U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
DUNN MINING INC.
-----------------------------
(Exact name of Registrant as specified in its charter)
NEVADA 1000 APPLIED FOR
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(State or other jurisdiction of Standard IRS Employer
incorporation or organization) Industrial Classification Identification Number
DUNN MINING INC.
Gregory Paul Byrne, President
9867 Okanagan Centre Road
Lake Country, British Columbia
Canada V4V 2J3
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(Name and address of principal (Zip Code)
executive offices)
Registrant's telephone number, (250) 766-0036
including area code: Fax: (250) 766-1258
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Approximate date of commencement of
Proposed sale to the public: as soon as practicable after the effective
date of this Registration Statement.
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) 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(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. |__|
1
CALCULATION OF REGISTRATION FEE
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TITLE OF AMOUNT TO PROPOSED PROPOSED AMOUNT OF
EACH CLASS BE MAXIMUM MAXIMUM REGISTRATION
OF REGISTERED OFFERING AGGREGATE FEE (2)
SECURITIES PRICE PER OFFERING
TO BE SHARE (1) PRICE (2)
REGISTERED
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Common Stock 1,620,000 $0.05 $81,000 $8.67
shares
(1) Based on the last sales price on May 19, 2006.
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 under the Securities Act.
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 SECTION 8(A), MAY
DETERMINE.
SUBJECT TO COMPLETION, DATED MARCH 22, 2007
AGENT FOR SERVICE OF PROCESS: Empire Stock Transfer Inc.
2470 St. Rose Parkway, Suite 304
Henderson, NV 89075
2
PROSPECTUS
DUNN MINING INC.
COMMON STOCK
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The selling shareholders named in this prospectus are offering all of the shares
of common stock offered through this prospectus.
Our common stock is presently not traded on any market or securities exchange.
----------------
The purchase of the securities offered through this prospectus involves a high
degree of risk. SEE SECTION ENTITLED "RISK FACTORS ON PAGES 6 - 9.
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.
The selling shareholders will sell our shares at $0.05 per share until our
shares are quoted on the OTC Bulletin Board, and thereafter at prevailing market
prices or privately negotiated prices. We determined this offering price based
upon the price of the last sale of our common stock to investors.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
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THE DATE OF THIS PROSPECTUS IS: MARCH 22, 2007
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TABLE OF CONTENTS
PAGE
SUMMARY ....................................................... 6
RISK FACTORS .................................................. 7
- IF WE DO NOT OBTAIN ADDITIONAL FINANCING, OUR BUSINESS
WILL FAIL ................................................ 7
- BECAUSE WE HAVE NOT COMMENCED BUSINESS OPERATIONS, WE FACE
A HIGH RISK OF BUSINESS FAILURE .......................... 8
- BECAUSE OF THE SPECULATIVE NATURE OF EXPLORATION OF MINING
PROPERTIES, THERE IS SUBSTANTIAL RISK THAT OUR BUSINESS
WILL FAIL ................................................ 8
- WE NEED TO CONTINUE AS A GOING CONCERN IF OUR BUSINESS IS
TO SUCCEED. OUR INDEPENDENT AUDITOR HAS RAISED DOUBT ABOUT
OUR ABILITY TO CONTINUE AS A GOING CONCERN................ 8
- BECAUSE OF THE INHERENT DANGERS INVOLVED IN MINERAL
EXPLORATION, THERE IS A RISK THAT WE MAY INCUR LIABILITY OR
DAMAGES AS WE CONDUCT OUR BUSINESS ....................... 9
- EVEN IF WE DISCOVER COMMERCIAL RESERVES OF PRECIOUS METALS
ON THE SMOKE PROPERTY, WE MAY NOT BE ABLE TO
SUCCESSFULLY COMMENCE COMMERCIAL PRODUCTION .............. 9
- BECAUSE OUR DIRECTORS OWN 71.2% OF OUR OUTSTANDING COMMON STOCK
THEY WILL HAVE SIGNIFICANT INFLUENCE OVER CORPORATE DECISIONS
THAT MAY BE DISADVANTAGEOUS TO OTHER MINORITY SHAREHOLDERS .9
- BECAUSE OUR PRESIDENT AND SECRETARY HAVE OTHER BUSINESS
INTERESTS, THEY MAY NOT BE ABLE OR WILLING TO DEVOTE A
SUFFICIENT AMOUNT OF TIME TO OUR BUSINESS OPERATIONS,
CAUSING OUR BUSINESS TO FAIL.............................. 9
- BECAUSE OUR MANAGEMENT HAS ONLY LIMITED EXPERIENCE IN
MINERAL EXPLORATION, OUR BUSINESS HAS A HIGHER RISK OF
FAILURE................................................... 9
- IF A MARKET FOR OUR COMMON STOCK DOES NOT DEVELOP,
SHAREHOLDERS MAY BE UNABLE TO SELL THEIR SHARES ......... 10
- A PURCHASER IS PURCHASING PENNY STOCK WHICH LIMITS THE
SELL THE ABILITY TO STOCK ................................ 10
FORWARD-LOOKING STATEMENTS..................................... 10
USE OF PROCEEDS ............................................... 10
DETERMINATION OF OFFERING PRICE ............................... 10
DILUTION ...................................................... 10
SELLING SHAREHOLDERS .......................................... 10
PLAN OF DISTRIBUTION .......................................... 14
LEGAL PROCEEDINGS ............................................. 15
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS .. 16
BIOGRAPHICAL INFORMATION ...................................... 16
TERM OF OFFICE ................................................ 16
SIGNIFICANT EMPLOYEES ......................................... 16
CONFLICTS OF INTEREST ......................................... 17
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 17
DESCRIPTION OF SECURITIES ..................................... 17
INTEREST OF NAMED EXPERTS AND COUNSEL ......................... 18
DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES .................................... 19
ORGANIZATION WITHIN LAST FIVE YEARS ........................... 19
DESCRIPTION OF BUSINESS ....................................... 19
DESCRIPTION, LOCATION AND ACCESS .............................. 19
SMOKE PROPERTY STAKING AND PURCHASE AGREEMENT ................. 20
EXPLORATION HISTORY ........................................... 20
GEOLOGICAL ASSESSMENT: REPORT PROPERTY......................... 20
CONCLUSIONS ................................................... 20
PROPOSED BUDGET FOR PHASE ONE ................................. 21
COMPLIANCE WITH GOVERNMENT REGULATION ......................... 22
EMPLOYEES ..................................................... 23
RESEARCH AND DEVELOPMENT EXPENDITURES ......................... 23
SUBSIDIARIES .................................................. 23
PATENTS AND TRADEMARKS ........................................ 23
REPORTS TO SECURITY HOLDERS ................................... 23
PLAN OF OPERATIONS ............................................ 24
RESULTS OF OPERATIONS FOR PERIOD ENDING NOVEMBER 30, 2006 ..... 24
DESCRIPTION OF PROPERTY ....................................... 25
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ................ 25
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS ...... 25
NO PUBLIC MARKET FOR COMMON STOCK ............................. 25
STOCK HOLDERS OF OUR COMMON SHARES ............................ 25
RULE 144 SHARES ............................................... 25
REGISTRATION RIGHTS ........................................... 26
DIVIDENDS ..................................................... 26
EXECUTIVE COMPENSATION ........................................ 26
SUMMARY COMPENSATION TABLE .................................... 26
ANNUAL COMPENSATION TABLE ..................................... 26
STOCK OPTION GRANTS ........................................... 27
CONSULTING AGREEMENTS ......................................... 27
FINANCIAL STATEMENTS .......................................... 27
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ................. 45
4
SUMMARY
PROSPECTIVE INVESTORS ARE URGED TO READ THIS PROSPECTUS IN ITS ENTIRETY.
We intend to be in the business of mineral property exploration. To date, we
have not conducted any exploration on our sole mineral property, the Smoke
property, located in British Columbia, Canada. We own a 100% interest in the
one mineral claim comprising the Smoke property. We purchased this claim from
Terry Loney of Garsen, Ontario for a cash payment of $7,000.
Our objective is to conduct mineral exploration activities on the Smoke
property in order to assess whether it possesses economic reserves of gold. We
have not yet identified any economic mineralization on the property. Our
proposed exploration program is designed to search for an economic mineral
deposit.
There is currently no public market for our common stock and no certainty that a
market will develop. If no market is ever developed for our shares, it will be
difficult for shareholders to sell their stock. In such a case, shareholders may
find that they are unable to achieve benefits from their investment.
We were incorporated on April 4, 2006 under the laws of the state of Nevada.
Our principal offices are located at 9867 Okanagan Centre Road, Lake Country,
British Columbia, Canada. Our telephone number is (250) 385-8444.
THE OFFERING:
SECURITIES BEING OFFERED Up to 1,620,000 shares of common stock.
OFFERING PRICE The selling shareholders will sell our shares at $0.05
per share until our shares are quoted on the OTC
Bulletin Board, and thereafter at prevailing market
prices or privately negotiated prices. We determined
this offering price based upon the price of the last
sale of our common stock to investors.
TERMS OF THE OFFERING The selling shareholders will determine when and
how they will sell the common stock offered in this
prospectus.
TERMINATION OF THE OFFERING The offering will conclude when all of the 1,620,000
shares of common stock have been sold, the shares no
longer need to be registered to be sold or we decide
to terminate the registration of the shares.
SECURITIES ISSUED AND TO BE
ISSUED 5,620,000 shares of our common stock are issued and
outstanding as of the date of this prospectus. All of
the common stock to be sold under this prospectus will
be sold by existing shareholders.
USE OF PROCEEDS We will not receive any proceeds from the sale of
the common stock by the selling shareholders.
SUMMARY FINANCIAL INFORMATION
Balance Sheet November 30, 2006
5
(unaudited)
Cash $15,789
Total Assets $15,789
Liabilities $ 0
Total Stockholders' Equity $15,789
STATEMENT OF LOSS AND DEFICIT
From Incorporation on April 4, 2006 to November 30, 2006 (unaudited)
Revenue $ 0
Net Loss $(9,211)
RISK FACTORS
An investment in our common stock involves a high degree of risk. You should
carefully consider the risks described below and the other information in this
prospectus before investing in our common stock. If any of the following risks
occur, our business, operating results and financial condition could be
seriously harmed. The trading price of our common stock could decline due to any
of these risks, and you may lose all or part of your investment.
IF WE DO NOT OBTAIN ADDITIONAL FINANCING, OUR BUSINESS WILL FAIL.
As of November 30, 2006 we had cash in the amount of $15,789. We currently do
not have any operations and we have no income. As well, we will not receive any
funds from this registration.
Our business plan calls for significant expenses in connection with the
exploration of the Smoke property. While we have sufficient funds on hand to
conduct the Phase One exploration program on the property, estimated to cost
$5,575, we do not have sufficient funds to complete Phase Two of the intended
exploration plan, estimated to cost $10, 875, and therefore we will need to
obtain additional financing in order to complete even this aspect of our
business plan. In addition, we may require even more additional financing in
order to determine whether the property contains economic mineralization. We
will also require additional financing if the costs of the exploration of the
Smoke property are greater than anticipated.
We will require additional financing to sustain our business operations if we
are not successful in earning revenues once exploration is complete. We do not
currently have any arrangements for financing and may not be able to find such
financing if required. Obtaining additional financing would be subject to a
number of factors, including the market price for gold, and investor acceptance
of our property and general market conditions. These factors may make the
timing, amount, terms or conditions of additional financing unavailable to us.
The most likely source of future funds presently available to us is through the
sale of equity capital. Any sale of share capital will result in dilution to
existing shareholders. The only other anticipated alternative for the financing
of further exploration would be our sale of a partial interest in the Smoke
property to a third party in exchange for cash or exploration expenditures,
which is not presently contemplated.
6
BECAUSE WE HAVE NOT COMMENCED BUSINESS OPERATIONS, WE FACE A HIGH RISK OF
BUSINESS FAILURE.
We have not yet commenced exploration on the Smoke property. Accordingly, we
have no way to evaluate the likelihood that our business will be successful. We
were incorporated on April 4, 2006 and to date have been involved primarily in
organizational activities and the acquisition of our mineral property. We have
not earned any revenues as of the date of this prospectus. Potential investors
should be aware of the difficulties normally encountered by new mineral
exploration companies and the high rate of failure of such enterprises. The
likelihood of success must be considered in light of the problems, expenses,
difficulties, complications and delays encountered in connection with the
exploration of the mineral properties that we plan to undertake. These potential
problems include, but are not limited to, unanticipated problems relating to
exploration, and additional costs and expenses that may exceed current
estimates.
Prior to completion of our exploration stage, we anticipate that we will incur
increased operating expenses without realizing any revenues. We therefore expect
to incur significant losses into the foreseeable future. We recognize that if we
are unable to generate significant revenues from development of the Smoke
property and the production of minerals from the claims, we will not be able to
earn profits or continue operations.
There is no history upon which to base any assumption as to the likelihood that
we will prove successful, and it is doubtful that we will generate any operating
revenues or ever achieve profitable operations. If we are unsuccessful in
addressing these risks, our business will most likely fail. If we determine
that the Smoke property does not contain any reserves and that we are unable to
complete our business plan with respect to the claims, we intend to acquire an
interest or interests in additional mineral claims for exploration purposes.
Additional acquisitions will depend upon our ability to raise additional funding
through our sale of common stock.
BECAUSE OF THE SPECULATIVE NATURE OF EXPLORATION OF MINING PROPERTIES, THERE IS
A SUBSTANTIAL RISK THAT OUR BUSINESS WILL FAIL.
The search for valuable minerals as a business is extremely risky. The
likelihood of our mineral claims containing economic mineralization or reserves
is extremely remote. Exploration for minerals is a speculative venture
necessarily involving substantial risk. In all probability, the Smoke property
does not contain any reserves and funds that we spend on exploration will be
lost. As well, problems such as unusual or unexpected formations and other
conditions are involved in mineral exploration and often result in unsuccessful
exploration efforts. In such a case, we would be unable to complete our business
plan.
WE NEED TO CONTINUE AS A GOING CONCERN IF OUR BUSINESS IS TO SUCCEED. OUR
INDEPENDENT AUDITOR HAS RAISED DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING
CONCERN.
The Independent Auditor's Report to our audited financial statements for the
period ended August 31, 2006 indicates that there are a number of factors that
raise substantial doubt about our ability to continue as a going concern. Such
factors identified in the report are that we have incurred losses since our
inception, we have not yet been successful in establishing profitable
operations, and our dependence upon obtaining adequate financing. If we are not
able to continue as a going concern, it is likely investors will lose all of
their investment.
7
BECAUSE OF THE INHERENT DANGERS INVOLVED IN MINERAL EXPLORATION, THERE IS A RISK
THAT WE MAY INCUR LIABILITY OR DAMAGES AS WE CONDUCT OUR BUSINESS.
The search for valuable minerals involves numerous hazards. As a result, we may
become subject to liability for such hazards, including pollution, cave-ins and
other hazards against which we cannot insure or against which we may elect not
to insure. The payment of such liabilities may have a material adverse effect
on our financial position.
EVEN IF WE DISCOVER COMMERCIAL RESERVES OF PRECIOUS METALS ON THE SMOKE
PROPERTY, WE MAY NOT BE ABLE TO SUCCESSFULLY COMMENCE COMMERCIAL PRODUCTION.
The Smoke property does not contain any known bodies of mineralization. If our
exploration programs are successful in establishing zinc, copper and silver of
commercial tonnage and grade, we will require additional funds in order to place
the property into commercial production. We may not be able to obtain such
financing.
BECAUSE OUR DIRECTORS OWN 71.2% OF OUR OUSTANDING COMMON STOCK, THEY WILL HAVE
SIGNIFICANT INFLUENCE OVER CORPORATE DECISIONS THAT MAY BE DISADVANTAGEOUS TO
OTHER MINORITY SHAREHOLDERS.
Our directors own approximately 71.2% of the outstanding shares of our common
stock. Accordingly, they will have significant influence in determining the
outcome of all corporate transactions or other matters, including mergers,
consolidations, and the sale of all or substantially all of our assets. The
interests of our directors may differ from the interests of the other
stockholders and thus result in corporate decisions that are disadvantageous to
other shareholders.
Although our directors have a fiduciary duty to act in the best interests of the
corporation and shareholders in making corporate decisions, they may vote their
shares as they wish in respect of any shareholder resolution.
BECAUSE OUR PRESIDENT AND SECRETARY HAVE OTHER BUSINESS INTERESTS, THEY MAY NOT
BE ABLE OR WILLING TO DEVOTE A SUFFICIENT AMOUNT OF TIME TO OUR BUSINESS
OPERATIONS, CAUSING OUR BUSINESS TO FAIL.
Our president, Mr. Gregory Paul Byrne spends approximately 20% of his business
time providing his services to us. While Mr. Byrne presently possesses adequate
time to attend to our interests, it is possible that the demands on Mr. Byrne
from his other obligations could increase with the result that he would no
longer be able to devote sufficient time to the management of our business.
BECAUSE MANAGEMENT HAS NO EXPERIENCE IN MINERAL EXPLORATION, OUR BUSINESS
HAS A HIGHER RISK OF FAILURE.
None of our directors has any technical training in the field of geology and
specifically in the areas of exploring for, starting and operating a mine. As a
result, we may not be able to recognize and take advantage of potential
acquisition and exploration opportunities in the sector without the aid of
qualified geological consultants. As well, with no direct training or
experience, our management may not be fully aware of the specific requirements
related to working in this industry. Their decisions and choices may not be
well thought out and our operations, earnings and ultimate financial success may
suffer irreparable harm as a result.
8
IF A MARKET FOR OUR COMMON STOCK DOES NOT DEVELOP, SHAREHOLDERS MAY BE UNABLE TO
SELL THEIR SHARES.
There is currently no market for our common stock and no certainty that a market
will develop. We currently plan to apply for listing of our common stock on the
over the counter bulletin board upon the effectiveness of the registration
statement, of which this prospectus forms a part. Our shares may never trade on
the bulletin board. If no market is ever developed for our shares, it will be
difficult for shareholders to sell their stock. In such a case, shareholders may
find that they are unable to achieve benefits from their investment.
A PURCHASER IS PURCHASING PENNY STOCK WHICH LIMITS HIS OR HER ABILITY TO SELL
THE STOCK.
The shares offered by this prospectus constitute penny stock under the Exchange
Act. The shares will remain penny stock for the foreseeable future. The
classification of penny stock makes it more difficult for a broker-dealer to
sell the stock into a secondary market, thus limiting investment liquidity. Any
broker-dealer engaged by the purchaser for the purpose of selling his or her
shares in our company will be subject to rules 15g-1 through 15g-10 of the
Exchange Act. Rather than creating a need to comply with those rules, some
broker-dealers will refuse to attempt to sell penny stock.
Please refer to the "Plan of Distribution" section for a more detailed
discussion of penny stock and related broker-dealer restrictions.
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that involve risks and
uncertainties. We use words such as anticipate, believe, plan, expect, future,
intend and similar expressions to identify such forward-looking statements. You
should not place too much reliance on these forward-looking statements. Our
actual results may differ materially from those anticipated in these forward-
looking statements for many reasons, including the risks faced by us described
in the "Risk Factors" section and elsewhere in this prospectus.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the common stock offered
through this prospectus by the selling shareholders.
DETERMINATION OF OFFERING PRICE
The selling shareholders will sell our shares at $0.05per share until our shares
are quoted on the OTC Bulletin Board, and thereafter at prevailing market prices
or privately negotiated prices. We determined this offering price, based upon
the price of the last sale of our common stock to investors.
DILUTION
The common stock to be sold by the selling shareholders is common stock that is
currently issued and outstanding. Accordingly, there will be no dilution to our
existing shareholders.
SELLING SHAREHOLDERS
The selling shareholders named in this prospectus are offering all of the
1,620,000 shares of common stock offered through this prospectus. These shares
were acquired from us in private placements that
9
were exempt from registration under Regulation S of the Securities Act of 1933.
The shares include the following:
1. 150,000 shares of our common stock that the selling shareholders acquired
from us in an offering that was exempt from registration under Regulation S of
the Securities Act of 1933 and was completed on April 29, 2006;
2. 850,000 shares of our common stock that the selling shareholders acquired
from us in an offering that was exempt from registration under Regulation S of
the Securities Act of 1933 and was completed on May 5, 2006;
3. 300,000 shares of our common stock that the selling shareholders acquired
from us in an offering that was exempt from registration under Regulation S of
the Securities Act of 1933 and was completed on May 8, 2006;
4. 200,000 shares of our common stock that the selling shareholders acquired
from us in an offering that was exempt from registration under Regulation S of
the Securities Act of 1933 and was completed on May 11, 2006;
5. 20,000 shares of our common stock that the selling shareholders acquired
from us in an offering that was exempt from registration under Regulation S of
the Securities Act of 1933 and was completed on May 16, 2006;
6. 60,000 shares of our common stock that the selling shareholders acquired
from us in an offering that was exempt from registration under Regulation S of
the Securities Act of 1933 and was completed on May 16, 2006; and
7. 40,000 shares of our common stock that the selling shareholders acquired
from us in an offering that was exempt from registration under Regulation S of
the Securities Act of 1933 and was completed on May 16, 2006.
The following table provides as of the date of this prospectus, information
regarding the beneficial ownership of our common stock held by each of the
selling shareholders, including:
1. the number of shares owned by each prior to this offering;
2. the total number of shares that are to be offered for each;
3. the total number of shares that will be owned by each upon completion of the
offering; and
4. the percentage owned by each upon completion of the offering.
NAME OF SELLING SHARES OWNED TOTAL NUMBER OF TOTAL SHARES
OWNED STOCKHOLDER PRIOR TO THIS SHARES TO BE OWNED UPON PERCENT
COMPLETION OFFERING OFFERED FOR SELLING COMPLETION UPON
OFFERING SHAREHOLDERS OF THIS OF THIS
ACCOUNT OFFERING OFFERING
Done Jones
#24 - 2201 53rd Avenue
Vernon, BC V1B 9N8 50,000 50,000 Nil Nil
Tracy R. Drury
$101 - 3020 Alventory Way
Vernon, BC V1T 5L4 50,000 50,000 Nil Nil
Gerald L. Morin
9792 Springfield Road
Coldstream, BC V1B 3E5 50,000 50,000 Nil Nil
10
NAME OF SELLING SHARES OWNED TOTAL NUMBER OF TOTAL SHARES
OWNED STOCKHOLDER PRIOR TO THIS SHARES TO BE OWNED UPON PERCENT
COMPLETION OFFERING OFFERED FOR SELLING COMPLETION UPON
OFFERING SHAREHOLDERS OF THIS OF THIS
ACCOUNT OFFERING OFFERING
Theodore Brown
5508 - Willow Place
Vernon, BC V1T 3N9 50,000 50,000 Nil Nil
Moon Huan Kim
101 - 236 East Georgia Street
Vancouver, BC V6A 1Z7 50,000 50,000 Nil Nil
Frank Tischik
4113 - 27th Street
Vernon, BC V1T 2Y2 50,000 50,000 Nil Nil
James David Russell
5221 Hartnell Rd.
Vernon, BC V1B 3J4 50,000 50,000 Nil Nil
Robert Frank Koenig
9842 Hill Drive
Vernon, BC V1B 3C8 50,000 50,000 Nil Nil
Andy Dalglish
6015 Hwy 6
Vernon, BC V1B 3L9 100,000 100,000 Nil Nil
Debby A. Byrne
235 Cypress Drive
Coldstream, BC V1B 2Y1 100,000 100,000 Nil Nil
Shelley Dalglish
6015 Hwy 6
Lavington, BC V1B 3L9 100,000 100,000 Nil Nil
Patick Byrne
235 Cypress Drive
Coldstream, BC V1B 2Y1 100,000 100,000 Nil Nil
Don Byrne
973 Whitelane Rd.
Vernon, BC V1B 3E7 100,000 100,000 Nil Nil
Darren Baziw
2602 41st
Vernon, BC V1T 3H 100,000 100,000 Nil Nil
11
NAME OF SELLING SHARES OWNED TOTAL NUMBER OF TOTAL SHARES PERCENT OWNED
OWNED STOCKHOLDER PRIOR TO THIS SHARES TO BE OWNED UPON UPON COMPLETION
COMPLETION OFFERING OFFERED FOR SELLING COMPLETION OF THIS
OFFERING SHAREHOLDERS OF THIS OFFERING
ACCOUNT OFFERING
Annette Campbell
1713 - 15th Avenue
Vernon, BC V1T 9R4 100,000 100,000 Nil Nil
Robben Jean Splawinski
3312 Hwy 6
Lumby, BC V0E 2G7 100,000 100,000 Nil Nil
Katherine Ann Byrne
9867 O.K. Centre Rd. W.
Okanagan Centre, BC V4V 2J3 100,000 100,000 Nil Nil
Robert Ihaksi
886 Mt. Grazy Rd.
Vernon, BC V1B 2Z2 100,000 100,000 Nil Nil
Rod Kienlen
8711 Kalamalka Rd.
Vernon, BC 100,000 100,000 Nil Nil
Brett Day
305 - 3300 Centennial Drive
Vernon, BC V1T 9M5 20,000 20,000 Nil Nil
Linda Carr
B5 - 59 North Fork Road
Cherryville, BC V0E 2G3 20,000 20,000 Nil Nil
Jennifer Chapman
#32 - 2201 53rd Avenue
Vernon, BC V1T 9N8 20,000 20,000 Nil Nil
Kris Geary
866 Hwy 6
Cherryville, BC V0E 2G2 20,000 20,000 Nil Nil
Julie Cullen
6-2306 39th Street
Vernon, BC V1T 9L2 20,000 20,000 Nil Nil
David Calder
3009 38 Street
Vernon, BC V1T 6H7 20,000 20,000 Nil Nil
12
The named party beneficially owns and has sole voting and investment over all
shares or rights to these shares. The numbers in this table assume that none of
the selling shareholders sells shares of common stock not being offered in this
prospectus or purchases additional shares of common stock, and assumes that all
shares offered are sold. The percentages are based on 5,620,000 shares of
common stock outstanding on the date of this prospectus.
None of the selling shareholders:
(1)has had a material relationship with us other than as a shareholder at
any time within the past three years;
(2)has ever been one of our officers or directors; or
(3)has the right to acquire any shares with sixty days from options, warrants,
rights, conversion privileges, or similar obligations.
PLAN OF DISTRIBUTION
The selling shareholders may sell some or all of their common stock in one or
more transactions, including block transactions.
The selling shareholders will sell our shares at $0.05 per share until our
shares are quoted on the OTC Bulletin Board, and thereafter at prevailing market
prices or privately negotiated prices. We determined this offering price
arbitrarily based upon the price of the last sale of our common stock to
investors. The shares may also be sold in compliance with the Securities and
Exchange Commission's Rule 144.
The selling shareholders may also sell their shares directly to market makers
acting as principals, brokers or dealers, who may act as agent or acquire the
common stock as principal. Any broker or dealer participating in such
transactions as agent may receive a commission from the selling shareholders,
or, if they act as agent for the purchaser of such common stock, from such
purchaser. The selling shareholders will likely pay the usual and customary
brokerage fees for such services. Brokers or dealers may agree with the selling
shareholders to sell a specified number of shares at a stipulated price per
share and, to the extent such broker or dealer is unable to do so while acting
as agent for the selling shareholders, to purchase, as principal, any unsold
shares at the price required to fulfill the respective broker's or dealer's
commitment to the selling shareholders.
Brokers or dealers who acquire shares as principals may thereafter resell such
shares from time to time in transactions in a market or on an exchange, in
negotiated transactions or otherwise, at market prices prevailing at the time of
sale or at negotiated prices, and in connection with such re-sales may pay or
receive commissions to or from the purchasers of such shares. These transactions
may involve cross and block transactions that may involve sales to and through
other brokers or dealers. If applicable, the selling shareholders may distribute
shares to one or more of their partners who are unaffiliated with us. Such
partners may, in turn, distribute such shares as described above. We can provide
no assurance that all or any of the common stock offered will be sold by the
selling shareholders.
We are bearing all costs relating to the registration of the common stock.
These are estimated to be $14,000.00. The selling shareholders, however, will
pay any commissions or other fees payable to brokers or dealers in connection
with any sale of the common stock.
The selling shareholders must comply with the requirements of the Securities Act
and the Exchange Act in the offer and sale of the common stock. In particular,
during such times as the selling shareholders may be deemed to be engaged in a
distribution of the common stock, and therefore be considered to be an
underwriter, they must comply with applicable law and may, among other things:
13
1. Not engage in any stabilization activities in connection with our common
stock;
2. Furnish each broker or dealer through which common stock may be offered,
such copies of this prospectus, as amended from time to time, as may be required
by such broker or dealer; and
3. Not bid for or purchase any of our securities or attempt to induce any
person to purchase any of our securities other than as permitted under the
Exchange Act.
The Securities Exchange Commission has also adopted rules that regulate broker-
dealer practices in connection with transactions in penny stocks. Penny stocks
are generally equity securities with a price of less than $5.00 (other than
securities registered on certain national securities exchanges or quoted on the
Nasdaq system, provided that current price and volume information with respect
to transactions in such securities is provided by the exchange or system).
The penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from those rules, deliver a standardized risk
disclosure document prepared by the Commission, which:
* contains a description of the nature and level of risk in the market for
penny stocks in both public offerings and secondary trading;
* contains a description of the broker's or dealer's duties to the customer
and of the rights and remedies available to the customer with respect to
a violation of such duties;
* contains a brief, clear, narrative description of a dealer market,
including "bid" and "ask" prices for penny stocks and the significance of
the spread between the bid and ask price;
* contains a toll-free telephone number for inquiries on disciplinary
actions;
* defines significant terms in the disclosure document or in the conduct of
trading penny stocks; and
* contains such other information and is in such form (including language,
type, size, and format) as the Commission shall require by rule or
regulation;
The broker-dealer also must provide, prior to proceeding with any transaction in
a penny stock, the customer:
* with bid and offer quotations for the penny stock;
* details of the compensation of the broker-dealer and its salesperson in
the transaction;
* the number of shares to which such bid and ask prices apply, or other
comparable information relating to the depth and liquidity of the market
for such stock; and
* monthly account statements showing the market value of each penny stock
held in the customer's account.
In addition, the penny stock rules require that prior to a transaction in a
penny stock not otherwise exempt from those rules; the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitability statement.
These disclosure requirements will have the effect of reducing the trading
activity in the secondary market for our stock because it will be subject to
these penny stock rules. Therefore, stockholders may have difficulty selling
those securities.
LEGAL PROCEEDINGS
We are not currently a party to any legal proceedings. Our address for service
of process in Nevada is 2470 St. Rose Parkway, Suite 304, Henderson, NV 89075.
14
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Our executive officers and directors and their respective ages as of the date of
this prospectus are as follows:
DIRECTORS:
NAME OF DIRECTOR AGE
Gregory Paul Byrne 45
EXECUTIVE OFFICERS:
NAME OF OFFICER AGE OFFICE
- --------------- ----- -------
Gregory Paul Byrne 45 President, Chief Executive Officer,
Secretary, Treasurer, Principal
Accounting Officer and a
Director
BIOGRAPHICAL INFORMATION
Set forth below is a brief description of the background and business experience
of each of our executive officers and directors for the past five years.
MR. GREGORY PAUL BYRNE has acted as our President, Chief Executive Officer,
Secretary, Treasurer, Principal Accounting Officer and as a director since our
incorporation on April 4, 2006. Since April, 2006 he has been the owner
operator of R & G Mechanical Contractors Ltd., a plumbing and heating contractor
located in Lake Country, B.C. From May, 2004 until April, 2006 he was employed
as a supervisor by Combined Mechanical Contractors Ltd., a plumbing and heating
contractor located in Vernon, B.C.. From November, 2003 until April, 2004 he was
employed as a supervisor by Richardson Mechanical Ltd., a plumbing and heating
contractor located in Kelowna, B.C. From September, 2003 until October, 2003 he
was employed as a plumber/gas fitter by Bry-Mac Mechanical Ltd., a plumbing and
heating contractor located in Vernon, B.C. From July, 2000 until September, 2003
he was employed as an owner/office manager by B.C. Oilfields Ltd., an oil field
equipment supply firm located in Vernon, B.C.
Mr. Byrne does not have any professional training or technical credentials in
the exploration, development and operation of mines.
Mr. Byrne intends to devote 20% of his business time per week to our affairs.
TERM OF OFFICE
Our directors are appointed for a one-year term to hold office until the next
annual general meeting of our shareholders or until removed from office in
accordance with our bylaws. Our officers are appointed by our board of
directors and hold office until removed by the board.
SIGNIFICANT EMPLOYEES
We have no significant employees other than the officers and directors described
above.
15
CONFLICTS OF INTEREST
We do not have any written procedures in place to address conflicts of interest
that may arise in our directors between our business and their other business
activities.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table provides the names and addresses of each person known to us
to own more than 5% of our outstanding common stock as of the date of this
prospectus, and by the officers and directors, individually and as a group.
Except as otherwise indicated, all shares are owned directly.
TITLE OF CLASS NAME AND ADDRESS AMOUNT OF BENEFICIAL PERCENT
OF BENEFICIAL OWNER OWNERSHIP OF CLASS
Common Stock Gregory Paul Byrne 4,000,000 71.17%
President, Chief Executive Officer
Secretary, Treasurer,
Principal Accounting Officer,
and Director,
9867 Okanagan Centre Road,
Lake Country, BC, Canada
Common Stock All officers and directors as
a groupthat consists of one 4,000,000 71.17%
person
The percent of class is based on 5,620,000 shares of common stock issued and
outstanding as of the date of this prospectus.
DESCRIPTION OF SECURITIES
GENERAL
Our authorized capital stock consists of 75,000,000 shares of common stock at a
par value of $0.001 per share.
COMMON STOCK
As of December 31, 2006, there were 5,620,000 shares of our common stock issued
and outstanding that are held by 26 stockholders of record.
Holders of our common stock are entitled to one vote for each share on all
matters submitted to a stockholder vote. Holders of common stock do not have
cumulative voting rights. Therefore, holders of a majority of the shares of
common stock voting for the election of directors can elect all of the
directors. Two persons present and being, or representing by proxy,
shareholders are necessary to constitute a quorum at any meeting of our
stockholders. A vote by the holders of a majority of our outstanding shares is
required to effectuate certain fundamental corporate changes such as
liquidation, merger or an amendment to our articles of incorporation.
Holders of common stock are entitled to share in all dividends that the board of
directors, in its discretion, declares from legally available funds. In the
event of a liquidation, dissolution or winding up, each outstanding share
entitles its holder to participate pro rata in all assets that remain after
16
payment of liabilities and after providing for each class of stock, if any,
having preference over the common stock.
Holders of our common stock have no pre-emptive rights, no conversion rights and
there are no redemption provisions applicable to our common stock.
PREFERRED STOCK
We do not have an authorized class of preferred stock.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our common stock. We
currently intend to retain future earnings, if any, to finance the expansion of
our business. As a result, we do not anticipate paying any cash dividends in the
foreseeable future.
SHARE PURCHASE WARRANTS
We have not issued and do not have outstanding any warrants to purchase shares
of our common stock.
OPTIONS
We have not issued and do not have outstanding any options to purchase shares of
our common stock.
CONVERTIBLE SECURITIES
We have not issued and do not have outstanding any securities convertible into
shares of our common stock or any rights convertible or exchangeable into shares
of our common stock.
INTERESTS OF NAMED EXPERTS AND COUNSEL
No expert or counsel named in this prospectus as having prepared or certified
any part of this prospectus or having given an opinion upon the validity of the
securities being registered or upon other legal matters in connection with the
registration or offering of the common stock was employed on a contingency
basis, or had, or is to receive, in connection with the offering, a substantial
interest, direct or indirect, in the registrant. Nor was any such person
connected with the registrant as a promoter, managing or principal underwriter,
voting trustee, director, officer, or employee.
The financial statements included in this prospectus and the registration
statement have been audited by Madsen & Associates, Certified Public
Accountants, to the extent and for the periods set forth in their report
appearing elsewhere in this document and in the registration statement filed
with the SEC, and are included in reliance upon such report given upon the
authority of said firm as experts in auditing and accounting.
Daniel C. Masters, legal counsel, has provided an opinion on the validity of our
common stock. We have retained him solely for the purpose of providing this
opinion and have not received any other legal services from him.
Otherwise, no expert or counsel has given an opinion or assisted in the
preparation of our registration statement. No counsel or expert has acted as a
promoter of our company or the offering.
17
DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
Our directors and officers are indemnified as provided by the Nevada Revised
Statutes and our Bylaws. These provisions provide that we shall indemnify a
director or former director against all expenses incurred by him by reason of
him acting in that position. The directors may also cause us to indemnify an
officer, employee or agent in the same fashion.
We have been advised that in the opinion of the Securities and Exchange
Commission indemnification for liabilities arising under the Securities Act 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 is asserted by one of our directors, officers, or controlling
persons in connection with the securities being registered, we will, unless in
the opinion of our legal counsel the matter has been settled by controlling
precedent, submit the question of whether such indemnification is against public
policy to a court of appropriate jurisdiction. We will then be governed by the
court's decision.
ORGANIZATION WITHIN LAST FIVE YEARS
We were incorporated on April 4, 2006 under the laws of the state of Nevada. On
that date, Gregory Paul Byrne was appointed as President, Secretary, Chief
Executive Officer, Principal Accounting Officer and director.
No promoter has received, or has an agreement to receive, anything of value,
directly or indirectly, from us.
DESCRIPTION OF BUSINESS
IN GENERAL
We intend to commence operations as an exploration stage company. We will be
engaged in the acquisition and exploration of mineral properties with a view to
exploiting any mineral deposits we discover that demonstrate economic
feasibility. We own a 100% interest in one mineral claim known as the Smoke
property. There is no assurance that a commercially viable mineral deposit
exists on the property. Further exploration will be required before a final
evaluation as to the economic and legal feasibility is determined.
Our plan of operation is to conduct exploration work on the Smoke property in
order to ascertain whether it possesses economic quantities of gold. There can
be no assurance that economic mineral deposits or reserves exist on the Smoke
property until appropriate exploration work is done and an economic evaluation
based on such work concludes that production of minerals from the property is
economically feasible.
Even if we complete our proposed exploration programs on the Smoke property and
they are successful in identifying a mineral deposit, we will have to spend
substantial funds on further drilling and engineering studies before we will
know if we have a commercially viable mineral deposit.
DESCRIPTION, LOCATION AND ACCESS
The Smoke property is 100 km due south of Smithers, B.C., on the southern slopes
of Smoke mountain. The geographic centre of the claims is at UTM coordinates
5972500N and 614500E.
Access to the property is by helicopter only. Logging in the vicinity of Nadina
Lake gives road access for mobilization purposes as far south as Hill Tout Lake,
15 km east of the claims.
18
Smoke Mountain is an approximately circular topographic high located on the
western edge of the Nechako Plateau near the Coast Mountains. The claims largely
cover the rolling upland area of the mountain, but include portions of the steep
eastern and southern slopes. The southerly flowing creek that begins in the
swamps and meadows of the property steepens to the south and runs through steep
to vertical rock cliffs. Elevations range from 1310 to 1676 meters above sea
level.
Timber on the property is a mixture of fir, spruce and pine. A large meadow
occurs adjacent to the lake and the alpine areas are dotted with small lakes.
Outcrops are abundant above 1525 meters (5,000 f.) elevation, but below that are
restricted mainly to creeks. Abundant glacio-fluvial debris up to 15 meters
thick covers a large portion of the area below 1525 meters.
SMOKE PROPERTY STAKING AND PURCHASE AGREEMENT
On May 15, 2006, we entered into an agreement with Mr. Terry Loney of Garson,
Ontario, whereby he agreed to sell to us one mineral claim located approximately
100 kilometers south of Smithers, British Columbia in an area having the
potential to contain gold mineralization or deposits. In order to acquire a
100% interest in these claims, we paid $7,000 to Mr. Loney.
EXPLORATION HISTORY
The property was originally staked by Placer Dome Inc. in 1989 to explore
the possibility of gold mineralization peripheral to an existing porphyry
showing. A short geological and stream geochemical program was carried out
during the 1989 field season, and one old drill hole, drilled by Noranda in the
early seventies, was re-sampled. At the conclusion of the 1989 program
completion of mapping and prospecting around the porphyry system was
recommended.
During the 1990 field season geological mapping, prospecting and re-valuation of
old drill core was done. Previously unmapped areas were examined and seven old
drill cores, drilled by Noranda, were logged and sampled where mineralization or
alteration was present. The 1990 program did not indicate any new or significant
mineralization on the property, and it was recommended that the claims should be
allowed to lapse.
GEOLOGICAL ASSESSMENT REPORT: SMOKE PROPERTY
We have obtained a geological summary report on the Smoke property that was
prepared by Ms. Amanda Tremblay, a geologist, of Ottawa, Ontario, Canada. She
holds a Bachelor of Science degree in geology, with honors, from Queens
University in Kingston, Ontario, Canada. The report discusses the geology of the
area surrounding and particular to the Smoke property, and makes a
recommendation for further exploration work.
In her report, Ms. Brickner opines that the anomalous gold values in both
creek sediment and rock samples from the Smoke property suggest that there may
be unrecognized mineralization peripheral to exposed porphyry type showings. She
is of the opinion that this data provides enough information to warrant further
investigation to confirm the work and showings noted to date.
CONCLUSIONS
Ms. Tremblay, the author of the geological report on the Smoke property,
believes that the area has potential for gold mineralization. She is of the
opinion, based on the results from previous works, that a new exploration grid
should be established to cover the property to provide spatial control for
further
19
exploration activities. She recommends that geophysical and geochemical
surveying should be carried out, as should geological mapping, prospecting and
sampling. She also recommends that stripping, trenching and sampling should be
carried out in areas of known mineralization and in areas that are located
during the prospecting and mapping of the property. She recommends that whole
rock analysis, trace element analysis, and possibly mineralogical studies should
accompany all sampling on the property. Once all the geological information is
completed, she recommends that a program of diamond drilling should be
undertaken to provide an aspect of geological and geochemical information in the
third dimension. She recommends a two phase exploration program consisting
firstly of grid establishment, and then prospecting, geological mapping and
interpretation, followed secondly by geophysical surveys, and mapping and
interpretation, in order to identify targets for future drilling.
A grid is two sets of uniformly spaced parallel lines, intersecting at right
angles, by means of which the surface of an area is divided into squares when a
checkerboard placement of soil or rock is desired.
Sampling involves taking a sample of surface material which is then analyzed by
a lab to test the content of trace elements occurring in nature ie. Copper,
lead, zinc, gold, etc.
Trenching involves removing surface soil using a backhoe or bulldozer. Samples
are then taken from the bedrock below and analyzed for mineral content.
The geochemical portion of the initial phase program will consist of our
consulting geologist gathering chip samples and grab samples from the property.
Grab samples are soil samples or pieces of rock that appear to contain precious
metals such as gold or silver, or industrial metals such as copper and nickel.
All samples gathered will be sent to a laboratory where they are crushed and
analyzed for metal content.
Geological mapping involves plotting previous exploration data relating to a
property on a map in order to determine the best property locations to conduct
subsequent exploration work. Sampling involves gathering rock and soil samples
from property areas with the most potential to host economically significant
mineralization. All samples gathered will be sent to a laboratory where they are
crushed and analyzed for metal content. Prospecting is the analysis of rocks on
the property surface with a view to discovering indications of potential
mineralization.
Geophysical surveying is the search for mineral deposits by measuring the
physical property of near-surface rocks, and looking for unusual responses
caused by the presence of mineralization. Electrical, magnetic, gravitational,
seismic and radioactive properties are the ones most commonly measured.
Geophysical surveys are applied in situations where there is insufficient
information obtainable from the property surface to allow informed opinions
concerning the property's merit.
Prospecting involves analyzing rocks on the property surface with a view to
discovering indications of potential mineralization.
Mineralization is the accumulation of high concentrations of valuable elements,
such as gold, silver, and copper, in rock and soil.
Drilling involves extracting a long cylinder of rock from the ground to
determine amounts of metals at different depths. Pieces of rock obtained, known
as drill core, are analyzed for mineral content.
PROPOSED BUDGET FOR PHASE ONE
Approximate costs for the first phase of the two phase program are as follows:
20
Line cutting
(Grid Establishment)
15 km @ $300.00 per km $4500.00
Prospecting, Geological Mapping, Consultation and Interpretation 1075.00
Total $5575.00
PROPOSED BUDGET FOR PHASE TWO
Approximate costs for the second phase of the two phase program are as follows:
Geophysical Surveys
I.P. Survey (Induced Polarization)
15 km @ $525.00 per km $7875.00
Mapping, Report Writing and Interpretation 3000.00
Total $10,875.00
COMPLIANCE WITH GOVERNMENT REGULATION
We will be required to comply with all regulations, rules and directives of
governmental authorities and agencies applicable to the exploration of minerals
in Canada generally, and in the Province of British Columbia, specifically. The
governmental agencies responsible for overseeing the exploration of minerals in
Canada are primarily the Ministry of Natural Resources Canada and the Ministry
of the Environment. In British Columbia, the responsible government agency is
the Ministry of Energy, Mines and Petroleum Resources.
Under these laws, prior to production, we have the right to explore the
property, subject only to a notice of work which may entail posting a bond. In
addition, production of minerals in the Province of British Columbia will
require prior approval of applicable governmental regulatory agencies. We can
provide no assurance to investors that such approvals will be obtained. The
cost and delay involved in attempting to obtain such approvals cannot be known
at this time.
We have budgeted for regulatory compliance costs in the proposed work program
recommended by the geological report. Such costs will be less than $500 and
will consist of having any significant soil or rock that is moved during the
exploration process returned to its original location. Soil and rock movement
during proposed exploration is anticipated to be negligible.
We will have to sustain the cost of reclamation and environmental mediation for
all exploration (and development) work undertaken. The amount of these costs is
not known at this time as we do not know the extent of the exploration program
that will be undertaken beyond completion of the recommended work program.
However, it is anticipated that such costs will not exceed $20,000 for future
exploration phases. Because there is presently no information on the size,
tenor, or quality of any resource or reserve at this time, it is impossible to
assess the impact of any capital expenditures on earnings, our competitive
position or us in the event a potentially economic deposit is discovered.
If we enter into production, the cost of complying with permit and regulatory
environment laws will be greater than in phase one because the impact on the
project area is greater. Permits and regulations will control all aspects of
any production program if the project continues to that stage because of the
potential impact on the environment. Examples of regulatory requirements
include:
- Water discharge will have to meet water standards;
21
- Dust generation will have to be minimal or otherwise re-mediated;
- Dumping of material on the surface will have to be re-contoured and
re-vegetated;
- An assessment of all material to be left on the surface will need
to be environmentally benign;
- Ground water will have to be monitored for any potential
contaminants;
- The socio-economic impact of the project will have to be evaluated
and if deemed negative, will have to be re-mediated; and
- There will have to be an impact report of the work on the local
fauna and flora.
During the exploration phase, a bond will need to be provided covering possible
land disturbance. In the case of normal fieldwork, this should be minimal. The
costs of compliance with environmental regulations in the production phase are
variable and cannot be determined at this time.
EMPLOYEES
We have no employees as of the date of this prospectus other than our director.
RESEARCH AND DEVELOPMENT EXPENDITURES
We have not incurred any other research or development expenditures since our
incorporation.
SUBSIDIARIES
We do not have any subsidiaries.
PATENTS AND TRADEMARKS
We do not own, either legally or beneficially, any patents or trademarks.
REPORTS TO SECURITY HOLDERS
Although we are not required to deliver a copy of our annual report to our
security holders, we will voluntarily send a copy of our annual report,
including audited financial statements, to any registered shareholder who
requests it. We will not be a reporting issuer with the Securities & Exchange
Commission until our registration statement on Form SB-2 is declared effective.
We have filed a registration statement on form SB-2 under the Securities Act of
1933 with the Securities and Exchange Commission with respect to the shares of
our common stock offered through this prospectus. This prospectus is filed as a
part of that registration statement, but does not contain all of the information
contained in the registration statement and exhibits. Statements made in the
registration statement are summaries of the material terms of the referenced
contracts, agreements or documents of the company. We refer you to our
registration statement and each exhibit attached to it for a more detailed
description of matters involving the company, and the statements we have made in
this prospectus are qualified in their entirety by reference to these additional
materials. You may inspect the registration statement, exhibits and schedules
filed with the Securities and Exchange Commission at the Commission's principal
office in Washington, D.C. Copies of all or any part of the registration
22
statement may be obtained from the Public Reference Section of the Securities
and Exchange Commission, 100 F Street,, N.W., Washington, D.C. 20549. Please
call the Commission at 1-800-SEC-0330 for further information on the operation
of the public reference rooms. The Securities and Exchange Commission also
maintains a web site at http://www.sec.gov that contains reports, proxy
statements and information regarding registrants that file electronically with
the Commission. Our registration statement and the referenced exhibits can also
be found on this site.
MANAGEMENT'S DISCUSSION AND ANALYSIS
PLAN OF OPERATIONS
Our plan of operation for the twelve months following the date of this
prospectus is to complete the recommended phase one and two exploration programs
on the Smoke property consisting of geological mapping, sampling and
prospecting, followed by geological surveys. We anticipate that the program will
cost approximately $16,450.00. To date, we have not commenced exploration on
the Smoke property.
In the next 12 months, we also anticipate spending an additional $15,000 on
professional fees and administrative expenses, including fees payable in
connection with the filing of this registration statement and complying with
reporting obligations.
Total expenditures over the next 12 months are therefore expected to be
approximately $31,450.00.
Our cash reserves are not sufficient to meet our obligations for the next
twelve-month period. As a result, we will need to seek additional funding in
the near future. We currently do not have a specific plan of how we will obtain
such funding; however, we anticipate that additional funding will be in the form
of equity financing from the sale of our common stock. We may also seek to
obtain short-term loans from our director, although no such arrangement has been
made. At this time, we cannot provide investors with any assurance that we will
be able to raise sufficient funding from the sale of our common stock or through
a loan from our director to meet our obligations over the next twelve months.
We do not have any arrangements in place for any future equity financing.
We do not expect to earn any revenue from operations until we have either
commenced mining operations on the Smoke property or have sold an interest in
the property to a third party. Before this occurs, we expect that we will have
to complete current recommended exploration on the property, as well as
additional exploration recommended by a geologist.
We do not have any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on the small business issuer's
financial condition, changes in financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital resources that
are material to investors.
RESULTS OF OPERATIONS FOR PERIOD ENDING NOVEMBER 30, 2006
We have not earned any revenues from our incorporation on April 4, 2006 to
November 30, 2006. We do not anticipate earning revenues unless we enter into
commercial production on the Smoke property, which is doubtful. We have not
commenced the exploration stage of our business and can provide no assurance
that we will discover economic mineralization on the property, or if such
minerals are discovered, that we will enter into commercial production.
23
We incurred operating expenses in the amount of $9,211 for the period from our
inception on April 4, 2006 to November 30, 2006. These operating expenses were
comprised of $7,000 for mineral property expenditures, $1,500 in legal and
accounting, $63 in bank charges, and $648 in office expenses.
We have not attained profitable operations and are dependent upon obtaining
financing to pursue exploration activities. For these reasons our auditors
believe that there is substantial doubt that we will be able to continue as a
going concern.
DESCRIPTION OF PROPERTY
We own a 100% interest in the mineral claim comprising the Smoke property. We
do not own or lease any property other than the Smoke property.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None of the following parties has, since our date of incorporation, had any
material interest, direct or indirect, in any transaction with us or in any
presently proposed transaction that has or will materially affect us:
* Any of our directors or officers;
* Any person proposed as a nominee for election as a director;
* Any person who beneficially owns, directly or indirectly, shares
carrying more than 10% of the voting rights attached to our
outstanding shares of common stock;
* Our sole promoter, Gregory Paul Byrne;
* Any member of the immediate family of any of the foregoing persons.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
NO PUBLIC MARKET FOR COMMON STOCK
There is presently no public market for our common stock. We anticipate
applying for trading of our common stock on the over the counter bulletin board
upon the effectiveness of the registration statement of which this prospectus
forms a part. However, we can provide no assurance that our shares will be
traded on the bulletin board or, if traded, that a public market will
materialize. As well, there is no assurance that our stock may be resold at the
offered price if and when an active secondary market might develop. Even if
developed, a public market for our securities may not be sustained.
We have not taken any steps to engage a market-marker to apply for quotation on
the OTC Bulletin Board on our behalf. If we are able to engage a market-maker,
we anticipate that it will take approximately two months for our securities to
be quoted on the OTC Bulletin Board following submission of the application.
However, there is no guarantee that our application will be approved. Even if
we obtain an OTC Bulletin Board quotation, there is no assurance that there will
be a liquid market for our stock.
STOCKHOLDERS OF OUR COMMON SHARES
As of the date of this registration statement, we have 26 registered
shareholders.
24
RULE 144 SHARES
A total of 4,000,000 shares of our common stock are available for resale to the
public after April 28, 2007 in accordance with the volume and trading
limitations of Rule 144 of the Act. In general, under Rule 144 as currently in
effect, a person who has beneficially owned shares of a company's common stock
for at least one year is entitled to sell within any three month period a number
of shares that does not exceed the greater of:
1. 1% of the number of shares of our common stock then outstanding which, in
our case, will equal 56,200 shares as of the date of this prospectus; or
2. the average weekly trading volume of the company's common stock during the
four calendar weeks preceding the filing of a notice on Form 144 with respect
to the sale.
Sales under Rule 144 are also subject to manner of sale provisions and notice
requirements and to the availability of current public information about the
company.
Under Rule 144(k), a person who is not one of the company's affiliates at any
time during the three months preceding a sale, and who has beneficially owned
the shares proposed to be sold for at least two years, is entitled to sell
shares without complying with the manner of sale, public information, volume
limitation or notice provisions of Rule 144.
As of the date of this prospectus, persons who are our affiliates hold all of
the 4,000,000 shares that may be sold pursuant to Rule 144.
REGISTRATION RIGHTS
We have not granted registration rights to the selling shareholders or to any
other persons.
DIVIDENDS
There are no restrictions in our articles of incorporation or bylaws that
prevent us from declaring dividends. The Nevada Revised Statutes, however, do
prohibit us from declaring dividends where, after giving effect to the
distribution of the dividend:
1. we would not be able to pay our debts as they become due in the usual course
of business; or
2. our total assets would be less than the sum of our total liabilities plus
the amount that would be needed to satisfy the rights of shareholders who have
preferential rights superior to those receiving the distribution.
We have not declared any dividends, and we do not plan to declare any dividends
in the foreseeable future.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The table below summarizes all compensation awarded to, earned by, or paid to
our executive officers by any person for all services rendered in all capacities
to us for the fiscal period ended August 31, 2006 and subsequent to that period
to the date of this prospectus.
ANNUAL COMPENSATION
25
Nonqualified
Name and Non-Equity Deferred
Principal Stock Option Incentive Plan Compensation All other
Position Year Salary Bonus Awards Awards Compensation on Earnings Compensation Total
Gregory 2006 $0 $0 None None None None None $0
Paul Byrne
President, CEO, Secretary & Director
STOCK OPTION GRANTS
We have not granted any stock options to the executive officers since our
inception.
CONSULTING AGREEMENTS
We do not have any employment or consulting agreement with Mr. Byrne. We do not
pay them any amount for acting as a director.
FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS:
1. Report of Independent Registered Public Accounting Firm;
2. Audited financial statements for the period ending August 31, 2006,
including:
a. Balance Sheets;
b. Statements of Operations;
c. Statements of Cash Flows;
d. Statements of Stockholders' Equity; and
e. Notes to the Financial Statements
3. Unaudited financial statements for the period ending November 30, 2006,
including:
a. Balance Sheets;
b. Statements of Operations;
c. Statements of Cash Flows;
d. Statements of Stockholders' Equity; and
e. Notes to the Financial Statements
26
DUNN MINING INC.
(AN EXPLORATION STAGE COMPANY)
FINANCIAL STATEMENTS
AUGUST 31, 2006
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
BALANCE SHEETS
STATEMENTS OF OPERATIONS
STATEMENTS OF CASH FLOWS
STATEMENT OF STOCKHOLDERS' EQUITY
NOTES TO THE FINANCIAL STATEMENTS
27
Dunn Mining Inc.
(An Exploration Stage Company)
Las Vegas, Nevada
REPORT OF INDEPENDENT REGISTERED ACCOUNTING FIRM
We have audited the accompanying balance sheet of Dunn Mining Inc. (An
Exploration Stage Company) as of August 31, 2006, and the related statements of
operations, stockholders' equity and cash flows for the period from date of
inception (April 4, 2006) to August 31, 2006. 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 an audit to obtain reasonable assurance whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used,
significant estimates made by management and evaluating the overall financial
statement presentation. We believe that our audit provide a reasonable basis
for our opinion.
In our opinion, these financial statements present fairly, in all material
aspects, the financial position of Dunn Mining Inc. as of August 31, 2006, and
the results of its operations and cash flows for the period from date of
inception (April 4, 2006) to August 31, 2006, in conformity with accounting
principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that Dunn
Mining Inc. will continue as a going concern. As discussed in Note 5 to the
financial statements, the Company has incurred losses since inception and has
not yet been successful in establishing profitable operations, raising
substantial doubt about its ability to continue as a going concern.
Management's plans in regards to these matters are also described in Note 5. The
financial statements do not include any adjustments that might result from the
outcome of these uncertainties.
/s/ Madsen & Associates CPA's, Inc.
- -----------------------------------
Madsen & Associates CPA's, Inc.
December 22, 2006
Salt Lake City, Utah
28
DUNN MINING INC.
(AN EXPLORATION STAGE COMPANY)
BALANCE SHEET
AUGUST 31, 2006
ASSETS
Current Assets:
Cash and cash equivalents $ 24,860
Total Assets 24,860
LIABILITIES & SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable and Accrued Expenses $ 7,550
Total Liabilities 7,550
Stockholders' Equity:
Common Stock, $.001 par value;
authorized 75,000,000 shares; 5,620,000 shares issued
and outstanding 5,620
Additional Paid-In Capital 19,380
Accumulated Deficit (7,690)
Total Stockholders' Equity 17,310
Total Liabilities and Stockholders' Equity $ 24,860
See accompanying notes to the financial statements
29
DUNN MINING INC.
(AN EXPLORATION STAGE COMPANY)
STATEMENT OF OPERATIONS
CUMULATIVE
FROM INCEPTION
(APRIL 4, 2006)
TO AUGUST 31,
2006
-----------------------
Revenues $ -
Operating Expenses:
Mineral Exploration Costs 7,000
General and Administrative 690
-----------------------
Total Operating Expenses 7,690
Net Income $ (7,690)
-----------------------
Earnings per share:
Weighted Average Shares Outstanding 5,326,000
Basic and Diluted $ (0.00)
See accompanying notes to the financial statements
30
DUNN MINING INC.
(AN EXPLORATION STAGE COMPANY)
STATEMENT OF CASH FLOWS
CUMULATIVE
FROM INCEPTION
(APRIL 4, 2006)
TO AUGUST 31,
2006
Cash Flows from Operating Activities:
Net Income $ (7,690)
Adjustments to reconcile net income to net cash
provided by operating activities:
Changes in assets and liabilties:
Accounts payable and Accrued Expenses 7,550
Net cash used by Operating Activities (140)
Cash Flows from Investing Activities: -
Cash Flows from Financing Activities:
Stock issued for Cash 25,000
Net cash provided by Financing Activities 25,000
Net Increase (Decrease) in Cash 24,860
Cash at Beginning of Period -
Cash at End of Period $ 24,860
See accompanying notes to the financial statements
31
DUNN MINING INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
AUGUST 31, 2006
DUNN MINING INC.
(AN EXPLORATION STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
FROM INCEPTION (APRIL 4, 20006) TO AUGUST 31, 2006
DEFICIT
ACCUMULATED
COMMON STOCK ADDITIONAL DURING
COMMON STOCK COMMON STOCK PAID-IN DEVELOPMENT TOTAL
SHARES AMOUNT CAPITAL STAGE EQUITY
BALANCE - April 19, 2006 - - - - -
Common Stock issued for
cash
April 28, 2006 - valued at $.001 4,000,000 4,000 - - 4,000
Common Stock issued for cash
April 29, 2006 - valued at $.01 150,000 150 1,350 1,500
Common Stock issued for cash
May 5, 2006 - valued at $.01 850,000 850 7,650 8,500
Common Stock issued for cash
May 8, 2006 - valued at $.01 300,000 300 2,700 3,000
Common Stock issued for cash
May 11, 2006 - valued at $.01 200,000 200 1,800 2,000
Common Stock issued for cash
May 15, 2006 - valued at $.05 20,000 20 980 1,000
Common Stock issued for cash
May 16, 2006 - valued at $.05 60,000 60 2,940 3,000
Common Stock issued for cash
May 19, 2006 - valued at $.05 40,000 40 1,960 2,000
Net Income - - - (7,690) (7,690)
BALANCE - August 31, 2006 5,620,000 5,620 19,380 (7,690) 17,310
See accompanying notes to the financial statements
32
DUNN MINING INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
AUGUST 31, 2006
1. HISTORY
Dunn Mining Inc. (the Company) was incorporated under the laws of the State of
Nevada, U.S. on April 4, 2006. The Company's fiscal year end is August 31.
During the year ended August 31, 2006, the Company commenced operations by
issuing shares and acquiring a mineral interest located in the Province of
British Columbia, Canada. The Company has not yet determined whether this
property contains reserves that are economically recoverable.
The Company is an exploration stage company as defined in Statement on Financial
Accounting Standard No. 7 (SFAS 7) (Accounting and Reporting by Development
Stage Companies). Further, as a "reporting company"pursuant to the Securities
Exchange Act of 1934, as amended, the Company's financial reports include the
information required by provisions of Regulation S-X under that Act, and
specifically Industry Guide 7 therein, applicable to the companies engaged
in mineral exploration and development.
2. SIGNIFICANT ACCOUNTING POLICIES
(a) Accounting Methods and Basis of Presentation
The Company recognizes income and expense based on the accrual method of
accounting. The financial statements have been prepared in accordance with
generally accepted accounting principles in the United States of America.
(b) Use of Estimates
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
(c) Mineral Properties
The Company has expensed the costs of acquiring and exploring its properties
during the periods in which they were incurred, and will continue to do so until
it is able to determine that commercially recoverable ore reserves are present
on the properties. If it determines that such reserves exist, it will
capitalize further costs.
(d) Basic and Diluted Net Loss Per Share
Basic net loss per share amounts are computed based on the weighted average
number of shares actively outstanding in accordance with SFAS 128 "Earnings Per
Share." Diluted net loss per share amounts are computed using the weighted
average number of common shares and common equivalent shares outstanding as if
shares had been issued on the exercise of any common share rights unless the
exercise becomes antidultive and then only the basic per share amounts are shown
in the report. As of August 31, 2006, the Company had no common stock
equivalents outstanding.
(e) Income Taxes
The Company utilizes the liability method of accounting for income taxes. Under
the liability method, deferred tax assets and liabilities are determined based
on the differences between financial reporting and the tax bases of the assets
and liabilities and are measured using the enacted tax rates and laws that will
be in effect, when the differences are expected to reverse. An allowance
against deferred tax assets is recognized when it is
33
DUNN MINING INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
AUGUST 31, 2006
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
more likely than not, that such tax benefit will not be realized. On August 31,
2006, the Company had a net operating loss to be carried forward in the amount
of $7,690. The tax benefit of approximately $2,700 has been fully offset by a
valuation reserve because the user of the future benefit is doubtful since the
Company has not generated taxable income since inception. The net operating
loss expires starting in 2026.
(f) Fair Value of Financial Instruments
The respective carrying value of certain on-balance-sheet financial instruments
approximated their fair values. These financial instruments include cash,
accounts payable, and accrued expenses.
(g) Recent Accounting Pronouncements
The Company does not expect that the adoption of other recent account
pronouncements will have a material effect on its financial statements.
(h) Revenue Recognition
Revenue will be recognized on the sale and delivery of a product or the
completion of a service provided.
(i) Statement of Cash Flows
For the purposes of the statement of cash flows, the Company considers all
highly liquid investments with a maturity of three months or less to be cash
equivalents.
(j) Financial and Concentration Risk
The Company does not have any concentration or related financial credit risk.
3. MINERAL INTERESTS
On May 14, 2006, the Company entered into a mineral property purchase agreement
to acquire a 100% interest in one mineral claim located in the Omineca Mining
Division, BC, for total consideration of $7,000. This agreement was subsequently
executed upon payment. This amount has been recorded as a mineral exploration
cost in the current period.
4. COMMON STOCK
The Company has authorized 75,000,000 shares of common stock with a par value of
$.001 per share. During the year ended August 31, 2006, the Company issued
5,620,000 shares of common stock for total cash proceeds of $25,000.
5. GOING CONCERN
The accompanying consolidated financial statements have been prepared in
conformity with generally accepted accounting principles, which contemplate
continuation of the Company as a going concern.
The Company has incurred losses since its inception and has not yet been
successful in establishing profitable operations. These factors raise
substantial doubt about the ability of the Company to continue as a going
concern. Continuance of the Company as a going concern is dependent upon
obtaining additional working capital through loans and/or additional sales of
the Company's common stock. There is no assurance that the Company will be
successful in raising this additional capital or achieving profitable
operations. The accompanying financial statements do not include any adjustments
that might result from the outcome of these uncertainties.
34
DUNN MINING INC.
(AN EXPLORATION STAGE COMPANY)
FINANCIAL STATEMENTS
NOVEMBER 30, 2006
(UNAUDITED)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
BALANCE SHEETS
STATEMENTS OF OPERATIONS
STATEMENT OF STOCKHOLDERS' EQUITY
STATEMENTS OF CASH FLOWS
NOTES TO THE FINANCIAL STATEMENTS
35
DUNN MINING INC.
(AN EXPLORATION STAGE COMPANY)
BALANCE SHEETS
(UNAUDITED)
ASSETS
NOVEMBER 30, AUGUST 31,
2006 2006
CURRENT ASSETS
Cash $ 15,789 $ 24,860
TOTAL ASSETS $ 15,789 $ 24,860
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ - $ 7,550
TOTAL CURRENT LIABILITIES - 7,550
STOCKHOLDERS' EQUITY
Capital stock
Authorized:
75,000,000 common shares with a par value of $0.001
Issued and outstanding:
5,620,000 common shares 5,620 5,620
Additional paid-in-capital 19,380 19,380
Deficit accumulated during the exploration stage (9,211) (7,690)
TOTAL STOCKHOLDERS' EQUITY 15,789 17,310
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 15,789 $ 24,860
NATURE AND CONTINUANCE OF OPERATIONS (Note 1)
SEE ACCOMPANYING NOTES
DUNN MINING INC.
(AN EXPLORATION STAGE COMPANY)
STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED CUMULATIVE
NOVEMBER 30, FROM
2006 APRIL 19,
2006 (INCEPTION)
TO
AUGUST 31, 2006
Bank charges and interest $ 21 $ 42
Mineral property - 7,000
Office expenses 648
Professional fees 1,500
Net loss $ (1,521) $ (7,690)
LOSS PER SHARE - BASIC AND DILUTED $ (0.00) $ (0.00)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 5,620,000 5,387,500
- SEE ACCOMPANYING NOTES -
36
DUNN MINING INC.
(AN EXPLORATION STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY
(UNAUDITED)
NUMBER PAR ADDITIONAL TOTAL DEFICIT
OF VALUE PAID-IN- CAPITAL ACCUMULATED
COMMON CAPITAL STOCK DURING THE EXPLORATION TOTAL
SHARES STAGE
Balance, April 19, 2006 - $ - $ - $ - $ - $
April 30, 2006
Subscribed for cash at $0.001 4,000,000 4,000 - 4,000 - 4,000
April 30, 2006
Subscribed for cash at $0.01 150,000 150 1,350 1,500 - 1,500
May 31, 2006
Subscribed for cash at $0.01 1,350,000 1,350 12,150 13,500 - 13,500
May 31, 2006
Subscribed for cash at $0.05 120,000 120 5,880 6,000 6,000
Net loss (7,690) (7,690)
Balance, August 31, 2006 5,620,000 $ 5,620 $ 19,380 $ 25,000 $ (7,690) $ 17,310
Net loss (1,521) (1,521)
Balance, November 30, 2006 5,620,000 $ 5,620 $ 19,380 $ 25,000 $ (9,211) $ 15,789
SEE ACCOMPANYING NOTES
37
DUNN MINING INC.
(AN EXPLORATION STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED CUMULATIVE
NOVEMBER 30, 2006 FROM
APRIL 19,
2006 (INCEPTION) TO
AUGUST 31, 2006
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (1,521) $ (7,690)
Adjustments to reconcile net loss to net cash
Accounts payable and accrued liabilities (7,550) 7,550
Net cash used in operations (9,071) (140)
CASH FLOWS FROM FINANCING ACTIVITIES
Shares subscribed for cash - 25,000
Net cash provided by financing activities - 25,000
Net increase (decrease) in cash (9,071) 24,860
Cash beginning 24,860 -
Cash ending $ 15,789 $ 24,860
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for:
Interest $ - $ -
Taxes $ - $ -
SEE ACCOMPANYING NOTES
38
DUNN MINING INC.
(An Exploration Stage Company)
Notes To The Financial Statements
November 30, 2006
(Unaudited)
1. NATURE AND CONTINUANCE OF OPERATIONS
Dunn Mining Inc. ("the Company") was incorporated under the laws of State of Nevada, U.S. on April 4, 2006, with an
authorized capital of 75,000,000 common shares with a par value of $0.001. The Company's year end is the end of
August. The Company is in the exploration stage of its resource business. During the period ended November 30,
2006, the Company commenced operations by issuing shares and acquiring a mineral property located in the Province of
British Columbia, Canada. The Company has not yet determined whether this property contains reserves that are
economically recoverable. The recoverability of costs incurred for acquisition and exploration of the property will
be dependent upon the discovery of economically recoverable reserves, confirmation of the Company's interest in the
underlying property, the ability of the Company to obtain necessary financing to satisfy the expenditure requirements
under the property agreement and to complete the development of the property and upon future profitable production or
proceeds for the sale thereof.
These financial statements have been prepared on a going concern basis which assumes the Company will be able to
realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The
Company has incurred losses since inception resulting in an accumulated deficit of $9,211 as at November 30, 2006 and
further losses are anticipated in the development of its business raising substantial doubt about the Company's
ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company
generating profitable operations in the future and/or to obtain the necessary financing to meet its obligations and
repay its liabilities arising from normal business operations when they come due. Management intends to finance
operating costs over the next twelve months with existing cash on hand and loans from directors and or private
placement of common stock.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The financial statements of the Company have been prepared in accordance with generally accepted accounting
principles in the United States of America and are presented in US dollars.
Exploration Stage Company
The Company complies with the Financial Accounting Standards Board Statement No. 7, its characterization of the
Company as an exploration stage enterprise.
Mineral Interests
Mineral property acquisition, exploration and development costs are expensed as incurred until such time as economic
reserves are quantified. To date the Company has not established any proven or probable reserves on its mineral
properties. The Company has adopted the provisions of SFAS No. 143 "Accounting for Asset Retirement Obligations"
which establishes standards for the initial measurement and subsequent accounting for obligations associated with the
sale, abandonment, or other disposal of long-lived tangible assets arising from the acquisition, construction or
development and for normal operations of such assets. As at November 30, 2006, any potential costs relating to the
retirement of the Company's mineral property interest has not yet been determined.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the period. Actual results could differ from those estimates.
39
DUNN MINING INC.
(An Exploration Stage Company)
Notes To The Financial Statements
November 30, 2006
(Unaudited)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Foreign Currency Translation
The financial statements are presented in United States dollars. In accordance with Statement of Financial
Accounting Standards No. 52, "Foreign Currency Translation", foreign denominated monetary assets and liabilities are
translated into their United States dollar equivalents using foreign exchange rates which prevailed at the balance
sheet date. Non monetary assets and liabilities are translated at the exchange rates prevailing on the transaction
date. Revenue and expenses are translated at average rates of exchange during the year. Gains or losses resulting
from foreign currency transactions are included in results of operations.
Fair Value of Financial Instruments
The carrying value of cash and accounts payable and accrued liabilities approximates their fair value because of the
short maturity of these instruments. Unless otherwise noted, it is management's opinion the Company is not exposed
to significant interest, currency or credit risks arising from these financial instruments.
Environmental Costs
Environmental expenditures that relate to current operations are expensed or capitalized as appropriate.
Expenditures that relate to an existing condition caused by past operations, and which do not contribute to current
or future revenue generation, are expensed. Liabilities are recorded when environmental assessments and/or remedial
efforts are probable, and the cost can be reasonably estimated. Generally, the timing of these accruals coincides
with the earlier of completion of a feasibility study or the Company's commitments to plan of action based on the
then known facts.
Income Taxes
The Company follows the liability method of accounting for income taxes. Under this method, deferred income tax
assets and liabilities are recognized for the estimated tax consequences attributable to differences between the
financial statement carrying values and their respective income tax basis (temporary differences). The effect on
deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date.
At November 30, 2006 a full deferred tax asset valuation allowance has been provided and no deferred tax asset has
been recorded.
Basic and Diluted Loss Per Share
The Company computes loss per share in accordance with SFAS No. 128, "Earnings per Share" which requires presentation
of both basic and diluted earnings per share on the face of the statement of operations. Basic loss per share is
computed by dividing net loss available to common shareholders by the weighted average number of outstanding common
shares during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding
during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive.
The Company has no potential dilutive instruments and accordingly basic loss and diluted loss per share are equal.
40
DUNN MINING INC.
(An Exploration Stage Company)
Notes To The Financial Statements
November 30, 2006
(Unaudited)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Stock-based Compensation
In December 2004, the FASB issued SFAS No. 123R, "Share-Based Payment", which replaced SFAS No. 123, "Accounting for
Stock-Based Compensation" and superseded APB Opinion No. 25, "Accounting for Stock Issued to Employees". In
January 2005, the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin ("SAB") No. 107,
"Share-Based Payment", which provides supplemental implementation guidance for SFAS No. 123R. SFAS No. 123R requires
all share-based payments to employees, including grants of employee stock options, to be recognized in the financial
statements based on the grant date fair value of the award. SFAS No. 123R was to be effective for interim or annual
reporting periods beginning on or after June 15, 2005, but in April 2005 the SEC issued a rule that will permit most
registrants to implement SFAS No. 123R at the beginning of their next fiscal year, instead of the next reporting
period as required by SFAS No. 123R. The pro-forma disclosures previously permitted under SFAS No. 123 no longer will
be an alternative to financial statement recognition. Under SFAS No. 123R, the Company must determine the appropriate
fair value model to be used for valuing share-based payments, the amortization method for compensation cost and the
transition method to be used at date of adoption.
The transition methods include prospective and retroactive adoption options. Under the retroactive options, prior
periods may be restated either as of the beginning of the year of adoption or for all periods presented. The
prospective method requires that compensation expense be recorded for all unvested stock options and restricted
stock at the beginning of the first quarter of adoption of SFAS No. 123R, while the retroactive methods would
record compensation expense for all unvested stock options and restricted stock beginning with the first period
restated. The Company adopted the modified prospective approach of SFAS No. 123R for the year ended August 31,
2006. The Company did not record any compensation expense for the period ended November 30, 2006 because there
were no stock options outstanding prior to the adoption or at November 30, 2006.
Recent Accounting Pronouncements
In February 2006, the FASB issued SFAS No. 155, "Accounting for Certain Hybrid Financial Instruments-an amendment of
FASB Statements No. 133 and 140", to simplify and make more consistent the accounting for certain financial
instruments. SFAS No. 155 amends SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", to
permit fair value re-measurement for any hybrid financial instrument with an embedded derivative that otherwise
would require bifurcation, provided that the whole instrument is accounted for on a fair value basis. SFAS No.
155 amends SFAS No. 140, "Accounting for the Impairment or Disposal of Long-Lived Assets", to allow a qualifying
special-purpose entity to hold a derivative financial instrument that pertains to a beneficial interest other
than another derivative financial instrument. SFAS No. 155 applies to all financial instruments acquired or
issued after the beginning of an entity's first fiscal year that begins after September 15, 2006, with earlier
application allowed. This standard is not expected to have a significant effect on the Company's future reported
financial position or results of operations.
In March 2006, the FASB issued SFAS No. 156, "Accounting for Servicing of Financial Assets, an amendment of FASB
Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities". This statement requires all separately recognized servicing assets and servicing liabilities be
initially measured at fair value, if practicable, and permits for subsequent measurement using either fair value
measurement with changes in fair value reflected in earnings or the amortization and impairment requirements of
Statement No. 140. The subsequent measurement of separately recognized servicing assets and servicing liabilities
at fair value eliminates the necessity for entities that manage the risks inherent in servicing assets and
servicing liabilities with derivatives to qualify for hedge accounting treatment and eliminates the
characterization of declines in fair value as impairments or direct write-downs. SFAS No. 156 is effective for an
entity's first fiscal year beginning after September 15, 2006. This adoption of this statement is not expected
to have a significant effect on the Company's future reported financial position or results of operations.
41
DUNN MINING INC.
(An Exploration Stage Company)
Notes To The Financial Statements
November 30, 2006
(Unaudited)
3. MINERAL INTERESTS
On May 15, 2006, the Company entered into a mineral property purchase agreement to acquire a 100% interest in one
mineral claim located in the Omineca Mining Division, BC for total consideration of $7,000.
The mineral interest is held in trust for the Company by the vendor of the property. Upon request from the Company
the title will be recorded in the name of the Company with the appropriate mining recorder.
4. COMMON STOCK
The total number of common shares authorized that may be issued by the Company is 75,000,000 shares with a par value of
one tenth of one cent ($0.001) per share and no other class of shares is authorized.
During the year ended August 31, 2006, the Company issued 5,620,000 shares of common stock for total cash proceeds of
$25,000. At November 30, 2006 there were no outstanding stock options or warrants.
5. INCOME TAXES
As of November 30, 2006, the Company had net operating loss carry forwards of approximately $9,211 that may be available
to reduce future years' taxable income through 2026. Future tax benefits which may arise as a result of these losses have
not been recognized in these financial statements, as their realization is determined not likely to occur and
accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-
forwards.
42
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
We have had no changes in or disagreements with our accountants.
Until _________________, all dealers that effect transactions in these
securities whether or not participating in this offering, may be required to
deliver a prospectus. This is in addition to the dealer's obligation to deliver
a prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
Part II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our officers and directors are indemnified as provided by the Nevada Revised
Statutes and our bylaws.
Under the NRS, director immunity from liability to a company or its shareholders
for monetary liabilities applies automatically unless it is specifically limited
by a company's articles of incorporation that is not the case with our articles
of incorporation. Excepted from that immunity are:
(1) a willful failure to deal fairly with the company or its
shareholders in connection with a matter in which the director has
a material conflict of interest;
(2) a violation of criminal law (unless the director had reasonable
cause to believe that his or her conduct was lawful or no
reasonable cause to believe that his or her conduct was unlawful);
(3) a transaction from which the director derived an improper personal
profit; and
(4) willful misconduct.
Our bylaws provide that we will indemnify our directors and officers to the
fullest extent not prohibited by Nevada law; provided, however, that we may
modify the extent of such indemnification by individual contracts with our
directors and officers; and, provided, further, that we shall not be required to
indemnify any director or officer in connection with any proceeding (or part
thereof) initiated by such person unless:
(1) such indemnification is expressly required to be made by law;
(2) the proceeding was authorized by our Board of Directors;
(3) such indemnification is provided by us, in our sole discretion,
pursuant to the powers vested us under Nevada law; or
(4) such indemnification is required to be made pursuant to the bylaws.
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Our bylaws provide that we will advance all expenses incurred to any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that he is or was our director or
officer, or is or was serving at our request as a director or executive officer
of another company, partnership, joint venture, trust or other enterprise, prior
to the final disposition of the proceeding, promptly following request. This
advanced of expenses is to be made upon receipt of an undertaking by or on
behalf of such person to repay said amounts should it be ultimately determined
that the person was not entitled to be indemnified under our bylaws or
otherwise.
Our bylaws also provide that no advance shall be made by us to any officer in
any action, suit or proceeding, whether civil, criminal, administrative or
investigative, if a determination is reasonably and promptly made: (a) by the
board of directors by a majority vote of a quorum consisting of directors who
were not parties to the proceeding; or (b) if such quorum is not obtainable, or,
even if obtainable, a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, that the facts known to the
decision- making party at the time such determination is made demonstrate
clearly and convincingly that such person acted in bad faith or in a manner that
such person did not believe to be in or not opposed to our best interests.
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated costs of this offering are as follows:
Securities and Exchange Commission registration fee $ 8.67
Transfer Agent Fees $ 1,000.00
Accounting and auditing fees and expenses $ 6,000.00
Legal fees and expenses $ 5,500.00
Edgar filing fees $ 1,100.00
-----------
Total $ 13,608.67
===========
All amounts are estimates other than the Commission's registration fee.
We are paying all expenses of the offering listed above. No portion of these
expenses will be borne by the selling shareholders. The selling shareholders,
however, will pay any other expenses incurred in selling their common stock,
including any brokerage commissions or costs of sale.
RECENT SALES OF UNREGISTERED SECURITIES
We completed an offering of 4,000,000 shares of our common stock at a price of
$0.001 per share on April 28, 2006 to Gregory Paul Byrne, our President, Chief
Executive Officer, Secretary and Treasurer. The total amount received from this
offering was $4,000.
These shares were issued pursuant to Regulation S of the Securities Act.
Appropriate legends were affixed to the stock certificates representing these
shares.
We completed an offering of 1,500,000 shares of our common stock at a price of
$0.01 per share to a total of 19 purchasers on May 11, 2006. The total amount
received from this offering was
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$15,000. We completed this offering pursuant to Regulation S of the Securities
Act. The purchasers were as follows:
Name of Shareholder Number of Shares
Don Jones 50,000
Tracy R. Drury 50,000
Gerald L. Morin 50,000
Theodore Brown 50,000
Moon Huan Kim 50,000
Frank Tischuk 50,000
James David Russell 50,000
Robert Frank Koenig 50,000
Andy Dalglish 100,000
Debby A. Byrne 100,000
Shelley Dalglish 100,000
Patrick Byrne 100,000
Don Byrne 100,000
Darren Baziw 100,000
Annette Campbell 100,000
Robben Jean Splawinski 100,000
Katherine Ann Byrne 100,000
Robert Ihaski 100,000
Rod Kienlen 100,000
We completed an offering of 120,000 shares of our common stock at a price of
$0.05 per share to a total of 6 purchasers on May 15, 2006 and May 19, 2006.
The total amount received from this offering was $6,000. We completed this
offering pursuant to Regulation S of the Securities Act. The purchasers were as
follows:
Name of Shareholder Number of Shares
Brett Day 20,000
Linda Carr 20,000
Jennifer Chapman 20,000
Kris Geary 20,000
Julie Cullen 20,000
David Calder 20,000
REGULATION S COMPLIANCE
Each offer or sale was made in an offshore transaction;
Neither we, a distributor, any respective affiliates, nor any person on behalf
of any of the foregoing made any directed selling efforts in the United States;
Offering restrictions were, and are, implemented;
No offer or sale was made to a U.S. person or for the account or benefit of a
U.S. person;
Each purchaser of the securities certifies that it was not a U.S. person and was
not acquiring the securities for the account or benefit of any U.S. person;
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Each purchaser of the securities agreed to resell such securities only in
accordance with the provisions of Regulation S, pursuant to registration under
the Act, or pursuant to an available exemption from registration; and agreed not
to engage in hedging transactions with regard to such securities unless in
compliance with the Act;
The securities contain a legend to the effect that transfer is prohibited except
in accordance with the provisions of Regulation S, pursuant to registration
under the Act, or pursuant to an available exemption from registration; and that
hedging transactions involving those securities may not be conducted unless in
compliance with the Act; and
We are required, either by contract or a provision in its bylaws, articles,
charter or comparable document, to refuse to register any transfer of the
securities not made in accordance with the provisions of Regulation S pursuant
to registration under the Act, or pursuant to an available exemption from
registration; provided, however, that if any law of any Canadian province
prevents us from refusing to register securities transfers, other reasonable
procedures, such as a legend described in paragraph (b)(3)(iii)(B)(3) of
Regulation S have been implemented to prevent any transfer of the securities not
made in accordance with the provisions of Regulation S.
Exhibits
Exhibit
Number Description
3.1 Articles of Incorporation
3.2 Bylaws
5.1 Legal opinion, with consent to use
10.1 Mineral Property Purchase Agreement dated May 15, 2006
23.1 Consent of Madsen & Associates, Certified Public Accountants
23.2 Consent of Geological Consultant
99.1 Claims Location Map
THE UNDERSIGNED REGISTRANT HEREBY UNDERTAKES:
1. To file, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(a) include any prospectus required by Section 10(a)(3) of the Securities Act
of 1933;
(b) reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information set forth in
this registration statement; and notwithstanding the forgoing, 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 price 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) include any additional or changed material information on the plan of
distribution.
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2. That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered herein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
3. To remove from registration by means of a post-effective amendment any of
the securities being registered hereby which remain unsold at the termination of
the offering.
4. That, for determining our liability under the Securities Act to any
purchaser in the initial distribution of the securities, we undertake that in a
primary offering of our securities 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, we 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 that we file relating to the
offering required to be filed pursuant to Rule 424 (Section 230.424
of this chapter);
(ii) any free writing prospectus relating to the offering prepared by or on
our behalf or used or referred to by us;
(iii) the portion of any other free writing prospectus relating to the
offering containing material information about us or our securities
provided by or on behalf of us; and
(iv) any other communication that is an offer in the offering made by us to
the purchaser.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to our directors, officers and controlling persons pursuant to the
provisions above, or otherwise, we have 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 us of expenses incurred or paid by one of our directors,
officers, or controlling persons in the successful defense of any action, suit
or proceeding, is asserted by one of our directors, officers, or controlling
person in connection with the securities being registered, we 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 is against public policy as expressed in the Securities Act, and
we will be governed by the final adjudication of such issue.
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
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, at Lake Country,
Province of British Columbia on March 22, 2007.
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DUNN MINING INC.
By: /s/ Gregory Paul Byrne
------------------------------
Gregory Paul Byrne, President, Chief
Executive Officer, Secretary, Principal
Accounting Officer, Principal Financial
Officer, Treasurer and Director
POWER OF ATTORNEY
ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Gregory Paul Byrne, his true and lawful attorney-in-
fact and agent, with full power of substitution and re-substitution, for him and
in his name, place and stead, in any and all capacities, to sign any and all
pre- or post-effective amendments to this registration statement, and to file
the same with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite or necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any one of them, or their or his substitutes, may lawfully do or
cause to be done by virtue hereof.
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.
SIGNATURE CAPACITY IN WHICH SIGNED DATE
/s/ Gregory Paul Byrne President, Chief Executive March 22, 2007
- ----------------------- Officer, Secretary, Principal
Gregory Paul Byrne Accounting Officer, Principal
Financial Officer, Treasurer and
Director