6,500,000 6,500,000 -0- 4.9%
Sun Suping 6,500,000 6,500,000 -0- 4.9%
Yang Nuan 6,500,000 6,500,000 -0- 4.9%
PRIVATE PLACEMENT COMPLETED ON OCTOBER 24, 2008 AT A PRICE OF $0.001 PER SHARE
Don Prest 5,000,000 5,000,000 -0- 3.8%
TOTAL: 41,610,000 41,610,000 -0- -0-
- ----------
(1) Beneficial ownership calculation under Rule 13d-3 of the SECURITIES AND
EXCHANGE ACT OF 1934, as amended (the "Exchange Act"). Under Rule 13d-3, a
beneficial owner of a security includes any person who, directly or
indirectly, through any contract, arrangement, understanding, relationship
or otherwise has or shares: (i) voting power, which includes the power to
vote or to direct the voting of shares; and (ii) investment power, which
includes the power to dispose or direct the disposition of shares. Certain
shares may be deemed to be beneficially owned by more than one person (if,
for example, persons share the power to vote or the power to dispose of the
shares). In addition, shares are deemed to be beneficially owned by a
person if the person has the right to acquire the shares (for example, upon
exercise of an option) within 60 days of the date as of which the
information is provided. In computing the percentage ownership of any
person, the amount of shares outstanding is deemed to include the amount of
shares beneficially owned by such person (and only such person) by reason
of these acquisition rights.
(2) Based on 130,110,000 shares of our common stock issued and outstanding as
of the date of this prospectus.
Because a selling stockholder may offer by this prospectus all or some part of
the common shares which it holds, no estimate can be given as of the date hereof
as to the number of common shares actually to be offered for sale by a selling
stockholder or as to the number of common shares that will be held by a selling
stockholder upon the termination of such offering.
13
PLAN OF DISTRIBUTION
TIMING OF SALES
The selling stockholders may offer and sell the shares covered by this
prospectus at various times. The selling stockholders will act independently of
us in making decisions with respect to the timing, manner and size of each sale.
OFFERING PRICE
The selling stockholders will sell their shares at an offering price of $0.02
per share until our shares are quoted on the OTC Bulletin Board. Thereafter, the
sales price offered by the selling stockholders to the public may be:
1. the market price prevailing at the time of sale;
2. a price related to such prevailing market price; or
3. such other price as the selling stockholders determine from time to
time.
MANNER OF SALE
The shares may be sold by means of one or more of the following methods:
1. a block trade in which the broker-dealer so engaged will attempt to
sell the shares as agent, but may position and resell a portion of the
block as principal to facilitate the transaction;
2. purchases by a broker-dealer as principal and resale by that
broker-dealer for its account pursuant to this prospectus;
3. ordinary brokerage transactions in which the broker solicits
purchasers;
4. through options, swaps or derivative;
5. privately negotiated transactions; or
6. in a combination of any of the above methods.
The selling stockholders may sell their shares directly to purchasers or may use
brokers, dealers, underwriters or agents to sell their shares. Brokers or
dealers engaged by the selling stockholders may arrange for other brokers or
dealers to participate. Brokers or dealers may receive commissions, discounts or
concessions from the selling stockholders, or, if any such broker-dealer acts as
agent for the purchaser of shares, from the purchaser in amounts to be
negotiated immediately prior to the sale. The compensation received by brokers
or dealers may, but is not expected to, exceed that which is customary for the
types of transactions involved. Broker-dealers may agree with a selling
stockholder to sell a specified number of shares at a stipulated price per
share, and, to the extent the broker-dealer is unable to do so acting as agent
for a selling stockholder, to purchase as principal any unsold shares at the
price required to fulfill the broker-dealer commitment to the selling
stockholder. Broker-dealers who acquire shares as principal may thereafter
resell the shares from time to time in transactions, which may involve block
transactions and sales to and through other broker-dealers, including
transactions of the nature described above, in the over-the-counter market or
otherwise at prices and on terms then prevailing at the time of sale, at prices
then related to the then-current market price or in negotiated transactions. In
connection with resales of the shares, broker-dealers may pay to commissions or
receive from commissions the purchasers of shares as described above.
If our selling stockholders enter into arrangements with brokers or dealers, as
described above, we are obligated to file a post-effective amendment to the
registration statement of which this prospectus forms a part, disclosing such
arrangements, including the names of any broker dealers acting as underwriters.
The selling stockholders and any broker-dealers or agents that participate with
the selling stockholders in the sale of the shares may be deemed to be
"underwriters" within the meaning of the Securities Act. In that event, any
commissions received by broker-dealers or agents and any profit on the resale of
the shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act.
14
SALES PURSUANT TO RULE 144
Any shares of common stock covered by this prospectus that qualify for sale
pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather
than pursuant to this prospectus.
REGULATION M
We have advised the selling security holders that the anti-manipulation rules of
Regulation M under the Exchange Act may apply to sales of shares in the market
and to the activities of the selling security holders and their affiliates.
Regulation M under the Exchange Act prohibits, with certain exceptions,
participants in a distribution from bidding for, or purchasing for an account in
which the participant has a beneficial interest, any of the securities that are
the subject of the distribution. Accordingly, the selling stockholder is not
permitted to cover short sales by purchasing shares while the distribution is
taking place. Regulation M also governs bids and purchases made in order to
stabilize the price of a security in connection with a distribution of the
security. In addition, we will make copies of this prospectus available to the
selling security holders for the purpose of satisfying the prospectus delivery
requirements of the Securities Act.
STATE SECURITIES LAWS
Under the securities laws of some states, the shares may be sold in such states
only through registered or licensed brokers or dealers. In addition, in some
states the shares may not be sold unless the shares have been registered or
qualified for sale in the state or an exemption from registration or
qualification is available and is complied with.
SALES BY RESIDENTS OF BRITISH COLUMBIA
Selling stockholders that are residents of British Columbia, and that acquired
their shares of our common stock on or after September 15, 2008 and before our
ticker-symbol date, have to rely on an exemption from prospectus and
registration requirements of British Columbia securities laws to sell their
shares which are being registered for resale by this prospectus. Such selling
stockholders have to comply with the British Columbia Securities Commission's
B.C. Instrument 51-509 "Issuers Quoted in the U.S. Over-the-Counter Markets" to
resell their shares. B.C. Instrument 51-509 requires, among other conditions,
that such British Columbia stockholders trade their shares of our common stock
through an investment dealer from an account at that investment dealer in the
name of the selling stockholder, and that the investment dealer executes the
trade through the OTC Bulletin Board or Pink Sheets.
EXPENSES OF REGISTRATION
We are bearing all costs relating to the registration of the common stock. These
expenses are estimated to be approximately $5,000 including, but not limited to,
legal, accounting, printing and mailing fees. The selling stockholders, however,
will pay any commissions or other fees payable to brokers or dealers in
connection with any sale of the common stock.
DESCRIPTION OF SECURITIES TO BE REGISTERED
GENERAL
Our authorized capital stock consists of an aggregate of 200,000,000 shares of
common stock, with a par value of $0.0001 per share. As of the date of this
prospectus, there are 130,110,000 shares of our common stock issued and
outstanding held by 34 shareholders of record.
COMMON STOCK
Holders of our common stock are entitled to one vote for each share held on all
matters submitted to a stockholder vote, except that at all elections of
directors, each stockholder shall be entitled to as many votes as shall be equal
to the number of such stockholder's shares of capital stock entitled to vote,
multiplied by the number of directors to be elected, and such stockholder may
cast all of such votes for a single director or may cast such votes among
several directors. The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum for holding all meetings of stockholders, except as
otherwise provided by applicable law or by the Articles of Incorporation.
15
Holders of common stock are entitled to share in all dividends that the Board of
Directors, in its discretion, declares from available funds. The payment of
dividends is at the discretion of our Board of Directors. We have never declared
or paid any cash dividends on our common stock. We currently intend to retain
future earnings, if any, to finance the expansion of our business. As a result,
we do not anticipate paying any cash dividends in the foreseeable future.
In the event of liquidation, dissolution or winding up, each outstanding share
entitles its holder to participate pro rata in all assets that remain after
payment of liabilities.
Holders of our common stock have no pre-emptive rights, no conversion rights and
there are no sinking fund or redemption provisions applicable to our common
stock.
INTERESTS OF NAMED EXPERTS AND COUNSEL
No expert or counsel named in this prospectus as having prepared or certified
any part of this prospectus or having given an opinion upon the validity of the
securities being registered or upon other legal matters in connection with the
registration or offering of the common stock offered hereby was employed on a
contingency basis, or had, or is to receive, in connection with such offering, a
substantial interest, direct or indirect, in us, nor was any such person
connected with us as a promoter, managing or principal underwriter, voting
trustee, director, officer or employee.
Boughton Law Corporation, legal counsel, has provided an opinion on the validity
of the share of our common stock that are the subject of this prospectus.
The audited financial statements for the years ended February 28, 2010 and 2009,
included in this prospectus, have been audited by Weaver & Martin, LLC, which is
an independent registered public accounting firm, to the extent and for the
periods set forth in their report appearing elsewhere in this prospectus. These
financial statements are included in reliance upon the authority of said firm as
an expert in auditing and accounting.
DESCRIPTION OF BUSINESS AND PROPERTIES
INCORPORATION AND ORGANIZATIONAL ACTIVITITES
We were incorporated on August 25, 2004 under the laws of the State of Nevada.
We appointed Garry E. Wong as our sole officer and director.
OUR BUSINESS
MINERAL CLAIMS
Since inception, we were an exploration stage company engaged in the acquisition
and exploration of mineral properties in Canada. On April 26, 2005, we entered
into a mineral property purchase agreement to acquire a 100% interest in a
mineral claim located in the Scadding Township, Sudbury Mining Division,
Ontario, Canada for total consideration of $7,500. This claim expired. On March
18, 2008, we entered into a mineral property purchase agreement with Laurence
Stephenson (the "Stephenson Agreement") to acquire a 100% interest in a mineral
claim known as the Emmy Claim located in the Emory Creek area of the New
Westminster Mining Division, British Columbia, Canada (the "British Columbia
Claim"). This claim expired on January 25, 2010 and was re-staked on February 4,
2010 by Teuton Resources Corp. ("Teuton"). The Company entered into a Letter and
Trust Agreement with Teuton dated February 4, 2010 and paid Teuton Cnd$500 to
hold the re-staked Emmy Claim in trust for the Company. As of the date of this
Prospectus the Emmy Claim is in good standing until February 4, 2011. In 2008 we
paid $5,000 to a geologist for analysis of the property underlying our Emmy
Claim and paid a further $ to update this analysis to a current date.
We have obtained an updated geological report on the property underlying our
Emmy Claim. The geology report was originally prepared and dated June 5, 2008
and was updated on February 10, 2010. The updated geology report recommends that
a Phase I program of geological mapping, sampling and prospecting be undertaken
to further define areas of potential interest. The first priority is 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 should 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 our, 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
16
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
$10,000 along with an additional $25,000 of further geological investigation in
order to complete Phase II. Provision of an additional budget of $50,000 is
recommended for the contingent exploration work that would be required to
complete the follow-up surveys.
EXPLORATION STAGE COMPANY
We are considered an exploration or exploratory stage company because we are
involved in the examination and investigation of land that we believe may
contain minerals for the purpose of discovering the presence of such minerals,
if any, and its extent. There is no assurance that commercially viable minerals
exist on the property underlying our British Columbia Claim, and a great deal of
further exploration will be required before a final evaluation as to the
economic and legal feasibility for our future exploration is determined. To
date, we have not discovered an economically viable reserve on the property
underlying our interests, and there is no assurance that we will discover one.
PROPERTY DESCRIPTION
The property consists of one mineral claim representing 320 units listed in the
table below:
CLAIM NUMBER AND NAME AREA (IN HECTARES) EXPIRY DATE
- --------------------- ------------------ -----------
#705501 Emmy 418 February 4, 2011
Following is the Map referred to in the geologist report attached as Exhibit
10.5:
17
[MAP SHOWING THE EMMY CLAIM LOCATION]
18
The Pacific Nickel Mine located in Southwestern BC near Hope was a very
significant producer of copper and nickel from an ultramafic intrusive geologic
environment. As one of the largest Canadian sources of these metals outside of
Sudbury, Ontario and Thompson, Manitoba, the lack of exploration in this area
makes it a unique underdeveloped mineral belt that requires a concerted
exploration program that should include geological mapping; silt, soil and rock
sampling, thin section analysis, and airborne geophysics followed by diamond
drilling.
The Emory Creek Claim is located 5 kilometres north of the mine area and
approximately 11 kilometres north of Hope B.C. on Map Sheet M092H053.
There is tremendous similarity and coincident features in the rock types and
geophysical imprint between the geology of the Pacific Nickel Mine area and the
ultramafic belt extending to the northwest and southwest from it. It is evident
from the public and private record that this belt has not been subjected to
detailed recent exploration until now with numerous exploration companies
initiating large scale programs. Research into the mine area has provided some
excellent exploration features that should be looked for on the unexplored area.
EXPLORATION PROGRAM
We will engage a geologist to provide a further analysis of the property and
potential for minerals. Our initial program will 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 will be 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 claims for exploration potential and obtain further
funding to acquire new exploration targets.
COMPETITION
We operate in a highly competitive industry, competing with other mining and
exploration companies, and institutional and individual investors, which are
actively seeking mineral based exploration properties throughout the world
together with the equipment, labour and materials required to exploit such
properties. Many of our competitors have financial resources, staff and
facilities substantially greater than ours. The principal area of competition is
encountered in the financial ability to cost effectively acquire prime mineral
exploration prospects and then exploit such prospects. Competition for the
acquisition of mineral exploration properties is intense, with many properties
available in a competitive bidding process in which we may lack technological
information or expertise available to other bidders. Therefore, we may not be
successful in acquiring and developing profitable properties in the face of this
competition. No assurance can be given that a sufficient number of suitable
mineral exploration properties will be available for acquisition and
development.
19
MINERAL EXPLORATION REGULATION
Our mineral exploration activities are, or will be, subject to extensive foreign
laws and regulations governing prospecting, development, production, exports,
taxes, labor standards, occupational health, waste disposal, protection and
remediation of the environment, protection of endangered and protected species,
mine safety, toxic substances and other matters. Mineral exploration is also
subject to risks and liabilities associated with pollution of the environment
and disposal of waste products occurring as a result of mineral exploration and
production. Compliance with these laws and regulations may impose substantial
costs on us and will subject us to significant potential liabilities. Changes in
these regulations could require us to expend significant resources to comply
with new laws or regulations or changes to current requirements and could have a
material adverse effect on our business operations.
Exploration and production activities are subject to certain environmental
regulations which may prevent or delay the commencement or continuance of our
operations. Our activities may be subject to certain federal, state and local
laws and regulations, relating to environmental quality and pollution control.
Such laws and regulations increase the costs of these activities and may prevent
or delay the commencement or continuance of a given operation. Compliance with
these laws and regulations does not appear to have a future material effect on
our operations or financial condition to date. Specifically, we may be subject
to legislation regarding emissions into the environment, water discharges and
storage and disposition of hazardous wastes. However, such laws and regulations,
whether national or local, are frequently changed and we are unable to predict
the ultimate cost of compliance. Generally, environmental requirements do not
appear to affect us any differently or to any greater or lesser extent than
other companies in the industry and our current operations have not expanded to
a point where either compliance or cost of compliance with environmental
regulation is a significant issue for us. Costs have not been incurred to date
with respect to compliance with environmental laws but such costs may be
expected to increase with an increase in scale and scope of exploration.
Mineral exploration operations are subject to comprehensive regulation which may
cause substantial delays or require capital outlays in excess of those
anticipated causing an adverse effect on our business operations. Mineral
exploration operations are subject to foreign, federal, state, and local laws
relating to the protection of the environment, including laws regulating removal
of natural resources from the ground and the discharge of materials into the
environment. Mineral exploration operations are also subject to federal, state,
and local laws and regulations which seek to maintain health and safety
standards by regulating the design and use of mining methods and equipment.
Various permits from government bodies are required for mining operations to be
conducted; no assurance can be given that such permits will be received.
Environmental standards imposed by federal, state, or local authorities may be
changed and any such changes may have material adverse effects on our
activities. Moreover, compliance with such laws may cause substantial delays or
require capital outlays in excess of those anticipated, thus causing an adverse
effect on us. Additionally, we may be subject to liability for pollution or
other environmental damages which we may elect not to insure against due to
prohibitive premium costs and other reasons. As of the date of this Prospectus,
we have not been required to spend any material amount on compliance with
environmental regulations. However, we may be required to do so in future and
this may affect our ability to expand or maintain our operations.
EMPLOYEES
As of the date of this Prospectus we have no significant employees other than
Garry E. Wong, our sole officer and director. We intend to retain independent
geologists and consultants on a contract basis to conduct the work programs on
the property underlying our interests in order to carry out our plan of
operations.
RESEARCH AND DEVELOPMENT EXPENDITURES
We have not incurred any research or development expenditures since our
incorporation.
SUBSIDIARIES
We do not have any subsidiaries.
PATENTS AND TRADEMARKS
We do not own, either legally or beneficially, any patent or trademark.
20
LEGAL PROCEEDINGS
We currently are not party to any material legal proceedings and, to our
knowledge, no such proceedings are threatened or contemplated.
MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET INFORMATION
Our shares of common stock are quoted for trading on the OTC Bulletin Board
under the symbol "DBAY.OB". The market for our common stock is limited, volatile
and sporadic. The following table sets forth the high and low bid prices
relating to our common stock for the periods indicated, as provided by the OTC
Bulletin Board. These quotations reflect inter-dealer prices without retail
mark-up, mark-down, or commissions, and may not reflect actual transactions.
Quarter Ended High Bid Low Bid
------------- -------- -------
February 28, 2010 $nil $nil
November 30, 2009 $nil $nil
August 31, 2009 $nil $nil
May 31, 2009 $nil $nil
On June 1, 2010, the low bid price of our common stock was $nil per share, the
high ask price of our common stock was $nil per share, and the last reported
sale price for our common stock was $nil per share.
CONVERTIBLE SECURITIES
As of the date of this Prospectus, we have not issued and do not have
outstanding any securities convertible into shares of our common stock or any
rights convertible or exchangeable into shares of our common stock. We may,
however, issue such convertible or exchangeable securities in the future.
144 SHARES
The SEC enacted changes to Rule 144, which took effect on February 15, 2008. In
general, under revised Rule 144, the following guidelines will apply:
Affiliate or person selling Non-affiliate (and has not been
on behalf of an affiliate an affiliate during the prior three months)
------------------------- -------------------------------------------
Restricted During six-month holding period--no During six-month holding period--no
Securities of resales under Rule 144 permitted resales under Rule 144 permitted
Reporting Issuers
After six-month holding period--may After six-month holding period but
resell in accordance with all Rule 144 before one year--unlimited public
requirements, including current public resales under Rule 144 except that the
information, volume limitations, manner current public information requirement
of sale requirements for equity still applies
securities, and filing of Form 144
After one year holding period--unlimited
public resales under Rule 144, need not
comply with any other Rule 144
requirements
Restricted During one-year holding period--no During one-year holding period--no
Securities of resales under Rule 144 permitted resales under Rule 144 permitted
Non-Reporting
Issuers After one-year holding period--may After one year holding period--unlimited
resell in accordance with all Rule 144 public resales under Rule 144, need not
requirements, including current public comply with any other Rule 144
information, volume limitations, manner requirements
of sale requirements for equity
securities, and filing of Form 144
21
Unless and until the Registration Statement of which this Prospectus forms a
part is declared effective by the SEC and we subsequently file a registration
statement on Form 8-A to register our common stock (which we intend to do upon
receipt of notification of effectiveness of the Registration Statement of which
this Prospectus forms a part), we will be considered a "non-reporting" issuer
such that the guidelines set forth in the bottom row of the chart above will be
applicable. Once the Registration Statement of which this Prospectus forms a
part is declared effective and we file a Registration Statement on Form 8-A to
register our common stock, we will be considered a "reporting company" such that
the guidelines in the first row of the chart above will be applicable.
As of the date of this Prospectus, to the best of our knowledge and belief, the
only "affiliates" of us (as such term is defined in Rule 144, is Garry E. Wong,
our sole officer and director. As disclosed in this Prospectus under the heading
"Security Ownership of Certain Beneficial Owners and Management", our sole
officer and director is the beneficial owner of an aggregate of 88,500,000
shares of common stock, representing 68% of our currently issued and outstanding
common stock. As an affiliate, our officer/director may sell such shares upon
satisfaction of the relevant holding period for affiliates indicated above;
provided that he will comply with all other Rule 144 requirements.
As of the date of this Prospectus, "non-affiliates" of our company hold all of
our securities not held by affiliates. As of the date of this Prospectus, all of
our "non-affiliates" are those individuals listed as selling shareholders in
this Prospectus. Such non-affiliates may sell such shares upon satisfaction of
the relevant holding period for non-affiliates indicated above, provided that
they comply with any other applicable Rule 144 requirements as indicated above.
REGISTRATION RIGHTS
We have not granted registration rights to the selling stockholders or to any
other person.
HOLDERS OF OUR COMMON STOCK
As of the date of this Prospectus we had 34 registered holders of our common
stock.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our common stock. We
currently intend to retain future earnings, if any, to finance the expansion of
our business. As a result, we do not anticipate paying any cash dividends in the
foreseeable future.
There are no restrictions in our Articles or Bylaws that prevent us from
declaring dividends. The NEVADA REVISED STATUTES, however, do prohibit us from
declaring dividends where, after giving effect to the distribution of the
dividend:
1. we would not be able to pay our debts as they become due in the usual
course of business; or
2. our total assets would be less than the sum of our total liabilities plus
the amount that would be needed to satisfy the rights of stockholders who
have preferential rights superior to those receiving the distribution.
EQUITY COMPENSATION PLANS
As of the date of this Prospectus, we do not have any equity compensation plans
in place.
FINANCIAL STATEMENTS
This Prospectus includes our audited financial statements from our inception
(August 25, 2004) to February 29, 2010 and the years ended February 28, 2010 and
2009 together with the notes thereto. These financial statements have been
prepared on the basis of accounting principles generally accepted in the United
States and are expressed in U.S.
22
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Stockholders and Directors
Deer Bay Resources Inc. (An Exploration Stage Company)
We have audited the accompanying balance sheets of Deer Bay Resources Inc. (an
exploration stage company) as of February 28, 2010 and 2009 and the related
statements of operations, stockholders' equity (deficit), and cash flows for the
period from August 24, 2004 (inception) to February 28, 2010 and the years ended
February 28, 2010 and 2009. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatements. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Deer Bay Resources Inc. (An
Exploration Stage Company) as of February 28, 2010 and 2009 and the results of
its operations, stockholders' equity (deficit), and cash flows for the period
from August 24, 2004 (inception) to February 28, 2010 and the years ended
February 28, 2010 and 2009 in conformity with U.S. generally accepted accounting
principles
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has suffered recurring losses from operations.
This factor raises substantial doubt about the Company's ability to continue as
a going concern. Management's plans with regard to these matters are also
described in Note 1. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
/s/ Weaver & Martin, LLC
- --------------------------------
Weaver & Martin, LLC
Kansas City, Missouri
May 18, 2010
F-1
Deer Bay Resources Inc.
(An Exploration Stage Company)
Balance Sheets
February 28, February 28,
2010 2009
-------- --------
$ $
Assets
Current Assets
Cash 96 37
-------- --------
Total Assets 96 37
======== ========
Liabilities and Stockholders' Equity (Deficit)
Current Liabilities
Accounts payable 3,000 --
Related party loans (Note 4) 10,500 1,000
-------- --------
Total Current Liabilities 13,500 1,000
-------- --------
Stockholders' Equity (Deficit)
Capital stock
Authorized:
200,000,000 common shares with a par value of $0.0001
Issued and outstanding:
130,110,000 common shares issued and outstanding 13,011 13,011
Additional paid-in-capital 62,789 62,789
Deficit accumulated during the exploration stage (89,204) (76,763)
-------- --------
Total stockholders' equity (deficit) (13,404) (963)
-------- --------
Total liabilities and stockholders' equity (deficit) 96 37
======== ========
Nature of operations and continuance of business (Note 1)
See Accompanying Notes
F-2
Deer Bay Resources Inc.
(An Exploration Stage Company)
Statements of Operations
Cumulative from
August 25, 2004
(Inception) to Year Ended Year Ended
February 28, 2010 February 28, 2010 February 28, 2009
----------------- ----------------- -----------------
$ $ $
Revenue -- -- --
------------ ------------ ------------
Expenses
Bank charges 668 115 158
Mineral property costs 16,000 500 8,000
Office expenses 1,725 80 534
Professional fees 55,580 10,500 25,889
Transfer agent and filing fees 15,231 1,246 12,106
------------ ------------ ------------
Net Loss (89,204) (12,441) (46,687)
============ ============ ============
Loss per share - Basic and diluted -- --
============ ============
Weighted Average Number of Common
Shares Outstanding 130,110,000 89,507,000
============ ============
See Accompanying Notes
F-3
Deer Bay Resources Inc.
(An Exploration Stage Company)
Statement of Stockholders' Equity (Deficit)
From August 25, 2004 (Inception) to February 28, 2010
Deficit
Accumulated
Number of Additional During the
Common Par Paid-in Exploration
Shares Value Capital Stage Total
------ ----- ------- ----- -----
$ $ $ $
August 25, 2004 -- -- -- -- --
October 11, 2004 - Issued for
cash at $0.001 6,300,000 630 5,670 -- 6,300
October 25, 2004 - Issued for
cash at $0.01 1,050,000 105 10,395 -- 10,500
January 5, 2005 - Issued for 260,000 26 12,974 -- 13,000
cash at $0.05
Net loss -- -- -- (3,729) (3,729)
----------- -------- -------- --------- --------
Balance, February 28, 2005 7,610,000 761 29,039 (3,729) 26,071
Net loss -- -- -- (11,824) (11,824)
----------- -------- -------- --------- --------
Balance, February 28, 2006 7,610,000 761 29,039 (15,553) 14,247
Net loss -- -- -- (2,598) (2,598)
----------- -------- -------- --------- --------
Balance, February 28, 2007 7,610,000 761 29,039 (18,151) 11,649
Net loss -- -- -- (11,925) (11,925)
----------- -------- -------- --------- --------
Balance, February 29, 2008 7,610,000 761 29,039 (30,076) (276)
June 24, 2008 - Issued for
cash at $0.001 32,500,000 3,250 29,250 -- 32,500
June 24, 2008 - Issued for
cash at $0.0001 85,000,000 8,500 -- -- 8,500
October 24, 2008 - Issued for
cash at $0.001 5,000,000 500 4,500 -- 5,000
Net loss -- -- -- (46,687) (46,687)
----------- -------- -------- --------- --------
Balance, February 28, 2009 130,110,000 13,011 62,789 (76,763) (963)
Net loss -- -- -- (12,441) (12,441)
----------- -------- -------- --------- --------
Balance, February 28, 2010 130,110,000 13,011 62,789 (89,204) (13,404)
=========== ======== ======== ========= ========
See Accompanying Notes
F-4
Deer Bay Resources Inc.
(An Exploration Stage Company)
Statements of Cash Flows
Cumulative from
August 25, 2004
(Inception) to Year Ended Year Ended
February 28, 2010 February 28, 2010 February 28, 2009
----------------- ----------------- -----------------
$ $ $
Cash flows from operating activities
Net loss (89,204) (12,441) (46,687)
Adjustment to reconcile net loss to net cash:
Write-off of mineral properties 16,000 500 8,000
Changes in operating assets and liabilities:
Accounts payable and accrued liabilities 3,000 3,000 (5,000)
------- ------- -------
Net cash used in operating activities (70,204) (8,941) (43,687)
------- ------- -------
Cash flows to investing activities
Mineral property costs (16,000) (500) (8,000)
------- ------- -------
Net cash used in investing activities (16,000) (500) (8,000)
------- ------- -------
Cash flows from financing activities
Proceeds from officer's loan 10,500 9,500 1,000
Common shares issued for cash 75,800 -- 46,000
------- ------- -------
Net cash provided by financing activities 86,300 9,500 47,000
------- ------- -------
Net increase (decrease) in cash 96 59 (4,687)
Cash - beginning of period -- 37 4,724
------- ------- -------
Cash - end of period 96 96 37
======= ======= =======
Supplemental cash flow information:
Cash paid for:
Interest -- -- --
Taxes -- -- --
======= ======= =======
See Accompanying Notes
F-5
Deer Bay Resources Inc.
(An Exploration Stage Company)
Notes to Financial Statements
1. Nature of Operations and Continuance of Business
Deer Bay Resources Inc. ("the Company") was incorporated under the laws of
State of Nevada, U.S. on August 25, 2004. The Company's principal business
is the acquisition and exploration of mineral resources. The Company has
not presently determined whether its property contains mineral reserves
that are economically recoverable. We have not produced any significant
revenues from the Company's principal business or commenced significant
operations and are considered an exploration stage company as defined by
SEC Guide 7 with reference to Financial Accounting Standards Board (FASB)
issued Accounting Standards Codification (ASC) topic 915.
On April 29, 2008 the Company's articles of incorporation were amended to
increase the authorized share capital to 200,000,000 common shares and
change the par value to $0.0001. This amendment was applied retroactively
to all share, and per share, amounts.
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 $89,204 as at February 28, 2010 and a working
capital deficiency of $13,404. 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.
2. Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in accordance with United States
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported
amounts of revenue and expenses in the reporting period. The Company
regularly evaluates estimates and assumptions related to donated services
and expenses, and deferred income tax asset valuation allowances. The
Company bases its estimates and assumptions on current facts, historical
experience and various other factors that it believes to be reasonable
under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities and the
accrual of costs and expenses that are not readily apparent from other
sources. The actual results experienced by the Company may differ
materially and adversely from the Company's estimates. To the extent there
are material differences between the estimates and the actual results,
future results of operations will be affected.
Cash and Cash Equivalents
The Company considers all highly liquid instruments with maturity of three
months or less at the time of issuance to be cash equivalents.
Mineral Claim Payments and Exploration Expenditures
The Company is primarily engaged in the acquisition and exploration of
mining properties. Mineral property exploration costs are expensed as
incurred. Mineral property acquisition costs are initially capitalized when
incurred. We assess the carrying cost for impairment under the FASB ASC
topic 360 at each fiscal quarter end. When it has been determined that a
mineral property can be economically developed as a result of establishing
proven and probable reserves, the costs subsequently incurred to develop
such property are capitalized. Such costs will be amortized using the
units-of-production method over the established life of the proven and
probable reserves. If mineral properties are subsequently abandoned or
impaired, any capitalized costs will be charged to operations.
F-6
Deer Bay Resources Inc.
(An Exploration Stage Company)
Notes to Financial Statements
2. Summary of Significant Accounting Policies (continued)
Long-lived Assets
The Company tests long-lived assets or asset groups for recoverability when
events or changes in circumstances indicate that their carrying amount may
not be recoverable. Circumstances which could trigger a review include, but
are not limited to: significant decreases in the market price of the asset;
significant adverse changes in the business climate or legal factors;
accumulation of costs significantly in excess of the amount originally
expected for the acquisition or construction of the asset; current period
cash flow or operating losses combined with a history of losses or a
forecast of continuing losses associated with the use of the asset; and
current expectation that the asset will more likely than not be sold or
disposed significantly before the end of its estimated useful life.
Recoverability is assessed based on the carrying amount of the asset and
its fair value which is generally determined based on the sum of the
undiscounted cash flows expected to result from the use and the eventual
disposal of the asset, as well as specific appraisal in certain instances.
An impairment loss is recognized when the carrying amount is not
recoverable and exceeds fair value.
Financial Instruments
The fair values of financial instruments, which include cash, note payable
and due to related party were estimated to approximate their carrying
values due to the immediate or short-term maturity of these financial
instruments. Foreign currency transactions are primarily undertaken in
Canadian dollars. The financial risk is the risk to the Company's
operations that arise from fluctuations in foreign exchange rates and the
degree of volatility of these rates. Currently, the Company does not use
derivative instruments to reduce its exposure to foreign currency risk.
Foreign Currency Translation
The Company's functional and reporting currency is the United States
dollar. Monetary assets and liabilities denominated in foreign currencies
are translated in accordance with ASC 820, using the exchange rate
prevailing at the balance sheet date. Gains and losses arising on
settlement of foreign currency denominated transactions or balances are
included in the determination of income. Foreign currency transactions are
primarily undertaken in Canadian dollars. The Company has not, to the date
of these financials statements, entered into derivative instruments to
offset the impact of foreign currency fluctuations.
New Accounting Standards Adopted During the Year Ended February 28, 2010
On February 28, 2010 the Company adopted FAS ASU No. 2009-01 (Topic 105) -
Generally Accepted Accounting Principles - amendments based on - Statement
of Financial Accounting Standards No. 168 - The FASB Accounting and
Standards Codification and the Hierarchy of Generally Accepted Accounting
Principles. Beginning with this Statement the FASB will no longer issue new
standards in the form of Statements, FASB Staff Positions, or Emerging
Issues Task Force Abstracts. Instead, it will issue Accounting Standard
Updates. This ASU includes FASB Statement No. 168 in its entirety. While
ASU's will not be considered authoritative in their own right, they will
serve to update the Codification, provide the bases for conclusions and
changes in the Codification, and provide background information about the
guidance. The Codification modifies the GAAP hierarchy to include only two
levels of GAAP: authoritative and non-authoritative. The adoption of these
changes had no impact on the Company's financial statements.
F-7
Deer Bay Resources Inc.
(An Exploration Stage Company)
Notes to Financial Statements
2. Summary of Significant Accounting Policies (continued)
On November 30, 2009, the Company adopted FASB ASC 105 -- GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES, which established the FASB Accounting
Standards Codification ("the Codification"), as the single official source
of authoritative, nongovernmental, U.S. GAAP. Rules and interpretive
releases of the Securities and Exchange Commission (SEC) under authority of
federal securities laws are also sources of authoritative GAAP for SEC
registrants. The FASB will no longer issue new standards in the form of
Statements, FASB Staff Positions, or Emerging Issues Task Force Abstracts;
instead the FASB will issue Accounting Standards Updates. Accounting
Standards Updates will not be authoritative in their own right as they will
only serve to update the Codification. These changes and the Codification
itself do not change GAAP. The Codification is designed to simplify U.S.
GAAP into a single, topically ordered structure. All guidance contained in
the Codification carries an equal level of authority. The Codification is
effective for interim and annual periods ending after September 15, 2009.
Accordingly, the Company refers to the Codification in respect of the
appropriate accounting standards throughout this document as "FASB ASC".
Other than the manner in which new accounting guidance is referenced, the
adoption of these changes had no impact on the Company's financial
statements.
On November 1, 2009 the Company adopted FAS ASU 2009-05 for changes to
measuring liabilities at fair value. These changes clarify existing
guidance that in circumstances in which a quoted price in an active market
for the identical liability is not available, an entity is required to
measure fair value using either a valuation technique that uses a quoted
price of either a similar liability or a quoted price of an identical or
similar liability when traded as an asset, or another valuation technique
that is consistent with the principles of fair value measurements, such as
an income approach (e.g., present value technique). This guidance also
states that both a quoted price in an active market for the identical
liability and a quoted price for the identical liability when traded as an
asset in an active market when no adjustments to the quoted price of the
asset are required are Level 1 fair value measurements. These changes
become effective for the Company on November 1, 2009. The Company does not
anticipate the adoption of these changes will have an impact on the
Company's financial statements.
On September 1, 2009, the Company adopted the changes issued by FSP FAS
157-4, "Determining Fair Value When the Volume and Level of Activity for
the Asset or Liability Have Significantly Decreased and Identifying
Transactions That Are Not Orderly" ("FSP FAS 157-4;"), to address
challenges in estimating fair value when the volume and level of activity
for an asset or liability have significantly decreased. This FSP emphasizes
that even if there has been a significant decrease in the volume and level
of activity for the asset or liability and regardless of the valuation
technique(s) used, the objective of a fair value measurement remains the
same. Fair value is the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction (that is, not a
forced liquidation or distressed sale) between market participants at the
measurement date under current market conditions. This FSP is effective for
interim and annual reporting periods ending after June 15, 2009.
Implementation of this Standard did not have any impact on the Company's
consolidated financial statements.
On August 31, 2009, the Company adopted the changes issued by FASB ASC
topic 855 to subsequent events. ASC 855 establishes authoritative
accounting and disclosure guidance for recognized and non-recognized
subsequent events that occur after the balance sheet date but before
financial statements are issued. ASC 855 also requires disclosure of the
date through which an entity has evaluated subsequent events and the basis
for that date. The adoption of the changes to ASC 855 had no impact on the
Company's financial statements.
On August 31, 2009, the Company adopted the changes issued by FASB ASC
topic 825 on determining fair value when the volume and level of activity
for the asset or liability have significantly decreased and identifying
transactions that are not orderly. ASC 825 provides additional guidance for
estimating fair value when the volume and level of activity for the asset
or liability have significantly decreased and includes guidance for
identifying circumstances that indicate a transaction is not orderly. This
guidance is necessary to maintain the overall objective of fair value
measurements, which is that fair value which is the price that would be
received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date under
current market conditions. The adoption of the changes to ASC 825 had no
impact on the Company's financial statements.
F-8
Deer Bay Resources Inc.
(An Exploration Stage Company)
Notes to Financial Statements
2. Summary of Significant Accounting Policies (continued)
On August 31, 2009, the Company adopted the changes issued by the FASB to
recognition and presentation of other-than-temporary impairments. These
changes amend existing other-than-temporary impairment guidance for debt
securities to make the guidance more operational and to improve the
presentation and disclosure of other-than-temporary impairments on debt and
equity securities. The adoption of these changes had no impact on the
Company's financial statements.
On August 31, 2009, the Company adopted the changes issued by the FASB for
interim disclosures about fair value of financial instruments. These
changes require a publicly traded company to include disclosures about the
fair value of its financial instruments whenever it issues summarized
financial information for interim reporting periods. Such disclosures
include the fair value of all financial instruments, for which it is
practicable to estimate that value, whether recognized or not recognized in
the statement of financial position; the related carrying amount of these
financial instruments; and the method(s) and significant assumptions used
to estimate the fair value. Other than the required disclosures, the
adoption of these changes had no impact on the Company's financial
statements.
On March 1, 2009, the Company adopted changes issued by the FASB to the
fair value option for financial assets and liabilities. These changes
permit measurement of certain financial assets and financial liabilities at
fair value. If the fair value option is elected, the unrealized gains and
losses are reported in earnings at each reporting date. Generally, the fair
value option may be elected on an instrument-by-instrument basis, as long
as it is applied to the instrument in its entirety. The fair value option
election is irrevocable, unless a new election date occurs. The adoption of
these changes had no material impact on the Company's financial statements,
as we did not elect the fair value option for any of the Company's
financial assets or liabilities.
On March 1, 2009, the Company adopted the changes issued by FASB ASC topic
805 for business combinations. These changes require an acquirer to
recognize the assets acquired, the liabilities assumed, and any
non-controlling interest in the acquired business at the acquisition date,
measured at their fair values as of that date, with limited exceptions.
This statement also requires the acquirer in a business combination
achieved in stages to recognize the identifiable assets and liabilities, as
well as the non-controlling interest in the acquired business, at the full
amounts of their fair values. ASC 805 makes various other amendments to
authoritative literature intended to provide additional guidance or to
confirm the guidance in that literature to that provided in this statement.
The Company's adoption of the changes to ASC 805 had no impact on the
Company's financial statements. However, we expect the changes to ASC 805
will have an impact on the Company's accounting for future business
combinations, but the effect is dependent upon making acquisitions in the
future.
On March 1, 2009, the Company adopted the changes issued by FASB ASC topic
810-10 for non-controlling interests in consolidated financial statements.
ASC 810-10 states that accounting and reporting for minority interests are
to be re-characterized as non-controlling interests and classified as a
component of equity. The calculation of earnings per share continues to be
based on income amounts attributable to the parent. ASC 810-10 applies to
all entities that prepare consolidated financial statements, except
not-for-profit organizations, but affects only those entities that have an
outstanding non-controlling interest in one or more subsidiaries or that
deconsolidate a subsidiary. The Company's adoption of the changes to ASC
810-10 had no impact on the Company's financial statements.
On March 1, 2009, the Company adopted the changes issued by FASB ASC topic
815-10-50 for disclosures about derivative instruments and hedging
activities. ASC 815-10-50 changes the disclosure requirements for
derivative instruments and hedging activities. Entities are required to
provide enhanced disclosures about (a) how and why an entity uses
derivative instruments, (b) how derivative instruments and related hedged
items are accounted for, and (c) how derivative instruments and related
hedged items affect an entity's financial position, financial performance,
and cash flows. The Company's adoption of the changes to ASC 815-10-50 did
not have an impact on the Company's current or comparative consolidated
financial statements.
F-9
Deer Bay Resources Inc.
(An Exploration Stage Company)
Notes to Financial Statements
2. Summary of Significant Accounting Policies (continued)
On March 1, 2009, the Company adopted changes issued by the FASB to
accounting for intangible assets. These changes amend the factors that
should be considered in developing renewal or extension assumptions used to
determine the useful life of a recognized intangible asset in order to
improve the consistency between the useful life of a recognized intangible
asset outside of a business combination and the period of expected cash
flows used to measure the fair value of an intangible asset in a business
combination. The adoption of these changes had no impact on the Company's
financial statements.
On March 1, 2009, the Company adopted the changes issued by the FASB to the
hierarchy of generally accepted accounting principles. These changes
identify the sources of accounting principles and the framework for
selecting the principles used in the preparation of financial statements of
nongovernmental entities that are presented in conformity with GAAP.
Adoption of these changes had no impact on the Company's financial
statements.
On March 1, 2009, the Company adopted the changes issued by the FASB on
accounting for convertible debt instruments that may be settled in cash
upon conversion (including partial cash settlement). These changes specify
that issuers of such instruments should separately account for the
liability and equity components in a manner that will reflect the entity's
nonconvertible debt borrowing rate when interest cost is recognized in
subsequent periods. The adoption of these changes had no impact on the
Company's results of operations or financial position.
On March 1, 2009, the Company adopted the changes issued by the FASB to
whether an instrument (or embedded feature) is indexed to an entity's own
stock. These changes provide a new two-step model to be applied in
determining whether a financial instrument or an embedded feature is
indexed to an issuer's own stock and thus able to qualify for scope
exception. The adoption of these changes did not have an impact on the
Company's financial statements.
On March 1, 2009, the Company adopted the changes issued by the FASB to
determine whether instruments granted in share-based payment transactions
are participating securities. These changes address the question of whether
instruments granted in share-based payment transactions are participating
securities prior to vesting. This guidance indicates that unvested
share-based payment awards that contain rights to dividend payments should
be included in earnings per share calculations. The adoption of these
changes had no impact on the Company's results of operations or financial
position.
On March 1, 2009, the Company adopted the changes issued by the FASB to
equity method investment accounting considerations. These changes clarify
the accounting for certain transactions and impairment considerations
involving equity method investments. The intent of these changes is to
provide guidance on (i) determining the initial carrying value of an equity
method investment, (ii) performing an impairment assessment of an
underlying indefinite-lived intangible asset of an equity method
investment, (iii) accounting for an equity method investee's issuance of
shares, and (iv) accounting for a change in an investment from the equity
method to the cost method. The adoption of these changes had no impact on
the Company's current or prior consolidated financial position or results
of operations.
On March 1, 2009, the Company adopted the changes issued by the FASB to
disclosures by public entities (enterprises) about transfers of financial
assets and interest in variable interest entities. These changes require
additional disclosure about transfers of financial assets and an
enterprise's involvement with variable interest entities. The adoption of
these changes did not have an impact on the Company's financial statements.
F-10
Deer Bay Resources Inc.
(An Exploration Stage Company)
Notes to Financial Statements
2. Summary of Significant Accounting Policies (continued)
On March 1, 2009, the Company adopted the changes issued by the FASB to
employers' disclosures about pensions and other postretirement benefits.
These changes require enhanced disclosures about the plans for assets of a
Company's defined benefit pension and other postretirement plans. The
enhanced disclosures are intended to provide users of financial statements
with a greater understanding of: (1) how investment allocation decisions
are made, including the factors that are pertinent to an understanding of
investment policies and strategies; (2) the major categories of plan
assets; (3) the inputs and valuation techniques used to measure the fair
value of plan assets; (4) the effect of fair value measurements using
significant unobservable inputs (Level 3) on changes in plan assets for the
period; and (5) significant concentrations of risk within plan assets. The
adoption of these changes did not have an impact on the Company's financial
statements.
New accounting standards to be adopted are as follows:
In June 2009, the FASB issued ASC topic 860-20 for changes to the
accounting for transfers of financial assets. These changes remove the
concept of a qualifying special-purpose entity and remove the exception
from the application of variable interest accounting to variable interest
entities that are qualifying special-purpose entities; limits the
circumstances in which a transferor derecognizes a portion or component of
a financial asset; defines a participating interest; requires a transferor
to recognize and initially measure at fair value all assets obtained and
liabilities incurred as a result of a transfer accounted for as a sale; and
requires enhanced disclosure; among others. These changes become effective
for the Company on March 1, 2010. The adoption of these changes is not
expected to have an impact on the Company's financial statements.
In June 2009, the FASB issued changes to the accounting for variable
interest entities. These changes require an enterprise to perform an
analysis to determine whether the enterprise's variable interest or
interests give it a controlling financial interest in a variable interest
entity; to require ongoing reassessments of whether an enterprise is the
primary beneficiary of a variable interest entity; to eliminate the
quantitative approach previously required for determining the primary
beneficiary of a variable interest entity; to add an additional
reconsideration event for determining whether an entity is a variable
interest entity when any changes in facts and circumstances occur such that
holders of the equity investment at risk, as a group, lose the power from
voting rights or similar rights of those investments to direct the
activities of the entity that most significantly impact the entity's
economic performance; and to require enhanced disclosures that will provide
users of financial statements with more transparent information about an
enterprise's involvement in a variable interest entity. This Statement
shall be effective for the Company on March 1, 2010. Earlier application is
prohibited. The Company does not anticipate any significant financial
impact from adoption of this accounting pronouncement.
In October 2009, the FASB issued ASU 2009-13 for changes to
MULTIPLE-DELIVERABLE REVENUE ARRANGEMENTS A CONSENSUS OF THE FASB EMERGING
ISSUES TASK FORCE, which amends ASC topic 605, Revenue Recognition, to
require companies to allocate revenue in multiple-element arrangements
based on an element's estimated selling price if vendor-specific or other
third-party evidence of value is not available. ASU 2009-13 is effective
for us on November 1, 2010. Earlier application is permitted. We do not
anticipate the adoption of these changes will have an impact on the
Company's financial statements.
3. Mineral Interests
On March 18, 2008, the Company entered into a mineral property purchase
agreement to acquire a 100% interest in the Emmy Claim located in the New
Westminster Mining Division, BC for total consideration of $8,000. This
mining interest was held in trust for the Company by the vendor of the
property. On January 25, 2010 this mineral claim had lapsed and was
re-staked by a third party. On February 4, 2010 the Company entered into a
Letter and Trust Agreement with this third party to acquire the Emmy Claim.
The Company paid $500 as consideration. The Emmy Claim expires February 4,
2011. The third party holds the Emmy Claim in trust for the Company and
upon request; title will be recorded in the name of the Company.
4. Related Party Loans
The President of the Company loaned $1,500 during the year and is owed
$2,500 as at February 28, 2010. A shareholder of the Company loaned $8,000
during the year which is due as at February 28, 2010. These loans are
unsecured, non-interest bearing and due on demand.
F-11
Deer Bay Resources Inc.
(An Exploration Stage Company)
Notes to Financial Statements
5. Common Stock
During the year ended February 28, 2005 the Company issued 7,610,000 shares
of common stock for total cash proceeds of $29,800.
On April 29, 2008 the Company's articles of incorporation were amended to
increase the authorized share capital to 200,000,000 common shares and
reduce par value to $0.0001. This amendment has been applied retroactively
to all share and per share amounts.
On June 24, 2008 the Company issued 32,500,000 common shares at $.001 per
share to six individuals pursuant to a private placement under Regulation S
of the Securities and Exchange Commission for total cash proceeds of
$32,500.
On June 24, 2008, the Company issued 85,000,000 common shares at $.0001 to
the Company's President for total cash proceeds of $8,500.
On October 24, 2008 the Company received $5,000 pursuant to a subscription
for 5,000,000 common shares at $0.001 per share.
At February 28, 2010, there were no outstanding stock options or warrants.
6. Income Taxes
Potential benefits of income tax losses are not recognized in the accounts
until realization is more likely than not. The Company has net operating
losses of $89,000 which commence expiring in 2025. The Company is required
to compute tax asset benefits for net operating losses carried forward.
Potential benefits of net operating losses have not been recognized in
these financial statements because the Company cannot be assured it is more
likely than not it will utilize the net operating losses carried forward in
future years.
The components of the net deferred tax asset at February 28, 2010 and
February 29, 2009 and the statutory tax rate, the effective tax rate and
the elected amount of the valuation allowance are scheduled below:
Year Ended Year Ended
February 28, 2010 February 28, 2009
----------------- -----------------
$ $
Cumulative Net Operating Losses 89,000 77,000
Statutory Tax Rate 34% 34%
Effective Tax Rate -- --
Deferred Tax Asset 30,000 26,000
Valuation Allowance (30,000) (26,000)
------- -------
Net Deferred Tax Asset -- --
======= =======
7. Subsequent Events
In accordance with ASC 855 management evaluated all activity of the Company
through May 18, 2010 (the issue date of the financial statements) and
concluded that no subsequent events have occurred that would require
recognition or disclosure in the financial statements.
F-12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition, changes in financial
condition, plan of operations and results of operations should be read in
conjunction with our audited financial statements from our inception (August 25,
2004) to February 29, 2010 and the years ended February 28, 2010 and 2009
together with the notes thereto, and the section entitled "Description of
Business", included in this Prospectus. The discussion contains forward-looking
statements that involve risks, uncertainties and assumptions. Our actual results
may differ materially from those anticipated in these forward-looking statements
as a result of many factors, including, but not limited to, those set forth
under "Risk Factors" and elsewhere in this prospectus.
PLAN OF OPERATIONS
Our plan of operations for the next twelve months is to complete the following
objectives within the time periods specified:
1. Register our shares for resale by our selling stockholders. Our first
milestone is to complete the registration of our shares for resale by
the selling stockholders named in this prospectus, effect registration
of our common stock as a class under the Exchange Act concurrently
with the effectiveness of the registration statement of which this
prospectus forms a part. The remaining costs are expected to be
approximately $10,000. The nature of these costs is audit, legal,
transfer agent fees and SEC registration costs.
2. We plan to complete phase one of our recommended exploration program
on the property underlying our interest at an estimated cost of
$70,000. We expect to commence our exploration program in the summer
of 2010, depending on weather conditions and the availability of
personnel and equipment.
3. We anticipate spending approximately $1,000 per month in ongoing
general and administrative expenses per month for the next twelve
months, for a total anticipated expenditure of $12,000 over the next
twelve months. The general and administrative expenses for the year
will consist primarily of professional fees for the audit and legal
work relating to our regulatory filings throughout the year, as well
as transfer agent fees and general office expenses.
Thus, we estimate that our expenditures over the next twelve months will be
approximately $49,000 ($5,000 to complete the registration of our shares,
$20,000 to complete phase one of our recommended exploration program, $12,000 to
pay current liabilities and $12,000 to cover ongoing general and administrative
expenses. As at November 30, 2010, we had cash of $277 and liabilities of
$12,082. As such, we anticipate that our cash may not be sufficient to enable us
to complete phase one of our recommended exploration program, to pay for the
costs of registering our shares, and to pay our accounts payable and our general
and administrative expenses for approximately the next twelve months. In
addition, we will require additional financing if we determine to proceed with
subsequent phases of our recommended work program. Our recommended work program
is described in this Prospectus under the heading "Description of Business and
Properties--Our Planned Exploration Program".
During the twelve-month period following the date of this Prospectus, we
anticipate that we will not generate any revenue. Accordingly, we will be
required to obtain additional financing in order to continue our plan of
operations beyond the next twelve months. We believe that debt financing will
not be an alternative for funding additional exploration as we do not have
tangible assets to secure any debt financing. We anticipate that additional
funding will be in the form of equity financing from the sale of our common
stock and by loans from our sole officer/director and current shareholders.
However, we do not have any financing arranged and we cannot provide investors
with any assurance that we will be able to secure sufficient funding from the
sale of our common stock to fund our exploration program. In the absence of such
financing, we will not be able to continue exploration of the property
underlying our interests and our business plan will fail. Even if we are
successful in obtaining equity financing to fund any continuation of our
exploration program, there is no assurance that we will obtain the funding
necessary to pursue any advanced exploration of the property underlying our
interests. If we do not continue to obtain additional financing, we will be
forced to abandon our mineral claim on February 4, 2011.
We may consider entering into a joint venture arrangement to provide the
required funding to develop the property underlying our interests. We have not
undertaken any efforts to locate a joint venture participant. Even if we
determined to pursue a joint venture participant, there is no assurance that any
third party would enter into a joint venture agreement with us in order to fund
exploration of the property underlying our interests. If we enter into a joint
venture arrangement, we would likely have to assign a percentage in our interest
to the joint venture participant.
23
RESULTS OF OPERATIONS
REVENUES
We have had no operating revenues since our inception on August 25, 2004. We
anticipate that we will not generate any revenues for so long as we are an
exploration stage company.
EXPENSES AND LOSS FROM OPERATIONS
Our expenses and losses for the following periods are set forth below:
STATEMENT OF OPERATIONS DATA
Inception
For the Year For the Year (August 25, 2004)
Ended Ended to
Febraury 28, February 28, February 28,
2010 2009 2010
-------- -------- --------
(Audited) (Audited) (Audited)
REVENUES $ -- $ -- $ --
-------- -------- --------
EXPENSES
Bank charges $ 115 $ 158 $ 668
Mineral property costs $ 500 $ 8,000 $ 16,000
Office expenses $ 80 $ 534 $ 1,725
Professional fees $ 10,500 $ 25,889 $ 55,580
Transfer agent and filing fees $ 1,246 $ 12,106 $ 15,231
-------- -------- --------
Total Operating Expenses $ 12,441 $ 46,687 $ 89,204
-------- -------- --------
NET LOSS $(12,441) $(46,687) $(89,204)
======== ======== ========
LIQUIDITY AND CAPITAL RESOURCES
We had cash of $96 and a working capital deficit of $13,404 at February 28,
2010.
CASH FLOWS FROM OPERATING ACTIVITIES
Net cash used in operating activities was ($70,204) for the period from
inception on August 25, 2004 to February 28, 2010, the majority of which
represents professional fees of $55,580 and transfer agent and filing fees of
$15,231 offset by accounts payable of $3,000. We anticipate that cash used in
operating activities will decrease over the next twelve months as discussed
under "Plan of Operations" above.
CASH FLOWS FROM FINANCING ACTIVITIES
We have funded our business to date primarily from sales of our common stock.
From our inception on August 25, 2004 to February 28, 2010, we have raised a
total of $75,800 from private offerings of our securities and $10,500 from
proceeds from our sole officer and a shareholder.
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash used in acquiring mineral properties was $16,000 during the period from
inception on August 25, 2004 to February 28, 2010.
OFF-BALANCE SHEET ARRANGEMENTS
We have not entered into any off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition,
changes of financial condition, revenues, expenses, results of operations,
liquidity, capital expenditures or capital resources that is material to
investors.
24
CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
We have had no disagreements with our principal independent accountants.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Our directors and executive officers and their respective ages as of the date of
this prospectus are as follows:
Name Age Office Held
- ---- -- -----------
Garry E. Wong 64 President, Chief Executive Officer, Chief Financial
Officer, Secretary, Treasurer and a director
The following describes the business experience of each of our directors and
executive officers, including other directorships held in reporting companies:
GARRY E. WONG
Mr. Wong has been our President, Chief Executive Officer, Chief Financial
Officer, Secretary, Treasurer and a director continuously from 2005 to date. He
practiced as a Member of the Law Society of British Columbia and a partner in
three different Vancouver law firms and for the period from 1993 to 2002
practiced in a partnership called Wong Hui & Associates. Since 2002 he practiced
as a sole proprietorship until 2009 when he retired. Mr. Wong specialized in
corporate and commercial law, real estate and real estate financing. He has
served as a director of various companies and has also served as a director and
president of a number of not for profit organizations such as the Zajac
Foundation and the Mount St Joseph Hospital foundation. Mr. Wong received his
Bachelor of Arts Degree from the University of Washington, in 1966 and received
his Bachelor of law from Osgoode hall at York University, Toronto, Ontario,
Canada.
TERM OF OFFICE
Our directors are appointed for a one-year term to hold office until the next
annual general meeting of our stockholders or until they resign or are removed
from the board in accordance with our bylaws. Our officers are appointed by our
Board of Directors and hold office until they resign or are removed from office
by the Board of Directors.
SIGNIFICANT EMPLOYEES
We have no significant employees other than Garry E. Wong.
COMMITTEES OF THE BOARD OF DIRECTORS
We presently do not have an audit committee, a compensation committee, a
nominating committee, an executive committee of our Board of Directors, stock
plan committee or any other committees. However, our Board of Directors is
considering establishing various committees during the fiscal year ended
February 28, 2011.
FAMILY RELATIONSHIPS
There are no family relationships among our directors and officers.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
None of our directors, executive officers or control persons has been involved
in any of the following events during the past five years:
1. any bankruptcy petition filed by or against any business of which such
person was a general partner or executive officer either at the time
of the bankruptcy or within two years prior to that time;
2. any conviction in a criminal proceeding or being subject to a pending
criminal proceeding (excluding traffic violations and other minor
offences);
25
3. being subject to any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining, barring,
suspending or otherwise limiting his involvement in any type of
business, securities or banking activities; or
4. being found by a court of competent jurisdiction (in a civil action),
the Commission or the Commodity Futures Trading Commission to have
violated a federal or state securities or commodities law, and the
judgment has not been reversed, suspended or vacated.
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid to our sole officer during
our fiscal years ended February 28, 2010, 2009 and 2008.
SUMMARY COMPENSATION TABLE
Non-Equity Nonqualified
Name and Incentive Deferred
Principal Stock Option Plan Compensation All Other
Position Year Salary($) Bonus($) Awards($) Awards($) Compensation($) Earnings($) Compensation($) Totals($)
-------- ---- --------- -------- --------- --------- --------------- ----------- --------------- ---------
Garry E. Wong 2008/
President, CEO, 2009/
CFO, Secretary 2010 Nil Nil Nil Nil Nil Nil Nil Nil
& Treasurer
The following table sets forth information as at February 28, 2010 relating to
outstanding equity awards for our sole officer:
OUTSTANDING EQUITY AWARDS AT YEAR END TABLE
Option Awards Stock Awards
---------------------------------------------------------------- ----------------------------------------------
Equity
Incentive
Equity Plan
Incentive Awards:
Plan Market or
Awards: Payout
Equity Number of Value of
Incentive Number Unearned Unearned
Plan Awards; of Market Shares, Shares,
Number of Number of Number of Shares Value of Units or Units or
Securities Securities Securities or Units Shares or Other Other
Underlying Underlying Underlying of Stock Units of Rights Rights
Unexercised Unexercised Unexercised Option Option That Stock That That That
Options Options Unearned Exercise Expiration Have Not Have Not Have Not Have Not
Name Exercisable(#) Unexercisable(#) Options(#) Price($) Date Vested(#) Vested($) Vested(#) Vested(#)
- ---- -------------- ---------------- ---------- ----- ---- --------- --------- --------- ---------
Garry E. Nil Nil Nil N/A N/A N/A N/A N/A N/A
Wong
The following table sets forth information relating to compensation paid to our
directors during our fiscal years ended February 28, 2010, 2009 and 2008.
26
DIRECTOR COMPENSATION TABLE
Fees Non-Equity Nonqualified
Earned Incentive Deferred
Paid in Stock Option Plan Compensation All Other
Name Year Cash($) Awards($) Awards($) Compensation($) Earnings($) Compensation($) Total($)
---- ---- ------- --------- --------- --------------- ----------- --------------- --------
Garry E. Wong 2008/
2009/
2010 Nil Nil Nil Nil Nil Nil Nil
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the number of
shares of our common stock owned beneficially as of the date of this prospectus
by: (i) each person (including any group) known to us to own more than 5% of our
shares of common stock; (ii) each of our directors; (iii) each of our officers;
and (iv) our officers and directors as a group. To our knowledge, each holder
listed possesses sole voting and investment power with respect to the shares
shown.
Amount and Nature of Percent of
Title of Class Name and Address of Beneficial Owner(1) Beneficial Owner(2) Class (3)
- -------------- --------------------------------------- ------------------- ---------
Directors and Officers:
Common Stock Garry Wong 88,500,000 68%
Our directors and officers as a group
(one person) 88,500,000 68%
- ----------
(1) The business address of our officers and director's is our company address,
which is 2366 Wall Street, Suite 407, Vancouver, British Columbia Canada
V5L 4Y1.
(2) Under Rule 13d-3 of the Exchange Act a beneficial owner of a security
includes any person who, directly or indirectly, through any contract,
arrangement, understanding, relationship, or otherwise has or shares: (i)
voting power, which includes the power to vote, or to direct the voting of
shares; and/or (ii) investment power, which includes the power to dispose
or direct the disposition of shares. In addition, shares are deemed to be
beneficially owned by a person if the person has the right to acquire the
shares within 60 days of the date as of which the information is provided.
(3) Based on the 130,110,000 shares of our common stock issued and outstanding
as of the date of this Prospectus.
CHANGES IN CONTROL
We are unaware of any contract, or other arrangement or provision of our
Articles or by-laws, the operation of which may at a subsequent date result in a
change of control of our company.
TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL PERSONS
Except as described below, none of the following parties has, since our date of
incorporation, had any material interest, direct or indirect, in any transaction
with us or in any presently proposed transaction that has or will materially
affect us:
1. any of our directors or officers;
2. any person proposed as a nominee for election as a director;
3. any person who beneficially owns, directly or indirectly, shares
carrying more than 5% of the voting rights attached to our outstanding
shares of common stock; or
4. any member of the immediate family (including spouse, parents,
children, siblings and in-laws) of any of the above persons.
27
PURCHASE OF COMMON SHARES BY GARRY E. WONG
Garry E. Wong, our President, Chief Executive Officer, Chief Financial Officer,
Secretary, Treasurer and currently our sole director, acquired 3,500,000 shares
of our common stock at a price of $0.001 per share after our incorporation on
August 25, 2004. On March 18, 2008 Mr. Wong acquired 85,000,000 shares of our
common stock at a price of $0.0001 per share.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our directors and officers are indemnified as provided by the Nevada Revised
Statutes, our Articles of Incorporation and our Bylaws.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, the registrant has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
28
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is a list of the expenses to be incurred by us in connection with
the preparation and filing of this registration statement. All amounts shown are
estimates except for the SEC registration fee:
$
---------
SEC registration fee: 60.00
Audit fees and expenses: 4,500.00
Legal fees and expenses: 5,000.00
Transfer agent and registrar fees: 0.00
Fees and expenses for qualification under state securities laws: 0.00
Miscellaneous (including Edgar filing fees): 467.00
---------
Total: 10,027.00
=========
We are paying all expenses of the offering listed above. No portion of these
expenses will be borne by the selling stockholders. The selling stockholders,
however, will pay any other expenses incurred in selling their common stock,
including any brokerage or underwriting discounts or commissions paid by the
selling stockholders to broker-dealers in connection with the sale of their
shares.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our officers and directors are indemnified as provided by the Nevada Revised
Statutes (the "NRS"), our articles of incorporation and our bylaws.
NEVADA REVISED STATUTES
Section 78.7502 of the NRS provides as follows:
1. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, except an action by or in the right of the corporation, by
reason of the fact that he is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses,
including attorneys' fees, judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with the action, suit
or proceeding if he acted in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the corporation,
and, with respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful.
2. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment
in its favour by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses, including amounts paid in settlement and attorneys' fees actually
and reasonably incurred by him in connection with the defence or settlement
of the action or suit if he acted in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation.
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3. To the extent that a director, officer, employee or agent of a corporation
has been successful on the merits or otherwise in defence of any action,
suit or proceeding referred to in subsections 1 and 2, or in defence of any
claim, issue or matter therein, the corporation shall indemnify him against
expenses, including attorneys' fees, actually and reasonably incurred by
him in connection with the defence.
Section 78.751 of the NRS provides as follows:
1. Any discretionary indemnification under NRS 78.7502 unless ordered by a
court or advanced pursuant to subsection 2, may be made by the corporation
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in
the circumstances. The determination must be made:
(a) By the stockholders;
(b) By the board of directors by majority vote of a quorum consisting of
directors who were not parties to the action, suit or proceeding;
(c) If a majority vote of a quorum consisting of directors who were not
parties to the action, suit or proceeding so orders, by independent
legal counsel in a written opinion; or
(d) If a quorum consisting of directors who were not parties to the
action, suit or proceeding cannot be obtained, by independent legal
counsel in a written opinion.
2. The articles of incorporation, the bylaws or an agreement made by the
corporation may provide that the expenses of officers and directors
incurred in defending a civil or criminal action, suit or proceeding must
be paid by the corporation as they are incurred and in advance of the final
disposition of the action, suit or proceeding, upon receipt of an
undertaking by or on behalf of the director or officer to repay the amount
if it is ultimately determined by a court of competent jurisdiction that he
is not entitled to be indemnified by the corporation.
3. The indemnification and advancement of expenses authorized in or ordered by
a court pursuant to this section:
(a) Does not exclude any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under the
articles of incorporation or any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, for either an
action in his official capacity or an action in another capacity while
holding his office, except that indemnification, unless ordered by a
court pursuant to NRS 78.7502 or for the advancement of expenses made
pursuant to subsection 2, may not be made to or on behalf of any
director or officer if a final adjudication establishes that his acts
or omissions involved intentional misconduct, fraud or a knowing
violation of the law and was material to the cause of action.
(b) Continues for a person who has ceased to be a director, officer,
employee or agent and inures to the benefit of the heirs, executors
and administrators of such a person.
OUR ARTICLES OF INCORPORATION
Our articles of incorporation do not limit the automatic director immunity from
liability under the NRS.
Our articles of incorporation further provide that, to the fullest extent
permitted by NRS 78, a director or officer of the Corporation will not be
personally liable to the Corporation or its stockholders for damages for breach
of fiduciary duty as a director or officer, provided that this article will not
eliminate or limit the liability of a director or officer for:
1. acts or omissions which involve intentional misconduct, fraud or a
knowing violation of law; or
2. the payment of dividends in violation of NRS 78.300.
OUR BYLAWS
Our bylaws provide the following indemnification provisions:
Right to Indemnification. Each person who was or is a party or is threatened to
be made a party to or is involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (hereinafter a "proceeding"),
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by reason of the fact that he or she, or a person of whom he or she is the legal
representative, is or was a director or officer of the corporation or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, whether
the basis of such proceeding is alleged action in an official capacity or in any
other capacity while serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the corporation to the fullest extent permitted
by the laws of Nevada as the same exist or may hereafter be amended (but in the
case of such amendment, only to the extent that such amendment permits the
corporation to provide broader indemnification rights than said laws permitted
the corporation to provide prior to such amendment) against all costs, charges,
expenses, liabilities and losses (including attorneys' fees, judgments, fines,
ERISA excise taxes or penalties and amounts paid or to be paid in settlement and
amounts expended in seeking indemnification granted to such person under
applicable law, this bylaw or any agreement with the corporation) reasonably
incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of his or her heirs,
executors and administrators; provided, however, that, except as provided in
Section 2 of this Article, the corporation shall indemnify any such person
seeking indemnification in connection with a proceeding (or part thereof)
initiated by such person only if such proceeding (or part thereof) was initiated
or authorized by one or more members of the Board of Directors of the
corporation. The right to indemnification conferred in this Section shall be a
contract right and shall include the right to be paid by the corporation the
expenses incurred in defending any such proceeding in advance of its final
disposition; provided, however, that, if the Nevada Revised Statutes, Chapter
78, so requires, the payment of such expenses incurred by a director or officer
in his or her capacity as a director or officer (and not in any other capacity
in which service was or is rendered by such person while a director or officer,
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of a proceeding shall be made only upon delivery to the
corporation of an undertaking, by or on behalf of such director or officer, to
repay all amounts so advanced if it shall ultimately be determined that such
director or officer is not entitled to be indemnified under this Section or
otherwise. In no event shall anything herein contained be so construed as to
permit the Board to authorize payment of, or the corporation to pay, any amounts
for any purpose where the director or officer was engaged in any action or
activity known to him or her while so engaged to be unlawful, nor any action or
activity constituting willful misfeasance, bad faith, gross negligence, or
reckless disregard of his or her duties and obligations to the corporation and
the stockholders. The rights set forth herein shall not be exclusive of other
right to which any director or officer may be entitled as a matter of law. The
corporation may, by action of its Board of Directors, provide indemnification to
employees and agents of the corporation with the same scope and effect as the
foregoing indemnification of directors and officers.
Right of Claimant to Bring Suit. If a claim under Section 1 of this Article is
not paid in full by the corporation within thirty days after a written claim has
been received by the corporation, the claimant may at any time thereafter bring
suit against the corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant shall be entitled to be paid also
the expense of prosecuting such claim. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition where the required
undertaking, if any is required, has been tendered to the corporation) that the
claimant has failed to meet a standard of conduct which makes it permissible
under Nevada law for the corporation to indemnify the claimant for the amount
claimed. Neither the failure of the corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is permissible in the circumstances because he or she has met such
standard of conduct, nor an actual determination by the corporation (including
its Board of Directors, independent legal counsel, or its stockholders) that the
claimant has not met such standard of conduct, shall be a defense to the action
or create a presumption that the claimant has failed to meet such standard of
conduct.
Non-Exclusivity of Rights. The right to indemnification and the payment of
expenses incurred in defending a proceeding in advance of its final disposition
conferred in this Article shall not be exclusive of any other right which any
person may have or hereafter acquire under any statute, provision of the
Articles of Incorporation, Bylaw, agreement, vote of stockholders or
disinterested directors or otherwise.
Insurance. The corporation may maintain insurance, at its expense, to protect
itself and any director, officer, employee or agent of the corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any such expense, liability or loss, whether or not the corporation
would have the power to indemnify such person against such expense, liability or
loss under Nevada law.
Expenses as a Witness. To the extent that any director, officer, employee or
agent of the corporation is by reason of such position, or a position with
another entity at the request of the corporation, a witness in any action, suit
or proceeding, he or she shall be indemnified against all costs and expenses
actually and reasonably incurred by him or her or on his or her behalf in
connection therewith.
II-3
Indemnity Agreements. The corporation may enter into indemnity agreements with
the persons who are members of its Board of Directors from time to time, and
with such officers, employees and agents as the Board may designate, such
indemnity agreements to provide in substance that the corporation will indemnify
such persons to the full extent contemplated by this Article.
Effect of Amendment. Any amendment, repeal or modification of any provision of
this Article by the stockholders and the directors of the corporation shall not
adversely affect any right or protection of a director or other of the
corporation existing at the time of the amendment, repeal or modification.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
After our incorporation on August 25, 2004, we issued 3,500,000 shares of our
common stock for consideration of $3,500 to our founding officer and director.
This share issuance was exempt from registration under the Securities Act
pursuant to Section 4(2) thereof.
Effective as of October 13, 2004, we completed a private placement of 2,800,000
shares at a price of $0.001 per share to a total of 8 purchasers. The total
proceeds from this offering were $2,800. We completed this offering pursuant to
Rule 903 of Regulation S under the Securities Act. Each sale of shares was
completed as an "offshore transaction", as defined in Rule 902(h) of Regulation
S, on the basis that: (i) each investor was outside of the United States at the
time the offer to purchase the shares was made; and (ii) at the time the
subscription agreement for the shares was executed, the investor was outside of
the United States or we had a reasonable belief that the investor was outside of
the United States. We did not engage in any directed selling efforts, as defined
in Regulation S, in the United States. Each investor represented to us that the
investor was not a U.S. person, as defined in Regulation S, and was not
acquiring the shares for the account or benefit of a U.S. Person. Each investor
represented their intention to acquire the securities for investment only and
not with a view toward distribution. Appropriate legends have been affixed to
the stock certificate issued to each purchaser in accordance with Regulation S.
None of the securities were sold through an underwriter and accordingly, there
were no underwriting discounts or commissions involved. No registration rights
were granted to any of the investors.
Effective as of October 28, 2004, we completed a private placement of 1,050,000
shares at a price of $0.01 per share to a total of 7 purchasers. The total
proceeds from this offering were $10,500. We completed this offering pursuant to
Rule 903 of Regulation S under the Securities Act. Each sale of shares was
completed as an "offshore transaction", as defined in Rule 902(h) of Regulation
S, on the basis that: (i) each investor was outside of the United States at the
time the offer to purchase the shares was made; and (ii) at the time the
subscription agreement for the shares was executed, the investor was outside of
the United States or we had a reasonable belief that the investor was outside of
the United States. We did not engage in any directed selling efforts, as defined
in Regulation S, in the United States. Each investor represented to us that the
investor was not a U.S. person, as defined in Regulation S, and was not
acquiring the shares for the account or benefit of a U.S. Person. Each investor
represented their intention to acquire the securities for investment only and
not with a view toward distribution. Appropriate legends have been affixed to
the stock certificate issued to each purchaser in accordance with Regulation S.
None of the securities were sold through an underwriter and accordingly, there
were no underwriting discounts or commissions involved. No registration rights
were granted to any of the investors.
Effective as of December 24, 2004, we completed a private placement of 260,000
shares at a price of $0.05 per share to a total of 13 purchasers. The total
proceeds from this offering were $13,000. We completed this offering pursuant to
Rule 903 of Regulation S under the Securities Act. Each sale of shares was
completed as an "offshore transaction", as defined in Rule 902(h) of Regulation
S, on the basis that: (i) each investor was outside of the United States at the
time the offer to purchase the shares was made; and (ii) at the time the
subscription agreement for the shares was executed, the investor was outside of
the United States or we had a reasonable belief that the investor was outside of
the United States. We did not engage in any directed selling efforts, as defined
in Regulation S, in the United States. Each investor represented to us that the
investor was not a U.S. person, as defined in Regulation S, and was not
acquiring the shares for the account or benefit of a U.S. Person. Each investor
represented their intention to acquire the securities for investment only and
not with a view toward distribution. Appropriate legends have been affixed to
the stock certificate issued to each purchaser in accordance with Regulation S.
None of the securities were sold through an underwriter and accordingly, there
were no underwriting discounts or commissions involved. No registration rights
were granted to any of the investors.
Effective as of May 1, 2008, we completed a private placement of 32,500,000
shares at a price of $0.001 per share to a total of 5 purchasers. The total
proceeds from this offering were $32,500. We completed this offering pursuant to
Rule 903 of Regulation S under the Securities Act. Each sale of shares was
completed as an "offshore transaction", as defined in Rule 902(h) of Regulation
S, on the basis that: (i) each investor was outside of the United States at the
II-4
time the offer to purchase the shares was made; and (ii) at the time the
subscription agreement for the shares was executed, the investor was outside of
the United States or we had a reasonable belief that the investor was outside of
the United States. We did not engage in any directed selling efforts, as defined
in Regulation S, in the United States. Each investor represented to us that the
investor was not a U.S. person, as defined in Regulation S, and was not
acquiring the shares for the account or benefit of a U.S. Person. Each investor
represented their intention to acquire the securities for investment only and
not with a view toward distribution. Appropriate legends have been affixed to
the stock certificate issued to each purchaser in accordance with Regulation S.
None of the securities were sold through an underwriter and accordingly, there
were no underwriting discounts or commissions involved. No registration rights
were granted to any of the investors.
Effective as of October 24, 2008, we completed a private placement of 5,000,000
shares at a price of $0.001 per share to a total of one purchaser. The total
proceeds from this offering were $5,000. We completed this offering pursuant to
Rule 903 of Regulation S under the Securities Act. The sale of shares was
completed as an "offshore transaction", as defined in Rule 902(h) of Regulation
S, on the basis that: (i) the investor was outside of the United States at the
time the offer to purchase the shares was made; and (ii) at the time the
subscription agreement for the shares was executed, the investor was outside of
the United States or we had a reasonable belief that the investor was outside of
the United States. We did not engage in any directed selling efforts, as defined
in Regulation S, in the United States. The investor represented to us that the
investor was not a U.S. person, as defined in Regulation S, and was not
acquiring the shares for the account or benefit of a U.S. Person. The investor
represented his intention to acquire the securities for investment only and not
with a view toward distribution. Appropriate legends have been affixed to the
stock certificate issued to the purchaser in accordance with Regulation S. None
of the securities were sold through an underwriter and accordingly, there were
no underwriting discounts or commissions involved. No registration rights were
granted to the investor.
ITEM 16. EXHIBITS
The following exhibits are filed with this registration statement on Form S-1:
Exhibit
Number Description of Exhibit
- ------ ----------------------
3.1 Articles of Incorporation (1)
3.2 Bylaws (1)
5.1 Opinion of Boughton Law Corporation, with consent to use, regarding the
validity of the securities being registered
10.3 Letter and Trust Agreement dated February 4, 2010 between Teuton
Resources Corp and Deer Bay Resources Inc. (2)
10.4 Form of Private Placement Subscription Agreement (1)
10.5 Geology Report on Emory Creek Claim by Glen Macdonald, P. Geo. Dated
February 10, 2010 (2)
23.1 Consent of Independent Registered Public Accounting Firm
23.2 Consent of Geologist
23.3 Consent of Counsel (included in Exhibit 5.1)
24.1 Power of Attorney (included in the signature page of this registration
statement)
- ----------
(1) Incorporated by reference from Form S-1 filed with the Securities and
Exchange Commission on November 28, 2008.
(2) Incorporated by reference from Form 10-K filed with the Securities and
Exchange Commission on May 18, 2010.
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ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes that it will:
1. File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(a) Include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933;
(b) Reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in the volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration statement.
(c) Include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
2. For determining any liability under the Securities Act, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
3. Remove from registration by means of a post-effective registration
statement any of the securities being registered which remain unsold at the
termination of the offering.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
For the purpose of determining liability under the Securities Act of 1933 to any
purchaser, each prospectus filed pursuant to Rule 424(b) as part of a
registration statement relating to an offering, other than registration
statements relying on Rule 430B or other than prospectuses filed in reliance on
Rule 430A, shall be deemed to be part of and included in the registration
statement as of the date it is first used after effectiveness. Provided,
however, that no statement made in a registration statement or prospectus that
is part of the registration statement or made in a document incorporated or
deemed incorporated by reference into the registration statement or prospectus
that is part of the registration statement will, as to a purchaser with a time
of contract of sale prior to such first use, supersede or modify any statement
that was made in the registration statement or prospectus that was part of the
registration statement or made in any such document immediately prior to such
date of first use.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Vancouver, Province of
British Columbia, Country of Canada on June 1, 2010
DEER BAY REOURCES INC.
By: /s/ Garry E. Wong
-----------------------------------
Garry E. Wong
President, Chief Executive Officer,
Chief Financial Officer, Secretary,
Treasurer and a Director
POWER OF ATTORNEY
Know all persons by these presents that that each individual whose signature
appears below constitutes and appoints Garry E. Wong as a true and lawful
attorney-in-fact and agent, with full power of substitution and re-substitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this registration
statement, and to sign any registration statement for the same offering covered
by this registration statement that is to be effective upon filing under Rule
462 promulgated under the Securities Act of 1933, and all post-effective
amendments thereto, and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any one of them, or his or their
substitutes, may lawfully do or cause to be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated.
Signature Title Date
--------- ----- ----
/s/ Garry Wong President, Chief Executive Officer, June 1, 2010
- ------------------------- Chief Financial Officer, Secretary,
Garry Wong Treasurer and a Director
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