Attached files
| file | filename |
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| EX-31.1 - CERTIFICATE RULE 13A-14A J. GREGORIO, CEO - Novation Holdings Inc | certrule13a14ajgregorioceo.htm |
| EX-32.2 - CERTIFICATE 18 U.S.C. REYNAN BALLAN, CFO - Novation Holdings Inc | certsect906reynanballancfo.htm |
| EX-32.1 - CERTIFICATE 18 U.S.C. JANCY GREGORIO, CEO - Novation Holdings Inc | certsect906jancygregorioceo.htm |
| EX-31.2 - CERTIFICATE RULE 13A-14A REYNAN BALLAN, CFO - Novation Holdings Inc | certrule13a14arballancfo.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
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(X )
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITES EXCHANGE ACT OF 1934
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For the quarterly period ended .November 30, 2010
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( )
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TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transaction period from to
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Commission File number 333-108218
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STANFORD MANAGEMENT LTD.
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(Exact name of Registrant as specified in charter)
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Delaware
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98-0413066
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employee I.D. No.)
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2431 M. de la Cruz Street
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Pasay City, Philippines
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-
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code 011-632-813-1139
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Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See definition of “large accelerated filer”, “accelerated filer” and “small reporting company” Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] (Do not check if a small reporting company) Small reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes [ ] No [X]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PROCEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 after the distribution of securities subsequent to the distribution of securities under a plan confirmed by a court. Yes □ No □
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
December 31, 2010: 52,170,000 common shares
-1-
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Page Number
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PART 1.
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FINANCIAL INFORMATION
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ITEM 1.
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Financial Statements (unaudited)
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3
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Balance Sheet as at November 30, 2010 and August 31, 2010
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4
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Statement of Operations
For the three months ended November 30, 2010 and 2009 and for the period September 24, 1998 (Date of Inception) to November 30, 2010
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5
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Statement of Cash Flows
For the three months ended November 30, 2010 and 2009 and for the period September 14, 1998 (Date of Inception) to November 30, 2010
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6
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Notes to the Financial Statements.
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7
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ITEM 2.
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Management’s Discussion and Analysis or Financial Conditions and Results of Operations
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11
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ITEM 3.
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Quantitative and Qualitative Disclosure about Market Risk
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18
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ITEM 4.
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Controls and Procedures
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19
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ITEM 4T.
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Controls and Procedures
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20
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PART 11.
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OTHER INFORMATION
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20
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ITEM 1.
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Legal Proceedings
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20
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ITEM 1A.
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Risk Factors
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20
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ITEM 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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22
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ITEM 3.
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Defaults Upon Senior Securities
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22
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ITEM 4.
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Submission of Matters to a Vote of Security Holders
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22
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ITEM 5.
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Other Information
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22
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ITEM 6.
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Exhibits
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22
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SIGNATURES.
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23
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-2-
PART 1 – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The accompanying balance sheets of Stanford Management Ltd. (pre-exploration stage company) (the Company) at November 30, 2010 (with comparative figures as at August 31, 2010) and the statement of operations for the three months ended November 30, 2010 and 2009 and for the period from September 24, 1998 (date of inception) to November 30, 2010 and the statement of cash flows for the three months ended November 30, 2010 and 2009 and for the period from September 24, 1998 (date of incorporation) to November 30, 2010 have been prepared by the Company’s management in conformity with accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature.
Operating results for the three months ended November 30, 2010, are not necessarily indicative of the results that can be expected for the year ending August 31, 2011.
-3-
STANFORD MANAGEMENT LTD.
Pre-Exploration Stage Company)
BALANCE SHEETS
(UNAUDITED)
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ASSETS
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November 30, 2010
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August 31, 2010
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Current Assets
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Cash
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$ 1,016
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$ 1,015
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Total Assets
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$ 1,016
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$ 1,015
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LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
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Current Liabilities
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Accounts payable and accrued liabilities
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$ 75,059
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$ 131,268
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Advances from related parties – Note 4
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87,681
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26,178
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Total current liabilities
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162,740
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157,446
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Stockholders’ deficiency
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Common Stock
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500,000,000 common shares authorized, at $0.001 par value
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52,170,000 shares issued and outstanding
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52,170
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52,170
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Capital in excess of par value
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154,480
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154,480
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Deficit accumulated during the pre-exploration stage
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(368,374)
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(363,081)
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Total stockholders’ deficiency
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(161,724)
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(156,431)
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$ 1,016
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$ 1,015
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The accompanying notes are an integral part of these interim unaudited financial statements.
-4-
STANFORD MANAGEMENT LTD.
(Pre-Exploration Stage Company)
STATEMENTS OF OPERATIONS
For the three months ended November 30, 2010 and 2009 and for the period from September 24, 1998 (date of inception) to November 30, 2010
(UNAUDITED)
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Three months ended
Nov. 30, 2010
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Three months ended
Nov. 30, 2009
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Date of Inception to
Nov. 30, 2010
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REVENUE
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$ -
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$ -
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$ -
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GENERAL AND ADMINISTRATIVE EXPENSES:
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Impairment on mineral claim acquisition costs
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-
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-
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5,000
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Exploration costs
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-
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-
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20,940
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General and administration
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5,293
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7,672
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342,434
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NET LOSS
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$ (5,293)
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$ (7,672)
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$ (368,374)
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NET LOSS PER COMMON SHARE
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Basic
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$ (0.00)
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$ (0.00)
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AVERAGE OUTSTANDING SHARES
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Basic
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52,170,000
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52,170,000
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The accompany notes are an integral part of these interim unaudited financial statements.
-5-
STANFORD MANAGEMENT LTD.
(Pre-Exploration Stage Company)
STATEMENTS OF CASH FLOWS
For the three months ended
November 30, 2010 and 2009 and for the period from September 24, 1998 (date of inception) to
November 30, 2010
(UNAUDITED)
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Three months ended
November 30, 2010
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Three months ended
November 30, 2009
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September 24, 1998
(date of inception) to
November 30, 2010
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Cash flows from Operating Activities
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Net loss
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$ (5,293)
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$ (7,672)
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$ (368,374)
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Adjustments to reconcile net loss to net cash used in operating activities:
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Capital contributions – noncash expenses
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-
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3,150
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151,200
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Changes in accounts payable
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(56,209)
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(340)
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75,059
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Net cash provided (used) in operations
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(61,502)
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(4,862)
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(142,115)
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Cash flows from investing activities
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-
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-
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-
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Cash flows from financing activities
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Advances from related parties
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61,503
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2,318
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87,681
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Proceeds from issuance of common stock
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-
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-
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55,450
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Net change in cash flows from financing activities
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61,503
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2,318
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143,131
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Net (decrease) increase in cash
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1
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(2,544)
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1,016
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Cash at beginning of period
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1,015
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2,621
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-
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CASH AT END OF PERIOD
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$ 1,016
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$ 77
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$ 1,016
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SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING
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Capital contributions – noncash expenses
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$ -
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$ 3,150
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$ 151,200
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The accompanying notes are an integral part of these interim unaudited financial statements
-6-
STANFORD MANAGEMENT LTD.
(Pre-Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
November 30, 2010
(UNAUDITED)
1. ORGANIZATION
The Company was incorporated under the laws of the State of Delaware on September 24, 1998 with the authorized common stock of 25,000,000 shares at $0.001 par value. On March 9, 2007, at the Annual General Meeting of Stockholders a Resolution was approved whereby the authorized share capital was increased to 500,000,000 common shares with a par value of $0.001 per share.
The Company was organized for the purpose of acquiring and developing mineral properties. At the report date mineral claims, with unknown reserves, had been acquired. The Company has not established the existence of a commercially minable ore deposit and therefore is considered to be in the pre-exploration stage (see note 3).
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Methods
The Company recognizes income and expenses based on the accrual method of accounting.
Dividend Policy
The Company has not yet adopted a policy regarding payment of dividends.
Income Taxes
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The Company utilizes the liability method of accounting for income taxes. Under the liability method deferred tax assets and liabilities are determined based on differences between financial reporting and the tax bases of the assets and liabilities and are measured using the enacted tax rates and laws that will be in effect, when the differences are expected to be reversed. An allowance against deferred tax assets is recorded, when it is more likely than not, that such tax benefits will not be realized.
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On November 30, 2010, the Company had a net operating loss carry forward of $368,374. The tax benefit of approximately $110,500 from the loss carry forward has been fully offset by a valuation reserve because the use of the future tax benefit is doubtful since the Company has no operations. The loss carry forward will begin to expire in 2018.
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Statement of Cash Flows
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For the purposes of the statement of cash flows, the Company considers all highly liquid investments with a maturity of three months or less to be cash equivalents.
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Basic and Diluted Net Income (loss) Per Share
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Basic net income (loss) per share amounts are computed based on the weighted average number of shares actually outstanding. Diluted net income (loss) per share amounts are computed using the weighted average number of common and common equivalent shares outstanding as if shares
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-7-
STANFORD MANAGEMENT LTD.
(Pre-Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
November 30, 2010
(UNAUDITED)
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2.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
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Basic and Diluted Net Income (loss) Per Share - continued
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had been issued on the exercise of any common share rights unless the exercise becomes antidilutive and then only the basic per share amounts are shown in the report.
Revenue Recognition
Revenue is recognized on the sale and transfer of goods or completion of service.
Advertising and Market Development
The company expenses advertising and market development costs as incurred.
Financial and Concentrations Risk
The Company does not have any concentration or related financial credit risk.
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Environmental Requirements
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At the report date environmental requirements related to the mineral claim acquired are unknown and therefore an estimate of any future cost cannot be made.
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Estimates and Assumptions
Management uses estimates and assumptions in preparing financial statements in accordance with accounting principles accepted in the United States of America. Those estimates and assumptions may affect the reported amounts of the assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were assumed in preparing these financial statements.
Impairment of Long-lived Assets
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The Company reviews and evaluates long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The assets are subject to impairment consideration under ASC 360-10-35-17 if events or circumstances indicate that their carrying amounts might not be recoverable. When the Company determines that an impairment analysis should be done, the analysis will be performed using rules of ASC 930-360-35, Asset Impairment, and 360-10-15-3 through 15-5, Impairment or Disposal of Long-Lived Assets.
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-8-
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STANFORD MANAGEMENT LTD.
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(Pre-Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
November 30, 2010
(UNAUDITED)
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2.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
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Mineral Property Acquisition Costs
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Mineral property acquisition costs are initially capitalized when incurred. These costs are then assessed for impairment when factors are present to indicate the carrying costs may not be recoverable. Mineral exploration costs are expensed when incurred.
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Financial Instruments
The carrying amounts of financial instruments, including cash and accounts payable, areconsidered by management to be their estimated fair value due to their short termmaturities.
Reclassification
Certain prior period amounts have been reclassified to conform with current year’s financial statement presentation.
Recent Accounting Pronouncements
The Company does not expect that the adoption of other recent accounting pronouncements will have a material impact on its financial statements.
3. ACQUISITION OF MINING CLAIMS
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On February 2, 2008, the Company purchased for $5,000 a 100% interest in a mineral property called San Carlos Gold Claim located in the Philippines from Ramos Ventures Ltd., a non related company. Under the mining laws of the Philippines there is no requirement to maintain the claim in good standing and the claim will lapse once the Company has no further interest in it.
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The acquisition costs have been impaired and expensed because there has been no exploration activity nor has there been any reserve established and we cannot currently project any future cash flows or salvage value for the coming year and the acquisition costs might not be recoverable.
4. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES
For the three months ended November 30, 2010, a Director made advances of $61,503 to the Company.
As at November 30, 2010, officers-directors had acquired 15% of the common capital stock issued, and have made no interest, demand loans of $87,681 and have made contributions to capital of $151,200 in the form of expenses paid for the Company.
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5.
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CAPITAL STOCK
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The shareholders, at the Annual General Meeting held on March 9, 2007, approved an amendment to the Certificate of Incorporation whereby the authorized share capital of the
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-9-
STANFORD MANAGEMENT LTD.
(Pre-Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
November 30, 2010
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(UNAUDITED)
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Company would be increased from 25,000,000 common shares with a par value of $0.001 per share to 500,000,000 common shares with a par value of $0.001 per share.
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The Company has completed one Regulation S offering of 40,300,000 post split shares of its capital stock for a total consideration of $2,015. In addition, the Company has completed another Regulation S offering of 6,870,000 post split shares of its capital stock for a total consideration of $3,435. Under an Offering Memorandum the Company issued 5,000,000 post split shares for a total consideration of $50,000.
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On September 19, 2007, the shareholders of the Company approved a 20 to 1 forward stock split which became effective on November 6, 2007, resulting in an increase of the outstanding shares of common stock from 2,608,500 to 52,170,000. The 52,170,000 post split common shares are shown as split from the date of inception.
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6.
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GOING CONCERN
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The Company will need additional working capital to service its debt and to develop the mineral claims acquired, which raises substantial doubt about its ability to continue as a going concern. Continuation of the Company as a going concern is dependent upon obtaining additional working capital and the management of the Company has developed a strategy, which it believes will accomplish this objective through additional equity funding, and long term financing, which will enable the Company to operate for the coming year.
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-10-
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
OVERVIEW
The Company was incorporated on September 24, 1998 under the laws of the State of Delaware. The Company's amended Articles of Incorporation currently provide that the Company is authorized to issue 500,000,000 post-split shares of common stock, par value $0.001 per share. As at November 30, 2010 there were a total of 52,170,000 post-split common shares issued and outstanding.
LIQUIDITY AND CAPITAL RESOURCES
As at November 30, 2010, the Company had $1,016 in cash and liabilities of $162,740. The liabilities of $75,059 owed to general creditors are as follows: former directors and officers - $74,914 and office – $145. The amount owed to related parties of $87,681 is non-interest bearing and has no fixed terms of repayment.
During the three months, the Company has incurred the following expenses:
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Expenditure
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Amount
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Accounting and audit
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i
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$ 4,500
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Bank charges and interest
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ii
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25
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Edgarizing
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iii
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450
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Office and general
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iv
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268
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Transfer agent fees
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v
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50
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Total expenses
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$ 5,293
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i.
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The Company accrued $1,750 for the preparation of year end working papers for filing with the Form 10-K. The accrual for the audit of the financial statements as at August 31, 2010 by the Company’s new independent accountants, Madsen & Associates CPA’s Inc. is $2,750.
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ii.
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Standard monthly bank charges for the three months.
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iii.
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Represents the cost to edgarize the Form 10-K for the year ended August 31, 2010.
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iv.
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Represent courier and photocopying charges incurred during the period.
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vii.
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Annual audit charges invoiced by the transfer agent.
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The Company estimates the following expenses will be required during the next twelve months to meet its obligations:
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Expenditures
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Requirements
For
Twelve Months
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Current
Accounts
Payable
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Required
Funds for
Twelve Months
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Accounting and audit
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1
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$ 11,100
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$ -
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$ 11,100
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Bank charges
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2
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150
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-
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150
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Directors - former
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3
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-
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74,914
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74,914
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Edgar filing fees
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4
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1,200
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-
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1,200
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Filing fees and franchise taxes
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5
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375
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-
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375
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Office
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6
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1,000
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145
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1,145
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Transfer agent's fees
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7
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1,000
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-
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1,000
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Estimated expenses
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$ 14,825
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$ 75,059
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$ 89,884
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-11-
No recognition has been given to management fees, rent or telephone since, at the present time, these expenses are not cash oriented.
1. Accounting and auditing expense has been projected as follows:
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Filings
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Accountant
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Auditors
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Total
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Form 10-Q – Feb. 28, 2011
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1,250
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850
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2,100
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Form 10-Q – May 31, 2011
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1,250
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850
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2,100
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Form 10-K – Aug 31, 2011
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1,500
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3,300
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4,800
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Form 10-Q – Nov. 30, 2011
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1,250
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850
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2,100
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$ 5,250
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$ 5,850
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$ 11,100
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2. Bank charges have been estimated at the amount accrued since account opened during the year and projected for twelve months.
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3. The former directors and officers are owed the sum of money as noted above. The amount is on a demand basis but bears no interest.
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4. Edgar filing fees comprise the cost of filing the various Forms 10-K and 10-Q on Edgar. It is estimated the cost for each of the Form 10-Qs will be $250 and the cost of filing the 10-K will be $450.
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5. Filing fees to The Company Corporation as a registered agent in the State of Delaware is estimated at $215 per year. Franchise taxes paid to the State of Delaware are $160.
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6. Relates to photocopying and faxing and miscellaneous directors’ expenses based on prior year’s actual charges giving consideration to some of the expenses not being of a recurring nature.
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7. Each year the Company is charged fees of approximately $1,000 by its transfer agent to act on its behalf.
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Stanford will have to raise sufficient funds to settle the balance of the outstanding liabilities if it wishes to continue to operate in the future.
Stanford does not expect to purchase or sell any plant or significant equipment during the next year.
Stanford does not expect any significant changes in the number of employees.
LIQUIDITY AND CAPITAL RESOURCES
Stanford has had no revenue since inception and its accumulated deficit is $368,374. To date, the growth of Stanford has been funded by the sale of shares and advances by its director in order to meet the requirements of filing with the SEC and previously maintaining the SF claim in good standing.
The amount required to cover total operating costs for the next twelve months and to settle all the outstanding amounts owed to third party creditors would be $75,059 less the amount in the bank account being $1,016. At present, Stanford does not have these funds to pay for future expenses and eliminate accounts payable and therefore would be required to either sell shares in its capital stock or obtain further advances from its director. Stanford’s future operations and growth is dependent on its ability to raise capital for expansion and to seek revenue sources.
-12-
RESULTS OF OPERATIONS
The San Carlos Gold Claim
Stanford purchased a 100% interest in San Carlos. The property consists of one – 6 unit claim block containing 92.7 hectares which have been staked and recorded with the Mineral Resources Department of the Ministry of Energy and Mineral Resources of the Government of the Republic of Philippines.
San Carlos, located about 30 km Northwest of the city of San Carlos, (closest city) lies 30 km Northwest of San Carlos and 40 km Northeast of Dagupan, is a gold exploration project, located 35 km East of the past producing Villanueva Gold Mine. The claims are accessible by all-weather government-maintained roads to the town of San Carlos (to the Southeast) and to Dagupan to the North East. Year-round deep sea port facilities at Iba and the skilled population base found between San Carlos and Dagupan is readily available.
The past producing mines yielded 27 million ounces of gold during the years 1919 and 1998.
The district is immensely rich in mineral resources. The high elevation forest of the district have concentrations of heavy minerals like Ilmenite, Rutile, Monosite and Zircon which offer scope of exploitation for industrial purposes.
A recommended two phased mineral exploration program consisting of air photo interpretation, geological mapping, geochemical soil sampling and geophysical surveying will enhance the targets for diamond drilling. This exploration program to fully evaluate the prospects of the San Carlos, at a cost of Php 1,756,211 is fully warranted to be undertaken.
Previous exploration work to investigate the mineral potential of the property has outlined some favourable areas for continued exploration and development.
2. PROPERTY DESCRIPTION AND LOCATION
San Carlos project consists of 1 unpatented mineral claim, located 30 kilometers Northwest of the city of San Carlos at UTM co-ordinates Latitude 10°30’00”N and Longitude 123°29’00”E. The mineral claim was assigned to Stanford by Ramos Ventures Ltd and the said assignment was filed with the Mineral Resources Department of the Ministry of Energy and Mineral Resources of the Government of the Republic of the Philippines.
There are no known environmental concerns or parks designated for any area contained within the claims. The property has no encumbrances. As advanced exploration proceeds there may be bonding requirements for reclamation.
3. ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE ANDTOPOGRAPHY
San Carlos is accessible from San Carlos by traveling on the country’s only highway system which for the most part consists of one lane in each direction and by taking an all weather gravel road. San Carlos lies in a non-active seismic area, which means that it is free from major earthquakes. The city was formed in the so-called Carbon period, some 350 million years ago. During this period, large shallow marshes were formed with abundant vegetation. The rotting plants and trees in these marshes turned into peat and later into coal. The town still has large coal reserves, the basis for the city’s coal mining industry of today.
The Philippines is situated between 5 and 22 degrees North latitude. This means the country falls within the so-called tropical climate zone, a zone characterized by high temperatures the whole year round, relatively high rainfall and lush vegetation. Rainfall on the city can occur in every month, but the wettest months are October, November and December. Annual rainfall is approximately 1.5 meters. Due to the steep, deforested, mountains on average 60 percent of the rainwater runs off fast to the sea. The remaining 40 percent partly evaporates partly seeps through to the island’s underground water aquifier.
-13-
San Carlos has an experienced work force and will provide all the necessary services needed for an exploration and development operation, including police, hospitals, groceries, fuel, helicopter services, hardware and other necessary items. Drilling companies and assay facilities are present in San Carlos.
4. HISTORY
Deposits of shell and eroded sand formed the basis for the limestone, which makes up most of Philippines. This limestone was, over the ages, pushed upwards, making it possible to find today sea fossils high in the country’s mountains. This pushing up continues today. It is caused by the fact that the Philippine Plate, on which most of the country lies, is slowly diving under the Eurasian Plate of the mainland of Asia.
Philippines are characterized by steep mountains without any substantial forest cover. Highest peaks reach over 1,000 meters. The island is 300 km long and 35 km wide. High, steep mountains, short distances and lack of forest cover mean that rainwater runs fast to the sea, causing substantial erosion.
The island has vast copper, gold and coal reserves which are mined mainly in the central part.
Numerous showings of mineralization have been discovered in the area and six prospects have achieved significant production, with the nearby Villanueva Gold Mine (35 kilometers away) producing 165,000 ounces of Gold annually.
During the 1990’s several properties west of San Carlos were drilled by junior mineral exploration companies.
Stanford is preparing to conduct preliminary exploration work on the property.
5. GEOLOGICAL SETTING
Regional Geology of the Area
The hilly terrains and the middle level plain contain crystalline hard rocks such as charnockites, granite gneiss, khondalites, leptynites, metamorphic gneisses with detached occurrences of crystalline limestone, iron ore, quartzo-feldspathic veins and basic intrusives such as dolerites and anorthosites. Coastal zones contain sedimentary limestones, clay, laterites, heavy mineral sands and silica sands. The hill ranges are sporadically capped with laterites and bauxites of residual nature. Gypsum and phosphatic nodules occur as sedimentary veins in rocks of the cretaceous age. Gypsum of secondary replacement occurs in some of the areas adjoining the foot hills of the Western Ghats. Lignite occurs as sedimentary beds of tertiary age. The Black Granite and other hard rocks are amenable for high polish. These granites occur in most of the districts except the coastal area.
Stratigraphy
The principal bedded rocks for the area of San Carlos Gold Claim (and for most of the Philippines for that matter) are Precambrian rocks which are exposed along a wide axial zone of a broad complex.
Gold at the Villanueva Gold Mine (which, as stated above, is in close proximity to the San Carlos) is generally concentrated within extrusive volcanic rocks in the walls of large volcanic caldera.
Intrusive
In general the volcanoes culminate with effluents of hydrothermal solutions that carry precious metals in the form of naked elements, oxides or sulphides.
These hydrothermal solutions intrude into the older rocks as quartz veins. These rocks may be broken due to mechanical and chemical weathering into sand size particles and carried by streams and channels. Gold occurs also in these sands as placers.
Recent exploration result for gold occurrence in San Carlos, Kalinga is highly encouraging. Gold belt in sheared gneissic rocks is found in three subparallel auriferous load zones where some blocks having 220 to 450 meter length and 1.5 to 2 metre width could be identified as most promising ones.
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Structure
DEPOSITIONAL ENVIRONMENT / GEOLOGICAL SETTING: Veins form in high-grade, dynamothermal metamorphic environment where metasedimentary belts are invaded by igneous rocks.
HOST/ASSOCIATED ROCK TYPES: Hosted by paragneisses, quartzites, clinopyroxenites, wollastonite-rich rocks, pegmatites. Other associated rocks are charnockites, granitic and intermediate intrusive rocks, quartz-mica schists, granulites, aplites, marbles, amphibolites, magnetite-graphite iron formations and anorthosites.
TECTONIC SETTING(S): Katazone (relatively deep, high-grade metamorphic environments associated with igneous activity; conditions that are common in the shield areas).
DEPOSITIONAL ENVIRONMENT / GEOLOGICAL SETTING: Veins form in high-grade, dynamothermal metamorphic environment where metasedimentary belts are invaded by igneous rocks.
6. DEPOSIT TYPES
Deposits are from a few millimeters to over a metre thick in places. Individual veins display a variety of forms, including saddle-, pod- or lens-shaped, tabular or irregular bodies; frequently forming anastomosing or stockwork patterns
Mineralization is located within a large fractured block created where prominent northwest-striking shears intersect the northstriking caldera fault zone. The major lodes cover an area of 2 km and are mostly within 400m of the surface. Lodes occur in three main structural settings:
(i) steeply dipping northweststriking shears;
(ii) flatdipping (1040) fractures (flatmakes); and
(iii) shatter blocks between shears.
Most of the gold occurs in tellurides and there are also significant quantities of gold in pyrite.
7. MINERALIZATION
No mineralization has been reported for the area of the property but structures and shear zones affiliated with mineralization on adjacent properties pass through it.
8. EXPLORATION
Previous exploration work has not to the author’s knowledge included any attempt to drill the structure on San Carlos. Records indicate that no detailed exploration has been completed on the property.
Property Geology
To the east of the property is intrusives consisting of rocks such as tonalite, monzonite, and gabbro while the property itself is underlain by sediments and volcanics. The intrusives also consist of a large mass of granodiorite towards the western most point of the property.
The area consists of interlayered chert, argillite and massive andesitic to basaltic volcanics. The volcanics are hornfelsed, commonly contain minor pyrite, pyrrhotite.
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9. DRILLING SUMMARY
No drilling is reported on the San Carlos.
10. SAMPLING METHOD; SAMPLE PREPARATION; DATA VERIFICATION
All the exploration conducted to date has been conducted according to generally accepted exploration procedures with methods and preparation that are consistent with generally accepted exploration practices. No opinion as to the quality of the samples taken can be presented.
No other procedures of quality control were employed and no opinion on their lack is expressed.
11. ADJACENT PROPERTIES
The adjacent properties are cited as examples of the type of deposit that has been discovered in the area and are not major facets to this report.
12. INTERPRETATIONS AND CONCLUSIONS
The area is well known for numerous productive mineral occurrences including the Villanueva Gold Claim.
The locale of the San Carlos is underlain by the units of the Precambrian rocks that are found at those mineral occurrence sites.
These rocks consisting of cherts and argillites (sediments) and andesitic to basaltic volcanic have been intruded by granodiorite. Structures and mineralization probably related to this intrusion are found throughout the region and occur on the claim. They are associated with all the major mineral occurrences and deposits in the area.
Potential mineralization to be found on the claim is consistent with that found associated with zones of extensive mineralization. Past work however has been limited and sporadic and has not tested the potential of the property.
Potential for significant amounts of mineralization to be found exists on the property and it merits intensive exploration.
13. RECOMMENDATIONS
A two phased exploration program to further delineate the mineralized system currently recognized on San Carlos is recommended.
The program would consist of air photo interpretation of the structures, geological mapping, both regionally and detailed on the area of the main showings, geophysical survey using both magnetic and electromagnetic instrumentation in detail over the area of the showings and in a regional reconnaissance survey and geochemical soil sample surveying regionally to identify other areas on the claim that are mineralized and in detail on the known areas of mineralization. The effort of this exploration work is to define and enable interpretation of a follow-up diamond drill program, so that the known mineralization and the whole property can be thoroughly evaluated with the most up to date exploration techniques.
Budget
The proposed budget for the recommended work in Php 1,756,211 (US $38,227) is as follows:
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Phase I
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Philippine Paso
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U. S. Dollar
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1. Geological Mapping
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321,420
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6,996
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2. Geophysical Surveying
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279,500
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6,084
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TOTAL PHASE I
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600,920
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13,080
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Phase II
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1. Geochemical surveying and surface sampling (includes sample collection and assaying)
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1,155,291
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25,147
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TOTAL EXPLORATION
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1,756,211
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38,227
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The Company’s Main Product
Stanford’s primary product will be the sale of minerals, both precious and commercial. No minerals have been found to exist on the San Carlos and therefore the possibilities of obtaining a cash flow from the sale of minerals in the future might be remote.
Stanford’s Exploration Facilities
No decision has been made as to what type, if any, explorations facilities will be constructed on the San Carlos.
Investment Policies
The Company does not have an investment policy at this time. Any excess funds it has on hand will be deposited in interest bearing notes such as term deposits or short term money instruments. There are no restrictions on what the director is able to invest or additional funds held by the Company. Presently the Company does not have any excess funds to invest.
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ITEM 3.
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QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
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Market Information
There are no common shares subject to outstanding options, warrants or securities convertible into common equity of our Company.
The number of shares subject to Rule 144 is 8,000,000 Share certificates representing these shares have the appropriate legend affixed on them.
There are no shares that have been offered pursuant to an employee benefit plan or dividend reinvestment plan. Our shares are traded on the OTCBB. Although the OTCBB does not have any listing requirements per se, to be eligible for quotation on the OTCBB, we must remain current in our filings with the SEC; being as a minimum Forms 10-Q and 10-K. Securities already quoted on the OTCBB that become delinquent in their required filings will be removed following a 30 or 60 day grace period if they do not make their filing during that time.
In the future our common stock trading price might be volatile with wide fluctuations. Things that could cause wide fluctuations in our trading price of our stock could be due to one of the following or a combination of several of them:
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our variations in our operations results, either quarterly or annually;
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trading patterns and share prices in other exploration companies which our shareholders consider similar to ours;
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the exploration results on the San Carlos claim, and
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other events which we have no control over.
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In addition, the stock market in general, and the market prices for thinly traded companies in particular, have experienced extreme volatility that often has been unrelated to the operating performance of such companies. These wide fluctuations may adversely affect the trading price of our shares regardless of our future performance. In the past, following periods of volatility in the market price of a security, securities class action litigation has often been instituted against such company. Such litigation, if instituted, whether successful or not, could result in substantial costs and a diversion of management’s attention and resources, which would have a material adverse effect on our business, results of operations and financial conditions.
Trends
We are in the pre-explorations stage, have not generated any revenue and have no prospects of generating any revenue in the foreseeable future. We are unaware of any known trends, events or uncertainties that have had, or are reasonably likely to have, a material impact on our business or income, either in the long term or short term, as more fully described under ‘Risk Factors’.
ITEM 4. CONTROLS AND PROCEDURES
It is management’s responsibility for establishing and maintaining adequate internal control over financial reporting. Under the supervision and with the participation of our management, including Janay B. Gregorio, Chief Executive Officer and Reynan Ballan, Chief Accounting Officer, they have evaluated the effectiveness of Stanford’s disclosure controls and procedures as required by the Exchange Act Rule 13a-15(d) as at November 30, 2010 (the “Evaluation Date”). Based on the evaluation by management, they have concluded these disclosure controls and procedures were not effective as of the Evaluation Date as a result of material weaknesses in internal control over financial reporting as more fully discussed below.
Under Rule 13a-15(e)/15d-15(e); Regulation S-K, Item 307, the SEC states that “disclosure controls and procedures” have the following characteristics:
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designed to ensure disclosure of information that is required to be disclosed in the reports that Stanford files or submits under the Exchange Act;
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recorded, processed, summarized and reported with the time period required by the SEC’s rules and forms; and
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accumulated and communicated to management to allow them to make timely decisions about the required disclosures.
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As of November 30, 2010, the management of Stanford assessed the effectiveness of the Company’s internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and SEC guidance on conducting such assessments.
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Management concluded, during the three months ended November 30, 2010, internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules. Management realized there are deficiencies in the design or operation of the Company’s internal control that adversely affected the Company’s internal controls which management considers to be material weaknesses.
Material Weaknesses
Management assessed the effectiveness of our internal control over financial reporting as of the Evaluation Date and identified the following material weaknesses:
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As at November 30, 2010, Stanford did not have an audit committee which complies to the requirements of an audit committee since it did not have an independent “financial expert” on the committee. Even though it has a Code of Ethics it does not emphasize fraud and methods to avoid it. Due to the small size of Stanford a whistleblower policy is not necessary.
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Due to a significant number and magnitude of out-of-period adjustments identified during the quarter-end closing process, management has concluded that the controls over the quarter-end financial reporting process were not operating effectively. A material weakness in the quarter-end financial reporting process could result in Stanford not being able to meet its regulatory filing deadlines and, if not remedied, has the potential to cause a material misstatement or to miss a filing deadline in the future. Management override of existing controls is possible given the small size of the organization and lack of personnel.
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There is no system in place to review and monitor internal control over financial reporting. This is due to Stanford maintaining an insufficient complement of personnel to carry out ongoing monitoring responsibilities and ensure effective internal control over financial reporting.
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ITEM 4A. CONTROLS AND PROCEDURES
There were no changes in Stanford’s internal controls over financial reporting during the three months ended November 30, 2010 that have materially affected, or are reasonably likely to material affect, Stanford’s internal control over financial reporting. Nevertheless, management will have to introduce the above mentioned changes in internal control and procedures to protect Stanford’s assets.
PART 11 – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no legal proceedings to which Stanford is a party or to which its mineral claim is subject, nor to the best of management’s knowledge are any material legal proceedings contemplated.
ITEM 1A RISK FACTORS
Our shareholders and any future investors must be aware of the following risk factors prior to investing in Stanford’s common stock. It must be emphasized that Stanford, if any of these risks become fact, may have to cease operations and our shareholders and any future investors could lose part or all of their investment.
RISKS ASSOCIATED WITH OUR COMMON STOCK
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1.
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The Company’s share price is subject to the Penny Stock Rule which will result in any broker-dealer involved in the Company’s shares having increased administrative responsibilities which will have a negative effect on both the Company’s ability to raise funds and an investor’s ability to purchase or sell his shares.
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The Company’s common stock is considered to be a “penny stock” because it meets one or more of the definitions in SEC Rule 3a51-1:
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(i)
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it has a price of less than five dollars per share;
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(ii)
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it is not traded on a recognized national exchange;
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(iii)
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it is not quoted on a National Association of Securities Dealers, Inc.
(“NASD”) automated quotation system (NASDAQ), or even if so, has
a price less than five dollars per share; or
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(iv)
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is issued by a company with net tangible assets of less that
$2,000,000, if in business more than three years continuously, or
$5,000,000, if the business is less than three years continuously, or with average revenues of less than $6,000,000 for the past three years.
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A broker-dealer will have to undertake certain administrative functions required when dealing in a penny stock transaction. Disclosure forms detailing the level of risk in acquiring The Company’s shares will have to be sent to an interested investor, current bid and offer quotations will have to be provided with an indication as to what compensation the broker-dealer and the salesperson will be receiving from this transaction and a monthly statement showing the closing month price of the shares being held by the investor. In addition, the broker-dealer will have to receive from the investor a written agreement consenting to the transaction. This additional administrative work might make the broker-dealer reluctant to participate in the purchase and sale of the Company’s shares.
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From the Company’s point of view, being subject to the Penny Stock Rule could make it extremely difficult for it to attract new investors for future capital requirements since many financial institutions are restricted under their by-laws from investing in shares under a certain dollar amount. Ordinary investors might not be willing to subscribe to shares in the capital stock of the Company due to the uncertainty as to whether the share price will ever be able to be high enough that the Penny Stock Rule is no longer a concern.
RISKS ASSOCIATED WITH THE COMPANY
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1.
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The Company has a limited operating history in which new investors can value the performance of the Company, its management and its future expectations.
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The Company commenced its operations in 1998 but only became involved in the mineral exploration industry in January 2001. With no past operating history, any meaningful evaluation of the Company is difficult. Having been mainly inactive since its inception, the Company is basically a start-up company and therefore there is no history available which will allow a new investor to assess its business plan, its management and its future operations. Without these three factors, a new investor cannot make a meaningful decision as to whether or not the purchase of shares in the Company is a wise investment.
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2.
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The Company has a lack of working capital which, unless obtained on acceptable terms in the future, will inhibit its future growth strategy.
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The only present source of working capital available to the Company is through the sale of common shares, incurring debt or other borrowing. At present, the Company does not have adequate funds to conduct operations and financing may not be available when needed. Even if the financing is available, it may be on terms the Company deems unacceptable or are materially adverse to shareholders’ interests with respect to dilution of book value, dividend preferences, liquidation preferences, or other terms. The Company’s inability to obtain financing would have a materially adverse effect on its ability to implement its growth strategy, and as a result, could require it to cease its operations. An investor may be investing in a company that does not have adequate funds to conduct its operations and, if so, an investor might lose all of his investment.
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3.
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The Company has incurred losses since its inception and therefore has an accumulated deficit which might inhibit the raising of additional capital.
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Since inception, the Company has incurred losses and has an accumulative deficit of $368,374 as at November 30, 2010. The Company has never generated any revenue from its business activities and has no prospect of generating any such revenue in the foreseeable future. Those factors are expected to negatively affect the Company’s ability to raise funds from the public since there is no certainty the Company will ever be able to make a profit.
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4.
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Absence of cash dividends may affect a shareholder’s return on investment.
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The Board of Directors does not anticipate paying cash dividends on the outstanding shares, both now and in the future, and intends to retain any future earnings to finance its exploration activities on the mineral claim to be obtained in the near future. Payment of dividends, if any, will depend, among other factors, on earnings, capital requirements and the general operating and financial condition of the Company, and will be subject to legal limitations on the payment of dividends out of paid-in capital. An investor should be aware that a dividend, either in cash or shares, may never be paid by the Company and, therefore, the shares of the Company should not be purchased by an investor as an income producing security.
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5.
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There is an absence of recent exploration activities on the San Carlos other than the preparation of a geological report containing an initial exploration program.
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Since its purchase on February 2, 2008, there has been no significant exploration activity on the San Carlos, except for several properties being drilled by junior mineral exploration companies west of the claim. The Company does not have sufficient funds to under take the exploration program recommended by Jeffrey Manalastas, Professional Geologist.
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6.
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No matter how much money is spent on exploring the San Carlos there may never be an ore reserve found.
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No matter how much the Company spends on exploration activities it may never discover a commercially viable quantity of ore on the San Carlos. Most exploration activities do not result in the discovery of commercially mineable deposits of ore. In fact, it is extremely remote that a mineral property will become a producing mine.
ITEM 2. UNREGISTERED SALE OF EQUITY SECURITIES AND USE OF PROCEEDS
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None
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ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
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ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS
1. Certificate of Incorporation, Articles of Incorporation and By-laws
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1.1
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Certificate of Incorporation (incorporated by reference from Stanford’s Registration Statement on Form SB-2 filed on August 26, 2003)
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1.2
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Articles of Incorporation (incorporated by reference from Stanford’s Registration Statement on Form SB-2 filed on August 26, 2003)
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1.3
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By-laws (incorporated by reference from Stanford’s Registration Statement on Form SB-2 filed on August 26, 2003)
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
STANFORD MANAGEMENT LTD.
(Registrant)
JANAY B. GREGORIO
Janay B. Gregoria
Chief Executive Officer
President and Director
Dated: January 10, 2011
REYNAN BALLAN
Reynan Ballan
Chief Accounting Officer
Chief Financial Officer
and Director
Dated: January 10, 2011
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