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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
AMENDMENT NUMBER THREE
SEC FILE NUMBER: 333-124632
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
SHEPARD INC.
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(Name of small business issuer in its charter)
NEVADA 1000 Applied For
- ------------- --------------------------- ----------------
(State or (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification No.)
incorporation or
organization)
Shepard Inc.
Michael Eyre, President
470 Granville Street, Suite 318
Vancouver, British Columbia
Canada V6C 1V5
Telephone: (604) 719-8129
Facsimile: (604) 688-8872
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(Address and telephone number of principal executive offices)
Val-U-Corp Services, Inc.
1802 North Carson Street, Suite 212
Carson City, Nevada, 89701
Telephone: 775-684-5708
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(Name, address and telephone number of agent for service)
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, please
check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering.
|__|
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |__|
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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 box. |__|
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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 $257,000 $0.10 $ 257,000 $23.64
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(1) Based on the last sales price on December 31, 2004
(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 September 30, 2005
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PROSPECTUS
SHEPARD INC.
2,570,000 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.
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The purchase of the securities offered through this prospectus involves a high
degree of risk. SEE SECTION ENTITLED "RISK FACTORS" ON PAGES 6-10
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. In order to have our shares quoted on the
OTC Bulletin Board, a market maker must file an application on our behalf in
order to make a market for our common stock. We determined this offering price
based upon the price of the last sale of our common stock to investors.
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.
The Date Of This Prospectus Is: September 30, 2005
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Table Of Contents
PAGE
Summary ....................................................... 4
Risk Factors .................................................. 5
- If we do not obtain additional financing, our business
will fail ................................................ 5
- Because we have not commenced business operations, we face
a high risk of business failure .......................... 6
- Because of the speculative nature of exploration of mining
properties, there is substantial risk that our business
will fail ................................................ 6
- We need to continue as a going concern if our business is
to succeed. Our independent auditor has raised doubt about
our ability to continue as a going concern................ 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 ....................... 7
- Even if we discover commercial reserves of precious metals
on the CB-1 Property, we may not be able to
successfully obtain commercial production ................ 7
- Because our directors own 53.86% of our outstanding
stock, they could control and make corporate decisions that
may be disadvantageous to other minority stockholders ..... 7
- Because our president has other business interests,
he may not be able or willing to devote a sufficient
amount of time to our business operations, causing our
business to fail ......................................... 8
- Because management has no technical experience in mineral
exploration, our business has a high risk of failure...... 8
- If a market for our common stock does not develop,
shareholders may be unable to sell their shares .......... 8
- A purchaser is purchasing penny stock which limits the
ability to sell stock .................................... 8
Use of Proceeds ............................................... 9
Determination of Offering Price ............................... 9
Dilution ...................................................... 9
Selling Securityholders ....................................... 9
Plan of Distribution .......................................... 12
Legal Proceedings ............................................. 14
Directors, Executive Officers, Promoters and Control Persons.. 14
Security Ownership of Certain Beneficial Owners and Management 16
Description of Securities ..................................... 16
Interest of Named Experts and Counsel ......................... 17
Disclosure of Commission Position of Indemnification for
Securities Act Liabilities .................................... 18
Organization Within Last Five Years ........................... 18
Description of Business ....................................... 18
Plan of Operations ............................................ 23
Description of Property ....................................... 25
Certain Relationships and Related Transactions ................ 25
Market for Common Equity and Related Stockholder Matters ...... 25
Executive Compensation ........................................ 26
Financial Statements .......................................... 27
Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure........................................... 43
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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 exploration target, the CB-1
mineral claim located in the South Mining District, eight kilometers northeast
of Yellowknife, Northwest Territories, Canada. We acquired a 100% interest,
subject to a 2.5% production royalty, in the CB-1 claim from WGT Consultants
(NWT) Ltd., a private company owned by Peter Hill.
Our objective is to conduct mineral exploration activities on the CB-1 claim in
order to assess whether it possesses economic reserves of gold. We have not yet
identified any economic mineralization on the CB-1 claim. Our proposed
exploration program is designed to search for an economic mineral deposit.
We were incorporated on March 9, 2004, under the laws of the state of Nevada. We
have not received any revenue since our inception and, as a result, our auditors
have expressed doubt about our ability to continue as a going concern. In
addition, our management has no technical experience in geology or mineral
exploration and only devotes 20% of his business time to our affairs.
Our principal offices are located at 470 Granville Street, Suite 318, Vancouver,
British Columbia, Canada. Our telephone number is (604)719-8129.
The Offering:
Securities Being Offered Up to 2,570,000 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
2,570,000 shares of common stock have been sold,
the shares no longer need to be registered to be
sold or we decide to terminate the registration
of the shares.
Securities Issued
And to be Issued 5,570,000 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.
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Use of Proceeds We will not receive any proceeds from the sale of
the common stock by the selling shareholders.
Absence of Public Market There is currently no public market for our common
stock and no guarantee that one will develop. As a
result, our shareholders may have difficulty
finding purchasers for our stock when they wish to
sell it and not receive value for their investment.
Summary Financial Information
Balance Sheet
December 31, 2004 June 30, 2005
(audited) (unaudited)
Cash $34,939 $27,264
Total Assets $34,939 $27,264
Liabilities $4,633 $1,825
Total Stockholders' Equity $30,306 $25,439
Statement of Operations
From Incorporation on
March 9, 2004 to June 30, 2005
(unaudited)
Revenue $ 0
Net Loss and Deficit ($9,561)
Our fiscal year end is December 31.
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, OUT BUSINESS WILL FAIL.
Our current operating funds are less than necessary to complete all intended
exploration of the CB-1 claim, and therefore we will need to obtain additional
financing in order to complete our business plan. As of September 30, 2005, we
had cash in the amount of $26,680. We currently do not have any operations and
we have no income. As well, we will not receive any funds from this
registration.
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Our business plan calls for significant expenses in connection with the
exploration of the CB-1 claim. While we have sufficient funds to conduct the
recommended phase one exploration program on the claim, which is estimated to
cost $5,000, we will need additional funds to complete the $20,000 phase two
exploration program. We will also require additional financing if the costs of
the exploration of the CB-1 claim are greater than anticipated. Even after
completing all proposed exploration, we will not know if we have a commercially
viable mineral deposit.
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 may not be able to find such
financing if required.
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 advances from related parties and joint venture
or sale of a partial interest in the CB-1 claim 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.
We have not yet commenced exploration on the CB-1 claim. Accordingly, we have no
way to evaluate the likelihood that our business will be successful. We were
incorporated on March 9, 2004 and to date have been involved primarily in
organizational activities and the acquisition of the CB-1 claim. 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 CB-1
Property and the production of minerals from the claim, we will not be able to
earn profits or continue operations.
There is no history upon which to base any assumption as to the likelihood that
we will prove successful, and it is doubtful that we will generate any operating
revenues or ever achieve profitable operations. If we are unsuccessful in
addressing these risks, our business will most likely fail.
BECAUSE OF THE SPECULATIVE NATURE OF EXPLORATION OF MINING PROPERTIES, THERE IS
A SUBSTANTIAL RISK THAT OUR BUSINESS WILL FAIL.
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The search for valuable minerals as a business is extremely risky. The
likelihood of our mineral claim containing economic mineralization or reserves
of gold is extremely remote. Exploration for minerals is a speculative venture
necessarily involving substantial risk. In all probability, the CB-1 claim does
not contain any reserves and funds that we spend on exploration will be lost. As
well, 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.
WE NEED TO CONTINUE AS A GOING CONCERN IF OUR BUSINESS IS TO SUCCEED. OUR
INDEPENDENT AUDITOR HAS RAISED SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE
AS A GOING CONCERN.
The report of our independent accountant to our audited financial statements for
the period ended December 31, 2004 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 that we have no source of revenue and
our dependence upon obtaining adequate financing. If we are not able to continue
as a going concern, it is likely investors will lose all of their investment.
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 CB-1 CLAIM, WE
MAY NOT BE ABLE TO SUCCESSFULLY COMMENCE COMMERCIAL PRODUCTION.
The CB-1 claim does not contain any known bodies of mineralization. If our
exploration programs are successful in establishing gold of commercial tonnage
and grade, we will require additional funds in order to place the CB-1 claim
into commercial production. We may not be able to obtain such financing.
BECAUSE OUR DIRECTORS OWN 53.86% OF OUR OUTSTANDING COMMON STOCK, THEY COULD
MAKE AND CONTROL CORPORATE DECISIONS THAT MAY BE DISADVANTAGEOUS TO OTHER
MINORITY SHAREHOLDERS.
Our directors own approximately 53.86% 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.
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BECAUSE OUR PRESIDENT HAS OTHER BUSINESS INTERESTS, HE MAY NOT BE ABLE OR
WILLING TO DEVOTE A SUFFICIENT AMOUNT OF TIME TO OUR BUSINESS OPERATIONS,
CAUSING OUR BUSINESS TO FAIL.
Our president, Mr. Michael Eyre, only spends approximately 20% of his business
time providing his services to us. While Mr. Eyre presently possesses adequate
time to attend to our interests, it is possible that the demands on Mr. Eyre
from his other obligations could increase with the result that he would no
longer be able to devote sufficient time to the management of our business.
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 and
specifically in the areas of exploring for, starting and operating a mine. As a
result, we may not be able to recognize and take advantage of potential
acquisition and exploration opportunities in the 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, earnings and ultimate financial success may
suffer irreparable harm as a result.
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 no certainty 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. Our shares may never trade on
the bulletin board. 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 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, thus limiting investment liquidity. 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
Exchange Act. Rather than creating a need to comply with those rules, some
broker-dealers will refuse to attempt to sell penny stock.
Please refer to the "Plan of Distribution" section for a more detailed
discussion of penny stock and related broker-dealer restrictions.
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
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should not place too much reliance on these forward-looking statements. Our
actual results may differ materially from those anticipated in these
forward-looking statements 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.
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 Securityholders
The selling shareholders named in this prospectus are offering all of the
2,570,000 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 and pursuant to a mineral CB-1
Property purchase agreement. The shares include the following:
1. 2,500,000 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 September
23, 2004;
2. 70,000 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 September 30, 2004;
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.
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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
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M. Elaine Burns 100,000 100,000 Nil Nil
2573 East Broadway
Vancouver, BC
Jim San Severino 100,000 100,000 Nil Nil
1126 West 12th St., Ste 6
Vancouver, BC
Karin Christopher 100,000 100,000 Nil Nil
1126 W 12th Ave, Ste 2
Vancouver, BC
Michael Loughlin 100,000 100,000 Nil Nil
835 Younette Drive
West Vancouver, BC
Kelly Jordan 100,000 100,000 Nil Nil
1308 West 50th Avenue
Vancouver, BC
Michael Sweeney 100,000 100,000 Nil Nil
3018 Point Grey Road
Suite 2
Vancouver, BC
Jim Callaghen 100,000 100,000 Nil Nil
1351 West 8th Avenue
Vancouver, BC
David Matzele 100,000 100,000 Nil Nil
7322 Dr. Edward Street
Vancouver, BC
Norman Dumont 100,000 100,000 Nil Nil
333 Wethersfield, Ste 106
Vancouver, BC
Tyrone McClay 100,000 100,000 Nil Nil
1839 West 5th Ave, Ste 2
Vancouver, BC
Theresa Bajan 100,000 100,000 Nil Nil
2509 McBain Avenue
Vancouver, BC
Gordon Burns 100,000 100,000 Nil Nil
2173 East Broadway
Vancouver, BC
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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
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Roberto Picchi 100,000 100,000 Nil Nil
11 E 11th Ave, Ste 209
Vancouver, BC
Kaylee Waters 100,000 100,000 Nil Nil
1308 West 50th Avenue
Vancouver, BC
Joanne Finlayson 100,000 100,000 Nil Nil
2638 Charles Street
Vancouver, BC
Andrew Statham 100,000 100,000 Nil Nil
5886 Falcon Road
West Vancouver, BC
Traci Deyrmenjian 100,000 100,000 Nil Nil
4292 West 10th Avenue
Vancouver, BC
Andre Stephen 100,000 100,000 Nil Nil
3985 Cambie St,Ste 1
Vancouver, BC
Andre Simon Gregorian 100,000 100,000 Nil Nil
819 Hamilton St, Ste 1401
Vancouver, BC
Ara Simon Gregorian 100,000 100,000 Nil Nil
1480 Esquimalt Ave, Ste 73
West Vancouver, BC
Gordon Sanders 100,000 100,000 Nil Nil
20391 Westminster Highway
Richmond, BC
Heidi Herbers 100,000 100,000 Nil Nil
253 Boyne Street
New Westminster, BC
Lisa Bacica 100,000 100,000 Nil Nil
620 Queens Ave, Suite 56
New Westminster, BC
Aurelia Stoica 100,000 100,000 Nil Nil
420 Granville St, Ste 316
Vancouver, BC
Artin Deyrmenjian 100,000 100,000 Nil Nil
3415 West 15th Avenue
Vancouver, BC
Garo Deyrmenjian 10,000 10,000 Nil Nil
4292 West 10th Avenue
Vancouver, BC
Tony Biamonte 10,000 10,000 Nil Nil
620 Queens Ave, Ste 56
New Westminster, BC
Erin Williams 10,000 10,000 Nil Nil
353 Hickey Drive
Coquitlam, BC
Roni-Lyn Sanders 10,000 10,000 Nil Nil
353 Hickey Drive
Coquitlam, BC V3K 5Z5
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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
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Jason Birmingham 10,000 10,000 Nil Nil
212 Davie St, Suite 402
Vancouver, BC
Gerard Murphy 10,000 10,000 Nil Nil
3803 West 26th Avenue
Vancouver, BC
Jeanette Murphy 10,000 10,000 Nil Nil
3803 West 26th Avenue
Vancouver, BC
Each of the above shareholders beneficially owns and has sole voting and
investment over all shares or rights to the shares registered in his or her
name. The numbers in this table assume that none of the selling shareholders
sells shares of common stock not being offered in this prospectus or purchases
additional shares of common stock, and assumes that all shares offered are sold.
The percentages are based on 5,570,000 shares of common stock outstanding on the
date of this prospectus.
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;
(2) has ever been one of our officers or directors; or
(3) is a broker-dealer or affiliate of a broker dealer.
Plan Of Distribution
There is currently no market for our common stock and we cannot give any
assurance that the shares offered will have a market value. In addition, there
is no guarantee that our shares may be resold at the offered price if and when
an active secondary market might develop or that a public market for our shares
may be sustained, even if developed.
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We expect to make application to have our shares quoted for trading following
the effective date of our registration statement. We must retain a market maker
to file such an application on our behalf and address any comments from the NASD
regarding the submission before our shares will be quoted for trading. While
this process typically takes two to three months from the date the application
is filed, there is no guarantee that we will be successful in obtaining the
quotation.
We have not engaged a market maker to apply for quotation on the OTC Bulletin
Board and can provide no assurance that we will find a market maker who will
file the application.
While a quotation on the OTC Bulletin Board should increase our liquidity, there
is no guarantee that stockholders will be able to sell our shares for an
acceptable price.
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. The shares may also be sold in compliance with the Securities and
Exchange Commission's Rule 144.
We are bearing all costs relating to the registration of the common stock. These
are estimated to be $12,500. 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 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
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).
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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;
* 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 information 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 proceeding with any transaction in
a penny stock, the customer:
* with bid and offer quotations for the penny stock;
* details of 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 North 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:
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Directors:
Name of Director Age
Michael Eyre 43
Glen MacDonald 56
Executive Officers:
Name of Officer Age Office
- --------------------- ----- -------
Michael Eyre 43 President and Chief
Executive Officer
Glen MacDonald 56 Treasurer and Secretary
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.
Mr. Michael Eyre has acted as our President, chief executive officer, secretary,
and as a director since our incorporation on March 9, 2004. Since September
1984, Mr. Eyre has acted as the owner and operator of Richmond Auto Sports, a
Richmond, British Columbia based private business involved in the sale and lease
of new and used automobiles.
Mr. Eyre does not have any professional training or technical credentials in the
exploration, development and operation of mines.
Mr. Eyre intends to devote approximately 20% of his business time to our
affairs.
Mr. Glen Macdonald has acted as our treasurer and as a director since our
incorporation on March 9, 2004. Mr. MacDonald holds bachelor degrees in
economics and geology from the University of British Columbia and has practiced
his profession as a geologist for over 28 years. He is a member of the
Association of Professional Engineers, Geologists and Geophysicists of Alberta
and of the Association of Professional Engineers and Geoscientists of the
Province of British Columbia. Mr. Macdonald currently acts as a director of the
following Canadian reporting companies that are involved in mineral property
exploration:
Name of Company Month of Directorship Commencement
--------------- ----------------------------------
Dynamic Resources Corp. September 1993
AVC Venture Corp. November 1999
Starfield Resources Inc. January 1997
Consolidated Goldwin Ventures Inc. March 1998
Golden Cariboo Resources Ltd. February 2000
Thelon Ventures Ltd. April 2002
Maxim Resources Inc. May 2002
Otish Mountain Exploration Inc. March 2003
Mr. MacDonald intends to devote approximately 10% of his business time to our
affairs.
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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.
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.
Amount of
Title of Name and address beneficial Percent
Class of beneficial owner ownership of class
- --------------------------------------------------------------------------------
Common Michael Eyre 1,500,000 26.93%
Stock President, Chief
Executive Officer
and a Director
21320 Westminster Hwy, Ste 1100
Richmond, B.C., Canada
Common Glen MacDonald 1,500,000 26.93%
Stock Secretary, Treasurer
and a Director
1600 Beach Avenue, Suite 905
Vancouver, BC, Canada
Common All officers and directors 3,000,000 53.86%
Stock as a group that consists of shares
two people
The percent of class is based on 5,570,000 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 September 30, 2005, there were 5,570,000 shares of our common stock issued
and outstanding that are held by 34 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. Two persons
present and being, or representing by proxy, shareholders 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.
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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,
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. Nor was any such person
connected with the registrant as a promoter, managing or principal underwriter,
voting trustee, director, officer, or employee.
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Batcher, Zarcone & Baker, LLP 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 Morgan & Company, Chartered 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.
William G. Timmins, a professional geologist, has prepared a geology report on
the CB-1 mineral claim. His assessment of the property and his recommendations
are included in this prospectus.
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. These provisions provide that we shall indemnify a
director or former director against all expenses incurred by him by reason of
him acting in that position. The directors may also cause us to indemnify an
officer, employee or agent in the same fashion.
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 a court of appropriate jurisdiction. We will then be governed by the
court's decision.
Organization Within Last Five Years
We were incorporated on March 9, 2004 under the laws of the state of Nevada. On
that date, Michael Eyre and Glen MacDonald were appointed as our directors. As
well, Mr. Eyre was appointed as our president and chief executive officer, while
Mr. MacDonald was appointed as our secretary and treasurer.
Description Of Business
In General
We intend to commence operations as an exploration stage company. We will be
engaged in the acquisition, and exploration of mineral properties with a view to
exploiting any mineral deposits we discover. We own a 100% beneficial interest
in one mineral claim known as the CB-1 claim. There is no assurance that a
commercially viable mineral deposit exists on the CB-1 claim. We do not have any
current plans to acquire interests in additional mineral properties, though we
may consider such acquisitions in the future.
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Mineral property exploration is typically conducted in phases. Each subsequent
phase of exploration work is recommended by a geologist based on the results
from the most recent phase of exploration. We have not yet commenced the initial
phase of exploration on the CB-1 claim. Once we have completed each phase of
exploration, we will make a decision as to whether or not we proceed with each
successive phase based upon the analysis of the results of that program. Our
directors will make this decision based upon the recommendations of the
independent geologist who oversees the program and records the results. One of
our directors, Glen Macdonald, is a professional geologist and will be able to
assess the recommendations of our independent geologist. While our president,
Michael Eyre, does not have any professional training or technical credentials
in mineral exploration, he is familiar with the industry as an investor.
Our plan of operation is to conduct exploration work on the CB-1 claim in order
to ascertain whether it possesses economic quantities of gold. There can be no
assurance that an economic mineral deposit exists on the CB-1 claim until
appropriate exploration work is completed.
Even if we complete our proposed exploration programs on the CB-1 claims and we
are successful in identifying a mineral deposit, we will have to spend
substantial funds on further drilling and engineering studies before we will
know if we have a commercially viable mineral deposit.
Conflict of Interest
- --------------------
One of our directors, Glen Macdonald, is involved in non-company business
ventures that involve mineral properties and exploration. As well, he is a
director or officer of eight other mineral exploration companies.
Presently, our business plan is focused entirely on the CB-1 mineral property,
so there is no expectation of any conflict between our business interests and
those of Mr. Macdonald. However, possible conflicts may arise in the future if
we seek to acquire interests in additional mineral properties. For example, we
may seek an interest in a property that is owned by Mr. Macdonald. As well, we
may seek an interest in a property that is owned by a company in which Mr.
Macdonald has an interest or of which he is a director. We do not have any plans
in this regard.
Our bylaws provide that each officer who holds another office or possesses
property whereby, whether directly or indirectly, duties or interests might be
created in conflict with his duties or interests as our officer shall, in
writing, disclose to the president the fact and the nature, character and extent
of the conflict and abstain from voting with respect to any resolution in which
the officer has a personal interest. For example, if we propose to enter into a
transaction in which Mr. Macdonald has a direct interest, he must disclose this
interest to our other director, Mr. Eyre, at the board meeting to consider the
transaction. Mr. Macdonald must then abstain from voting on the resolution to
approve the transaction. Accordingly, in order for us to approve the
transaction, Mr. Eyre would have to approve it. In making this decision, Mr.
Eyre is required to act in the best interests of shareholders.
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CB-1 Claim Purchase Agreement
On June 9, 2004, we entered into a mineral purchase and sale agreement with WGT
Consultants (NWT) Ltd. of Vancouver, British Columbia, whereby they sold to us a
100% undivided right title and interest in one mineral claim, subject to a 2.5%
production royalty, located in the South Mining District of the Northwest
Territories, Canada. We acquired this interest in the CB-1 claim by paying WGT
Consultants (NWT) Ltd. $2,500. WGT Consultants (NWT) Ltd. is an arm's length
private company owned by Peter Hill.
Description, Location and Access
The CB-1 claim is located eight kilometres northeast of the town of Yellowknife
in the South Mining District of the Northwest Territories. The CB-1 claim is
accessible by taking Highway No.4, which crosses the northern boundary of the
claim. The area has been permitted for mining in the past and grid power lines
pass by the claim. The claim may be accessed by vehicle. The claim is centered
approximately at 62.533(0)N and 114.195(0)W.
Topography on the CB-1 claim is rugged and surrounded by muskeg swamps and small
lakes. A mix of jack pine, black spruce, tamarack and birch trees are on the
property as well as alder trees and willow bushes which are found in the swamp
areas. The property ranges from 195 meters above sea level at Hay Lake on the
south side of the claim to 245 meters on the claim itself.
Climate in the region of the CB-1 claim is warm during the summer and cold in
the winter. Snow begins accumulating in October and lasts until April.
Title to the CB-1 Claim
The CB-1 claim consists of one mineral claim comprising 205 acres. 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.
Claim details are as follows:
Claim Name Claim Number Date of Staking Expiry Date
CB-1 F90256 November 10, 2004 November 10, 2005
In order to extend the expiry date relating to each claim by one year, we must
spend at least $410 on the exploration of each claim by November 10, 2005.
Thereafter, we must spend at least $2.00 per acre per year on the exploration of
each claim in order to extend the expiry date by a year.
Mineralization
The CB-1 claim consists of a number of quartz veins cutting turbidites, deep
marine rock layers formed as a result of sediment transport by water currents,
mainly within 1.5 kilometers east of a regional fault. The main vein can be
traced for approximately 700 meters and is truncated at its east end by a fault.
Roughly 160 meters south is of its west end is the sub-parallel, 240 meter long
vein. A further 160 meters south is a third vein that is 160 meters in length. A
vein is a regularly shaped and lengthy occurrence of mineralization
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The mineralogy of the veins is similar, consisting of light to dark grey quartz.
Quartz is a common rock-forming mineral consisting of silicon and oxygen, which
is often associated with gold deposits. Concentrations of sulphides are present
in the rock, as well as occurrences of copper and gold. Sulphide minerals are,
by definition, a compound of sulphur and another element, such as iron. They are
often found in proximity to mineral deposits.
Exploration History
Between 1936 and 1942, Teck-Cominco conducted exploration on the CB-1 claim
including trenching, geological mapping and diamond drilling. Treminco conducted
further exploration including mapping, trenching, sampling and drilling between
1984 and 1986. Mapping involves plotting previous exploration data relating to a
property on a map in order to determine the best property locations to conduct
subsequent exploration work. Trenching involves removing surface soil using a
backhoe or bulldozer. Samples are then taken from the bedrock below and analysed
for mineral content. Drilling involves extracting a long cylinder of rock from
the ground to determine amounts of metals at different depths. Pieces of the
rock obtained, known as drill core, are analysed for mineral content.
In May 2005, the vendor of the CB-1 claim, WGT Consultants (NWT) Ltd., retained
Mr. William G. Timmins, a professional geologist, to complete an evaluation of
the claim and to sample vein mineralization in old trenches on three different
veins.
Geological Assessment Report: CB-1 Property
We retained Mr. William G. Timmins, a professional geologist, to complete an
evaluation of the CB-1 claim and to prepare a geology report on the claim. Based
on his review, Mr. Timmins concludes that the CB-1 claim warrants further
exploration, given gold values recovered from grab samples taken from the
property. Grab samples are pieces of rock or soil that a geologist gathers for
mineral testing because they appear to contain valuable mineralization.
Mr. Timmins recommends an initial exploration program consisting of two phases:
Phase I would consist of a geological study of the claim, which would include a
review of previous exploration data relating to the CB-1 claim. Phase I would
take approximately one month to complete and would cost approximately $5,000.
Phase II would consist of geophysical test surveys and geological mapping based
on the results of the phase I review. 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, seismic and radioactive properties are the
ones most commonly measured. Geophysical surveys are applied in situations where
there is insufficient information obtainable from the property surface to allow
informed opinions concerning the merit of properties. Phase II would take
approximately two months to complete and would cost approximately $20,000.
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Compliance with Government Regulation
We will be required to comply with all regulations, rules and directives of
governmental authorities and agencies applicable to the exploration of minerals
in Canada generally, and in British Columbia specifically.
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
- There will have to be an impact report of the work on the local
fauna and flora.
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.
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Subsidiaries
We do not have any subsidiaries.
Patents and Trademarks
We do not own, either legally or beneficially, any patents or trademarks.
Reports to Security Holders
Although we are not required to deliver a copy of our annual report to our
security holders, we will voluntarily send a copy of our annual report,
including audited financial statements, to any registered shareholder who
requests it. We will not be a reporting issuer with the Securities and Exchange
Commission until our registration statement on Form SB-2 is declared effective.
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.
Plan Of Operations
Our plan of operation for the next twelve months is to complete the recommended
phase one and two exploration programs on the CB-1 claim consisting of a
geological study of the claim, geophysical test surveys and geological mapping.
We anticipate that these exploration programs will cost approximately $5,000 and
$20,000 respectively. The anticipated budget for the phase one program is as
follows:
Geological Study by Geologist $ 3,500
Report writing/consulting $ 1,500
Total $ 5,000
The anticipated budget for the phase two program is as follows:
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Geophysical survey $16,000
Follow-up Mapping $ 1,500
Report writing/consulting $ 1,500
Operating Supplies $ 1,000
Total $20,000
To date, we have not commenced exploration on the CB-1 claims.
We plan to commence the phase one exploration program on the CB-1 claim in the
fall of 2005. The program should take approximately up to a one month to
complete. We will then undertake the phase two work program during the spring of
2006. This program will take approximately two months to complete.
Although we do not have any verbal or written agreement regarding the retention
of any qualified engineer or geologist for this exploration program, Mr. William
Timmins, the author of the geology report on the CB-1 claim has indicated that
he is willing to oversee the exploration programs on the property.
As well, we anticipate spending an additional $15,000 on administrative fees,
including fees payable in connection with the filing of this registration
statement and complying with reporting obligations. We anticipate that these
expenses will include the following:
Transfer Agent fees $1,000
Accounting and auditing fees and expenses $5,000
Legal fees and expenses $5,000
Edgar filing fees $1,500
General office costs $2,500
Total expenditures over the next 12 months are therefore expected to be $40,000.
While we have enough funds to complete the phase I exploration program on the
CB-1 claim, we will require additional funding in order to cover anticipated
administrative expenses and phase II exploration program costs. We anticipate
that additional funding will be in the form of equity financing from the sale of
our common stock or from director loans. We do not have any arrangements in
place for any future equity financing or loans.
Results Of Operations For The Period From Inception Through June 30, 2005
We have not earned any revenues from our incorporation on March 9, 2004 to June
30, 2005. We do not anticipate earning revenues unless we enter into commercial
production on the CB-1 claim, which is doubtful. We have not commenced the
exploration stage of our business and can provide no assurance that we will
discover economic mineralization on the CB-1 claim, or if such minerals are
discovered, that we will enter into commercial production.
We incurred operating expenses in the amount of $9,561 for the period from our
inception on March 9, 2004 to June 30, 2005. These operating expenses were
comprised of exploration expenses of $2,053, professional fees of $6,381,
regulatory fees of $620 and office and sundry expenses of $507.
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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 the mineral exploration rights relating to the CB-1 mineral claim. We do
not own any real property interest in the CB-1 claim or any other property.
Certain Relationships And Related Transactions
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, Michael Eyre;
* Any member of the immediate family of any of the foregoing persons.
Market For Common Equity And Related Stockholder Matters
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 34 registered
shareholders.
Rule 144 Shares
A total of 3,000,000 shares of our common stock are available for resale to the
public after May 7, 2005 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:
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1. 1% of the number of shares of the company's common stock then outstanding
which, in our case, will equal 55,700 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 5,000,000 shares that may be sold pursuant to Rule 144.
Registration Rights
We have not granted registration rights to the selling shareholders or to any
other persons.
Dividends
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 December 31, 2004 and the three-month period
ended March 31, 2005.
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Annual Compensation
Other Restricted Options/ LTIP Other
Stock * SARs payouts Comp
Name Title Year Salary Bonus Comp. Awarded (#) ($)
- ---------------------------------------------------------------------------
Michael Pres. 2005 $0 0 0 0 0 0
Eyre CEO, 2004 $0 0 0 0 0 0
& Dir.
Glen Sec. 2005 $0 0 0 0 0 0
MacDonald & Treas. 2004 $0 0 0 0 0 0
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 our directors or
officers. We do not pay Mr. Eyre or Mr. MacDonald any amount for acting as a
director of the Company.
Financial Statements
Index to Financial Statements:
1. Report of Independent Registered Public Accounting Firm;
2. Audited financial statements for the period ending December 31, 2004
(our fiscal year end), including:
a. Balance Sheet;
b. Statement of Operations;
c. Statement of Cash Flows;
d. Statement of Stockholders' Equity; and
e. Notes to Financial Statements
3. Unaudited financial statements for the period ending June 30, 2005,
including:
a. Balance Sheet;
b. Statement of Operations
c. Statement of Cash Flows; and
d. Statement of Stockholders' Equity;
e. Notes to Financial Statements
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SHEPARD INC.
(An Exploration Stage Company)
FINANCIAL STATEMENTS
DECEMBER 31, 2004
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[MORGAN]
& [COMPANY]
[Chartered Accountants]
[Logo]
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Directors
Shepard Inc.
(An exploration stage company)
We have audited the accompanying balance sheet of Shepard Inc. (an exploration
stage company) as at December 31, 2004 and the related statements of operations,
cash flows, and stockholders' equity for the period from March 9, 2004 (date of
inception) to December 31, 2004. 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 audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform an audit to obtain reasonable assurance 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 audit provides a
reasonable basis for our opinion.
The Company has not generated significant revenues or profits to date. This
factor, among others, may indicate the Company will be unable to continue as a
going concern. The Company's continuation as a going concern depends upon its
ability to generate sufficient cash flow to conduct its proposed operations and
its ability to obtain additional sources of capital and financing. The
accompanying financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Company as at December 31,
2004 and the results of its operations and its cash flows for the period from
March 9, 2004 (date of inception) to December 31, 2004, in conformity with
accounting principles generally accepted in the United States of America.
Vancouver, Canada /s/ Morgan & Company
January 20, 2005 Chartered Accountants
Tel: (604) 687-5841 Member of P.O. Box 10007 Pacific Centre
Fax: (604) 687-0075 ACPA Suite 1488-700 West Georgia Street
www.morgan-cas.com International Vancouver, B.C. V7Y 1A1
29
<page>
SHEPARD INC.
(An Exploration Stage Company)
BALANCE SHEET
DECEMBER 31, 2004
<table>
<caption>
- --------------------------------------------------------------------------------------------------------------------
<s> <c>
ASSETS
Current
Cash and cash equivalents $ 34,939
====================================================================================================================
LIABILITIES
Current
Accounts payable and accrued liabilities $ 4,633
----------------
SHAREHOLDERS' EQUITY
Share Capital
Authorized:
75,000,000 common shares with a par value of $0.001
Issued:
5,570,000 common shares 5,570
Additional paid-in capital 29,430
Deficit Accumulated During The Development Stage (4,694)
----------------
30,306
----------------
$ 34,939
====================================================================================================================
</table>
See accompanying notes
30
<page>
SHEPARD INC.
(An Exploration Stage Company)
STATEMENT OF OPERATIONS
<table>
<caption>
- -------------------------------------------------------------------------------------------------------------------
PERIOD FROM PERIOD FROM
DATE OF DATE OF
ORGANIZATION INCEPTION
MARCH 9 MARCH 9
2004 TO 2004 TO
DECEMBER 31 DECEMBER 31
2004 2004
- -------------------------------------------------------------------------------------------------------------------
<s> <c> <c>
Expenses
Exploration expenses $ 2,053 $ 2,053
Office and sundry 426 426
Professional fees 2,215 2,215
-------------------- -----------------
Loss For The Period $ (4,694) $ (4,694)
===================================================================================================================
Loss Per Share $ (0.00)
=================================================================================================
Weighted Average Number Of Shares Outstanding 3,707,339
=================================================================================================
</table>
See accompanying notes
31
<page>
SHEPARD INC.
(An Exploration Stage Company)
STATEMENT OF CASH FLOWS
<table>
<caption>
- ------------------------------------------------------------------------------------------------------------------
PERIOD FROM PERIOD FROM
DATE OF DATE OF
ORGANIZATION INCEPTION
MARCH 9 MARCH 9
2004 TO 2004 TO
DECEMBER 31 DECEMBER 31
2004 2004
- ------------------------------------------------------------------------------------------------------------------
<s> <c> <c>
Cash Flows From Operating Activity
----------------------------------
Loss for the period $ (4,694) $ (4,694)
Changes in non-cash working capital items
Accounts payable and accrued liabilities 4,633 4,633
-------------------------------------
(61) (61)
-------------------------------------
Cash Flows From Financing Activity
----------------------------------
Issue of share capital 35,000 35,000
-------------------------------------
Increase In Cash And Cash Equivalents, End Of Period $ 34,939 $ 34,939
===================================================================================================================
</table>
See accompanying notes
32
<page>
SHEPARD INC.
(An Exploration Stage Company)
STATEMENT OF SHAREHOLDERS' EQUITY
DECEMBER 31, 2004
<table>
<caption>
COMMON STOCK DEFICIT
-------------------------------------------- ACCUMULATED
ADDITIONAL DURING THE
PAID-IN DEVELOPMENT
SHARES AMOUNT CAPITAL STAGE TOTAL
------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c>
May 2004 - Shares issued at $0.001 3,000,000 $ 3,000 $ - $ - $ 3,000
September 2004 - Shares issued at $0.01
2,500,000 2,500 22,500 - 25,000
September 2004 - Shares issued at $0.10
70,000 70 6,930 - 7,000
Loss for the period - - - (4,694) (4,694)
------------------------------------------------------------------------------
Balance, December 31, 2004 5,570,000 $ 5,570 $ 29,430 $ (4,694) $ 30,306
==============================================================================
</table>
See accompanying notes
33
<page>
SHEPARD, INC.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004
(Stated in U.S. Dollars)
1. NATURE AND CONTINUANCE OF OPERATIONS
Organization
The Company was incorporated in the State of Nevada, U.S.A., on March 9,
2004.
Exploration Stage Activities
The Company has been in the exploration stage since its formation and has
not yet realized any revenues from its planned operations. The Company
commenced its exploration stage activities by acquiring an exploration
prospect in the mining sector.
Going Concern
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern.
As shown in the accompanying financial statements, the Company has incurred
a net loss of $4,694 for the period from inception, March 9, 2004, to
December 31, 2004 and has no sales. The future of the Company is dependent
upon its ability to obtain financing and upon future profitable operations
from the development of its mineral property interests. Management has
plans to seek additional capital through a private placement and public
offering of its common stock. The financial statements do not include any
adjustments relating to the recoverability and classification of recorded
assets, or the amounts of and classification of liabilities that might be
necessary in the event the Company cannot continue in existence.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) Use of Estimates and Assumptions
The preparation of financial statements in conformity with U.S.
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could
differ from those estimates.
b) Cash and Cash Equivalents
Cash and cash equivalents consist of all cash balances and all highly
liquid investments purchased with a maturity of three months or less.
34
<page>
SHEPARD, INC.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004
(Stated in U.S. Dollars)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
c) Exploration Activities
The Company expenses all costs related to the maintenance and
exploration of mineral claims in which it has secured exploration
rights prior to establishment of proven and probable reserves. To date,
the Company has not established the commercial feasibility of its
exploration prospects, therefore, all costs are being expensed.
d) Foreign Currency Translation
The Company's functional currency is the U.S. dollar. Transactions
in foreign currency are translated into U.S. dollars as follows:
i) monetary items at the rate prevailing at the balance sheet
date;
ii) non-monetary items at the historical exchange rate;
iii) revenue and expense at the average rate in effect during the
applicable accounting period.
Gains or losses on foreign currency translation are included in the
statement of operations.
e) Fair Value of Financial Instruments
The carrying value of cash and cash equivalents, and accounts payable
and accrued liabilities approximates their fair value because of the
short maturity of these instruments. The Company's operations are in
Canada and virtually all of its assets and liabilities are giving rise
to significant exposure to market risks from changes in foreign
currency rates. The Company's financial risk is the risk that arises
from fluctuations in foreign exchange rates and the degree of
volatility of these rates. Currently, the Company does not use
derivative instruments to reduce its exposure to foreign currency risk.
f) Income Taxes
Deferred taxes are provided on an asset and liability method whereby
deferred tax assets are recognized for taxable temporary differences,
and operating loss, tax credit carryforwards and deferred tax
liabilities are recognized for deductible temporary differences.
Temporary differences are the differences between the reported amounts
of assets and liabilities and their tax bases.
35
<page>
SHEPARD, INC.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004
(Stated in U.S. Dollars)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
g) Basic and Diluted Net Loss Per Share
The Company computes net loss per share in accordance with SFAS No.
128, "Earnings per Share". SFAS No. 128 requires presentation of both
basic and diluted earnings per share (EPS) on the face of the income
statement. Basic EPS is computed by dividing net loss available to
common shareholders by the weighted average number of shares
outstanding during the period. Diluted EPS reflects the potential
dilution that could occur if securities or other contracts to issue
common stock were exercised or converted into common stock. The Company
has no potentially issuable common stock at December 31, 2004.
h) Stock Based Compensation
The Company accounts for stock based employee compensation arrangements
in accordance with the provisions of Accounting Principles Board
Opinion No. 25 - "Accounting for Stock Issued to Employees" (APB No.
25) and complies with the disclosure provisions of Statement of
Financial Accounting Standards No. 123 - "Accounting for Stock Based
Compensation" (SFAS No. 123). Under APB No. 25, compensation expense is
recognized based on the difference, if any, on the date of grant
between the estimated fair value of the Company's stock and the amount
an employee must pay to acquire the stock. Compensation expense is
recognized immediately for past services and rateably for future
services over the option vesting period.
i) Comprehensive Loss
SFAS No. 130, "Reporting Comprehensive Income," establishes standards
for the reporting and display of comprehensive loss and its components
in the financial statements. As at December 31, 2004, the Company has
no items that represent a comprehensive loss and, therefore, has not
included a schedule of comprehensive loss in the financial statements.
j) New Accounting Standards
Management does not believe that any recently issued, but not yet
effective, accounting standards, if currently adopted, could have a
material effect on the accompanying financial statements.
36
<page>
SHEPARD, INC.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004
(Stated in U.S. Dollars)
3. MINERAL PROSPECT
Pursuant to an agreement (the "Agreement") dated June 9, 2004, the Company
has acquired a 100% interest, subject to a 2.5% production royalty, in a
mineral prospect located in the Northwest Territories, Canada, for cash
consideration of CDN$2,500. Since the Company has not established the
commercial feasibility of the mineral claims, the acquisition costs have
been expensed.
4. COMMON STOCK
During the period from March 9, 2004 (inception) to December 31, 2004, the
Company issued a total of 5,570,000 common shares for total cash proceeds
of $35,000.
At December 31, 2004, there were no outstanding stock options or warrants.
37
<page>
SHEPARD INC.
(An Exploration Stage Company)
FINANCIAL STATEMENTS
JUNE 30, 2005
(Unaudited)
(Stated in U.S. Dollars)
38
<page>
SHEPARD INC.
(An Exploration Stage Company)
BALANCE SHEET
(Unaudited)
(Stated in U.S. Dollars)
<table>
<caption>
- --------------------------------------------------------------------------------------------------------------------
JUNE 30 DECEMBER 31
2005 2004
- --------------------------------------------------------------------------------------------------------------------
<s> <c> <c>
ASSETS
Current
Cash and cash equivalents $ 27,264 $ 34,939
====================================================================================================================
LIABILITIES
Current
Accounts payable and accrued liabilities $ 1,825 $ 4,633
----------------------------------
SHAREHOLDERS' EQUITY
Share Capital
Authorized:
75,000,000 common shares with a par value of $0.001
Issued:
5,570,000 common shares 5,570 5,570
----- -----
Additional paid-in capital 29,430 29,430
------ ------
Deficit Accumulated During The Exploration Stage (9,561) (4,694)
----------------------------------
25,439 30,306
----------------------------------
$ 27,264 $ 34,939
====================================================================================================================
</table>
See accompanying notes
39
<page>
SHEPARD INC.
(An Exploration Stage Company)
STATEMENT OF OPERATIONS
(Unaudited)
(Stated in U.S. Dollars)
<table>
<caption>
- --------------------------------------------------------------------------------------------------------------------------------
CUMULATIVE
PERIOD FROM
INCEPTION
MARCH 9
THREE MONTHS ENDED SIX MONTHS ENDED 2004 TO
JUNE 30 JUNE 30 JUNE 30
2005 2004 2005 2004 2005
- --------------------------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c> <c>
Expenses
Exploration expenses $ - $ - $ - $ - $ 2,053
Office and sundry 44 13 81 13 507
Professional fees 1,636 - 4,166 - 6,381
Regulatory fees 620 - 620 - 620
---------------------------------------------------------------------------------------
Loss For The Period $ (2,300) $ (13) $ (4,867) $ (13) $ (9,561)
================================================================================================================================
Loss Per Share $ (0.00) $ (0.00) $ (0.00) $ (0.00)
===================================================================================================================
Weighted Average Number
- ----------------------- 5,570,000 861,878 5,570,000 1,714,286
Of Shares Outstanding
===================================================================================================================
</table>
See accompanying notes
40
<page>
SHEPARD INC.
(An Exploration Stage Company)
STATEMENT OF CASH FLOWS
(Unaudited)
(Stated in U.S. Dollars)
<table>
<caption>
- --------------------------------------------------------------------------------------------------------------------
PERIOD FROM
INCEPTION
MARCH 9
SIX MONTHS ENDED 2004 TO
JUNE 30 JUNE 30
2005 2004 2005
- --------------------------------------------------------------------------------------------------------------------
<s> <c> <c> <c>
Cash Flows From Operating Activities
Loss for the period $ (4,867) $ (13) $ (9,561)
Changes in non-cash working capital items
Accounts payable and accrued liabilities (2,808) - 1,825
-------------------------------------------------
(7,675) (13) (7,736)
-------------------------------------------------
Cash Flows From Financing Activity
Issue of share capital - 3,000 35,000
-------------------------------------------------
Increase (Decrease) In Cash And Cash
- ------------------------------------ (7,675) 2,987 27,264
Equivalents During The Period
Cash And Cash Equivalents, Beginning Of
- --------------------------------------- 34,939 - -
Period
-------------------------------------------------
Cash And Cash Equivalents, End Of Period $ 27,264 $ 2,987 $ 27,264
====================================================================================================================
Supplementary Disclosure Of Cash Flow
- -------------------------------------------------------------------------------
Information
Cash paid for:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
====================================================================================================================
</table>
See accompanying notes
41
<page>
SHEPARD, INC.
(An Exploration Stage Company)
NOTE TO FINANCIAL STATEMENTS
JUNE 30, 2005
(Unaudited)
(Stated in U.S. Dollars)
1. BASIS OF PRESENTATION
The unaudited financial statements of the Company at June 30, 2005, and for
the six month period then ended, include the accounts of the Company, and
reflect all adjustments (consisting only of normal recurring adjustments)
which are, in the opinion of management, necessary for a fair presentation
of the financial position and operating results for the interim periods.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted in these interim statements under
the rules and regulations of the Securities and Exchange Commission
("SEC"). Accounting policies used in fiscal 2005 are consistent with those
used in fiscal 2004. The results of operations for the six months ended
June 30, 2005 are not necessarily indicative of the results for the entire
fiscal year ending December 31, 2005. These interim financial statements
should be read in conjunction with the financial statements for the fiscal
year ended December 31, 2004 and the notes thereto included in the
Company's Form 10-KSB. The financial statements have been prepared in
accordance with generally accepted accounting principles in the United
States.
42
<page>
Changes In And Disagreements With Accountants on
Accounting and Financial Disclosure
We have had no changes in or disagreements with our accountants.
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 (the "NRS") 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
43
<page>
(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
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 $ 23.64
Transfer Agent fees $ 1,000.00
Accounting and auditing fees and expenses $ 5,000.00
Legal fees and expenses $ 5,000.00
Edgar filing fees $ 1,500.00
-----------
Total $ 12,523.64
===========
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 completed an offering of 3,000,000 shares of our common stock at a price of
$0.001 per share to a total of two purchasers on May 7, 2004. The total amount
received from this offering was $3,000. Of these shares, 1,500,000 were sold to
Mr. Michael Eyre and 1,500,000 were sold to Mr. Glen MacDonald. Mr. Eyre is our
president, chief executive officer and a director. Mr. MacDonald is our
secretary, treasurer and a director. These shares were issued pursuant to
Regulation S of the Securities Act.
44
<page>
We completed an offering of 2,500,000 shares of our common stock at a price of
$0.01 per share to a total of twenty-five purchasers on September 23, 2004. The
total amount received from this offering was $2,500,000. These shares were
issued pursuant to Regulation S of the Securities Act. The purchasers in this
offering were as follows:
Name of Subscriber Number of Shares
------------------ ----------------
M. Elaine Burns 100,000
Jim San Severino 100,000
Karin Christopher 100,000
Michael Loughlin 100,000
Kelly Jordan 100,000
Michael Sweeney 100,000
Jim Callaghen 100,000
David Matzele 100,000
Andre Stephen 100,000
Traci Deyrmenjian 100,000
Andrew Statham 100,000
Joanne Finlayson 100,000
Kaylee Waters 100,000
Roberto Picchi 100,000
Gordon Burns 100,000
Theresa Bajan 100,000
Tyrone McClay 100,000
Norman Dumont 100,000
Artin Deyrmenjian 100,000
Aurelia Stoica 100,000
Lisa Bacica 100,000
Heidi Herbers 100,000
Gordon Sanders 100,000
Ara Simon Gregorian 100,000
Andre Simon Gregorian 100,000
We completed an offering of 70,000 shares of our common stock at a price of
$0.10 per share to a total of seven purchasers on September 30, 2004. The total
amount received from this offering was $7,000. We completed this offering
pursuant to Regulation S of the Securities Act. The purchasers in this offering
were as follows:
Name of Subscriber Number of Shares
------------------ ----------------
Garo Deyrmenjian 10,000
Tony Biamonte 10,000
Erin Williams 10,000
Roni-Lyn Sanders 10,000
Jason Birmingham 10,000
Gerard Murphy 10,000
Jeanette Murphy 10,000
Regulation S Compliance
Each offer or sale was made in an offshore transaction;
45
<page>
Neither we, a distributor, any respective affiliates nor any person on behalf of
any of the foregoing made any directed selling efforts in the United States;
Offering restrictions were, and are, implemented;
No offer or sale was made to a U.S. person or for the account or benefit of a
U.S. person;
Each purchaser of the securities certifies that it was not a U.S. person and was
not acquiring the securities for the account or benefit of any U.S. person;
Each purchaser of the securities agreed to resell such securities only in
accordance with the provisions of Regulation S, pursuant to registration under
the Act, or pursuant to an available exemption from registration; and agreed not
to engage in hedging transactions with regard to such securities unless in
compliance with the Act;
The securities contain a legend to the effect that transfer is prohibited except
in accordance with the provisions of Regulation S, pursuant to registration
under the Act, or pursuant to an available exemption from registration; and that
hedging transactions involving those securities may not be conducted unless in
compliance with the Act; and
We are required, either by contract or a provision in its bylaws, articles,
charter or comparable document, to refuse to register any transfer of the
securities not made in accordance with the provisions of Regulation S pursuant
to registration under the Act, or pursuant to an available exemption from
registration; provided, however, that if any law of any Canadian province
prevents us from refusing to register securities transfers, other reasonable
procedures, such as a legend described in paragraph (b)(3)(iii)(B)(3) of
Regulation S have been implemented to prevent any transfer of the securities not
made in accordance with the provisions of Regulation S.
Exhibits
Exhibit
Number Description
Exhibits
Exhibit
Number Description
3.1* Articles of Incorporation
3.2* Bylaws
5.1** Legal opinion of Batcher, Zarcone & Baker, LLP, with
consent to use
10.1* Mineral claim purchase agreement dated
June 9, 2004
23.1 Consent of Morgan & Company, Chartered Accountants
23.2* Consent of William G. Timmins, with consent to use
99.1* Location map
* filed as an exhibit to our SB-2 dated May 4, 2005
** filed as an exhibit to our SB-2 dated September 7, 2005
The undersigned registrant hereby undertakes:
1. To file, during any period in which it offers or sells
securities, a post-effective amendment to this registration
statement to:
46
<page>
(a) include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(b) reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information set forth
in this registration statement; and 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 any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the commission pursuant to Rule 424(b) if, in
the aggregate, the changes in the volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
registration Statement; and
(c) include any additional or changed material information on
the plan of distribution.
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
n 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 September 30, 2005.
47
<page>
Shepard Inc.
By: /s/ Michael Eyre
------------------------------
Michael Eyre
President, Chief Executive Officer
and Director
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/ Michael Eyre President, Chief Executive September 30, 2005
- -------------------- Officer and Director
Michael Eyre
/s/ Glen MacDonald Treasurer, secretary, September 30, 2005
- ----------------------- principal accounting
Glen MacDonald officer, principal
financial officer
and director
48