UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(B) OR (G) OF THE SECURITIES EXCHANGE ACT OF 1934
CASTMOR RESOURCES LTD.
(Exact name of registrant as specified in its charter)
NEVADA
(State or other jurisdiction of incorporation or organization)
98-0471928
(I.R.S. Employer Identification Number)
4620 MANILLA ROAD SE, SUITE 10
CALGARY, ALBERTA T2G 4B7
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: 403.561.8907
Securities to be registered pursuant to Section 12(b) of the Act: None
Securities to be registered under Section 12(g) of the Act:
Common stock, $0.0001 par value per share
(Title of class)
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer,"
"non-accelerated filer" and "smaller reporting company" in Rule 12b-2 of the
Exchange Act. (Check one):
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [ X ]
TABLE OF CONTENTS
Page
EXPLANATORY NOTE 3
FORWARD-LOOKING STATEMENTS 3
ITEM 1. BUSINESS. 4
ITEM 1A. RISK FACTORS. 12
ITEM 2. FINANCIAL INFORMATION. 15
ITEM 3. PROPERTIES. 17
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. 17
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS. 17
ITEM 6. EXECUTIVE COMPENSATION. 19
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. 19
ITEM 8. LEGAL PROCEEDINGS. 19
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS. 19
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES. 20
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED. 20
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS. 21
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. 24
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE. 44
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS. 44
2
EXPLANATORY NOTE
We are filing this General Form for Registration of Securities on Form 10 to
register our common stock, par value $0.0001, pursuant to Section 12(g) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
Once we have completed this registration, we will be subject to the requirements
of Regulation 13A under the Exchange Act, which will require us to file annual
reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on
Form 8-K, and we will be required to comply with all other obligations of the
Exchange Act applicable to issuers filing registration statements pursuant to
Section 12(g).
As used in this registration statement, unless the context otherwise requires,
"we", "us", "our" or "Castmor Resources" refers to Castmor Resources, Ltd. "SEC"
refers to the Securities Exchange Commission. "Securities Act" refers to the
Securities Act of 1933, as amended. "Exchange Act" refers to the Securities
Exchange Act of 1934, as amended.
FORWARD-LOOKING STATEMENTS
Information in this registration statement contains "forward looking statements"
which can be identified by the use of forward-looking words such as "believes",
"estimates", "could", "possibly", "probably", "anticipates", "estimates",
"projects", "expects", "may", or "should" or other variations or similar words.
No assurance can be given that the future results anticipated by the
forward-looking statements will be achieved. These statements constitute
cautionary statements identifying important factors with respect to those
forward-looking statements, including certain risks and uncertainties that could
cause actual results to vary materially from the future results anticipated by
those forward-looking statements. Such statements are only predictions and
involve known and unknown risks, uncertainties and other factors, including the
risks in the section titled "Risk Factors". Among the key factors that have a
direct bearing on our results of operations are the effects of various
governmental regulations, the fluctuation of our direct costs and the costs and
effectiveness of our operating strategy. Other factors could also cause actual
results to vary materially from the future results anticipated by those
forward-looking statements.
The forward-looking statements are based upon management's current views and
assumptions regarding future events and operating performance, and are
applicable only as of the dates of such statements. We do not have any intention
or obligation to update publicly any forward-looking statements, whether as a
result of new information, future events, changes in assumptions, or otherwise.
3
PART I
ITEM 1. BUSINESS.
GENERAL
We were incorporated in the State of Nevada on June 27, 2005. Our office is
located at 4620 Manilla Road SE, Suite 10, Calgary, Alberta T2G 4B7. We have no
subsidiaries. Our telephone number is 403.561.8907. Our facsimile number is
403.451.1661. We have not been involved in any mergers or acquisitions since our
inception, and there are no pending or anticipated mergers, acquisitions,
spin-offs or recapitalizations.
We are an exploration stage company in that we are engaged in the search for
mineral deposits that are not in either the development or production stage,
with a view to exploiting any mineral deposits we discover that demonstrate
economic feasibility. Since we are an exploration stage company, there is no
assurance that commercially exploitable reserves of valuable minerals exist on
our property. We need to do further exploration before a final evaluation of the
economic and legal feasibility of our future exploration is determined.
We have not commenced business operations. To date, our activities have been
limited to organizational matters, acquiring our mineral claims, obtaining a
geology report and the preparation and filing of our information circular and
this registration statement. Our assets are limited to our mineral claims, the
acquisition of which have been recorded as an expense in our financial
statements in accordance with our accounting policy.
By a Transfer of Mineral Disposition dated November 7, 2005, from a
non-affiliated third party, we acquired a 100% interest in the White Bear Arm
Property: two non-contiguous mineral exploration licenses (license numbers
011117M and 011300M) comprising 17 claims located along southeastern coastal
Labrador, approximately 13 kilometers northeast of the community of
Charlottetown in Labrador, Canada, having a total area of 425 hectares (1,054.8
acres). One of the licenses (license number 011300M), comprising eight claims,
was inadvertently allowed to expire and was cancelled on January 24, 2007. We
reacquired a 100% interest in the same eight claims under a new mineral license
(license number 013632M) by a Transfer of Mineral Disposition dated July 16,
2007, from a non-affiliated third party. The mineral licenses underlying the
White Bear Arm Property are registered with the Government of Newfoundland and
Labrador and are presently in good standing.
MAP OF THE LOCATION OF THE WHITE BEAR ARM PROPERTY
[GRAPHIC OMITED]
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 White Bear Arm Property. Upon completion of each
phase of exploration, we will make a decision as to whether or not we will
proceed with each successive phase based upon the analysis of the results of
that program. Our directors will make this decision based upon the
4
recommendations of an independent geologist who will oversee the program and
record the results.
We presently have no known reserves of any type of mineral. We plan to conduct
appropriate exploration work on the White Bear Arm Property in order to
ascertain whether it possesses commercially exploitable reserves of valuable
minerals. There can be no assurance that commercially exploitable reserves of
valuable minerals exist on the White Bear Arm Property or that we will discover
them, if they exist. If we are unable to find reserves of valuable minerals or
we cannot remove the minerals because we either do not have the capital to do
so, or because it is not economically feasible to do so, then we will cease
operations and our shareholders may lose their investment.
Even if Phase I of our proposed exploration program identifies high priority
geological targets suitable for a Phase II diamond drilling program, we will
need to raise additional funding to finance the Phase II drilling program and
any additional drilling and engineering studies that are required before we will
know if we have commercially exploitable reserves of valuable minerals. We
anticipate that any additional funding that we require will be in the form of
equity financing from the sale of our common stock. There is no assurance,
however, that we will be able to raise sufficient funding from the sale of our
common stock. The risky nature of this enterprise and lack of tangible assets
places debt financing beyond the credit-worthiness required by most banks or
typical investors of corporate debt until such time as an economically viable
mine can be demonstrated. We do not have any arrangements in place for any
future equity financing. If we are unable to secure additional funding, we will
cease or suspend operations. We have no plans, arrangements or contingencies in
place in the event that we cease operations.
MINERAL CLAIMS
The White Bear Arm Property consists of two non-contiguous mineral exploration
licenses comprising a total of 17 claims having a total area of 425 hectares
(mineral rights licence numbers 011117M and 013632M), wholly owned by us. We
hold all of our mineral titles free and clear of any encumbrances or liens.
The following table sets out all the mineral exploration licenses that currently
compose the White Bear Arm Property.
- --------------------------------------------------------------------------------------------
MINERAL NATIONAL
EXPLORATION NUMBER TOPOGRAPHIC
LICENSE OF AREA SERIES MAP
NUMBER LICENSEE HOLDER CLAIMS (HECTARES) SHEET ISSUANCE DATE
- --------------------------------------------------------------------------------------------
011117M Castmor Resources Ltd. (100%) 9 225 13A/16 July 13, 2005
013632M Castmor Resources Ltd. (100%) 8 200 13A/16, 3D13 June 4, 2007
- --------------------------------------------------------------------------------------------
TOTALS 17 425
(1,054.8 acres)
============================================================================================
Our mineral exploration licenses entitle us to explore the claims composing the
White Bear Arm Property subject to the laws and regulations of the Province of
Newfoundland and Labrador. Title to mineral claims are issued and administered
by the Mineral Lands Division of the Ministry of Natural Resources, and title
must comply with all provisions under the Mineral Act of Newfoundland and
Labrador.
Under Newfoundland law, our mineral licenses may be held for one year after the
date of Issuance Date, and thereafter from year to year if, on or before the
anniversary date, we perform assessment work on the underlying claims having a
minimum value of not less than C$200 per claim in the first year, C$250 per
claim in the second year, and C$300 per claim in the third year. If we are
unable to complete the assessment work required to be done in any twelve month
period, we can maintain our claims in good standing by posting a cash security
deposit for the amount of the deficiency. When the deficient work is completed
and accepted the security deposit will be refunded. Otherwise, the security
deposit will be forfeited. If we do not comply with these maintenance
requirements, then we will forfeit our claims at the end of the anniversary date
for each respective claim. All of our claims are presently in good standing.
GLOSSARY OF TECHNICAL TERMS
The following are the definitions of certain technical and geological terms used
in this registration statement:
5
AMPHIBOLE: Family of silicate minerals forming prism or needle-like crystals.
Amphibole minerals generally contain iron, magnesium, calcium and aluminum in
varying amounts, along with water.
AMPHIBOLITE: A dark-colored metamorphic rock of mafic composition consisting
mainly of the minerals hornblende and plagioclase.
ANATECTIC: Having melted from preexistent rock.
ASSAY: A chemical analysis that determines the amount of easily extractable
elements in a sample (of rock, soil, till, silt, etc.). The concentrations of
precious metals such as gold and silver are typically reported as grams of metal
per tonne of rocks; base metal assays (copper, lead, zinc, etc.) are given in
weight percent. Assay sheets from laboratories typically give gold
concentrations in parts per billion (ppb). 1000 ppb equals 1 part per million
(ppm), equals 1 gram/tonne (there are about 34 grams in an ounce). Base metal
assays are typically measured in ppm (10,000 ppm equals one percent).
BIOTITE: common rock-forming mineral of the mica family. Biotite is a black or
dark brown silicate rich in iron, magnesium, potassium, aluminum, and, of
course, silica. Like other micas, it forms flat book-like crystals that peel
apart into individual sheets on cleavage planes.
BOREAL: Referring to the northern forests.
CO: The chemical symbol for Cobalt.
CONTACT: The surface of delimitation between a vein and its wall, or country
rock.
CU: The chemical symbol for Copper.
DERIVATIVE: A rock composed of materials derived from the weathering of older
rocks, a sedimentary rock, or a rock formed of material that has not been in a
state of fusion immediately before its accumulation.
DYKES: Tabular igneous intrusions that cut across the bedding or foliation of
the country rock.
ECOCLIMATE: Climate operating as an ecological factor. The sum of the
meteorological factors within a habitat.
ESKERS: A long, narrow ridge of coarse gravel deposited by a stream flowing in
or under a decaying glacial ice sheet.
FACIES: The overall characteristics of a rock unit that reflect its origin and
differentiate the unit from others around it. Mineralogy and sedimentary source,
fossil content, sedimentary structures and texture distinguish one facies from
another.
FELSIC: Igneous rock composed principally of feldspars and quartz.
FERROMAGNESION: Containing iron and magnesium.
FLUVIOGLACIAL: Pertaining to the meltwater streams flowing from wasting glacier
ice and esp. To the deposits and landforms produced by such streams, as kame
terraces and outwash plains; relating to the combined action of glaciers and
streams.
FOLIATED: Of a planar structure or any planar set of minerals in metamorphic
rocks that formed from direct pressure during deformation.
GABBRO: Coarse grained mafic intrusive rock composed mainly of plagioclase and
pyroxene.
GABBROIC: Having the quality of gabbro
GABBRONORITE: Gabbro containing orthopyroxene and labradorite, a plagioclasic
feldspar.
GARNET: Any of a group of hard silicate minerals having the general formula
asb2(sio4)3, occurring chiefly as well-formed crystals in metamorphic rocks.
GARNETIFEROUS: Containing garnets.
GEOPHYSICS: The study of the physical properties of the earth and the
composition and movement of its component rock. Geophysics is used extensively
in mineral exploration to detect mineralized rocks characterized by any one or
more of their physical properties.
GNEISS: A layered or banded crystalline metamorphic rock, the grains of which
are aligned or elongated into a roughly parallel arrangement.
6
GOSSAN: A rusty rock in which iron-bearing sulphide minerals have been oxidized
by air and water. Gossans may overlie a significant sulphide body.
GRANITE: Medium to coarse-grained felsic intrusive rock.
GRANITE: An igneous (formed from molten material) rock that solidified within
the Earth's crust and is principally composed of quartz, feldspar, and biotite.
GRANITIC: See Granitoid.
GRANITOID: Pertaining to or composed of granite.
GRANULITE: A relatively coarse, granular rock formed at high pressures and
temperatures, which may exhibit a crude gneissic structure due to the
parallelism of flat lenses of quartz or feldspar.
GRAPHITE: Native carbon mineral often with high conductance properties.
IGNEOUS: Rock or material, which solidified from molten material.
INTRUSION: A mass of rock that has been forced into or between other rocks.
INTRUSIVE: A body of igneous rock formed by the consolidation of magma intruded
into other rocks, in contrast to lavas, which are extruded upon the surface.
LITHOLOGY: The character of a rock described in terms of its structure, color,
mineral composition, grain size, and arrangement of its component parts; all
those visible features that in the aggregate impart individuality to the rock.
MAFIC: Pertaining to or composed of the ferromagnesian rock-forming silicates,
said of some igneous rocks and their constituent minerals.
MAGMA: Molten rock, formed within the inner parts of the Earth, which
crystallizes to form an igneous rock.
MAGMATIC SULPHIDE DEPOSIT: A deposit - usually of nickel, copper, cobalt or
platinum group elements - that is found in mafic or ultramafic igneous rocks.
MAGNETITE: Magnetic iron ore, being a black iron oxide containing 72.4% iron
when pure.
MASL: Metres above sea level.
MASS: A large irregular deposit of ore, which cannot be recognized as a vein or
bed.
METAMORPHIC: A rock that has been altered by physical and chemical processes
including heat, pressure, and fluids.
METASEDIMENTARY: Having the quality of a sediment or sedimentary rock that shows
evidence of having been subjected to metamorphism.
MIGMATITIC: Having the quality of a composite rock composed of igneous or
igneous-appearing and metamorphic materials that are generally distinguishable
megascopically.
MONZONITE: A granular plutonic rock containing approximately equal amounts of
orthoclase and plagioclase, and thus intermediate between syenite and diorite.
MORAINAL: Have the quality of a mass of rocks, gravel, sand, clay, etc., carried
and deposited directly by a glacier.
NI: The chemical symbol for Nickel.
OLIVINE: A naturally occurring mineral (magnesium-iron silicate) that is usually
olive green.
PARAGNEISS: A gneiss formed by the metamorphism of a sedimentary rock.
7
PELITIC: A fine-grained sedimentary rock composed of more or less hydrated
aluminum silicates with which are mingled small particles of various other
minerals.
PLAGIOCLASE: Any of a series of triclinic minerals of the feldspar family,
ranging in composition from albite to anorthite and found in many rocks.
PSAMMITIC: Of or having the quality of fine-grained, clayey sandstone.
PYRITE: Iron sulphide.
QUARTZOFELDSPATHIC: Composition of a rock particularly rich in silica and
feldspar.
SULPHIDE: Minerals in which the metallic elements are chemically bound to
sulphur.
TERRACE: A raised portion of an ancient riverbed or a bank on which alluvial
deposits may be found.
TROCTOLITE: Igneous rock, found in the lunar highlands, composed of plagioclase
and olivine.
ULTRAMAFIC: An igneous rock composed chiefly of mafic minerals.
HISTORY OF THE CLAIMS
According to the geological report prepared by Jacques Whitford Limited,
previous exploration work in the area of the White Bear Arm Property extends
back to the 1950s, when various reconnaissance missions were performed
throughout the Province of Newfoundland and Labrador. Documented field work is
found back to the mid 1990s, when the massive Voisey's Bay nickel-copper
deposits were discovered, spurring an exploration rush throughout much of
Labrador.
In the immediate area of the White Bear Arm Property, detailed mineral
exploration work was completed by Noranda Mining and Exploration Inc. in 1995
and 1996. Geological mapping, prospecting, geochemical sampling, airborne
electromagnetics, and ground geophysics are some of the many surveys completed
over the property. Noranda explored the area for its magmatic Ni-Cu sulphide
potential.
Geological mapping and compilation has been completed by the Newfoundland and
Labrador Department of Mines and Energy. In the most recent mapping, the White
Bear Arm Complex ("WBAC") is described as being composed of gabbronorite,
olivine gabbronorite and troctolite, together with lesser monzonite and
metamorphic derivatives that in the south are strongly deformed and
metamorphosed to amphibolite intercalated with metasedimentary gneiss of the
Paradise River Metasedimentary Gneiss Belt (PRMBGB). Pronounced Ni, Co and Cu
lake bottom anomalies were also noted in the eastern end of the WBAC An assay of
0.15% Cu and 0.13% Ni was historically returned from a gossan at Mountain Brook
in the WBAC.
LOCATION AND ACCESS
The White Bear Arm Property is located approximately 13 kilometers northeast of
the community of Charlottetown, Labrador, Canada. The mineral licenses composing
the White Bear Arm Property straddle the boundary between National Topographic
Series map sheets 13A/16 and 3D/13. The following map shows the distribution of
the claims underlying the White Bear Arm Property, in the vicinity of
Charlottetown, southeastern Labrador. The property is approximately five
kilometers from tidewater.
8
MINERAL EXPLORATION LICENSES OF THE WHITE BEAR ARM PROPERTY AND GENERALIZED
GEOLOGY
[GRAPHIC OMITED]
Charlottetown, located 290 kilometers east-southeast of the town of Goose Bay,
has a gravel air strip for scheduled air traffic, and is serviced by chartered
float plane and scheduled coastal boat traffic during ice free months (June to
October). The town has a motel, and some supplies and services can be procured
there.
The White Bear Arm Property is accessible by helicopter for the purpose of an
initial assessment.
TOPOGRAPHIC AND PHYSICAL ENVIRONMENT
The area is moderately to heavily wooded, with some open barren areas on ridges
and hilltops, and underlain by a thick layer of muskeg and caribou moss. The
topography of the area is locally rugged, with elevations ranging from up to 230
masl, locally. The area is heavily wooded.
The White Bear Arm Property is located within the Paradise River Ecoregion,
classified as having a maritime mid-boreal ecoclimate, with its forests
dominated by closed stands of balsam fir and black spruce. The region is
dominated by northwest trending lakes and bays that mimic the structural grain
of the bedrock. Relief is locally rugged, with elevations reaching 300 meters
above sea level. The area is heavily wooded, with some open barren areas on
ridges and hilltops.
Composed of granites, gneisses, and gabbroic intrusive rocks, the area is
generally rough and undulating with deeply dissected coastal margins. Its
surface rises rapidly from the sea coast to elevations of about 300 masl, and is
covered with sandy morainal deposits of variable thickness. Fluvioglacial
deposits are sporadically distributed in the form of eskers and river terraces.
The general area is marked by cool, rainy summers and cold winters. The mean
annual temperature is approximately 1 Celsius. The mean summer temperature is
11.5 Celsius and the mean winter temperature is -9 Celsius. The mean annual
precipitation ranges 800-1100 millimeters.
REGIONAL GEOLOGY
The White Bear Arm Property lies within the eastern portion of the Grenville
lithotectonic province of Labrador, within rocks of the PRMGB. The belt consists
of sulphide-bearing pelitic, migmatitic metasedeimentary gneiss and minor
psammitic gneiss at amphibolite to granulite facies, which are intercalated with
granitoid and mafic-ultramafic intrusives. The latter are generally interpreted
by field regional geophysics to be part of the WBAC, which has locally intruded
and assimilated the PRMGB, and is interpreted to underlie it. According to
9
Jacques Whitford Limited, the juxtaposition of a possible nickel source (WRAC)
with sulphidic host material (PRMGB), and the presence of significant Ni-Cu-Co
lake bottom anomalies provide an ideal exploration environment for Ni-Cu
magmatic sulphide deposits.
LOCAL GEOLOGY
Detailed geology in the vicinity of the White Bear Arm Property was extrapolated
by Jacques Whitford Limited from work completed by Noranda Mining and
Exploration Inc. Underlying the area, the principal lithology is a
quartzofeldspathic, frequently garnetiferous (some samples contain up to 50%
garnet), meta-sedimentary gneiss. The gneiss is foliated uniformly, trends
towards the northwest, and is steeply dipping. The outcrop consists of banded
pink and black, fine-grained garnet-biotite gneiss.
Locally, the spectacular flake graphite is developed, and can attain 5% of the
rock over narrow widths. Additionally, disseminated pyrite, commonly 2-3%
(occasionally up to 20%) as patches, occurs as rusty staining within the gneiss.
Traces of chalcopynte was locally noted to occur in the area.
Where exposure is adequate, amphibolite is seen to occur parallel to the
foliation, as narrow (amphibole and garnet mineralogy) dykes, comprising
dominantly amphibole, garnet and magnetite.
Granite in the area occurs both as granitic gneiss with banding and anatectic
(diffuse veining) textures, as well as totally undeformed dykes and masses with
sharp contacts. These late granites are found to cross-cut both the paragneisses
and amphibolites.
GEOLOGY REPORT
In January 2006, we retained Jacques Whitford Limited to complete an initial
evaluation of the White Bear Arm Property and to prepare a geological summary
report on it. No representative of Jacques Whitford Limited visited the property
prior to preparing the report.
Jacques Whitford Limited is a Canadian owned multidisciplinary environmental
engineering and sciences consulting firm providing solutions to clients in both
the public and private sectors. Formed in 1972, the firm has grown to more than
1,100 staff located in 40 offices across Canada, the United States and
internationally. Jacques Whitford is licensed to practice Professional
Geoscience in Newfoundland and Labrador.
RECOMMENDED EXPLORATION PROGRAM
Based on their review of data relating to the White Bear Arm Property, Jacques
Whitford concluded that the White Bear Arm Property warrants further exploration
because the regional and local geology indicate a prospective environment for
hosting Ni-Cu sulphide deposits or industrial minerals such as garnet. In
particular, the area contains sulphide-bearing rock, through which mafic,
Ni-bearing magma intrudes. Garnetiferous gneiss has also been mapped on the
property. Jacques Whitford recommended a two-phase exploration program to
further evaluate the property.
10
An estimated budget for our exploration program is set out in the following
table:
- --------------------------------------------------------------------------
PHASE I
- --------------------------------------------------------------------------
Geologist, sampling and mapping supervision $ 2,700
Geological assistant $ 1,500
Rock, stream sediment and till sampling $ 2,500
Room and board lodging in Charlottetown $ 1,000
Transportation from Goose Bay to project area $ 13,500
Permits, fees, filings, insurance and other administrative items 1,000
Reports and maps 1,000
Overhead $ 3,480
- --------------------------------------------------------------------------
TOTAL PHASE I COSTS: $ 26,680
- --------------------------------------------------------------------------
PHASE II
- --------------------------------------------------------------------------
Diamond Drilling and Core Sampling $170,000
Overhead $ 25,500
- --------------------------------------------------------------------------
TOTAL PHASE II COSTS: $195,500
- --------------------------------------------------------------------------
TOTAL PROGRAM COSTS: $222,180
==========================================================================
The above budget was provided to us by Jacques Whitford and is contained in
their geological report respecting the White Bear Arm Property. Actual project
costs may exceed Jacques Whitford's estimates.
We have sufficient capital to complete Phase I of our exploration program. If
Phase I of our exploration program identifies high priority targets for further
exploration in Phase II, then we expect to complete Phase II within 12 months of
obtaining our Phase I results. We will not have sufficient funds from this
offering to initiate Phase II of our exploration plan, even if we sell all of
the offered shares.
We anticipate that any additional funding that we require will be in the form of
equity financing from the sale of our common stock. There is no assurance,
however, that we will be able to raise sufficient funding from the sale of our
common stock. The risky nature of this enterprise and lack of tangible assets
places debt financing beyond the credit-worthiness required by most banks or
typical investors of corporate debt until such time as an economically viable
mine can be demonstrated. We do not have any arrangements in place for any
future equity financing. If we are unable to secure additional funding, we will
cease or suspend operations. We have no plans, arrangements or contingencies in
place in the event that we cease operations.
MANAGEMENT EXPERIENCE
Our management has no professional training or technical credentials in the
exploration, development, and operation of mines. Consequently, we may not be
able to recognize or take advantage of potential acquisition and exploration
opportunities in the sector without the aid of qualified geological consultants.
Moreover, with no direct training or experience, our management may not be fully
aware of the specific requirements related to working in this industry. They may
make mistakes in their decisions and choices that could cause our operations and
ultimate financial success to suffer irreparable harm.
GEOLOGICAL AND TECHNICAL CONSULTANTS
Since our officers and directors are inexperienced with exploration, we intend
to retain qualified persons on a contract basis to perform the surveying,
exploration, and excavating of the White Bear Arm Property as needed. We do not
presently have any verbal or written agreement regarding the retention of any
such person for the exploration program.
COMPETITIVE FACTORS
The mining industry is highly fragmented and we will be competing with many
other exploration companies looking for minerals. We are one of the smallest
exploration companies and are an infinitely small participant in the mineral
exploration business. While we will generally compete with other exploration
companies, there is no competition for the exploration of minerals from our
claims.
11
We are a junior mineral exploration company. We compete with other junior
mineral exploration companies for financing from a limited number of investors
that are prepared to make investments in junior mineral exploration companies.
The presence of competing junior mineral exploration companies may impact on our
ability to raise additional capital in order to fund our exploration programs if
investors are of the view that investments in competitors are more attractive
based on the merit of the mineral properties under investigation and the price
of the investment offered to investors.
We will also be competing with other junior and senior mineral companies for
available resources, including, but not limited to, professional geologists,
camp staff, mineral exploration supplies and drill rigs.
LOCATION CHALLENGES
We do not expect any major challenges in accessing the White Bear Arm Property
during the initial exploration stages.
REGULATIONS
Our mineral exploration program is subject to the regulations of the Department
of Natural Resources of Newfoundland & Labrador.
We will secure all necessary permits for exploration and, if development is
warranted on the property, we will file final plans of operation before we start
any mining operations. We anticipate no discharge of water into active stream,
creek, river, lake or any other body of water regulated by environmental law or
regulation. Restoration of the disturbed land will be completed according to
law. All holes, pits and shafts will be sealed upon abandonment of the property.
It is difficult to estimate the cost of compliance with the environmental law
since the full nature and extent of our proposed activities cannot be determined
until we start our operations and know what that will involve from an
environmental standpoint.
Exploration stage companies are not required to discuss environmental matters
except as they relate to exploration activities. The only "cost and effect" of
compliance with environmental regulations in Canada is returning the surface to
its previous condition upon abandonment of the property.
EMPLOYEES
We currently have no employees other than our two officers and directors, who
have not been paid for their services and will not receive compensation from the
proceeds of this offering. We do not have any employment agreements with our
directors and officers. We do not presently have pension, health, annuity,
insurance, stock options, profit sharing or similar benefit plans; however, we
may adopt plans in the future. There are presently no personal benefits
available to our officers and directors.
We do not intend to hire additional employees at this time. All of the work on
the property will be conducted by unaffiliated independent contractors that we
will hire. The independent contractors will be responsible for surveying,
geology, engineering, exploration, and excavation. The geologists will evaluate
the information derived from the exploration and excavation and the engineers
will advise us on the economic feasibility of removing the mineralized material.
ITEM 1A. RISK FACTORS.
ANY INVESTMENT IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. IF ANY OF THE
FOLLOWING RISKS OCCUR, OUR BUSINESS, OPERATING RESULTS AND FINANCIAL CONDITION
COULD BE SERIOUSLY HARMED AND OUR SHAREHOLDERS COULD LOSE ALL OR PART OF THEIR
INVESTMENT.
(1) IT IS IMPOSSIBLE TO EVALUATE THE INVESTMENT MERITS OF OUR COMPANY BECAUSE WE
HAVE NO OPERATING HISTORY.
We are an exploration stage company with no operating history upon which an
evaluation of our future success or failure can be made. We were incorporated on
June 27, 2005, and have accumulated a net loss of $24,306 against no revenue.
Thus far, our activities have been primarily limited to organizational matters,
acquiring our mineral claims, obtaining a geology report and the preparation and
filing of our offering circular and this registration statement.
12
(2) SINCE MINERAL EXPLORATION IS A HIGHLY SPECULATIVE VENTURE, ANYONE PURCHASING
OUR STOCK WILL LIKELY LOSE THEIR ENTIRE INVESTMENT.
Potential investors should be aware of the difficulties normally encountered by
new mineral exploration companies and the high rate of failure of such
enterprises. Exploration for minerals is a speculative venture necessarily
involving substantial risk. The expenditures to be made by us on our exploration
program may not result in the discovery of commercially exploitable reserves of
valuable minerals. The likelihood of success must be considered in light of the
problems, expenses, difficulties, complications and delays encountered in
connection with the exploration of the mineral properties that we plan to
undertake. The probability of a mineral claim ever having commercially
exploitable reserves is extremely remote, and in all probability our mineral
claims do not contain any reserves. Any funds spent on the exploration of these
claims will probably be lost. Problems such as unusual or unexpected formations
and other conditions are involved in mineral exploration and often result in
unsuccessful exploration efforts. We may also become subject to significant
liability for pollution, cave-ins or hazards, which we cannot insure or which we
may elect not to insure. In such a case, we would be unable to complete our
business plan and our shareholders may lose their entire investment.
(3) IF WE DO NOT OBTAIN ADDITIONAL FINANCING, OUR BUSINESS MAY FAIL.
The proceeds from our initial public offering are estimated to be sufficient to
complete Phase I of the proposed exploration of our mineral claims but we will
need to obtain additional financing in order to complete our business plan. As
of February 29, 2008, we had cash on hand of $71,188. Our business plan calls
for significant expenses in connection with the exploration of our mineral
property. Phase I of the proposed exploration program on our claims as
recommended by our consulting geologist is estimated to cost $26,680. We will
require additional financing in order to complete Phase II, which is estimated
to cost $195,500. Furthermore, if our exploration program is successful in
discovering commercially exploitable reserves of valuable minerals, we will
require additional funds in order to place our mineral claim into commercial
production. While we do not presently have sufficient information about the
claims to estimate the amount required to place the mineral claims into
commercial production, there is a risk that we may not be able to obtain
whatever financing is required. Obtaining additional financing will depend on a
number of factors, including market prices for minerals, investor acceptance of
our properties, and investor sentiment. These factors may make the timing,
amount, terms or conditions of additional financing unavailable to us. If we are
unsuccessful in obtaining additional financing when we need it, our business may
fail before we ever become profitable and our shareholders may lose their entire
investment.
(4) SINCE MARKET FACTORS IN THE MINING BUSINESS ARE OUT OF OUR CONTROL, WE MAY
NOT BE ABLE TO PROFITABLY SELL ANY MINERALS THAT WE FIND.
If we are successful in locating commercially exploitable reserves of valuable
minerals, we can provide no assurance that we will be able to sell it. Numerous
factors beyond our control may affect the marketability of any minerals
discovered. These factors include fluctuations in the market price of such
minerals due to changes in supply or demand, the proximity and capacity of
processing facilities for the discovered minerals, government regulations,
including regulations relating to prices, taxes, royalties, land tenure, land
use, importing and exporting of minerals and environmental protection. The
precise effect of these factors cannot be accurately predicted, but the
combination of these factors may result in us not receiving an adequate return
on invested capital so that our investors may lose their entire investment.
(5) IF WE CANNOT COMPETE SUCCESSFULLY WITH OTHER EXPLORATION COMPANIES, OUR
EXPLORATION PROGRAM MAY SUFFER AND OUR SHAREHOLDERS MAY LOSE THEIR INVESTMENT.
We are an exploration stage company engaged in the business of exploring for
commercially producible quantities of minerals. We compete with other mineral
resource exploration stage companies for financing from a limited number of
investors that are prepared to make investments in mineral resource exploration
stage companies. The presence of competing mineral resource exploration stage
companies may impede our ability to raise additional capital in order to fund
our property acquisitions and exploration programs if investors are of the view
that investments in competitors are more attractive based on the merit of the
mineral properties under investigation and the price of the investment offered
to investors.
Many of the resource exploration stage companies with whom we compete have
greater financial and technical resources than we do. Accordingly, these
competitors may be able to spend greater amounts on acquisitions of properties
of merit and on exploration of their properties. In addition, they may be able
to afford greater geological expertise in the targeting and exploration of
resource properties. As a result, our competitors will likely have resource
properties of greater quality and interest to prospective investors who may
finance additional exploration and to senior exploration stage companies that
may purchase resource properties or enter into joint venture agreements with
junior exploration stage companies. This competition could adversely impact our
ability to finance the exploration of our mineral property.
13
(6) COMPLIANCE WITH GOVERNMENT REGULATIONS IN THE COURSE OF EXPLORING OUR
MINERAL PROPERTY MAY INCREASE THE ANTICIPATED TIME AND COST OF OUR EXPLORATION
PROGRAM SO THAT WE ARE UNABLE TO COMPLETE THE PROGRAM OR ACHIEVE PROFITABILITY.
Exploration and exploitation activities are subject to federal, provincial and
local laws, regulations and policies, including laws regulating the removal of
natural resources from the ground and the discharge of materials into the
environment. Exploration and exploitation activities are also subject to
federal, provincial, and local laws and regulations which seek to maintain
health and safety standards by regulating the design and use of drilling methods
and equipment.
We will be subject to the Mining Act of Newfoundland as we carry out our
exploration program. We may be required to obtain work permits, post bonds, and
perform remediation work for any physical disturbance to the land in order to
comply with these regulations. While our planned exploration program provides
for regulatory compliance, there is a risk that new regulations could increase
our time and costs of doing business and prevent us from carrying out our
exploration program. If we are unable to complete our exploration program or
achieve profitability, our investors may lose their entire investment.
(7) SINCE OUR BOARD OF DIRECTORS DOES NOT INTEND TO PAY DIVIDENDS ON OUR COMMON
STOCK IN THE FORESEEABLE FUTURE, IT IS LIKELY THAT INVESTORS WILL ONLY BE ABLE
TO REALIZE A RETURN ON THEIR INVESTMENT BY RESELLING SHARES PURCHASED THROUGH
THIS OFFERING.
We have not paid any cash dividends on our common stock since our inception and
we do not anticipate paying cash dividends in the foreseeable future. We intend
to retain our earnings, if any, to provide funds for reinvestment in our
acquisition and exploration activities. Therefore, we do not anticipate
declaring or paying dividends in the foreseeable future. Furthermore, payment of
dividends, if any, in the future is within the discretion of the board of
directors and will depend on our earnings, if any, our capital requirements and
financial condition and other relevant factors.
(8) SINCE OUR EXECUTIVE OFFICERS HAVE NO EXPERIENCE IN MINERAL EXPLORATION AND
DO NOT HAVE FORMAL TRAINING SPECIFIC TO MINERAL EXPLORATION, THERE IS A HIGHER
RISK THAT OUR BUSINESS WILL FAIL.
Our executive officers have no experience in mineral exploration and do not have
formal training in geology or in the technical aspects of management of a
mineral exploration company. This inexperience presents a higher risk that we
will be unable to complete our business plan for the exploration of our mineral
claims. In addition, we will have to rely on the technical services of others
with expertise in geological exploration in order for us to carry our planned
exploration program. If we are unable to contract for the services of such
individuals, it will make it difficult and may be impossible to pursue our
business plan. There is thus a higher risk that our operations, earnings and
ultimate financial success could suffer irreparable harm and that our investors
will lose all of their investment.
(9) IF WE ARE UNABLE TO HIRE AND RETAIN KEY PERSONNEL, WE MAY NOT BE ABLE TO
IMPLEMENT OUR BUSINESS PLAN AND OUR BUSINESS WILL FAIL.
We will compete with other mining companies in the recruitment and retention of
qualified managerial and technical employees. Our success will be largely
dependent upon our ability to hire highly qualified personnel. This is
particularly true in highly technical businesses such as mineral exploration.
These individuals may be in high demand and we may not be able to attract the
staff we need. In addition, we may not be able to afford the high salaries and
fees demanded by qualified personnel, or may lose such employees after they are
hired. Currently, we have not hired any key personnel and we do not intend to do
so until we have proved mineral reserves. If we are unable to hire key personnel
when needed, our exploration program may be slowed down or suspended.
(10) SINCE OUR OFFICERS HAVE OTHER BUSINESS INTERESTS, THEY WILL ONLY BE
DEVOTING SIX HOURS PER WEEK TO OUR OPERATIONS, WHICH MAY RESULT IN PERIODIC
INTERRUPTIONS OR SUSPENSIONS OF EXPLORATION.
Our officers have other outside business activities and will only be devoting
six hours per month, to our operations. As a result, our operations may be
sporadic and occur at times that are convenient to our officers. Consequently,
our business activities may be periodically interrupted or suspended.
14
(11) OUR OFFICERS AND DIRECTORS OWN A CONTROLLING PERCENTAGE OF VOTING STOCK,
WHICH WILL ALLOW THEM TO MAKE KEY DECISIONS AND EFFECT TRANSACTIONS WITHOUT
FURTHER SHAREHOLDER APPROVAL.
Our directors and executive officers collectively own 75% of our outstanding
voting stock. Accordingly, these stockholders, as a group, will be able to
control the outcome of stockholder votes, including votes concerning the
election of directors, the adoption or amendment of provisions in our Articles
of Incorporation and our Bylaws, and the approval of mergers and other
significant corporate transactions. These factors may also have the effect of
delaying or preventing a change in our management or our voting control. Our
Articles of Incorporation do not provide for cumulative voting.
(12) SINCE SUBSTANTIALLY ALL OF OUR ASSETS, DIRECTORS AND OFFICERS ARE LOCATED
OUTSIDE THE UNITED STATES, IT MAY BE DIFFICULT FOR INVESTORS TO ENFORCE WITHIN
THE UNITED STATES ANY JUDGMENTS OBTAINED AGAINST US OR ANY OF OUR DIRECTORS OR
OFFICERS.
Substantially all of our assets are located outside the United States and we do
not currently maintain a permanent place of business within the United States.
We were incorporated in the State of Nevada and have an agent for service in
Carson City, Nevada. Our agent for service will accept on our behalf the service
of any legal process and any demand or notice authorized by law to be served
upon a corporation. Our agent for service will not, however, accept service on
behalf of any of our officers or directors. All of our directors and officers
are residents of Canada and neither of them have an agent for service in the
United States. Therefore, it may be difficult for investors to enforce within
the United States any judgments obtained against us or our officers or
directors, including judgments predicated upon the civil liability provisions of
the securities laws of the United States or any state thereof.
(13) WE MAY ISSUE SHARES OF PREFERRED STOCK WITH GREATER RIGHTS THAN OUR COMMON
STOCK, WHICH MAY ENTRENCH MANAGEMENT AND RESULT IN DILUTION OF OUR SHAREHOLDERS'
INVESTMENT.
Our Articles of Incorporation authorize the issuance of up to 50,000,000 shares
of preferred stock, par value $.0001 per share. The authorized but unissued
preferred stock may be issued by our board of directors from time to time on any
number of occasions, without stockholder approval, as one or more separate
series of shares comprised of any number of the authorized but unissued shares
of preferred stock, designated by resolution of our board of directors stating
the name and number of shares of each series and setting forth separately for
such series the relative rights, privileges and preferences thereof, including,
if any: (i) the rate of dividends payable thereon; (ii) the price, terms and
conditions of redemption; (iii) voluntary and involuntary liquidation
preferences; (iv) provisions of a sinking fund for redemption or repurchase; (v)
terms of conversion to common stock, including conversion price, and (vi) voting
rights. Such preferred stock may enable our board of directors to hinder or
discourage any attempt to gain control of us by a merger, tender offer at a
control premium price, proxy contest or otherwise. Consequently, the preferred
stock could entrench our management. The market price of our common stock could
be depressed to some extent by the existence of the preferred stock. As of the
date of this registration statement, no shares of preferred stock have been
issued.
ITEM 2. FINANCIAL INFORMATION.
Our business plan is to explore the White Bear Arm Property to determine whether
it contains commercially exploitable reserves of valuable minerals. We intend to
proceed with Phase I of the exploration program recommended by Jacques Whitford.
Phase I will consist of expanded geological mapping, and geochemical sampling
that will cover previously established grid areas, as well as other prospective
sites that may be developed to delineate either base metals or industrial
minerals. Geochemical sampling will include rock, stream sediment and till
sampling. Several airborne electromagnetic anomalies will be re-verified on the
ground and mapped for size and extent. If Phase I develops any high priority
targets for further exploration, then we will proceed with Phase II of the
proposed exploration program, consisting of 800 to 1000 metres of diamond
drilling, mobilized to the nearest road by truck, then helicopter-supported from
that point. We anticipate that Phase I will cost approximately $26,660 while
Phase II would cost approximately $195,500 To date, we have not commenced
exploration on the White Bear Arm Property.
We expect that Phase I of our exploration program will be concluded by July 1,
2008. During Phase I we will retain a consulting geologist to review all past
exploration data relating to the White Bear Arm Property and plot relevant
information on a map. This is known as geological mapping. Based on this
mapping, the geologist will choose property areas that are most likely to host
economic mineralization. He will then conduct a sampling program focusing on
these property areas by gathering rock and soil samples from the identified
areas that appear to contain mineralization. The samples will be sent to a
laboratory for mineral analysis. By August 2008, we should receive the results
of the sample analysis and be able to determine which property areas, if any,
contain significant mineralization.
If the results of Phase I warrant further exploration, we plan to commence Phase
II of the exploration program in August 2008. Phase II will take approximately
three months to complete and will consist of using heavy equipment to drill up
to five holes to a depth of 200 meters. Drilling locations will be determined by
analyzing the results of the Phase I sampling program. Cylinders of rock will be
removed from the drill holes and sent to a laboratory for mineral analysis.
15
Results will indicate the presence of any minerals below the property surface.
We do not have any verbal or written agreement regarding the retention of any
qualified engineer or geologist for our exploration program. Jacques Whitford
have indicated that, subject to availability, they would be prepared to oversee
the exploration program, but we have not discussed any terms of such an
arrangement. We are also uncertain as to when Jacques Whitford will have
qualified personnel available to oversee the exploration program.
We have sufficient capital to complete Phase I of our exploration program. If
Phase I of our exploration program identifies high priority targets for further
exploration in Phase II, then we expect to complete Phase II within 12 months of
obtaining our Phase I results. We will not have sufficient funds from this
offering to initiate Phase II of our exploration plan, even if we sell all of
the offered shares.
We anticipate that any additional funding that we require will be in the form of
equity financing from the sale of our common stock. There is no assurance,
however, that we will be able to raise sufficient funding from the sale of our
common stock. The risky nature of this enterprise and lack of tangible assets
places debt financing beyond the credit-worthiness required by most banks or
typical investors of corporate debt until such time as an economically viable
mine can be demonstrated. We do not have any arrangements in place for any
future equity financing. If we are unable to secure additional funding, we will
cease or suspend operations. We have no plans, arrangements or contingencies in
place in the event that we cease operations.
Our officers will only be devoting approximately six hours per week of their
time to our business. We do not foresee this limited involvement as negatively
impacting our company over the next 12 months because all exploratory work is
being performed by an outside consultant. If, however, the demands of our
business require more time of our officers, such as raising additional capital
or addressing unforeseen issues with regard to our exploration efforts, they are
prepared to adjust their timetables to devote more time to our business. They
may, however, not be able to devote sufficient time to the management of our
business, as and when needed.
We do not have plans to purchase any significant equipment or to hire any
employees during the next 12 months and until we have proved reserves.
RESULTS OF OPERATIONS
Our business is in the early stage of development. Since inception on June 27,
2005 we have not earned any revenue and we have not identified any commercially
exploitable reserves of valuable minerals on our property. We do not anticipate
earning revenue until such time as we have entered into commercial production of
the White Bear Arm Property. We are presently in the exploration stage of our
business and we can provide no assurance that we will discover commercially
exploitable reserves of valuable minerals on the White Bear Arm Property, or
that if such resources are discovered that we will commercially produce them.
We incurred operating expenses in the amount of $24,306 for the period from
inception on June 27, 2005 to February 29, 2008. These operating expenses
included: (a) professional fees of $11,172; (b) office expenses of $5,031; (c)
mineral property acquisition and exploration costs of $5,000; (d) interest
expenses of $1,750; and (e) other expenses of $1,353.
LIQUIDITY AND CAPITAL RESOURCES
Since inception on June 27, 2005 our activities have been financed from the
proceeds of share subscriptions and a promissory note for $15,000 issued to a
non-affiliated third party on July 31, 2007. The promissory note accrues
interest at the rate of 20% per annum, calculated semi-annually, and is due and
payable on July 31, 2008. Proceeds from the promissory note were used to pay for
offering expenses, claim renewal and working capital.
As of February 29, 2008 we had total assets of $71,188 comprised entirely of
cash. We have sufficient working capital to maintain our present level of
operations for the next 12 months and to complete Phase I of our proposed
exploration program, but not Phase II. We will be required to seek additional
funding in order to complete Phase II of our exploration program.
We anticipate that any additional funding that we require will be in the form of
equity financing from the sale of our common stock. There is no assurance,
however, that we will be able to raise sufficient funding from the sale of our
common stock. The risky nature of this enterprise and lack of tangible assets
places debt financing beyond the credit-worthiness required by most banks or
typical investors of corporate debt until such time as an economically viable
mine can be demonstrated. We do not have any arrangements in place for any
future equity financing. If we are unable to secure additional funding, we will
cease or suspend operations. We have no plans, arrangements or contingencies in
place in the event that we cease operations.
16
ITEM 3. PROPERTIES.
We have a 100% interest in the White Bear Arm Property, comprising 17 mineral
claims located along southeastern coastal Labrador, approximately 13 kilometers
northeast of the community of Charlottetown in Labrador, Canada, having a total
area of 425 hectares (1,054.8 acres). This interest only relates to the right to
explore for and extract minerals from the claims. We do not own any real
property interest in the claims. We do not own or lease any property other than
the White Bear Arm Property.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information regarding the beneficial
ownership of our common stock as of February 29, 2008 by (i) each person known
by us to be a beneficial owner of more than five percent (5%) of our issued and
outstanding common stock; (ii) each of our Directors and executive officers; and
(iii) all our directors and executive officers as a group.
- ----------------------------------------------------------------------
NAME NUMBER OF SHARES %
- ----------------------------------------------------------------------
Fidel Thomas 1,000,000 8
4620 Manilla Road SE, Suite 10
Calgary, Alberta T2G 4B7
Alfonso Quijada 8,300,000 67
4620 Manilla Road SE, Suite 10
Calgary, Alberta T2G 4B7
- ----------------------------------------------------------------------
Directors and officers as a group (two persons) 9,300,000 75
======================================================================
Unless otherwise noted, we believe that all persons named in the table have sole
voting and investment power with respect to all shares of common stock
beneficially owned by them. For purposes hereof, a person is considered to be
the beneficial owner of securities that can be acquired by such person within 60
days from the date hereof, upon the exercise of warrants or options or the
conversion of convertible securities. Each beneficial owner's percentage
ownership is determined by assuming that any such warrants, options or
convertible securities that are held by such person (but not those held by any
other person) and which can be exercised within 60 days from the date hereof,
have been exercised.
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS.
The following sets forth our directors, executive officers, promoters and
control persons, their ages, and all offices and positions held. Directors are
elected for a period of one year and thereafter serve until their successor is
duly elected by the shareholders. Officers and other employees serve at the
will of the Board of Directors.
- -----------------------------------------------------------------------------------------------------------------------
TERM PERIOD SERVED AS
NAME POSITION AGE DIRECTOR/OFFICER
- -----------------------------------------------------------------------------------------------------------------------
Fidel Thomas Chief Executive Officer, President, Chief Financial Officer and a director 42 2007 to present
Alfonso Quijada Vice-President, Chief Operating Officer, Secretary and a director 37 2006 to present
- -----------------------------------------------------------------------------------------------------------------------
Fidel Thomas has been an independent corporate communications and business
development consultant since 2003. His clients include numerous private and
publicly held corporations, including Minco Gold Corp., Minco Silver Corp.,
Trivello Energy Corp., SMS Active Technologies and Visiphor Corp. Originally, an
actor, screen-writer and director, Mr. Thomas was active in the Canadian
entertainment industry from 1997 to 2002, through his production company, Inner
Vision Images Motion Picture Corp., and later, as an officer and director of AMP
Productions, Ltd. from 2003 to 2007. He is also currently Chief Executive
Officer and a director of Pickford Minerals, Inc. Ltd, an exploration company
having mineral interests in Labrador, Canada. Mr. Thomas received a Bachelor of
Sociology from the University of East London in September, 1994. He earned a
Diploma in Media Practice from the University of Central London in 1998. In
2007, he successfully completed a mining professional development course at the
Norman B. Keevil Institute of Mining Engineering at the University of British
Columbia.
Alfonso Quijada has raised millions of dollars for private and public companies,
including $1.8 million for Rhino Films and $2.5 million for an oil refinery in
Bulgaria. From 1994 through to 1998 he was the founder and president of New
17
World Artist Productions Inc., an international production company, focused
primarily on live-productions and music development in Japan. He was the VP of
Investor Relations for Tri-Gate Entertainment Inc. from 2000 to 2003. From 2002
to 2003, Mr. Quijada also headed up investor relations for TNR Gold Corp. Since
2003, he has served as an independent consultant, advising companies on
corporate development and finance. He is also currently Chief Operating Officer
and a director of Pickford Minerals, Inc. Ltd, an exploration company having
mineral interests in Labrador, Canada.
Messrs. Thomas and Quijada are the only "promoters" of our company, as defined
by Rule 405 of the Securities Act.
We do not anticipate that any conflicts of interest will arise with respect to
our directors' concurrent involvement with Pickford Minerals, Inc. or their
other business activities. Our directors do not have and will not accept any
employment with any enterprise that may conflict with their duties to Castmor
Resources.
The address for all our officers and directors is 4620 Manilla Road, SE, Suite
10, Calgary, AB T2G 4B7.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
During the past five years none of our directors, executive officers, promoters
or control persons have:
(1) had any bankruptcy petition filed by or against any business of which such
person was a general partner or executive officer either at the time of the
bankruptcy or within two years prior to that time;
(2) been convicted in a criminal proceeding or subject to a pending criminal
proceeding;
(3) been subject to any order, judgment, or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining, barring, suspending or otherwise limiting his involvement
in any type of business, securities or banking activities; or
(4) been found by a court of competent jurisdiction in a civil action, the
Commission or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law, and the judgment has not been
reversed, suspended, or vacated.
COMMITTEES OF THE BOARD
All proceedings of the board of directors for the fiscal year ended August 31,
2007 were conducted by resolutions consented to in writing by our board of
directors and filed with the minutes of the proceedings of our board of
directors. Our company currently does not have nominating, compensation or audit
committees or committees performing similar functions nor does our company have
a written nominating, compensation or audit committee charter. Our board of
directors does not believe that it is necessary to have such committees because
it believes that the functions of such committees can be adequately performed by
the board of directors.
Our company does not have any defined policy or procedure requirements for
shareholders to submit recommendations or nominations for directors. The board
of directors believes that, given the stage of our development, a specific
nominating policy would be premature and of little assistance until our business
operations develop to a more advanced level. Our company does not currently have
any specific or minimum criteria for the election of nominees to the board of
directors and we do not have any specific process or procedure for evaluating
such nominees. The board of directors will assess all candidates, whether
submitted by management or shareholders, and make recommendations for election
or appointment.
A shareholder who wishes to communicate with our board of directors may do so by
directing a written request addressed to our President, Fidel Thomas, at the
address appearing on the first page of this registration statement.
AUDIT COMMITTEE FINANCIAL EXPERT
We do not have a standing audit committee. Our directors perform the functions
usually designated to an audit committee. Our board of directors has determined
that we do not have a board member that qualifies as an "audit committee
financial expert" as defined in Item 407(d)(5) of Regulation S-K, nor do we have
a board member that qualifies as "independent" as the term is used in Item
7(d)(3)(iv)(B) of Schedule 14A under the Securities Exchange Act of 1934, as
amended, and as defined by Rule 4200(a)(14) of the NASD Rules.
We believe that our board of directors is capable of analyzing and evaluating
our financial statements and understanding internal controls and procedures for
financial reporting. Our board of directors does not believe that it is
necessary to have an audit committee because management believes that the
functions of an audit committees can be adequately performed by the board of
directors. In addition, we believe that retaining an independent director who
18
would qualify as an "audit committee financial expert" would be overly costly
and burdensome and is not warranted in our circumstances given the stage of our
development and the fact that we have not generated any positive cash flows from
operations to date.
As we generate revenue in the future, we intend to form a standing audit
committee and identify and appoint a financial expert to serve on our audit
committee.
ITEM 6. EXECUTIVE COMPENSATION.
To date we have no employees other than our officers. No compensation has been
awarded, earned or paid to our officers. We have no employment agreements with
any of our officers. We do not contemplate entering into any employment
agreements until such time as we have proven mineral reserves.
There is no arrangement pursuant to which any of our directors has been or is
compensated for services provided as one of our directors.
There are no stock option plans, retirement, pension, or profit sharing plans
for the benefit of our officers or directors. We do not have any long-term
incentive plans that provide compensation intended to serve as incentive for
performance.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
We have issued common stock to the following officers, directors, promoters and
beneficial owners of more than 5% of our outstanding securities.
- ------------------------------------------------------------------------------------------------------------------------------------
NAME POSITION WITH COMPANY SHARES CONSIDERATION DATE
- ------------------------------------------------------------------------------------------------------------------------------------
Fidel Thomas Chief Executive Officer, President, Chief Financial Officer and a director 1,000,000 $ 100 June 30, 2007
Alfonso Quijada Vice-President, Chief Operating Officer, Secretary and a director 8,300,000 $ 830 July 15, 2006
- ------------------------------------------------------------------------------------------------------------------------------------
Messrs. Thomas and Quijada are the only "promoters" of our company, as defined
by the Rule 405 of the Securities Act.
ITEM 8. LEGAL PROCEEDINGS.
Neither Castmor Resources, nor any of its officers or directors is a party to
any material legal proceeding or litigation and such persons know of no material
legal proceeding or contemplated or threatened litigation. There are no
judgments against Castmor Resources or its officers or directors. None of our
officers or directors have been convicted of a felony or misdemeanor relating to
securities or performance in corporate office.
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.
NO ESTABLISHED PUBLIC MARKET FOR COMMON STOCK
On March 4, 2008, our common stock was cleared for quotation on the Pink Sheets
quotation service under the symbol CASL. There is not, however, an established
public market for our shares.
NEW RULE 144
Castmor Resources is presently a "shell company" as defined under Rule 405 of
the Securities Act and Rule 12b-2 of the Exchange Act. The new Rule 144 cannot
be relied upon for the resale of securities of a shell company, and may be
relied upon to sell securities of a former shell company only if all of the
following conditions are met: the issuer has ceased to be a shell company; the
issuer is subject to the reporting requirements of the Exchange Act; the issuer
has filed all Exchange Act reports required for the past 12 months; and at least
one year has elapsed from the time that the issuer filed current Form 10
information on Form 8-K changing its status to a non-shell company.
HOLDERS
There are 53 shareholders of record for the common shares.
19
DIVIDEND POLICY
We have not 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.
PENNY STOCK REGULATION
Our shares must comply with the Penny Stock Reform Act of 1990, which may
potentially decrease our shareholders' ability to easily transfer their shares.
Broker-dealer practices in connection with transactions in "penny stocks" are
regulated. Penny stocks generally are equity securities with a price of less
than $5.00. The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document that provides information about penny
stocks and the risks in the penny stock market. The broker-dealer also must
provide the customer with current bid and offer quotations for the penny stock,
the compensation of the broker-dealer and its salesperson in the transaction,
and monthly account statements showing the market value of each penny stock held
in the customer's account. In addition, the penny stock rules generally require
that prior to a transaction in a penny stock, the broker-dealer make a special
written determination that the penny stock is a suitable investment for the
purchaser and receive the purchaser's written agreement to the transaction.
These disclosure requirements may have the effect of reducing the level of
trading activity in the secondary market for a stock that must comply with the
penny stock rules. Since our shares must comply with such penny stock rules, our
shareholders will in all likelihood find it more difficult to sell their
securities.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.
On July 16, 2005, we issued 10,300,000 restricted common shares to a director in
exchange for debt settlement in connection with professional fees in the amount
$1,030 paid on behalf of the Company by a director of the Company. The shares
were issued without registration under the Securities Act of 1933 in reliance on
an exemption from registration provided by Regulation S of the Securities Act.
No general solicitation was made in connection with the offer or sale of these
securities.
On October 25, 2005, we issued 750,000 restricted common shares to a
non-affiliated person in exchange for cash of $15,000. The shares were issued
without registration under the Securities Act of 1933 in reliance on an
exemption from registration provided by Regulation S of the Securities Act. No
general solicitation was made in connection with the offer or sale of these
securities.
On October 31, 2005, we issued 180,000 restricted common shares to a
non-affiliated person in exchange for debt settlement in connection with the
acquisition of mineral claims for $3,600 (CAD$4,250). The shares were issued
without registration under the Securities Act of 1933 in reliance on an
exemption from registration provided by Regulation S of the Securities Act. No
general solicitation was made in connection with the offer or sale of these
securities.
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
GENERAL
Our authorized capital stock consists of 100,000,000 shares of common stock at a
par value of $0.0001 per share and 50,000,000 shares of preferred stock at a par
value of $0.0001 per share.
COMMON STOCK
As of the date of this registration statement, there were 12,435,000 shares of
our common stock issued and outstanding that are held by 53 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. At all meetings of shareholders, except where otherwise provided by
statute or by the Articles of Incorporation, or by these Bylaws, the presence,
in person or by proxy duly authorized, of the holder or holders of not less than
twenty percent (20%) of the outstanding shares of stock entitled to vote shall
constitute a quorum for the transaction of business. A vote by the holders of a
majority of our outstanding shares is required to effect certain fundamental
corporate changes such as liquidation, merger or an amendment to our articles of
incorporation.
Holders of our 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 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.
20
PREFERRED STOCK
We have authorized 50,000,000 shares of preferred stock at a par value of
$0.0001 per share. We have no shares of preferred stock outstanding as of the
date of this registration statement.
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.
NEVADA ANTI-TAKEOVER LAWS
The Nevada Revised Statutes Sections 78.378 through 78.3793, under certain
circumstances, place restrictions upon the acquisition of a controlling interest
in a Nevada corporation, including the potential requirements of shareholder
approval and the granting of dissenters' rights in connection with such an
acquisition. These provisions could have the effect of delaying or preventing a
change in control of our company.
TRANSFER AGENT
Our transfer agent and registrar is Holladay Stock Transfer, Inc., located at
2939 North 67th Place, Scottsdale, Arizona 85251.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Nevada law provides for discretionary indemnification for each person who serves
as one of our directors or officers. We may indemnify such individuals against
all costs, expenses and liabilities incurred in a threatened, pending or
completed action, suit or proceeding brought because such individual is one of
our officers or directors. Such individual must have conducted himself in good
faith and reasonably believed that his conduct was in, or not opposed to, our
best interests. In a criminal action, he must not have had a reasonable cause to
believe his conduct was unlawful.
Article Twelfth of our Articles of Incorporation states that no director or
officer of the Corporation shall be personally liable to the Corporation or any
of its stockholders for damages for breach of fiduciary duty as a director or
officer involving any act or omission of any such director or officer; provided,
however, that the foregoing provision shall not eliminate or limit the liability
of a director or officer (i) for acts or omissions which involve intentional
misconduct, fraud or a knowing violation of law, or (ii) the payment of
dividends in violation of Section 78.300 of the Nevada Revised Statutes. Any
repeal or modification of this Article by the stockholders of the Corporation
shall be prospective only, and shall not adversely affect any limitation on the
personal liability of a director or officer of the Corporation for acts or
omissions prior to such repeal or modification.
Under Article IX, our bylaws provide the following indemnification:
01. INDEMNIFICATION
The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
Corporation) by reason of the fact that such person is or was a Director,
Trustee, Officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a Director, Trustee, Officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgment, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding if such person acted in good
faith and in a manner such person reasonably believed to be in or not opposed to
the best interests of the Corporation, and with respect to any criminal action
or proceeding, had no reasonable cause to believe such person's conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which such person reasonably believed to be in or not
opposed to the best interests of the Corporation, and with respect to any
criminal action proceeding, had reasonable cause to believe that such person's
conduct was unlawful.
21
02. DERIVATIVE ACTION
The Corporation shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the Corporation to procure a judgment in the
Corporation's favor by reason of the fact that such person is or was a Director,
Trustee, Officer, employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a Director, Trustee, Officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorney's fees) and amount paid in
settlement actually and reasonably incurred by such person in connection with
the defense or settlement of such action or suit if such person acted in good
faith and in a manner such person reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to amounts paid in
settlement, the settlement of the suit or action was in the best interests of
the Corporation; provided, however, that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable for gross negligence or willful misconduct in the
performance of such person's duty to the Corporation unless and only to the
extent that, the court in which such action or suit was brought shall determine
upon application that, despite circumstances of the case, such person is fairly
and reasonably entitled to indemnity for such expenses as such court shall deem
proper. The termination of any action or suit by judgment or settlement shall
not, of itself, create a presumption that the person did not act in good faith
and in a manner which such person reasonably believed to be in or not opposed to
the best interests of the Corporation.
03. SUCCESSFUL DEFENSE
To the extent that a Director, Trustee, Officer, employee or Agent of the
Corporation has been successful on the merits or otherwise, in whole or in part
in defense of any action, suit or proceeding referred to in Paragraphs .01 and
..02 above, or in defense of any claim, issue or matter therein, such person
shall be indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection therewith.
04. AUTHORIZATION
Any indemnification under Paragraphs .01 and .02 above (unless ordered by a
court) shall be made by the Corporation only as authorized in the specific case
upon a determination that indemnification of the Director, Trustee, Officer,
employee or agent is proper in the circumstances because such person has met the
applicable standard of conduct set forth in Paragraphs .01 and .02 above. Such
determination shall be made (a) by the Board of Directors of the Corporation by
a majority vote of a quorum consisting of Directors who were not parties to such
action, suit or proceeding, or (b) is such a quorum is not obtainable, by a
majority vote of the Directors who were not parties to such action, suit or
proceeding, or (c) by independent legal counsel (selected by one or more of the
Directors, whether or not a quorum and whether or not disinterested) in a
written opinion, or (d) by the Shareholders. Anyone making such a determination
under this Paragraph .04 may determine that a person has met the standards
therein set forth as to some claims, issues or matters but not as to others, and
may reasonably prorate amounts to be paid as indemnification.
05. ADVANCES
Expenses incurred in defending civil or criminal action, suit or proceeding
shall be paid by the Corporation, at any time or from time to time in advance of
the final disposition of such action, suit or proceeding as authorized in the
manner provided in Paragraph .04 above upon receipt of an undertaking by or on
behalf of the Director, Trustee, Officer, employee or agent to repay such amount
unless it shall ultimately be by the Corporation is authorized in this Section.
06. NONEXCLUSIVITY
The indemnification provided in this Section shall not be deemed exclusive of
any other rights to which those indemnified may be entitled under any law,
bylaw, agreement, vote of shareholders or disinterested Directors or otherwise,
both as to action in such person's official capacity and as to action in another
capacity while holding such office, and shall continue as to a person who has
ceased to be a Director, Trustee, Officer, employee or agent and shall inure to
the benefit of the heirs, executors, and administrators of such a person.
07. INSURANCE
The Corporation shall have the power to purchase and maintain insurance on
behalf of any person who is or was a Director, Trustee, Officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a Director, Trustee, Officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against any liability
assessed against such person in any such capacity or arising out of such
person's status as such, whether or not the corporation would have the power to
indemnify such person against such liability.
22
08. "CORPORATION" DEFINED
For purposes of this Section, references to the "Corporation" shall include, in
addition to the Corporation, an constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger which, if
its separate existence had continued, would have had the power and authority to
indemnify its Directors, Trustees, Officers, employees or agents, so that any
person who is or was a Director, Trustee, Officer, employee or agent of such
constituent corporation or of any entity a majority of the voting Shares of
which is owned by such constituent corporation or is or was serving at the
request of such constituent corporation as a Director, Trustee, Officer,
employee or agent of the corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under the provisions of this
Section with respect to the resulting or surviving Corporation as such person
would have with respect to such constituent corporation if its separate
existence had continued.
09. FURTHER BYLAWS
The Board of Directors may from time to time adopt further Bylaws with specific
respect to indemnification and may amend these and such Bylaws to provide at all
times the fullest indemnification permitted by the General Corporation Law of
the State of Nevada.
23
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
INDEX TO FINANCIAL STATEMENTS
CASTMOR RESOURCES LTD.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS FOR THE SIX MONTH PERIOD ENDED FEBRUARY 29, 2008
(UNAUDITED)
Balance Sheets
Statements of Stockholders' Equity
Statements of Operations
Statements of Cash Flows
Notes to Financial Statements
FINANCIAL STATEMENTS FOR THE YEARS ENDED AUGUST 31, 2006 AND AUGUST 31, 2007
Report of Independent Registered Public Accounting Firm
Balance Sheets
Statements of Stockholders Equity
Statements of Operations and Deficit
Statements of Cash Flows
Notes to Financial Statements
24
CASTMOR RESOURCES LTD.
(An exploration stage company)
Balance Sheets
February 29, 2008
(Unaudited - Prepared by Management)
(Expressed in U.S. Dollars)
- -------------------------------------------------------------------------------------------------------------
February 29 August 31
2008 2007
- -------------------------------------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 71,188 $ 16,889
Mineral resource security deposit 3,763 3,763
- -------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 74,951 $ 20,652
=============================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities 4,377 2,877
Promissory note 15,000 15,000
- -------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 19,377 17,877
- -------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
SHARE CAPITAL
Authorized:
50,000,000 preferred shares at a par value of $0.0001 per share
Issued and outstanding: Nil
100,000,000 common shares with a par value of $0.0001 per share
Issued and outstanding: 12,435,000 common shares 1,244 1,123
(August 31, 2007: 11,230,000)
ADDITIONAL PAID-IN CAPITAL 78,636 18,507
(DEFICIT) ACCUMULATED DURING THE EXPLORATION STAGE (24,306) (16,855)
- -------------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 55,574 2,775
- -------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 74,951 $ 20,652
=============================================================================================================
The accompanying notes are an integral part of these financial statements.
25
CASTMOR RESOURCES LTD.
(An exploration stage company)
Statements of Stockholders' Equity
For the period from June 27, 2005 (inception) to February 29, 2008
(Unaudited - Prepared by Management)
(Expressed in U.S. Dollars)
- --------------------------------------------------------------------------------------------------------------------------
Deficit
accumulated Total
Additional during stockholders'
Preferred Stock Common Stock paid-in exploration equity
Shares Amount Shares Amount capital stage (deficiency)
- --------------------------------------------------------------------------------------------------------------------------
Issuance of common stock for settlement
of debt July 16, 2005 ($0.0001 per share) - $ - 10,300,000 $1,030 $ - $ - $ 1,030
Loss and comprehensive loss for the period - - - - - (1,914) (1,914)
- --------------------------------------------------------------------------------------------------------------------------
Balance, August 31, 2005 - - 10,300,000 $1,030 $ - $ (1,914) $ (884)
- --------------------------------------------------------------------------------------------------------------------------
Issuance of common stock for cash
October 25, 2005 ($0.02 per share) - $ - 750,000 $ 75 $ 14,925 $ - $ 15,000
Issuance of common stock for settlement
of debt October 31, 2005 ($0.02 per share) - $ - 180,000 $ 18 $ 3,582 $ - $ 3,600
Loss and comprehensive loss for the year - - - - - (9,537) (9,537)
- --------------------------------------------------------------------------------------------------------------------------
Balance, August 31, 2006 - $ - 11,230,000 $1,123 $ 18,507 $ (11,451) $ 8,179
- --------------------------------------------------------------------------------------------------------------------------
Loss and comprehensive loss for the year - - - - - (5,404) (5,404)
- --------------------------------------------------------------------------------------------------------------------------
Balance, August 31, 2007 - $ - 11,230,000 $1,123 $ 18,507 $ (16,855) $ 2,775
- --------------------------------------------------------------------------------------------------------------------------
Issuance of common stock for cash
November 30, 2007 ($0.05 per share) - $ - 1,205,000 $ 121 $ 60,129 $ - $ 60,250
Loss and comprehensive loss for the period - - - - - (7,451) (7,451)
- --------------------------------------------------------------------------------------------------------------------------
Balance, February 29, 2008 - $ - 12,435,000 $1,244 $ 78,636 $ (24,306) $ 55,574
==========================================================================================================================
The accompanying notes are an integral part of these financial statements
26
CASTMOR RESOURCES LTD.
(A exploration stage company)
Statements of Operations
(Unaudited - Prepared by Management)
(Expressed in U.S. Dollars)
- ------------------------------------------------------------------------------------------------------------------------------------
Cumulative from
June 27, 2005 Three months ended Six months ended
(inception) to February 29 February 28 February 29 February 28
February 29, 2008 2008 2007 2008 2007
- ------------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Bank charges $ 179 $ 72 $ - $ 104 $ 12
Consulting fees 398 - - - -
Interest 1,750 750 - 1,500 -
Office expenses 5,031 - 17 - 56
Professional fees 11,172 5,071 - 5,071 -
Resource property acquisition and exploration costs 5,000 - - - -
Transfer Expenses 880 - - 880 -
Foreign exchange gainloss) (104) - - (104) -
- ------------------------------------------------------------------------------------------------------------------------------------
LOSS FROM OPERATIONS 24,306 5,893 17 7,451 68
- ------------------------------------------------------------------------------------------------------------------------------------
NET LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD $ (24,306) $ (5,893) $ (17) $ (7,451) $ (68)
- ------------------------------------------------------------------------------------------------------------------------------------
BASIC AND DILUTED LOSS PER SHARE $ (0.00) $ (0.00) $ (0.00) $ (0.00)
====================================================================================================================================
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
- - basic and diluted 12,435,000 11,230,000 11,829,208 11,230,000
====================================================================================================================================
The accompanying notes are an integral part of these financial statements
27
CASTMOR RESOURCES LTD.
(An exploration stage company)
Statements of Cash Flows
(Unaudited - Prepared by Management)
(Expressed in U.S. Dollars)
- -------------------------------------------------------------------------------------------------------------
Cumulative from
June 27, 2005
(inception) to Six months ended Six months ended
February 29, 2008 February 29, 2008 February 28, 2007
- -------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES
Net (Loss) for the period $ (24,306) $ (7,451) $ (68)
Changes in operating assets and liabilities
- - (increase) decrease in prepaid expenses - - (2,425)
- - (increase) decrease in security deposit (3,763) - -
- - accounts payable and accrued liabilities 9,007 1,500 (2,184)
- -------------------------------------------------------------------------------------------------------------
NET CASH USED IN OPERATING ACTIVITIES (19,062) (5,951) (4,677)
- -------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES
Proceeds from promissory note 15,000 - -
Proceeds from issuance of common stock 75,250 60,250 -
- -------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 90,250 60,250 -
- -------------------------------------------------------------------------------------------------------------
INCREASE IN CASH AND CASH EQUIVALENTS 71,188 54,299 (4,677)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD - 16,889 8,087
- -------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 71,188 $ 71,188 $ 3,410
=============================================================================================================
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid $ - $ - $ -
=============================================================================================================
Income taxes paid $ - $ - $ -
=============================================================================================================
The accompanying notes are an integral part of these financial statements
28
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Castmor Resources Ltd. (hereinafter "the Company") was incorporated in the State
of Nevada, U.S.A., on June 27, 2005. The Company's fiscal year end is August 31.
The Company has been in the exploration stage since its formation and has not
yet realized any revenues from its operations. It is primarily engaged in the
acquisition and exploration of mining properties. Upon location of a
commercially minable reserve, the Company expects to actively prepare the site
for its extraction and enter a development stage. In 2005, the Company acquired
mineral interests in two non-contiguous properties located along southeastern
coastal Labrador, approximately 13 kilometers northeast of the community of
Charlottetown, Labrador, Canada and has not yet determined whether these
properties contain reserves that are economically recoverable.
These financial statements have been prepared in accordance with generally
accepted accounting principles in the United States of America applicable to a
going concern which assume that the Company will realize its assets and
discharge its liabilities in the normal course of business. The Company has
incurred accumulated losses of $24,306 since inception and has no source of
revenue. The future of the Company is dependent upon its ability to obtain
financing and upon future acquisition, exploration and development of profitable
operations from its mineral properties. These factors create doubt as to the
ability of the Company to continue as a going concern. Realization values may be
substantially different from the carrying values as shown in these financial
statements should the Company be unable to continue as a going concern.
Management is in the process of identifying sources for additional financing to
fund the ongoing development of the Company's business.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Company have been prepared in accordance with
the generally accepted accounting principles in the United States of America.
Because a precise determination of many assets and liabilities is dependent upon
future events, the preparation of financial statements for a period necessarily
involves the use of estimates that have been made using careful judgment. The
financial statements have, in management's opinion been properly prepared within
reasonable limits of materiality and within the framework of the significant
accounting policies summarized below:
Accounting Method
The Company's financial statements are prepared using the accrual basis of
accounting in accordance with accounting principles generally accepted in the
United States of America.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all highly
liquid investments and short-term debt instruments with original maturities of
three months or less to be cash equivalents. As at February 29, 2008, there were
no cash equivalents.
Use of Estimates
The preparation of financial statements in conformity with 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 for the reporting period. Actual
results could differ from these estimates.
29
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Concentration of Credit Risk
The Company places its cash and cash equivalents with high credit quality
financial institutions. As of February 29, 2008, the Company had no amounts in a
bank beyond insured limits.
Foreign Currency Transactions
The Company is located and operating outside of the United States of America. It
maintains its accounting records in U.S. Dollars as follows:
At the transaction date each asset, liability, revenue and expense is translated
into U.S. dollars by the use of the exchange rate in effect at that date. At the
period end, monetary assets and liabilities are remeasured by using the exchange
rate in effect at that date. The resulting foreign exchange gains and losses are
included in operations.
Fair Value of Financial Instruments
The Company's financial instruments as defined by Statement of Financial
Accounting Standards No. 107, "Disclosures about Fair Value of Financial
Instruments," include cash and cash equivalents, accounts payable and accrued
liabilities and promissory note. Fair values were assumed to approximate
carrying value for these financial instruments, except where noted. Management
is of the opinion that the Company is not exposed to significant interest or
credit risks arising from these financial instruments. The Company is operating
outside the United States of America and has significant exposure to foreign
currency risk due to the fluctuation of currency in which the Company operates
and U.S. dollars.
Mineral Property Payments and Exploration Costs
The Company expenses all costs related to the acquisition, maintenance and
exploration of mineral claims in which it has secured exploration rights prior
to establishment of proven and probable reserves. When it has been determined
that a mineral property can be economically developed as a result of
establishing proven and probable reserves, the costs incurred to develop such
property are capitalized. Such costs will be amortized using the
units-of-production method over the estimated life of the probable reserve. To
date, the Company has not established the commercial feasibility of its
exploration prospects; therefore, all costs are being expensed.
Long-lived assets impairment
Long-lived assets of the Company are reviewed for impairment whenever events or
circumstances indicate that the carrying amount of assets may not be
recoverable, pursuant to guidance established in SFAS No. 144, Accounting for
the Impairment or Disposal of Long-Lived Assets.
Management considers assets to be impaired if the carrying value exceeds the
future projected cash flows from related operations (undiscounted and without
interest charges). If impairment is deemed to exist, the assets will be written
down to fair value. Fair value is generally determined using a discounted cash
flow analysis.
30
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Assets retirement obligations
The Company has adopted SFAS No 143, Accounting for Assets Retirement
Obligations which requires that the fair value of a liability for an asset
retirement obligation be recognized in the period in which it is incurred. SFAS
No. 143 requires the Company to record a liability for the present value of the
estimated site restoration costs with corresponding increase to the carrying
amount of the related long-lived assets. The liability will be accreted and the
asset will be depreciated over the life of the related assets. Adjustments for
changes resulting from the passage of time and changes to either the timing or
amount of the original present value estimate underlying the obligation will be
made. As at February 29, 2008, the Company does not have any asset retirement
obligations.
Costs associated with environmental remediation obligations will be accrued when
it is probable that such costs will be incurred and they can be reasonably
estimated.
Stock-Based Compensation
The Company adopted SFAS No. 123(revised), "Share-Based Payment", to account for
its stock options and similar equity instruments issued. Accordingly,
compensation costs attributable to stock options or similar equity instruments
granted are measured at the fair value at the grant date, and expensed over the
expected vesting period. SFAS No. 123(revised) requires excess tax benefits be
reported as a financing cash inflow rather than as a reduction of taxes paid.
The Company did not grant any stock options during the period ended February 29,
2008.
Comprehensive Income
The Company adopted Statement of Financial Accounting Standards No. 130 (SFAS
130), Reporting Comprehensive Income, which establishes standards for reporting
and display of comprehensive income, its components and accumulated balances.
The Company is disclosing this information on its Statement of Stockholders'
Equity. Comprehensive income comprises equity except those resulting from
investments by owners and distributions to owners. The Company has no elements
of "other comprehensive income" for the period ended February 29, 2008.
Income Taxes
The Company has adopted Statement of Financial Accounting Standards No. 109
(SFAS 109), Accounting for Income Taxes, which requires the Company to recognize
deferred tax liabilities and assets for the expected future tax consequences of
events that have been recognized in the Company's financial statements or tax
returns using the liability method. Under this method, deferred tax liabilities
and assets are determined based on the temporary differences between the
financial statement and tax bases of assets and liabilities using enacted tax
rates in effect in the years in which the differences are expected to reverse.
Basic and Diluted Loss Per Share
In accordance with SFAS No. 128 - "Earnings Per Share", the basic loss per
common share is computed by dividing net loss available to common stockholders
by the weighted average number of common shares outstanding. Diluted loss per
common share is computed similar to basic loss per common share except that the
denominator is increased to include the number of additional common shares that
would be outstanding if the potential common shares had been issued and if the
additional common shares were dilutive.
31
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
New Accounting Pronouncements
In February 2007, the FASB issued SFAS No. 159, "The fair value Option for
Financial Assets and Financial Liabilities - Including an Amendment of FASB
Statement No. 115". This statements objective is to improve financial reporting
by providing the Company with the opportunity to mitigate volatility in reported
earnings caused by measuring related assets and liabilities differently without
having to apply complex hedge accounting provisions. This statement is expected
to expand the use of fair value measurement, which is consistent with the FASB's
long-term measurement objective for accounting for financial instruments. The
adoption of SFAS 159 did not have an impact on the Company's financial
statements. The Company presently comments on significant accounting policies
(including fair value of financial instruments) in Note 2 to the financial
statements.
In December 2007, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 141,(revised 2007), "Business Combinations". SFAS 141 (R) applies the
acquisition method of accounting for business combinations established in SFAS
141 to all acquisitions where the acquirer gains a controlling interest,
regardless of whether consideration was exchanged. Consistent with SFAS 141,
SFAS 141 (R) requires the acquirer to fair value the assets and liabilities of
the acquiree and record goodwill on bargain purchases, with main difference the
application to all acquisitions where control is achieved. SFAS 141 (R) is
effective for financial statements issued for fiscal years beginning after
December 15, 2008. The adoption of this statement is not expected to have a
material effect on the Company's future financial position or results of
operations
In December 2007, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 160, "Noncontrolling Interests in Consolidated Financial Statements - An
amendment of ARB No. 51".SFAS 160 requires companies with noncontrolling
interests to disclose such interests clearly as a portion of equity but separate
from the parent's equity. The noncontrolling interest's portion of net income
must also be clearly presented on the Income Statement. SFAS 160 is effective
for financial statements issued for fiscal years beginning after December 15,
2008. The adoption of this statement is not expected to have a material effect
on the Company's future financial position or results of operations.
In March 2008, the FASB issued FASB Statement No. 161 ("SFAS 161"), "Disclosures
about Derivative Instruments and Hedging Activities". SFAS 161 requires
companies with derivative instruments to disclose information that should enable
financial-statement users to understand how and why a company uses derivative
instruments, how derivative instruments and related hedged items are accounted
for under FASB Statement No. 133 "Accounting for Derivative Instruments and
Hedging Activities" and how derivative instruments and related hedged items
affect a company's financial position, financial performance and cash flows.
SFAS 161 is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008. The adoption of this
statement is not expected to have a material effect on the Company's future
financial position or results of operations.
NOTE 3 - MINERAL PROPERTY INTEREST
On October 31, 2005 the Company acquired a 100% interest in two non-contiguous
mineral claims located along southeastern coastal Labrador, approximately 13
kilometers northeast of the community of Charlottetown, Labrador, Canada. The
claims were acquired from a non-affiliated third party for a consideration of
$4,250 CAD which covered an exploration program security deposit and staking and
other related costs of $401 (CAD$450) and $3,199 (CAD$3,800), respectively. The
Company expensed the staking and other related costs of $3,199 in connection
with the acquisition of the mineral claims.
One of the licenses comprising eight claims, was inadvertently allowed to expire
and was cancelled on January 24, 2007. The Company reacquired a 100% interest in
the same eight claims under a new mineral license by a Transfer of Mineral
Disposition dated July 16, 2007, from a non-affiliated third party, for $505
CAD. The Company expensed the entire cost of reacquiring the mineral claims.
Up to February 29, 2008, the Company had made $3,763 (CAD$4,050) exploration
program security deposit. The Company is required to incur exploration
expenditures of CAD$6,750 for the above noted mineral claims before July 13,
2008. Failure in compliance of the exploration requirement will result the
forfeiture of the exploration program deposit made to the mining division of
Labrador Canada.
NOTE 4 - PROMISSORY NOTE
On July 31, 2007, the Company issued an unsecured promissory note of $15,000 to
a non affiliated party, bearing an interest rate of 20% per annum, maturing on
July 31, 2008. As at February 29, 2008, the note has accrued interest of $1,750.
32
NOTE 5 - PREFERRED AND COMMON STOCK
The Company has 50,000,000 shares of preferred stock authorized and none issued.
The Company has 100,000,000 shares of common stock authorized, of which
12,435,000 shares are issued and outstanding. All shares of common stock are
non-assessable and non-cumulative, with no preemptive rights.
The Company did not sell any shares of its common stock during the three month
period ended February 29, 2008. During the three month period ended November 30,
2007, the Company sold 1,205,000 shares of common stock at $0.05 per share under
a registered public offering for gross proceeds of $60,250. The Company did not
issue any shares during the year ended August 31, 2007. During the year ended
August 31, 2006, the Company issued 750,000 shares of common stock for cash
consideration of $15,000 and 180,000 shares of common stock for settlement of
debt of $3,600.
NOTE 6 - COMMITMENT AND CONTINGENCY
See Note 3
NOTE 7 - SEGMENT INFORMATION
The Company currently conducts all of its operations in Canada
33
CHANG LEE LLP
CHARTERED ACCOUNTANTS
505-815 Hornby Street
Vancouver, B.C., V6Z 2E6
Tel: 604-687-3776
Fax: 604-688-3373
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF
CASTMOR RESOURCES LTD.
(An exploration stage company)
We have audited the accompanying balance sheets of Castmor Resources Ltd. (an
exploration stage company) as at August 31, 2007 and 2006 and the related
statements of stockholders' equity, operations and cash flows for the period
from June 27, 2005 (date of inception) to August 31, 2007. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our 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.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Company as at August 31,
2007 and 2006 and the results of its operations and its cash flows for the
period from June 27, 2005 (date of inception) to August 31, 2007, in conformity
with accounting principles generally accepted in the United States.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 1 to the financial
statements, the Company incurred losses from operations since inception, has not
attained profitable operations and is dependent upon obtaining adequate
financing to fulfill its exploration activities. These factors raise substantial
doubt about the Company's ability to continue as a going concern. Management's
plans in regard to these matters are also discussed in Note 1. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Vancouver, Canada Chang Lee LLP
April 21, 2008 Chartered Accountants
34
CASTMOR RESOURCES LTD.
(An exploration stage company)
Balance Sheets
August 31, 2007
(Expressed in U.S. Dollars)
- -----------------------------------------------------------------------------------------------------------
August 31 August 31
2007 2006
- -----------------------------------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 16,889 $ 8,087
Prepaid expenses - 623
Mineral resource security deposit 3,763 1,653
- -----------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 20,652 $ 10,363
===========================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities 2,877 2,184
Promissory note 15,000 -
- -----------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 17,877 2,184
- -----------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
SHARE CAPITAL
Authorized:
50,000,000 preferred shares at a par value of $0.0001 per share
Issued and outstanding: Nil
100,000,000 common shares with a par value of $0.0001 per share
Issued and outstanding: 11,230,000 common shares 1,123 1,123
(August 31, 2006: 11,230,000)
ADDITIONAL PAID-IN CAPITAL 18,507 18,507
(DEFICIT) ACCUMULATED DURING THE EXPLORATION STAGE (16,855) (11,451)
- -----------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 2,775 8,179
- -----------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 20,652 $ 10,363
===========================================================================================================
The accompanying notes are an integral part of these financial statements.
35
CASTMOR RESOURCES LTD.
(An exploration stage company)
Statements of Stockholders' Equity
For the period from June 27, 2005 (inception) to August 31, 2007
(Expressed in U.S. Dollars)
- ------------------------------------------------------------------------------------------------------------------------
Deficit
accumulated Total
Additional during stockholders'
Preferred Stock Common Stock paid-in exploration equity
Shares Amount Shares Amount capital stage (deficiency)
- ------------------------------------------------------------------------------------------------------------------------
Issuance of common stock for settlement of
debt July 16, 2005 ($0.0001 per share) - $ - 10,300,000 $1,030 $ - $ - $ 1,030
Loss and comprehensive loss for the period - - - - - (1,914) (1,914)
- ------------------------------------------------------------------------------------------------------------------------
Balance, August 31, 2005 - - 10,300,000 $1,030 $ - $ (1,914) $ (884)
- ------------------------------------------------------------------------------------------------------------------------
Issuance of common stock for cash
October 25, 2005 ($0.02 per share) - $ - 750,000 $ 75 $ 14,925 $ - $ 15,000
Issuance of common stock for settlement of
debt October 31, 2005 ($0.02 per share) - $ - 180,000 $ 18 $ 3,582 $ - $ 3,600
Loss and comprehensive loss for the year - - - - - (9,537) (9,537)
- ------------------------------------------------------------------------------------------------------------------------
Balance, August 31, 2006 - $ - 11,230,000 $1,123 $ 18,507 $ (11,451) $ 8,179
- ------------------------------------------------------------------------------------------------------------------------
Loss and comprehensive loss for the year - - - - - (5,404) (5,404)
- ------------------------------------------------------------------------------------------------------------------------
Balance, August 31, 2007 - $ - 11,230,000 $1,123 $ 18,507 $ (16,855) $ 2,775
========================================================================================================================
The accompanying notes are an integral part of these financial statements
36
CASTMOR RESOURCES LTD.
(A exploration stage company)
Statements of Operations
(Expressed in U.S. Dollars)
- ---------------------------------------------------------------------------------------------------------------
Cumulative from
June 27, 2005
(inception) to Year ended Year ended
August 31, 2007 August 31, 2007 August 31, 2006
- ---------------------------------------------------------------------------------------------------------------
EXPENSES
Bank charges $ 75 $ 51 $ 24
Consulting fees 398 - -
Interest 250 250 -
Office expenses 5,031 1,684 2,308
Professional fees 6,101 2,500 3,601
Resource property acquisition and exploration costs 5,000 919 3,604
- ---------------------------------------------------------------------------------------------------------------
LOSS FROM OPERATIONS 16,855 5,404 9,537
- ---------------------------------------------------------------------------------------------------------------
NET LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD $ (16,855) $ (5,404) $ (9,537)
- ---------------------------------------------------------------------------------------------------------------
BASIC AND DILUTED LOSS PER SHARE $ (0.00) $ (0.00)
===============================================================================================================
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
- - basic and diluted 11,230,000 11,086,904
- ---------------------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements
37
CASTMOR RESOURCES LTD.
(An exploration stage company)
Statements of Cash Flows
(Expressed in U.S. Dollars)
- --------------------------------------------------------------------------------------------------------
Cumulative from
June 27, 2005
(inception) to Year ended Year ended
Augusts 31, 2007 August 31, 2007 August 31, 2006
- --------------------------------------------------------------------------------------------------------
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES
Net (Loss) for the period $ (16,855) $ (5,404) $ (9,537)
Changes in operating assets and liabilities
- - (increase) decrease in prepaid expenses - 623 (623)
- - (increase) decrease in security deposit (3,763) (2,110) (1,653)
- - accounts payable and accrued liabilities 7,507 693 4,900
- --------------------------------------------------------------------------------------------------------
NET CASH (USED IN) OPERATING ACTIVITIES (13,111) (6,198) (6,913)
- --------------------------------------------------------------------------------------------------------
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES
Proceeds from promissory note 15,000 15,000 -
Proceeds from issuance of common stock 15,000 - 15,000
- --------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 30,000 15,000 15,000
- --------------------------------------------------------------------------------------------------------
INCREASE IN CASH AND CASH EQUIVALENTS 16,889 8,802 8,087
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD - 8,087 -
- --------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 16,889 $ 16,889 $ 8,087
========================================================================================================
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid $ - $ - $ -
========================================================================================================
Income taxes paid $ - $ - $ -
========================================================================================================
The accompanying notes are an integral part of these financial statements
38
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Castmor Resources Ltd. (hereinafter "the Company") was incorporated in the State
of Nevada, U.S.A., on June 27, 2005. The Company's fiscal year end is August 31.
The Company has been in the exploration stage since its formation and has not
yet realized any revenues from its operations. It is primarily engaged in the
acquisition and exploration of mining properties. Upon location of a
commercially minable reserve, the Company expects to actively prepare the site
for its extraction and enter a development stage. In 2005, the Company acquired
mineral interests in two non-contiguous properties located along southeastern
coastal Labrador, approximately 13 kilometers northeast of the community of
Charlottetown, Labrador, Canada and has not yet determined whether these
properties contain reserves that are economically recoverable.
These financial statements have been prepared in accordance with generally
accepted accounting principles in the United States of America applicable to a
going concern which assume that the Company will realize its assets and
discharge its liabilities in the normal course of business. The Company has
incurred accumulated losses of $16,855 since inception and has no source of
revenue. The future of the Company is dependent upon its ability to obtain
financing and upon future acquisition, exploration and development of profitable
operations from its mineral properties. These factors create doubt as to the
ability of the Company to continue as a going concern. Realization values may be
substantially different from the carrying values as shown in these financial
statements should the Company be unable to continue as a going concern.
Management is in the process of identifying sources for additional financing to
fund the ongoing development of the Company's business.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Company have been prepared in accordance with
the generally accepted accounting principles in the United States of America.
Because a precise determination of many assets and liabilities is dependent upon
future events, the preparation of financial statements for a period necessarily
involves the use of estimates that have been made using careful judgment. The
financial statements have, in management's opinion been properly prepared within
reasonable limits of materiality and within the framework of the significant
accounting policies summarized below:
Accounting Method
The Company's financial statements are prepared using the accrual basis of
accounting in accordance with accounting principles generally accepted in the
United States of America.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all highly
liquid investments and short-term debt instruments with original maturities of
three months or less to be cash equivalents. As at August 31, 2007 and 2006,
there were no cash equivalents.
Use of Estimates
The preparation of financial statements in conformity with 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 for the reporting period. Actual
results could differ from these estimates.
39
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Concentration of Credit Risk
The Company places its cash and cash equivalents with high credit quality
financial institutions. As of August 31, 2007 and 2006, the Company had no
amounts in a bank beyond insured limits.
Foreign Currency Transactions
The Company is located and operating outside of the United States of America. It
maintains its accounting records in U.S. Dollars as follows:
At the transaction date each asset, liability, revenue and expense is translated
into U.S. dollars by the use of the exchange rate in effect at that date. At the
period end, monetary assets and liabilities are remeasured by using the exchange
rate in effect at that date. The resulting foreign exchange gains and losses are
included in operations.
Fair Value of Financial Instruments
The Company's financial instruments as defined by Statement of Financial
Accounting Standards No. 107, "Disclosures about Fair Value of Financial
Instruments," include cash and cash equivalents, accounts payable and accrued
liabilities and promissory note. Fair values were assumed to approximate
carrying value for these financial instruments, except where noted. Management
is of the opinion that the Company is not exposed to significant interest or
credit risks arising from these financial instruments. The Company is operating
outside the United States of America and has significant exposure to foreign
currency risk due to the fluctuation of currency in which the Company operates
and U.S. dollars.
Mineral Property Payments and Exploration Costs
The Company expenses all costs related to the acquisition, maintenance and
exploration of mineral claims in which it has secured exploration rights prior
to establishment of proven and probable reserves. When it has been determined
that a mineral property can be economically developed as a result of
establishing proven and probable reserves, the costs incurred to develop such
property are capitalized. Such costs will be amortized using the
units-of-production method over the estimated life of the probable reserve. To
date, the Company has not established the commercial feasibility of its
exploration prospects; therefore, all costs are being expensed.
Long-lived assets impairment
Long-lived assets of the Company are reviewed for impairment whenever events or
circumstances indicate that the carrying amount of assets may not be
recoverable, pursuant to guidance established in SFAS No. 144, Accounting for
the Impairment or Disposal of Long-Lived Assets.
Management considers assets to be impaired if the carrying value exceeds the
future projected cash flows from related operations (undiscounted and without
interest charges). If impairment is deemed to exist, the assets will be written
down to fair value. Fair value is generally determined using a discounted cash
flow analysis.
40
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Assets retirement obligations
The Company has adopted SFAS No 143, Accounting for Assets Retirement
Obligations which requires that the fair value of a liability for an asset
retirement obligation be recognized in the period in which it is incurred. SFAS
No. 143 requires the Company to record a liability for the present value of the
estimated site restoration costs with corresponding increase to the carrying
amount of the related long-lived assets. The liability will be accreted and the
asset will be depreciated over the life of the related assets. Adjustments for
changes resulting from the passage of time and changes to either the timing or
amount of the original present value estimate underlying the obligation will be
made. As at August 31, 2007 and 2006, the Company does not have any asset
retirement obligations.
Costs associated with environmental remediation obligations will be accrued when
it is probable that such costs will be incurred and they can be reasonably
estimated.
Stock-Based Compensation
The Company adopted SFAS No. 123(revised), "Share-Based Payment", to account for
its stock options and similar equity instruments issued. Accordingly,
compensation costs attributable to stock options or similar equity instruments
granted are measured at the fair value at the grant date, and expensed over the
expected vesting period. SFAS No. 123(revised) requires excess tax benefits be
reported as a financing cash inflow rather than as a reduction of taxes paid.
The Company did not grant any stock options during the period ended August 31,
2007 and 2006.
Comprehensive Income
The Company adopted Statement of Financial Accounting Standards No. 130 (SFAS
130), Reporting Comprehensive Income, which establishes standards for reporting
and display of comprehensive income, its components and accumulated balances.
The Company is disclosing this information on its Statement of Stockholders'
Equity (Deficiency). Comprehensive income comprises equity except those
resulting from investments by owners and distributions to owners. The Company
has no elements of "other comprehensive income" for the period ended August 31,
2007 and 2006.
Income Taxes
The Company has adopted Statement of Financial Accounting Standards No. 109
(SFAS 109), Accounting for Income Taxes, which requires the Company to recognize
deferred tax liabilities and assets for the expected future tax consequences of
events that have been recognized in the Company's financial statements or tax
returns using the liability method. Under this method, deferred tax liabilities
and assets are determined based on the temporary differences between the
financial statement and tax bases of assets and liabilities using enacted tax
rates in effect in the years in which the differences are expected to reverse.
Basic and Diluted Loss Per Share
In accordance with SFAS No. 128 - "Earnings Per Share", the basic loss per
common share is computed by dividing net loss available to common stockholders
by the weighted average number of common shares outstanding. Diluted loss per
common share is computed similar to basic loss per common share except that the
denominator is increased to include the number of additional common shares that
would be outstanding if the potential common shares had been issued and if the
additional common shares were dilutive.
41
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
New Accounting Pronouncements
In February 2007, the FASB issued SFAS No. 159, "The fair value Option for
Financial Assets and Financial Liabilities - Including an Amendment of FASB
Statement No. 115". This statements objective is to improve financial reporting
by providing the Company with the opportunity to mitigate volatility in reported
earnings caused by measuring related assets and liabilities differently without
having to apply complex hedge accounting provisions. This statement is expected
to expand the use of fair value measurement, which is consistent with the FASB's
long-term measurement objective for accounting for financial instruments. The
adoption of SFAS 159 did not have an impact on the Company's financial
statements. The Company presently comments on significant accounting policies
(including fair value of financial instruments) in Note 2 to the financial
statements.
In December 2007, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 141,(revised 2007), "Business Combinations". SFAS 141 (R) applies the
acquisition method of accounting for business combinations established in SFAS
141 to all acquisitions where the acquirer gains a controlling interest,
regardless of whether consideration was exchanged. Consistent with SFAS 141,
SFAS 141 (R) requires the acquirer to fair value the assets and liabilities of
the acquiree and record goodwill on bargain purchases, with main difference the
application to all acquisitions where control is achieved. SFAS 141 (R) is
effective for financial statements issued for fiscal years beginning after
December 15, 2008. The adoption of this statement is not expected to have a
material effect on the Company's future financial position or results of
operations
In December 2007, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 160, "Noncontrolling Interests in Consolidated Financial Statements - An
amendment of ARB No. 51".SFAS 160 requires companies with noncontrolling
interests to disclose such interests clearly as a portion of equity but separate
from the parent's equity. The noncontrolling interest's portion of net income
must also be clearly presented on the Income Statement. SFAS 160 is effective
for financial statements issued for fiscal years beginning after December 15,
2008. The adoption of this statement is not expected to have a material effect
on the Company's future financial position or results of operations.
In March 2008, the FASB issued FASB Statement No. 161 ("SFAS 161"), "Disclosures
about Derivative Instruments and Hedging Activities". SFAS 161 requires
companies with derivative instruments to disclose information that should enable
financial-statement users to understand how and why a company uses derivative
instruments, how derivative instruments and related hedged items are accounted
for under FASB Statement No. 133 "Accounting for Derivative Instruments and
Hedging Activities" and how derivative instruments and related hedged items
affect a company's financial position, financial performance and cash flows.
SFAS 161 is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008. The adoption of this
statement is not expected to have a material effect on the Company's future
financial position or results of operations.
NOTE 3 - MINERAL PROPERTY INTEREST
On October 31, 2005 the Company acquired a 100% interest in two non-contiguous
mineral claims located along southeastern coastal Labrador, approximately 13
kilometers northeast of the community of Charlottetown, Labrador, Canada. The
claims were acquired from a non-affiliated third party for cash consideration of
$4,250 CAD, which covered an exploration program security deposit and staking
and other related costs of $401 (CAD$450) and $3,199 (CAD$3,800), respectively.
The Company expensed the staking and other related costs of $3,199 in connection
with the acquisition of the mineral claims
One of the licenses comprising eight claims, was inadvertently allowed to expire
and was cancelled on January 24, 2007. The Company reacquired a 100% interest in
the same eight claims under a new mineral license by a Transfer of Mineral
Disposition dated July 16, 2007, from a non-affiliated third party, for $505
CAD. The Company expensed the entire cost of reacquiring the mineral claims.
In connection with the above noted mineral property, the Company had made $3,763
(CAD$4,050) and $1,653 (CAD$1,800) for exploration program security deposit in
fiscal year 2007 and 2006, respectively. The Company is required to incur
exploration expenditures of CAD$6,750 for the above noted mineral claims before
July 13, 2008. Failure in compliance of the exploration requirement will result
the forfeiture of the exploration program deposit made to the mining division of
Labrador Canada.
NOTE 4 - PROMISSORY NOTE
On July 31, 2007, the Company issued an unsecured promissory note of $15,000 to
a non affiliated party, bearing an interest rate of 20% per annum, maturing on
July 31, 2008. As at August 31, 2007, the note has accrued interest of $250.
42
NOTE 5 - PREFERRED AND COMMON STOCK
The Company has 50,000,000 shares of preferred stock authorized and none issued.
The Company has 100,000,000 shares of common stock authorized, of which
11,230,000 shares are issued and outstanding. All shares of common stock are
non-assessable and non-cumulative, with no preemptive rights.
The Company issued no shares of common stock during the year ended August 31,
2007. During the year ended August 31, 2006, the Company issued 750,000 shares
of common stock for cash consideration of $15,000 and 180,000 shares of common
stock for settlement of debt of $3,600.
NOTE 6 - INCOME TAXES
At August 31, 2007, the Company had deferred tax assets of approximately $5,900
principally arising from net operating loss carryforwards for income tax
purposes. As our management cannot determine that it is more likely than not
that we will realize the benefit of the deferred tax asset, a valuation
allowance equal to the deferred tax asset has been established at August 31,
2007. The significant components of the deferred tax asset at August 31, 2007
and 2006 were as follows:
- --------------------------------------------------------------------------------
August 31, 2007 August 31, 2006
Net operating loss carryforwards $ 5,900 $ 4,000
- --------------------------------------------------------------------------------
Valuation allowance (5,900) (4,000)
Net deferred tax asset $ - $ -
- --------------------------------------------------------------------------------
At August 31, 2007, we had net operating loss carryforwards of approximately
$16,800, which expire in the year 2025 through 2027.
NOTE 7 - COMMITMENT AND CONTINGENCY
See Note 3
NOTE 8 - SEGMENT INFORMATION
The Company currently conducts all of its operations in Canada
NOTE 9 - SUBSEQUENT EVENT
Subsequent to the year end, the Company issued 1,205,000 shares of common stock
at $0.05 per share under a registered public offering for gross proceeds of
$60,250.
43
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
In March 2008, we engaged the services of Chang Lee LLP, Chartered Accountants,
of Vancouver, British Columbia, to provide an audit of our financial statements
for the period from August 31, 2005 to August 31, 2007. This is our first
auditor. We have no disagreements with our auditor through the date of this
registration statement.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements
See Item 13 above.
(b) Exhibits
- --------------------------------------------------------------------------------
EXHIBIT NO. DOCUMENT
- --------------------------------------------------------------------------------
3.1 Articles of Incorporation
3.2 Bylaws
99.1 Specimen Stock Certificate
99.2 Map of the Location of the White Bear Arm Property
99.3 Map of Mineral Exploration Licenses and Generalized Geology
================================================================================
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the registrant has duly caused this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized.
CASTMOR RESOURCES LTD.
Date: By /s/ Fidel Thomas
Fidel Thomas
Chief Executive Officer, President,
Chief Financial Officer,
Principal Accounting Officer
and a director