ZANDARIA VENTURES INC.
535 Thurlow Street, Suite 600
Vancouver, British Columbia
Canada, V6E 3C2
October 21, 2005
U.S. Securities & Exchange Commission
Division of Corporate Finance
450 Fifth Street, N.W.
Washington, D.C. 20549
Mail Stop 0305
Attention: Tim Buchmiller, Division of Corporate Finance
Dear Sirs:
Re: Zandaria Ventures Inc. - Registration Statement on Form SB-2
Amendment No. 1 - File No. 333-127389
Further to your letter dated September 8, 2005 concerning the deficiencies in
our registration statement on Form SB-2, we provide the following responses:
Registration Fee Table
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1. Provide references to the specific provisions of Rule 457 on which you
rely.
We have revised our disclosure to specifically refer to Rule 457(o).
Table of Contents, page 4
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2. We note that the "Risk Factors" section of your table of contents does
not track the actual risk factors included in your prospectus. For
example, you have not included a risk factor indicating that your
auditor has raised doubt about your ability to continue as a going
concern. If your auditor has raised such a doubt, please revise your
risk factors to describe the material risks of your ability to continue
as a going concern. Also include a reference to your auditor's doubts
or conclusions in the "Summary" section of your prospectus and indicate
whether you will need to raise funds within the next twelve months in
order to continue your operations.
We have revised our Table of Contents so that it is consistent with our
"Risk Factors" section. We have inserted the following risk factor:
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"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.
The report of our independent accountant to our audited financial
statements for the period ended March 31, 2005 indicates that there are
a number of factors that raise substantial doubt about our ability to
continue as a going concern. Our continuation is dependent upon our
ability to generate profitable operations in the future and/or to
obtain necessary financing to meet our obligations and repay our
liabilities arising from normal business operations when they become
due. If we are not able to continue as a going concern, it is likely
investors will lose all of their investment."
We have also disclosed our independent accountant's doubt about our
continuation as a going concern in our "Summary" section.
Summary, page 5
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3. We note your use of industry terms such as "economic reserves,"
"economic mineralization," and "economic mineral deposit." Please
revise your disclosure so that the meaning of these terms can be
understood by investors who are not familiar with your industry.
We have disclosed that an "economic reserve" is a specific body of rock
that can be economically mined and that "economic mineralization" is
minerals in sufficient quantities such that extracting them from the
ground would be profitable. As well, we have replaced the term
"economic mineral deposit" in our disclose with the term "economic
mineralization".
4. We note that your prospectus summary indicates that your objective is
to conduct mineral exploration activities for gold, silver, and copper
whereas other sections of your prospectus refer to only gold. Please
revise your prospectus so that your disclosure in this regard is
consistent throughout your prospectus.
We have revised our disclosure to indicate that we are exploring for
gold, silver and copper.
Risk Factors, page 6
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5. Add a risk factor that addresses, if true, that your property has not
been examined in the field by a professional geologist or mining
engineer, detail the risks to investors.
We have added the following risk factor:
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"BECAUSE THE CHIP MINERAL CLAIMS HAVE NOT BEEN EXAMINED BY ANY
PROFESSIONAL GEOLOGIST OR MINING ENGINEER RETAINED BY US, THERE IS A
GREATER RISK THAT OUR PROPERTY MAY NOT CONTAIN ECONOMIC MINERALIZATION
In connection with our acquisition of the Chip mineral claims, we
retained Mr. George E. Nicholson, a professional geologist, to prepare
a report on the property. However, Mr. Nicholson's report was based on
his review of past exploration data respecting the Chip mineral claims.
Because we have not retained a geologist to examine our mineral claims
in person, there is a greater risk that our property may not contain
economic mineralization."
6. Add a risk to address the fact that you have no employees.
We have added the following risk factor:
"BECAUSE WE DO NOT HAVE ANY EMPLOYEES OTHER THAN OUR PRESIDENT, WE WILL
BE DEPENDENT ON OUR MANAGEMENT AND INDEPENDENT CONTRACTORS TO CARRY OUT
OUR BUSINESS PLAN.
We do not have any employees other than our president, Steven Cozine.
To carry out our business plan, we will have to retain independent
contractors to conduct exploration work on the Chip claims. If we are
unable to retain personnel when needed, our ability to conduct
exploration may be delayed."
Selling Securityholders, page 8
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7. For each of the three private placements, disclose the per share price.
We have disclosed the price per share for all three private placements.
8. Correct the selling price for the shares in the last paragraph.
We have corrected the selling price in the last paragraph.
Directors, Executive Officers, Promoters and Control Persons, page 20
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9. Relocate the "Certain Relationships and Related Transactions"
disclosure to this section which covers related information. Expand the
"Certain Relationships and Related Transactions" disclosure to describe
the sale of $2,500,000 shares to Mr. Cozine for $2,500 and the
outstanding cash advance made to him.
<page>
We have relocated the "Certain Relationships and Related Transactions"
disclosure to this section and have described the share sale and cash
advance to Mr. Cozine.
Interests of Named Experts and Counsel, page 15
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10. We note your reference to the financial statements audited by Cinnamon
Jang Willoughby & Company, Chartered Accountants and your reference to
them as experts. However, we do not see where your auditors have
provided consent to use its report on the financial statements or to
the reference to them as experts. Please revise to include the
financial statements or to the reference to them as experts. Please
revise to include the consent from your independent registered
accounting firm as an exhibit to the SB-2.
We filed a consent from our independent registered accounting firm as
an exhibit to our initial registration statement. We have filed an
updated consent with our revised registration statement.
Description of Business, page 15
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11. For your property, provide the disclosures required by Industry Guide
7(b). In particular, provide:
o Any conditions that you must meet in order to obtain or retain title
to the property.
o The source of power that can be utilized at the property.
Refer to Industry Guide 7 (b) (1)-(5) for specific guidance.
We have disclosed the following:
"In British Columbia, to extend the expiry date of each claim by one
year, annual assessment work or cash in lieu is required of $0.40 per
hectare in years one to three followed by $0.80 per hectare thereafter.
There is also a filing fee of $0.04 per hectare. In order to retain
title to the property, we must conduct at least $442.53 on the Chip
claims by April 3, 2006, thereby extending the expiry date for an
additional year."
"There is no available source of power located on the property. We will
need to use portable generators if we require a power source for
exploration of the property."
12. Insert a small-scale map clearly showing the location and access to
your property with an index map showing where the property is situated
in relationship to a political boundary (i.e., the state or province,
etc., in which it was located. Note that SEC's EDGAR program now
accepts digital maps, so please include these in any future amendments
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that are uploaded to EDGAR. It is relatively easy to include automatic
links at the appropriate locations within the document GIF or JPEG
files, which allow the figures and/or diagrams to appear in the right
location when the document is viewed on the Internet. For more
information, please consult the EDGAR manual, and if you need addition
assistance, please call Filer Support at 202-942-8900. Otherwise,
provide the map to the staff for our review.
We have filed a location map as an exhibit to our amended registration
statement.
13. Please indicate why Mr. Cozine holds the claims in trust for the
company. Indicate whether this is common procedure and the reasons
for such procedure. Describe any materials risks from this arrangement
in your "Risk Factors" section.
Mr. Cozine holds the Chip mineral claims in trust for the company since
it is simpler and less expensive for an individual to hold title to
mineral claims in British Columbia than a foreign incorporated company.
14. Explain in the Summary and/or Risk Factors that you have paid $2,500
toward the mineral claims purchase and still owe $17,500 to complete
the acquisition.
We have disclosed in the "Summary" section that we have paid $2,500
toward the purchase of the Chip mineral claims and must pay $17,500 by
April 5, 2006 in order to complete the acquisition. We have also added
the following risk factor:
"IF WE ARE UNABLE TO MAKE THE $17,500 PAYMENT TO COMPLETE THE
ACQUISITION OF THE CHIP CLAIMS BY APRIL 5, 2006, WE WILL LOSE OUR
INTEREST IN THE PROPERTY AND OUR BUSINESS WILL FAIL.
Upon the execution of the agreement to acquire the Chip mineral claims,
we paid the vendor $2,500. In order to complete the purchase, we must
pay him an additional $17,500 by April 5, 2006. We do not currently
have the cash on hand to complete the acquisition and have no guarantee
that we will be able to raise the funds to make the required payment.
If we are unable to make the payment by the deadline date, we will lose
our interest in the Chip mineral claims and our business will fail."
15. Disclose the nature of your ownership or interest in the property. For
example, if another party is the fee simple owner of the real property
underlying the mineral claims, identify them and explain what rights
they have to the property. If you do not have fee simple ownership of
the property underlying the mineral claims, please describe any
material risks from the ownership structure in your "Risk Factors"
section. Disclose any other underlying agreements or interests in the
property.
<page>
We have disclosed the following in the "Claim Data" section:
"The fee simple owner of the real property underlying the claims that
comprise the Chip mineral claims is the government of British Columbia.
The government has the right to sell title to this land to a third
party, but is unlikely to do so given the remote location of the
property. We have the right to explore the claims for mineralization,
provided such exploration does not unreasonably disturb the fee simple
owner's use of the land. Because the property is undeveloped, the
British Columbia government's rights to the land are unlikely to be
impacted."
We have also added the following risk factor:
"BECAUSE WE ONLY HAVE MINERAL EXPLORATION RIGHTS TO THE CHIP CLAIMS,
THE LANDOWNER MAY BE ABLE TO PREVENT US FROM CONDUCTING EXPLORATION ON
THE CLAIMS.
We hold the exclusive right to explore the Chip mineral claims for
mineralization and to remove minerals from the property. However, our
rights are subject to those held by the fee simple property owner, the
government of British Columbia, to make use of the land. If the
government decides to develop, sell or make any other use of the land,
our right to explore the property could be impacted. As a result, we
would not be able to continue exploration on the property and we would
be forced to abandon our business plan."
Geology Report, page 18
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16. Disclose a brief geological justification written in non-technical
language for Mr. Nicholson's recommendation that you conduct an initial
exploration program.
Mr. Nicholson bases his recommendations on previous gold, silver and
copper found in rocks and soil in the eastern area of the property.
17. Please confirm whether the geology report described here is the one
that Mr. Simpson was required to furnish pursuant to the mineral claims
sale.
The geology report written by Mr. Nicholson is the one that Mr.Simpson
provided to us pursuant to the mineral claims sale.
Plan of Operations, page 20
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18. We note that your total expenditures over the next 12 months are
expected to be approximately $57,600 and that as of March 31, 2005 you
had $15,280 in cash. As such, please indicate how long you will be able
to satisfy your cash requirements, state that you will have to raise
additional funds within the next twelve months in order to effect your
plan of operations, and describe your plans to do so. Refer to Item
303(a)(1)(i) of Regulation S-B.
<page>
We have disclosed the following:
"While we have enough funds to cover the estimated cost of the phase
one exploration program, we will require additional funding in order to
cover administrative costs, phase two exploration costs and any
additional recommended exploration on the Chip claims following the
completion of the phase two program. Our current cash on hand is
sufficient for approximately six months. We will have to raise
additional funds within that time period in order to effect our plan of
operations. 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 March 31, 2005,
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page 21
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19. Revise the filing to provide disclosures regarding off-balance sheet
arrangements as required by Item 303(c) of Regulation S-B.
In the period from our inception on February 23, 2005 to March 31,
2005, there were no off-balance sheet arrangements.
Financial Statements
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20. Please update the financial statements as required by Item 310(a) of
Regulation S-B. As such, you should amend your filing to provide an
audited balance sheet as of date within 135 days and corresponding
audited statements of income, cash flows and changes in stockholders'
equity. Please also update the financial statements as appropriate to
comply with Item 310(g) of Regulation S-B.
We have updated our financial statements to June 30, 2005.
21. Please revise the financial statements to remove the caption
"unaudited."
We have revised our financial statements to remove the caption
"unaudited".
Report of Independent Registered Public Accounting Firm
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22. Please have your auditor revise its report to identify the statement
of stockholders' equity as having been audited. Refer to Rule 2-02(a)
of Regulation S-X.
Our auditor has revised its report to identify the statement of
stockholders' equity as having been audited.
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23. Please have your auditor revise its report on the financial statements
to specifically identify the period for which the statements of loss
and deficit, stockholders' equity and cash flows are covered by this
report. The report should specifically state the date of inception.
Our auditor has revised its report on the financial statements to
specifically identify the period for which the statements of loss and
deficit, stockholders' equity and cash flows are covered. The report
now specifically states the date of inception, as well.
24. In Note 1, you state that the financial statements have been prepared
on a going concern basis. In addition, your disclosures here and
throughout the filing raise doubt as to you ability to continue as a
going concern. Have your auditor tell us why it did not include an
explanatory paragraph regarding the going concern. Please refer to AU
Section 341. Have your auditor revise its report as appropriate.
Our auditors have revised their report to indicate that there is
substantial doubt about our ability to continue as a going concern.
Note 2 - Summary of Significant Accounting Policies
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25. You state that costs of lease, acquisition, exploration, carrying and
retaining unproven mineral properties are expenses as incurred.
Paragraph 9 of EITF 04-02 states that mineral rights are tangible
assets and should be accounted for the reported as a separate component
of property, plant and equipment. Please revise your filing to comply
with EITF 04-02.
In accordance with your request, we have recorded our mineral property
on our balance sheet.
26. Further, we note your disclosure in Note 3 that you acquired a 100%
interest in the three mineral claims for $20,000, of which $2,500 has
been paid and the remaining $17,500 is due before April 5, 2006. We
note you have only recorded the initial $2,500 payment in your
financial statements. Tell us the basis for your conclusion that the
additional $17,500 due in 2006 did not require any entry in the
financial statements or revise the filing to reflect the full amount of
the mineral claim as tangible assets with a corresponding liability for
the remaining amount to be paid. Please also revise the filing to
disclose any contingencies associated with the payment of the final
$17,500.
We have now disclosed the recorded value of the property as $20,000.
Note 3 - Mineral Property
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27. We note the date of the mineral property purchase and sale agreement
here is "March 29 25, 2005" (sic), but the date of the agreement filed
as an exhibit is April 5, 2005. Please reconcile.
<page>
We have revised the note to indicate that the agreement dated is April
5, 2005.
Exhibit 5.1 - Legality Opinion
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28. We will accept an opinion of counsel on a jurisdiction in which counsel
is not admitted to practice so long as the opinion is not qualified as
to jurisdiction, therefore, please delete the first sentence of the
second to last paragraph of the opinion so that the opinion does not
appear to be qualified as to jurisdiction.
We have filed a revised legal opinion with the noted sentence removed.
29. Given the limitation in the last paragraph, that the opinion is "as of
the date hereof," please file a signed legal opinion which does not
contain this limitation or which is dated as of the date you intend the
registration statement to go effective.
The legal opinion will be updated and re-filed as of the date that our
registration statement will be declared effective in order to address
this comment.
30. Counsel should also consent to being named in the prospectus.
Counsel's consent is included in its revised opinion.
Yours truly,
/s/ Steven Cozine
Zandaria Ventures Inc.
Steven Cozine, President