Attached files
file | filename |
---|---|
EX-5.1 - Eco-Tek Group, Inc. | ex5-1.htm |
EX-23.1 - Eco-Tek Group, Inc. | ex23-1.htm |
EX-23.3 - Eco-Tek Group, Inc. | ex23-3.htm |
As filed
with the Securities and Exchange Commission on January 12,
2010
Registration
No. 333-162557
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
S-1/ A
Amendment
No. 2
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
SANDALWOOD VENTURES,
LTD.
(Name of
registrant in its charter)
Nevada
|
1000
|
68-0679096
|
(State
or jurisdiction
|
(Primary
Standard
|
(IRS
Employer
|
of
incorporation or
organization)
|
Industrial
Classification Code Number)
|
Identification
No.)
|
15
Park
Lossiemouth,
Morayshire 1V30 5SE
Scotland
+01343830382
(Address
and telephone number of principal executive offices and principal
place
of
business or intended principal place of business)
Incorp.
Services, Inc.
375 N.
Stephanie Street, Suite 1411
Henderson,
Nevada, 89014-8909
(702)
866-2500
(Name,
address and telephone number of agent for service)
Copies
to:
David
M. Loev
|
John
S. Gillies
|
|
The
Loev Law Firm, PC
|
The
Loev Law Firm, PC
|
|
6300
West Loop South, Suite 280
|
&
|
6300
West Loop South, Suite 280
|
Bellaire,
Texas 77401
|
Bellaire,
Texas 77401
|
|
Phone:
(713) 524-4110
|
Phone:
(713) 524-4110
|
|
Fax:
(713) 524-4122
|
Fax:
(713) 456-7908
|
Approximate
date of proposed sale to the public:
as soon
as practicable after the effective date of this Registration
Statement.
If any of
the Securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, check
the following box. þ
If this
Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, please check the following box and list the
Securities Act registration statement number of earlier effective registration
statement for the same offering. [ ]
If this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. [ ]
If this
Form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. [ ]
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
Large
accelerated filer [ ]
|
Accelerated
filer [ ]
|
Non-accelerated
filer [ ]
|
Smaller
reporting company þ
|
CALCULATION OF REGISTRATION
FEE
Title
of Each Class of Securities To be Registered
|
Amount
Being
Registered
|
Proposed
Maximum Price Per Share(1)
|
Proposed
Maximum Aggregate Price(1)
|
Amount
of Registration Fee
|
Common
Stock
|
3,665,700(2)
|
$0.10
|
$366,570
|
$26.14
|
Total
|
3,665,700(2)
|
$0.10
|
$366,570
|
$26.14
|
(1) The
Offering price is the stated, fixed price of $0.10 per share until the
securities are quoted on the OTC Bulletin Board for the purpose of calculating
the registration fee pursuant to Rule 457. This amount is only for purposes of
determining the registration fee, the actual amount received by a selling
shareholder will be based upon fluctuating market prices once the securities are
quoted on the OTC Bulletin Board.
(2)
Represents an aggregate of 2,707,850 shares of the Registrant’s $0.001 par value
per share common stock and Series A Common Stock Purchase Warrants to purchase
an aggregate of 957,850 shares of the Registrant’s common stock at an exercise
price of $0.05 per share.
The
Registrant hereby amends its Registration Statement, on such date or dates as
may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
PROSPECTUS
SANDALWOOD
VENTURES, LTD.
RESALE
OF
3,665,700 SHARES OF COMMON STOCK
The
selling stockholders listed on page 33 may offer and sell up to 3,665,700 shares of our common stock under this Prospectus
for their own account.
We
currently lack a public market for our common stock. Selling shareholders will
sell at a price of $0.10 per share until our shares are quoted on the OTC
Bulletin Board and thereafter at prevailing market prices or privately
negotiated prices.
A current
Prospectus must be in effect at the time of the sale of the shares of common
stock discussed above. The selling stockholders will be responsible for any
commissions or discounts due to brokers or dealers. We will pay all of the other
Offering expenses.
Each
selling stockholder or dealer selling the common stock is required to deliver a
current Prospectus upon the sale. In addition, for the purposes of the
Securities Act of 1933, as amended, selling stockholders may be deemed
underwriters.
The
information in this Prospectus is not complete and may be changed. We may not
sell these securities until the Registration Statement filed with the Securities
and Exchange Commission is effective. This Prospectus is not an offer to sell
these securities and it is not soliciting an offer to buy these securities in
any state where the offer or sale is not permitted.
THIS
INVESTMENT INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD PURCHASE SHARES ONLY IF
YOU CAN AFFORD A COMPLETE LOSS. WE URGE YOU TO READ THE "RISK FACTORS" SECTION
BEGINNING ON PAGE 9, ALONG WITH THE REST OF THIS PROSPECTUS BEFORE YOU MAKE YOUR
INVESTMENT DECISION.
NEITHER
THE SECURITIES AND EXCHANGE COMMISSION (“SEC”) NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES, OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE
OF THIS PROSPECTUS IS _________, 2010
TABLE
OF CONTENTS
Page
|
|
Prospectus
Summary
|
5
|
Summary
Financial Data
|
7
|
Risk
Factors
|
9
|
Use
of Proceeds
|
19
|
Dividend
Policy
|
19
|
Legal
Proceedings
|
19
|
Directors,
Executive Officers, Promoters and Control Persons
|
19
|
Executive
Compensation
|
20
|
Security
Ownership of Certain Beneficial Owners and Management
|
22
|
Experts
|
22
|
Indemnification
of Directors and Officers
|
23
|
Description
of Business
|
24
|
Description
of Property
|
27
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations
|
28
|
Certain
Relationships and Related Transactions
|
30
|
Corporate
Governance
|
30
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
30
|
Descriptions
of Capital Stock
|
30
|
Shares
Available for Future Sale
|
31
|
Plan
of Distribution and Selling Stockholders
|
32
|
Market
for Common Equity and Related Stockholder Matters
|
35
|
Additional
Information
|
35
|
Legal
Matters
|
35
|
Financial
Statements
|
F-1
|
PART
I - INFORMATION REQUIRED IN PROSPECTUS
PROSPECTUS
SUMMARY
The
following summary highlights material information found in more detail elsewhere
in the Prospectus. It does not contain all of the information you should
consider. As such, before you decide to buy our common stock, in addition to the
following summary, we urge you to carefully read the entire Prospectus,
especially the risks of investing in our common stock as discussed under "Risk
Factors." In this Prospectus, the terms "we," "us," "our," "Company," and
"Sandalwood" refer to Sandalwood Ventures, Ltd., a Nevada
corporation. "Common Stock" refers to the Common Stock, par value
$0.001 per share, of Sandalwood Ventures, Ltd. Additionally, unless
otherwise stated all amounts listed herein are in United States
dollars.
We are an
exploration stage company engaged in the acquisition and exploration of mineral
properties. We acquired a 100% undivided interest in one mineral claim known as
the "Sandalwood 1 Lode Claim,” totaling 20 acres located in the Goodsprings
(Yellow Pine) Mining District situated within the southwestern corner of the
State of Nevada, U.S.A. Our plan of operation is to conduct mineral exploration
activities on the Sandalwood 1 Lode Claim in order to assess whether it
possesses mineral deposits of lead, zinc, copper or silver sufficient for
commercial extraction.
We have
generated no revenues since our inception in April 2007, had working capital of
$29,526 as of September 30, 2009, had a net loss of $12,180 for the year ended
June 30, 2009, a net loss of $5,709 for the three months ended September 30,
2009, and an accumulated net loss of $44,631 for the period from inception until
September 30, 2009. We had a deficit accumulated during the
exploration stage of $44,631 as of September 30, 2009. We have
budgeted the need for approximately $100,000 of additional funding during the
next 12 months to continue our business operations, pay costs and expenses
associated with our filing requirements with the Securities and Exchange
Commission (assuming the Registration Statement, of which this Prospectus is a
part is declared effective) and conduct our exploration activities as planned,
and we can provide no assurances that such funding can be raised on favorable
terms, if at all. We believe we can continue our operations for
approximately the next 12 months if no additional financing is raised; provided
that we will not be able to conduct any exploration activities during that time
if no additional funding is raised. If we are unable
to raise adequate working capital for the remainder of fiscal 2010 and 2011, we
will be restricted in the implementation of our business
plan. If this were to happen, the value of our securities
would diminish and we may be forced to change our business plan, which would
result in the value of our securities declining in value and/or becoming
worthless. If we raise an adequate amount of working capital to
implement our business plan, we anticipate incurring net losses until we can
complete our exploration activities and unless we can locate commercial
quantities of precious minerals, of which there can be no
assurance.
We are an
exploration stage mineral mining company, and as such, there is no assurance
that commercially viable mineral deposits exist on our claim (described in more
detail below under "Description of Business") and we will require further
exploration before the final evaluation as to the economic and legal feasibility
of the claim is determined.
Our
objective is to conduct exploration activities on our mineral claim to assess
whether the claim has any commercially viable lead, zinc, copper or silver
deposits. Until we can validate otherwise, the claim is without known
resources or reserves and we have planned a three phase exploration program to
explore our claim. We will explore our
claim as financing allows although there are no assurances that financing will
be available to complete our exploration program.
If our
exploration activities indicate that there are no commercially viable lead,
zinc, copper or silver deposits on our mining claim we will abandon the claim
and acquire one or more new claims to explore in Nevada. We will
continue to acquire and explore claims in Nevada as long as we can afford to do
so.
The
shares of common stock offered herein represent shares sold and shares issuable
in connection with the exercise of warrants, as part of units sold by the
Company, each consisting of one (1) share of common stock, and one (1) two year
Class A Warrant with an exercise price of $0.05 per share (each a “Warrant,” and
collectively with the shares, referred to hereinafter as the
"Units"). The Company sold an aggregate of 2,707,850 Units for
aggregate consideration of approximately $54,157 or $0.02 per Unit in offshore
transactions pursuant to Regulation S of the Securities Act of 1933, as amended,
to an aggregate of 32 shareholders from September 2007 to November
2008. An aggregate of 1,750,000 of the Warrants
have expired unexercised to date.
We have
no revenues, have achieved significant losses since inception, have had only
limited operations, and have been issued a going concern opinion by our
auditors. We rely upon the sale of our securities to fund operations
or interim loans from our shareholders; however, there can be no assurance that
either of these sources of financing will be available in the near future, if at
all.
The
following summary is qualified in its entirety by the detailed information
appearing elsewhere in this Prospectus. The securities offered hereby are
speculative and involve a high degree of risk. See "Risk Factors."
-5-
SUMMARY OF THE
OFFERING:
Common
Stock Offered:
|
3,665,700 shares by selling
stockholders
|
Common
Stock Outstanding Before The Offering:
|
42,707,850
shares
|
Common
Stock Outstanding After The Offering:
|
43,665,700 shares (which assumes the exercise of all
957,850 shares issuable in connection with the
exercise of warrants being registered herein)
|
Use
Of Proceeds:
|
We
will not receive any proceeds from the shares offered by the selling
stockholders in this Offering. However, we may receive up to $47,893 in connection with the exercise of an
aggregate of 957,850 Warrants to purchase
shares of the Company’s common stock at an exercise price of $0.05 per
share, which shares of common stock issuable in connection with the
exercise of such Warrants are being registered herein. In the
event the Warrants are exercised and the Company receives the exercise
consideration, the Company will use such funding for working capital and
to expand and continue its exploration plans as described
herein.
|
Offering
Price:
|
The
Offering price of the shares has been arbitrarily determined by us based
on estimates of the price that purchasers of speculative securities, such
as the shares, will be willing to pay considering the nature and capital
structure of our Company, the experience of our officers and Directors and
the market conditions for the sale of equity securities in similar
companies. The Offering price of the shares bears no relationship to the
assets, earnings or book value of us, or any other objective standard of
value. We believe that no shares will be sold by the selling shareholders
prior to us becoming a publicly-traded company, at which time the selling
shareholders will sell shares based on the market price of such shares. We
are not selling any shares of our common stock, and are only registering
the re-sale of shares of common stock previously sold by
us.
|
No
Market:
|
No
assurance is provided that a market will be created for our securities in
the future, or at all. If in the future a market does exist for our
securities, it is likely to be highly illiquid and
sporadic.
|
Need
for Additional Financing:
|
We
have generated no revenues to date. We have budgeted the need for
approximately $100,000 of additional funding during the next 12 months to
continue our business operations, pay costs and expenses associated with
our filing requirements with the Securities and Exchange Commission
(assuming the Registration Statement, of which this Prospectus is a part
is declared effective) and conduct our exploration activities as
planned. We believe we can continue our operations for approximately
the next 12 months if no additional financing is raised; provided that we
will not be able to conduct any exploration activities during that time if
no additional funding is raised. If we are unable to raise the
additional funding, the value of our securities, if any, would likely
become worthless and we may be forced to abandon our business
plan. Even assuming we raise the additional capital we require
to continue our business operations, we will require substantial fees and
expenses associated with this Offering, and we anticipate incurring net
losses for the foreseeable future.
|
Going
Concern:
|
Because
of our need for additional funding (as described above), as well as other
factors, our independent accountants have issued a going concern opinion
as described in greater detail in Note 2 to our audited financial
statements filed herewith.
|
Address:
|
15
Park
Lossiemouth,
Morayshire 1V30 5SE
Scotland
|
Telephone
Number:
|
+01343830382
|
-6-
SUMMARY
FINANCIAL DATA
You
should read the unaudited summary financial information presented below as of
September 30, 2009 and for the three months ended September 30, 2009 and 2008.
We derived the unaudited summary financial information from our unaudited
financial statements for the three months ended September 30, 2009 and
2008 appearing elsewhere in this Prospectus. You should read this unaudited
summary financial information in conjunction with our plan of operation,
financial statements and related notes to the financial statements, each
appearing elsewhere in this Prospectus.
BALANCE
SHEET SUMMARY INFORMATION
September
30,
|
||||
2009
|
||||
(Unaudited)
|
||||
ASSETS
|
||||
Current
assets
|
||||
Cash
and cash equivalents
|
$
|
35,524
|
||
Prepaid
expenses
|
10,804
|
|||
Total
current assets
|
46,328
|
|||
Total
assets
|
$
|
46,328
|
||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||
Current
liabilities
|
||||
Accounts
Payable
|
$
|
16,802
|
||
Total
current liabilities
|
16,802
|
|||
Commitments
and contingencies
|
-
|
|||
Stockholders'
equity
|
||||
Preferred
stock, $.001 par value, 50,000,000 shares authorized,
|
||||
none
issued and outstanding
|
-
|
|||
Common
stock, $.001 par value, 250,000,000 shares authorized,
|
||||
42,707,850
shares issued and outstanding
|
42,708
|
|||
Additional
paid in capital
|
31,449
|
|||
Deficit
accumulated during the exploration stage
|
(44,631
|
)
|
||
Total
stockholders' equity
|
29,526
|
|||
Total
liabilities and stockholders' equity
|
$
|
46,328
|
-7-
STATEMENT
OF EXPENSES SUMMARY INFORMATION
For
the three months ended
|
||||||||
September
30,
|
||||||||
2009
|
2008
|
|||||||
(Unaudited)
|
(Unaudited)
|
|||||||
Costs
and Expenses
|
||||||||
General
and administrative expenses
|
$
|
4,721
|
$
|
5,708
|
||||
Exploration
Costs
|
988
|
-
|
||||||
Total
costs and expenses
|
5,709
|
5,708
|
||||||
Net
loss
|
$
|
(5,709
|
)
|
$
|
(5,708
|
)
|
||
Basic
and diluted net loss per share
|
$
|
(0.00
|
)
|
$
|
(0.00
|
)
|
||
Weighted
average common shares
|
||||||||
outstanding,
basic and diluted
|
42,707,850
|
41,750,000
|
||||||
-8-
RISK
FACTORS
The
securities offered herein are highly speculative and should only be purchased by
persons who can afford to lose their entire investment in us. You should
carefully consider the following risk factors and other information in this
Prospectus before deciding to become a holder of our common stock. If any of the
following risks actually occur, our business and financial results could be
negatively affected to a significant extent.
The
Company's business is subject to the following Risk Factors (references to
"our," "we," "Sandalwood" and words of similar meaning in these Risk Factors
refer to the Company):
General
WE HAVE FUTURE CAPITAL NEEDS
AND WITHOUT ADEQUATE CAPITAL WE MAY BE FORCED TO CEASE OR CURTAIL OUR BUSINESS
OPERATIONS.
Our
growth and continued operations could be impaired by limitations on our access
to capital markets. Furthermore, the limited capital we have raised,
and the capital we hope will be available to us from our principals, if any, may
not be adequate for our long-term growth. If financing is available,
it may involve issuing securities senior to our common stock or equity
financings, which are dilutive to holders of our common stock. In
addition, in the event we do not raise additional capital from conventional
sources, such as our existing investors or commercial banks, there is every
likelihood that our growth will be restricted and we may be forced to scale back
or curtail implementing our business plan.
Even if
we are successful in raising capital in the future, we will likely need to raise
additional capital to continue and/or expand our operations. If we do
not raise the additional capital, the value of any investment in our Company may
become worthless. In the event we do not raise additional capital from
conventional sources, it is likely that we may need to scale back or curtail
implementing our business plan.
WE HAVE NOT GENERATED ANY
REVENUES SINCE OUR INCEPTION IN APRIL 2007.
Since our
inception in April 2007, we have yet to generate any revenues, and currently
have only limited operations, as we are presently in the planning stage of our
business development as an exploration stage company. We may not be
able to generate any revenues in the future and as a result the value of our
common stock may become worthless.
SHAREHOLDERS WHO HOLD
UNREGISTERED SHARES OF OUR COMMON STOCK ARE SUBJECT TO RESALE RESTRICTIONS
PURSUANT TO RULE 144, DUE TO OUR STATUS AS A “SHELL
COMPANY.”
Pursuant
to Rule 144 of the Securities Act of 1933, as amended (“Rule 144”), a “shell
company” is defined as a company that has no or nominal operations; and, either
no or nominal assets; assets consisting solely of cash and cash equivalents; or
assets consisting of any amount of cash and cash equivalents and nominal other
assets. As such, we are a “shell company” pursuant to Rule 144, and
as such, sales of our securities pursuant to Rule 144 are not able to be made
until 1) we have ceased to be a “shell company; 2) we are subject to Section 13
or 15(d) of the Securities Exchange Act of 1934, as amended, and have filed all
of our required periodic reports for at least the previous one year period prior
to any sale pursuant to Rule 144; and a period of at least twelve months has
elapsed from the date “Form 10 information” has been filed with the Commission
reflecting the Company’s status as a non-“shell company.” Because
none of our non-registered securities can be sold pursuant to Rule 144, until at
least a year after we cease to be a “shell company”, any non-registered
securities we sell in the future or issue to consultants or employees, in
consideration for services rendered or for any other purpose will have no
liquidity until and unless such securities are registered with the Commission
and/or until a year after we cease to be a “shell company” and have complied
with the other requirements of Rule 144, as described above. As a
result, it may be harder for us to fund our operations and pay our consultants
with our securities instead of cash. Furthermore, it will be harder
for us to raise funding through the sale of debt or equity securities unless we
agree to register such securities with the Commission, which could cause us to
expend additional resources in the future. Our status as a “shell
company” could prevent us from raising additional funds, engaging consultants,
and using our securities to pay for any acquisitions (although none are
currently planned), which could cause the value of our securities, if any, to
decline in value or become worthless.
-9-
THERE IS SUBSTANTIAL DOUBT
AS TO WHETHER WE CAN CONTINUE AS A GOING CONCERN.
We have
generated no revenues since our inception in April 2007, had working capital of
$29,526 as of September 30, 2009, had a net loss of $12,180 for the year ended
June 30, 2009, and a net loss of $5,709 for the three months ended September 30,
2009, and a net loss of $44,631 for the period from inception until September
30, 2009. We had a deficit accumulated during the exploration stage
of $44,631 as of September 30, 2009. These factors among others
indicate that we may be unable to continue as a going concern, particularly in
the event that we cannot obtain additional financing and/or attain profitable
operations. The accompanying financial statements do not include any
adjustments that might result from the outcome of this uncertainty and if we
cannot continue as a going concern, your investment could become devalued or
even worthless.
THE SUCCESS OF THE COMPANY
DEPENDS HEAVILY ON EDWIN SLATER, OUR SOLE OFFICER AND
DIRECTOR.
The
success of the Company will depend on the ability of Edwin Slater, the Chief
Executive Officer and sole Director of the Company. The loss of Mr.
Slater will have a material adverse effect on the business, results of
operations (if any) and financial condition of the Company. In
addition, the loss of Mr. Slater may force the Company to seek a replacement who
may have less experience, fewer contacts, or less understanding of the
business. Further, we may not be able to find a suitable replacement
for Mr. Slater, which could force the Company to curtail its operations and/or
cause any investment in the Company to become worthless. The Company
does not have an employment agreement with Mr. Slater.
MR. SLATER, OUR SOLE OFFICER
AND DIRECTOR EXERCISES MAJORITY VOTING CONTROL OVER THE COMPANY AND THEREFORE
WILL EXERCISE CONTROL OVER CORPORATE DECISIONS INCLUDING THE APPOINTMENT OF NEW
DIRECTORS.
Edwin
Slater, our sole officer and Director, can vote an aggregate of 40,000,000
shares of common stock, currently equal to 93.7% of our outstanding common
stock. Mr. Slater therefore exercises control in determining the
outcome of all corporate transactions or other matters, including the election
of Directors, mergers, consolidations, the sale of all or substantially all of
our assets, and also the power to prevent or cause a change in control. Any
investor who purchases shares in the Company will be a minority shareholder and
as such will have little to no say in the direction of the Company and the
election of Directors. Additionally, it will be difficult if not impossible for
investors to remove Mr. Slater as a Director of the Company, which will mean he
will remain in control of who serves as officers of the Company as well as
whether any changes are made in the Board of Directors. As a potential investor
in the Company, you should keep in mind that even if you own shares of the
Company's common stock and wish to vote them at annual or special shareholder
meetings, your shares will likely have little effect on the outcome of corporate
decisions.
OUR SOLE OFFICER AND
DIRECTOR HAS OTHER EMPLOYMENT OUTSIDE OF THE COMPANY, AND AS SUCH, MAY NOT BE
ABLE TO DEVOTE SUFFICIENT TIME TO OUR OPERATIONS.
Edwin
Slater, our President, Chief Executive Officer and sole Director is currently
our only employee. Further, Mr. Slater currently has employment outside of the
Company. As such, Mr. Slater only spends approximately 15 hours per
week on Company matters; and as such, he may not be able to devote a sufficient
amount of time to our operations. This may be exacerbated by the fact
that Mr. Slater is currently our only officer. If Mr. Slater is not
able to spend a sufficient amount of his available time on our operations, we
may not ever generate any revenue and/or any investment in the Company could
become worthless.
-10-
WE LACK AN OPERATING HISTORY
WHICH YOU CAN USE TO EVALUATE US, MAKING ANY INVESTMENT IN OUR COMPANY
RISKY.
We lack
an operating history which investors can use to evaluate our previous earnings,
as we were only incorporated in April 2007. Therefore, an investment in us is
risky because we have no business history and it is hard to predict what the
outcome of our business operations will be in the future.
OUR GROWTH WILL PLACE
SIGNIFICANT STRAINS ON OUR RESOURCES.
The
Company is currently in the exploration stage, with only limited operations, and
has not generated any revenues since inception in April 2007. The Company's
growth, if any, is expected to place a significant strain on the Company's
managerial, operational and financial resources as Edwin Slater is our only
officer or Director; and the Company will likely continue to have limited
employees in the future. Moving forward, the Company's systems, procedures or
controls may not be adequate to support the Company's operations and/or the
Company may be unable to achieve the rapid execution necessary to successfully
implement its business plan. The Company's future operating results, if any,
will also depend on its ability to add additional personnel commensurate with
the growth of its operations, if any. If the Company is unable to manage growth
effectively, the Company's business, results of operations and financial
condition will be adversely affected.
OUR ARTICLES OF
INCORPORATION, AS AMENDED, AND BYLAWS LIMIT THE LIABILITY OF, AND PROVIDE
INDEMNIFICATION FOR, OUR OFFICERS AND DIRECTORS.
Our
Articles of Incorporation, generally limit our officer’s and Director’s personal
liability to the Company and its stockholders for breach of fiduciary duty as an
officer or Director except for breach of the duty of loyalty or acts or
omissions not made in good faith or which involve intentional misconduct or a
knowing violation of law. Our Articles of Incorporation, as amended, and Bylaws,
as amended, provide indemnification for our officers and Directors to the
fullest extent authorized by the Nevada General Corporation Law against all
expense, liability, and loss, including attorney's fees, judgments, fines excise
taxes or penalties and amounts to be paid in settlement reasonably incurred or
suffered by an officer or Director in connection with any action, suit or
proceeding, whether civil or criminal, administrative or investigative
(hereinafter a "Proceeding") to which the officer or Director is made a party or
is threatened to be made a party, or in which the officer or Director is
involved by reason of the fact that he is or was an officer or Director of the
Company, or is or was serving at the request of the Company as an officer or
director of another corporation or of a partnership, joint venture, trust or
other enterprise whether the basis of the Proceeding is an alleged action in an
official capacity as an officer or Director, or in any other capacity while
serving as an officer or Director. Thus, the Company may be prevented from
recovering damages for certain alleged errors or omissions by the officers and
Directors for liabilities incurred in connection with their good faith acts for
the Company. Such an indemnification payment might deplete the
Company's assets. Stockholders who have questions regarding the fiduciary
obligations of the officers and Directors of the Company should consult with
independent legal counsel. It is the position of the Securities and Exchange
Commission that exculpation from and indemnification for liabilities arising
under the Securities Act of 1933, as amended, and the rules and regulations
thereunder is against public policy and therefore unenforceable.
-11-
IF THE REGISTRATION
STATEMENT, OF WHICH THIS PROSPECTUS IS A PART BECOMES EFFECTIVE, WE WILL BECOME
A PUBLIC REPORTING COMPANY, AND WILL INCUR SIGNIFICANT INCREASED COSTS IN
CONNECTION WITH COMPLIANCE WITH SECTION 404 OF THE SARBANES OXLEY ACT, AND OUR
MANAGEMENT WILL BE REQUIRED TO DEVOTE SUBSTANTIAL TIME TO NEW COMPLIANCE
INITIATIVES.
If the
Registration Statement, of which this Prospectus is a part, becomes effective,
we will become subject to among other things, the periodic reporting
requirements of Section 15(d) of the Securities Exchange Act of 1934, as
amended, and will incur significant legal, accounting and other expenses in
connection with such requirements. The Sarbanes-Oxley Act of 2002
(the "Sarbanes-Oxley Act") and new rules subsequently implemented by the SEC
have imposed various new requirements on public companies, including requiring
changes in corporate governance practices. As such, our management and other
personnel will need to devote a substantial amount of time to these new
compliance initiatives. Moreover, these rules and regulations will increase our
legal and financial compliance costs and will make some activities more
time-consuming and costly. In addition, the Sarbanes-Oxley Act requires, among
other things, that we maintain effective internal controls for financial
reporting and disclosure of controls and procedures. Our compliance with Section
404 will require that we incur substantial accounting expense and expend
significant management efforts. We currently do not have an internal audit
group, and we will need to hire additional accounting and financial staff with
appropriate public company experience and technical accounting knowledge.
Additionally, due to the fact that we only have one officer and Director, who
has no experience as an officer or Director of a reporting company, such lack of
experienced personnel may impair our ability to maintain effective internal
controls over financial reporting and disclosure controls and procedures, which
may result in material misstatements to our financial statements and an
inability to provide accurate financial information to our stockholders.
Moreover, if we are not able to comply with the requirements of
Section 404 in a timely manner, or if we or our independent registered public
accounting firm identify deficiencies in our internal controls over financial
reporting that are deemed to be material weaknesses, the market price of our
stock could decline, and we could be subject to sanctions or investigations by
the SEC or other regulatory authorities, which would require additional
financial and management resources.
WE MAY NOT FIND ANY
COMMERCIAL QUANTITIES OF MINERALS IN THE FUTURE, AND MAY NOT GENERATE ANY
PROFITS, WHICH MAY FORCE US TO CURTAIL OUR BUSINESS PLAN.
As an
exploration stage company, we have no revenues or profits to date. We have
generated no revenues since our inception in April 2007; had working
capital of $29,526 as of September 30, 2009, had a net loss of $12,180 for the
year ended June 30, 2009, a net loss of $5,709 for the three months ended
September 30, 2009, and a net loss of $44,631 for the period from inception
until September 30, 2009. We had a deficit accumulated during the
exploration stage of $44,631 as of September 30, 2009. We have
budgeted the need for approximately $100,000 of additional funding during the
next 12 months to continue our business operations, pay costs and expenses
associated with our filing requirements with the Securities and Exchange
Commission (assuming the Registration Statement, of which this Prospectus is a
part is declared effective) and conduct our exploration activities as planned,
and such required funding may not be able to be raised on favorable terms, if at
all. We believe we can continue our operations for approximately the next
12 months if no additional financing is raised; provided that we will not be
able to conduct any exploration activities during that time if no additional
funding is raised. However, if we do not begin exploration and/or do
not have enough money to continue exploration activities it is likely that we
will never generate any revenues. Additionally, if we are unsuccessful in mining
attempts we may choose to attempt in the future, it is likely that we will never
generate any revenues. Additionally, the exploration of minerals is highly
speculative, and if throughout our mineral exploration we do not find commercial
quantities of minerals, we will likely be forced to curtail or abandon our
business plan. If this happens, you could lose your investment in us. If we are
unable to generate profits, we will be forced to rely on external financing, of
which there is no guarantee, to continue with our business plan.
-12-
OUR SOLE OFFICER AND
DIRECTOR LACKS TECHNICAL AND/OR EXPLORATION EXPERIENCE IN AND WITH COMPANIES
WITH MINING ACTIVITIES AND WITH THE REPORTING AND DISCLOSURE OBLIGATIONS OF
PUBLICLY-TRADED COMPANIES.
While we
rely heavily on Mr. Slater, our Chief Executive Officer and Director, he lacks
technical training and experience exploring for, starting and/or operating a
mine. As a result of Mr. Slater's lack of experience in exploration and/or
development of mines, he may not be fully aware of many of the specific
requirements related to working within our industry. As a result of
Mr. Slater's lack of experience, his decisions may not take into account
standard engineering or managerial approaches mineral companies commonly
use. Additionally, due to Mr. Slater currently being located in
Scotland; only being able to devote 15 hours per week to the Company’s
activities; having employment outside of the Company; and lacking experience
with mining operations in general, we may be unable to successfully implement
our business plan, and/or manage our future growth if any. The
Company also currently relies on its geologist and plans to rely on outside
consultants (as funding permits) in the United States on an as needed basis for
advice and guidance regarding the Company’s planned exploration activities, in
addition to Mr. Slater. Mr. Slater does not currently believe that
his outside employment affects the day to day operations of the Company;
however, Mr. Slater is prepared to relinquish his outside employment in the
event the Company’s operations grow and he is required to spend additional time
on Company matters, and the Company may also employ more accomplished officers
and Directors in the future, funding permitting. While the Company
believes that the time and resources that Mr. Slater is able to provide to the
Company, and/or may be willing to provide to us in the future, as well as our
outside consultants and geologist are adequate to support the Company’s business
plan and exploration activities, our operations and growth (if any) may be
adversely affected by Mr. Slater being located on another continent than our
mining claims, only being able to provide a limited number of hours of service
to the Company per week and/or his outside employment. Consequently,
we may never complete our planned mining activities and any investment in the
Company may become devalued or worthless.
Furthermore,
Mr. Slater has no experience serving as an officer or Director of a
publicly-traded company, or experience with the reporting or financial
disclosure requirements which public companies are subject to. Such lack of
experience may impair our ability to maintain effective internal controls over
financial reporting and disclosure controls and procedures, which may result in
material misstatements to our financial statements and an inability to provide
accurate financial information to our stockholders. Consequently, our
operations, future earnings and ultimate financial success could suffer
irreparable harm due to his ultimate lack of experience in our industry and with
publicly-traded companies and their reporting requirements in
general.
THERE IS UNCERTAINTY AS TO
OUR ABILITY TO ENFORCE CIVIL LIABILITIES BOTH IN AND OUTSIDE OF THE UNITED
STATES DUE TO THE FACT THAT OUR OFFICER, DIRECTOR AND CERTAIN OF OUR ASSETS ARE
NOT LOCATED IN THE UNITED STATES.
Our
office is not located in the United States. Our sole officer and Director is
located in the United Kingdom. As a result, it may be difficult for shareholders
to effect service of process within the United States on our sole officer and
Director. In addition, investors may have difficulty enforcing judgments based
upon the civil liability provisions of the securities laws of the Unites States
or any state thereof, both in and outside of the United States.
OUR PLANNED EXPLORATION AND
DEVELOPMENT ACTIVITIES MAY BE ADVERSELY EFFECTED BY INCLEMENT WEATHER IN AND
AROUND OUR CLAIM.
The
temperatures on our claim are typical of a desert climate, with relative high
temperatures and low participation. Inclement weather at out claim or the
airports in and around our claim may make it more difficult for us to obtain the
materials we will require for any of our planned exploration activities, and/or
for our personnel to visit our claim. As a result, if there is an abnormal
amount of rain, a lack of rain, and/or inclement weather on our claim or
particularly bad winter weather at the airports surrounding our claim, we could
be forced to expend additional finances dealing with such rainfall or drought on
our claim and with the delays such abnormal rainfall could have on our then
operations, if any. The expense of additional monies could cause our revenues,
if any to decline and/or cause us to curtail or abandon our business
operations.
-13-
OUR PLANNED MINERAL
EXPLORATION EFFORTS ARE HIGHLY SPECULATIVE.
Mineral
exploration is highly speculative. It involves many risks and is often
nonproductive. Even if we believe we have found a valuable mineral deposit, it
may be several years before production is possible. During that time, it may
become no longer feasible to produce those minerals for economic, regulatory,
political, or other reasons. Additionally, we may be required to make
substantial capital expenditures and to construct mining and processing
facilities. As a result of these costs and uncertainties, we may be unable to
start, or if started, to finish our exploration activities.
OUR FAILURE TO MAKE REQUIRED
WORK EXPENDITURES OR PAY THE ANNUAL FEES IN LIEU THEREOF COULD CAUSE US TO LOSE
TITLE TO OUR MINERAL CLAIM, WHICH COULD PREVENT US FROM CARRYING OUT OUR
BUSINESS PLAN.
Our
mineral claim currently has an expiration date of September 1, 2010 and in order
to maintain the claim in good standing it will be necessary for us to coordinate
an agent to perform and record an Affidavit of Annual Assessment Work for the
claim with a minimum expenditure of $100 per claim, or alternatively, to file an
Affidavit and Notice of Intent to Hold Mining Claim and Site, together with an
annual maintenance fee to the U.S. Bureau of Land Management in the sum of $125
per claim, and a county recorders fee of between $8.50 to $10.50 per
claim. Failure to perform and record valid exploration work or pay
the equivalent maintenance fees on the anniversary dates will result in
forfeiture of title to the claim, which could prevent us from carrying out our
business plan and would likely cause any investment in us to become
worthless.
OUR PROPERTY HAS NOT
PRODUCED ANY COMMERCIAL RESERVES OR ORE BODY, AND THE PROBABILITY OF SUCH
PROPERTY PRODUCING ANY COMMERCIALLY VIABLE RESERVES IN THE FUTURE IS
REMOTE.
Our
mineral project is in the exploration stage as opposed to the development stage
and we have no known body of economic mineralization. The known mineralization
at these projects has not been determined to be economic ore. Until further
exploration activities can be conducted, we will be unable to determine whether
a commercially mineable ore body exists on any of our properties. In order to
carry out exploration and development programs of any economic ore body and
place it into commercial production, we will be required to raise substantial
additional funding, and even if we are successful in completing our exploration
activities on our property, we may not be successful in finding commercial
quantities of minerals. Furthermore, the probability of an individual prospect
ever having reserves or being commercially viable is extremely remote. As a
result, there is only a small probability that any of our properties contain any
reserves and that any funds spent on exploration activities will ever be
recovered.
MINING OPERATIONS IN GENERAL
INVOLVE A HIGH DEGREE OF RISK, WHICH WE MAY BE UNABLE, OR MAY NOT CHOOSE TO INSURE
AGAINST, MAKING EXPLORATION AND/OR DEVELOPMENT ACTIVITIES WE MAY PURSUE SUBJECT
TO POTENTIAL LEGAL LIABILITY FOR CERTAIN CLAIMS.
Our
operations will be subject to all of the hazards and risks normally encountered
in the exploration, development and production of minerals. These include
unusual and unexpected geological formations, rock falls, flooding and other
conditions involved in the drilling and removal of material, any of which could
result in damage to, or destruction of, mines and other producing facilities,
damage to life or property, environmental damage and possible legal liability.
Although we plan to take adequate precautions to minimize these risks, and risks
associated with equipment failure or failure of retaining dams which may result
in environmental pollution, even with our precautions, damage or loss may occur
and we may be subject to liability which will have a material adverse effect on
our business, results of operation and/or financial condition. If this were to
happen, we could be forced to curtail or abandon our business
activities.
-14-
WE WILL BE SUBJECT TO
NUMEROUS RISKS IF WE COMMENCE MINING OPERATIONS.
The
mineral exploration and mining business is competitive in all of its phases. We
currently have no mining operations of any kind; however, if we do commence
mining activities in the future, we will be subject to numerous risks,
including:
o
|
competitors
with greater financial, technical and other resources, in the search for
and the acquisition of attractive mineral properties;
|
o
|
our
ability to select and acquire suitable producing properties or prospects
for mineral exploration;
|
o
|
the
accuracy of our reserve estimates, if any, which may be affected by the
following factors beyond our
control:
|
-
|
declines
in the market price of the various metals we mine;
|
-
|
increased
production or capital costs;
|
-
|
reduction
in the grade or tonnage of the deposit;
|
-
|
increase
in the dilution of the ore; or
|
-
|
reduced
recovery rates;
|
o
|
risks
and hazards associated with environmental hazards, political and country
risks, civil unrest or terrorism, industrial accidents, labor disputes,
unusual or unexpected geologic formations, cave-ins, explosive rock
failures; and flooding and periodic interruptions due to inclement or
hazardous weather conditions; and
|
o
|
our
failure to maintain insurance on certain risks associated with any
exploration activities we may undertake in the
future.
|
If we do
begin exploration activities in the future, we will be subject to the above
risks. If any of the above risks occur, we may be forced to curtail or abandon
our operations and/or exploration and development activities, if any. As a
result, any investment in us could decrease in value and/or become
worthless.
OUR DETERMINATIONS OF
PLANNED ACTIVITIES AND ESTIMATES OF POTENTIAL RESERVES, IF ANY, MAY BE
INACCURATE.
We are
currently in the exploration stage. Before we can begin a development project,
if ever, we must first determine whether it is economically feasible to do so.
This determination is based on estimates of several factors,
including:
o
|
expected
recovery rates of metals from the ore;
|
o
|
facility
and equipment costs;
|
o
|
capital
and operating costs of a development project;
|
o
|
future
metals prices;
|
o
|
tax
rates;
|
o
|
inflation
rates;
|
o
|
political
risks and regulatory climate in Canada; and
|
o
|
availability
of credit.
|
Any
development projects we may undertake in the future will likely not have an
operating history upon which to base these estimates and as a result, actual
cash operating costs and returns from a development project, if any, may differ
substantially from our estimates. Consequently, it may not be economically
feasible to continue with a development project, if one is started.
AS WE UNDERTAKE EXPLORATION
OF OUR MINING CLAIM, WE WILL BE SUBJECT TO COMPLIANCE OF GOVERNMENT REGULATION
THAT MAY INCREASE THE ANTICIPATED TIME AND COST OF OUR EXPLORATION
PROGRAM.
There are
several governmental regulations that materially restrict the exploration of
minerals. We will be subject to the mining laws and regulations as contained in
the Chapter 519A of the Nevada Revised Statutes as we carry out our exploration
program. We may be required to obtain work permits and perform remediation work
for any physical disturbance to the land in order to comply with these
regulations. While our planned exploration program budgets for regulatory
compliance in connection with such exploration activities, there is a risk that
new regulations could increase our time and costs of doing business and prevent
us from carrying out our exploration program.
-15-
Risks Relating To the
Company’s Securities
WE HAVE NEVER PAID CASH
DIVIDENDS IN CONNECTION WITH OUR COMMON STOCK AND HAVE NO PLANS TO PAY DIVIDENDS
IN THE FUTURE.
We have
paid no cash dividends on our common stock to date and it is not anticipated
that any cash dividends will be paid to holders of our common stock in the
foreseeable future. While our dividend policy will be based on the
operating results and capital needs of our business, it is anticipated that any
earnings will be retained to finance our future expansion.
INVESTORS MAY FACE
SIGNIFICANT RESTRICTIONS ON THE RESALE OF OUR COMMON STOCK DUE TO FEDERAL
REGULATIONS OF PENNY STOCKS.
Our
common stock will be subject to the requirements of Rule 15(g)9, promulgated
under the Securities Exchange Act as long as the price of our common stock is
below $5.00 per share. Under such rule, broker-dealers who recommend low-priced
securities to persons other than established customers and accredited investors
must satisfy special sales practice requirements, including a requirement that
they make an individualized written suitability determination for the purchaser
and receive the purchaser's consent prior to the transaction. The Securities
Enforcement Remedies and Penny Stock Reform Act of 1990, also requires
additional disclosure in connection with any trades involving a stock defined as
a penny stock. Generally, the Commission defines a penny stock as any equity
security not traded on an exchange or quoted on NASDAQ that has a market price
of less than $5.00 per share. The required penny stock disclosures include the
delivery, prior to any transaction, of a disclosure schedule explaining the
penny stock market and the risks associated with it. Such requirements could
severely limit the market liquidity of the securities and the ability of
purchasers to sell their securities in the secondary market.
In
addition, various state securities laws impose restrictions on transferring
"penny stocks" and as a result, investors in the common stock may have their
ability to sell their shares of the common stock impaired.
SHAREHOLDERS MAY BE DILUTED
SIGNIFICANTLY THROUGH OUR EFFORTS TO OBTAIN FINANCING AND SATISFY OBLIGATIONS
THROUGH THE ISSUANCE OF ADDITIONAL SHARES OF OUR COMMON
STOCK.
We have
no committed source of financing. Wherever possible, our Board of Directors will
attempt to use non-cash consideration to satisfy obligations. In many instances,
we believe that the non-cash consideration will consist of restricted shares of
our common stock. Our Board of Directors has authority, without action or vote
of the shareholders, to issue all or part of the authorized but unissued shares
of common stock. In addition, if a trading market develops for our common stock,
we may attempt to raise capital by selling shares of our common stock, possibly
at a discount to market. These actions will result in dilution of the ownership
interests of existing shareholders, may further dilute common stock book value,
and that dilution may be material. Such issuances may also serve to enhance
existing management’s ability to maintain control of the Company because the
shares may be issued to parties or entities committed to supporting existing
management.
STATE SECURITIES LAWS MAY
LIMIT SECONDARY TRADING, WHICH MAY RESTRICT THE STATES IN WHICH AND CONDITIONS
UNDER WHICH YOU CAN SELL SHARES.
Secondary
trading in our common stock will not be possible in any state until the common
stock is qualified for sale under the applicable securities laws of the state or
there is confirmation that an exemption, such as listing in certain recognized
securities manuals, is available for secondary trading in the state. If we fail
to register or qualify, or to obtain or verify an exemption for the secondary
trading of, the common stock in any particular state, the common stock cannot be
offered or sold to, or purchased by, a resident of that state. In the event that
a significant number of states refuse to permit secondary trading in our common
stock, the liquidity for the common stock could be significantly
impacted.
-16-
BECAUSE WE ARE NOT SUBJECT
TO COMPLIANCE WITH RULES REQUIRING THE ADOPTION OF CERTAIN CORPORATE GOVERNANCE
MEASURES, OUR STOCKHOLDERS HAVE LIMITED PROTECTIONS AGAINST INTERESTED DIRECTOR
TRANSACTIONS, CONFLICTS OF INTEREST AND SIMILAR MATTERS.
The
Sarbanes-Oxley Act of 2002, as well as rule changes proposed and enacted by the
SEC, the New York and American Stock Exchanges and the Nasdaq Stock Market, as a
result of Sarbanes-Oxley, require the implementation of various measures
relating to corporate governance. These measures are designed to enhance the
integrity of corporate management and the securities markets and apply to
securities that are listed on those exchanges or the Nasdaq Stock Market.
Because we are not presently required to comply with many of the corporate
governance provisions and because we chose to avoid incurring the substantial
additional costs associated with such compliance any sooner than legally
required, we have not yet adopted these measures.
Because
our Directors are not independent directors, we do not currently have
independent audit or compensation committees. As a result, our Directors have
the ability to, among other things, determine their own level of compensation.
Until we comply with such corporate governance measures, regardless of whether
such compliance is required, the absence of such standards of corporate
governance may leave our stockholders without protections against interested
director transactions, conflicts of interest, if any, and similar matters and
any potential investors may be reluctant to provide us with funds necessary to
expand our operations.
We intend
to comply with all corporate governance measures relating to director
independence as and when required. However, we may find it very difficult or be
unable to attract and retain qualified officers, Directors and members of board
committees required to provide for our effective management as a result of the
Sarbanes-Oxley Act of 2002. The enactment of the Sarbanes-Oxley Act of 2002 has
resulted in a series of rules and regulations by the SEC that increase
responsibilities and liabilities of Directors and executive officers. The
perceived increased personal risk associated with these recent changes may make
it more costly or deter qualified individuals from accepting these
roles.
WE DO NOT CURRENTLY HAVE A
PUBLIC MARKET FOR OUR SECURITIES. IF THERE IS A MARKET FOR OUR SECURITIES IN THE
FUTURE, SUCH MARKET MAY BE VOLATILE AND ILLIQUID.
There is
currently no public market for our common stock. In the future, we hope to quote
our securities on the Over-The-Counter Bulletin Board (“OTCBB”). There may not
be a public market for our common stock in the future. If there is a market for
our common stock in the future, we anticipate that such market would be illiquid
and would be subject to wide fluctuations in response to several factors,
including, but not limited to:
(1)
|
actual
or anticipated variations in our results of operations;
|
|
(2)
|
our
ability or inability to generate new revenues;
|
|
(3)
|
the
number of shares in our public float;
|
|
(4)
|
increased
competition; and
|
|
(5)
|
conditions
and trends in the market for precious
metals.
|
Furthermore,
if our common stock becomes quoted on the OTCBB in the future, our stock price
may be impacted by factors that are unrelated or disproportionate to our
operating performance. These market fluctuations, as well as general economic,
political and market conditions, such as recessions, interest rates or
international currency fluctuations may adversely affect the market price of our
common stock. Additionally, moving forward we anticipate having a
limited number of shares in our public float, and as a result, there could be
extreme fluctuations in the price of our common stock. Further, due
to the limited volume of our shares which trade and our limited public float, we
believe that our stock prices (bid, ask and closing prices) will be entirely
arbitrary, will not relate to the actual value of the Company, and will not
reflect the actual value of our common stock. Shareholders and
potential investors in our common stock should exercise caution before making an
investment in the Company, and should not rely on the publicly quoted or traded
stock prices in determining our common stock value, but should instead determine
the value of our common stock based on the information contained in the
Company's public reports, industry information, and those business valuation
methods commonly used to value private companies.
-17-
NEVADA LAW AND OUR ARTICLES
OF INCORPORATION AUTHORIZE US TO ISSUE SHARES OF STOCK, WHICH SHARES MAY CAUSE
SUBSTANTIAL DILUTION TO OUR EXISTING SHAREHOLDERS.
We have
authorized capital stock consisting of 250,000,000 shares of common stock,
$0.001 par value per share and 50,000,000 shares of preferred stock, $0.001 par
value per share. As of the date of this Prospectus, we have 42,707,850 shares of
common stock issued and outstanding and – 0 – shares of Preferred Stock issued
and outstanding. As a result, our Board of Directors has the ability
to issue a large number of additional shares of common stock without shareholder
approval, which if issued could cause substantial dilution to our then
shareholders. Additionally, shares of Preferred Stock may be issued
by our Board of Directors without shareholder approval with voting powers, and
such preferences and relative, participating, optional or other special rights
and powers as determined by our Board of Directors, which may be greater than
the shares of common stock currently outstanding. As a result, shares
of Preferred Stock may be issued by our Board of Directors which cause the
holders to have super majority voting power over our shares, provide the holders
of the Preferred Stock the right to convert the shares of Preferred Stock they
hold into shares of our common stock, which may cause substantial dilution to
our then common stock shareholders and/or have other rights and preferences
greater than those of our common stock shareholders. Investors should keep in
mind that the Board of Directors has the authority to issue additional shares of
common stock and Preferred Stock, which could cause substantial dilution to our
existing shareholders. Additionally, the dilutive effect of any
Preferred Stock, which we may issue may be exacerbated given the fact that such
Preferred Stock may have super majority voting rights and/or other rights or
preferences which could provide the preferred shareholders with voting control
over us subsequent to this Offering and/or give those holders the power to
prevent or cause a change in control. As a result, the issuance of
shares of common stock and/or Preferred Stock may cause the value of our
securities to decrease and/or become worthless.
IF OUR COMMON STOCK IS NOT
APPROVED FOR QUOTATION ON THE OVER-THE-COUNTER BULLETIN BOARD, OUR COMMON STOCK
MAY NOT BE PUBLICLY-TRADED, WHICH COULD MAKE IT DIFFICULT TO SELL SHARES OF OUR
COMMON STOCK AND/OR CAUSE THE VALUE OF OUR COMMON STOCK TO DECLINE IN
VALUE.
In order
to have our common stock quoted on the OTCBB, which is our current plan, we will
need to first have this Registration Statement declared effective; then engage a
market maker, who will file a Form 15c2-11 with the Financial Industry
Regulatory Authority ("FINRA"); and clear FINRA comments to obtain a trading
symbol on the OTCBB. Assuming we clear SEC comments and assuming we clear FINRA
comments, we anticipate receiving a trading symbol and having our shares of
common stock quoted on the OTCBB in approximately one (1) to two (2) months
after the effectiveness of this Registration Statement. In the event we are
unable to have this Registration Statement declared effective by the SEC or our
Form 15c2-11 is not approved by the FINRA, we plan to file a 15c2-11 to quote
our shares of common stock on the Pink Sheets. If we are not cleared to have our
securities quoted on the OTCBB and/or in the event we fail to obtain
effectiveness of this Registration Statement, and are not cleared for trading on
the Pink Sheets, there will be no public market for our common stock and it
could be difficult for our then shareholders to sell shares of common stock
which they own. As a result, the value of our common stock will likely be less
than it would otherwise due to the difficulty shareholders will have in selling
their shares. If we are unable to obtain clearance to quote our securities on
the OTCBB and/or the Pink Sheets, it will be difficult for us to raise capital
and we could be forced to curtail or abandon our business operations, and as a
result, the value of our common stock could become worthless.
-18-
USE
OF PROCEEDS
We will
not receive any proceeds from the resale of already issued and outstanding
shares of common stock by the Selling Stockholders which are offered in this
Prospectus. However, we may receive up to $47,893 in
connection with the exercise of an aggregate of 957,850 Warrants to purchase shares of the Company’s
common stock at an exercise price of $0.05 per share, which shares of common
stock issuable in connection with the exercise of such Warrants are being
registered herein. In the event the Warrants are exercised and the
Company receives the exercise consideration, the Company will use such funding
for working capital purposes, to pay the expenses of its ongoing periodic and
current report filing obligations and to expand and continue its exploration
plans as described herein.
DIVIDEND
POLICY
To date,
we have not declared or paid any dividends on our outstanding shares. We
currently do not anticipate paying any cash dividends in the foreseeable future
on our common stock. Although we intend to retain our earnings to finance our
operations and future growth, our Board of Directors will have discretion to
declare and pay dividends in the future. Payment of dividends in the future will
depend upon our earnings, capital requirements and other factors, which our
Board of Directors may deem relevant.
LEGAL
PROCEEDINGS
From time
to time, we may become party to litigation or other legal proceedings that we
consider to be a part of the ordinary course of our business. We are not
currently involved in legal proceedings that could reasonably be expected to
have a material adverse effect on our business, prospects, financial condition
or results of operations. We may become involved in material legal proceedings
in the future.
DIRECTORS,
EXECUTIVE OFFICERS,
PROMOTERS
AND CONTROL PERSONS
The
following table sets forth the name, age and position of our Director and
executive officer. There are no other persons who can be classified as a
promoter or controlling person of us. Our executive officer and Director
currently serving is as follows:
NAME
|
AGE
|
POSITION
|
Edwin
Slater
|
36
|
Chief
Executive Officer, Chief Financial Officer, President, Secretary,
Treasurer, and Director
|
Set forth
below is a brief description of the background and business experience of our
executive officers and Director.
Edwin
Slater
Mr.
Slater has served as our Chief Executive Officer, Chief Financial Officer,
President, Secretary, Treasurer and sole Director since our inception in April
2007. Since October 2009, Mr. Slater has performed services as an independent
oil consultant, focusing on working with start-up exploration companies in and
around the United Kingdom. Through such activities, he plans to assemble staff
and crew for exploration companies mainly in the oil sector, including planning
and organizing support crews that service drilling camps. From January 2007 to
October 2009, Mr. Slater was employed by Chevron Offshore. While employed
by Chevron Offshore, Mr. Slater was responsible for the maintenance of the flow
of oil and gas from Chevron Offshore’s offshore installation to its land
refinery, which included serving as a liaison with oil rig bosses, providing
flow reports, mechanical reports, and safety updates. Mr. Slater also worked
with a team responsible for on-site safety and helped head up local safety
initiatives. From January 2001 to January 2007, Mr. Slater served as a Control
Room Operator with Chevron Offshore in the United Kingdom. From
January 2000 to January 2001, Mr. Slater was employed as a Shop Floor Manager
with MacLeman Butcher in Scotland. From January 1990 to January 2000,
Mr. Slater was employed as the Master Butcher with MacLeman
Butcher.
Our
Director and any additional Directors we may appoint in the future are elected
annually and will hold office until our next annual meeting of the shareholders
and until their successors are elected and qualified. Officers will hold their
positions at the pleasure of the Board of Directors, absent any employment
agreement. Our officers and Directors may receive compensation as determined by
us from time to time by vote of the Board of Directors. Such compensation might
be in the form of stock options. Directors may be reimbursed by the Company for
expenses incurred in attending meetings of the Board of Directors. Vacancies in
the Board are filled by majority vote of the remaining Directors.
-19-
Involvement In Certain Legal
Proceedings
There
have been no events under any bankruptcy act, no criminal proceedings and no
judgments, injunctions, orders or decrees material to the evaluation of the
ability and integrity of any Director or executive officer, of the Company
during the past five years.
Independence of
Directors
We are
not required to have independent members of our Board of Directors, and do not
anticipate having independent Directors until such time as we are required to do
so.
Audit Committee and
Financial Expert
The
Company is not required to have an audit committee and as such, does not have
one.
Code of
Ethics
We have
not adopted a formal Code of Ethics. The Board of Directors, evaluated the
business of the Company and the number of employees and determined that since
the business is operated by only one person our President, Chief Executive
Officer, Secretary, Treasurer and Director, Edwin Slater, general rules of
fiduciary duty and federal and state criminal, business conduct and securities
laws are adequate ethical guidelines. In the event our
operations, employees and/or Directors expand in the future, we may take actions
to adopt a formal Code of Ethics.
EXECUTIVE
COMPENSATION
Summary
Compensation Table:
Name
and principal position
(a)
|
Year
ended June 30
(b)
|
Salary
($)
(c)
|
Bonus
($)
(d)
|
Stock
Awards ($)
(e)
|
Option
Awards ($)
(f)
|
Non-Equity
Incentive Plan Compensation ($)
(g)
|
Nonqualified
Deferred Compensation Earnings ($)
(h)
|
All
Other Compensation ($)
(i)
|
Total
($)
(j)
|
||||||||||||||||||||||||
Edwin
Slater
CEO,
President, Secretary, Treasurer and Director
|
2009
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
$
|
-
|
|||||||||||||||||||||||
2008
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
$
|
-
|
||||||||||||||||||||||||
2007
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
$
|
-
|
The table
above does not include perquisites and other personal benefits in amounts less
than 10% of the total annual salary and other compensation.
-20-
Summary
of Compensation
Sandalwood
Ventures, Ltd. was incorporated in April 2007 and has paid no compensation to
any executive or Director to date. There have been no material
changes in the Company’s compensation policies and payments/awards since June
30, 2009, the end of the Company’s last fiscal year.
Stock Option
Grants
We have
not granted any stock options to our executive officers since our
incorporation.
Employment
Agreements
We do not
have an employment or consulting agreement with Edwin Slater, our Chief
Executive Officer, Chief Financial Officer, President, Secretary, Treasurer and
Director.
Compensation
Discussion and Analysis
Director
Compensation
Our Board
of Directors (consisting solely of Mr. Slater) does not currently receive any
consideration for their services as members of the Board of
Directors. The Board of Directors reserves the right in the future to
award the members of the Board of Directors cash or stock based consideration
for their services to the Company, which awards, if granted shall be in the sole
determination of the Board of Directors.
Executive
Compensation Philosophy
Our Board
of Directors determines the compensation given to our executive officers in
their sole determination, and as such Mr. Slater, as our sole Director,
determines his salary in his sole discretion. As Mr. Slater does not
currently draw any compensation from us, we do not currently have any executive
compensation program in place. Our Board of Directors also reserves
the right to pay our executive or any future executives a salary, and/or issue
them shares of common stock issued in consideration for services rendered and/or
to award incentive bonuses which are linked to our performance, as well as to
the individual executive officer’s performance. This package may also
include long-term stock based compensation to certain executives which is
intended to align the performance of our executives with our long-term business
strategies. Additionally, while our Board of Directors has not
granted any performance base stock options to date, the Board of Directors
reserves the right to grant such options in the future, if the Board in its sole
determination believes such grants would be in the best interests of the
Company.
Incentive
Bonus
The Board
of Directors may grant incentive bonuses to our executive officer and/or future
executive officers in its sole discretion, if the Board of Directors believes
such bonuses are in the Company’s best interest, after analyzing our current
business objectives and growth, if any, and the amount of revenue we are able to
generate each month, which revenue is a direct result of the actions and ability
of such executives.
Long-term,
Stock Based Compensation
In order
to attract, retain and motivate executive talent necessary to support the
Company’s long-term business strategy we may award our executive and any future
executives with long-term, stock-based compensation in the future, in the sole
discretion of our Board of Directors, which we do not currently have any
immediate plans to award.
-21-
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS
AND MANAGEMENT
The
following table presents certain information regarding the beneficial ownership
of all shares of common stock as of January 5, 2010
by (i) each person who owns beneficially more than five percent (5%) of the
outstanding shares of common stock based on 42,707,850 shares outstanding as
of January 5, 2010 , (ii) each of our
Directors, (iii) each named executive officer and (iv) all Directors and
officers as a group. Except as otherwise indicated, all shares are owned
directly.
Name
and Address of Beneficial Owner
|
Shares
Beneficially Owned
|
Percentage
Beneficially Owned
|
Edwin
Slater
15
Park
Lossiemouth,
Morayshire
1V30
5SE
Scotland
|
40,000,000
|
93.7%
|
All
Officers and Directors as a Group (1 individual)
|
40,000,000
|
93.7%
|
The
number of shares of common stock owned are those "beneficially owned" as
determined in accordance with Rule 13d-3 of the Exchange Act of 1934, as
amended, including any shares of common stock as to which a person has sole or
shared voting or investment power and any shares of common stock which the
person has the right to acquire within sixty (60) days through the exercise of
any option, warrant or right.
INTEREST
OF NAMED EXPERTS AND COUNSEL
This Form
S-1 Registration Statement was prepared by our counsel, The Loev Law Firm,
PC. The financial statements attached hereto were audited by GBH
CPAs, PC (“GBH”). Neither The Loev Law Firm, PC, nor GBH, has any
interest contingent or otherwise in Sandalwood Ventures, Ltd.
EXPERTS
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, any interest, directly or
indirectly, in our company or any of our parents or subsidiaries, if
any. Nor was any such person connected with us or any of our parents
or subsidiaries, if any, as a promoter, managing or principal underwriter,
voting trustee, director, officer, or employee.
The
financial statements of the Company as of June 30, 2009 and 2008 and for the
years then ended and for the period from April 10, 2007 (inception) to June 30,
2009, included in this Prospectus, have been audited by GBH CPAs, PC, our
independent registered public accounting firm, as stated in their report
appearing herein and have been so included in reliance upon the reports of such
firm, given upon their authority as experts in accounting and
auditing.
Laurence
Sookochoff
The
geological Report (described below) for the Sandalwood 1 Lode Claim was prepared
by Laurence Sookochoff, Professional Geoscientist, and the summary
information of the geological report disclosed in this Prospectus is in reliance
upon the authority and capability of Mr. Sookochoff as a Professional
Geoscientist.
Laurence
Sookochoff is a consulting geologist and principal of Sookochoff Consultants
Inc., which has an office at 120 125A-1030 Denman Street, Vancouver, British
Columbia, Canada, V6G 2M6. He graduated from the University of British Columbia
in 1966 with a Bachelors of Science degree in Geology. He has been practicing in
his profession for the past forty-three years. He is registered and is in good
standing with the Association of Professional Engineers and Geoscientists of
British Columbia, Canada.
-22-
INDEMNIFICATION
OF DIRECTORS AND OFFICERS
The
Nevada Revised Statutes and our Articles of Incorporation, allow us to indemnify
our officers and Directors from certain liabilities and our Bylaws, as amended
(“Bylaws”), state that we shall indemnify every (i) present or former Director,
advisory Director or officer of us, (ii) any person who while serving in any of
the capacities referred to in clause (i) served at our request as a Director,
officer, partner, venturer, proprietor, trustee, employee, agent or similar
functionary of another foreign or domestic corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, and (iii) any person
nominated or designated by (or pursuant to authority granted by) the Board of
Directors or any committee thereof to serve in any of the capacities referred to
in clauses (i) or (ii) (each an “Indemnitee”).
Our
Bylaws provide that we shall indemnify an Indemnitee against all judgments,
penalties (including excise and similar taxes), fines, amounts paid in
settlement and reasonable expenses actually incurred by the Indemnitee in
connection with any proceeding in which he was, is or is threatened to be named
as a defendant or respondent, or in which he was or is a witness without being
named a defendant or respondent, by reason, in whole or in part, of his serving
or having served, or having been nominated or designated to serve, if it is
determined that the Indemnitee (a) conducted himself in good faith, (b)
reasonably believed, in the case of conduct in his Official Capacity, that his
conduct was in our best interests and, in all other cases, that his conduct was
at least not opposed to our best interests, and (c) in the case of any criminal
proceeding, had no reasonable cause to believe that his conduct was unlawful;
provided, however, that in the event that an Indemnitee is found liable to us or
is found liable on the basis that personal benefit was improperly received by
the Indemnitee, the indemnification (i) is limited to reasonable expenses
actually incurred by the Indemnitee in connection with the Proceeding and (ii)
shall not be made in respect of any Proceeding in which the Indemnitee shall
have been found liable for willful or intentional misconduct in the performance
of his duty to us.
Except as
provided above, the Bylaws provide that no indemnification shall be made in
respect to any proceeding in which such Indemnitee has been (a) found liable on
the basis that personal benefit was improperly received by him, whether or not
the benefit resulted from an action taken in the Indemnitee's official capacity,
or (b) found liable to us. The termination of any proceeding by
judgment, order, settlement or conviction, or on a plea of nolo contendere or
its equivalent, is not of itself determinative that the Indemnitee did not meet
the requirements set forth in clauses (a) or (b) above. An Indemnitee
shall be deemed to have been found liable in respect of any claim, issue or
matter only after the Indemnitee shall have been so adjudged by a court of
competent jurisdiction after exhaustion of all appeals
therefrom. Reasonable expenses shall, include, without limitation,
all court costs and all fees and disbursements of attorneys’ fees for the
Indemnitee. The indemnification provided shall be applicable whether
or not negligence or gross negligence of the Indemnitee is alleged or
proven.
Neither
our Bylaws, nor our Articles of Incorporation include any specific
indemnification provisions for our officer or Directors against liability under
the Securities Act of 1933, as amended. Additionally, insofar as indemnification
for liabilities arising under the Securities Act of 1933, as amended (the "Act")
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
-23-
FORWARD
LOOKING STATEMENTS
This Form
S-1 includes forward-looking statements which include words such as "anticipates", "believes", "expects", "intends", "forecasts", "plans", "future", "strategy" or words of similar
meaning. Various factors could cause actual results to differ materially
from those expressed in the forward-looking statements, including those
described in "Risk
Factors" in this Prospectus. We urge you to be cautious of these
forward-looking statements. Except as required by applicable law,
including the securities laws of the United States and/or if the existing
disclosure fundamentally or materially changes, we do not intend to update any
of the forward-looking statements to conform these statements to actual
results.
DESCRIPTION
OF BUSINESS
Overview
We were
incorporated as Sandalwood Ventures, Ltd. in Nevada in April 2007. We chose to
incorporate in Nevada for numerous reasons including the fact that we plan to
raise capital in the future in the United States and we believe that we are more
attractive to United States investors due to the fact that we are incorporated
in the United States. In addition, we believe certain provisions of Nevada law
provide favorable treatment for officers and Directors, including Nevada Revised
Statutes ("NRS") Section 78.335. NRS Section 78.335 mandates that Directors in
Nevada companies must be removed by "not less than two-thirds of the voting
power of the issued and outstanding stock entitled to vote." This is in contrast
to many of the more popular states where companies choose to incorporate, which
require only majority vote to remove Directors, including Delaware, which
pursuant to Delaware General Corporation Law, Section 141(k) only requires a
vote of "a majority of the shares then entitled to vote."
We have
300,000,000 shares of stock authorized, representing 250,000,000 shares of
common stock, $0.001 par value and 50,000,000 shares of preferred stock, $0.001
par value.
We are an
exploration stage company engaged in the acquisition and exploration of mineral
properties. We acquired a 100% undivided interest in one mineral claim known as
the "Sandalwood 1 Lode Claim,” totaling 20 acres located in the Goodsprings
(Yellow Pine) Mining District situated within the southwestern corner of the
State of Nevada, U.S.A. Our plan of operation is to conduct mineral exploration
activities on the Sandalwood 1 Lode Claim in order to assess whether it
possesses mineral deposits of lead, zinc, copper or silver in commercial
quantities, capable of commercial extraction.
In April
2009, we engaged Laurence Sookochoff, Professional Geoscientist, who is familiar
with the Goodsprings (Yellow Pine) Mining District in Nevada, to develop a
report about our Sandalwood 1 Lode Claim. The report entitled “Geological Evaluation Report on the
Sandalwood 1 Lode Claim” dated June 30, 2007 (the “Report”) describes the
mineral claim, the regional geology, the mineral potential of the claim and
recommendations on how we should explore the claim. We paid $3,000
for the Report.
The
Sandalwood 1 Lode Claim was acquired by us in April 2007, for a total of $6,000
US from Mr. Larry Sostad. Subsequent to the purchase of the claim from Mr.
Sostad, we contracted with Mr. Sostad's company, Diamond S. Holdings, Ltd.
("Diamond") to perform any necessary exploration work on the Sandalwood 1 Lode
Claim. Diamond subsequently contracted with Laurence Sookochoff, who along with
Diamond, has conducted all exploration activities on our property to date, and
who will conduct the following planned activities described below, subsequent to
the date of this Prospectus, funding permitting.
The
Sandalwood 1 Lode Claim currently has an expiration date of September 1, 2010
and in order to maintain the claim in good standing it will be necessary for us
to coordinate an agent to perform and record an Affidavit of Annual Assessment
Work for the claim with a minimum expenditure of $100 per claim, or
alternatively, to file an Affidavit and Notice of Intent to Hold Mining Claim
and Site, together with an annual maintenance fee to the U.S. Bureau of Land
Management in the sum of $125 per claim, and a county recorders fee of between
$8.50 to $10.50 per claim. Failure to perform and record valid
exploration work or pay the equivalent maintenance fees on the anniversary dates
will result in forfeiture of title to the claim.
-24-
In the
Report, Mr. Sookochoff recommended the following exploration program on the
Sandalwood 1 Lode Claim, which we have not begun to date and which will require
us to raise additional funding subsequent to the effectiveness of our
Registration Statement of which this Prospectus is a part:
Phase
I
Trenching
and sampling over known mineralized zones (estimated to take three weeks
to complete).
|
|
Total
estimated cost: $ 5,500
|
Phase
II
a)V a)
VLF-EM (as defined below) and soil geochemical surveys;
and
|
Estimated
cost: $ 9,500
|
b)Afte r
the VLF-EM surveying is completed, we will perform sampling and geological
mapping of the veins within anomalous zones.
|
Estimated
cost: $ 14,000
|
Total
estimated cost $23,500
|
Phase
III
Test
diamond drilling of the prime targets. Diamond drilling is
required to test the extent of mineralization to depth. We anticipate the
drill hole locations being determined based on the results of, and the
interpretation of, the previous exploration we plan to conduct in Phases I
through III.
|
|
Total
estimated cost: $ 40,000
|
Total
estimated costs of Phases I through III: $
69,000.
|
A
Vertical Loop Electro Magnetic Survey ("VLF-EM") is completed by walking over
the property or flying over the property in an airplane using a specially
equipped receiver to pick up the possible location of precious
minerals.
The
VLF-EM survey of our claim will be used to prepare a map of abnormal magnetic
fields from the claim, which abnormalities may be associated with mineral
deposits. These abnormal readings are then compared, with the results correlated
to determine the structural significance of the VLF-EM anomalies.
While we
currently plan to conduct the exploration activities listed above, beginning
with Phase I and continuing through Phase III as soon as we have sufficient
funds to begin Phase I, our management will make a decision whether to proceed
with each successive phase of the exploration program upon completion of the
previous phase and upon analysis of the results of that program. Additionally,
we are waiting for the results from Phases I-III before deciding whether any
additional exploration activities would be appropriate on the claim, as we
believe that we will know whether or not our claim has any commercially viable
mineral deposits upon the completion of our Phase III exploration
activities.
-25-
Employees
We
currently have no employees other than our sole officer and Director, Edwin
Slater. We plan to use contractors in the future if the need arises during the
course of our exploration and/or development activities, in the
future.
Exploration
Work
All
exploration work to be completed by us on our claim will be conducted by or
under the supervision of Laurence Sookochoof, whose background and experience is
explained in greater detail under "Interest of Named Experts,"
above.
Competition
Mines
have limited lives and as a result, we may seek to expand our reserves, if any,
through the acquisition of new properties in the future. There is a limited
supply of desirable mineral lands available in the United States, Canada and
other areas where we may consider conducting exploration and/or production
activities. We will face strong competition for new properties from other mining
companies, most of which have greater financial resources than we do and as a
result, we may be unable to acquire new mining properties on terms that we
consider acceptable.
There is
a global market for lead, zinc, copper and silver, which we plan to sell, if we
are successful in our exploration and mining activities, at prevailing market
prices. We do not believe that any single company or other institution has
sufficient market power to significantly affect the price or supply of these
metals.
Dependence
On One Or A Few Major Customers
We do not
depend on one or a small number of customers, as we have not successfully
discovered or extracted any commercial quantities of minerals. We have no
customers and have not generated any revenues to date.
Patents,
Trademarks And Licenses
We have
no patents, trademarks or licenses. We do own the mineral rights to certain
property in Nevada, which is explained in detail under "Description of
Property," below.
Need
For Government Approval
In
connection with our planned exploration activities, we may be required to comply
with certain environmental laws and regulations which may require us to obtain
permits issued by regulatory agencies and to file various reports and keep
records of our operations affecting the environment. While we will not need any
permits for Phases I through II (described above), we may require a permit to
conduct diamond drilling pursuant to Phase III above. We plan to conduct our
Phase III exploration activities only if the results from Phases I and II are
encouraging.
Costs
And Effects Of Compliance With Environmental Laws
All of
our exploration, development and production activities which we may undertake in
the future on our property in Nevada will be subject to regulation by
governmental agencies under various environmental laws. These laws address
emissions to the air, discharges to water, management of wastes, management of
hazardous substances, protection of natural resources, antiquities and
endangered species, and reclamation of lands disturbed by mining
operations.
-26-
Additionally,
depending on the results of our exploration activities, if completed, and what
mining activities we may undertake, certain regulations may also require us to
obtain permits for our activities. These permits normally may be subject to
public review processes resulting in public approval of the activity. While
these laws and regulations may govern how we conduct many aspects of our
business, we do not believe that they will have a material adverse effect on our
results of operations or financial condition. We plan to evaluate our operations
in light of the cost and impact of environmental regulations on those
operations. We also plan to evaluate new laws and regulations as they develop to
determine the impact on, and changes necessary to, our planned operations.
Additionally, it is possible that future changes in these laws or regulations
could have a significant impact on some portion of our business, causing us to
reevaluate those activities at that time.
Description of
Property
Office
Space:
The
Company leases an office space (which supplies the Company with a phone and mail
forwarding service) at Riverside house, Riverside Drive, Aberdeen, United
Kingdom, for which the Company pays approximately $225 per month.
Mining
Property:
The
Sandalwood 1 Lode Claim is comprised of one located claim with an area of 20
acres located in the Goodsprings (Yellow Pine) Mining District situated within
the southwestern corner of the State of Nevada, U.S.A. The Sandalwood 1 Lode
Claim covers some former exploratory workings.
The
Sandalwood 1 Lode Claim is situated on the easternmost portion of the Yellow
Pine Mining District in southern Nevada. Although less famous than many of the
other mining districts of the Great Basin it nevertheless ranks second in
historical total Nevada lead and zinc production.
The
property consists of one located claim comprised of 20 acres recorded as the
Sandalwood 1 Lode Mining Claim ("Sandalwood 1 Lode Claim"). The Sandalwood 1
Lode Claim was filed April 12, 2007 in the Clark County recorder's office in Las
Vegas as Mining Map 080 0036 Page 0036 in the official records book No.
2007412.
Access
from Las Vegas, Nevada to the Sandalwood 1 Lode Claim is southward via
Interstate Highway #15 for approximately 27 miles, and one mile and one-half
miles before the town of Jean, Nevada, to a junction with a road which is taken
easterly for approximately one mile to a junction with a road which is taken
southerly for one mile to the northern boundary of the Sandalwood 1 Lode
Claim.
The
Sandalwood 1 Lode Claim is situated at the northern end of the Sheep Mountain
Range, a southerly trending range of mountains with peaks reaching an elevation
of 4,184 feet. The claim covers the northeasterly and the southwesterly facing
slopes of a northerly trending ridge. The topography is relatively flat in the
northern portion and moderately steep sloping from near the valley floor at an
elevation of 3,040 feet, to 3,400 feet at the southern boundary, at the crest of
a north-south trending ridge, of the Sandalwood 1 Lode Claim.
The area
is of a typically desert climate with relatively high temperatures and low
precipitation. Vegetation consists mainly of desert shrubs and cactus. Sources
of water would likely be available from valley wells.
History
The
history of the Yellow Pine Mining District stems from 1856 when Mormon
missionaries reported ore in the area. The completion of the San Pedro, Los
Angeles and Salt Lake railroad in 1905 and recognition of oxidized zinc minerals
in the ore in 1906 stimulated development of the mines and the region has been
subject to intermittent activity up to 1964, particularly during the World War I
and II years.
The
history of the Sandalwood 1 Lode Claim mine workings is not known. However, the
localized exploration workings were probably excavated during the period of mid
to late 1800's after the Goodsprings concentrator was in operation and much
exploration activity ensued as a very convenient market for ore.
Blank Check Company
Issues
Rule 419
of the Securities Act of 1933, as amended (the “Act”) governs offerings by
“blank check companies.” Rule 419 defines a “blank check company” as
a development stage company that has no specific business plan or purpose or has
indicated that its business plan is to engage in a merger or acquisition with an
unidentified company or companies, or other entity or person; and issuing “penny
stock,” as defined in Rule 3a51-1 under the Securities Exchange Act of
1934.
Our
management believes that the Company does not meet the definition of a “blank
check company,” because, while we are in the development stage, we do have a
specific business plan and purpose as described above, and our current purpose
is not to engage in a merger or acquisition, and as such, we should not
therefore be characterized as a “blank check company.”
-27-
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF
FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The
following discussion should be read in conjunction with our financial
statements.
COMPARISON
OF EXPENSES FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2009 COMPARED TO THE THREE
MONTHS ENDED SEPTEMBER 30, 2008
We
generated no revenues for the three months ended September 30, 2009 or the three
months ended September 30, 2008, and do not anticipate generating any revenues
until such time, if ever, as we are able to successfully complete the
exploration of our Sandalwood 1 Lode Claim, as detailed above; are successful in
locating commercial quantities of minerals; and are able to extract and sell
such minerals.
We had
total expenses of $5,709 for the three months ended September 30, 2009, compared
to total expenses of $5,708 for the three months ended September 30, 2008, an
increase in total expenses of $1 from the prior period. Total
expenses increased as a result of the $988 increase in exploration costs, to
$988 for the three months ended September 30, 2009, compared to no exploration
costs for the three months ended September 30, 2008, in connection with
exploration activities performed on our Sandalwood 1 Lode Claim, offset by the
$987 or 17% decrease in general and administrative costs, to $4,721 for the
three months ended September 30, 2009, compared to $5,708 for the three months
ended September 30, 2008, mainly due to decreased accounting
expenses.
We had a
net loss of $5,709 for the three months ended September 30, 2009, compared to a
net loss of $5,708 for the three months ended September 30, 2008.
COMPARISON
OF EXPENSES FOR THE YEAR ENDED JUNE 30, 2009 COMPARED TO THE YEAR ENDED JUNE 30,
2008
We
generated no revenues for the year ended June 30, 2009 or the year ended June
30, 2008, and do not anticipate generating any revenues until such time, if
ever, as we are able to successfully complete the exploration of our Sandalwood
1 Lode Claim, as detailed above; are successful in locating commercial
quantifies of minerals; and are able to extract and sell such
minerals.
We had
total expenses of $12,180 for the year ended June 30, 2009, compared to total
expenses of $18,782 for the year ended June 30, 2008, a decrease in total
expenses of $6,602 or 35.2% from the prior period. Total expenses
decreased for the year ended June 30, 2009, due to the $5,782 or 37.4% decrease
in general and administrative expenses to $9,680 for the year ended June 30,
2009 compared to $15,462 for the year ended June 30, 2008, which decrease was in
connection with lower legal fees relating to preparation of documents for public
filing offset by increased corporate filing fees and other miscellaneous costs
of approximately $3,000, and by the $820 or 24.7% decrease in exploration
expense to $2,500 for the year ended June 30, 2009, compared to $3,320 for the
year ended June 30, 2008, in connection with decreased expenses relating to
certain one-time geological, staking and recording fees for Sandalwood 1 Lode
Mining Claim during the year ended June 30, 2008.
We had a
net loss of $12,180 for the year ended June 30, 2009, compared to a net loss of
$18,782 for the year ended June 30, 2008, which represented a $6,602 or 35.2%
decrease in net loss, which was solely due to the decreased expenses for the
year ended June 30, 2009, compared to the year ended June 30, 2008.
LIQUIDITY
AND CAPITAL RESOURCES
We had
current assets of $46,328, which included $10,804 of prepaid assets, consisting
of $10,000 prepaid legal fees and $804 in prepaid rent, and cash and cash
equivalents of $35,524 as of September 30, 2009.
We had
total liabilities consisting solely of accounts payable of $16,802 as of
September 30, 2009.
-28-
We had
working capital of $29,526 and a deficit accumulated during the exploration
stage of $44,631 as of September 30, 2009.
We had
net cash used in operating activities of $3,557 for the three months ended
September 30, 2009, which consisted of net loss of $5,709 offset by $1,750 of
increase in accounts payable and $402 of decrease in prepaid
expenses.
From
September 2007 to November 2008, we sold an aggregate of 2,707,850 units, each
consisting of one (1) share of common stock, and one (1) two year Class A
Warrant with an exercise price of $0.05 per share (each a “Warrant,” and
collectively with the shares, referred to hereinafter as the "Units"), for
aggregate consideration of approximately $54,157 or $0.02 per Unit in offshore
transactions pursuant to Regulation S of the Securities Act of 1933, as amended,
to an aggregate of 32 shareholders. An aggregate
of Warrants to purchase 375,000 shares expired unexercised in September 2009,
additional Warrants to purchase 1,065,000 shares expired unexercised in November
2009 and Warrants to purchase an additional 310,000 shares expired unexercised
in December 2009.
We have
budgeted the need for approximately $100,000 of additional funding during the
next 12 months to continue our business operations, pay costs and expenses
associated with our filing requirements with the Securities and Exchange
Commission (assuming the Registration Statement, of which this Prospectus is a
part is declared effective) and conduct our exploration activities as planned
which funding may not be available on favorable terms, if at all. We
believe we can continue our operations for approximately the next 12 months if
no additional financing is raised; provided that we will not be able to conduct
any exploration activities during that time if no additional funding is
raised. If we are unable to raise adequate
working capital for the remainder of fiscal 2010 and throughout 2011, we will be
restricted in the implementation of our exploration
plan.
Assuming
that our registration statement of which this Prospectus is a part is declared
effective by the Commission, we plan to seek out additional debt and/or equity
financing to pay costs and expenses associated with our filing requirements with
the Securities and Exchange Commission and conduct our exploration activities
(as described herein); however, we do not currently have any specific plans to
raise such additional financing at this time. We believe that by
becoming a reporting company and becoming subject to the filing requirements of
Section 15(d) of the Securities Exchange Act of 1934, as amended, as well as by
engaging a market maker to quote our common stock on the OTCBB (as is our
current plan) we will be able to make an investment in the Company more
attractive to potential investors, which will help facilitate our ability to
raise capital. The sale of additional equity securities, if undertaken by the
Company and if accomplished, may result in dilution to our shareholders. We
cannot assure you, however, that future financing will be available in amounts
or on terms acceptable to us, or at all.
Critical
Accounting Policies:
Mineral
property acquisition, exploration and related costs are expensed as incurred
unless proven and probable reserves exist and the property may commercially be
mined. When it has been determined that a mineral property can be economically
developed, the costs incurred to develop such property, including costs to
further delineate the ore body and develop the property for production, may be
capitalized. Interest costs, if any, allocable to the cost of developing mining
properties and to constructing new facilities are capitalized until operations
commence. Mine development costs incurred either to develop new ore deposits,
expand the capacity of operating mines, or to develop mine areas substantially
in advance of current production are also capitalized. All such capitalized
costs, and estimated future development costs, are then amortized using the
units-of-production method over the estimated life of the ore body. Costs
incurred to maintain current production or to maintain assets on a standby basis
are charged to operations. Costs of abandoned projects are charged to operations
upon abandonment. The Company evaluates, at least quarterly, the carrying value
of capitalized mining costs and related property, plant and equipment costs, if
any, to determine if these costs are in excess of their net realizable value and
if a permanent impairment needs to be recorded. The periodic evaluation of
carrying value of capitalized costs and any related property, plant and
equipment costs are based upon expected future cash flows and/or estimated
salvage value. The Company currently does not have any capitalized
mining costs and therefore no adjustments are needed.
-29-
CERTAIN
RELATIONSHIPS AND
RELATED
TRANSACTIONS
In April
2007, we sold an aggregate of 40,000,000 shares of our common stock to Edwin
Slater, our Chief Executive Officer and Director in consideration for $40,000,
or $0.001 per share.
Review,
Approval and Ratification of Related Party Transactions
Given our
small size and limited financial resources, we have not adopted formal policies
and procedures for the review, approval or ratification of transactions, such as
those described above, with our executive officer and Director and significant
stockholders. However, all of the transactions described above were
approved and ratified by our Board of Directors, consisting solely of Mr.
Slater. In connection with the approval of the transactions described
above, our Director took into account several factors, including his fiduciary
duty to the Company; the relationship of the related parties described above to
the Company; the material facts underlying each transaction; the anticipated
benefits to the Company and related costs associated with such benefits; whether
comparable products or services were available (if applicable); and the terms
the Company could receive from an unrelated third party.
We intend
to establish formal policies and procedures in the future, once we have
sufficient resources and have appointed additional Directors, so that such
transactions will be subject to the review, approval or ratification of our
Board of Directors, or an appropriate committee thereof. On a
moving forward basis, our sole Director will continue to approve any related
party transaction based on the criteria set forth above.
CORPORATE
GOVERNANCE
The
Company promotes accountability for adherence to honest and ethical conduct;
endeavors to provide full, fair, accurate, timely and understandable disclosure
in reports and documents that the Company files with the Securities and Exchange
Commission (the “SEC”) and in other public communications made by the Company;
and strives to be compliant with applicable governmental laws, rules and
regulations. The Company has not formally adopted a written code of business
conduct and ethics that governs the Company’s employees, officers and Directors
as the Company is not required to do so.
In lieu
of an Audit Committee, the Company’s Board of Directors, consisting solely of
Mr. Slater, is responsible for reviewing and making recommendations concerning
the selection of outside auditors, reviewing the scope, results and
effectiveness of the annual audit of the Company's financial statements and
other services provided by the Company’s independent public accountants. The
Board of Directors, consisting solely of Mr. Slater, the Chief Executive Officer
and Chief Financial Officer of the Company reviews the Company's internal
accounting controls, practices and policies.
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
DESCRIPTION
OF CAPITAL STOCK
We have
authorized capital stock consisting of 250,000,000 shares of common stock,
$0.001 par value per share (“Common Stock”) and 50,000,000 shares of preferred
stock, $0.001 par value per share (“Preferred Stock”). As of January 5, 2010 , we had 42,707,850 shares of Common Stock
and no shares of Preferred Stock issued and outstanding.
-30-
Common
Stock
The
holders of outstanding shares of Common Stock are entitled to receive dividends
out of assets or funds legally available for the payment of dividends of such
times and in such amounts as the board from time to time may
determine. Holders of Common Stock are entitled to one vote for each
share held on all matters submitted to a vote of shareholders. There
is no cumulative voting of the election of directors then standing for
election. The Common Stock is not entitled to pre-emptive rights and
is not subject to conversion or redemption. Upon liquidation,
dissolution or winding up of our company, the assets legally available for
distribution to stockholders are distributable ratably among the holders of the
Common Stock after payment of liquidation preferences, if any, on any
outstanding payment of other claims of creditors. Each outstanding
share of Common Stock is, and all shares of Common Stock to be outstanding upon
completion of this Offering will upon payment therefore be, duly and validly
issued, fully paid and non-assessable.
Preferred
Stock
Shares of
Preferred Stock may be issued from time to time in one or more series, each of
which shall have such distinctive designation or title as shall be determined by
our Board of Directors (“Board of Directors”) prior to the issuance of any
shares thereof. Preferred Stock shall have such voting powers, full
or limited, or no voting powers, and such preferences and relative,
participating, optional or other special rights and such qualifications,
limitations or restrictions thereof, as shall be stated in such resolution or
resolutions providing for the issue of such class or series of Preferred Stock
as may be adopted from time to time by the Board of Directors prior to the
issuance of any shares thereof. The number of authorized shares of
Preferred Stock may be increased or decreased (but not below the number of
shares thereof then outstanding) by the affirmative vote of the holders of a
majority of the voting power of all the then outstanding shares of our capital
stock entitled to vote generally in the election of the directors, voting
together as a single class, without a separate vote of the holders of the
Preferred Stock, or any series thereof, unless a vote of any such holders is
required pursuant to any Preferred Stock Designation.
Options,
Warrants and Convertible Securities
We
currently have an aggregate of 957,850 outstanding
Class A Common Stock Warrants, which each provide the holder thereof the right,
for two years from their grant date, to purchase one (1) share of the Company’s
common stock at an exercise price of $0.05 per share.
SHARES
AVAILABLE FOR FUTURE SALE
Future
sales of substantial amounts of our common stock could adversely affect market
prices prevailing from time to time, and could impair our ability to raise
capital through the sale of equity securities.
Upon the
date of this Prospectus, there are 42,707,850 shares of common stock issued and
outstanding. Upon the effectiveness of this Registration Statement, 3,665,700 shares of common stock to be resold pursuant to
this Prospectus (which number includes 957,850
shares of common stock which are not currently issued and outstanding, but which
are issuable upon the exercise of outstanding Warrants) will be eligible for
immediate resale in the public market if and when any market for the common
stock develops. The remaining 40,000,000 shares of our currently
issued and outstanding common stock, which shares are solely owned by our Chief
Executive Officer, Edwin Slater, which are not being registered pursuant to this
Registration Statement will constitute “restricted securities” as that term is
defined by Rule 144 of the Act and bear appropriate legends, restricting
transferability. The Company may also raise capital in the future by
issued issuing additional restricted shares to investors.
Restricted
securities may not be sold except pursuant to an effective registration
statement filed by us or an applicable exemption from registration, including an
exemption under Rule 144 promulgated under the Act.
-31-
Pursuant
to Rule 144 of the Securities Act of 1933, as amended (“Rule 144”), a “shell
company” is defined as a company that has no or nominal operations; and, either
no or nominal assets; assets consisting solely of cash and cash equivalents; or
assets consisting of any amount of cash and cash equivalents and nominal other
assets. As such, we are a “shell company” pursuant to Rule 144, and
as such, sales of our securities pursuant to Rule 144 are not able to be made
until 1) we have ceased to be a “shell company; 2) we are subject to Section 13
or 15(d) of the Securities Exchange Act of 1934, as amended, and have filed all
of our required periodic reports for the previous one year period prior to any
sale; and a period of at least twelve months has elapsed from the date “Form 10
information” has been filed with the Commission reflecting the Company’s status
as a non-“shell company.” Because none of our securities can be sold
pursuant to Rule 144, until at least a year after we cease to be a “shell
company”, any non-registered securities we issue will have no liquidity and will
in fact be ineligible to be resold until and unless such securities are
registered with the Commission and/or until a year after we cease to be a “shell
company” and have complied with the other requirements of Rule 144, as described
above.
Assuming
we cease to be a “shell company” and at least a year has passed since we filed
“Form 10 information” with the Commission and we otherwise meet the requirements
of Rule, and assuming we remain a non-reporting company, under Rule 144 a person
(or persons whose shares are aggregated) who is not deemed to have been our
affiliate at any time during the 90 days preceding a sale, and who owns shares
within the definition of “restricted securities” under Rule 144 under the
Securities Act that were purchased from us (or any affiliate) at least one year
previously, would be entitled to sell such shares under Rule 144 without
restrictions. A person who may be deemed our affiliate, who owns
shares that were purchased from us (or any affiliate) at least one year
previously, is entitled to sell within any three-month period a number of shares
that does not exceed 1% of the then outstanding common stock. Sales
by affiliates are also subject to certain manner of sale provisions, notice
requirements and the availability of current public information about
us.
If the
Company should cease to be a “shell company” and should become a “reporting
company,” the conditions applicable to the resale of securities under Rule 144
are different. If we become a reporting company, a person (or persons
whose shares are aggregated) who owns shares that were purchased from us (or any
affiliate) at least six months previously, would be entitled to sell
such shares without restrictions other than the availability of current public
information about us. A person who may be deemed our affiliate, who
owns shares that were purchased from us (or any affiliate) at least six months
previously would be entitled to sell his shares if he complies with the volume
limitations, manner of sale provisions, public information requirements and
notice requirements discussed above. A person who is not deemed to
have been our affiliate at any time during the 90 days preceding a sale, and who
owns restricted securities that were purchased from us (or any affiliate) at
least one year previously, would be entitled to sell such shares under Rule 144
without restrictions.
PLAN
OF DISTRIBUTION AND SELLING STOCKHOLDERS
This
Prospectus relates to the resale of 3,665,700 shares
of common stock by the selling stockholders. The table below sets forth
information with respect to the resale of shares of common stock by the selling
stockholders. We will not receive any proceeds from the resale of common stock
by the selling stockholders for shares currently outstanding. Except as
described in footnotes below, none of the selling stockholders have had a
material relationship with us since our inception. Additionally, no selling
shareholders are registered broker-dealers or affiliates of
broker-dealers.
-32-
Selling
Stockholders:
Shareholder
Name
|
Date
Shares Acquired (1)
|
Common
Stock Beneficially Owned Before Resale
|
Amount
Offered
|
Shares
Beneficially Owned After Resale (3)
|
||||
Beraggova
|
Katarina
|
November
2008
|
268,500
(2)
|
268,500
|
-
|
|||
Covesea
Developments
|
(4)
|
September
2007
|
25,000
|
25,000
|
-
|
|||
Cundy
|
Jason
|
November
2007
|
25,000
|
25,000
|
-
|
|||
Denny
|
Phillippa
|
November
2007
|
350,000
|
350,000
|
-
|
|||
Elexhauseroua
|
Jana
|
November
2008
|
60,300
(2)
|
60,300
|
-
|
|||
Evans
|
Debra
|
November
2007
|
345,000
|
345,000
|
-
|
|||
Gordon
|
Malcolm
|
November
2007
|
345,000
|
345,000
|
-
|
|||
Gordon
|
Jay
|
December
2007
|
310,000
|
310,000
|
-
|
|||
Jencurakoua
|
Marcela
|
November
2008
|
68,000
(2)
|
68,000
|
-
|
|||
Jencurakova
|
Barbora
|
November
2008
|
182,900
(2)
|
182,900
|
-
|
|||
Jencurdk
|
Valdimir
|
November
2008
|
61,200
(2)
|
61,200
|
-
|
|||
Mcandie
|
Martin
|
September
2007
|
25,000
|
25,000
|
-
|
|||
Papp
|
Mario
|
November
2008
|
63,900
(2)
|
63,900
|
-
|
|||
SAB
CABS (5)
|
September
2007
|
25,000
|
25,000
|
-
|
||||
Sabiston
|
Iain
|
September
2007
|
25,000
|
25,000
|
-
|
|||
Slater
|
Wilma
|
September
2007
|
25,000
|
25,000
|
-
|
|||
Slater
|
Martin
|
September
2007
|
25,000
|
25,000
|
-
|
|||
Slater
|
Dennis
|
September
2007
|
25,000
|
25,000
|
-
|
|||
Slater
|
David
|
September
2007
|
25,000
|
25,000
|
-
|
|||
Stewart
|
William
|
September
2007
|
25,000
|
25,000
|
-
|
|||
Stewart
|
Denise
|
September
2007
|
25,000
|
25,000
|
-
|
|||
Stewart
|
Jennifer
|
September
2007
|
25,000
|
25,000
|
-
|
|||
Stewart
|
William
|
September
2007
|
25,000
|
25,000
|
-
|
|||
Stryckoua
|
Katarina
|
November
2008
|
258,300
(2)
|
258,300
|
-
|
|||
Thomson
|
John
|
September
2007
|
25,000
|
25,000
|
-
|
|||
Thomson
|
Ewan
|
September
2007
|
25,000
|
25,000
|
-
|
|||
Thomson
|
Graham
|
September
2007
|
25,000
|
25,000
|
-
|
|||
Trtilek
|
Pavel
|
November
2008
|
172,300
(2)
|
172,300
|
-
|
|||
Vavrekova
|
Katarina
|
November
2008
|
177,300
(2)
|
177,300
|
-
|
|||
Vongrejova
|
Alena
|
November
2008
|
274,500
(2)
|
274,500
|
-
|
|||
Vongrev
|
Maros
|
November
2008
|
61,300
(2)
|
61,300
|
-
|
|||
Zelenayova
|
Petra
|
November
2008
|
267,200
(2)
|
267,200
|
-
|
|||
TOTALS
|
3,665,700
|
3,665,700
|
-33-
(1)
All shares were purchased from the Company as part of the Units (defined
above) at $0.02 per share in offshore transactions pursuant to a private
placement pursuant to an exemption from registration provided by
Regulation S of the Securities Act of 1933, as amended.
|
||||||||
(2)
One half of such beneficially owned shares represent shares of common
stock and the other half of such beneficially owned shares represent
shares issuable in connection with the exercise of
Warrants.
|
||||||||
(3)
Assuming the sale of all shares registered herein.
|
||||||||
(4)
Covesea Developments is beneficially owned by John Thompson, its Manager,
who is also a Selling Shareholder.
|
||||||||
(5)
SAB CABS is beneficially owned by Iain Sabiston, its President, who is
also a Selling Shareholder.
|
Upon the
effectiveness of this Registration Statement, the 40,000,000 outstanding shares
of common stock not registered herein will be subject to the resale provisions
of Rule 144, if available. The 3,665,700 remaining
shares offered by the selling stockholders pursuant to this Prospectus
(including 957,850 shares of common stock which are
not currently issued and outstanding, but which are issuable upon the exercise
of outstanding Warrants) may be sold by one or more of the following methods,
without limitation:
o
|
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits the purchaser;
|
o
|
block
trades in which the broker-dealer will attempt to sell the shares as agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
|
o
|
purchases
by a broker-dealer as principal and resale by the broker-dealer for its
account;
|
o
|
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
o
|
privately-negotiated
transactions;
|
o
|
broker-dealers
may agree with the Selling Security Holders to sell a specified number of
such shares at a stipulated price per share;
|
o
|
a
combination of any such methods of sale; and
|
o
|
any
other method permitted pursuant to applicable
law.
|
The
Selling Security Holders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this Prospectus.
We
currently lack a public market for our common stock. Selling shareholders will
sell at a price of $0.10 per share until our shares are quoted on the OTC
Bulletin Board and thereafter at prevailing market prices or privately
negotiated prices.
-34-
The
Offering price of the shares has been arbitrarily determined by us based on
estimates of the price that purchasers of speculative securities, such as the
shares offered herein, will be willing to pay considering the nature and capital
structure of our Company, the experience of the officers and Directors, and the
market conditions for the sale of equity securities in similar companies. The
Offering price of the shares bears no relationship to the assets, earnings or
book value of our Company, or any other objective standard of value. We believe
that only a small number of shares, if any, will be sold by the selling
shareholders, prior to the time our common stock is quoted on the
OTC Bulletin Board, at which time the selling shareholders will sell their
shares based on the market price of such shares. The Company is not selling any
shares pursuant to this Registration Statement and is only registering the
re-sale of securities previously purchased from us.
The
Selling Security Holders may pledge their shares to their brokers under the
margin provisions of customer agreements. If a Selling Security Holder defaults
on a margin loan, the broker may, from time to time, offer and sell the pledged
shares.
We have
advised the Selling Security Holders that the anti-manipulation provisions of
Regulation M under the Securities Exchange Act of 1934 will apply to purchases
and sales of shares of common stock by the Selling Security Holders.
Additionally, there are restrictions on market-making activities by persons
engaged in the distribution of the shares. The Selling Security Holders have
agreed that neither them nor their agents will bid for, purchase, or attempt to
induce any person to bid for or purchase, shares of our common stock while they
are distributing shares covered by this Prospectus.
Accordingly,
the Selling Security Holders are not permitted to cover short sales by
purchasing shares while the distribution is taking place. We will advise the
Selling Security Holders that if a particular offer of common stock is to be
made on terms materially different from the information set forth in this Plan
of Distribution, then a post-effective amendment to the accompanying
Registration Statement must be filed with the Securities and Exchange
Commission.
Broker-dealers
engaged by the Selling Security Holders may arrange for other broker-dealers to
participate in sales. Broker-dealers may receive commissions or discounts from
the Selling Security Holders (or, if any broker-dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be negotiated. It is not
expected that these commissions and discounts will exceed what is customary in
the types of transactions involved.
The
Selling Security Holders may be deemed to be an "underwriter" within the meaning
of the Securities Act in connection with such sales. Therefore, any commissions
received by such broker-dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act.
MARKET FOR COMMON
EQUITY
AND
RELATED STOCKHOLDER MATTERS
No
established public trading market exists for our common stock and the Company’s
common stock has never been quoted on any market or exchange. Except
for this Offering, there is no common stock that is being, or has been proposed
to be, publicly offered. As of January 5, 2010 ,
there were 42,707,850 shares of common stock outstanding, held by approximately
33 shareholders of record.
ADDITIONAL
INFORMATION
Our
fiscal year ends on June 30. We plan to furnish our shareholders annual reports
containing audited financial statements and other appropriate reports, where
applicable. In addition, the effectiveness of the Registration Statement of
which this Prospectus is a part will trigger the Company’s obligation to file
current and periodic reports with the Commission under Section 15(d) of the
Securities Act of 1934, as amended. You may read and copy any reports,
statements, or other information we file at the SEC's public reference room at
100 F. Street, N.E., Washington D.C. 20549. You can request copies of these
documents, upon payment of a duplicating fee by writing to the SEC. Please call
the SEC at 1-800-SEC-0330 for further information on the operation of the public
reference rooms. Our SEC filings are also available to the public on the SEC's
Internet site at http\\www.sec.gov.
LEGAL
MATTERS
Certain
legal matters with respect to the issuance of shares of common stock offered
hereby will be passed upon by The Loev Law Firm, PC, Bellaire,
Texas.
FINANCIAL
STATEMENTS
The
Financial Statements are stated in U.S. dollars and are prepared in accordance
with U.S. Generally Accepted Accounting Principles. The following financial
statements pertaining to Sandalwood Ventures, Ltd. are filed as part of this
Prospectus.
-35-
Table
of Contents to Financial Statements
Unaudited
Financial Statements
Page
|
||
Balance
Sheets as of September 30, 2009 and June 30,
2009
|
F-2
|
|
Statements
of Expenses for the three months ended September 30, 2009 and 2008, and
April 10, 2007 (inception) to June 30, 2009
|
F-3
|
|
Statements
of Changes in Stockholders’ Equity for the period from April 10, 2007
(inception) to September 30, 2009
|
F-4
|
|
Statements
of Cash Flows for the three months ended September 30, 2009 and
2008
|
F-5
|
|
Notes
to Financial Statements
|
F-6
|
Audited
Financial Statements
Page
|
||
Report
of Independent Registered Public Accounting Firm
|
F-9
|
|
Balance
Sheets as of June 30, 2009 and 2008
|
F-10
|
|
Statements
of Expenses for the years ended June 30, 2009 and 2008, and April 10, 2007
(inception) to June 30, 2009
|
F-11
|
|
Statements
of Changes in Stockholders’ Equity for the period from April 10, 2007
(inception) to June 30, 2009
|
F-12
|
|
Statements
of Cash Flows for the years ended June 30, 2009 and 2008
|
F-13
|
|
Notes
to Financial Statements
|
F-14
|
F-1
SANDALWOOD
VENTURES, LTD
|
||||||||
(An
Exploration Stage Company)
|
||||||||
BALANCE
SHEETS
(Unaudited)
|
||||||||
September
30,
|
June
30,
|
|||||||
2009
|
2009
|
|||||||
ASSETS
|
||||||||
Current
assets
|
||||||||
Cash
and cash equivalents
|
$ | 35,524 | $ | 39,081 | ||||
Prepaid
expenses
|
10,804 | 11,206 | ||||||
50,287 | ||||||||
Total
current assets
|
46,328 | 50,287 | ||||||
Total
assets
|
$ | 46,328 | $ | 50,287 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Current
liabilities
|
||||||||
Accounts
Payable
|
$ | 16,802 | $ | 15,052 | ||||
Total
current liabilities
|
16,802 | 15,052 | ||||||
Commitments
and contingencies
|
- | - | ||||||
Stockholders'
equity
|
||||||||
Preferred
stock, $.001 par value, 50,000,000 shares authorized,
|
||||||||
none
issued and outstanding
|
- | - | ||||||
Common
stock, $.001 par value, 250,000,000 shares authorized,
|
||||||||
42,707,850
shares issued and outstanding
|
42,708 | 42,708 | ||||||
Additional
paid-in capital
|
31,449 | 31,449 | ||||||
Deficit
accumulated during the exploration stage
|
(44,631 | (38,922 | ) | |||||
Total
stockholders' equity
|
29,526 | 35,235 | ||||||
Total
liabilities and stockholders' equity
|
$ | 46,328 | $ | 50,287 |
The
accompanying notes are an integral part of these financial
statements.
F-2
SANDALWOOD
VENTURES, LTD
|
||||||||||||
(An
Exploration Stage Company)
|
||||||||||||
STATEMENTS
OF EXPENSES
|
||||||||||||
(Unaudited)
|
||||||||||||
April
10, 2007
|
||||||||||||
For
the three months ended
|
(Inception)
to
|
|||||||||||
September
30,
|
September
30,
|
|||||||||||
2009
|
2008
|
2009
|
||||||||||
Costs
and Expenses
|
||||||||||||
General
and administrative expenses
|
$
|
4,721
|
$
|
5,708
|
$
|
31,823
|
||||||
Exploration
costs
|
988
|
-
|
12,808
|
|||||||||
Total
costs and expenses
|
5,709
|
5,708
|
44,631
|
|||||||||
Net
loss
|
$
|
(5,709
|
)
|
$
|
(5,708
|
)
|
$
|
(44,631
|
)
|
|||
Basic
and diluted net loss per share
|
$
|
(0.00
|
)
|
$
|
(0.00
|
)
|
||||||
Weighted
average common shares
|
||||||||||||
outstanding,
basic and diluted
|
42,707,850
|
41,750,000
|
F-3
(An
Exploration Stage Company)
|
||||||||||||||||||||
STATEMENTS
OF CHANGES IN STOCKHOLDERS' EQUITY
|
||||||||||||||||||||
Period
from April 10, 2007 (Inception) to September 30, 2009
|
||||||||||||||||||||
(Unaudited)
|
||||||||||||||||||||
Number
of Common Shares Issued
|
Common
Stock at Par Value
|
Additional
Paid-in Capital
|
Deficit
accumulated during the development stage
|
Total
|
||||||||||||||||
Balances,
June 30, 2007
|
40,000,000
|
40,000
|
-
|
(7,960
|
)
|
32,040
|
||||||||||||||
Issuance
of shares for cash , net of direct
|
||||||||||||||||||||
issuance
costs of $20,000
|
1,750,000
|
1,750
|
13,250
|
-
|
15,000
|
|||||||||||||||
Net
loss
|
-
|
-
|
(18,782
|
)
|
(18,782
|
)
|
||||||||||||||
Balances,
June 30, 2008
|
41,750,000
|
41,750
|
13,250
|
(26,742
|
)
|
28,258
|
||||||||||||||
Issuance
of shares for cash
|
957,850
|
958
|
18,199
|
-
|
19,157
|
|||||||||||||||
Net
loss
|
-
|
-
|
-
|
(12,180
|
)
|
(12,180
|
)
|
|||||||||||||
Balances,
June 30, 2009
|
42,707,850
|
42,708
|
31,449
|
(38,922
|
)
|
35,235
|
||||||||||||||
Net
loss
|
-
|
-
|
-
|
(5,709
|
)
|
(5,709
|
)
|
|||||||||||||
Balances,
September 30, 2009
|
42,707,850
|
$
|
42,708
|
$
|
31,449
|
$
|
(44,631
|
)
|
$
|
29,526
|
The
accompanying notes are an integral part of these financial
statements.
F-4
(An
Exploration Stage Company)
|
||||||||||||
STATEMENTS
OF CASH FLOWS
|
||||||||||||
(Unaudited)
|
||||||||||||
April
10, 2007
|
||||||||||||
Three
months ended
|
(Inception)
to
|
|||||||||||
September
30,
|
September
30,
|
|||||||||||
2009
|
2008
|
2009
|
||||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
Net
loss
|
$
|
(5,709
|
)
|
$
|
(5,708
|
)
|
$
|
(44,631
|
)
|
|||
Changes
in:
|
||||||||||||
Prepaid
expenses
|
402
|
800
|
(10,804
|
)
|
||||||||
Accounts
Payable
|
1,750
|
188
|
16,802
|
|||||||||
Net
cash used in operating activities
|
(3,557
|
)
|
(4,720
|
)
|
(38,633
|
)
|
||||||
Cash
flows from financing activities:
|
||||||||||||
Issuance
of stock for cash
|
-
|
-
|
74,157
|
|||||||||
Net
cash provided by financing activities
|
-
|
-
|
74,157
|
|||||||||
NET
CHANGE IN CASH AND CASH EQUIVALENTS
|
(3,557
|
)
|
(4,720
|
)
|
35,524
|
|||||||
CASH
AND CASH EQUIVALENTS, beginning of period
|
39,081
|
30,722
|
-
|
|||||||||
CASH
AND CASH EQUIVALENTS, end of period
|
$
|
35,524
|
$
|
26,002
|
$
|
35,524
|
||||||
Supplemental
cash flow disclosures:
|
||||||||||||
Cash
paid for income taxes
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
Cash
paid for interest
|
-
|
-
|
-
|
The
accompanying notes are an integral part of these financial
statements.
F-5
SANDALWOOD
VENTURES, LTD
|
(AN
EXPLORATION STAGE COMPANY)
|
NOTES
TO FINANCIAL STATEMENTS
|
NOTE
1 - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Sandalwood
Ventures, Ltd. (the "Company") was incorporated on April 10, 2007 under the laws
of the State of Nevada for the purpose of acquiring, exploring and developing
mining properties. The Company's fiscal year end is June 30. The Company is an
Exploration Stage Company.
Use
of Estimates.
The
preparation of financial statements in accordance with generally accepted
accounting principles in the United States of America requires the use of
estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities known to exist as
of the date the financial statements are published, and the reported amounts of
revenues and expenses during the reporting period. Uncertainties with respect to
such estimates and assumptions are inherent in the preparation of the Company's
financial statements; accordingly, it is possible that the actual results could
differ from these estimates and assumptions and could have a material effect on
the reported amounts of the Company's financial position and results of
operations.
Basic
and Diluted Net Income (Loss) Per Share.
Basic EPS
is computed by dividing net income (loss) available to common shareholders
(numerator) by the weighted average number of shares outstanding (denominator)
during the period. Diluted EPS gives effect to all dilutive potential common
shares outstanding during the period using the treasury stock method and
convertible preferred stock using the if-converted method. In computing Diluted
EPS, the average stock price for the period is used in determining the number of
shares assumed to be purchased from the exercise of stock options or warrants.
Diluted EPS excludes all dilutive potential shares if their effect is
anti-dilutive. At September 30, 2009 and 2008, respectively, there were
2,332,850 and 1,750,000 potential common shares that were
anti-dilutive.
Recent
Accounting Pronouncements.
In
June 2009, the FASB issued SFAS No. 168, The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles
(“SFAS 168” or ASC 105-10). SFAS 168 (ASC 105-10) establishes the Codification
as the sole source of authoritative accounting principles recognized by the FASB
to be applied by all nongovernmental entities in the preparation of financial
statements in conformity with GAAP. SFAS 168 (ASC 105-10) was prospectively
effective for financial statements issued for fiscal years ending on or after
September 15, 2009, and interim periods within those fiscal years. The
adoption of SFAS 168 (ASC 105-10) on July 1, 2009 did not impact the
Company’s results of operations or financial condition. The
Codification did not change GAAP; however, it did change the way GAAP is
organized and presented. As a result, these changes impact how companies
reference GAAP in their financial statements and in their significant accounting
policies. The Company implemented the Codification in this Report by providing
references to the Codification topics alongside references to the corresponding
standards.
In May
2009, the FASB issued SFAS No. 165 (ASC 855-10) entitled “Subsequent
Events”. Companies are now required to disclose the date through which
subsequent events have been evaluated by management. Public entities (as
defined) must conduct the evaluation as of the date the financial statements are
issued, and provide disclosure that such date was used for this
evaluation. SFAS No. 165 (ASC 855-10) provides that financial
statements are considered “issued” when they are widely distributed for general
use and reliance in a form and format that complies with GAAP. SFAS
No. 165 (ASC 855-10) is effective for interim or annual periods ending
after June 15, 2009, and must be applied prospectively. The adoption
of SFAS No. 165 (ASC 855-10) during the quarter ended September 30, 2009
did not have a significant effect on the Company’s financial statements as of
that date or for the quarter period then ended. In connection with
preparing the accompanying unaudited financial statements as of September 30,
2009 and for the quarter period ended September 30, 2009, management evaluated
subsequent events through the date that the financial statements were issued
(filed with the SEC).
F-6
With the
exception of the pronouncements noted above, no other accounting standards or
interpretations issued or recently adopted are expected to a have a material
impact on the Company’s financial position, operations or cash
flows.
NOTE
2 - GOING CONCERN
These
financial statements have been prepared on a going concern basis, which implies
the Company will continue to realize its assets and discharge its liabilities in
the normal course of business. As shown in the accompanying financial
statements, the Company has no revenues and has accumulated losses since
inception. These factors raise substantial doubt regarding the Company's ability
to continue as a going concern. The continuation of the Company as a going
concern is dependent upon the continued financial support from its shareholders,
the ability of the Company to obtain necessary equity financing to continue
operations, and the attainment of profitable operations. These financial
statements do not include any adjustments related to the recoverability and
classification of recorded assets, or the amounts and classification of
liabilities that might be necessary in the event the Company cannot continue as
a going concern.
NOTE
3 – COMMON STOCK AND WARRANTS
The
Company is authorized to issue 250,000,000 shares of $0.001 par value common
stock.
In April
2007, the Company issued 40,000,000 shares of common stock to the president of
the Company at $0.001 per share for cash proceeds of $40,000.
In
September 2007, the Company issued 375,000 shares of common stock at $.02 per
share for cash proceeds of $7,500. The Company granted 375,000 warrants to
purchase 375,000 shares of the Company’s common stock at an exercise price of
$0.05 per share of common stock issuable in connection with the exercise of the
warrants. 375,000 warrants expired in September 2009.
In
November 2007, the Company issued 1,065,000 shares of common stock at $.02 per
share for cash proceeds of $21,300. The Company granted warrants to purchase
1,065,000 shares of the Company’s common stock at an exercise price of $0.05 per
share of common stock issuable in connection with the exercise of the warrants.
1,065,000 warrants expired in November 2009.
In
December 2007, the Company issued 310,000 shares of common stock at $.02 per
share for cash proceeds of $6,200. The Company granted warrants to purchase
310,000 shares of the Company’s common stock at an exercise price of $0.05 per
share of common stock issuable in connection with the exercise of the
warrants. The 310,000 warrants expired in
December 2009.
In
November 2008, the Company issued 957,850 shares of common stock at $.02 per
share for cash proceeds of $19,157. The Company granted warrants to purchase
957,850 shares of the Company’s common stock at an exercise price of $0.05 per
share of common stock issuable in connection with the exercise of the
warrants.
The
Company determined the fair value of both the common stock and warrants as of
the date the transactions were entered into. The fair value of the common stock
was the market price at the closing date, while the fair value of warrants was
determined by the Black-Scholes method. The following table details the
significant assumptions used to compute the fair market value of warrants
granted in these transactions:
F-7
2009
|
2008
|
|||||||
Volatility
|
305.62
|
%
|
305.62
|
%
|
||||
Discount
rate
|
2.20-2.41
|
%
|
3.90-4.90
|
%
|
||||
Expected
dividend rate
|
0.00
|
%
|
0.00
|
%
|
||||
Stock
price on the measurement date
|
$
|
0.02
|
$
|
0.02
|
||||
Expected
term
|
2
years
|
2
years
|
The
Company allocated the proceeds between the warrants and the common stock based
on the relative fair values as follows:
2009
|
2008
|
|||||||
Relative
fair value of warrants
|
$ | 9,350 | $ | 17,089 | ||||
Relative
fair value of stock
|
$ | 9,807 | $ | 17,911 |
The
following table is an analysis of warrants for the purchase of the Company's
stock for the three months ended September 30, 2009 and 2008:
Weighted
|
||||||||
Average
|
||||||||
Warrants
|
Exercise
Price
|
|||||||
Outstanding,
June 30, 2008
|
1,750,000
|
$
|
0.05
|
|||||
Granted
|
-
|
-
|
||||||
Expired/Cancelled
|
-
|
-
|
||||||
Exercised
|
-
|
-
|
||||||
Outstanding,
September 30,2008
|
1,750,000
|
0.05
|
||||||
Granted
|
957,850
|
0.05
|
||||||
Expired/Cancelled
|
-
|
-
|
||||||
Exercised
|
-
|
-
|
||||||
Outstanding,
June 30, 2009
|
2,707,850
|
0.05
|
||||||
Granted
|
-
|
-
|
||||||
Expired/Cancelled
|
(375,000
|
)
|
0.05
|
|||||
Exercised
|
-
|
-
|
||||||
Outstanding,
September 30, 2009
|
2,332,850
|
$
|
0.05
|
|||||
F-8
REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
To the
Shareholders
Sandalwood
Ventures, Ltd.
(An
Exploration Stage Company)
Morayshire,
Scotland
We have
audited the accompanying balance sheets of Sandalwood Ventures, Ltd. (the
“Company”) as of June 30, 2009 and 2008, and the related statements of expenses,
changes in stockholders’ equity, and cash flows for the years then ended and for
the period from inception (April 10, 2007) to June 30, 2009. These financial
statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects the financial position of Sandalwood Ventures, Ltd. as of June
30, 2009 and 2008, and the results of its operations and its cash flows for the
years then ended and for the period from inception (April 10, 2007) to June 30,
2009, in conformity with accounting principles generally accepted in the
United States of America.
The
accompanying financial statements have been prepared assuming that Sandalwood
will continue as a going concern. As discussed in Note 2 to the financial
statements, Sandalwood has no revenues and has accumulated losses since
inception. These factors raise substantial doubt about the Company’s ability to
continue as a going concern. Management’s plans in regard to these matters are
also discussed in Note 2. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ GBH CPAs,
PC
GBH CPAs,
PC
www.gbhcpas.com
Houston,
Texas
October
5, 2009
F-9
SANDALWOOD
VENTURES, LTD
|
||||||||
(An
Exploration Stage Company)
|
||||||||
BALANCE
SHEETS
|
||||||||
June
30,
|
June
30,
|
|||||||
2009
|
2008
|
|||||||
ASSETS
|
||||||||
Current
assets
|
||||||||
Cash
and cash equivalents
|
$
|
39,081
|
$
|
30,722
|
||||
Prepaid
expenses
|
11,206
|
12,400
|
||||||
Total
current assets
|
50,287
|
43,122
|
||||||
Total
assets
|
$
|
50,287
|
$
|
43,122
|
||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Current
liabilities
|
||||||||
Accounts
payable
|
$
|
15,052
|
$
|
14,864
|
||||
Total
current liabilities
|
15,052
|
14,864
|
||||||
Commitments
and contingencies
|
-
|
-
|
||||||
Stockholders'
equity:
|
||||||||
Preferred
stock, $0.001 par value, 50,000,000 shares authorized,
|
||||||||
none
issued and outstanding
|
-
|
-
|
||||||
Common
stock, $0.001 par value, 250,000,000 shares authorized,
|
||||||||
42,707,850
and 41,750,000 shares issued and outstanding, respectively
|
42,708
|
41,750
|
||||||
Additional
paid-in capital
|
31,449
|
13,250
|
||||||
Deficit
accumulated during the exploration stage
|
(38,922
|
)
|
(26,742
|
)
|
||||
Total
stockholders' equity
|
35,235
|
28,258
|
||||||
Total
liabilities and stockholders' equity
|
$
|
50,287
|
$
|
43,122
|
The
accompanying notes are an integral part of these financial
statements.
F-10
SANDALWOOD
VENTURES, LTD
|
||||||||||||
(An
Exploration Stage Company)
|
||||||||||||
STATEMENTS
OF EXPENSES
|
||||||||||||
April
10, 2007
|
||||||||||||
For
the year ended
|
(Inception)
to
|
|||||||||||
June
30,
|
June
30,
|
|||||||||||
2009
|
2008
|
2009
|
||||||||||
Costs
and Expenses
|
||||||||||||
General
and administrative expense
|
$
|
9,680
|
$
|
15,462
|
$
|
27,102
|
||||||
Exploration
costs
|
2,500
|
3,320
|
11,820
|
|||||||||
Total
costs and expenses
|
12,180
|
18,782
|
38,922
|
|||||||||
Net
loss
|
$
|
(12,180
|
)
|
$
|
(18,782
|
)
|
$
|
(38,922
|
)
|
|||
Basic
and diluted net loss per share
|
$
|
0.00
|
$
|
0.00
|
||||||||
Weighted
average common shares
|
||||||||||||
outstanding,
basic and diluted
|
42,379,819
|
41,132,000
|
The
accompanying notes are an integral part of these financial
statements.
F-11
SANDALWOOD
VENTURES, LTD
|
||||||||||||||||||||
(An
Exploration Stage Company)
|
||||||||||||||||||||
STATEMENTS
OF CHANGES IN STOCKHOLDERS' EQUITY
|
||||||||||||||||||||
Period
from April 10, 2007 (Inception) through June 30, 2009
|
||||||||||||||||||||
Number
of Common Shares Issued
|
Common
Stock at Par Value
|
Additional
Paid-in Capital
|
Deficit
Accumulated During the Exploration Stage
|
Total
|
||||||||||||||||
Balances,
June 30, 2007
|
40,000,000
|
40,000
|
-
|
(7,960
|
)
|
32,040
|
||||||||||||||
Issuance
of shares for cash, net
|
||||||||||||||||||||
of
direct issuance costs of $20,000
|
1,750,000
|
1,750
|
13,250
|
-
|
15,000
|
|||||||||||||||
Net
loss
|
-
|
-
|
-
|
(18,782
|
)
|
(18,782
|
)
|
|||||||||||||
Balances,
June 30, 2008
|
41,750,000
|
41,750
|
13,250
|
(26,742
|
)
|
28,258
|
||||||||||||||
Issuance
of shares for cash
|
957,850
|
958
|
18,199
|
-
|
19,157
|
|||||||||||||||
Net
loss
|
-
|
-
|
-
|
(12,180
|
)
|
(12,180
|
)
|
|||||||||||||
Balances,
June 30, 2009
|
42,707,850
|
$
|
42,708
|
$
|
31,449
|
$
|
(38,922
|
)
|
$
|
35,235
|
The
accompanying notes are an integral part of these financial
statements.
F-12
SANDALWOOD
VENTURES, LTD
|
||||||||||||
(An
Exploration Stage Company)
|
||||||||||||
STATEMENTS
OF CASH FLOWS
|
||||||||||||
April
10, 2007
|
||||||||||||
Year
Ended
|
(Inception)
to
|
|||||||||||
June
30,
|
June
30,
|
|||||||||||
2009
|
2008
|
2009
|
||||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
Net
loss
|
$
|
(12,180
|
)
|
$
|
(18,782
|
)
|
$
|
(38,922
|
)
|
|||
Changes
in operating assets and liabilities:
|
||||||||||||
Prepaid
expenses
|
1,194
|
27,600
|
(11,206
|
)
|
||||||||
Accounts
payable
|
188
|
6,904
|
15,052
|
|||||||||
Net
cash provided by (used in) operating activities
|
(10,798
|
)
|
15,722
|
(35,076
|
)
|
|||||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||
Proceeds
from sales of common stock, net
|
||||||||||||
of
direct issuance costs of $20,000 during June 30, 2008
|
19,157
|
15,000
|
74,157
|
|||||||||
Net
cash provided by financing activities
|
19,157
|
15,000
|
74,157
|
|||||||||
NET
CHANGE IN CASH AND CASH EQUIVALENTS
|
8,359
|
30,722
|
39,081
|
|||||||||
CASH
AND CASH EQUIVALENTS, beginning of period
|
30,722
|
-
|
-
|
|||||||||
CASH
AND CASH EQUIVALENTS, end of period
|
$
|
39,081
|
$
|
30,722
|
$
|
39,081
|
||||||
Supplemental
cash flow disclosures:
|
||||||||||||
Cash
paid for income taxes
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
Cash
paid for interest
|
-
|
-
|
-
|
The
accompanying notes are an integral part of these financial
statements.
F-13
NOTE
1 - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Sandalwood
Ventures, Ltd. (the "Company") was incorporated on April 10, 2007 under the laws
of the State of Nevada for the purpose of acquiring, exploring and developing
mining properties. The Company's fiscal year end is June 30. The Company is an
Exploration Stage Company.
Use
of Estimates.
The
preparation of financial statements in accordance with generally accepted
accounting principles in the United States of America requires the use of
estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities known to exist as
of the date the financial statements are published, and the reported amounts of
revenues and expenses during the reporting period. Uncertainties with respect to
such estimates and assumptions are inherent in the preparation of the Company's
financial statements; accordingly, it is possible that the actual results could
differ from these estimates and assumptions and could have a material effect on
the reported amounts of the Company's financial position and results of
operations.
Cash
and Cash Equivalents.
The
Company considers all highly liquid instruments with maturity of three months or
less at the time of issuance to be cash equivalents. Cash consists of cash on
deposit with a high quality major financial institution and to date; the Company
has not experienced any losses on its balances.
Mineral
Property Acquisition, Exploration and Development Costs.
Mineral
property acquisition, exploration and related costs are expensed as incurred
unless proven and probable reserves exist and the property may commercially be
mined. When it has been determined that a mineral property can be economically
developed, the costs incurred to develop such property, including costs to
further delineate the ore body and develop the property for production, may be
capitalized. Interest costs, if any, allocable to the cost of developing mining
properties and to constructing new facilities are capitalized until operations
commence. Mine development costs incurred either to develop new ore deposits,
expand the capacity of operating mines, or to develop mine areas substantially
in advance of current production are also capitalized. All such capitalized
costs, and estimated future development costs, are then amortized using the
units-of-production method over the estimated life of the ore body. Costs
incurred to maintain current production or to maintain assets on a standby basis
are charged to operations. Costs of abandoned projects are charged to operations
upon abandonment. The Company evaluates, at least quarterly, the carrying value
of capitalized mining costs and related property, plant and equipment costs, if
any, to determine if these costs are in excess of their net realizable value and
if a permanent impairment needs to be recorded. The periodic evaluation of
carrying value of capitalized costs and any related property, plant and
equipment costs are based upon expected future cash flows and/or estimated
salvage value. The Company currently does not have any capitalized
mining costs and therefore no adjustments are needed.
F-14
Financial
Instruments.
The
carrying values of the Company's financial instruments, which include cash and
amounts due to vendors, approximate their fair values due to the immediate or
short-term maturity of these financial instruments.
Income
Taxes.
An asset
and liability approach is used for financial accounting and reporting for income
taxes. Deferred income taxes arise from temporary differences between income tax
and financial reporting and principally relate to recognition of revenue and
expenses in different periods for financial and tax accounting purposes and are
measured using currently enacted tax rates and laws. In addition, a deferred tax
asset can be generated by net operating loss carryforwards (“NOLs”). If it is
more likely than not that some portion or all of a deferred tax asset will not
be realized, a valuation allowance is recognized.
Basic
and Diluted Net Income (Loss) Per Share.
Basic EPS
is computed by dividing net income (loss) available to common shareholders
(numerator) by the weighted average number of shares outstanding (denominator)
during the period. Diluted EPS gives effect to all dilutive potential common
shares outstanding during the period using the treasury stock method and
convertible preferred stock using the if-converted method. In computing Diluted
EPS, the average stock price for the period is used in determining the number of
shares assumed to be purchased from the exercise of stock options or warrants.
Diluted EPS excludes all dilutive potential shares if their effect is
anti-dilutive. At June 30, 2009 and 2008, respectively, there were 2,707,850 and
1,750,000 potential common shares that were anti-dilutive.
Recent
Accounting Pronouncements.
The
Company does not expect that any recently issued accounting pronouncements will
have a significant impact on the financial statements of the
Company.
NOTE
2 - GOING CONCERN
These
financial statements have been prepared on a going concern basis, which implies
the Company will continue to realize its assets and discharge its liabilities in
the normal course of business. As shown in the accompanying financial
statements, the Company has no revenues and has accumulated losses since
inception. These factors raise substantial doubt regarding the Company's ability
to continue as a going concern. The continuation of the Company as a going
concern is dependent upon the continued financial support from its shareholders,
the ability of the Company to obtain necessary equity financing to continue
operations, and the attainment of profitable operations. These financial
statements do not include any adjustments related to the recoverability and
classification of recorded assets, or the amounts and classification of
liabilities that might be necessary in the event the Company cannot continue as
a going concern.
NOTE
3 - COMMITMENTS AND CONTINGENCIES
The
Company's activities are subject to laws and regulations governing environmental
quality. The Company cannot predict what effect future regulations or
legislation, enforcement policies, and claims for damages to property,
employees, other persons and the environment resulting from the Company's
operations could have on its activities. Although no assurances can be made, the
Company's management believes that absent the occurrence of an extraordinary
event, compliance with existing laws, rules and regulations regulating the
release of materials in the environment or otherwise relating to the protection
of the environment will not have a material effect upon the Company's financial
position.
F-15
NOTE
4 - PREFERRED STOCK
The
Company is authorized to issue 50,000,000 shares of $0.001 par value preferred
stock, which may be issued from time to time in one or more series as shall be
determined by the Board of Directors. Such stock shall have such voting powers,
full or limited, or no voting powers, and such preferences and relative,
participating, optional or other special rights and such qualifications,
limitations or restrictions thereof, as shall be stated in resolutions providing
for the issue of such class or series of Preferred Stock. There are no preferred
shares issued.
NOTE
5 - COMMON STOCK AND WARRANTS
The
Company is authorized to issue 250,000,000 shares of $0.001 par value common
stock.
In April
2007, the Company issued 40,000,000 shares of common stock to the president of
the Company at $0.001 per share for cash proceeds of $40,000.
In
September 2007, the Company issued 375,000 shares of common stock at $.02 per
share for cash proceeds of $7,500. The company granted 375,000
warrants to purchase 375,000 shares of the Company’s common stock at an exercise
price of $0.05 per share of common stock issuable in connection with the
exercise of the warrants. 375,000 warrants expired in September
2009.
In
November 2007, the Company issued 1,065,000 shares of common stock at $.02 per
share for cash proceeds of $21,300. The Company granted warrants to purchase
1,065,000 shares of the Company’s common stock at an exercise price of $0.05 per
share of common stock issuable in connection with the exercise of the
warrants.
In
December 2007, the Company issued 310,000 shares of common stock at $.02 per
share for cash proceeds of $6,200. The Company granted warrants to purchase
310,000 shares of the Company’s common stock at an exercise price of $0.05 per
share of common stock issuable in connection with the exercise of the
warrants.
In
November 2008, the Company issued 957,850 shares of common stock at $.02 per
share for cash proceeds of $19,157. The Company granted warrants to purchase
957,850 shares of the Company’s common stock at an exercise price of $0.05 per
share of common stock issuable in connection with the exercise of the
warrants.
The
Company determined the fair value of both the common stock and warrants as of
the date the transactions were initially entered into. The fair value of the
common stock was the market price at the closing date, while the fair value of
the warrants was determined by the Black-Scholes method. The following table
details the significant assumptions used to computing the fair market values of
warrants granted in this transaction:
2009
|
2008
|
|||||||
Volatility
|
305.62
|
%
|
305.62
|
%
|
||||
Discount
rate
|
2.20%
- 2.41
|
%
|
3.9%
- 4.9
|
%
|
||||
Expected
dividend rate
|
0
|
%
|
0
|
%
|
||||
Stock
price on the measurement date
|
$
|
0.02
|
$
|
0.02
|
||||
Expected
term
|
2
years
|
2
years
|
F-16
The
Company allocated the proceeds between the warrants and the stock based on the
relative fair values as follows:
2009
|
2008
|
|||||||
Relative
fair value of warrants
|
$
|
9,350
|
$
|
17,089
|
||||
Relative
fair value of stock
|
$
|
9,807
|
$
|
17,911
|
To
following table is an analysis of warrants for the purchase of the Company’s
stock for the years ended June 30, 2009 and 2008.
Warrants
|
Weighted
Average Exercise Price
|
|||||||
Outstanding,
June 30, 2007
|
- | $ | - | |||||
Granted
|
1,750,000 | 0.05 | ||||||
Expired/Cancelled
|
- | - | ||||||
Exercised
|
- | - | ||||||
Outstanding,
June 30, 2008
|
1,750,000 | $ | 0.05 | |||||
Granted
|
957,850 | 0.05 | ||||||
Expired/Cancelled
|
- | - | ||||||
Exercised
|
- | - | ||||||
Outstanding,
June 30, 2008
|
2,707,850 | $ | 0.05 |
NOTE
6 - INCOME TAXES
The
Company uses the liability method, where deferred tax assets and liabilities are
determined based on the expected future tax consequences of temporary
differences between the carrying amounts of assets and liabilities for financial
and income tax reporting purposes. The Company has net operating losses of
approximately $39,000 which begin expiring in 2027. The potential benefit of
Company's net operating losses have not been recognized in these financial
statements because the Company cannot be assured it is more likely-than-not it
will utilize the net operating losses carried forward.
2009
|
2008
|
|||||||
Statutory
rate
|
34%
|
34%
|
||||||
Income
tax benefit at statutory rate
|
$
|
4,141
|
$
|
6,386
|
||||
Valuation
allowance
|
(4,141
|
)
|
(6,386
|
)
|
||||
Provision
for income taxes
|
$
|
-
|
$
|
-
|
||||
Deferred
tax assets and liabilities:
|
||||||||
Net
operating loss carryforwards
|
$
|
4,011
|
$
|
5,838
|
||||
Valuation
allowance
|
(4,011
|
)
|
(5,838
|
)
|
||||
Net
deferred tax assets
|
$
|
-
|
$
|
-
|
F-17
DEALER
PROSPECTUS DELIVERY OBLIGATION
Until
ninety (90) days after the later of (1) the effective date of the registration
statement or (2) the first date on which the securities are offered publicly,
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 dealers’ obligation to deliver
a Prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
-36-
PART
II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM
13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The
following table sets forth the expenses in connection with this Registration
Statement. All of such expenses are estimates, other than the filing fees
payable to the Securities and Exchange Commission.
Description
|
Amount
to be Paid
|
|||
Filing
Fee - Securities and Exchange Commission
|
$
|
26.14
|
||
Attorney's
fees and expenses
|
40,000.00
|
*
|
||
Accountant's
fees and expenses
|
10,000.00
|
*
|
||
Transfer
agent's and registrar fees and expenses
|
1,000.00
|
*
|
||
Printing
and engraving expenses
|
1,000.00
|
*
|
||
Miscellaneous
expenses
|
500.00
|
*
|
||
Total
|
$
|
52,526.14
|
*
|
*
Estimated
ITEM
14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
See
Indemnification of Directors and Officers above.
ITEM
15. RECENT SALES OF UNREGISTERED SECURITIES
In April
2007, we issued 40,000,000 shares of our common stock to Edwin Slater, our Chief
Executive Officer and Director in consideration for $40,000, or $0.001 per
share. We claim an exemption from registration afforded by Section
4(2) of the Securities Act of 1933, as amended (the “Act”), since the foregoing
issuances did not involve a public offering, the recipients took the shares for
investment and not resale and we took appropriate measures to restrict
transfer. No underwriters or agents were involved in the foregoing
issuances and we paid no underwriting discounts or commissions.
From
September 2007 to November 2008, we sold an aggregate of 2,707,850 units, each
consisting of one (1) share of common stock, and one (1) two year Class A
Warrant with an exercise price of $0.05 per share (each a “Warrant,” and
collectively with the shares, referred to hereinafter as the "Units"), for
aggregate consideration of approximately $54,157 or $0.02 per Unit in offshore
transactions pursuant to Regulation S of the Securities Act of 1933, as amended,
to an aggregate of 32 shareholders. An aggregate of 1,750,000 of the
Warrants have expired unexercised to date. We claim an exemption from
registration afforded by Regulation S of the Act ("Regulation S") for the above
issuances since the issuances were made to non-U.S. persons (as defined under
Rule 902 section (k)(2)(i) of Regulation S), pursuant to an offshore
transaction, and no directed selling efforts were made in the United States by
the issuer, a distributor, any of their respective affiliates, or any person
acting on behalf of any of the foregoing.
-37-
ITEM
16. EXHIBITS
Exhibit Number
|
Description of Exhibit
|
Exhibit
3.1 (1)
|
Articles
of Incorporation
|
Exhibit
3.2 (1)
|
Bylaws
|
Exhibit
5.1*
|
Opinion
and consent of The Loev Law Firm, PC re: the legality of the shares being
registered
|
Exhibit
10.1 (1)
|
Mineral
Property Acquisition Agreement
|
Exhibit
23.1*
|
Consent
of GBH CPAs, PC
|
Exhibit
23.2*
|
Consent
of The Loev Law Firm, PC (included in Exhibit 5.1)
|
Exhibit
23.3*
|
Consent
of Laurence Sookochoff, Professional
Geoscientist
|
* Attached
hereto.
(1) Filed
as an exhibit to the Company’s Form S-1 Registration Statement, filed with the
Commission on October 19, 2009, and incorporated by reference
herein.
-38-
ITEM
17. UNDERTAKINGS
The
undersigned registrant hereby undertakes:
1.
|
To
file, during any period in which offers or sales are being made, a post
effective amendment to this Registration
Statement:
|
(a)
|
To
include any Prospectus required by Section 10(a)(3) of the Securities
Act;
|
|
(b)
|
To
reflect in the Prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of Prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in the volume
and rise represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement; and
|
|
(c)
|
To
include any material information with respect to the plan of distribution
not previously disclosed in this Registration Statement or any material
changes to such information in the Registration
Statement.
|
2.
|
For
determining liability under the Securities Act, treat each post-effective
amendment as a new registration statement of the securities offered, and
the offering of the securities at that time to be the initial bona fide
offering.
|
3.
|
To
file a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the
offering.
|
4.
|
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer of
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by
the final adjudication of such
issue.
|
5.
|
That,
for the purpose of determining liability under the Securities
Act:
|
Each
Prospectus filed pursuant to Rule 424(b) as part of a registration
statement relating to an offering, other than registration statements
relying on Rule 430B or other than Prospectuses filed in reliance on Rule
430A, shall be deemed to be part of and included in the registration
statement as of the date it is first used after effectiveness. Provided,
however, that no statement made in a registration statement or Prospectus
that is part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the registration
statement or Prospectus that is part of the registration statement will,
as to a purchaser with a time of contract of sale prior to such first use,
supersede or modify any statement that was made in the registration
statement or Prospectus that was part of the registration statement or
made in any such document immediately prior to such date of first
use.
|
-39-
SIGNATURES
In
accordance with the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements of filing on Form S-1 and authorized this Registration Statement to
be signed on its behalf by the undersigned in the City
of
Morayshire, Scotland, on January 12,
2010.
SANDALWOOD VENTURES,
LTD.
By: /s/
Edwin Slater
Edwin
Slater
Chief
Executive Officer
(Principal
Executive Officer and
Principal
Financial Officer),
President,
Treasurer and Director
-40-
EXHIBIT
INDEX
Exhibit Number
|
Description of Exhibit
|
Exhibit
3.1 (1)
|
Articles
of Incorporation
|
Exhibit
3.2 (1)
|
Bylaws
|
Exhibit
5.1*
|
Opinion
and consent of The Loev Law Firm, PC re: the legality of the shares being
registered
|
Exhibit
10.1 (1)
|
Mineral
Property Acquisition Invoice and Claim Information
|
Exhibit
23.1*
|
Consent
of GBH CPAs, PC
|
Exhibit
23.2*
|
Consent
of The Loev Law Firm, PC (included in Exhibit 5.1)
|
Exhibit
23.3*
|
Consent
of Laurence Sookochoff, Professional
Geoscientist
|
* Attached
hereto.
(1)
Filed as an exhibit to the Company’s Form S-1 Registration Statement, filed with
the Commission on October 19, 2009, and incorporated by reference
herein.
-41-