As filed with the Securities and Exchange Commission on April 27, 2006
Registration No. 333-129664
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2/A
Amendment No. 3
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
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(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
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(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
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(Name, address and telephone number of agent for service)
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, Texas 77019 Houston, Texas 77019
Phone: (713) 524-4110 Phone: (713) 524-4110
Fax: (713) 524-4122 Fax: (713) 456-7908
Approximate date of proposed sale to the public: as soon as practicable after
the effective date of this Registration Statement.
If any of the Securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. (X)
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of 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(1) Registration
To be Registered Registered Fee
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Common Stock 2,318,039 $ 0.10 $ 231,803.90 $ 27.28
$0.001 par value
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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. This 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 31 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.
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.
The information in this Prospectus is not complete and may be changed. We
may not sell these securities until the Registration Statement filed with the
Securities and Exchange Commission is effective. This Prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
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 7, 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 , 2006
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TABLE OF CONTENTS
Prospectus Summary 5
Summary Financial Data 6
Risk Factors 7
Use of Proceeds 15
Dividend Policy 15
Legal Proceedings 16
Directors, Executive Officers, Promoters and Control Persons 16
Security Ownership of Certain Beneficial Owners and Management 17
Interest of Named Experts and Counsel 17
Indemnification of Directors and Officers 18
Description of Business 19
Management's Discussion and Analysis of Financial Condition and Results of
Operations 23
Description of Property 26
Certain Relationships and Related Transactions 27
Executive Compensation 27
Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure 28
Descriptions of Capital Stock 29
Shares Available for Future Sale 30
Plan of Distribution and Selling Stockholders 31
Market for Common Equity and Related Stockholder Matters 33
Additional Information 34
Legal Matters 34
Financial Statements F-1
Part II 35
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.
We are an exploration stage mineral mining company, and as such, there is
no assurance that commercially viable mineral deposits exist on either of our
two claims (described in more detail below under "Description of Business") and
we will require further exploration before the final evaluation as to the
economic and legal feasibility of the claims is determined.
The shares of Common Stock offered herein by the selling shareholders were
purchased by the selling shareholders in offshore transactions pursuant to
Regulation S of the Securities Act of 1933 in September 2005 for consideration
of $0.03 per share.
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:
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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
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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, with currency fluctuations, with
the fact that our claims may be subject to
inclement weather, with the fact that our
property has not to date produced any
minerals and may not in the future, the fact
that our Board of Directors has authority to
issue shares of Common Stock and Preferred
Stock, without shareholder approval, which
shares may cause substantial dilution to our
then shareholders, the fact that we do not
currently have a market for our securities,
that there is uncertainty as to our ability
to enforce civil liabilities both in and
outside of the United States due to the fact
that our officers, Directors and Assets are
not located in the US, the fact that we rely
heavily on key personnel, with the fact that
our sole officer and Director lacks
experience in and with mining companies and
with the potential volatility of our common
stock when traded and the penny stock
restrictions on our common stock. See "Risk
Factors."
OFFERING PRICE: The offering price of the shares has
been arbitrarily determined by us based on
estimates of the price that purchasers of
speculative securities, such as the shares,
will be willing to pay considering the nature
and capital structure of our Company, the
experience of our officers and Directors and
the market conditions for the sale of equity
securities in similar companies. The offering
price of the shares bears no relationship to
the assets, earnings or book value of us, or
any other objective standard of value. We
believe that no shares will be sold by the
selling shareholders prior to us becoming a
publicly traded company, at which time the
selling shareholders will sell shares based
on the market price of such shares. We are
not selling any shares of our common stock,
and are only registering the re-sale of
shares of Common Stock previously sold by us.
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 January 31, 2005 and for the three month
period ending January 31, 2006. We derived the summary financial information
from our unaudited financial statements for the period ending January 31, 2006,
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.
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STATEMENT OF OPERATIONS
THREE MONTHS INCEPTION
ENDING THROUGH
January 31, January 31,
2006 2006
(Unaudited) (Unaudited)
Operating expenses:
Exploration expenses $ - 0 - $ 9,020
Other general and administrative 4,631 41,304
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Loss from operations 4,631 50,324
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Net loss $ (4,631) $ (50,324)
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BALANCE SHEET AS OF JANUARY 31, 2006
(UNAUDITED)
ASSETS
Current assets:
Cash $ 39,260
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Total current assets $ 39,260
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable & accrued liabilities $ 5,043
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Total current liabilities 5,043
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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, 17,318,039 shares issued and outstanding 17,318
Additional paid in capital 67,223
Deficit accumulated during the exploration stage (50,324)
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Total stockholders' equity 34,217
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Total Liabilities and Stockholders' Equity $ 39,260
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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 the following Risk Factors (references
to "our," "we," "Claron" and words of similar meaning in these Risk Factors
refer to the Company):
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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 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 $39,000 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 exploration 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 January 31, 2006,
was $50,324. We had net working capital of $34,217 as of January 31, 2006. 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 $39,000 we have remaining from the approximately $85,000 we
have raised from the sale of shares of Common Stock to date. This estimate is
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based on the fact that approximately $35,000 spent by us to date included one
time expenditures including legal fees and accounting fees in connection with
the preparation of this Registration Statement, the preparation of the
geological report on our property and the Phase I 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 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.
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
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.
OUR SOLE OFFICER AND DIRECTOR LACKS TECHNICAL AND/OR EXPLORATION EXPERIENCE IN
AND WITH COMPANIES WITH MINING ACTIVITIES AND WITH PUBLICLY TRADED COMPANIES.
While we rely heavily on Mr. Sali, our Chief Executive Officer and
Director, he lacks technical training and experience exploring for, starting
and/or operating a mine. As a result of Mr. Sali's lack of experience in
exploration and/or development of mines, he may not be fully aware of many of
the specific requirements related to working within our industry. Additionally,
as a result of Mr. Sali's lack of experience, his decisions may not take into
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account standard engineering or managerial approaches mineral companies commonly
use. Furthermore, Mr. Sali has no experience serving as an officer or Director
of a publicly traded company, or experience with the reporting requirements
which public companies are subject to. Consequently, our operations, earnings
and ultimate financial success could suffer irreparable harm due to his ultimate
lack of experience in our industry and with publicly traded companies in
general.
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 shares or 86.6% 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 IS CURRENTLY 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, Mr. Sali is only able to spend approximately thirty (30) hours per week
on our business. 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.
WE WILL BE SUBJECT TO NUMEROUS RISKS IF WE COMMENCE MINING OPERATIONS, OF WHICH
THERE CAN BE NO ASSURANCE.
The mineral exploration and mining business is competitive in all of its
phases. We currently have no mining operations of any kind, however, if we do
commence mining activities in the future, we will be subject to numerous risks,
including:
o competitors with greater financial, technical and other
resources, in the search for and the acquisition of attractive mineral
properties;
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o our ability to select and acquire suitable producing properties
or prospects for mineral exploration;
o the accuracy of our reserve estimates, if any, which may be
affected by the following factors beyond our control:
- declines in the market price of the various metals we mine;
- increased production or capital costs;
- reduction in the grade or tonnage of the deposit;
- increase in the dilution of the ore; or
- reduced recovery rates;
o risks and hazards associated with environmental hazards,
political and country risks, civil unrest or terrorism, industrial
accidents, labor disputes, unusual or unexpected geologic formations,
cave-ins, explosive rock failures; and flooding and periodic
interruptions due to inclement or hazardous weather conditions; and
o our failure to maintain insurance on certain risks associated
with any exploration activities we may undertake in the future.
If we do begin exploration activities in the future, of which there can be
no assurance, we will be subject to above risks. If any of the above risks
occur, we may be forced to curtail or abandon our operations and/or exploration
and development activities, if any. As a result, any investment in us could
decrease in value and/or become worthless.
THERE IS UNCERTAINTY AS TO OUR ABILITY TO ENFORCE CIVIL LIABILITIES BOTH IN AND
OUTSIDE OF THE UNITED STATES DUE TO THE FACT THAT OUR OFFICERS, DIRECTORS AND
ASSETS ARE NOT LOCATED IN THE UNITED STATES.
Our office, our mining property, and the majority of our assets are located
in Canada. Our current, limited operations are conducted in Canada. Our officer
and Director is located in Canada. As a result, it may be difficult for
shareholders to effect service of process within the United States on our
officer and Director. In addition, investors may have difficulty enforcing
judgments based upon the civil liability provisions of the securities laws of
the Unites States or any state thereof, both in and outside of the United
States.
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OUR PLANNED EXPLORATION AND DEVELOPMENT ACTIVITIES MAY BE ADVERSELY EFFECTED BY
INCLEMENT WEATHER IN AND AROUND OUR CLAIMS.
The temperatures on our claims can 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, and while we do not believe this presence would
hamper a year-round exploration and/or development program, such presence of
snow could cause us to spend additional resources to heat and/or remove snow
from our operations, if any. Additionally, inclement weather at the airports in
and around our claims may make it more difficult for us to obtain the materials
we will require for any of our planned exploration activities, and/or for our
personnel to visit our claims. As a result, if there is an abnormal amount of
snowfall and/or inclement weather on our claims or particularly bad winter
weather at the airports surrounding our claims, we could be forced to expend
additional finances dealing with such snow on our claims and with the delays
such abnormal snow falls could have on our then operations, if any. The expense
of additional monies could cause our revenues, if any to decline and/or cause us
to curtail or abandon our business operations.
OUR DETERMINATIONS OF WHETHER OUR PLANNED ACTIVITIES AND ESTIMATES OF POTENTIAL
RESERVES MAY BE INACCURATE.
We are currently in the exploration stage. Before we can begin a
development project, if ever, 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.
Any development projects we may undertake in the future 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.
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,
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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, IF ANY, WILL BE SUBJECT TO CURRENCY FLUCTUATIONS.
While we do not currently have any operations, we believe that our
products, if any, will be sold in world markets in United States dollars. As a
result, currency fluctuations may affect the cash flow we realize from our
future operations and exploration activities, which we plan to conduct in
Canada, if any. Foreign exchange fluctuations may materially adversely affect
our financial performance and results of operations.
OUR PROPERTY HAS NOT PRODUCED ANY COMMERCIAL RESERVES OR ORE BODY, AND THE
PROBABILITY OF SUCH PROPERTY PRODUCING ANY COMMERCIALLY VIABLE RESERVES IN THE
FUTURE IS REMOTE.
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. Until further exploration activities can be conducted, there can be no
assurance that a commercially mineable ore body exists on any of our properties.
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. Furthermore, the probability of an individual
prospect ever having reserves or being commercially viable is extremely remote.
As a result, there is only a small probability that any of our properties
contain any reserves and that any funds spent on exploration activities will
ever be recovered.
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.
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NEVADA LAW AND OUR ARTICLES OF INCORPORATION AUTHORIZE US TO ISSUE SHARES OF
STOCK, WHICH SHARES MAY CAUSE SUBSTANTIAL DILUTION TO OUR EXISTING SHAREHOLDERS
AND/OR HAVE RIGHTS AND PREFERENCES GREATER THAN THE COMMON STOCK OFFERED IN THIS
PROSPECTUS.
Pursuant to our Articles of Incorporation, we have 100,000,000 shares
of Common Stock and 10,000,000 shares of preferred stock ("Preferred Stock")
authorized. As of the filing of this Registration Statement, we have 17,318,039
shares of Common Stock issued and outstanding and - 0 - shares of Preferred
Stock issued and outstanding. As a result, our Board of Directors has the
ability to issue a large number of additional shares of Common Stock without
shareholder approval, which if issued could cause substantial dilution to our
then shareholders. Additionally, shares of Preferred Stock may be issued by our
Board of Directors without shareholder approval with voting powers, and such
preferences and relative, participating, optional or other special rights and
powers as determined by our Board of Directors, which may be greater than the
shares of Common Stock offered in this Prospectus. As a result, shares of
Preferred Stock may be issued by our Board of Directors which cause the holders
to have super majority voting power over our shares, provide the holders of the
Preferred Stock the right to convert the shares of Preferred Stock they hold
into shares of our Common Stock, which may cause substantial dilution to our
then Common Stock shareholders and/or have other rights and preferences greater
than those of our Common Stock shareholders. Investors should keep in mind that
the Board of Directors has the authority to issue additional shares of Common
Stock and Preferred Stock, which could cause substantial dilution to our
existing shareholders. Additionally, the dilutive effect of any Preferred
Stock, which we may issue may be exacerbated given the fact that such Preferred
Stock may have super majority voting rights and/or other rights or preferences
which could provide the preferred shareholders with voting control over us
subsequent to this offering and/or provide those holders the power to prevent or
cause a change in control. As a result, the issuance of shares of Common Stock
and/or Preferred Stock, may cause the value of our securities to decrease and/or
become worthless.
WE DO NOT CURRENTLY HAVE A PUBLIC MARKET FOR OUR SECURITIES. IF THERE IS A
MARKET FOR OUR SECURITIES IN THE FUTURE, OUR STOCK PRICE MAY BE VOLATILE AND
ILLIQUID.
There is currently no public market for our Common Stock. After this
Registration Statement becomes effective, we hope to trade our securities on the
OTC Bulletin Board. However, we can make no assurances that there will be a
public market for our Common Stock in the future. If there is a market for our
Common Stock in the future, we anticipate that such market would be illiquid and
would be subject to wide fluctuations in response to several factors, including,
but not limited to:
(1) actual or anticipated variations in our results of operations;
(2) our ability or inability to generate new revenues;
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(3) increased competition;
(4) conditions and trends in the silver and/or copper industries; and
(5) the market for minerals and metals which we may choose to mine for.
Furthermore, our stock price may be impacted by factors that are unrelated
or disproportionate to our operating performance. These market fluctuations, as
well as general economic, political and market conditions, such as recessions,
interest rates or international currency fluctuations may adversely affect the
market price and liquidity of our Common Stock.
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
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.
-15-
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.
From February 1999 to March 2001, Mr. Sali was employed as an electrician with
the University of Saskatchewan in Saskatoon, Saskatchewan, Canada. From October
1996 to February 1999, Mr. Sali was employed as an electrician with Alliance
Energy in Saskatoon, Saskatchewan, Canada.
Other than the work experience listed above, Mr. Sali has no previous
history as an officer or Director of a mining company or any publicly traded
companies or businesses (see the Risk Factor entitled "Our Sole Officer And
Director Lacks Technical And/Or Exploration Experience In And With Mining
Activities and With Publicly Traded Companies in General," above).
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.
-16-
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 April
25, 2006 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 86.6%
#2-630 2nd Ave.
S7K-2C8 Saskatoon
Saskatchewan, Canada
========================= ========== ==========
All the officers and directors 15,000,000 86.6%
as a group (1 Person)
(1) Based on 17,318,039 shares outstanding as of April 25, 2006.
(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
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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
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.
Other than in the limited situation described above, our Bylaws 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
-18-
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 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 chose to incorporate in Nevada for numerous reasons including the fact that
we plan to raise capital in the future in the United States and we believe that
we are more attractive to United States investors due to the fact that we are
incorporated in the United States. In addition, we believe certain provisions of
Nevada law provide favorable treatment for officers and Directors, including
Nevada Revised Statutes ("NRS") Section 78.335. NRS Section 78.335 mandates that
Directors in Nevada companies must be removed by "not less than two-thirds of
the voting power of the issued and outstanding stock entitled to vote." This is
in contrast to many of the more popular states where companies choose to
incorporate, which require only majority vote to remove Directors, including
Delaware, which pursuant to Delaware General Corporation Law, Section 141(k)
only requires a vote of "a majority of the shares then entitled to vote."
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, which were
acquired by us on July 6, 2005, for a total of $6,000 US from a private seller,
which consideration included an aggregate of $20 CDN, which was paid to the
"Ministry of Employment and Investment Energy and Minerals Division Mineral
Titles Branch" in British Columbia, Canada, in connection with the transfer of
the claims from the private seller. Cell claims are the terms used for mining
claims in British Columbia, Canada, and consist of twenty (20) hectares (or
approximately 49.4 acres). The rights to four of the cells were to expire on
March 22, 2006, but were extended by us for an additional year, for an aggregate
of CDN $700, and now expire on March 22, 2007. 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 per year extended, 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 I initial exploration program on the Lucky Todd
1, which included exploring the area for mineral deposits by taking ground
-19-
samples. The results of the Lucky Todd 1, Phase I 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:
Phase II - Planned to begin in May or June 2006, and to take approximately
30 days.
Completing a Vertical Loop Electro Magnetic Survey
("VLF-EM") over portions of the claim. A VLF-EM survey is
completed by walking over the property using a specially equipped
receiver to pick up the possible location of minerals. We plan to
conduct the VLF-EM on the north east quarter of the south east
cell of the Lucky Todd Claims, where adit and grab samples were
previously taken during the Phase I activities. The total area
which is planned to be surveyed by the VLF-EM is approximately 50
acres.
The VLF-EM survey of our claims will be used to prepare a
map of abnormal magnetic fields from the claims, which
abnormalities may be associated with mineral deposits. These
abnormal readings are then compared, with the results correlated
to determine the structural significance of the VLF-EM anomalies.
We believe that the VLF-EM survey is a necessary first step in
the exploration of our property, because we believe it will help
us determine which areas of the property are more likely to
contain mineral deposits than others.
Estimate cost: $7,500
======
Phase III - Planned to begin in July or August 2006, and to take
approximately 45 days.
After the VLF-EM surveying is completed, we will perform
sample and geological mapping of the possible veins of minerals
on the property.
We believe that this surveying will provide information
regarding the degree of mineralization. Additionally, we believe
that surveying at this stage is essential to integrate and
correlate the VLF-EM results and the sampling results.
Estimated cost: $15,000
=======
-20-
Phase IV - Planned to begin in September or October 2006, and to take
approximately 60 days.
Further testing and diamond drilling of prime targets.
Diamond drilling is required to test the extent of mineralization
to depth. We anticipate the drill hole locations being determined
based on the results of, and the interpretation of, the previous
exploration we plan to conduct in Phases II and III.
Estimate cost: $30,000
=======
While we currently plan to conduct the exploration activities listed above
during the time periods given, our management will make a decision whether to
proceed with each successive phase of the exploration program upon completion of
the previous phase and upon analysis of the results of that program.
Additionally, we are waiting for the results from Phases III-IV before deciding
whether any additional exploration activities would be appropriate on the
claims, as we believe that we will know whether or not our claims have any
commercially viable mineral deposits upon the completion of our Phase IV
exploration activities.
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, in the future.
EXPLORATION WORK
All exploration work to be completed by us on our claims will be conducted
by or under the supervision of Laurence Sookochoof, whose background and
experience is explained in greater detail under "Interest of Named Experts,"
above.
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.
-21-
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.
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. While we will not
need any permits for Phases I through III (described above), we will require a
permit to conduct diamond drilling pursuant to Phase IV above. We plan to
conduct our Phase IV exploration activities only if the results from Phases II
and III are encouraging. Our Phase IV activities, if any, will require drilling
permits from the provincial government ministry of mining in British Columbia.
The permits require us to submit a form to the British Columbia Ministry of
Energy and Mines (the "Ministry"). The information required in the form
includes the location of the work site, a description of the work proposed and
the area of surface disturbance. Based on the information submitted, the
Ministry requires a security deposit which is refundable upon the completion of
the reclamation of the site, which is required. Management anticipates that the
deposit required for our planned drilling program will be around CAN $2,000.
The cost of the reclamation of our claims will be dependent on how many holes
are drilled, which information we will not know until the completion of our
Phase III studies; however we anticipate this cost being in the range of $1,000
to $2,000. Other than the required refundable deposit and costs associated with
reclamation, there are no costs associated with the permits.
The Ministry's review of the permits normally takes one month and the
Company is not aware of any correctly completed permits which have been denied
by the Ministry. The permit once granted by the Ministry is only valid for the
specific work stated in the form and if we were to decide to extend our drilling
program beyond its original size and/or conduct any other explanatory work on
the property which would require reclamation; we would be required to submit an
application for an additional permit.
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.
-22-
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 $43,000 that remains from the sale of shares of our
common stock to offshore investors during 2005. We plan to begin our Phase II
exploration activities in May or June 2006, once the snow has cleared from the
Lucky Todd Claims. We plan to conduct the Phase II studies, i.e. the VLF-EM
survey on the north east quarter of the south east cell of the Lucky Todd
Claims, where adit and grab samples were previously taken during the Phase I
activities. The total area which is planned to be surveyed by the Phase II
survey is approximately 50 acres.
We plan to begin our Phase III activities in July or August 2006 and our
Phase IV activities in September to October 2006, assuming the successful
completion and satisfactory results of each prior phase. Our Phase II, Phase
III and Phase IV exploration activities are described in greater detail under
"Description of Business," above. 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 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 I exploration
activities, described in greater detail above under "Description of Business."
-23-
STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED JANUARY 31, 2006 (UNAUDITED)
We generated no revenues for the three month period ending January 31,
2006.
We had total expenses of $4,631 for the three months ended January 31,
2006, which consisted solely of other general and administrative expenses, which
mainly consisted of attorney's fees and accountant's fees in connection with the
filing of this Form SB-2 Registration Statement. We had a total loss from
operations of $4,631 for the three month period ending January 31, 2006.
We had a net loss of $4,631 for the three months ending January 31, 2006.
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JANUARY 31, 2006 (UNAUDITED)
We generated no revenues for the six month period ending January 31, 2006.
We had total expenses of $36,131 for the six months ended January 31, 2006,
which consisted solely of other general and administrative expenses, which
mainly consisted of attorney's fees and accountant's fees in connection with the
filing of this Form SB-2 Registration Statement and fees paid to consultants in
connection with consulting services relating to our claims. We had a total loss
from operations of $36,131 for the six month period ending January 31, 2006.
We had a net loss of $36,131 for the six months ending January 31, 2006.
STATEMENT OF OPERATIONS FOR THE PERIOD FROM INCEPTION (JULY 7, 2005) THROUGH
JANUARY 31, 2006 (UNAUDITED)
We generated no revenues for the period from inception through January 31,
2006.
We had exploration costs of $9,020 and other general and administrative
expenses of $41,304 for the period from inception through January 31, 2006, and
a loss from operations of $50,324.
We had a net loss of $50,324 for the period from inception through January
31, 2006.
STATEMENT OF OPERATIONS FOR THE PERIOD FROM INCEPTION THROUGH JULY 31, 2005
(AUDITED)
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.
-24-
We had a net loss of $14,193 for the period from inception through July 31,
2005.
LIQUIDITY AND CAPITAL RESOURCES
As of January 31, 2006, we had $39,260 of current assets, consisting solely
of $39,260 of cash.
We had $5,043 of current liabilities, representing accounts payable and
accrued liabilities in connection with exploration studies conducted on our
property as of January 31, 2006.
We had an accumulated deficit of $50,324 and net working capital of $34,217
as of January 31, 2006.
We had net cash used in operating activities of ($30,281) for the six
months ended January 31, 2006, which included net loss of $36,131, $807 of
shareholder receivable, which represented the amount which Mr. Sali, our Chief
Executive Officer and President paid us in connection with monies owed to
complete his purchase of 15,000,000 shares of our Common Stock for $15,000,
which sale took place in July 2005, $3,000 in prepaid attorneys fees and $2,043
in accounts payable and accrued liabilities.
We had net cash flows from financing activities of $69,541 for the six
months ended January 31, 2006, which included $69,541 of proceeds from the sale
of Common Stock.
In September 2005, we sold an aggregate of 2,318,039 shares of our
restricted Common Stock to thirty-seven shareholders in connection with
subscription agreements for an aggregate of $69,541 ($0.03 per share).
We have no current commitment from our officers and Directors or any of our
shareholders to supplement our operations or provide us with financing in the
future. If we are unable to raise additional capital from conventional sources
and/or additional sales of stock in the future, we may be forced to curtail or
cease our operations. Even if we are able to continue our operations, the
failure to obtain financing could have a substantial adverse effect on our
business and financial results.
In the future, we may be required to seek additional capital by selling
debt or equity securities, selling assets, or otherwise be required to bring
cash flows in balance when we approach a condition of cash insufficiency. The
sale of additional equity or debt securities, if accomplished, may result in
dilution to our then shareholders. We provide no assurance that financing will
be available in amounts or on terms acceptable to us, or at all.
-25-
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 separate answering service, mail and fax forwarding service, for
which we pay approximately $40 per month.
MINERAL RIGHTS
- ---------------
We own 100% of the mineral rights, which include the rights to all minerals
situated vertically downward from and inside the property of 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 ("Lucky Todd Claims"). Access to the claims is provided by a
gravel road. Our management believes that the property is currently in good
condition. There is currently no equipment and/or infrastructure of any kind on
the Lucky Todd Claims, nor is there any current source of power on the property
or any immediate plans to provide power. The Lucky Todd Claims do not contain
any known reserves.
We have completed preliminary studies on the property. In connection with
those studies, tunneling was done and a soil sample was taken from the claims.
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 were to expire on March 22, 2006, but were extended by us for an
additional year, for an aggregate of CDN $700, and now expire on March 22, 2007.
The rights of the remaining eight cells expire on July 8, 2006. The claims can
be extended indefinitely by us by paying CDN $175 for one (1) year for each
claim.
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, and while we do not believe this
presence would hamper a year-round exploration and/or development program, such
presence of snow could cause us to spend additional resources to heat and/or
remove snow from our operations, if any, and as a result, we do not plan to
begin our Phase II studies until such snow has melted. We plan to conduct the
Phase II studies, i.e. the VLF-EM survey on the north east quarter of the south
east cell of the Lucky Todd Claims, where adit and grab samples were previously
taken during the Phase I activities. The total area which is planned to be
surveyed by the Phase II survey is approximately 50 acres.
The Lucky Todd Claims have moderate to steep mountainous slopes with
incised valleys. The Lucky Todd Claims have been subject to previous
underground exploration and minimal surface development in the past prior to
1937. Prior exploration consisted of a small amount of surface work and eleven
-26-
mines of an aggregate footage of more than 600 feet. All but two of the mines
are crosscut (horizontal), except for two, and the majority of the mines have
been abandoned either prior to reaching their objective or because the results
which were found once the objective was reached were not promising.
In order to retain title to the mineral rights associated with the Lucky
Todd Claims we must conduct at least CDN $4.00 per hectare (equal to 2.47 acres)
of exploration work per year on the claims for the first three years of
exploration activities and CDN $8.00 per hectare thereafter. There are no
royalties or other underlying agreements or interests in the claims. The Lucky
Todd Claims consist of the following claims:
CLAIM NAME NUMBER OF CELLS TENURE NUMBER DATE OF GRANT EXPIRATION DATE*
Lucky Todd 4 509396 March 22, 2005 March 22, 2007
Lucky Todd 2 8 516354 July 8, 2005 July 8, 2006
*Subject to continuous one year extensions upon payment of CDN $175 per claim.
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)
* 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.
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(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.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
-28-
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 April
25, 2006, 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.
While we do not currently have any plans for the issuance of Preferred
Stock, the issuance of such Preferred Stock could adversely affect the rights of
the holders of Common Stock and, therefore, reduce the value of the Common
Stock. It is not possible to state the actual effect of the issuance of any
-29-
shares of Preferred Stock on the rights of holders of the Common Stock until the
board of directors determines the specific rights of the holders of the
Preferred Stock, which rights may be superior to those associated with our
Common Stock; which effects may include:
o Restricting dividends on the Common Stock;
o Rights and preferences including dividend and dissolution rights,
which are superior to our Common Stock;
o Diluting the voting power of the Common Stock;
o Impairing the liquidation rights of the Common Stock; or
o Delaying or preventing a change in control of the Company without
further action by the stockholders.
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. No public
market currently exists for the Company's Common Stock.
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
-30-
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. None of the selling
stockholders have had a material relationship with us since our inception.
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)
Abtin, 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 --
-31-
(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.
(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.
The offering price of the shares has been arbitrarily determined by us
based on estimates of the price that purchasers of speculative securities, such
as the shares offered herein, will be willing to pay considering the nature and
-32-
capital structure of our Company, the experience of the officers and Directors,
and the market conditions for the sale of equity securities in similar
companies. The offering price of the shares bears no relationship to the assets,
earnings or book value of our Company, or any other objective standard of value.
We believe that only a small number of shares, if any, will be sold by the
selling shareholders, prior to the time our Common Stock is quoted on the OTC
Bulletin Board, at which time the selling shareholders will sell their shares
based on the market price of such shares. The Company is not selling any shares
pursuant to this Registration Statement and is only registering the re-sale of
securities previously purchased from us.
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
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
April 25, 2006, there were 17,318,039 shares of Common Stock outstanding, held
by 38 shareholders of record.
-33-
ADDITIONAL INFORMATION
Our fiscal year ends on July 31. We plan to furnish our shareholders
annual reports containing audited financial statements and other appropriate
reports, where applicable. In addition, we intend to become a reporting company
and file annual, quarterly, and current reports, and other information with the
SEC, where applicable. You may read and copy any reports, statements, or other
information we file at the SEC's public reference room at 100 F. Street, N.E.,
Washington D.C. 20549. You can request copies of these documents, upon payment
of a duplicating fee by writing to the SEC. Please call the SEC at
1-800-SEC-0330 for further information on the operation of the public reference
rooms. Our SEC filings are also available to the public on the SEC's Internet
site at http\\www.sec.gov.
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.
-34-
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.
CLARON VENTURES, INC.
(AN EXPLORATION STAGE COMPANY)
BALANCE SHEET
(UNAUDITED)
January 31,
2006
-----------
ASSETS
Cash $ 39,260
-----------
Total Assets $ 39,260
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable & accrued liabilities $ 5,043
-----------
Total current liabilities 5,043
-----------
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, 17,318,039
shares issued and outstanding 17,318
Additional paid in capital 67,223
Deficit accumulated during the exploration stage (50,324)
-----------
Total stockholders' equity 34,217
-----------
Total Liabilities and Stockholders' Equity $ 39,260
===========
See accompanying notes to financial statements
F-1
CLARON VENTURES, INC.
(AN EXPLORATION STAGE COMPANY)
STATEMENTS OF OPERATIONS
THREE & SIX MONTHS ENDED JANUARY 31, 2006 AND FOR THE PERIOD
FROM INCEPTION (JULY 7, 2005) THROUGH JANUARY 31, 2006
(UNAUDITED)
Inception
Three Months Six Months through
January 31, January 31, January 31,
2006 2006 2006
----------- ---------- -----------
Operating expenses:
Exploration Expenses $ - $ - $ 9,020
Other general and administrative 4,631 36,131 41,304
----------- ---------- -----------
Loss from operations 4,631 36,131 50,324
Interest expense - - -
----------- ---------- -----------
Net loss $ (4,631) $ (36,131) $ (50,324)
=========== ========== ===========
Net loss per share:
Basic and diluted $ (0.00) $ (0.00)
=========== ==========
Weighted average shares outstanding:
Basic and diluted 17,318,039 16,776,323
=========== ==========
See accompanying notes to financial statements
F-2
CLARON VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JANUARY 31, 2006 AND FOR THE PERIOD
FROM INCEPTION (JULY 7, 2005) THROUGH JANUARY 31, 2006
(UNAUDITED)
Inception
Six Months through
January 31, January 31,
2006 2006
-------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (36,131) $ (50,324)
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 2,043 5,043
-------------- -------------
NET CASH USED IN OPERATING ACTIVITIES (30,281) (45,281)
-------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES: - -
-------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock 69,541 84,541
-------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES 69,541 84,541
-------------- -------------
NET CHANGE IN CASH 39,260 39,260
Cash, beginning of period - -
-------------- -------------
Cash, end of period $ 39,260 $ 39,260
============== =============
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ - $ -
============== =============
Income taxes paid $ - $ -
============== =============
See accompanying notes to financial statements
F-3
CLARON VENTURES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim financial statements of Claron Ventures, Inc.
have been prepared in accordance with accounting principles generally accepted
in the United States of America and the rules of the Securities and Exchange
Commission ("SEC"), and should be read in conjunction with the audited financial
statements and notes thereto contained in the Company's registration statement
filed with the SEC on Form 10-KSB. In the opinion of management, all
adjustments, consisting of normal recurring adjustments, necessary for a fair
presentation of financial position and the results of operations for the interim
periods presented have been reflected herein. The results of operations for
interim periods are not necessarily indicative of the results to be expected for
the full year. Notes to the financial statements which would substantially
duplicate the disclosure contained in the audited financial statements for the
most recent fiscal year end July 31, 2005 as reported in Form SB-2, have been
omitted.
NOTE 2 - CAPITAL STOCK
During the first quarter of 2006 the Company sold 2,318,039 share of common
stock for cash proceeds of $69,541.
F-4
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-5
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-6
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-7
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) $ (807)
========== ======== ================= ==========
F-8
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-9
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-10
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 AND SHAREHOLDER RECEIVABLE
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. In October
2005 the full amount of the shareholder receivable was remitted to the Company
by the sole shareholder. Furthermore, payment of the $807 shareholder receivable
was paid prior to the issuance of the financial statements, permitting this
shareholder receivable being classified as an asset.
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-11
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-12
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
See Indemnification of Directors and Officers above.
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 5,000.00*
=================
Total $ 53,027.28*
* 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.
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ITEM 27. EXHIBITS
Exhibit 3.1(1) Articles of Incorporation
Exhibit 3.2(1) Bylaws
Exhibit 5.1* Opinion and consent of David M. Loev, Attorney
at Law re: the legality of the shares being
registered
Exhibit 10.1(2) Lucky Todd Claims transfer documentation
Exhibit 10.2(2) Consulting Agreement with Diamond S
Holdings Ltd.
Exhibit 10.3* Invoice for purchase of Lucky Todd Claims
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 Laurence Sookochoff
* Filed as an exhibit to this SB-2 Registration Statement.
(1) Filed as exhibits to our Form SB-2 Registration Statement, filed with the
Commission on November 14, 2005, and incorporated herein by reference.
(2) Filed as exhibits to our Form SB-2A, filed with the Commission on April 5,
2006, an incorporated herein by reference.
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;
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(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 that contains a form of prospectus 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.
4. For determining liability of the undersigned small business
issuer under the Securities Act to any purchaser in the initial
distribution of the securities, the undersigned small business issuer
undertakes that in a primary offering of securities of the undersigned
small business issuer pursuant to this registration statement,
regardless of the underwriting method used to sell the securities to
the purchaser, if the securities are offered or sold to such purchaser
by means of any of the following communications, the undersigned small
business issuer will be a seller to the purchaser and will be
considered to offer or sell such securities to such purchaser:
i. Any preliminary prospectus or prospectus of the undersigned
small business issuer relating to the offering required to be
filed pursuant to Rule 424;
ii. Any free writing prospectus relating to the offering
prepared by or on behalf of the undersigned small business issuer
or used or referred to by the undersigned small business issuer;
iii. The portion of any other free writing prospectus relating to
the offering containing material information about the
undersigned small business issuer or its securities provided by
or on behalf of the undersigned small business issuer; and
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iv. Any other communication that is an offer in the offering
made by the undersigned small business issuer to the purchaser.
5. 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.
6. 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.
7. That, for the purpose of determining liability under the
Securities Act to any purchaser, each prospectus filed pursuant to
Rule 424(b) as part of a registration statement relating to an
offering, other than registration statements relying on Rule 430B or
other than prospectuses filed in reliance on Rule 430A, shall be
deemed to be part of and included in the registration statement as of
the date it is first used after effectiveness. Provided, however, that
no statement made in a registration statement or prospectus that is
part of the registration statement or made in a document incorporated
or deemed incorporated by reference into the registration statement or
prospectus that is part of the registration statement will, as to a
purchaser with a time of contract of sale prior to such first use,
supersede or modify any statement that was made in the registration
statement or prospectus that was part of the registration statement or
made in any such document immediately prior to such date of first use.
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
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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, April 27, 2006.
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, Principal
Accounting Officer, Treasurer, Secretary and Director
April 27, 2006
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EXHIBIT INDEX
ITEM 27. EXHIBITS
Exhibit 3.1(1) Articles of Incorporation
Exhibit 3.2(1) Bylaws
Exhibit 5.1* Opinion and consent of David M. Loev, Attorney
at Law re: the legality of the shares being
registered
Exhibit 10.1(2) Lucky Todd Claims transfer documentation
Exhibit 10.2(2) Consulting Agreement with Diamond S
Holdings Ltd.
Exhibit 10.3* Invoice for purchase of Lucky Todd Claims
Exhibit 23.1* Consent of Lopez, Blevins, 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 Laurence Sookochoff
* Filed as an exhibit to this SB-2 Registration Statement.
(1) Filed as exhibits to our Form SB-2 Registration Statement, filed with the
Commission on November 14, 2005, and incorporated herein by reference.
(2) Filed as exhibits to our Form SB-2A, filed with the Commission on April 5,
2006, an incorporated herein by reference.
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