UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended April 30, 2006
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT
For the transition period from to
----------- ---------------
Commission file number: 333-129664
CLARON VENTURES, INC.
---------------------
(Exact name of small business issuer as specified in its charter)
Nevada 98-0470356
------ ----------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
#2-630 2ND AVE.
SASKATOON, SASKATCHEWAN,
S7K-2C8 CANADA
(Address of principal executive offices)
----------------------------------------
(306)-374-1753
--------------
(Registrant's telephone number)
Check whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes
[X] No [ ]
As of June 12, 2006, 17,318,039 shares of Common Stock of the issuer were
outstanding ("Common Stock").
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X].
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CLARON VENTURES, INC.
(AN EXPLORATION STAGE COMPANY)
BALANCE SHEET
(UNAUDITED)
April 30,
2006
---------
ASSETS
Cash $ 30,004
---------
Total Assets $ 30,004
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable & accrued liabilities $ 10,744
---------
Total current liabilities 10,744
---------
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 (65,281)
---------
Total stockholders' equity 19,260
---------
Total Liabilities and Stockholders' Equity $ 30,004
=========
See accompanying notes to financial statement
CLARON VENTURES, INC.
(AN EXPLORATION STAGE COMPANY)
STATEMENTS OF OPERATIONS
THREE & NINE MONTHS ENDED APRIL 30, 2006 AND FOR THE PERIOD
FROM INCEPTION (JULY 7, 2005) TO APRIL 30, 2006
(UNAUDITED)
Three Months Nine Months Inception through
April 30, April 30, April 30,
2006 2006 2006
------------ ------------ -----------------
Operating expenses:
Exploration expenses $ 8,564 $ 8,564 $ 17,584
Other general and administrative 6,393 42,524 47,697
------------ ------------ -----------------
Loss from operations 14,957 51,088 65,281
============ ============ =================
Net loss $ (14,957) $ (51,088) $ (65,281)
============ ============ =================
Net loss per share:
Basic and diluted $ (0.00) $ (0.00)
============ ============
Weighted average shares outstanding:
Basic and diluted 17,318,039 16,952,927
============ ============
See accompanying notes to financial statements
CLARON VENTURES, INC.
(AN EXPLORATION STAGE COMPANY)
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED APRIL 30, 2006 AND FOR THE PERIOD
FROM INCEPTION (JULY 7, 2005) TO APRIL 30, 2006
(UNAUDITED)
Inception
Nine Months through
April 30, April 30,
2006 2006
----------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (51,088) $ (65,281)
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 7,744 10,744
NET CASH USED IN OPERATING ACTIVITIES (39,537) (54,537)
----------- ----------
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 30,004 30,004
Cash, beginning of period - -
Cash, end of period $ 30,004 $ 30,004
----------- ----------
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ - $ -
Income taxes paid $ - $ -
=========== ==========
See accompanying notes to financial statements
See accompanying notes to financial statements
CLARON VENTURES, INC.
(A EXPLORATION 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 SB-2/A. 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/A, have been
omitted.
NOTE 2 - CAPITAL STOCK
During the nine months ended April 30, 2006, the Company sold 2,318,039 shares
of common stock for cash proceeds of $69,541.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
CERTAIN STATEMENTS IN THIS QUARTERLY REPORT ON FORM 10-QSB (THIS "FORM
10-QSB"), CONSTITUTE "FORWARD LOOKING STATEMENTS" WITHIN THE MEANING OF SECTION
27A OF THE SECURITIES ACT OF 1934, AS AMENDED, AND THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995 (COLLECTIVELY, THE "REFORM ACT"). CERTAIN, BUT NOT
NECESSARILY ALL, OF SUCH FORWARD-LOOKING STATEMENTS CAN BE IDENTIFIED BY THE USE
OF FORWARD-LOOKING TERMINOLOGY SUCH AS "BELIEVES", "EXPECTS", "MAY", "SHOULD",
OR "ANTICIPATES", OR THE NEGATIVE THEREOF OR OTHER VARIATIONS THEREON OR
COMPARABLE TERMINOLOGY, OR BY DISCUSSIONS OF STRATEGY THAT INVOLVE RISKS AND
UNCERTAINTIES. SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS,
UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE
OR ACHIEVEMENTS OF CLARON VENTURES, INC. ("CLARON", "THE COMPANY", "WE", "US" OR
"OUR") TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR
ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. REFERENCES
IN THIS FORM 10-QSB, UNLESS ANOTHER DATE IS STATED, ARE TO APRIL 30, 2006.
ADDITIONALLY, UNLESS OTHERWISE STATED ALL AMOUNTS LISTED HEREIN ARE IN UNITED
STATES DOLLARS AND AMOUNTS PRECEDED BY "CDN" ARE IN CANADIAN DOLLARS.
BUSINESS HISTORY
We were incorporated as Claron Ventures, Inc. in Nevada on July 12, 2005.
We have 110,000,000 shares of stock authorized, representing 100,000,000 shares
of Common Stock, $0.001 par value and 10,000,000 shares of preferred stock,
$0.001 par value. We plan to explore and mine for silver, copper and other
minerals on properties in British Columbia, Canada.
We own 100% of the mineral rights on the "Lucky Todd 1" and "Lucky Todd 2"
claim grounds, which represent approximately 550 acres located in southwestern
British Columbia, Canada, 22 miles west of Princeton, British Columbia ("Lucky
Todd Claims"). The Lucky Todd Claims consist of twelve cell claims, which were
acquired by us on July 6, 2005, from an individual, Larry Sostad, for a total of
$6,000 US 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 prior to their expiration in March 2006, and now expire on
March 22, 2007. The rights to the remaining eight cells expire on July 8, 2006;
however, we plan to extend the claims 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 officer and Director
believes that such extension will be in our best interests. Subsequent to the
purchase of the claims from Mr. Sostad, we contracted with Mr. Sostad's company,
Diamond S. Holdings, Ltd. ("Diamond") to perform any necessary exploration work
on the Lucky Todd Claims. Diamond subsequently contracted with Laurence
Sookochoff, who along with Diamond, has conducted all exploration activities on
our property to date, and who will conduct the following planned activities
described below, subsequent to the date of this filing, funding permitting.
Mr. Sookochoff completed a Phase I initial exploration program on the Lucky
Todd 1, which included exploring the area for mineral deposits by taking ground
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 are currently planned to include:
PHASE II - Currently in the planning process, with the study planned to
begin soon after the filing of this report, with results expected
to be available at the beginning of July 2006.
Completion of 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.
Estimated 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
=======
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.
Estimated 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.
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, as described above. We plan to begin the Phase II study on our
claims, described above, shortly after the filing of this report, and anticipate
having results of the study available by the beginning of July 2006.
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 (approximately CDN $175 per claim per year) 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 approximately CDN
$175 per claim.
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. Laurence Sookochoff is a
consulting geologist and principal of Sookochoff Consultants Inc., which has an
office at 1305-13233 Homer Street, Vancouver, British Columbia, Canada, V6B 5T1.
He graduated from the University of British Columbia in 1996 with a Bachelors of
Science degree in 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.
COMPETITION
Mines have limited lives and as a result, we may seek to expand our
reserves through the acquisition of new properties in the future. There is a
limited supply of desirable mineral lands available in the United States, Canada
and other areas where we may consider conducting exploration and/or production
activities. We will face strong competition for new properties from other mining
companies, most of which have greater financial resources than we do and as a
result, we may be unable to acquire new mining properties on terms that we
consider acceptable.
There is a global market for silver and copper. We plan to sell copper and
silver, if we are successful in our exploration and mining activities, at
prevailing market prices. We do not believe that any single company or other
institution has sufficient market power to significantly affect the price or
supply of these metals.
DEPENDENCE ON ONE OR A FEW MAJOR CUSTOMERS
We do not depend on one or a small number of customers, as we have not
successfully discovered or extracted any commercial quantities of copper or
silver. We have no customers and have not generated any revenues to date.
PATENTS, TRADEMARKS AND LICENSES
We have no patents, trademarks or licenses. We do own the mineral rights to
certain property in British Columbia, Canada, which are explained in detail
above.
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 CDN $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.
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.
PLAN OF OPERATION FOR THE NEXT TWELVE MONTHS
We plan to continue our exploration activities on our Lucky Todd 1 claim
using the approximately $30,000 that remains from the sale of shares of our
common stock to offshore investors during 2005. We will shortly begin the Phase
II exploration activities on our claims, and expect to receive the results of
such claims by the beginning of July 2006.
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 above. We
anticipate that the cost of our planned exploration activities 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 had spent approximately $17,500 on exploration activities on our
property as of April 30, 2006, which funds were spent on our Phase I exploration
activities and the planning phases of our Phase II exploration activities.
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED APRIL 30, 2006
We generated no revenues for the three month period ended April 30, 2006.
We had total operating expenses of $14,957 for the three months ended April
30, 2006, which included exploration expenses of $8,564, relating to our planned
Phase II exploration activities on our Lucky Todd Claims, and other general and
administrative expenses of $6,033, which included attorney's fees and
accountant's fees in connection with the preparation, review and filing of our
amended Form SB-2 Registration Statement. We had a total loss from operations
of $14,957 for the three months ended April 30, 2006.
We had a net loss of $14,957 for the three months ended April 30, 2006.
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED APRIL 30, 2006
We generated no revenues for the nine month period ended April 30, 2006.
We had total operating expenses of $51,088 for the nine months ended April
30, 2006, which included exploration expenses of $8,564, relating to the Phase I
and planned Phase II exploration activities on our Lucky Todd Claims, and other
general and administrative expenses of $42,524 relating to attorney's fees and
accountant's fees in connection with the preparation of our Private Placement
Memorandum, as well as the preparation, review and filing of our Form SB-2
Registration Statement and financial statements contained therein, and fees paid
to consultants in connection with consulting services relating to our claims.
We had a total loss from operations of $51,088 for the nine months ended April
30, 2006.
We had a net loss of $51,088 for the nine months ended April 30, 2006.
LIQUIDITY AND CAPITAL RESOURCES
As of April 30, 2006, we had $30,004 of current assets, consisting solely
of $30,004 of cash.
We had $10,744 of current liabilities, representing accounts payable and
accrued liabilities, which included amounts owed to Diamond S. Holdings in
connection with exploration work completed and to be completed on our claims,
amounts owed to our independent auditors, certified public accountant, and
attorney as of April 30, 2006.
We had an accumulated deficit of $65,281 and net working capital of $19,260
as of April 30, 2006.
We had net cash used in operating activities of $39,537 for the nine months
ended April 30, 2006, which included net loss of $51,088, $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 $7,744 in accounts
payable and accrued liabilities.
We had net cash flows from financing activities of $69,541 for the nine
months ended April 30, 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 commitments from our officer and Director, Trevor Sali,
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.
RISK FACTORS
You should carefully consider the following risk factors and other
information in this quarterly report, as well as the information contained in
our Amended SB-2 Registration Statement, Amendment 4, as filed with the
Commission, 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):
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 four (4) months with the approximately $30,000 of
cash we had as of April 30, 2006. If we are unable to raise the additional funds
required for planned exploration and extraction activities, which we anticipate
costing approximately $50,000, 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 our 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 April 30, 2006,
was $65,281. We had net working capital of $19,260 as of April 30, 2006. We are
currently being funded by existing shareholders and anticipate being able to
continue our business operations for approximately the next four (4) months with
the approximately $30,000 that remained as of April 30, 2006, from the
approximately $85,000 we have raised from the sale of shares of Common Stock to
date. This estimate is based on the fact that approximately $55,000 spent by us
as of April 30, 2006, included one time expenditures including legal fees and
accounting fees in connection with the preparation and filing of our
Registration Statement, the preparation of the geological report on our
property, the Phase I exploration on our property and the planning of our Phase
II exploration study 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 another 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
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 86.7% of our outstanding Common Stock. Accordingly, Mr.
Sali will exercise control in determining the outcome of all corporate
transactions or other matters, including the election of directors, mergers,
consolidations, the sale of all or substantially all of our assets, and also the
power to prevent or cause a change in control. Any investors who purchase shares
will be minority shareholders and as such will have little to no say in the
direction of the Company and the election of Directors. Additionally, it will be
difficult if not impossible for investors to remove Mr. Sali as a Director of
the Company, which will mean he will remain in control of who serves as officers
of the Company as well as whether any changes are made in the Board of
Directors. As a potential investor in the Company, you should keep in mind that
even if you own shares of the Company's Common Stock and wish to vote them at
annual or special shareholder meetings, your shares will likely have little
effect on the outcome of corporate decisions.
OUR SOLE OFFICER AND DIRECTOR HAS OTHER EMPLOYMENT IN ADDITION TO SERVING AS THE
COMPANY'S SOLE OFFICER AND DIRECTOR, AND SUCH EMPLOYMENT MAY RESULT IN HIS BEING
ABLE TO SPEND ONLY A LIMITED AMOUNT OF TIME ON COMPANY MATTERS.
Trevor Sali, our sole officer and Director currently works full time for
Sasktel, in Saskatoon, Saskatchewan, Canada, as a data and networking
technician. Mr. Sali spends approximately thirty (30) to thirty-five (35) hours
of his time per week working for Saskel. As a result, Mr. Sali is only able to
spend approximately twenty (20) 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;
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 the 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 SOLE OFFICER AND DIRECTOR
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 sole
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.
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 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,
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.
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 OUR COMMON STOCK.
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 report, 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 our Common
Stock. 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. We hope to trade
our securities on the OTC Bulletin Board in the future; 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;
(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 $4.00 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
$4.00 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.
ITEM 3. CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures. Our Chief Executive
Officer and Principal Financial Officer, after evaluating the effectiveness
of our "disclosure controls and procedures" (as defined in the Securities
Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the
period covered by this Quarterly Report on Form 10-QSB (the "Evaluation
Date"), has concluded that as of the Evaluation Date, our disclosure
controls and procedures are effective to provide reasonable assurance that
information we are required to disclose in reports that we file or submit
under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the Securities and Exchange Commission
rules and forms, and that such information is accumulated and communicated
to our management, including our Chief Executive Officer and Principal
Financial Officer, as appropriate, to allow timely decisions regarding
required disclosure.
(b) Changes in internal control over financial reporting. There were no
significant changes in our internal control over financial reporting during
our most recent fiscal quarter that materially affected, or were reasonably
likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not aware of any pending legal proceeding to which it is a
party which is material to its business operations.
ITEM 2. CHANGES IN SECURITIES
There were no changes in the Company's securities during the quarter ended
April 30, 2006.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the
quarter ended April 30, 2006.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
Exhibit No. Description
- ----------- ------------
31.1* Certificate of the Chief Executive Officer and Principal
Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
32.1* Certificate of the Chief Executive Officer and Principal
Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
* Filed with.
b) REPORTS ON FORM 8-K
The Company filed no reports on Form 8-K during the quarterly period covered by
this report.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CLARON VENTURES, INC.
DATED: June 19, 2006 By: /s/ Trevor Sali
------------------------
Trevor Sali
Chief Executive Officer