As filed with the Securities and Exchange Commission on November 14 , 2005.
Registration No.
------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
CLARON VENTURES, INC.
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(Name of small business issuer in its charter)
Nevada 1000 98-0470356
--------------------- ---------------- ---------------
(State or jurisdiction (Primary Standard (IRS Employer
of incorporation or Industrial Identification
organization) Classification No.)
Code Number)
#2-630 2ND AVE.
S7K-2C8 SASKATOON
SASKATCHEWAN, CANADA
(306)-374-1753
- --------------------------------------------------------------------------------
(Address and telephone number of principal executive offices and principal place
of business or intended principal place of business)
Trevor Sali, President & Chief Executive Officer
#2-630 2ND AVE.
S7K-2C8 SASKATOON
SASKATCHEWAN, CANADA
(306)-374-1753
------------------------------------------------------------------
(Name, address and telephone number of agent for service)
With copies to:
David M. Loev, John S. Gillies,
David M. Loev, Attorney at Law David M. Loev, Attorney at Law
2777 Allen Parkway, Suite 1000 2777 Allen Parkway, Suite 1000
Houston, TX 77019 Houston, TX 77019
(713) 524-4110 Tel. (713) 524-4110 Tel.
(713) 524-4122 Fax (713) 456-7908 Fax.
Approximate date of proposed sale to the public: as soon as practicable after
the effective date of this Registration Statement.
If any of the Securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. ( )
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of earlier effective
registration statement for the same offering. ( )
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. ( )
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. ( )
If delivery of the Prospectus is expected to be made pursuant to Rule 434, check
the following box. ( ).
CALCULATION OF REGISTRATION FEE
Title of Each Amount Being Proposed Maximum Proposed Maximum Amount of
Class of Securities Being Price Per Share(1) Aggregate Price(2) Registration
To be Registered Registered Fee
- ---------------------------------------------------------------------------------------------
Common Stock 2,318,039 $ 0.10 $ 231,803.90 $ 27.28
$0.001 par value
- ---------------------------------------------------------------------------------------------
Total 2,318,039 $0.10 $ 231,803.90 $ 27.28
(1) The offering price is the stated, fixed price of $.10 per share until
the securities are quoted on the OTC Bulletin Board for the purpose of
calculating the registration fee pursuant to Rule 457.
(2) This amount has been calculated based upon Rule 457(c) and the amount is
only for purposes of determining the registration fee, the actual amount
received by a selling shareholder will be based upon fluctuating market prices
once the securities are quoted on the OTC Bulletin Board.
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
PROSPECTUS
CLARON VENTURES, INC.
RESALE OF 2,318,039 SHARES OF COMMON STOCK
The selling stockholders listed on page 20 may offer and sell up to
2,318,039 shares of our Common Stock under this Prospectus for their own
account.
We currently lack a public market for our Common Stock. Selling
shareholders will sell at a price of $0.10 per share until our shares are quoted
on the OTC Bulletin Board and thereafter at prevailing market prices or
privately negotiated prices. If before the Company's shares are quoted on the
OTC Bulletin Board, selling shareholders wish to sell at a price different from
$0.10 per share, we will file a post-effective amendment beforehand.
A current Prospectus must be in effect at the time of the sale of the
shares of Common Stock discussed above. The selling stockholders will be
responsible for any commissions or discounts due to brokers or dealers. We will
pay all of the other offering expenses.
Each selling stockholder or dealer selling the Common Stock is required to
deliver a current Prospectus upon the sale. In addition, for the purposes of the
Securities Act of 1933, selling stockholders are deemed underwriters.
THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD PURCHASE SHARES
ONLY IF YOU CAN AFFORD A COMPLETE LOSS. WE URGE YOU TO READ THE "RISK FACTORS"
SECTION BEGINNING ON PAGE 3 , ALONG WITH THE REST OF THIS PROSPECTUS BEFORE YOU
MAKE YOUR INVESTMENT DECISION.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED OF THESE SECURITIES, OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 2005
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TABLE OF CONTENTS
Prospectus Summary 1
Summary Financial Data 2
Risk Factors 3
Use of Proceeds 8
Dividend Policy 9
Legal Proceedings 9
Directors, Executive Officers, Promoters and Control Persons 9
Security Ownership of Certain Beneficial Owners and Management 10
Interest of Named Experts and Counsel 10
Indemnification of Directors and Officers 11
Description of Business 12
Management's Discussion and Analysis of Financial Condition and Results of 14
Operations
Description of Property 15
Certain Relationships and Related Transactions 16
Executive Compensation 16
Financial Statements F-1
Changes in and Disagreements with Accountants on Accounting and Financial 18
Disclosure
Descriptions of Capital Stock 18
Shares Available for Future Sale 18
Plan of Distribution and Selling Stockholders 19
Market for Common Equity and Related Stockholder Matters 22
Legal Matters 22
Part II 22
PART I - INFORMATION REQUIRED IN PROSPECTUS
PROSPECTUS SUMMARY
The following summary highlights material information found in more detail
elsewhere in the Prospectus. It does not contain all of the information you
should consider. As such, before you decide to buy our Common Stock, in
addition to the following summary, we urge you to carefully read the entire
Prospectus, especially the risks of investing in our Common Stock as discussed
under "Risk Factors." In this Prospectus, the terms "we," "us," "our,"
"Company," and "Claron" refer to Claron Ventures, Inc., a Nevada corporation,
"Common Stock" refers to the Common Stock, par value $0.001 per share, of Claron
Ventures, Inc. Additionally, unless otherwise stated all amounts listed herein
are in United States dollars and amounts proceeded by "CDN" are in Canadian
dollars.
The following summary is qualified in its entirety by the detailed
information appearing elsewhere in this Prospectus. The securities offered
hereby are speculative and involve a high degree of risk. See "Risk Factors."
SUMMARY OF THE OFFERING:
------------------------
COMMON STOCK OFFERED: 2,318,039 shares by selling stockholders
COMMON STOCK OUTSTANDING
BEFORE THE OFFERING: 17,318,039 shares
COMMON STOCK OUTSTANDING
AFTER THE OFFERING: 17,318,039 shares
USE OF PROCEEDS: We will not receive any proceeds from the
shares offered by the selling
stockholders. See "Use of Proceeds."
RISK FACTORS:
The securities offered hereby
involve a high degree of risk, including
risks associated with our need for
additional financing, the fact that our
auditor has expressed doubt as to
whether we will be able to continue as a
going concern, our lack of operating
history, the fact that we may never find
commercial quantities of minerals, the
fact that we have a poor financial
position, that our sole officer has
another job and is also attending
school, that we face many risks in
connection with the exploration of
minerals, the volatility of metal
prices, the cost of the development of
orebodies, with our determinations of
whether our planned activates and
estimates of potential reserves, with
currency fluctuations, with the fact
that our property has not to date
produced any minerals and may not in the
future, the fact that we may be unable
to or not choose to insure against
potential losses due to exploration and
mining, that the ownership of our claims
1
could possibly be subject to claims, the
competitiveness of our industry, the
fact that we rely heavily on key
personnel, and with the potential
volatility of our common stock when
traded and the penny stock restrictions
on our common stock. See "Risk Factors."
NO MARKET:
No assurance is provided that a
market will be created for our
securities in the future, or at all. If
in the future a market does exist for
our securities, it is likely to be
highly illiquid and sporadic.
SUMMARY FINANCIAL DATA
You should read the summary financial information presented below for the
period from inception (July 7, 2005) to July 31, 2005. We derived the summary
financial information from our audited financial statements for the period from
inception (July 7, 2005) to July 31, 2005 appearing elsewhere in this
Prospectus. You should read this summary financial information in conjunction
with our plan of operation, financial statements and related notes to the
financial statements, each appearing elsewhere in this Prospectus.
STATEMENT OF OPERATIONS FOR THE PERIOD FROM
INCEPTION (JULY 7, 2005) UNTIL JULY 31, 2005
Exploration expenses $ 9,020
Other general and administrative 5,173
------------
Loss from operations 14,193
------------
Net loss $ (14,193)
============
Net loss per share:
Basic and diluted $ (0.00)
============
Weighted average shares outstanding:
Basic and diluted 15,000,000
============
BALANCE SHEET AS OF JULY 31, 2005
ASSETS
Current assets:
Shareholder receivable $ 807
Prepaid attorney fees 3,000
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Total current assets $ 3,807
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable & accrued liabilities $ 3,000
---------
Total current liabilities 3,000
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STOCKHOLDERS' EQUITY:
Preferred stock $.001 par value, 10,000,000 shares
authorized, none issued $ -
Common stock, $.001 par value, 100,000,000 shares
authorized, 15,000,000 shares issued and outstanding 15,000
Deficit accumulated during the exploration stage (14,193)
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Total stockholders' equity 807
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Total Liabilities and Stockholders' Equity $ 3,807
==========
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RISK FACTORS
The securities offered herein are highly speculative and should only be
purchased by persons who can afford to lose their entire investment in us. You
should carefully consider the following risk factors and other information in
this Prospectus before deciding to become a holder of our Common Stock. If any
of the following risks actually occur, our business and financial results could
be negatively affected to a significant extent.
The Company's business is subject to many risk factors, including the
following (references to "our," "we," "Claron" and words of similar meaning in
these Risk Factors refer to the Company):
WE MAY NOT BE ABLE TO CONTINUE OUR BUSINESS PLAN AND EXPLORATION ACTIVITIES
WITHOUT ADDITIONAL FINANCING.
We depend to a great degree on the ability to attract external financing in
order to conduct future exploratory and development activities. We are
currently funded solely by our shareholders and we believe that we can continue
our business operations for approximately the next twelve (12) months with the
approximately $46,000 of cash we have as of the filing of this Prospectus. If
we are unable to raise the additional funds required for planned exploration and
extraction activities, which we anticipate costing approximately $52,500, we may
be forced to abandon our current business plan. If you invest in us and we are
unable to raise the required funds, your investment could become worthless.
OUR AUDITORS HAVE EXPRESSED SUBSTANTIAL DOUBT AS TO WHETHER OUR COMPANY CAN
CONTINUE AS A GOING CONCERN.
We are in our early development stage, as planned principal activities have
not begun. We have not generated any revenues since inception and have incurred
substantial losses. These factors among others indicate that we may be unable
to continue as a going concern, particularly in the event that we cannot
generate sufficient cash flow to conduct its operations and/or obtain additional
sources of capital and financing.
WE LACK AN OPERATING HISTORY WHICH YOU CAN USE TO EVALUATE US, MAKING ANY
INVESTMENT IN OUR COMPANY RISKY.
We lack an operating history which investors can use to evaluate our
previous earnings, as we were only incorporated in July 2005. Therefore, an
investment in us is risky because we have no business history and it is hard to
predict what the outcome of our business operations will be in the future.
WE MAY NOT FIND ANY COMMERCIAL QUANTITIES OF MINERALS IN THE FUTURE, AND MAY NOT
GENERATE ANY PROFITS, WHICH MAY FORCE US TO CURTAIL OUR BUSINESS PLAN.
As an exploration stage company, we have no revenues or profits to date and
our net deficit accumulated during our exploration stage as of July 31, 2005,
was $14,193. We had net working capital of $807 as of July 31, 2005. We are
currently being funded by existing shareholders and anticipate being able to
continue our business operations for approximately the next twelve months with
the approximately $46,000 we have remaining from the approximately $84,000 we
have raised from the sale of shares of Common Stock to date. This estimate is
based on the fact that approximately $40,000 spent by us to date included one
time expenditures including legal fees in connection with the preparation of
this Registration Statement, the preparation of the geological report on our
property attached hereto as Exhibit 99.1 and the phase one exploration on our
property. However, if we do not begin exploration and/or do not have enough
money to continue exploration activities it is likely that we will never
generate any revenues. Additionally, if we are unsuccessful in mining attempts
we may choose to attempt in the future, it is likely that we will never generate
any revenues. Additionally, the exploration of minerals is highly speculative,
and if throughout our mineral exploration we do not find commercial quantities
of minerals, we will likely be forced to curtail or abandon our business plan.
If this happens, you could lose your investment in us. If we are unable to
generate profits, we will be forced to rely on external financing, of which
there is no guarantee, to continue with our business plan.
WE RELY UPON KEY PERSONNEL AND IF THEY LEAVE US, OUR BUSINESS PLAN AND RESULTS
OF OPERATIONS COULD BE ADVERSELY AFFECTED.
We rely heavily on our Chief Executive Officer, Chief Financial Officer,
Secretary, Treasurer and Director, Trevor Sali, for our success. His experience
and input create the foundation for our business and he is responsible for the
directorship and control over our exploration activities. We do not currently
have an employment agreement or "key man" insurance policy on Mr. Sali. Moving
3
forward, should we lose the services of Mr. Sali, for any reason, we will incur
costs associated with recruiting a replacement and delays in our operations. If
we are unable to replace him with other suitably trained individual or
individuals, we may be forced to scale back or curtail our business plan and
exploration activities. As a result of this, your investment in us could become
devalued.
WE HAVE A POOR FINANCIAL POSITION AND IF WE DO NOT GENERATE REVENUES, WE MAY BE
FORCED TO ABANDON OUR BUSINESS PLAN.
We currently have a poor financial position. We have not generated any
revenues or begun exploration on any properties. There is a risk that we will
not find enough, or even any, minerals needed to generate enough profits for
your investment in us to appreciate. If we never generate any revenues, we may
be forced to abandon our business plan and your shares may become worthless.
TREVOR SALI, OUR SOLE DIRECTOR AND OFFICER CAN VOTE AN AGGREGATE OF 86.7% OF OUR
COMMON STOCK AND CAN EXERCISE CONTROL OVER CORPORATE DECISIONS INCLUDING THE
APPOINTMENT OF NEW DIRECTORS.
Trevor Sali, our sole Director and officer can vote an aggregate of 15,000,000
share or 86.7% of our outstanding Common Stock. Accordingly, Mr. Sali will
exercise control in determining the outcome of all corporate transactions or
other matters, including the election of directors, mergers, consolidations, the
sale of all or substantially all of our assets, and also the power to prevent or
cause a change in control. Any investors who purchase shares will be minority
shareholders and as such will have little to no say in the direction of the
Company and the election of Directors. Additionally, it will be difficult if not
impossible for investors to remove Mr. Sali as a Director of the Company, which
will mean he will remain in control of who serves as officers of the Company as
well as whether any changes are made in the Board of Directors. As a potential
investor in the Company, you should keep in mind that even if you own shares of
the Company's Common Stock and wish to vote them at annual or special
shareholder meetings, your shares will likely have little effect on the outcome
of corporate decisions.
OUR SOLE OFFICER AND DIRECTOR CURRENTLY HAVE OTHER EMPLOYMENT AND IS PURSUING
HIS BACHELORS DEGREE, WHICH MAY TAKE HIS TIME AWAY FROM OUR OPERATIONS.
Trevor Sali, our sole officer and Director is also currently attending
Athabasca University for a commerce degree, which he currently spends
approximately six hours per week of his time on school work and classes. As a
result, he may not have enough time to devote to our operations and management
and consequently, we could be forced to curtail or abandon our business
operations.
OUR OPERATIONS AND EXPLORATION ACTIVITIES MAY BE ADVERSELY AFFECTED BY RISKS AND
HAZARDS ASSOCIATED WITH THE MINING INDUSTRY.
Our business is subject to a number of risks and hazards including:
o environmental hazards;
o political and country risks;
o civil unrest or terrorism;
o industrial accidents;
o labor disputes;
o unusual or unexpected geologic formations;
o cave-ins;
o explosive rock failures; and
o flooding and periodic interruptions due to inclement or hazardous
weather conditions.
Such risks could result in:
o damage to or destruction of mineral properties or producing
facilities;
o personal injury or fatalities;
o environmental damage;
o delays in mining;
4
o monetary losses; and
o legal liability.
For some of these risks, we may choose to maintain insurance in the future,
to protect against these losses at levels consistent with our historical
experience and industry practice. However, we may not be able to obtain or
maintain this insurance, particularly if there is a significant increase in the
cost of premiums. Additionally, insurance against environmental risks is
generally either unavailable or too expensive for us and other companies in our
industry. To the extent we are subject to environmental liabilities, we would
have to pay for these liabilities. Moreover, in the event that we are unable to
fully pay for the cost of remedying an environmental problem, we might be
required to suspend or abandon our operations or enter into other interim
compliance measures.
THE VOLATILITY OF METALS PRICES MAY ADVERSELY AFFECT OUR DEVELOPMENT AND
EXPLORATION EFFORTS.
Our ability to produce silver and copper in the future is dependent upon
our exploration success and our ability to find and develop ore reserves, of
which there can be no assurance. Additionally, if prices for these metals
decline, it may not be economically feasible for us to continue exploration or
development on a project, if any reserves are found to be present in the future.
OUR DETERMINATIONS OF WHETHER OUR PLANNED ACTIVITIES AND ESTIMATES OF POTENTIAL
RESERVES MAY BE INACCURATE.
Before we can begin a development project, we must first determine whether
it is economically feasible to do so. This determination is based on estimates
of several factors, including:
o expected recovery rates of metals from the ore;
o facility and equipment costs;
o capital and operating costs of a development project;
o future metals prices;
o currency exchange and repatriation risks;
o tax rates;
o inflation rates;
o political risks and regulatory climate in Canada; and
o availability of credit.
Our development projects will likely not have an operating history upon
which to base these estimates and as a result, actual cash operating costs and
returns from a development project, if any, may differ substantially from our
estimates. Consequently, it may not be economically feasible to continue with a
development project, if one is started.
5
OUR ORE RESERVE ESTIMATES, IF ANY IN THE FUTURE, MAY BE IMPRECISE.
We plan to choose where to mine based on estimates of where we believe we
will recover the greatest quantities of the metals we are searching for.
Investors are strongly cautioned not to place undue reliance on any estimates we
may generate of our reserves in the future. Our reserve estimates, if any, will
likely be made by our technical personnel and no assurance can be given that the
estimated amount of metal or the indicated level of recovery of these metals
will be realized. Reserve estimation is an interpretive process based upon
available data and various assumptions. Our reserve estimates may change based
on actual production experience, if any. Further, reserves are valued based on
estimates of costs and metals prices and the economic value of ore reserves may
be adversely affected by:
o declines in the market price of the various metals we mine;
o increased production or capital costs;
o reduction in the grade or tonnage of the deposit;
o increase in the dilution of the ore; or
o reduced recovery rates.
OUR PLANNED MINERAL EXPLORATION EFFORTS ARE HIGHLY SPECULATIVE.
Mineral exploration, is highly speculative. It involves many risks and is
often nonproductive. Even if we believe we have found a valuable mineral
deposit, it may be several years before production is possible. During that
time, it may become no longer feasible to produce those minerals for economic,
regulatory, political, or other reasons. Additionally, we may be required to
make substantial capital expenditures and to construct mining and processing
facilities. As a result of these costs and uncertainties, we may be unable to
start, or if started, to finish our exploration activities.
OUR OPERATIONS ARE SUBJECT TO CURRENCY FLUCTUATIONS.
Because our products are sold in world markets in United States dollars,
currency fluctuations may affect cash flow we realize from our operations and
exploration activities, which are planned to be conducted in Canada. Exchange
controls could require us to sell our products in a currency other than United
States dollars, or may require us to convert United States dollars into foreign
currency. Foreign exchange fluctuations may materially adversely affect our
financial performance and results of operations.
6
OUR PROPERTY HAS NOT PRODUCED ANY COMMERCIAL RESERVES OR ORE BODY, AND IT MAY
NOT PRODUCE ANY COMMERCIAL QUANTITIES OF MINERALS IN THE FUTURE.
Our mineral project is in the exploration stage as opposed to the
development stage and we have no known body of economic mineralization. The
known mineralization at these projects has not been determined to be economic
ore. Although we believe that exploration data available is encouraging in
respect to our property, there can be no assurance that a commercially mineable
ore body exists on any of our properties. There is no certainty that any
expenditure made in the exploration of our mineral properties will result in
discoveries of commercially recoverable quantities of ore. Such assurance will
require completion of final comprehensive feasibility studies and, possibly,
further associated exploration and other work that concludes a potential mine on
our property is likely to be economic. In order to carry out exploration and
development programs of any economic ore body and place it into commercial
production, we will be required to raise substantial additional funding, and
even if we are successful in completing our exploration activities on our
property, we may not be successful in finding commercial quantities of minerals.
MINING OPERATIONS IN GENERAL INVOLVE A HIGH DEGREE OF RISK, WHICH WE MAY BE
UNABLE, OR MAY NOT CHOOSE TO INSURE AGAINST, MAKING EXPLORATION AND/OR
DEVELOPMENT ACTIVITIES WE MAY PURSUE SUBJECT TO POTENTIAL LEGAL LIABILITY FOR
CERTAIN CLAIMS.
Our operations are subject to all of the hazards and risks normally
encountered in the exploration, development and production of minerals. These
include unusual and unexpected geological formations, rock falls, flooding and
other conditions involved in the drilling and removal of material, any of which
could result in damage to, or destruction of, mines and other producing
facilities, damage to life or property, environmental damage and possible legal
liability. Although we plan to take adequate precautions to minimize these
risks, and risks associated with equipment failure or failure of retaining dams
which may result in environmental pollution, there can be no assurance that even
with our precautions, damage or loss will not occur and that we will not be
subject to liability which will have a material adverse effect on our business,
results of operation and financial condition. If this were to happen, we could
be forced to curtail or abandon our business activities.
ALTHOUGH THE COMPANY HAS NO REASON TO BELIEVE THAT THE EXISTENCE AND EXTENT OF
ANY OF ITS PROPERTIES IS IN DOUBT, TITLE TO MINING PROPERTIES IS SUBJECT TO
POTENTIAL CLAIMS BY THIRD PARTIES CLAIMING AN INTEREST IN THEM.
Our mineral properties may be subject to previous unregistered agreements
or transfers, and title may be affected by undetected defects or changes in
mineral tenure laws. Our mineral interests consist of mineral claims, which have
not been surveyed, and therefore, the precise area and location of such claims
or rights may be in doubt. The failure to comply with all applicable laws and
regulations, including the failure to pay taxes or to carry out and file
assessment work, may invalidate title to portions of the properties where our
7
mineral rights are held, which may cause us to lose title to these claims and
any minerals which are found, and may force us to obtain new properties at
significant additional cost.
THE INDUSTRY IN WHICH WE OPERATE IS HIGHLY COMPETITIVE, AND WE MAY BE UNABLE TO
COMPETE EFFECTIVELY WITH OTHER COMPANIES.
The mineral exploration and mining business is competitive in all of its
phases. We compete with numerous other companies and individuals, including
competitors with greater financial, technical and other resources, in the search
for and the acquisition of attractive mineral properties. Our ability to acquire
properties in the future will depend not only on our ability to develop our
present properties, but also on our ability to select and acquire suitable
producing properties or prospects for mineral exploration. There is no assurance
that we will continue to be able to compete successfully with our competitors in
acquiring such properties or prospects. If we are unable to successfully
compete, we could be forced to change or abandon our business plan.
INVESTORS MAY FACE SIGNIFICANT RESTRICTIONS ON THE RESALE OF OUR COMMON STOCK
DUE TO FEDERAL REGULATIONS OF PENNY STOCKS.
Once our Common Stock is listed on the OTC Bulletin Board, it will be
subject to the requirements of Rule 15(g)9, promulgated under the Securities
Exchange Act as long as the price of our Common Stock is below $5.00 per share.
Under such rule, broker-dealers who recommend low-priced securities to persons
other than established customers and accredited investors must satisfy special
sales practice requirements, including a requirement that they make an
individualized written suitability determination for the purchaser and receive
the purchaser's consent prior to the transaction. The Securities Enforcement
Remedies and Penny Stock Reform Act of 1990, also requires additional disclosure
in connection with any trades involving a stock defined as a penny stock.
Generally, the Commission defines a penny stock as any equity security not
traded on an exchange or quoted on NASDAQ that has a market price of less than
$5.00 per share. The required penny stock disclosures include the delivery,
prior to any transaction, of a disclosure schedule explaining the penny stock
market and the risks associated with it. Such requirements could severely limit
the market liquidity of the securities and the ability of purchasers to sell
their securities in the secondary market.
USE OF PROCEEDS
We will not receive any proceeds from the resale of Common Stock by the
Selling Stockholders.
DIVIDEND POLICY
To date, we have not declared or paid any dividends on our outstanding
shares. We currently do not anticipate paying any cash dividends in the
foreseeable future on our Common Stock. Although we intend to retain our
8
earnings to finance our operations and future growth, our Board of Directors
will have discretion to declare and pay dividends in the future. Payment of
dividends in the future will depend upon our earnings, capital requirements and
other factors, which our Board of Directors may deem relevant.
LEGAL PROCEEDINGS
From time to time, we may become party to litigation or other legal
proceedings that we consider to be a part of the ordinary course of our
business. We are not currently involved in legal proceedings that could
reasonably be expected to have a material adverse effect on our business,
prospects, financial condition or results of operations. We may become involved
in material legal proceedings in the future.
DIRECTORS, EXECUTIVE OFFICERS,
PROMOTERS AND CONTROL PERSONS
The following table sets forth the name, age and position of each of our
directors and executive officers. There are no other persons who can be
classified as a promoter or controlling person of us. Our officers and
directors are as follows:
NAME AGE POSITION
---- --- --------
Trevor Sali 27 Chief Executive Officer, Chief
Financial Officer, Secretary,
Treasurer and Director
Trevor Sali has served as our Chief Executive Officer, Chief Financial
Officer, Secretary, Treasurer and sole Director since our incorporation in July
2005. Mr. Sali is currently pursuing a degree in commerce from Athabasca
University, for which he spends approximately six hours working on during the
work week. From June 2005 to September, 2005, Mr. Sali served as an electronics
technician at Saskel in Regina, Saskatchewan, Canada. From November 2003 to June
2004, Mr. Sali served as a derrickhand with O.D. Well Servicing in Saskatchewan,
Canada. From March 2001 to November 2003, Mr. Sali was employed as an
electrician with J.F. Electric in Coquitlam, British Columbia, Canada.
Our Directors are elected annually and hold office until our next annual
meeting of the shareholders and until their successors are elected and
qualified. Officers will hold their positions at the pleasure of the Board of
Directors, absent any employment agreement. Our officers and Directors may
receive compensation as determined by us from time to time by vote of the Board
of Directors. Such compensation might be in the form of stock options. Directors
may be reimbursed by the Company for expenses incurred in attending meetings of
the Board of Directors. Vacancies in the Board are filled by majority vote of
the remaining directors.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table provides the names and addresses of each person known
to own directly or beneficially more than a 5% of the outstanding Common Stock
(as determined in accordance with Rule 13d-3 under the Exchange Act) as of
November 1, 2005 and by the officers and directors, individually and as a group.
Except as otherwise indicated, all shares are owned directly.
Beneficially Owned
Prior to Offering
Name and Address of -------------------------------
Beneficial Owner Shares Percent(1)
- ------------------------- ----------- ----------
TREVOR SALI (2) 15,000,000 86.7 %
#2-630 2nd Ave.
S7K-2C8 Saskatoon
Saskatchewan, Canada
========================= =========== ==========
All the officers and directors 15,000,000 86.7 %
as a group (1 Person)
(1) Based on 17,318,039 shares outstanding as of November 1, 2005.
(2) Mr. Sali is our Chief Executive Officer, Chief Financial Officer,
Secretary, Treasurer and sole Director.
INTEREST OF NAMED EXPERTS AND COUNSEL
This Form SB-2 Registration Statement was prepared by our counsel, David M.
Loev, Attorney at Law, who has no interest in us.
EXPERTS
The financial statements of the Company as of July 31, 2005 included in
this Prospectus have been audited by Lopez, Blevins, Bork & Associates, LLP our
independent auditors, as stated in their report appearing herein and have been
so included in reliance upon the reports of such firm given upon their authority
as experts in accounting and auditing.
LAURENCE SOOKOCHOFF
Laurence Sookochoff who prepared the Geological Report, referenced and
defined below under "Description of Business," is a consulting geologist and
principal of Sookochoff Consultants Inc., which has an office at 1305-13233
Homer Street, Vancouver, British Columbia, Canada, V6B 5T1. He graduated from
the University of British Columbia in 1996 with a Bachelors of Science degree in
10
Geology. He has been practicing in his profession for the past thirty-eight
years. He is registered and is in good standing with the Association of
Professional Engineers and Geoscientists of British Columbia, Canada.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Nevada Revised Statutes and our Articles of Incorporation allow us
to indemnify our officers and directors from certain liabilities and our Bylaws
state that we shall indemnify every (i) present or former Director, advisory
director or officer of us, (ii) any person who while serving in any of the
capacities referred to in clause (i) served at the our request as a director,
officer, partner, venturer, proprietor, trustee, employee, agent or similar
functionary of another foreign or domestic corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, and (iii) any person
nominated or designated by (or pursuant to authority granted by) the Board of
Directors or any committee thereof to serve in any of the capacities referred to
in clauses (i) or (ii) (each an "Indemnitee").
Our Bylaws provide that we shall indemnify an Indemnitee against all
judgments, penalties (including excise and similar taxes), fines, amounts paid
in settlement and reasonable expenses actually incurred by the Indemnitee in
connection with any proceeding in which he was, is or is threatened to be named
as defendant or respondent, or in which he was or is a witness without being
named a defendant or respondent, by reason, in whole or in part, of his serving
or having served, or having been nominated or designated to serve, if it is
determined that the Indemnitee (a) conducted himself in good faith, (b)
reasonably believed, in the case of conduct in his Official Capacity, that his
conduct was in our best interests and, in all other cases, that his conduct was
at least not opposed to our best interests, and (c) in the case of any criminal
proceeding, had no reasonable cause to believe that his conduct was unlawful;
provided, however, that in the event that an Indemnitee is found liable to us or
is found liable on the basis that personal benefit was improperly received by
the Indemnitee, the indemnification (i) is limited to reasonable expenses
actually incurred by the Indemnitee in connection with the Proceeding and (ii)
shall not be made in respect of any Proceeding in which the Indemnitee shall
have been found liable for willful or intentional misconduct in the performance
of his duty to us.
The Bylaws also provide that no indemnification shall be made in
respect to any proceeding in which such Indemnitee has been (a) found liable on
the basis that personal benefit was improperly received by him, whether or not
the benefit resulted from an action taken in the Indemnitee's official capacity,
or (b) found liable to us. The termination of any proceeding by judgment,
order, settlement or conviction, or on a plea of nolo contendere or its
equivalent, is not of itself determinative that the Indemnitee did not meet the
requirements set forth in clauses (a) or (b) above. An Indemnitee shall be
deemed to have been found liable in respect of any claim, issue or matter only
after the Indemnitee shall have been so adjudged by a court of competent
jurisdiction after exhaustion of all appeals therefrom. Reasonable expenses
11
shall, include, without limitation, all court costs and all fees and
disbursements of attorneys for the Indemnitee. The indemnification provided
shall be applicable whether or not negligence or gross negligence of the
Indemnitee is alleged or proven.
DESCRIPTION OF BUSINESS
HISTORY
We were incorporated as Claron Ventures, Inc. in Nevada on July 12, 2005.
We have 110,000,000 shares of stock authorized, representing 100,000,000 shares
of Common Stock, $0.001 par value and 10,000,000 shares of preferred stock,
$0.001 par value. We plan to explore and mine for silver, copper and other
minerals on properties in British Columbia, Canada.
We own 100% of the mineral rights on the "Lucky Todd 1" and "Lucky Todd 2"
claim grounds, which represent approximately 550 acres located in southwestern
British Columbia, Canada, 22 miles west of Princeton, British Columbia ("Lucky
Todd Claims"). The Lucky Todd Claims consist of twelve cell claims. The rights
to four of the cells expire on March 22, 2006 and the rights of the remaining
eight cells expire on July 8, 2006. The rights to the cells can be extended by
us prior to their expiration for an additional CDN $175, for each claim. We do
not believe that there will be any problem extending these claims if our
officers and Directors feel that such extension will be in our best interest.
We have completed a phase 1 initial exploration program on the Lucky Todd
1, which included prospecting and taking ground samples. The results of the
Lucky Todd 1, phase 1 program showed that a limited amount of copper was present
in the ground samples.
We plan to conduct further exploration activities on the Lucky Todd 1 in
the future, funding permitting, which may include:
o Completing a Vertical Loop Electro Magnetic Survey ("VLF-EM")
over portions of the claim. A VLF-EM survey is completed by flying
over the property in an aircraft, using a specially equipped receiver
to pick up the possible location of minerals.
Estimate cost: $7,500
======
o Sampling and geological mapping of the possible veins of minerals
on the property.
Estimated cost: $15,000
=======
o Further testing and diamond drilling of prime targets.
Estimate cost: $30,000
=======
12
All information presented above regarding the Lucky Todd 1 claim is taken
from our commissioned report on the Lucky Todd 1 claim, 'Geological Evaluation
Report on the Lucky Todd Mineral Claims', conducted by Sookochoff Consultants
Inc., attached hereto as Exhibit 99.1, the "Geological Report." The bio of
Laurence Sookochoff, who prepared the Geological Report is described under the
Heading "Interest of Named Experts," in this Prospectus.
EMPLOYEES
We currently have no employees other than our sole officer and Director,
Trevor Sali. We plan to use contractors in the future if the need arises during
the course of our exploration and/or development activities.
COMPETITION
Mines have limited lives and as a result, we may seek to expand our
reserves through the acquisition of new properties in the future. There is a
limited supply of desirable mineral lands available in the United States, Canada
and other areas where we may consider conducting exploration and/or production
activities. We will face strong competition for new properties from other mining
companies, most of which have greater financial resources than we do and as a
result, we may be unable to acquire new mining properties on terms that we
consider acceptable.
There is a global market for silver and copper. We plan to sell copper and
silver, if we are successful in our exploration and mining activities, at
prevailing market prices. We do not believe that any single company or other
institution has sufficient market power to significantly affect the price or
supply of these metals.
DEPENDENCE ON ONE OR A FEW MAJOR CUSTOMERS
We do not depend on one or a small number of customers, as we have not
successfully discovered or extracted any commercial quantities of copper or
silver. We have no customers and have not generated any revenues to date.
PATENTS, TRADEMARKS AND LICENSES
We have no patents, trademarks or licenses. We do own the mineral rights
to certain property in British Columbia, Canada, which is explained in detail
under "Description of Property," below.
13
NEED FOR GOVERNMENT APPROVAL
In connection with our planned exploration activities, we may be required
to comply with certain environmental laws and regulations which may require us
to obtain permits issued by regulatory agencies and to file various reports and
keep records of our operations affecting the environment. Some permits may
require periodic renewal or review of their conditions. We cannot predict
whether we will be able to obtain or renew these permits, if necessary, or
whether material changes in permit conditions will be imposed. If we are not
granted permits which we may require for our exploration and mining activities,
those permits once granted or not renewed, or additional conditions are imposed
for those permits, it could have a material adverse effect on our financial
condition, results of operations and liquidity.
COSTS AND EFFECTS OF COMPLIANCE WITH ENVIRONMENTAL LAWS
All of our exploration, development and production activities which we may
undertake in the future on our property in Canada will be subject to regulation
by governmental agencies under various environmental laws. These laws address
emissions to the air, discharges to water, management of wastes, management of
hazardous substances, protection of natural resources, antiquities and
endangered species, and reclamation of lands disturbed by mining operations.
Additionally, depending on the results of our exploration activities, if
completed, and what mining activities we may undertake, certain regulations may
also require us to obtain permits for our activities. These permits normally may
be subject to public review processes resulting in public approval of the
activity. While these laws and regulations may govern how we conduct many
aspects of our business, we do not believe that they will have a material
adverse effect on our results of operations or financial condition. We plan to
evaluate our operations in light of the cost and impact of environmental
regulations on those operations. We also plan to evaluate new laws and
regulations as they develop to determine the impact on, and changes necessary
to, our planned operations. Additionally, it is possible that future changes in
these laws or regulations could have a significant impact on some portion of our
business, causing us to reevaluate those activities at that time.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our financial
statements.
PLAN OF OPERATION FOR THE NEXT TWELVE MONTHS
We plan to continue our exploration activities on our Lucky Todd 1 claim
using the approximately $46,000 that remains from the sale of shares of our
common stock to offshore investors during 2005. We anticipate that the cost of
our planned exploration activities (as described above under "Description of
Business") will be approximately $52,500 and will raise any additional funding
14
we may require in the future through the sale of debt and or equity, which may
be dilutive to our then existing shareholders. We do not currently have any
plans to purchase additional properties.
We have spent approximately $9,000 on research and development costs on our
property since inception, which funds were spent on our phase 1 exploration
activities, described in greater detail above under "Description of Business."
STATEMENT OF OPERATIONS FOR THE PERIOD FROM INCEPTION THROUGH JULY 31, 2005
We generated no revenues for the period from inception through July 31,
2005.
We had exploration costs of $9,020 and other general and administrative
expenses of $5,173 for the period from inception through July 31, 2005, for
total expenses of $14,193, and a loss from operations of $14,193.
We had a net loss of $14,193 for the period from inception through July 31,
2005.
LIQUIDITY AND CAPITAL RESOURCES
As of July 31, 2005, we had $3,807 of current assets, consisting of $807 of
shareholder receivable, representing the unpaid amount of the $15,000 paid to us
by our Chief Executive Officer in return for 15,000,000 shares of our Common
Stock, which amount has since been paid to us, and $3,000 in prepaid attorney's
fees.
We had $3,000 of current liabilities, representing accounts payable and
accrued liabilities in connection with exploration studies done on our property
as of July 31, 2005, which amount has since been paid.
We had a deficit accumulated during the development stage as of July 31,
2005 of $14,193 and working capital of $807.
In September 2005, we sold 2,318,039 shares of our restricted Common Stock
to thirty-seven shareholders in connection with subscription agreements for an
aggregate of $69,541.17 ($0.03 per share). Of the amount raised through those
sales and the cash we had on hand as of July 31, 2005, approximately $46,000
remains after expenditures on general administrative and exploration studies.
DESCRIPTION OF PROPERTY
OFFICE SPACE
- -------------
Our Chief Executive Officer, Trevor Sali provides us office space in his
house free of charge, which office space totals approximately 200 square feet.
We do not currently have any plans to obtain other office space. Additionally,
we also have a seperate answering service, mail and fax forwarding service, for
which we pay approximately $40 per month.
15
MINERAL RIGHTS
- ---------------
We own 100% of the mineral rights on the "Lucky Todd 1" and "Lucky Todd 2"
claim grounds, which represents approximately 550 acres located in southwestern
British Columbia, Canada, 22 miles west of Princeton, British Columbia ("Luck
Todd Claims"). We have completed preliminary studies on the property. In
connection with those studies, tunneling was done, which showed 2.129% copper
was present in the sample. We plan to conduct further exploration activities in
the future, funding permitting (see above under "Description of Business").
The Lucky Todd Claims consist of a twelve cell claims. The rights to four
of the cells expire on March 22, 2006 and the rights of the remaining eight
cells expire on July 8, 2006. The claims can be extended by us by paying CDN
$175.
The elevations of the Lucky Todd Claim property range from 3,350 feet to
4,450 feet. The temperatures on the claim could range between a low of -20
degrees in the winter to a high of 85 degrees in the summer. Snow may be
present on the ground from December to April, however this presence would not
hamper a year-round exploration and/or development program (from the Geological
Report, filed as exhibit 99.1 to this filing).
CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS
In July 2005, we issued Trevor Sali, our Chief Executive Officer, Chief
Financial Officer, Secretary and Treasurer 15,000,000 shares of our Common Stock
in return for $15,000.
EXECUTIVE COMPENSATION
Other(1)
Annual
Name & Principal Compen- Options
Position Year Salary ($) sation SARs
- ------------------- ------ ----------- --------- ---------
Trevor Sali, 2005 $ - 0 - - 0 - - 0 -
CEO, CFO,
Secretary,
Treasurer, and
Director (2)
16
* Does not include perquisites and other personal benefits in amounts less than
10% of the total annual salary and other compensation. Other than the
individual listed above, we had no executive employees who have received more
than $100,000.00 in compensation, including bonuses and options, since our
formation in July 2005.
(1) No Executive Officer received any LTIP payouts, restricted stock awards or
bonuses during the last fiscal year, and no salaries are being accrued.
(2) Mr. Sali was appointed as our Chief Executive Officer, Chief Financial
Officer, Secretary, Treasurer and Director on July 7, 2005. Mr. Sali does not
have an employment agreement with us.
CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures. Our Chief Executive
Officer and Principal Financial Officer, after evaluating the effectiveness of
our "disclosure controls and procedures" (as defined in the Securities Exchange
Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of July 31, 2005 (the "Evaluation
Date"), has concluded that as of the Evaluation Date, our disclosure controls
and procedures were effective to provide reasonable assurance that information
we are required to disclose in reports that we file or submit under the Exchange
Act is recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission rules and forms, and that
such information is accumulated and communicated to our management, including
our Chief Executive Officer and Chief Financial Officer, as appropriate, to
allow timely decisions regarding required disclosure.
(b) Changes in internal control over financial reporting. There were no
significant changes in our internal control over financial reporting during the
last fiscal year and/or up to and including the date of this filing that we
believe materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting.
17
FINANCIAL STATEMENTS
The Financial Statements required by Item 310 of Regulation S-B are stated
in U.S. dollars and are prepared in accordance with U.S. Generally Accepted
Accounting Principles. The following financial statements pertaining to Claron
Ventures, Inc. are filed as part of this Prospectus.
Report of Independent Registered Public Accounting Firm
To the Board of Directors
Claron Ventures, Inc.
(An Exploration Stage Company)
Saskatchewan, Canada
We have audited the accompanying balance sheet of Claron Ventures, Inc. as of
July 31, 2005, and the related statements of operations, stockholders' equity,
and cash flows for the period from July 7, 2005 (Inception) through July 31,
2005. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our 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 Claron Ventures, Inc. as of
July 31, 2005, and the results of its operations and its cash flows for the
period from July 7, 2005 (Inception) through July 31, 2005, in conformity with
accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that Claron
Ventures, Inc. will continue as a going concern. As discussed in Note 2 to the
financial statements, has incurred losses from inception through July 31, 2005
totaling $14,193. Claron Ventures, Inc. will require additional working capital
to develop its business until Claron Ventures, Inc. either (1) achieves a level
of revenues adequate to generate sufficient cash flows from operations; or (2)
obtains additional financing necessary to support its working capital
requirements. These conditions raise substantial doubt about Claron's ability to
continue as a going concern. Management's plans in regard to this matter are
also described in Note 2. The accompanying financial statements do not include
any adjustments that might result from the outcome of these uncertainties.
Lopez, Blevins, Bork & Associates, LLP
Houston, Texas
October 6, 2005
F-1
CLARON VENTURES, INC.
(AN EXPLORATION STAGE COMPANY)
BALANCE SHEET
July 31,
2005
ASSETS
Current assets:
Shareholder receivable $ 807
Prepaid attorney fees 3,000
--------
Total current assets $ 3,807
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable & accrued liabilities $ 3,000
--------
Total current liabilities 3,000
--------
Commitments
STOCKHOLDERS' EQUITY:
Preferred stock $.001 par value, 10,000,000 shares authorized, none issued $ -
Common stock, $.001 par value, 100,000,000 shares authorized, 15,000,000
shares issued and outstanding 15,000
Deficit accumulated during the exploration stage (14,193)
--------
Total stockholders' equity 807
--------
Total Liabilities and Stockholders' Equity $ 3,807
========
F-2
CLARON VENTURES, INC.
(AN EXPLORATION STAGE COMPANY)
STATEMENT OF OPERATIONS
Inception
through
July 31,
2005
-----------
Operating expenses:
Exploration expenses $ 9,020
Other general and administrative 5,173
-----------
Loss from operations 14,193
-----------
Net loss $ (14,193)
===========
Net loss per share:
Basic and diluted $ (0.00)
===========
Weighted average shares outstanding:
Basic and diluted 15,000,000
===========
F-3
CLARON VENTURES, INC.
(AN EXPLORATION STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' DEFICIT
PERIOD FROM JULY 7, 2005 (INCEPTION) THROUGH JULY 31, 2005
Deficit accumulated
Common stock during the
Shares Amount exploration stage Total
---------- -------- ------------------ ----------
Capital stock issued for cash 15,000,000 $ 15,000 $ - $ 15,000
---------- -------- ------------------ ----------
Net loss - - (14,193) (14,193)
---------- -------- ------------------ ----------
Balance, July 31, 2005 15,000,000 $ 15,000 $ (14,193) $ (14,193)
========== ======== ================= ==========
F-4
CLARON VENTURES, INC.
(AN EXPLORATION STAGE COMPANY)
STATEMENT OF CASH FLOWS
Inception through
July 31,
2005
-----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (14,193)
Adjustments to reconcile net income to net cash
provided by operating activities:
Changes in:
Shareholder receivable (807)
Prepaid attorney fees (3,000)
Accounts payable & accrued liabilities 3,000
-----------------
NET CASH USED IN OPERATING ACTIVITIES (15,000)
-----------------
CASH FLOWS FROM INVESTING ACTIVITIES: -
-----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock 15,000
-----------------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 15,000
-----------------
NET CHANGE IN CASH -
Cash, beginning of period -
-----------------
Cash, end of period $ -
=================
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ -
=================
Income taxes paid $ -
=================
F-5
CLARON VENTURES, INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF ACCOUNTING POLICIES
Claron Ventures, Inc. ("Company") was incorporated on July 7, 2005 under the
laws of Nevada to engage in the exploration of certain mineral interests in
British Columbia.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the balance sheet and the reported amounts of revenues and expenses
during the period. Actual results could differ from those estimates.
Basic Loss Per Share
Basic loss per share has been calculated based on the weighted average number of
shares of common stock outstanding during the period.
Long-lived Assets
Property and equipment are stated on the basis of historical cost less
accumulated depreciation. Depreciation is provided using the straight-line
method over the estimated useful lives of the assets. Major renewals and
improvements are capitalized, while minor replacements, maintenance and repairs
are charged to current operations.
Impairment losses are recorded on fixed assets used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amount. There
were no impairment losses in 2005.
Income Taxes
The asset and liability approach is used to account for income taxes by
recognizing deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between the carrying amounts and the tax
basis of assets and liabilities. Company records a valuation allowance to reduce
the deferred tax assets to the amount that is more likely than not to be
realized.
Mineral Properties
Cost of license acquisition, exploration, carrying and retaining unproven
mineral lease properties are expensed as incurred.
F-6
Financial Instruments
Company's financial instruments consist of cash, accounts payable and accrued
liabilities, notes payable and due to related parties. Unless otherwise noted,
it is management's opinion that Company is not exposed to significant interest,
currency or credit risks arising from these financial instruments. The fair
value of these financial instruments approximate their carrying values, unless
otherwise noted.
Recent Accounting Pronouncements
Company does not expect the adoption of recently issued accounting
pronouncements to have a significant impact on Company's results of operations,
financial position or cash flow.
NOTE 2 - GOING CONCERN
Claron Ventures, Inc. has a deficit accumulated during the exploration stage of
$14,193 as of July 31, 2005. Claron's financial statements are prepared using
the generally accepted accounting principles applicable to a going concern,
which contemplates the realization of assets and liquidation of liabilities in
the normal course of business. However, Claron Ventures, Inc. has no current
source of revenue. Without realization of additional capital, it would be
unlikely for Claron Ventures, Inc. to continue as a going concern. Claron's
management plans on raising cash from public or private debt or equity
financing, on an as needed basis and in the longer term, revenues from the
acquisition, exploration and development of mineral interests, if found.
Claron's ability to continue as a going concern is dependent on these additional
cash financings, and, ultimately, upon achieving profitable operations through
the development of mineral interests.
NOTE 3 - RELATED PARTIES
The Company neither owns nor leases any real or personal property, an officer
has provided office services without charge. Such costs are immaterial to the
financial statements and accordingly are not reflected herein. The officers and
directors are involved in other business activities and most likely will become
involved in other business activities in the future.
The sole shareholder was issued 15,000,000 shares of common stock for $15,000.
The sole shareholder provided $14,193 of cash for the company to pay expenses in
the period ending July 31, 2005. The sole shareholder owed the Company $807 as
of July 31, 2005 to fulfill the agreed upon consideration of $15,000.
NOTE 4 - CAPITAL STOCK
Company's authorized capital stock consists of 100,000,000 shares of common
stock, with a par value of $0.001 per share.
F-7
Company's authorized capital stock consists of 10,000,000 shares of preferred
stock, with a par value of $0.001 per share. Shares of preferred stock of the
Company may be issued from time to time in one or more series, each of which
shall have such distinctive designation or title as shall be determined by the
Board of Directors prior to the issuance of any shares thereof.
NOTE 5 - INCOME TAXES
Claron Ventures, Inc. follows Statement of Financial Accounting Standards Number
109 (SFAS 109), "Accounting for Income Taxes." Deferred income taxes reflect the
net effect of (a) temporary difference between carrying amounts of assets and
liabilities for financial purposes and the amounts used for income tax reporting
purposes, and (b) net operating loss carryforwards. No net provision for
refundable U.S. Federal income tax has been made in the accompanying statement
of loss because no recoverable taxes were paid previously. Similarly, no
deferred tax asset attributable to the net operating loss carryforward has been
recognized, as it is not deemed likely to be realized.
The provision for refundable U.S. Federal income tax consists of the following:
July 31,
2005
Refundable Federal income tax attributable to:
Current Operations $ 4,800
Less, Change in valuation allowance (4,800)
---------
Net refundable amount $ -
The cumulative tax effect at the expected rate of 34% of significant items
comprising our net deferred tax amount is as follows:
July 31,
2005
Deferred tax asset attributable to:
Net operating loss carryover $ 4,800
Less, Change in valuation allowance (4,800)
-------
Net deferred tax asset $ -
At July 31, 2005, Claron Ventures, Inc. had an unused net operating loss
carryover approximating $14,193 that is available to offset future taxable
income; it expires beginning in 2024.
NOTE 6 - SUBSEQUENT EVENTS (UNAUDITED)
In September 2005, Claron Ventures, Inc. issued 2,318,039 shares of common stock
for cash proceeds of $69,541.
F-8
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
DESCRIPTION OF CAPITAL STOCK
We have authorized capital stock consisting of 100,000,000 shares of Common
Stock, $0.001 par value per share ("Common Stock") and 10,000,000 shares of
preferred stock, $0.001 par value per share ("Preferred Stock"). As of November
1, 2005, we had 17,318,039 shares of Common Stock issued and outstanding and - 0
- - shares of Preferred Stock issued and outstanding.
COMMON STOCK
The holders of outstanding shares of Common Stock are entitled to receive
dividends out of assets or funds legally available for the payment of dividends
of such times and in such amounts as the board from time to time may determine.
Holders of Common Stock are entitled to one vote for each share held on all
matters submitted to a vote of shareholders. There is no cumulative voting of
the election of directors then standing for election. The Common Stock is not
entitled to pre-emptive rights and is not subject to conversion or redemption.
Upon liquidation, dissolution or winding up of our company, the assets legally
available for distribution to stockholders are distributable ratably among the
holders of the Common Stock after payment of liquidation preferences, if any, on
any outstanding payment of other claims of creditors. Each outstanding share of
Common Stock is, and all shares of Common Stock to be outstanding upon
completion of this Offering will upon payment therefore be, duly and validly
issued, fully paid and non-assessable.
PREFERRED STOCK
Shares of Preferred Stock may be issued from time to time in one or more
series, each of which shall have such distinctive designation or title as shall
be determined by our Board of Directors ("Board of Directors") prior to the
issuance of any shares thereof. Preferred Stock shall have such voting powers,
full or limited, or no voting powers, and such preferences and relative,
participating, optional or other special rights and such qualifications,
limitations or restrictions thereof, as shall be stated in such resolution or
resolutions providing for the issue of such class or series of Preferred Stock
as may be adopted from time to time by the Board of Directors prior to the
issuance of any shares thereof. The number of authorized shares of Preferred
Stock may be increased or decreased (but not below the number of shares thereof
then outstanding) by the affirmative vote of the holders of a majority of the
voting power of all the then outstanding shares of our capital stock entitled to
vote generally in the election of the directors, voting together as a single
class, without a separate vote of the holders of the Preferred Stock, or any
series thereof, unless a vote of any such holders is required pursuant to any
Preferred Stock Designation.
SHARES AVAILABLE FOR FUTURE SALE
Upon the date of this Prospectus, there are 17,318,039 shares of Common
Stock issued and outstanding. Upon the effectiveness of this registration
statement, 2,318,039 shares of Common Stock to be resold pursuant to this
Prospectus will be eligible for immediate resale in the public market if and
when any market for the Common Stock develops, without limitation. There
currently exists no public market for the Company's Common Stock.
18
The remaining 15,000,000 shares of our issued and outstanding Common Stock
which are not being registered pursuant to this registration statement will be
subject to the resale provisions of Rule 144. Sales of shares of Common Stock in
the public markets may have an adverse effect on prevailing market prices for
the Common Stock.
Rule 144 governs resale of "restricted securities" for the account of any
person (other than an issuer), and restricted and unrestricted securities for
the account of an "affiliate" of the issuer. Restricted securities generally
include any securities acquired directly or indirectly from an issuer or its
affiliates which were not issued or sold in connection with a public offering
registered under the Securities Act. An affiliate of the issuer is any person
who directly or indirectly controls, is controlled by, or is under common
control with, the issuer. Affiliates of the Company may include its directors,
executive officers, and persons directly or indirectly owning 10% or more of the
outstanding Common Stock. Under Rule 144 unregistered resales of restricted
Common Stock cannot be made until it has been held for one year from the later
of its acquisition from the Company or an affiliate of the Company.
Thereafter, shares of Common Stock may be resold without registration
subject to Rule 144's volume limitation, aggregation, broker transaction, notice
filing requirements, and requirements concerning publicly available information
about the Company ("Applicable Requirements"). Resales by the Company's
affiliates of restricted and unrestricted Common Stock are subject to the
Applicable Requirements. The volume limitations provide that a person (or
persons who must aggregate their sales) cannot, within any three-month period,
sell more than the greater of one percent of the then outstanding shares, or the
average weekly reported trading volume during the four calendar weeks preceding
each such sale. A non-affiliate may resell restricted Common Stock which has
been held for two years free of the Applicable Requirements.
PLAN OF DISTRIBUTION AND SELLING STOCKHOLDERS
This Prospectus relates to the resale of 2,318,039 shares of Common Stock
by the selling stockholders. The table below sets forth information with respect
to the resale of shares of Common Stock by the selling stockholders. We will not
receive any proceeds from the resale of Common Stock by the selling stockholders
for shares currently outstanding. None of the selling stockholders are
broker-dealers or affiliates of broker-dealers.
[Remainder of page left intentionally blank.]
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Selling Stockholders
AMOUNT OFFERED
DATE SHARES (ASSUMING ALL SHARES
SHARES BENEFICIALLY SHARES BENEFICIALLY
WERE OWNED IMMEDIATELY OWNED AFTER
SHAREHOLDERS ACQUIRED(1) BEFORE RESALE SOLD) RESALE(2)
------------------------------------------------------------------------------------------
Astin, Anita 9/12/05 16,667 16,667 --
Blum, Tyson 9/12/05 5,510 5,510 --
Caprani, Carlo 9/12/05 5,510 5,510 --
Chalut, Cindy 9/12/05 50,000 50,000 --
Chalut, Phil 9/12/05 50,000 50,000 --
Corsi, Patrick 9/12/05 136,612 136,612 --
Crowe, Maile 9/12/05 5,510 5,510 --
Crowe, Michael 9/12/05 5,510 5,510 --
Crowe, Rick 9/12/05 5,510 5,510 --
Dalal, Atanu 9/12/05 133,333 133,333 --
Dmytrowich, Jason 9/12/05 5,510 5,510 --
Dmytrowich, Tonya 9/12/05 5,510 5,510 --
Gaglardi, Gordon 9/12/05 40,000 40,000 --
Gerllays, Allen 9/12/05 16,667 16,667 --
Gorieu, Tyler 9/12/05 5,510 5,510 --
Head, Kevin 9/12/05 5,510 5,510 --
Johnson, Christy 9/12/05 100,000 100,000 --
Keeble, Maureen 9/12/05 50,000 50,000 --
Lang, Ashley 9/12/05 333,333 333,333 --
Lang, Deanna 9/12/05 333,333 333,333 --
Lay, David 9/12/05 30,000 30,000 --
Lay, Kenneth 9/12/05 30,000 30,000 --
Mashhour, M.H.R. 9/12/05 67,000 67,000 --
Moline, Shane 9/12/05 5,510 5,510 --
Motlebpoor, Abdolrahim 9/12/05 67,000 67,000 --
Nordmarken, Mike 9/12/05 83,334 83,334 --
Pantelakis, Walter 9/14/05 138,141 138,141 --
Powrheidari, Alireza 9/12/05 67,000 67,000 --
Schouw, James 9/12/05 43,333 43,333 --
Sinclair, Collin 9/12/05 5,510 5,510 --
Skujins, Paul 9/12/05 27,322 27,322 --
Tuss, Valentia 9/12/05 166,667 166,667 --
Van Der Horst, Mark 9/12/05 166,667 166,667 --
Wanner, Adriann 9/12/05 50,000 50,000 --
Whittick, Alice 9/12/05 50,000 50,000 --
Yanz, Kelly 9/12/05 5,510 5,510 --
Yanz,Michael 9/12/05 5,510 5,510 --
(1) All shares being registered pursuant to this Prospectus were purchased by
the Selling Stockholders in offshore transactions pursuant to Regulation S of
the Securities Act of 1933 for $0.03 US per share.
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(2) Assuming all shares registered are sold.
Upon the effectiveness of this registration statement, 15,000,000 shares of
our outstanding Common Stock will be subject to the resale provisions of Rule
144. The 2,318,039 remaining shares offered by the selling stockholders pursuant
to this Prospectus may be sold by one or more of the following methods, without
limitation:
o ordinary brokerage transactions and transactions in which
the broker-dealer solicits the purchaser;
o block trades in which the broker-dealer will attempt to sell
the shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
o an exchange distribution in accordance with the rules of the
applicable exchange;
o privately-negotiated transactions;
o broker-dealers may agree with the Selling Security Holders
to sell a specified number of such shares at a stipulated price
per share;
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law.
The Selling Security Holders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this Prospectus.
We currently lack a public market for our Common Stock. Selling
shareholders will sell at a price of $0.10 per share until our shares are quoted
on the OTC Bulletin Board and thereafter at prevailing market prices or
privately negotiated prices. If before the Company's shares are quoted on the
OTC Bulletin Board, selling shareholders wish to sell at a price different from
$0.10 per share, we will file a post-effective amendment beforehand.
The Selling Security Holders may pledge their shares to their brokers under
the margin provisions of customer agreements. If a Selling Security Holder
defaults on a margin loan, the broker may, from time to time, offer and sell the
pledged shares.
The Selling Security Holders may sell their shares of Common Stock short
and redeliver our Common Stock to close out such short positions; however, the
Selling Security Holders may not use shares of our Common Stock being registered
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in the Registration Statement to which this Prospectus is a part to cover any
short positions entered into prior to the effectiveness of such Registration
Statement. If the Selling Security Holders or others engage in short selling it
may adversely affect the market price of our Common Stock.
Broker-dealers engaged by the Selling Security Holders may arrange for
other broker-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the Selling Security Holders (or, if any
broker-dealer acts as agent for the purchaser of shares, from the purchaser) in
amounts to be negotiated. It is not expected that these commissions and
discounts will exceed what is customary in the types of transactions involved.
The Selling Security Holders may be deemed to be an "underwriter" within
the meaning of the Securities Act in connection with such sales. Therefore, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
MARKET FOR COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
No established public trading market exists for our Common Stock. We have
no shares of Common Stock subject to outstanding options or warrants to
purchase, or securities convertible into, our Common Stock. We have no
outstanding shares of Preferred Stock. Except for this offering, there is no
Common Stock that is being, or has been proposed to be, publicly offered. As of
November 1, 2005, there were 17,318,039 shares of Common Stock outstanding, held
by 38 shareholders of record.
LEGAL MATTERS
Certain legal matters with respect to the issuance of shares of Common
Stock offered hereby will be passed upon by David M. Loev, Attorney at Law,
Houston, Texas.
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
See Indemnification of Directors and Officers above.
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ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses in connection with this
registration statement. All of such expenses are estimates, other than the
filing fees payable to the Securities and Exchange Commission.
Description Amount to be Paid
- ----------------------------------------------- ----------------
Filing Fee - Securities and Exchange Commission $ 27.28
Attorney's fees and expenses 35,000.00
Accountant's fees and expenses 10,000.00
Transfer agent's and registrar fees and expenses 1,500.00
Printing and engraving expenses 1,500.00
Miscellaneous expenses 3,000.00
-----------------
Total 51,027.28
=================
* Estimated
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
On July 7, 2005, we issued 15,000,000 shares to our Chief Executive
Officer, Chief Financial Officer, Treasurer, Secretary and Director, Trevor Sali
in consideration for $15,000. We claim an exemption from registration
afforded by Section 4(2) of the Act for the above issuance, because that
issuance did not involve a public offering, the recipient had access to
information that would be included in a registration statement, he took the
shares for investment and not resale and we took appropriate measures to
restrict the transfer of the shares.
In September 2005, we issued an aggregate of 2,318,039 shares of our
restricted common stock to an aggregate of thirty-seven (37) shareholders for an
aggregate of $69,541.17 US (or $0.03 US per share) in connection with Offshore
Subscription Agreements, in a transaction not registered under the Securities
Act of 1933 (the "Act"). We claim an exemption from registration afforded by
Regulation S of the Act ("Regulation S") for the above issuances, since the
issuances were made to a non-U.S. person (as defined under Rule 902 section
(k)(2)(i) of Regulation S), pursuant to an offshore transaction, and no directed
selling efforts were made in the United States by the issuer, a distributor, any
of their respective affiliates, or any person acting on behalf of any of the
foregoing.
ITEM 27. EXHIBITS
Exhibit 3.1* Articles of Incorporation
Exhibit 3.2* Bylaws
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Exhibit 5.1* Opinion and consent of David M. Loev, Attorney
at Law re: the legality of the shares being
registered
Exhibit 23.1* Consent of Lopez, Belvins, Bork & Associates,
LLP, Certified Public Accountants
Exhibit 23.2* Consent of David M. Loev, Attorney at Law
(included in Exhibit 5.1)
Exhibit 23.3* Consent of Sookoehoff Consultants, Inc.
Exhibit 99.1* Geological Evaluation Report on the Lucky Todd
Mineral Claims
* Filed as an exhibit to this SB-2 Registration Statement
ITEM 28. UNDERTAKINGS
The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or sales are being
made, a post effective amendment to this Registration Statement:
(a) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(b) To reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would
not exceed that which was registered) and any deviation from the
low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in the
volume and rise represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
and
(c) To include any material information with respect to the plan
of distribution not previously disclosed in this Registration
Statement or any material changes as such information in the
Registration Statement.
2. For determining any liability under the Securities Act, to treat
each post-effective amendment as a new registration statement relating
to the securities offered herein, and the offering of the securities
at the time as the initial bona fide offering of those securities.
3. To file a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the offering.
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4. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer of controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and
will be governed by the final adjudication of such issue.
5. For determining any liability under the Securities Act, treat the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant under Rule 424(b)(1) or (4)
or 497(h) under the Securities Act as part of this registration
statement as of the time the Commission declared it effective.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
the requirements of filing on Form SB-2 and authorized this Registration
Statement to be signed on its behalf by the undersigned in the City of
Saskatoon Saskatchewan, Canada, November 14, 2005.
CLARON VENTURES, INC.
By: /s/ Trevor Sali
- ------------------------------------
Trevor Sali, Chief Executive Officer
and Chief Financial Officer
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated.
/s/ Trevor Sali
- -------------------------------------
Trevor Sali, Chief Executive Officer,
Chief Financial Officer, Treasurer,
Secretary and Director
November 14, 2005
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