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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
AMENDMENT NO. 1
FILE NUMBER: 333-113845
MONDIAL VENTURES, INC.
---------------------------
(Exact name of Registrant as specified in its charter)
NEVADA 1000 Applied For
- ------------- --------------------------- ----------------
(State or other Standard Industrial IRS Employer
jurisdiction of Classification Identification
incorporation or Number
organization)
Mondial Ventures, Inc.
Scott Taylor, President
8416 Angus Drive
Vancouver, British Columbia
Canada V6P 1L3
- ------------------------------ ----------
(Name and address of principal (Zip Code)
executive offices)
Val-U-Corp Services Inc.
1802 N Carson Street, Suite 212
Carson City, Nevada, USA
Telephone: 775-887-8853 89701
- ------------------------------ ----------
(Name, address and telephone (Zip Code)
number of agent for service)
Registrant's telephone number,
including area code: (604)317-0568
Fax:(604)681-7622
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Approximate date of
proposed sale to the public: as soon as practicable after
the effective date of this
Registration Statement.
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 of
1933, 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, 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
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(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. |__|
If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following. |__|
1
CALCULATION OF REGISTRATION FEE
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TITLE OF EACH PROPOSED PROPOSED
CLASS OF MAXIMUM MAXIMUM
SECURITIES DOLLAR OFFERING AGGREGATE AMOUNT OF
TO BE AMOUNT TO BE PRICE PER OFFERING REGISTRATION
REGISTERED REGISTERED SHARE (1) PRICE (2) FEE (2)
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Common Stock $380,000 $0.10 $380,000 $48.15
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(1) Based on the last sales price on December 31, 2003
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 under the Securities Act.
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 THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.
SUBJECT TO COMPLETION, Dated July 16, 2004
2
PROSPECTUS
MONDIAL VENTURES, INC.
3,800,000 SHARES
COMMON STOCK
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The selling shareholders named in this prospectus are offering all of the shares
of common stock offered through this prospectus.
Our common stock is presently not traded on any market or securities exchange.
----------------
THE PURCHASE OF THE SECURITIES OFFERED THROUGH THIS PROSPECTUS INVOLVES A HIGH
DEGREE OF RISK. See section entitled "Risk Factors" on pages 6-9.
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. 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 selling shareholders will sell our shares at $0.10 per share until our
shares are quoted on the OTC Bulletin Board, and thereafter at prevailing market
prices or privately negotiated prices. We determined this offering price based
upon the price of the last sale of our common stock to investors. There is no
assurance of when, if ever, our stock will be listed on an exchange.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
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The Date Of This Prospectus Is: July 16, 2004
3
Table Of Contents
PAGE
Summary .................................................................... 5
Risk Factors ............................................................... 6
Risks Related To Our Financial Condition and Business Model
- - -----------------------------------------------------------
- If we do not obtain additional financing, our business
will fail ............................................................. 6
- Because we have not commenced business operations, we face
a high risk of business failure ....................................... 7
- Because of the speculative nature of exploration of mining
properties, there is substantial risk that our business
will fail ............................................................. 7
- Because of the inherent dangers involved in mineral
exploration, there is a risk that we may incur liability or
damages as we conduct our business .................................... 8
- Even if we discover commercial reserves of precious metals
on the Q 29 Property, we may not be able to
successfully develop the Q29 claims ............................. 8
- We need to continue as a going concern if our business is
to succeed ............................................................ 8
- If we become subject to burdensome government regulation
or other legal uncertainties, our business will be
negatively affected ................................................... 8
- Because our directors own 61.2% of our outstanding stock,
they could control and make corporate decisions that may be
disadvantageous to other minority stockholders ........................ 9
- Because management has no technical experience in mineral
Exploration, our business has a higher risk of failure................. 9
- Because our directors have other business interests, they
May not be able or willing to devote a sufficient amount of
Time to our business operations, causing our business to fail.......... 9
- If a market for our common stock does not develop,
shareholders may be unable to sell their shares ...................... 9
- A purchaser is purchasing penny stock which limits the
sell the ability to stock ............................................. 9
Forward-Looking Statements ................................................. 10
Use of Proceeds ............................................................ 10
Determination of Offering Price ............................................ 10
Dilution ................................................................... 10
Selling Shareholders ....................................................... 10
Plan of Distribution ....................................................... 14
Legal Proceedings .......................................................... 16
Directors, Executive Officers, Promoters and Control Persons............... 16
Security Ownership of Certain Beneficial Owners and Management............. 17
Description of Securities .................................................. 18
Interest of Named Experts and Counsel ...................................... 19
Disclosure of Commission Position of Indemnification for
Securities Act Liabilities ................................................. 20
Organization Within Last Five Years ........................................ 20
Description of Business .................................................... 20
Plan of Operations ......................................................... 23
Description of Property .................................................... 24
Certain Relationships and Related Transactions ............................. 24
Market for Common Equity and Related Stockholder Matters ................... 24
Executive Compensation ..................................................... 26
Financial Statements ....................................................... 27
Changes in and Disagreements with Accountants .............................. 39
Available Information ...................................................... 39
4
Summary
Prospective investors are urged to read this prospectus in its entirety.
We intend to be in the business of mineral property exploration. To date, we
have not conducted any exploration on our sole mineral property, the Q29
property located in the Nanaimo Mining Division of British Columbia, Canada. We
own a 100% interest, subject to a 2% net smelter returns royalty, in the four
mineral claims comprising the Q29 property. We purchased these claims from Mr.
Edward McCrossan of Vancouver, British Columbia for a cash payment of $6,000.
Our objective is to conduct mineral exploration activities on the Q29 property
in order to assess whether it possesses economic reserves of copper and gold. We
have not yet identified any economic mineralization on the property. Our
proposed exploration program is designed to search for an economic mineral
deposit.
We were incorporated on May 29, 2002, under the laws of the state of Nevada. Our
principal offices are located at 8416 Angus Drive Vancouver, British Columbia,
Canada. Our telephone number is (604) 317-0568.
The Offering:
Securities Being Offered Up to 3,800,000 shares of common stock.
Offering Price The selling shareholders will sell our shares at
$0.10 per share until our shares are quoted on the
OTC Bulletin Board, and thereafter at prevailing
market prices or privately negotiated prices. We
determined this offering price based upon the price
of the last sale of our common stock to investors.
Terms of the Offering The selling shareholders will determine when and
how they will sell the common stock offered in this
prospectus.
Termination of the Offering The offering will conclude when all
of the 3,800,000 shares of common stock have been
sold, the shares no longer need to be registered to
be sold due to the operation of Rule 144(k) or we
decide at any time to terminate the registration of
the shares at our sole discretion. In any event,
the offering shall be terminated no later than two
years from the effective date of this registration
statement.
Securities Issued
And to be Issued 9,800,000 shares of our common stock are issued and
outstanding as of the date of this prospectus. All
of the common stock to be sold under this
prospectus will be sold by existing shareholders.
5
Use of Proceeds We will not receive any proceeds from the sale of
the common stock by the selling shareholders.
Summary Financial Information
Balance Sheet Data March 31, 2004
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Cash $18,525
Total Assets $18,525
Liabilities $ 7,375
Total Stockholders' Equity $11,150
Statement of Loss and Deficit
From Incorporation on
May 9, 2002 to March 31, 2004
Revenue $ 0
Net Loss ($18,450)
Risk Factors
An investment in our common stock involves a high degree of risk. You should
carefully consider the risks described below and the other information in this
prospectus before investing in our common stock. If any of the following risks
occur, our business, operating results and financial condition could be
seriously harmed. The trading price of our common stock could decline due to any
of these risks, and you may lose all or part of your investment.
IF WE DO NOT OBTAIN ADDITIONAL FINANCING, OUR BUSINESS WILL FAIL.
Our current operating funds are less than necessary to complete all intended
exploration of the Q29 property, and therefore we will need to obtain additional
financing in order to complete our business plan. As of July 16, 2004, we had
cash in the amount of $14,070. We currently do not have any operations and we
have no income.
Our business plan calls for significant expenses in connection with the
exploration of the Q29 property. While we have sufficient funds to conduct
initial exploration on the property, we will require additional financing in
order to determine whether the property contains economic mineralization. We
will also require additional financing if the costs of the exploration of the
Q29 property are greater than anticipated.
We will require additional financing to sustain our business operations if we
are not successful in earning revenues once exploration is complete. We do not
currently have any arrangements for financing and we can provide no assurance to
investors that we will be able to find such financing if required. Obtaining
additional financing would be subject to a number of factors, including the
market prices for copper and gold, investor acceptance of our property and
general market conditions. These factors may make the timing, amount, terms or
conditions of additional financing unavailable to us.
6
The most likely source of future funds presently available to us is through the
sale of equity capital. Any sale of share capital will result in dilution to
existing shareholders. The only other anticipated alternative for the financing
of further exploration would be our sale of a partial interest in the Q29
property to a third party in exchange for cash or exploration expenditures,
which is not presently contemplated.
BECAUSE WE HAVE NOT COMMENCED BUSINESS OPERATIONS, WE FACE A HIGH RISK OF
BUSINESS FAILURE.
Although we are preparing to commence exploration on the Q29 property in the
summer of 2004, we have not yet commenced exploration on the property.
Accordingly, we have no way to evaluate the likelihood that our business will be
successful. We were incorporated on May 29, 2002 and were essentially dormant
until November 2003. To date, we have been involved primarily in organizational
activities and the acquisition of our mineral property. We have not earned any
revenues as of the date of this prospectus. Potential investors should be aware
of the difficulties normally encountered by new mineral exploration companies
and the high rate of failure of such enterprises. The likelihood of success must
be considered in light of the problems, expenses, difficulties, complications
and delays encountered in connection with the exploration of the mineral
properties that we plan to undertake. These potential problems include, but are
not limited to, unanticipated problems relating to exploration, and additional
costs and expenses that may exceed current estimates.
Prior to completion of our exploration stage, we anticipate that we will incur
increased operating expenses without realizing any revenues. We therefore expect
to incur significant losses into the foreseeable future. We recognize that if we
are unable to generate significant revenues from development of the Q29 property
and the production of minerals from the claims, we will not be able to earn
profits or continue operations.
There is no history upon which to base any assumption as to the likelihood that
we will prove successful, and we can provide investors with no assurance that we
will generate any operating revenues or ever achieve profitable operations. If
we are unsuccessful in addressing these risks, our business will most likely
fail.
BECAUSE OF THE SPECULATIVE NATURE OF EXPLORATION OF MINING PROPERTIES, THERE IS
A SUBSTANTIAL RISK THAT OUR BUSINESS WILL FAIL.
The search for valuable minerals as a business is extremely risky. We can
provide investors with no assurance that our mineral claims contain economic
mineralization or reserves of copper or gold. Exploration for minerals is a
speculative venture necessarily involving substantial risk. Our exploration of
the Q29 property may not result in the discovery of commercial quantities of
copper or gold. Problems such as unusual or unexpected formations and other
conditions are involved in mineral exploration and often result in unsuccessful
exploration efforts. In such a case, we would be unable to complete our business
plan.
7
BECAUSE OF THE INHERENT DANGERS INVOLVED IN MINERAL EXPLORATION, THERE IS A RISK
THAT WE MAY INCUR LIABILITY OR DAMAGES AS WE CONDUCT OUR BUSINESS.
The search for valuable minerals involves numerous hazards. As a result, we may
become subject to liability for such hazards, including pollution, cave-ins and
other hazards against which we cannot insure or against which we may elect not
to insure. The payment of such liabilities may have a material adverse effect on
our financial position.
EVEN IF WE DISCOVER COMMERCIAL RESERVES OF PRECIOUS METALS ON THE Q29 PROPERTY,
WE MAY NOT BE ABLE TO SUCCESSFULLY DEVELOP THE Q29 CLAIMS.
The Q29 property does not contain any known bodies of mineralization. If our
exploration programs are successful in establishing copper of commercial tonnage
and grade, we will require additional funds in order to further develop the
property. At this time, we cannot assure investors that we will be able to
obtain such financing.
WE NEED TO CONTINUE AS A GOING CONCERN IF OUR BUSINESS IS TO SUCCEED.
The Independent Auditor's Report to our audited financial statements for the
period ended December 31, 2003, indicates that there are a number of factors
that raise substantial doubt about our ability to continue as a going concern.
Such factors identified in the report are our net loss position, our failure to
attain profitable operations and our dependence upon obtaining adequate
financing. If we are not able to continue as a going concern, it is likely
investors will lose their investments.
IF WE BECOME SUBJECT TO BURDENSOME GOVERNMENT REGULATION OR OTHER LEGAL
UNCERTAINTIES, OUR BUSINESS WILL BE NEGATIVELY AFFECTED.
There are several governmental regulations that materially restrict mineral
property exploration and development. Under British Columbia mining law, to
engage in certain types of exploration will require work permits, the posting of
bonds, and the performance of remediation work for any physical disturbance to
the land. While these current laws do not affect our current exploration plans,
if we proceed to commence drilling operations on the Q29 property, we will incur
modest regulatory compliance costs.
In addition, the legal and regulatory environment that pertains to the
exploration of ore is uncertain and may change. Uncertainty and new regulations
could increase our costs of doing business and prevent us from exploring for ore
deposits. The growth of demand for ore may also be significantly slowed. This
could delay growth in potential demand for and limit our ability to generate
revenues. In addition to new laws and regulations being adopted, existing laws
may be applied to mining that have not as yet been applied. These new laws may
increase our cost of doing business with the result that our financial condition
and operating results may be harmed.
8
BECAUSE OUR DIRECTORS OWN 61.2% OF OUR OUTSTANDING COMMON STOCK, THEY COULD MAKE
AND CONTROL CORPORATE DECISIONS THAT MAY BE DISADVANTAGEOUS TO OTHER MINORITY
SHAREHOLDERS.
Our directors own approximately 61.2% of the outstanding shares of our common
stock. Accordingly, they will have a significant influence in determining the
outcome of all corporate transactions or other matters, including mergers,
consolidations, and the sale of all or substantially all of our assets. They
will also have the power to prevent or cause a change in control. The interests
of our directors may differ from the interests of the other stockholders and
thus result in corporate decisions that are disadvantageous to other
shareholders.
BECAUSE MANAGEMENT HAS NO TECHNICAL EXPERIENCE IN MINERAL EXPLORATION, OUR
BUSINESS HAS A HIGHER RISK OF FAILURE.
None of our directors has any technical training in the field of geology. As a
result, we may not be able to recognize and take advantage of potential
acquisition and exploration opportunities in the sector without the aid of
qualified geological consultants. As well, with no direct training or
experience, our management may not be fully aware of the specific requirements
related to working in this industry. Their decisions and choices may not be well
thought out and our operations and ultimate financial success may suffer
irreparable harm as a result.
BECAUSE OUR DIRECTORS HAVE OTHER BUSINESS INTERESTS, THEY MAY NOT BE ABLE OR
WILLING TO DEVOTE A SUFFICIENT AMOUNT OF TIME TO OUR BUSINESS OPERATIONS,
CAUSING OUR BUSINESS TO FAIL.
Our president, Mr. Taylor and our secretary, Mr. Alvaro intend to devote 20 and
five hours per week respectively to our business affairs. It is possible that
the demands on Mr. Taylor' and Mr. Alvaro from their other obligations could
increase with the result that they would no longer be able to devote sufficient
time to the management of our business. In addition, Mr. Taylor and Mr. Alvaro
may not possess sufficient time for our business if the demands of managing our
business increased substantially beyond current levels.
IF A MARKET FOR OUR COMMON STOCK DOES NOT DEVELOP, SHAREHOLDERS MAY BE UNABLE TO
SELL THEIR SHARES.
There is currently no market for our common stock and we can provide no
assurance that a market will develop. We currently plan to apply for listing of
our common stock on the over the counter bulletin board upon the effectiveness
of the registration statement, of which this prospectus forms a part. However,
we can provide investors with no assurance that our shares will be traded on the
bulletin board or, if traded, that a public market will materialize. If no
market is ever developed for our shares, it will be difficult for shareholders
to sell their stock. In such a case, shareholders may find that they are unable
to achieve benefits from their investment.
A PURCHASER IS PURCHASING PENNY STOCK WHICH LIMITS HIS OR HER ABILITY TO SELL
THE STOCK.
The shares offered by this prospectus constitute penny stock under the
Securities and Exchange Act. The shares will remain penny stock for the
foreseeable future. The classification of penny stock makes
it more difficult for a broker-dealer to sell the stock into a secondary market,
which makes it more difficult for a purchaser to liquidate his or her
investment. Any broker-dealer engaged by the purchaser for the purpose of
selling his or her shares in our company will be subject to rules 15g-1 through
15g-10 of the Securities and Exchange Act. Rather than creating a need to comply
with those rules, some broker-dealers will refuse to attempt to sell penny
stock.
9
Forward-Looking Statements
This prospectus contains forward-looking statements that involve risks and
uncertainties. We use words such as anticipate, believe, plan, expect, future,
intend and similar expressions to identify such forward-looking statements. You
should not place too much reliance on these forward-looking statements. Our
actual results are most likely to differ materially from those anticipated in
these forward-looking statements for many reasons, including the risks faced by
us described in the "Risk Factors" section and elsewhere in this prospectus.
Use Of Proceeds
We will not receive any proceeds from the sale of the common stock offered
through this prospectus by the selling shareholders.
Determination Of Offering Price
The selling shareholders will sell our shares at $0.10 per share until our
shares are quoted on the OTC Bulletin Board, and thereafter at prevailing market
prices or privately negotiated prices. We determined this offering price, based
upon the price of the last sale of our common stock to investors. There is no
assurance of when, if ever, our stock will be listed on an exchange.
Dilution
The common stock to be sold by the selling shareholders is common stock that is
currently issued and outstanding. Accordingly, there will be no dilution to our
existing shareholders.
Selling Shareholders
The selling shareholders named in this prospectus are offering all of the
3,800,000 shares of common stock offered through this prospectus. These shares
were acquired from us in private placements that were exempt from registration
under Regulation S of the Securities Act of 1933. The shares include the
following:
1. 3,600,000 shares of our common stock that the selling shareholders
acquired from us in an offering that was exempt from registration under
Regulation S of the Securities Act of 1933 and was completed on December
19, 2003; and
2. 200,000 shares of our common stock that the selling shareholders
acquired from us in an offering that was exempt from registration under
Regulation S of the Securities Act of 1933 and was completed on December
31, 2003.
The following table provides as of the date of this prospectus, information
regarding the beneficial ownership of our common stock held by each of the
selling shareholders, including:
1. the number of shares owned by each prior to this offering;
2. the total number of shares that are to be offered for each;
3. the total number of shares that will be owned by each upon completion of
the offering; and
4. the percentage owned by each upon completion of the offering.
10
Total Number
Of Shares To Total Shares Percentage of
Be Offered For to Be Owned Shares owned
Name Of Shares Owned Selling Upon Upon
Selling Prior To This Shareholders Completion Of Completion of
Stockholder Offering Account This Offering This Offering
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Janet Bowell 450,000 450,000 Nil Nil
7838 Angus Drive
Vancouver, B.C.
V6P 5K5
Alicia Katz 450,000 450,000 Nil Nil
7838 Angus Drive
Vancouver, B.C.
V6P 5K5
Andrew Wood 450,000 450,000 Nil Nil
2696 West 34th Avenue
Vancouver, B.C.
V6N 2J2
Stephanie Hayes 450,000 450,000 Nil Nil
2121 West 6th Avenue
Suite 210 Vancouver, B.C.
V6K 1V5
Andrew Orchard 450,000 450,000 Nil Nil
2742 West 7th Avenue
Vancouver, B.C.
V6K 1Z4
Estuardo Ventura 450,000 450,000 Nil Nil
4018 West 16th Avenue
Vancouver, B.C.
V6R 3E1
Alexis Tsaparas 450,000 450,000 Nil Nil
4112 Puget Drive
Vancouver, B.C.
V6L 2V6
Josh Beale 450,000 450,000 Nil Nil
2519 West 5th Avenue
Vancouver, B.C.
V6K 1S9
Anna Morris 10,000 10,000 Nil Nil
1703 Edinburgh Street
New Westminster, B.C.
V3M 2W9
Eric Bull 10,000 10,000 Nil Nil
11239 10th Avenue
Edmonton, Alberta
T6J 6S1
11
Total Number
Of Shares To Total Shares Percent
Be Offered For Owned Upon Owned Upon
Name Of Shares Owned Selling Completion Completion
Selling Prior To This Shareholders of this Of This
Stockholder Offering Account Offering Offering
- --------------------------------------------------------------------------------
Will Beale 10,000 10,000 Nil Nil
2519 West 5th Avenue
Vancouver, B.C.
V6K 1S9
Ryan Cheney 10,000 10,000 Nil Nil
109-2424 Cypress Street
Vancouver, B.C.
V6J 1T6
Sukjae Yim 10,000 10,000 Nil Nil
3793 West 38th Avenue
Vancouver B.C.
V6Z 1N9
Laura Biffen 10,000 10,000 Nil Nil
203-2095 West 46th Avenue
Vancovuer, B.C.
V6M 2K8
John Bull 10,000 10,000 Nil Nil
321 10th Street
Calgary, Alberta
T2N 1V7
David M. Taylor 10,000 10,000 Nil Nil
383 Oaklawn Crescent
Ottawa, Ontario
K4A 3J4
Eramelinda Boquer 10,000 10,000 Nil Nil
5022 Third Avenue
Montreal, Quebec
H1Y 2W3
Michael Killam 10,000 10,000 Nil Nil
1166 Dorien St.
Montreal, Quebec
H2K 4A1
Sebastien Crete 10,000 10,000 Nil Nil
6607 Briand Street
Montreal Quebec
H4E 3L4
12
Total Number
Of Shares To Total Shares Percent
Be Offered For Owned Upon Owned Upon
Name Of Shares Owned Selling Completion Completion
Selling Prior To This Shareholders of this Of This
Stockholder Offering Account Offering Offering
- --------------------------------------------------------------------------------
Stephanie Senez 10,000 10,000 Nil Nil
1033 Brown Street
Verdun, Quebec
H4H 2A7
Andrew Stroll 10,000 10,000 Nil Nil
1225 Alexis-Nihon Blvd
Suite 302
Saint-Launrent, Quebec
H4R 2A6
Jake Nachum 10,000 10,000 Nil Nil
40 Dauphin Road
Dollard Des Ormeaux
Quebec, H9G 1W3
Jason Nachum 10,000 10,000 Nil Nil
40 Dauphin Road
Dollard Des Ormeaux
Quebec, H9G 1W3
Alain Themens 10,000 10,000 Nil Nil
315 Strasbourg Prom.
Dollard Des Ormeaux
Quebec, H9G 1R9
Peter Theodoropoulos 10,000 10,000 Nil Nil
304-2190 West 8th Avenue
Vancouver, B.C. V6B 3A2
Graeme Coutts 10,000 10,000 Nil Nil
6025 Angus Avenue
Vancouver, B.C.
V6M 3N9
David Clifton 10,000 10,000 Nil Nil
1288 Broughton Street
Suite 701 Vancouver, B.C.
V6G 2B5
Katie McMahon 10,000 10,000 Nil Nil
6225 Cedarhurst Street
Vancouver, B.C.
V6N 1H9
The named party beneficially owns and has sole voting and investment power over
all shares or rights to these shares. The numbers in this table assume that none
of the selling shareholders sells shares of common stock not being offered in
13
this prospectus or purchases additional shares of common stock, and assumes that
all shares offered are sold. The percentages are based on 9,800,000 shares of
common stock outstanding on the date of this prospectus.
David M. Taylor is the father of Scott Taylor, our president and a director.
Otherwise, none of the selling shareholders:
(1) has had a material relationship with us other than as a
shareholder at any time within the past three years; or
(2) has ever been one of our officers or directors.
Plan Of Distribution
The selling shareholders may sell some or all of their common stock in one or
more transactions, including block transactions:
The selling shareholders will sell our shares at $0.10 per share until our
shares are quoted on the OTC Bulletin Board, and thereafter at prevailing market
prices or privately negotiated prices. We determined this offering price
arbitrarily based upon the price of the last sale of our common stock to
investors. There is no assurance of when, if ever, our stock will be listed on
an exchange.
The shares may also be sold in compliance with the Securities and Exchange
Commission's Rule 144.
The selling shareholders may also sell their shares directly to market makers
acting as principals or brokers or dealers, who may act as agent or acquire the
common stock as a principal. Any broker or dealer participating in such
transactions as agent may receive a commission from the selling shareholders,
or, if they act as agent for the purchaser of such common stock, from such
purchaser.
The selling shareholders will likely pay the usual and customary brokerage fees
for such services. Brokers or dealers may agree with the selling shareholders to
sell a specified number of shares at a stipulated price per share and, to the
extent such broker or dealer is unable to do so acting as agent for the selling
shareholders, to purchase, as principal, any unsold shares at the price required
to fulfill the respective broker's or dealer's commitment to the selling
shareholders.
Brokers or dealers who acquire shares as principals may thereafter resell such
shares from time to time in transactions in a market or on an exchange, in
negotiated transactions or otherwise, at market prices prevailing at the time of
sale or at negotiated prices, and in connection with such re-sales may pay or
receive commissions to or from the purchasers of such shares. These transactions
may involve cross and block transactions that may involve sales to and through
other brokers or dealers. The selling shareholders and any broker-dealer who
execute sales for the selling shareholders may be deemed to be an "underwriter"
within the meaning of the Securities Act in connection with such sales.
None of the selling shareholders has any arrangement or agreement with any
broker-dealer or underwriting firm to resell any shares on behalf of the selling
shareholders.
If applicable, the selling shareholders may distribute shares to one or more of
their partners who are unaffiliated with us. Such partners may, in turn,
distribute such shares as described above. If these shares being registered for
resale are transferred from the named selling shareholders and the new
shareholders wish to rely on the prospectus to resell these shares, then we must
first file a prospectus supplement naming these individuals as selling
shareholders and providing the information required by Item 507 of Regulation
S-B concerning the identity of each selling shareholder and he or her
relationship to us. There is no agreement or understanding between the selling
shareholders and any partners with respect to the distribution of the shares
being registered for resale pursuant to this registration statement.
We can provide no assurance that all or any of the common stock offered will be
sold by the selling shareholders.
14
We are bearing all costs relating to the registration of the common stock. These
are estimated to be $11,500. The selling shareholders, however, will pay any
commissions or other fees payable to brokers or dealers in connection with any
sale of the common stock.
The selling shareholders must comply with the requirements of the Securities Act
and the Securities Exchange Act in the offer and sale of the common stock. In
particular, during such times as the selling shareholders may be deemed to be
engaged in a distribution of the common stock, and therefore be considered to be
an underwriter, they must comply with applicable law and may, among other
things:
1. Not engage in any stabilization activities in connection with our common
stock;
2. Furnish each broker or dealer through which common stock may be offered,
such copies of this prospectus, as amended from time to time, as may be
required by such broker or dealer; and
3. Not bid for or purchase any of our securities or attempt to induce any
person to purchase any of our securities other than as permitted under the
Securities Exchange Act.
The Securities Exchange Commission has also adopted rules that regulate
broker-dealer practices in connection with transactions in penny stocks. Penny
stocks are generally equity securities with a price of less than $5.00 (other
than securities registered on certain national securities exchanges or quoted on
the Nasdaq system, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
system).
The penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from those rules, deliver a standardized risk
disclosure document prepared by the Commission, which:
* contains a description of the nature and level of risk in the market for
penny stocks in both public offerings and secondary trading;
* contains a description of the broker's or dealer's duties to the customer
and of the rights and remedies available to the customer with respect to a
violation of such duties or other requirements
* contains a brief, clear, narrative description of a dealer market,
including "bid" and "ask" prices for penny stocks and the significance of
the spread between the bid and ask price;
* contains a toll-free telephone number for inquiries on disciplinary
actions;
* defines significant terms in the disclosure document or in the conduct of
trading penny stocks; and
* contains such other informatio n and is in such form (including language,
type, size, and format) as the Commission shall require by rule or
regulation;
The broker-dealer also must provide, prior to effecting any transaction in a
penny stock, the customer with:
15
* bid and offer quotations for the penny stock;
* the compensation of the broker-dealer and its salesperson in the
transaction;
* the number of shares to which such bid and ask prices apply, or other
comparable information relating to the depth and liquidity of the market
for such stock; and
* monthly account statements showing the market value of each penny stock
held in the customer's account.
In addition, the penny stock rules require that prior to a transaction in a
penny stock not otherwise exempt from those rules; the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitability statement.
These disclosure requirements will have the effect of reducing the trading
activity in the secondary market for our stock because it will be subject to
these penny stock rules. Therefore, stockholders may have difficulty selling
those securities.
Legal Proceedings
We are not currently a party to any legal proceedings. Our address for service
of process in Nevada is 1802 N. Carson Street, Suite 212, Carson City, Nevada,
89701.
Directors, Executive Officers, Promoters And Control Persons
Our executive officers and directors and their respective ages as of the date of
this prospectus are as follows:
Directors:
Name of Director Age
- ----------------------- -----
Scott Taylor 24
Joe Alvaro 56
Executive Officers:
Name of Officer Age Office
- --------------------- ----- -------
Scott Taylor 24 President, Chief
Executive Officer,
and a Director
Joe Alvaro 56 Secretary, Treasurer,
Principal Accounting
Officer and a Director
Biographical Information
Set forth below is a brief description of the background and business experience
of each of our executive officers and directors for the past five years.
16
Mr. Scott Taylor has acted as our President, chief executive officer and as a
director since our incorporation. Mr. Taylor is a graduate of Touro College in
Moscow, Russia, receiving his Bachelor of Science degree in science finance in
January 2004. As part of his degree requirement, Mr. Taylor completed a thesis
in international diamond mining ventures in northern Russia. Part of Mr.
Taylor's undergraduate work was completed at the University of Economics in
Barcelona, Spain, Franklin College in Lugano, Switzerland, the University of
Calgary and the University of British Columbia.
From January to December 2002, Mr. Taylor acted as a business development
consultant for Delta Financial Group in Moscow, Russia where he established a
customer service training program for the company's loan officers and analyzed
expansion and marketing efforts. From January to August 2003, Mr. Taylor was
employed as a research and financial analyst with Al-Toukhi Group, a private
company based in Dubai and Alberta. As part of his duties, Mr. Taylor researched
and compiled data on various Alberta oil sands projects.
Since October 2003, Mr. Taylor has been employed as a venture capital consultant
with Clifton Capital Consulting, a private British Columbia business involved in
organizing and acquiring gold, diamond and oil and gas projects in South America
and Russia.
Mr. Taylor intends to devote 20 hours of his business time per week to our
affairs.
Mr. Joe Alvaro has acted as our secretary, treasurer and as a director since our
incorporation. For over 30 years, he has been employed as a superintendent at
York Sheet Metal, a Burnaby, British Columbia based commercial construction
company that supplies and installs air conditioning, heating and sheet metal
products. He employment tasks include overseeing workers and materials for
specific contracts.
Mr. Alvaro intends to devote five hours of his business time per week to our
affairs.
Term of Office
Our directors are appointed for a one-year term to hold office until the next
annual general meeting of our shareholders or until removed from office in
accordance with our bylaws. Our officers are appointed by our board of directors
and hold office until removed by the board.
Significant Employees
We have no significant employees other than the officers and directors described
above.
Conflicts of Interest
We do not have any procedures in place to address conflicts of interest that may
arise in our directors between our business and their other business activities.
Of our directors, only Mr. Scott Taylor is involved in non-company business
ventures that involve mineral properties and exploration. As our present
business plan is focused entirely on the Q29 property, there is no expectation
of any conflict between Mr. Taylor's business interests and our interests.
However, possible conflicts may arise in the future if we seek to acquire
interests in additional mineral properties. We have no present intentions in
this regard.
Security Ownership Of Certain Beneficial Owners And Management
The following table provides the names and addresses of each person known to us
to own more than 5% of our outstanding common stock as of the date of this
prospectus, and by the officers and directors, individually and as a group.
Except as otherwise indicated, all shares are owned directly.
17
Amount of
Title of Name and address beneficial Percent
Class of beneficial owner ownership of class
- --------------------------------------------------------------------------------
Common Scott Taylor 3,000,000 30.06%
Stock President, Chief
Executive Officer
And Director
8416 Angus Drive
Vancouver, B.C.
Canada
Common Joe Alvaro 3,000,000 30.06%
Stock Secretary, Treasurer
Principal Accounting Officer
and Director
2664 Walpole Crescent
North Vancouver, B.C.
Canada
Common All Officers and Directors 6,000,000 60.12%
Stock as a Group that consists of shares
two people
The percent of class is based on 9,800,000 shares of common stock issued and
outstanding as of the date of this prospectus.
Description Of Securities
General
Our authorized capital stock consists of 75,000,000 shares of common stock at a
par value of $0.001 per share.
Common Stock
As of July 6, 2004, there were 9,800,000 shares of our common stock issued and
outstanding that are held by 30 stockholders of record.
Holders of our common stock are entitled to one vote for each share on all
matters submitted to a stockholder vote. Holders of common stock do not have
cumulative voting rights. Therefore, holders of a majority of the shares of
common stock voting for the election of directors can elect all of the
directors. Holders of our common stock representing a majority of the voting
power of our capital stock issued, outstanding and entitled to vote, represented
in person or by proxy, are necessary to constitute a quorum at any meeting of
our stockholders. A vote by the holders of a majority of our outstanding shares
is required to effectuate certain fundamental corporate changes such as
liquidation, merger or an amendment to our articles of incorporation.
Holders of common stock are entitled to share in all dividends that the board of
directors, in its discretion, declares from legally available funds. In the
event of a liquidation, dissolution or winding up, each outstanding share
entitles its holder to participate pro rata in all assets that remain after
payment of liabilities and after providing for each class of stock, if any,
18
having preference over the common stock. Holders of our common stock have no
pre-emptive rights, no conversion rights and there are no redemption provisions
applicable to our common stock.
Preferred Stock
We do not have an authorized class of preferred 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.
Share Purchase Warrants
We have not issued and do not have outstanding any warrants to purchase shares
of our common stock.
Options
We have not issued and do not have outstanding any options to purchase shares of
our common stock.
Convertible Securities
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.
Interests Of Named Experts And Counsel
No expert or counsel named in this prospectus as having prepared or certified
any part of this prospectus or having given an opinion upon the validity of the
securities being registered or upon other legal matters in connection with the
registration or offering of the common stock was employed on a contingency
basis, or had, or is to receive, in connection with the offering, a substantial
interest, direct or indirect, in the registrant or any of its parents or
subsidiaries. Nor was any such person connected with the registrant or any of
its parents or subsidiaries as a promoter, managing or principal underwriter,
voting trustee, director, officer, or employee.
Mr. Warren J. Soloski, our legal counsel, has provided an opinion on the
validity of our common stock.
The financial statements included in this prospectus and the registration
statement have been audited by Dohan and Company, Certified Public Accountants,
to the extent and for the periods set forth in their report appearing elsewhere
in this document and in the registration statement filed with the SEC, and are
included in reliance upon such report given upon the authority of said firm as
experts in auditing and accounting.
19
Disclosure Of Commission Position Of Indemnification For
Securities Act Liabilities
Our directors and officers are indemnified as provided by the Nevada Revised
Statutes and our Bylaws. We have been advised that in the opinion of the
Securities and Exchange Commission indemnification for liabilities arising under
the Securities Act is against public policy as expressed in the Securities Act,
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities is asserted by one of our directors, officers, or
controlling persons in connection with the securities being registered, we will,
unless in the opinion of our legal counsel the matter has been settled by
controlling precedent, submit the question of whether such indemnification is
against public policy to court of appropriate jurisdiction. We will then be
governed by the court's decision.
Organization Within Last Five Years
We were incorporated on May 29, 2002 under the laws of the state of Nevada. On
that date, Scott Taylor and Joe Alvaro were appointed as our directors. As well,
Mr. Taylor was appointed as our president and chief executive officer, while Mr.
Alvaro was appointed as our secretary and treasurer.
Description Of Business
In General
We intend to commence operations as an exploration stage mineral exploration
company. As such, there is no assurance that a commercially viable mineral
deposit exists on our sole mineral property interest, the Q29 property. Further
exploration will be required before a final evaluation as to the economic and
legal feasibility of the Q29 property is determined.
We will be engaged in the acquisition,and exploration of mineral properties with
a view to exploiting any mineral deposits we discover that demonstrate economic
feasibility. We own a 100% interest, subject to a 2% net smelter returns
royalty, in four contiguous mineral claims collectively known as the Q29
property. A net smelter returns royalty is the amount of money that we would
receive from the sale of minerals from the property to a smelter, less refining
charges, ore treatment charges, penalties and transportation costs.
Our plan of operation is to conduct exploration work on the Q29 property in
order to ascertain whether it possesses economic quantities of copper or gold.
There can be no assurance that economic mineral deposits or reserves, exist on
the Q29 property until appropriate exploration work is done and an economic
evaluation based on such work concludes that production of minerals from the
property is economically feasible.
Q29 Property Purchase Agreement
On December 22, 2003, we entered into an agreement with Mr. Edward McCrossan of
Vancouver, British Columbia, whereby he agreed to sell to us a total of four
mineral claims located approximately 20 kilometers west of Port Alice, British
Columbia. In order to acquire a 100% interest in these claims, on January 5,
2004 we paid $6,000 from our corporate bank account to Mr. McCrossan.
Other than selling the Q29 claims to us, Mr. McCrossan has not had and does not
have any relationship or affiliation with us or our management.
To date, we have spent $6,000 on the acquisition of the Q29 property. In the
next 12 months, we anticipate spending an additional $25,000 to complete the
exploration work recommended under the section below entitled "Geological
Report: Q29 Group Property".
Title to the Q29 Property
The Q29 property consists of four mineral claims. These claims will only be
valid as long as we spend a minimum of $880 in exploration work on each one each
year. Alternatively, we may pay the same amount per claims in cash to the
British Columbia government in order to maintain the claims in good standing.
This exploration work, or cash payments in lieu, are due by October 13, 2004.
A "mineral claim" refers to a specific section of land over which a title holder
owns rights to exploration to ground. Such rights may be transferred or held in
trust. Mr. McCrossan holds the four mineral claims comprising the Q29 property
in trust for us. It is a common procedure to have such claims held in trust
given the expense that we would incur in registering as a recorded claim holder
and as an extraprovincial company in British Columbia. We can request that the
claims be registered in our name at any time.
If the trustee becomes bankrupt or transfers the claims to a third party, we may
incur significant legal expenses in enforcing our interest in the claims in
British Columbia courts.
The registration of the claims in the name of a trustee does not impact a third
party's ability to commence an action against us respecting the Dotted Lake
property or to seize the claims after obtaining judgment.
Description, Location and Access
20
The Q29 property is located in the Nanaimo Mining Division on Vancouver Island,
British Columbia approximately 20 kilometers west of Port Alice. The property is
road accessible by Western Forest Products logging roads which being south of
Port Alice on the east side of Neroutsos Inlet. This road is accessible year
round, except for some occasional delays and interruptions in winter due to
snowfall.
Topography within the claims area is moderate with elevations ranging between
250 feet and 1,300 feet. Vegetation and climate are typical for the west coast
of Vancouver Island. The property area is covered with evergreen trees including
hemlock, cedar and Douglas fir and softwood species such as alder and poplar.
Mosses and a variety of berry bushes are common on the forest floor. Second
growth vegetation in previously logged areas can be dense and difficult to
traverse.
The bio-climatic zone of the property area is a temperate rainforest. Annual
rainfall can exceed 25 centimeters, but much of that occurs during the winter
months. Summer daytime temperatures between June and September average between
15 and 20 degrees Celsius. Winter temperatures can drop below freezing, but are
generally moderate due to the proximity of the Pacific Ocean.
There no power lines close to the Q29 property. Accordingly, a portable
generator would be necessary in order to supply power during exploration.
Mineralization
The northwestern portion of Vancouver Island, including the property area, is
underlain primarily by volcanic, limestone and marine sediment rocks. On the Q29
property, these rock formations were altered by intrusions. An intrusion occurs
when molten rock containing a mixture of minerals and gases enters into the
existing rock formation. Such intrusions often contain concentrations of
precious minerals such as gold and silver and base metals such as copper and
molybdenum.
No reserves or economically significant mineralization has been discovered on
the Q29 property. Very limited sampling results from the property indicate low
level anomalies of zinc and silver.
Exploration History
To date, no mineral deposit has been delineated on the Q29 property.
Consequently there has been no reserve or resource calculated. All proposed
property work is exploratory in nature. There is no known historical work from
the property prior to 2000. There is no equipment or infrastructure on the
property. As well, no mining operations have ever been conducted on the
property.
During October of 2000, Ed McCrossan, P.Geo., collected sixteen rock grab
samples were collected along logging road cut exposures within the Q29 claims.
Grab samples are soil samples or pieces of rock that appear to contain precious
metals such as gold or industrial metals such as copper. All samples gathered
were sent to a laboratory where they were crushed and analysed for metal
content. The samples indicate low level anomalies of zinc, silver, barium and
arsenic.
Geological Report: Q29 Group Property
We have obtained a geological report on the Q29 property that was prepared by
Mr. Edward McCrossan, a professional geologist, of Vancouver, British Columbia.
The geological report summarizes the results of exploration in the area of the
Q29 property and makes a recommendation for further exploration work.
In his report, Mr. McCrossan concludes that the Q29 property has the potential
to host precious metal and polymetallic mineral occurrences and deposits given
its location on northern Vancouver Island. He notes that previous sampling
results from an area of the property that appears to contain altered,
mineralized rock returned between 0.15% and 0.60% copper. If such mineralization
continued over a significant area, the Q29 property could potentially host a
mineral deposit. Mr. McCrossan also notes that the nearby Island Copper Mine
produced 345 tonnes of ore averaging 0.41% copper, 0.017% molybdenum, 0.19 grams
per tonne gold and 1.4 grams per tonne silver.
Mr. McCrossan recommends that we undertake an initial exploration program on the
property to determine the extent to which mineral levels continue over different
areas of the property. He suggests that such a program consist of grid
emplacement accompanied by geological, geochemical and geophysical surveys.
Additional phases consisting of trenching and diamond drilling are also
recommended.
The geochemical portion of the initial phase program will consist of our
consulting geologist and his assistant gathering samples from property areas
with the most potential to host economically significant mineralization based on
past exploration results.
We do not have an agreement with Mr. McCrossan to provide his geological
services for planned exploration work on the Q29 property. Mr. McCrossan has
indicated that he would be prepared to undertake such work if he was available
and that he would only retain an assistant after being retained by us. No
specific assistant has been determined.
Geophysical surveying is the search for mineral deposits by measuring the
physical property of near-surface rocks, and looking for unusual responses
caused by the presence of mineralization. Electrical, magnetic, gravitational,
21
seismic and radioactive properties are the ones most commonly measured.
Compliance with Government Regulation
We will be required to comply with all regulations, rules and directives of
governmental authorities and agencies applicable to the exploration of minerals
in Canada generally, and in the province of British Columbia, specifically.
Under these laws, prior to production, we have the right to explore the
property, subject only to a notice of work which may entail posting a bond if we
significantly disturb the property surface. This would first occur during the
drilling phase of exploration.
In addition, production of minerals in the province of British Columbia requires
prior approval of applicable governmental regulatory agencies. We can provide no
assurance to investors that such approvals will be obtained. The cost and delay
involved in attempting to obtain such approvals cannot be known at this time.
We will have to sustain the cost of reclamation and environmental mediation for
all exploration and development work undertaken. The amount of these costs is
not known at this time as we do not know the extent of the exploration program
that will be undertaken beyond completion of the currently planned work
programs. Because there is presently no information on the size, tenor, or
quality of any resource or reserve at this time, it is impossible to assess the
impact of any capital expenditures on earnings or our competitive position in
the event a potentially economic deposit is discovered.
If we enter into production, the cost of complying with permit and regulatory
environment laws will be greater than in the exploration phases because the
impact on the project area is greater. Permits and regulations will control all
aspects of any production program if the project continues to that stage because
of the potential impact on the environment. Examples of regulatory requirements
include:
- Water discharge will have to meet water standards;
- Dust generation will have to be minimal or otherwise re-mediated;
- Dumping of material on the surface will have to be re-contoured
and re-vegetated;
- An assessment of all material to be left on the surface will need
to be environmentally benign;
- Ground water will have to be monitored for any potential
contaminants;
- The socio-economic impact of the project will have to be
evaluated and if deemed negative, will have to be re-mediated;
and
22
- There will have to be an impact report of the work on the local
fauna and flora.
During the initial phases of exploration, there will be no significant costs of
compliance with government regulations.
Employees
We have no employees as of the date of this prospectus other than our two
directors.
Research and Development Expenditures
We have not incurred any other 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 patents or trademarks.
Plan Of Operation
Our plan of operation for the twelve months following the date of this
prospectus is to complete the recommended grid emplacement and geological,
geochemical and geophysical surveys on the Q29 property. We anticipate that the
cost of this program will be approximately $10,000 and will take approximately
60 days, including the interpretation of all data collected.
If results of this initial exploration program indicate that the Q29 property
may contain an economic mineral deposit, we will proceed with a trenching
program in the summer or fall of 2004. We expect the trenching program will cost
approximately $15,000 and take approximately 60 days to complete. We do not have
any arrangement with a qualified geologist to oversee the trenching program.
However, subject to availability, we intend to retain Mr. Edward McCrossan given
his familiarity with the Q29 property.
As well, we anticipate spending an additional $12,500 on professional fees,
including fees payable in connection with the filing of this registration
statement and complying with reporting obligations.
Total expenditures over the next 12 months are therefore expected to be $37,500.
While we have enough funds on hand to complete our initial exploration phase on
the Q29 property, we will require additional funding in order to proceed with
the trenching program and to cover administrative costs. We anticipate that
additional funding will be required in the form of equity financing from the
sale of our common stock. However, we cannot provide investors with any
assurance that we will be able to raise sufficient funding from the sale of our
common stock to fund the second phase of the exploration program. We believe
that debt financing will not be an alternative for funding the complete
exploration program. We do not have any arrangements in place for any future
equity financing.
23
Our cash reserves are not sufficient to meet our obligations for the
next twelve-month period. As a result, we will need to seek additional funding
in the near future. We currently do not have a specific plan of how we will
obtain such funding; however, we anticipate that additional funding will be in
the form of equity financing from the sale of our common stock. Our management
is prepared to provide us with short-term loans, although no such arrangement
has been made. At this time, we cannot provide investors with any assurance that
we will be able to raise sufficient funding from the sale of our common stock or
through a loan from our directors to meet our obligations over the next twelve
months. We do not have any arrangements in place for any future equity
financing.
We have not and do not intend to seek debt financing by way of bank loan, line
of credit or otherwise. Financial institutions do not typically lend money to
mineral exploration companies with no stable source of revenue.
If we do not secure additional funding for exploration expenditures, we may
consider seeking an arrangement with a joint venture partner that would provide
the required funding in exchange for receiving a part interest in the Q29
property. We have not undertaken any efforts to locate a joint venture partner.
There is no guarantee that we will be able to locate a joint venture partner who
will assist us in funding exploration expenditures upon acceptable terms. We may
also pursue acquiring interests in alternate mineral properties in the future.
Results Of Operations For Period Ending March 31, 2004
We did not earn any revenues during the period ending March 31, 2004. We have
not commenced the exploration stage of our business and can provide no assurance
that we will discover economic mineralization on the property.
We incurred operating expenses in the amount of $18,450 for the period from our
inception on May 29, 2002 to March 31, 2004. These operating expenses were
comprised of accounting and audit fees of $9,356, mineral property acquisition
costs of $6,000, legal fees of $2,310, filing fees of $602 and bank charges of
$182.
We have not attained profitable operations and are dependent upon obtaining
financing to pursue exploration activities. For these reasons our auditors
believe that there is substantial doubt that we will be able to continue as a
going concern.
Description Of Property
We own a 100% interest, subject to a 2% net smelter returns royalty, in four
mineral claims comprising the Q29 property. We do not own or lease any property
other than the Q29 property.
Certain Relationships And Related Transactions
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:
* Any of our directors or officers;
* Any person proposed as a nominee for election as a director;
* Any person who beneficially owns, directly or indirectly, shares carrying
more than 10% of the voting rights attached to our outstanding shares of
common stock;
* our sole promoter, Mr. Scott Taylor; and
* Any relative or spouse of any of the foregoing persons who has the same
house as such person.
Market For Common Equity And Related Stockholder Matters
24
No Public Market for Common Stock
There is presently no public market for our common stock. We anticipate applying
for trading of our common stock on the over the counter bulletin board upon the
effectiveness of the registration statement of which this prospectus forms a
part. However, we can provide no assurance that our shares will be traded on the
bulletin board or, if traded, that a public market will materialize.
Stockholders of Our Common Shares
As of the date of this registration statement, we have 30 registered
shareholders.
Rule 144 Shares
A total of 3,000,000 shares of our common stock are available for resale to the
public after December 12, 2004, and an additional 3,000,000 shares are available
for resale after December 15, 2004, in accordance with the volume and trading
limitations of Rule 144 of the Act. In general, under Rule 144 as currently in
effect, a person who has beneficially owned shares of a company's common stock
for at least one year is entitled to sell within any three month period a number
of shares that does not exceed the greater of:
1. 1% of the number of s hares of the company's common stock then outstanding
which, in our case, will equal 98,000, shares as of the date of this
prospectus; or
2. the average weekly trading volume of the company's common stock during the
four calendar weeks preceding the filing of a notice on Form 144 with respect
to the sale.
Sales under Rule 144 are also subject to manner of sale provisions and notice
requirements and to the availability of current public information about the
company.
Under Rule 144(k), a person who is not one of the company's affiliates at any
time during the three months preceding a sale, and who has beneficially owned
the shares proposed to be sold for at least two years, is entitled to sell
shares without complying with the manner of sale, public information, volume
limitation or notice provisions of Rule 144.
As of the date of this prospectus, persons who are our affiliates hold all of
the 6,000,000 shares that may be sold pursuant to Rule 144.
Stock Option Grants
To date, we have not granted any stock options.
Registration Rights
We have not granted registration rights to the selling shareholders or to any
other persons.
Dividends
25
There are no restrictions in our articles of incorporation 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 shareholders who
have preferential rights superior to those receiving the distribution.
We have not declared any dividends, and we do not plan to declare any dividends
in the foreseeable future.
Executive Compensation
Summary Compensation Table
The table below summarizes all compensation awarded to, earned by, or paid to
our executive officers by any person for all services rendered in all capacities
to us for the fiscal period ended ended December 31, 2003 and subsequent to that
period to the date of this prospectus.
Annual Compensation
Other Restricted Options/ LTIP Other
Stock * SARs payouts Comp
Name Title Year Salary Bonus Comp. Awarded (#) ($)
_______________________________________________________________________________
Scott Pres., 2003 $0 0 0 0 0 0
Taylor CEO &
Dir.
Joe Sec., 2003 $0 0 0 0 0 0
Alvaro & Dir.
Stock Option Grants
We have not granted any stock options to the executive officers since our
inception.
Consulting Agreements
We do not have any employment or consulting agreement with Mr. Taylor or
Mr. Alvaro. We do not pay them any amount for acting as a director.
Financial Statements
Index to Financial Statements:
1. Independent Auditor's Report;
2. Audited financial statements for the period from May 29, 2003 (inception) to
December 31, 2003, including:
26
a. Balance Sheet;
b. Statement of Operations;
c. Statement of Cash Flows;
d. Statement of Stockholders' Equity; and
e. Notes to Financial Statements
3. Interim financial statements for the three-month period
Ended March 31, 2004, including:
a. Balance Sheet;
b. Statements of Operations;
c. Statements of Cash Flows;
d. Statement of Stockholders' Equity; and
e. Notes to Financial Statements
27
MONDIAL VENTURES, INC.
(An Exploration Stage Company)
FINANCIAL STATEMENTS
December 31, 2003 and 2002
28
Dohan and Company 7700 North Kendall Drive, 200
Certified Public Accountants Miami, Florida 33156-7564
A Professional Association Telephone (305) 274-1366
Facsimile (305) 274-1368
E-mail info@uscpa.com
Internet www.uscpa.com
INDEPENDENT AUDITOR'S REPORT
Stockholders and Board of Directors
Mondial Ventures, Inc. (An Exploration Stage Company)
Vancouver, BC Canada
We have audited the accompanying balance sheet of Mondial Ventures, Inc. (An
Exploration Stage Company) as of December 31, 2003, and the related statements
of operations, stockholders' equity and cash flows for the year ended December
31, 2003 and the period from inception (May 29, 2002) to December 31, 2002.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. 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 Mondial Ventures, Inc. (An
Exploration Stage Company) at December 31, 2003, and the results of its
operations and its cash flows for the year ended December 31, 2003 and the
period from inception (May 29, 2002) to December 31, 2002 in conformity with
accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company incurred a loss of $5,527 for the year ended
December 31, 2003, which raises substantial doubt about its ability to continue
as a going concern. Management's plans in 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/ Dohan and Company, P.A.
Certified Public Accountants
Miami, Florida
February 25, 2004
29
MONDIAL VENTURES INC.
(An Exploration Stage Company)
BALANCE SHEET
December 31,
2003
ASSETS
------
Current
Cash and cash equivalents $ 29,573
Deferred tax asset less valuation allowance of $1,935 in 2003
-
-----------
Total assets $ 29,573
===========
LIABILITIES
-----------
Current
Accounts payable and accrued liabilities $ 5,500
-----------
STOCKHOLDERS' EQUITY
--------------------
Common stock
75,000,000 shares authorized, $0.001 par value
9,800,000 shares issued and outstanding in 2003 9,800
Additional paid-in capital 19,800
Deficit accumulated during the exploration stage ( 5,527)
-----------
Total stockholders' equity 24,073
-----------
Total liabilities and stockholders' equity $ 29,573
===========
The accompanying notes are an integral part of these financial statements
30
MONDIAL VENTURES, INC.
(An Exploration Stage Company)
STATEMENTS OF OPERATIONS
May 29, 2002
(Inception) to
December 31, December 31,
2003 2003
---- ----
Expenses
Accounting and audit fees $ 5,500 $ 5,500
Bank charges 27 27
--------- ---------
Loss before income taxes $ 5,527 $ 5,527
Provision for income taxes - -
--------- ---------
Net loss $ 5,527 $ 5,527
========= =========
Basic and diluted net loss per share $ 0.00
=========
Weighted average number of shares outstanding 460,384
=========
The accompanying notes are an integral part of these financial statements
31
MONDIAL VENTURES, INC.
(An Exploration Stage Company)
STATEMENTS OF CASH FLOWS
May 29, 2002
(Inception) to
December 31, December 31,
2003 2003
---- ----
Operating Activities
Net loss $( 5,527) $ ( 5,527)
Change in liabilities
Increase in accounts payable and accrued liabilities 5,500 5,500
--------- ---------
Net cash used in operating activities ( 27) ( 27)
--------- ---------
Financing Activity
Proceeds from the issuance of common stock 29,600 29,600
--------- ---------
Net cash from financing activity 29,600 29,600
--------- ---------
Increase in cash and cash equivalents during
period 29,573 29,573
Cash and cash equivalents, beginning of period - -
--------- ---------
Cash and cash equivalents, end of period $ 29,573 $ 29,573
========= =========
Cash paid during period for:
Interest $ - $ -
Income taxes - -
========= =========
The accompanying notes are an integral part of these financial statements
32
MONDIAL VENTURES, INC.
(An Exploration Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
Deficit
Accumulated
Additional During the
Common Shares Paid-in Exploration
--------------------------------
Number Par Value Capital Stage Total
------ --------- ------- ----- -----
Balance, May 29, 2002
(Inception) and December 31,
2002 - $ - $ - $ - $ -
Issuance of common stock
for cash at $0.001 per share,
December 2003 9,600,000 9,600 - - 9,600
Issuance of common stock
for cash at $0.10 per share,
December 2003 200,000 200 19,800 - 20,000
Net loss - - - ( 5,527) ( 5,527)
--------- ------- -------- ----------- ----------
Balance, December 31, 2003 9,800,000 $ 9,800 $ 19,800 $ ( 5,527) $ 24,073
========= ========= ========== =========== ==========
The accompanying notes are an integral part of these financial statements
33
MONDIAL VENTURES, INC.
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2003 and 2002
Note 1 Nature and Continuance of Operations
------------------------------------
The Company was incorporated in the State of Nevada on May 29,
2002 and is in the business of acquisition and exploration of
mineral properties. The Company is considered to be in the
exploration stage.
The Company has acquired a mineral property located in the
Province of British Columbia, Canada and has not yet determined
whether this property contains reserves that are economically
recoverable. The recoverability of amounts from the property will
be dependent upon the discovery of economically recoverable
reserves, confirmation of the Company's interest in the underlying
property, the ability of the Company to obtain necessary financing
to satisfy the expenditure requirements under the property
agreement and to complete the development of the property and upon
future profitable production or proceeds for the sale thereof.
These financial statements have been prepared in conformity with
generally accepted accounting principles in the United States of
America with the on-going assumption that the Company will be able
to realize its assets and discharge its liabilities in the normal
course of business. However, certain conditions noted below
currently exist which raise substantial doubt about the Company's
ability to continue as a going concern. These financial statements
do not include any adjustments to the amounts and classifications
of assets and liabilities that might be necessary should the
Company be unable to continue as a going concern.
The operations of the Company have primarily been funded by the
issuance of capital stock. Continued operations of the Company are
dependent on the Company's ability to complete equity financings
or generate profitable operations in the future. Management's plan
in this regard is to secure additional funds through future equity
financings. Such financings may not be available or may not be
available on reasonable terms.
Management of the Company intends to file an SB2 Registration
Statement, which includes a shareholder offering of 3,800,000
common shares at $0.10 per share. This offering is subject to
regulatory approval.
2003
----
Deficit accumulated during the exploration stage $ (5,527)
Working capital 24,073
========
34
MONDIAL VENTURES, INC.
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2003 and 2002
Note 2 Summary of Significant Accounting Policies
------------------------------------------
The financial statements of the Company have been prepared in
conformity with generally accepted accounting principles in the
United States of America and are stated in US dollars. The
significant accounting policies adopted by the Company are as
follows:
Use of Estimates
----------------
The preparation of financial statements in conformity with
generally accepted accounting principles in the United States of
America requires management to make estimates and assumptions that
affect the reported amount of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amount of revenues and
expenses during the reporting period. Actual results could differ
from these estimates.
Foreign Currency Translation
----------------------------
Transaction amounts denominated in foreign currencies are
translated at exchange rates prevailing at transaction dates.
Carrying values of monetary assets and liabilities are adjusted at
each balance sheet date to reflect the exchange rate at that date.
Non-monetary assets and liabilities are translated at the exchange
rate on the original transaction date. Gains and losses from
restatement of foreign currency monetary assets and liabilities
are included in the statements of operations. Revenues and
expenses are translated at the rates of exchange prevailing on the
dates such items are recognized in the statements of operations.
Comprehensive Income
--------------------
The Company has adopted Statement of Financial Accounting
Standards No.130, "Reporting Comprehensive Income". Comprehensive
income is comprised of foreign currency translation adjustments.
Cash and Cash Equivalents
-------------------------
The Company considers cash held at banks and all highly liquid
investments with original maturities of three months or less to be
cash and cash equivalents.
Mineral Property
----------------
Costs of acquisition, exploration, carrying and retaining unproven
mineral properties are expensed as incurred.
35
MONDIAL VENTURES, INC.
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2003 and 2002
Note 2 Summary of Significant Accounting Policies - (cont'd)
------------------------------------------
Impairment of Long-lived Assets
-------------------------------
Capital assets are reviewed for impairment in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 144,
"Accounting for the Impairment or Disposal of Long-lived Assets",
which was adopted effective January 1, 2002. Under SFAS No. 144,
these assets are tested for recoverability whenever events or
changes in circumstances indicate that their carrying amounts may
not be recoverable. An impairment charge is recognized for the
amount, if any, which the carrying value of the asset exceeds the
fair value.
Income Taxes
------------
A deferred tax asset or liability is recorded for all temporary
differences between financial and tax reporting and net operating
loss carryforwards. Deferred tax expenses (benefits) result from
the net change during the period of deferred tax assets and
liabilities.
Deferred tax assets are reduced by a valuation allowance when, in
the opinion of management, it is more likely than not that some
portion or all of the deferred tax assets will not be realized.
Deferred tax assets and liabilities are adjusted for the effects
of changes in tax laws and rates on the date of enactment.
Net Loss per Share
------------------
Basic net loss per share is computed by dividing net loss
attributable to common stockholders by the weighted average number
of shares of common stock outstanding during the period. Diluted
net loss per share takes into consideration shares of common stock
outstanding (computed under basic net loss per share) and
potentially dilutive shares of common stock.
Recent Accounting Pronouncements
--------------------------------
In April 2003, FASB issued Statements of Financial Accounting
Standards No. 149 "Amendment of Statement 133 on Derivative
Instruments and Hedging Activities" ("SFAS 149"). SFAS 149 amends
and clarifies financial accounting and reporting for derivative
instruments, including certain derivative instruments embedded in
other contracts and for hedging activities under FASB Statement
No. 133 "Accounting for Derivative Instruments and Hedging
Activities". SFAS 149 is generally effective for contracts entered
into or modified after June 30, 2003.
In May 2003, FASB issued Statements of Financial Accounting
Standards No. 150 "Accounting for Certain Financial Instruments
with Characteristics of both Liabilities and Equity" ("SFAS 150").
SFAS 150 establishes standards for how an issuer classifies and
measures certain financial instruments with characteristics of
both liabilities and equity.
36
MONDIAL VENTURES, INC.
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2003 and 2002
Note 2 Summary of Significant Accounting Policies - (cont'd)
------------------------------------------
Recent Accounting Pronouncements - (cont'd)
--------------------------------
SFAS 150 is effective for financial instruments entered into or
modified after May 31, 2003.
The adoption of these new pronouncements is not expected to have a
material effect on the Company's financial position or results of
operations.
Note 3 Mineral Property
----------------
Mineral Claims, Port Alice
--------------------------
Pursuant to a mineral property purchase agreement dated December
22, 2003, the Company acquired a 100% undivided right, title and
interest in and to four mineral claims located in Port Alice,
British Columbia for $6,000, paid by the Company upon closing of
this agreement on January 5, 2004. The property is subject to a 2%
net smelter returns royalty payable to the vendor.
As the claims do not contain any known reserves, the acquisition
costs will be expensed during the year ended December 31, 2004.
Note 4 Common Stock
------------
In December 2003, the Company issued 9,600,000 shares of common
stock at a price of $0.001 per share for total proceeds of $9,600.
In December 2003, the Company issued 200,000 shares of common
stock at a price of $0.10 per share for total proceeds of $20,000.
Note 5 Income Taxes
------------
A reconciliation of income taxes at statutory rates with the
reported taxes is as follows:
2003
----
Net loss $ (5,527)
=======
Expected income tax recovery $ 1,935
Unrecognized current benefit of operating losses (1,935)
-------
Total income taxes -
=======
37
MONDIAL VENTURES, INC.
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2003 and 2002
Note 5 Income Taxes - (cont'd)
------------
The significant components of the Company's future income tax
assets are as follows:
2003
----
Future income tax assets
Operating loss carryforwards $ 1,935
------
1,935
Valuation allowance (1,935)
------
Net future income tax asset -
======
The Company has available for deduction, against future taxable
income operating losses of approximately $5,500. These losses, if
not utilized,will expire in 2023. Future tax benefits which may
arise as a result of these operating losses have been offset by a
valuation allowance and have not been recognized in these
financial statements.
Note 6 Financial Instruments
---------------------
The Company's financial instruments consist of cash and cash
equivalents and accounts payable and accrued liabilities. Unless
otherwise noted, it is management's opinion that the Company is
not exposed to significant interest, currency or credit risks
arising from these financial instruments. The fair value of these
financial instruments approximates their carrying values, unless
otherwise noted.
Note 7 Segment Information
-------------------
The Company operates in one reportable segment, being the
exploration of mineral properties, in Canada.
38
MONDIAL VENTURES, INC.
(An Exploration Stage Company)
FINANCIAL STATEMENTS
March 31, 2004 and 2003
MONDIAL VENTURES INC.
(An Exploration Stage Company)
BALANCE SHEET
(Unaudited)
March 31,
2004
----
ASSETS
------
Current
Cash and cash equivalents $ 18,525
Deferred tax asset less valuation allowance of $6,458
-
----------------
Total assets $ 18,525
================
LIABILITIES
-----------
Current
Accounts payable and accrued liabilities $ 7,375
----------------
STOCKHOLDERS' EQUITY
--------------------
Common stock
75,000,000 shares authorized, $0.001 par value
9,800,000 shares issued and outstanding 9,800
Additional paid-in capital 19,800
Deficit accumulated during the exploration stage ( 18,450)
----------------
Total stockholders' equity 11,150
----------------
Total liabilities and stockholders' equity $ 18,525
================
The accompanying notes are an integral part of these financial statements
F-1
MONDIAL VENTURES, INC.
(An Exploration Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
-----------
May 29, 2002
(Inception) to
March 31, March 31, March 31,
2004 2003 2004
---- ---- ----
Expenses
Accounting and audit fees $ 3,856 $ - $ 9,356
Bank charges 155 - 182
Filing 602 - 602
Legal 2,310 - 2,310
Mineral property 6,000 - 6,000
------------- ---------- -----------
Loss before income taxes 12,923 - 18,450
Provision for income taxes - - -
------------- ----------- -----------
Net loss $ ( 12,923) $ - $ ( 18,450)
============= =========== ===========
Basic and diluted net loss per share
$ 0.01 $ 0.00
============= ===========
Weighted average number of shares outstanding
9,800,000 -
============= ===========
The accompanying notes are an integral part of these financial statements
F-2
MONDIAL VENTURES, INC.
(An Exploration Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
-----------
May 29, 2002
(Inception) to
March 31, March 31, March 31,
2004 2003 2004
---- ---- ----
Operating Activities
Net loss $ ( 12,923) $ - $ ( 18,450)
-------------- ------------- --------------
Change in liabilities
Increase in accounts payable and accrued
liabilities 1,875 - 7,375
-------------- -------------- --------------
Net cash used in operating activities ( 11,048) - ( 11,075)
-------------- -------------- --------------
Financing Activity
Proceeds from the issuance of common stock - - 29,600
-------------- -------------- --------------
Net cash from financing activity - - 29,600
-------------- -------------- ---------------
Increase (decrease) in cash and cash equivalents
during period ( 11,048) - 18,525
Cash and cash equivalents, beginning of period 29,573 - -
-------------- -------------- --------------
Cash and cash equivalents, end of period $ 18,525 $ - $ 18,525
============== ============== ==============
Cash paid during period for:
Interest $ - $ - $ -
Income taxes - - -
=============== =============== ==============
The accompanying notes are an integral part of these financial statements
F-3
MONDIAL VENTURES, INC.
(An Exploration Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited)
-----------
Deficit
Accumulated
Additional During the
Common Shares Paid-in Exploration
--------------------------------
Number Par Value Capital Stage Total
------ --------- ------- ----- -----
Balance, May 29, 2002
(Inception) and December 31,
2002 - $ - $ - $ - $ -
Issuance of common stock
for cash at $0.001 per share,
December 2003 9,600,000 9,600 - - 9,600
Issuance of common stock
for cash at $0.10 per share,
December 2003 200,000 200 19,800 - 20,000
Net loss for the period - - - ( 5,527) ( 5,527)
---------- ---------- --------- ----------- ----------
Balance, December 31, 2003 9,800,000 9,800 19,800 ( 5,527) 24,073
Net loss for the period - - - ( 12,923) ( 12,923)
---------- ----------- --------- ----------- ----------
Balance, March 31, 2004 9,800,000 $ 9,800 $ 19,800 $ ( 18,450) $ 11,150
========== =========== ========== =========== ==========
The accompanying notes are an integral part of these financial statements
F-4
MONDIAL VENTURES, INC.
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 2004
(Unaudited)
-----------
Note 1 Nature and Continuance of Operations
------------------------------------
The Company was incorporated in the State of Nevada on May 29,
2002 and is in the business of acquisition and exploration of
mineral properties. The Company is considered to be in the
exploration stage.
The Company has acquired a mineral property located in the
Province of British Columbia, Canada and has not yet determined
whether this property contains reserves that are economically
recoverable. The recoverability of amounts from the property will
be dependent upon the discovery of economically recoverable
reserves, confirmation of the Company's interest in the underlying
property, the ability of the Company to obtain necessary financing
to satisfy the expenditure requirements under the property
agreement and to complete the development of the property and upon
future profitable production or proceeds for the sale thereof.
These financial statements have been prepared in conformity with
generally accepted accounting principles in the United States of
America with the on-going assumption that the Company will be able
to realize its assets and discharge its liabilities in the normal
course of business. However, certain conditions noted below
currently exist which raise substantial doubt about the Company's
ability to continue as a going concern. These financial statements
do not include any adjustments to the amounts and classifications
of assets and liabilities that might be necessary should the
Company be unable to continue as a going concern.
2004
----
Deficit accumulated during the exploration stage $ (18,450)
Working capital 11,150
===========
The operations of the Company have primarily been funded by the
issuance of capital stock. Continued operations of the Company are
dependent on the Company's ability to complete equity financings
or generate profitable operations in the future. Management's plan
in this regard is to secure additional funds through future equity
financings. Such financings may not be available or may not be
available on reasonable terms.
Management of the Company filed an SB2 Registration Statement,
which includes a shareholder offering of 3,800,000 common shares
at $0.10 per share. This offering is subject to regulatory
approval.
F-5
MONDIAL VENTURES, INC.
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 2004
(Unaudited)
-----------
Note 1 Nature and Continuance of Operations - Cont'd
---------------------------------------------
Interim reporting
------------------
The accompanying unaudited interim financial statements have been
prepared by the Company in confirmity with generally accepted
accounting principles in the Unated States of America for interim
financial information. In the opinion of management, the
accompanying unaudited interim financial statements contain all
adjustments necessary (consisting of normal recurring accruals) to
present fairly the financial information contained therein. The
accompanying unaudited interim financial statements do not include
all disclosures required by generally accepted accounting
principles in the United States of America. The results of
operations for the three-month period ended March 31, 2004 are not
necessarily indicative of the results to be expected for the year
ending December 31, 2004.
Note 2 Summary of Significant Accounting Policies
------------------------------------------
The significant accounting policies adopted by the Company are as
follows:
Use of Estimates
----------------
The preparation of financial statements in conformity with
generally accepted accounting principles in the United States of
America requires management to make estimates and assumptions that
affect the reported amount of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amount of revenues and
expenses during the reporting period. Actual results could differ
from these estimates.
Foreign Currency Translation
----------------------------
Transaction amounts denominated in foreign currencies are
translated at exchange rates prevailing at transaction dates.
Carrying values of monetary assets and liabilities are adjusted at
each balance sheet date to reflect the exchange rate at that date.
Non-monetary assets and liabilities are translated at the exchange
rate on the original transaction date. Gains and losses from
restatement of foreign currency monetary assets and liabilities
are included in the statements of operations. Revenues and
expenses are translated at the rates of exchange prevailing on the
dates such items are recognized in the statements of operations.
Comprehensive Income
--------------------
The Company has adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income".
Comprehensive income is comprised of foreign currency translation
adjustments.
F-6
MONDIAL VENTURES, INC.
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 2004
(Unaudited)
-----------
Note 2 Summary of Significant Accounting Policies - (cont'd)
------------------------------------------
Cash and Cash Equivalents
-------------------------
The Company considers cash held at banks and all highly liquid
investments with original maturities of three months or less to be
cash and cash equivalents.
Mineral Property
----------------
Costs of acquisition, exploration, carrying and retaining unproven
mineral properties are expensed as incurred.
Impairment of Long-lived Assets
-------------------------------
Capital assets are reviewed for impairment in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 144,
"Accounting for the Impairment or Disposal of Long-lived Assets",
which was adopted effective January 1, 2002. Under SFAS No. 144,
these assets are tested for recoverability whenever events or
changes in circumstances indicate that their carrying amounts may
not be recoverable. An impairment charge is recognized for the
amount, if any, which the carrying value of the asset exceeds the
fair value.
Income Taxes
------------
A deferred tax asset or liability is recorded for all temporary
differences between financial and tax reporting and net operating
loss carryforwards. Deferred tax expenses (benefits) result from
the net change during the period of deferred tax assets and
liabilities.
Deferred tax assets are reduced by a valuation allowance when, in
the opinion of management, it is more likely than not that some
portion or all of the deferred tax assets will not be realized.
Deferred tax assets and liabilities are adjusted for the effects
of changes in tax laws and rates on the date of enactment.
Net Loss per Share
------------------
Basic net loss per share is computed by dividing net loss
attributable to common stockholders by the weighted average number
of shares of common stock outstanding during the period. Diluted
net loss per share takes into consideration shares of common stock
outstanding (computed under basic net loss per share) and
potentially dilutive shares of common stock.
Recent Accounting Pronouncements
--------------------------------
There are no new pronouncements that are expected to have a
material effect on the Company's financial position or results of
operations.
F-7
MONDIAL VENTURES, INC.
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 2004
(Unaudited)
-----------
Note 3 Mineral Property
Mineral Claims, Port Alice
Pursuant to a mineral property purchase agreement dated December
22, 2003, the Company acquired a 100% undivided right, title and
interest in and to four mineral claims located in Port Alice,
British Columbia for $6,000, paid by the Company upon closing of
this agreement on January 5, 2004. The property is subject to a 2%
net smelter returns royalty payable to the vendor.
As the claims do not contain any known reserves, the acquisition
costs were expensed during the year ended December 31, 2003.
Note 4 Financial Instruments
The Company's financial instruments consist of cash and cash
equivalents and accounts payable and accrued liabilities. Unless
otherwise noted, it is management's opinion that the Company is
not exposed to significant interest, currency or credit risks
arising from these financial instruments. The fair value of these
financial instruments approximates their carrying values, unless
otherwise noted.
Note 5 Segment Information
The Company operates in one reportable segment, being the
exploration of mineral properties, in Canada.
F-8
Changes In And Disagreements With Accountants
We have had no changes in or disagreements with our accountants.
Available Information
We have filed a registration statement on form SB-2 under the Securities Act of
1933 with the Securities and Exchange Commission with respect to the shares of
our common stock offered through this prospectus. This prospectus is filed as a
part of that registration statement, but does not contain all of the information
contained in the registration statement and exhibits. Statements made in the
registration statement are summaries of the material terms of the referenced
contracts, agreements or documents of the company. We refer you to our
registration statement and each exhibit attached to it for a more detailed
description of matters involving the company, and the statements we have made in
this prospectus are qualified in their entirety by reference to these additional
materials. You may inspect the registration statement, exhibits and schedules
filed with the Securities and Exchange Commission at the Commission's principal
office in Washington, D.C. Copies of all or any part of the registration
statement may be obtained from the Public Reference Section of the Securities
and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. Please
call the Commission at 1-800-SEC-0330 for further information on the operation
of the public reference rooms. The Securities and Exchange Commission also
maintains a web site at http://www.sec.gov that contains reports, proxy
statements and information regarding registrants that file electronically with
the Commission. Our registration statement and the referenced exhibits can also
be found on this site.
39
Until ____, all dealers that effect transactions in these securities whether or
not participating in this offering, may be required to deliver a prospectus.
This is in addition to the dealer's obligation to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
Part II
Information Not Required In The Prospectus
Indemnification Of Directors And Officers
Our officers and directors are indemnified as provided by the Nevada Revised
Statutes and our bylaws.
Under the NRS, director immunity from liability to a company or its shareholders
for monetary liabilities applies automatically unless it is specifically limited
by a company's articles of incorporation that is not the case with our articles
of incorporation. Excepted from that immunity are:
(1) a willful failure to deal fairly with the company or its
shareholders in connection with a matter in which the director
has a material conflict of interest;
(2) a violation of criminal law (unless the director had reasonable
cause to believe that his or her conduct was lawful or no
reasonable cause to believe that his or her conduct was
unlawful);
(3) a transaction from which the director derived an improper
personal profit; and
(4) willful misconduct.
Our bylaws provide that we will indemnify our directors and officers to the
fullest extent not prohibited by Nevada law; provided, however, that we may
modify the extent of such indemnification by individual contracts with our
directors and officers; and, provided, further, that we shall not be required to
indemnify any director or officer in connection with any proceeding (or part
thereof) initiated by such person unless:
(1) such indemnification is expressly required to be made by law;
(2) the proceeding was authorized by our Board of Directors;
(3) such indemnification is provided by us, in our sole discretion,
pursuant to the powers vested us under Nevada law; or
(4) such indemnification is required to be made pursuant to the
bylaws.
Our bylaws provide that we will advance all expenses incurred to any person who
40
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, by reason of the fact that he is or was our director or
officer, or is or was serving at our request as a director or executive officer
of another company, partnership, joint venture, trust or other enterprise, prior
to the final disposition of the proceeding, promptly following request. This
advanced of expenses is to be made upon receipt of an undertaking by or on
behalf of such person to repay said amounts should it be ultimately determined
that the person was not entitled to be indemnified under our bylaws or
otherwise.
Our bylaws also provide that no advance shall be made by us to any officer in
any action, suit or proceeding, whether civil, criminal, administrative or
investigative, if a determination is reasonably and promptly made: (a) by the
board of directors by a majority vote of a quorum consisting of directors who
were not parties to the proceeding; or (b) if such quorum is not obtainable, or,
even if obtainable, a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, that the facts known to the
decision- making party at the time such determination is made demonstrate
clearly and convincingly that such person acted in bad faith or in a manner that
such person did not believe to be in or not opposed to our best interests.
Other Expenses Of Issuance And Distribution
The estimated costs of this offering are as follows:
Securities and Exchange Commission registration fee $ 48.15
Transfer Agent Fees $ 1,000.00
Accounting fees and expenses $ 5,000.00
Legal fees and expenses $ 5,000.00
Edgar filing fees $ 1,500.00
-----------
Total $ 12,548.15
===========
All amounts are estimates other than the Commission's registration fee.
We are paying all expenses of the offering listed above. No portion of these
expenses will be borne by the selling shareholders. The selling shareholders,
however, will pay any other expenses incurred in selling their common stock,
including any brokerage commissions or costs of sale.
Recent Sales Of Unregistered Securities
We issued 3,000,000 shares of our common stock to Mr. Scott Taylor on
December 12, 2003 and 3,000,000 shares to Mr. Joe Alvaro on December 15, 2003.
Mr. Taylor is our president, chief executive officer and a director. Mr. Alvaro
is our secretary, treasurer, principal financial officer and a director.
Mr. Taylor and Mr. Alvaro acquired these 6,000,000 shares at a price of $0.001
per share for total proceeds to us of $6,000.00. These shares were issued
pursuant to Regulations S of the Securities Act of 1933 (the "Securities Act")
and are restricted shares as defined in the Securities Act. Appropriate legends
were affixed to the stock certificates representing these shares.
We completed an offering of 3,600,000 shares of our common stock at a price of
$0.001 per share to the following eight purchasers on December 19, 2003:
Name of Subscriber Number of Shares
Alicia Katz 450,000
Andrew Wood 450,000
Stephanie Hayes 450,000
Janet Ann Bowell 450,000
Andrew Orchard 450,000
Estuardo Ventura 450,000
Alexis Tsparas 450,000
Josh Biele 450,000
The total amount received from this offering was $3,600. We completed this
offering pursuant to Regulation S of the Securities Act.
We completed an offering of 200,000 shares of our common stock at a price of
$0.10 per share to the following 20 purchasers on December 31, 2003:
Name of Subscriber Number of Shares
Will Biele 10,000
Eric Bull 10,000
Anna Morris 10,000
Michael Killam 10,000
Sebastien Crete 10,000
Ermalinda Boquer 10,000
John Bull 10,000
Ryan Cheney 10,000
David Taylor 10,000
Sukjae Yim 10,000
Laura Biffen 10,000
Stephane Senez 10,000
Andres Stroll 10,000
Jake Nachum 10,000
Jason Nachum 10,000
Alain Themens 10,000
Graeme Coutts 10,000
Peter Theodoropoulos 10,000
David Clifton 10,000
Katie McMahon 10,000
41
The total amount received from this offering was $20,000. We completed this
offering pursuant to Regulation S of the Securities Act.
With respect to each of the above offerings completed pursuant to Regulation S
of the Securities Act, each purchaser represented to us that he was a non-U.S.
person as defined in Regulation S. We did not engage in a distribution of this
offering in the United States. Each purchaser represented his or her intention
to acquire the securities for investment only and not with a view toward
distribution. Appropriate legends will be affixed to the stock certificates
issued to each purchaser in accordance with Regulation S.
Each investor was given adequate access to sufficient information about us to
make an informed investment decision. 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
purchasers.
Exhibits
Exhibit
Number Description
3.1 Articles of Incorporation*
3.2 Bylaws*
5.1 Legal opinion of Warren J. Soloski, with consent to use*
10.1 Mineral Property Purchase Agreement*
23.1 Consent of Dohan and Company, Certified Public Accountants
23.2 Consent of Edward O. McCrossan, Professional
Geologist
99.1 Record of 2 Post Claims and annual filing for Q29
property
99.2 Location Map
* Filed as an exhibit to our registration statement on Form SB-2
dated March 23, 2004
The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(b) To reflect in the prospectus any facts or events arising after the
effective date of this registration statement, or most recent
post-effective amendment, which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
registration statement; Notwithstanding the forgoing, 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
42
any deviation from the 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 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(c) To include any material information with respect to the plan of
distribution not previously disclosed in this registration statement
or any material change to such information in the registration
statement.
2. That, for the purpose of 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 herein, and the
offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
3. To remove from registration by means of a post-effective amendment any of
the securities being registered hereby which remain unsold at the
termination of the offering.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to our directors, officers and controlling persons pursuant to
the provisions above, or otherwise, we have been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against
public policy as expressed in the Securities Act, and is, therefore,
unenforceable.
In the event that a claim for indemnification against such liabilities, other
than the payment by us of expenses incurred or paid by one of our directors,
officers, or controlling persons in the successful defense of any action, suit
or proceeding, is asserted by one of our directors, officers, or controlling
person sin connection with the securities being registered, we 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 is against public policy as expressed in the Securities Act, and
we will be governed by the final adjudication of such issue.
Signatures
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of
Vancouver, Province of British Columbia on July 16, 2004.
Mondial Ventures, Inc.
By:/s/ Scott Taylor
------------------------------
Scott Taylor, President, Chief
Executive Officer and Director
43
Power of Attorney
ALL MEN BY THESE PRESENT, that each person whose signature appears below
constitutes and appoints Scott Taylor, his 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 pre- or
post-effective amendments to this registration statement, 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 their or his 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.
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 CAPACITY IN WHICH SIGNED DATE
/S/ Scott Taylor President, Chief Executive July 16, 2004
- ----------------------- Officer and Director
Scott Taylor
/s/ Joe Alvaro Secretary, Treasurer, July 16, 2004
- ----------------------- Principal Accounting
Joe Alvaro Officer and Director