ZANDARIA VENTURES INC.
535 Thurlow Street, Suite 600
Vancouver, British Columbia
Canada, V6E 3C2
December 30, 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. 2 - File No. 333-127389
Further to your letter dated November 4, 2005 concerning the deficiencies in our
registration statement on Form SB-2, we provide the following responses:
Summary, page 5
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1. Please indicate in your "Summary" section whether you will need to
raise funds within the next twelve months in order to continue your
operations.
We have added the following disclosure to the "Summary" section:
We anticipate that our total expenditures over the next 12 months will
be approximately $57,600. Accordingly, we will need to raise additional
funds over this period to continue operations.
Certain Relationships and Related Transactions, page 13
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2. Please disclose whether Mr. Cozine repaid the amount advanced to him on
the date due.
We have disclosed that Mr. Cozine has not repaid this amount.
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Description of Business, page 15
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3. We note your response to comment 13 in your letter dated October 21,
2005. Please include in your prospectus which indicates why Mr. Cozine
holds the claims in trust for the company. Also, disclose whether this
is a common procedure and the reasons for such procedure. Describe any
materials risks from this arrangement in your "Risk Factors" section or
provide us with your analysis as to why you believe no material risks
are presented by this arrangement.
We have revised our disclosure to state the following:
"These claims have been transferred from the original claim staker,
Richard Simpson, to Steven Cozine, our president, who holds them in
trust for us. Mr. Cozine holds the mineral claims comprising the Chip
property in trust for us. It is a common procedure to have such claims
held in trust given the expense that we would incur in registering as a
recorded claim holder and as an extraprovincial company in British
Columbia.
If Mr. Cozine becomes bankrupt or transfers the claims to a third
party, we may incur significant legal expenses in enforcing our
interest in the claims in British Columbia courts.
The registration of the claims in the name of a trustee does not impact
a third party's ability to commence an action against us respecting the
Chip property or to seize the claims after obtaining judgment."
We have also added the following risk factor:
"BECAUSE WE CANNOT HOLD TITLE TO THE WANAPITEI RIVER PROPERTY UNTIL WE
REGISTER AS A CORPORATION IN BRITISH COLUMBIA, WE MAY INCUR SIGNIFICANT
LEGAL EXPENSES IN ENFORCING OUR INTEREST IN THE CLAIMS.
Before we can hold title to the Chip property in our name, we must
register as an extra-provincial corporation in British Columbia and
apply for a free miner's certificate. We intend to complete this
registration process following completion of the second phase of
recommended exploration on the property.
In the meantime, if Steven Cozine, our president and the current
registered holder of the claims, who holds them in trust for us,
becomes bankrupt or transfers the claims to a third party, we may incur
significant legal expenses in enforcing our interest in the claims in
British Columbia courts."
Geology Report, page 18
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4. Please clarify your disclosure that previous gold, silver and copper
was found on the property to indicate which of these minerals were
found and whether these findings were economic reserves or trace
amounts of those minerals. Please reconcile your disclosure here with
your disclosure on page 7 that "[t]he Chip claims do not contain any
know bodies of mineralization."
<page>
We have clarified that the mineralization discovered on the Chip
property was found in trace amounts.
Plan of Operations, page 20
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5. We note your response to comment 18 in your letter dated October 21,
2005. Please add appropriate risk factor disclosure regarding the
dilution your investors may face if you conduct future equity
offerings.
We have added the following risk factor:
"BECAUSE WE INTEND TO FINANCE OUR FUTURE OPERATIONS THROUGH THE SALE OF
ADDITIONAL SHARES OF COMMON STOCK IN OUR CAPITAL, SHAREHOLDERS WILL
SUFFER DILUTION, LIKELY RESULTING IN A LOSS OF INVESTMENT VALUE.
In order to complete anticipated exploration on the Chip property, we
will need to raise additional capital. The most likely source of future
funds will be through the sale of equity capital. Any sale of share
capital will result in dilution to existing shareholders. Such dilution
will likely have a negative impact on the value of our stock."
Results of Operations for the period from inception through June 30, 2005,
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page 21
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6. We note that you have restated your financial statements to reflect the
property acquisition costs as an asset based on prior comments 25 and
26 and in accordance with EITF 04-02. Please revise your discussion of
the results of operations on page 21 to remove the reference to $2,500
of property acquisition costs in your discussion of your operating
expenses.
We have removed the reference to the mineral property option payment
from the "Results of Operations" section.
Report of Independent Registered Public Accounting Firm
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7. Please refer to prior comments 22, 23 and 24. We note that the audit
report included in Amendment 2 to Form SB-2 does not include the
changes specified in your responses. Please revise the filing to
address the following:
o Please have your auditor revise its report to identify the
statement of stockholders' equity as having been audited.
o Please also have your auditor revise its report to
specifically identify the period for which the statements of
operations, stockholders' equity and cash flows are covered by
the report. Include specific disclosure of the date of
inception.
<page>
o Please have your auditor tell us why its report did not
include an explanatory paragraph regarding your ability to
continue as a going concern in light of disclosures throughout
the filing that your auditor has raised doubt about your
ability to continue as a going concern.
The independent accountant has provided an amended Report of
Independent Registered Public Accounting Firm that states that the
Statement of Stockholders' Equity has been audited. It also
specifically identifies the date of inception and includes an
explanatory paragraph regarding the company's ability to continue as a
going concern in accordance with Statement of Auditing Standards No.
59.
8. In addition, have your auditor tell us what consideration it has given
to revising the audit report date in light of the restatement of the
financial statements to properly account for the mineral property
costs. Refer to AICPA Auditing Standards Section 561.06.a.
As required by AICPA Auditing Standards Section 561.06a, the auditor
has revised its audit report date in respect of the restatements
described in Note 7 to the financial statements.
Financial Statements
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9. We note that in Amendment 2 to Form SB-2 you have removed your March
31, 2005 audited financial statements. Please revise the filing to
include your audited financial statements as of March 31, 2005 as
required by Item 310(a) of Regulation S-B. Please note that your
revised filing should also continue to include unaudited interim
financial statements as of a date within 135 days of the filing of your
amendment as required by Item 310(b) of Regulation S-B.
Our revised registration statement on Form SB-2 includes our audited
financial statements for the period ended March 31, 2005, as well as
interim financial statements for the period ended September 30, 2005.
10. We note that you restated your March 31, 2005 financial statements to
capitalize mineral property costs in accordance with EITF 04-02. To the
extent you restate previously issued financial statements, you should
revise the filing to label the financial statements as restated as
appropriate and also to include a footnote in the financial statements
that discusses the restatement and provides the disclosures required by
paragraph 37 of APB 20. Please revise the filing to comply.
<page>
As required by paragraph 37 of APB 20, we have revised the label of the
financial statements as "Restated" and provided disclosure of the
restatements in Note 7 to the financial statements.
Statement of Cash Flows
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11. Please refer to prior comment 26. We note that you reflect the full
amount of the mineral claim as a tangible asset on the balance sheet as
of June 30, 2005 with a corresponding liability for the remaining
amount to be paid. In your statement of cash flows, you show cumulative
cash used for investing activities of $20,000 for the acquisition
of mineral property. However, to date you have only paid $2,500. We
believe the remaining $17,500 should be disclosed as a non-cash
investing activity. As such, please revise your statement of cash flows
to remove the effects of the $17,500 from the operating cash flows
section. Please insert a supplemental disclosure of non-cash investing
and financing activities relating to the $17,500 of unpaid amounts
relating to the mineral property asset right. Refer to paragraph 32
of SFAS 95.
As required by paragraph 32 of SFAS 95, we have revised the statement
of cash flows to remove the effects of $17,500 accrued in relation to
the acquisition of the mineral property. We have provided supplemental
disclosure of non-cash investing activities on the statement of cash
flows and in Note 3 to the financial statements.
Note 2 - Significant Accounting Policies
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Mineral Property Costs
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12. Please revise this note to disclose the proper accounting policy for
the mineral property costs. It appears that you have not updated this
disclosure for the change in accounting resulting from prior comment
25.
We have revised Note 2 - Significant Accounting Policies to property
reflect our accounting policy for mineral property costs.
Note 3 - Mineral Property
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13. We note your response to comment 27 in your letter dated October 21,
2005. Your disclosure in Note 3, however, continues to disagree with
the date of the agreement (April 5, 2005) filed as an exhibit to your
registration statement. Please reconcile.
We have revised the agreement date disclosed in Note 3.
<page>
14. We note from your disclosures on page 16 that the initial payment of
$2,500 was made on April 15, 2005, subsequent to your fiscal year end.
However, we note from your audited financial statements as previously
filed that you reflected the $2,500 in your March 31, 2005 financial
statements. Please tell us why you believe it is appropriate to record
this transaction as of March 31, 2005. Alternatively, revise your March
31, 2005 financial statements to remove the effects of the acquisition
of the mineral property rights.
Our disclosure on page 16 indicated that we made the $2,500 by April
15, 2005, the payment agreement in the deadline. The payment was
actually made on March 29, 2005. We have revised our disclosure in the
registration statement to indicate the actual date of payment.
15. Please revise this note to clarify for the reader that a liability of
$17,500 relating to this mineral property purchase is included in
accounts payable and accrued liabilities as of June 30, 2005.
We have revised Note 3 to indicate that we incurred a $17,500 liability
in respect of the acquisition of the Chip property and have included
this in accounts payable and accrued liabilities.
Exhibit 5.1 - Legality Opinion
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16. We note your response to comment 30 in your letter dated October 21,
2005, but counsel has not properly consented to being named in the
prospectus. Please file an opinion that obtains such consent.
We have filed an updated opinion that includes the requested consent.
Yours truly,
/s/ Steven Cozine
Zandaria Ventures Inc.
Steven Cozine, President