Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2011
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________________________ to ______________________________
Commission File Number 001-33715
OKANA VENTURES, INC.
(Exact name of registrant as specified in
its charter)
Nevada | 20-2881151 |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
Moliere No. 222, Torre de Oficinas, Col. Los Morales Polanco, Delgacion | |
Miguel Hidalgo, Mexico City, Mexico | N/A |
(Address of principal executive offices) | (Zip Code) |
775-636-6986
(Registrants telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 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.
[X] YES
[ ] NO
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such
files).
[ ] YES [ ] 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 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 [ ] | (Do not check if a smaller reporting company) | Smaller 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 [X] NO
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant has filed all documents and reports
required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after 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 issuers classes of common stock, as of the latest practicable date. 3,350,000 common shares issued and outstanding as of May 23, 2011.
1
PART I FINANCIAL INFORMATION
Item 1. Financial Statements.
In the opinion of management, the accompanying balance sheets and related interim statements of income, cash flows, and stockholders equity include all adjustments, consisting only of normal recurring items, necessary for their fair presentation in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP). Interim results are not necessarily indicative of results for a full year. The information included in this Form 10-Q should be read in conjunction with information included in our Form 10-K filed on April 15, 2011 with the U.S. Securities and Exchange Commission.
2
OKANA VENTURES, INC.
(AN EXPLORATION STAGE
COMPANY)
CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
MARCH
31, 2011 AND 2010
3
OKANA VENTURES, INC.
(AN EXPLORATION STAGE
COMPANY)
INDEX TO CONDENSED FINANCIAL
STATEMENTS
(UNAUDITED)
4
OKANA VENTURES, INC.
(AN EXPLORATION STAGE
COMPANY)
Consolidated Balance Sheets
March 31, 2011 (unaudited) and December 31, 2010
ASSETS | ||||||
MARCH 31, | DECEMBER 31, | |||||
2011 | 2010 | |||||
(Unaudited) | ||||||
Current Assets | ||||||
Cash and cash equivalents | $ | 52 | $ | 58 | ||
Total Current Assets | 52 | 58 | ||||
TOTAL ASSETS | $ | 52 | $ | 58 | ||
LIABILITIES AND STOCKHOLDERS' (DEFICIT) | ||||||
LIABILITIES | ||||||
Current Liabilities | ||||||
Accounts payable | $ | 2,998 | $ | 6,007 | ||
Notes and loans payable to stockholder | 113,687 | 102,010 | ||||
Total Current Liabilities | 116,685 | 108,017 | ||||
Total Liabilities | 116,685 | 108,017 | ||||
STOCKHOLDERS' (DEFICIT) | ||||||
Common stock, par value $.0001, 100,000,000 shares authorized
and 3,350,000 shares issued and outstanding |
335 | 335 | ||||
Additional paid-in capital | 83,051 | 81,498 | ||||
Deficit accumulated during the pre-exploration and exploration stages | (197,244 | ) | (187,858 | ) | ||
Cumulative other comprehensive gain or (loss) | (2,775 | ) | (1,934 | ) | ||
Total Stockholders' (Deficit) | (116,633 | ) | (107,959 | ) | ||
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) | $ | 52 | $ | 58 |
The accompanying notes are an integral part of these financial statements.
F-1
OKANA VENTURES, INC.
(AN EXPLORATION STAGE
COMPANY)
Condensed Statements of Operation and Comprehensive Loss
March 31, 2011 and 2010 (unaudited)
THREE MONTHS ENDED | Cumulative Totals | ||||||||
MARCH 31, | May 9, 2005 | ||||||||
(Inception) | |||||||||
2011 | 2010 | to March 31, 2011 | |||||||
INCOME | |||||||||
OPERATING EXPENSES | |||||||||
Organizational expenses | $ | - | $ | - | $ | 1,097 | |||
Mineral property costs | - | - | 52,540 | ||||||
Consulting | - | - | 1,200 | ||||||
Professional fees | 6,000 | 7,405 | 91,914 | ||||||
Administrative expenses | 1,709 | 151 | 40,002 | ||||||
Taxes and licenses | - | - | 375 | ||||||
Total Operating Expenses | 7,709 | 7,556 | 187,128 | ||||||
OTHER INCOME AND (EXPENSE) | |||||||||
Miscellaneous consulting income | - | - | 7,224 | ||||||
Interest, net | (1,677 | ) | (1,283 | ) | (17,340 | ) | |||
Total other income and (expense) | (1,677 | ) | (1,283 | ) | (10,116 | ) | |||
NET LOSS APPLICABLE TO COMMON SHARES | $ | (9,386 | ) | $ | (8,839 | ) | $ | (197,244 | ) |
Foreign currency translation adjustment | (841 | ) | (499 | ) | (2,775 | ) | |||
COMPREHENSIVE LOSS | $ | (10,227 | ) | $ | (9,338 | ) | $ | (200,019 | ) |
NET LOSS PER BASIC AND DILUTED SHARES | $ | (0.00 | ) | $ | (0.00 | ) | |||
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING | 3,350,000 | 3,350,000 |
The accompanying notes are an integral part of these financial statements.
F-2
OKANA VENTURES, INC.
(AN EXPLORATION STAGE
COMPANY)
Condensed Statements Cash Flows
March 31, 2011 and 2010 (unaudited)
THREE MONTHS ENDED | Cumulative Totals | ||||||||
MARCH 31, | May 9, 2005 | ||||||||
(Inception) | |||||||||
2011 | 2010 | to March 31, 2011 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||
Net loss | $ | (9,386 | ) | $ | (8,839 | ) | $ | (197,244 | ) |
Adjustments to reconcile net loss to net cash (used in) operating activities | |||||||||
Interest expense - related party | 1,553 | 1,283 | 16,386 | ||||||
Changes in assets and liabilities | |||||||||
Decrease (increase) in prepaid expenses | - | 2,550 | - | ||||||
Increase (decrease) in accounts payable | (3,009 | ) | 557 | 2,998 | |||||
Net cash (used in) operating activities | (10,842 | ) | (4,449 | ) | (177,860 | ) | |||
CASH FLOWS FROM INVESTING ACTIVITIES | - | - | - | ||||||
Net cash (used in) investing activities | - | - | - | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||
Sale of common stock | - | - | 67,000 | ||||||
Proceeds from notes and loans payable to stockholders | 11,677 | 4,500 | 113,687 | ||||||
Net cash provided by financing activities | 11,677 | 4,500 | 180,687 | ||||||
EFFECT OF FOREIGN CURRENCY | |||||||||
TRANSLATION ADJUSTMENT | (841 | ) | (499 | ) | (2775 | ) | |||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (6 | ) | (448 | ) | 52 | ||||
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD | 58 | 2,515 | - | ||||||
CASH AND CASH EQUIVALENTS - END OF PERIOD | $ | 52 | $ | 2,067 | $ | 52 | |||
SUPPLEMENTAL CASH FLOW INFORMATION: | |||||||||
Cash paid for interest | $ | - | |||||||
Cash paid for taxes | $ | - |
The accompanying notes are an integral part of these financial statements.
F-3
OKANA VENTURES, INC.
(AN EXPLORATION STAGE
COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2011 AND 2010 (UNAUDITED)
NOTE 1- | ORGANIZATION AND BASIS OF PRESENTATION |
The condensed unaudited interim financial statements included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). The condensed financial statements and notes are presented as permitted on Form 10-Q and do not contain information included in the Companys annual statements and notes. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these condensed financial statements be read in conjunction with the December 31, 2010 audited financial statements and the accompanying notes thereto. While management believes the procedures followed in preparing these condensed financial statements are reasonable, the accuracy of the amounts are in some respects dependent upon the facts that will exist, and procedures that will be accomplished by the Company later in the year. | |
| |
These condensed unaudited financial statements reflect all adjustments, including normal recurring adjustments which, in the opinion of management, are necessary to present fairly the operations and cash flows for the periods presented. | |
| |
Okana Ventures, Inc., (the Company) was incorporated on May 9, 2005, under the laws of the State of Nevada. The business purpose of the Company is to acquire and develop mineral properties. | |
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NOTE 2- |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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Exploration Stage Company | |
| |
The Company is considered to be in the exploration stage as defined in FASC 915-10-05, Development Stage Entity, as interpreted by the Securities and Exchange Commission for mining companies in Industry Guide 7. The Company is devoting substantially all of its efforts to the execution of its business plan. | |
| |
Use of Estimates | |
| |
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. |
F-4
OKANA VENTURES, INC.
(AN EXPLORATION STAGE
COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2011 AND 2010 (UNAUDITED)
NOTE 2- |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) |
Cash and Cash Equivalents | |
Cash and cash equivalents consists principally of currency on hand, demand deposits at commercial banks, and liquid investment funds having a maturity of three months or less at the time of purchase. The Company had $52 and $58 in cash and cash equivalents as of March 31, 2011 and December 31, 2010, respectively. | |
Start-up Costs | |
In accordance with ASC 720-15-20, Start-up Activities, the Company expenses all costs incurred in connection with the start-up and organization of the Company. | |
Common Stock Issued For Other Than Cash | |
Services purchased and other transactions settled in the Company's common stock are recorded at the estimated fair value of the stock issued if that value is more readily determinable than the fair value of the consideration received. | |
Net Income or (Loss) Per Share of Common Stock | |
The following table sets forth the computation of basic and diluted earnings per share: |
Three Months Ended | ||||||
March 31, | ||||||
2011 | 2010 | |||||
Net income (loss) | $ | (9,386 | ) | $ | (8,839 | ) |
Weighted average common | ||||||
shares outstanding (Basic) | 3,350,000 | 3,350,000 | ||||
Options | - | - | ||||
Warrants | - | - | ||||
Weighted average common shares outstanding (Diluted) | 3,350,000 | 3,350,000 | ||||
Net loss per share (Basic and diluted) | $ | (0.00 | ) | $ | (0.00 | ) |
The Company has no potentially dilutive securities, such as options or warrants, currently issued and outstanding.
F-5
OKANA VENTURES, INC.
(AN EXPLORATION STAGE
COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2011 AND 2010 (UNAUDITED)
NOTE 2- |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) |
| |
Recently Enacted Accounting Standards | |
| |
In June 2009 the FASB established the Accounting Standards Codification (Codification or ASC) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in accordance with generally accepted accounting principles in the United States (GAAP). Rules and interpretive releases of the Securities and Exchange Commission (SEC) issued under authority of federal securities laws are also sources of GAAP for SEC registrants. Existing GAAP was not intended to be changed as a result of the Codification and, accordingly, the change did not impact our financial statements. The ASC does change the way the guidance is organized and presented. Accounting Standards Update (ASU) ASU No. 2009-05 (ASC Topic 820, which amends Fair Value Measurements and Disclosures Overall, ASU No. 2009-13 (ASC Topic 605), Multiple- Deliverable Revenue Arrangements, ASU No. 2009-14 (ASC Topic 985), Certain Revenue Arrangements that include Software Elements, and various other ASUs, No. 2009-2 through ASU No. 2011-04, which contain technical corrections to existing guidance or affect guidance to specialized industries or entities, were recently issued. These updates have no current applicability to the Company or their effect on the financial statements would not have been significant. | |
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Mineral Acquisition and Exploration Costs | |
| |
The Company has been in the pre-exploration and exploration stages since its formation on May 9, 2005 and has not yet realized any operating revenue from its planned operations. It is primarily engaged in the acquisition, exploration, and development of mining properties. Mineral property acquisition and exploration costs are expensed as incurred. When it has been determined that a mineral property can be economically developed as a result of establishing proven and profitable reserves, the costs incurred to develop such property are capitalized. Such costs, when capitalized, will be depreciated using the units-of-production method over the estimated life of the probable reserves. | |
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NOTE 3- |
PROVISION FOR INCOME TAXES |
| |
The Company recognizes the tax effects of transactions in the year in which such transactions enter into the determination of net income regardless of when reported for tax purposes. Deferred taxes are provided in the financial statements under FASC 740-10-65-1 to give effect to the temporary differences which may |
F-6
OKANA VENTURES, INC.
(AN EXPLORATION STAGE
COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2011 AND 2010 (UNAUDITED)
NOTE 3- |
PROVISION FOR INCOME TAXES (CONTINUED) |
| |
arise from differences in the bases of fixed assets, depreciation methods and allowances based on the income taxes expected to be payable in future years. Minimal development stage deferred tax assets arising as a result of net operating loss carry-forwards have been offset completely by a valuation allowance due to the uncertainty of their utilization in future periods. Operating loss carry-forwards generated during the period from May 9, 2005 (date of inception) through March 31, 2011 of approximately $200,019 will begin to expire in 2025. Accordingly, deferred tax assets of approximately $70,007 were offset by the valuation allowance. For the three months ended March 31, 2011 and 2010 the allowance increased by approximately $3,580 and $3,093, respectively. | |
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The Company has no tax positions at March 31, 2011 and 2010 for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. | |
| |
The Company recognizes interest accrued relative to unrecognized tax benefits in interest expense and penalties in operating expenses. During the three months ended March 31, 2011 and 2010 the Company recognized no interest and penalties. The Company had no accruals for interest and penalties at March 31, 2011 and 2010. | |
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NOTE 4 - |
STOCKHOLDERS DEFICIT |
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Common Stock | |
| |
As of December 31, 2010 the Company had 100,000,000 shares of common stock, par value $.0001 per share, authorized and 3,350,000 issued and outstanding. | |
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The following details the stock transactions for the Company: | |
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On May 10, 2005 the Company sold 75,000 shares of its common stock at $.02 per share for $1,500 cash to provide initial working capital. | |
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On July 31, 2006 the Company sold 775,000 shares of its common stock at $.02 per share for $15,500 cash for working capital. | |
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During June, 2007 the Company sold 2,500,000 of its shares at $.02 per share for $50,000. The proceeds were used for working capital and to fund its operating plan. | |
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The $200,019 comprehensive loss as of March 31, 2011, less the $67,000 cash received for stock and the $16,386 imputed interest on loans from stockholders yields a stockholders deficit of $116,633. |
F-7
OKANA VENTURES, INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2011 AND 2010 (UNAUDITED)
NOTE 5 - | ACQUISITION OF MINERAL RIGHTS |
On May 27, 2005 the Company entered into an agreement (the Agreement) to purchase an undivided interest in mineral claims on property located in Canada (the Property) for $40,000 CAD. Due to the uncertainty of fluctuating exchange rates, payments on the Property are stated in CAD as follows: |
Upon signing of the Agreement and transfer of title (paid) | $ | 5,000 | |
On or before May 27, 2006 (paid) | 5,000 | ||
On or before May 27, 2007 (paid) | 10,000 | ||
On or before May 27, 2008 | 20,000 | ||
TOTAL | $ | 40,000 |
Under the Agreement, the Company is obligated to perform exploration work of $60,000 CAD over a period of four years commencing on the date of the Agreement or to make an equivalent cash payment to the vendors with $30,000 CAD of the exploration work to be performed or an equivalent cash payment made therefore by May 27, 2007. If the exploration results in the discovery of mineral commodities, the Company is required to pay a royalty of 2.0% on all mineral commodities sold from production on the Property. The royalty may be reduced to 1.0% upon payment of $500,000 CAD to the vendors at any time. The Company is also responsible to maintain the mineral claims in good standing by paying all the necessary rents, taxes and filings associated with the Property.
In accordance with terms set forth in the Agreement, the Company can terminate the Agreement at any time, at which point the Company is released of all obligations. All property payments must be made within 30 days of the due date and all exploration work must be performed within 30 days of the required date. Otherwise, the mineral property rights will revert back to the vendors. In addition, there is no guarantee that any exploration will yield mineral commodities. Accordingly, the Company expenses Property payments when paid and exploration costs as incurred.
On April 12, 2008, the Company gave notice of termination of the Agreement, effective April 18, 2008. As a result, the Company has no further obligations for purchase or exploration of those mineral claims. The Company plans to evaluate other properties for future acquisition and exploration.
On August 9, 2010 the Company, as Optionee, entered into an Agreement to purchase a partially developed mineral claim in British Columbia, Canada. The Optionor is a company of which the Companys President is also the President. The Company can acquire title to the claim by payment of $2,500 USD upon signing the Agreement and another $2,500 USD by August 31, 2010 and by carrying out a $200,000 (Canadian dollars, CAD) program of exploration and development. The Company had paid the initial $5,000 as of August 31, 2010,
F-8
OKANA VENTURES, INC.
(AN EXPLORATION STAGE
COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2011 AND 2010 (UNAUDITED)
NOTE 5 - | ACQUISITION OF MINERAL RIGHTS (CONTINUED) |
reported as a mineral property expense. The exploration program consists of incurring exploration and development expense according to the following schedule: |
By August 31, 2011: $25,000 CAD
By
August 31, 2012: $25,000 CAD additionally
By August 31, 2013: $50,000 CAD
additionally and
By August 31, 2014: $100,000 CAD to complete the purchase.
Upon fulfillment of the purchase price the Company assumes an obligation to pay a royalty of 2% of net smelter returns to the original owner of the claim, with an option to reduce the royalty to 1% upon payment of $500,000 CAD or to eliminate the royalty by payment of $1,000,000 CAD. Additionally, the Company assumes an obligation to pay an identical 2% royalty and payout opportunity to the Optionor. | |
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During the period of May 9, 2005 (inception) to March 31, 2011 the Company has paid $20,000 CAD, recorded as $17,818 USD, and $5,000 USD for property acquisitions. In the same period, the Company has paid a total of $31,808 CAD for exploration work or cash in lieu of exploration work, recorded as $29,722 USD, for a total of $52,540 mineral property costs. | |
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NOTE 6 - |
NOTES AND LOANS PAYABLE TO STOCKHOLDERS |
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The Companys President, who is also a stockholder, regularly advances funds to the Company in exchange for demand notes at a zero interest rate. The Company imputes simple interest at 6% per annum as interest expense with the related-party contributed interest as additional paid-in capital. Total interest expense may include interest or finance charges other than the related-party contributed interest. The Company recorded related-party interest of $1,553 during the three months ended March 31, 2011, bringing the total of related-party interest to $16,386 from inception, May 9, 2005 to March 31, 2011. Other interest expense of $125 brought the total interest reported since inception to $17,340 as of March 31, 2011. Because the related-party notes are due on demand they are reported as current liabilities. As of March 31, 2011 and December 31, 2010, the Company owed notes of $109,687 and $102,010, respectively, to the stockholder. | |
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In addition to the notes described above, unsecured loans of $4,000, advanced by the Companys President during the three months ended March 31, 2011, brought the total notes and loans payable to stockholders to $113,687. |
F-9
OKANA VENTURES, INC.
(AN EXPLORATION STAGE
COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2011 AND 2010 (UNAUDITED)
NOTE 7 - | FOREIGN CURRENCY TRANSLATION |
The Company has transactions in both United States Dollars, USD, its reporting currency, and in Canadian Dollars, CAD. The Company has identified CAD as its functional currency. Transactions denominated in CAD are converted to the USD equivalent on the transaction date. CAD-denominated assets and liabilities are revalued to the USD equivalent on the reporting date. Changes in the value of CAD-denominated assets and liabilities due to exchange rate fluctuations are reported as Other Comprehensive Income or Loss. | |
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NOTE 8 - |
GOING CONCERN |
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The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, which contemplates continuation of the Company as a going concern. The Company has incurred an operating deficit since its inception, is in the exploration stage and has no recurring revenues. These items raise substantial doubt about the Companys ability to continue as a going concern. | |
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In view of these matters, realization of the assets of the Company is dependent upon its ability to meet its financial requirements through equity financing and future operations. These financial statements do not include adjustments relating to the recoverability and classification of asset amounts and classification of liabilities that might be necessary should the Company be unable to continue. | |
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NOTE 9 - |
SUBSEQUENT EVENTS |
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The Company has evaluated events from March 31, 2011 through the date the financial statements were issued and has determined that there are no events required to be disclosed. |
F-10
Item 2. Managements Discussion and Analysis or Plan of Operations.
FORWARD-LOOKING STATEMENTS
This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as may, should, expects, plans, anticipates, believes, estimates, predicts, potential or continue or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled Risk Factors that may cause our or our industrys actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.
In this annual report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to common shares refer to the common shares in our capital stock.
As used in this current report and unless otherwise indicated, the terms "we", "us", "our" and "our company" mean Okana Ventures, Inc.
General Overview
Okana Ventures, Inc. was incorporated on May 9, 2005, in the State of Nevada. We are an exploration stage corporation. An exploration stage corporation is one engaged in the search for mineral deposits or reserves which are not in either the development or production stage. We have conducted exploration activities on one property. Recorded title to the property upon which we conducted exploration activities was not held in our name. Title to the property was recorded in the name of Ronnie Birch, our past-president, who held the property in trust for our company. This property is located in British Columbia, Canada, and consists of 3 mining claims, comprising 722.655 hectares. We explored for gold on the property. Based on the results of our exploration we decided not to proceed with any further exploration and returned the title to the property to the previous title holders.
To date we have only performed limited exploration work on this one mining property. We are presently in the process of searching for another mining property that is still in its early exploration stage. We cannot guarantee that a commercially viable mineral deposit exists in any mining property we may acquire until we are able to perform further exploration and a comprehensive evaluation determines if it has economic feasibility.
We have no revenues, have achieved losses since inception, have no operations, have been issued a going concern opinion by our auditors and rely upon the sale of our securities and loans from our officers and directors to fund operations.
Our business is subject to the risks inherent with a natural resource based company in its early exploration stage of development. These risks include, but are not limited to: limited capital resources; limited industry operating experience; possible delays due to weather, manpower and equipment shortage and regulatory processing practices; possible cost overruns due to price increases in services, supplies and equipment; and the general speculative nature of exploring a raw mineral property for minerals.
At the present, we have no employees and only one officer and director.
5
Our companys common stock has been assigned the ticker symbol OKNV and has been approved for trading on the Over-The-Counter Bulletin Board. However, no trading market has developed.
Our principal office address is Moliere No. 222, Torre de Oficinas, Col. Los Morales Polanco, Delgacion Miguel Hidalgo, Mexico City, Mexico and our telephone number is (775) 636-6986.
Current Business
We currently hold two properties:
Properties
Westmoreland Property
To our knowledge, the mineral property upon which we carried out our initial exploration program on the Westmoreland property has never been mined. Based on a filed British Columbia assessment report (Assessment Report #17870) there was some preliminary geophysical and geochemical work carried out on a portion of what now comprises the Westmoreland Property in 1988 by Getchell Resources; however, we know of no follow-up work on that portion of the property or any work whatsoever on the balance of the Westmoreland property. The Westmoreland Property was claimed by Roger William MacInnis and Warner Gruenwald, jointly, and was examined and reported on by Mr. Gruenwald, Professional Geologist, before being acquired by us.
In January, 2007, our geologist, Mr. Gruenwald, reported to us on a small work program he carried out on a portion of the Westmoreland Property in October, 2006. This small work program cost $4,984 and was part of our initial exploration work program of $30,000. The results of this preliminary exploration work were utilized to determine the nature and extent of the balance of our overall work program.
We commenced the balance of our initial exploration program in June, 2007, which consisted of geochemical stream, soil and rock sampling along with prospecting, geological mapping and geophysical surveys. Work was focused on prospecting the numerous new roads and clear cuts to see if such activity had exposed previously covered bedrock. Areas of alteration, fault zones and especially quartz veining (float or in situ) were explored by establishing grids along which soil sampling was conducted. Streams were sampled by collecting silt and heavy mineral concentrates. The soil samples were analyzed to determine if elevated amounts of minerals were present. The results were then plotted on a map to determine where the elevated areas of mineralization occur. Rock sampling and geological mapping and prospecting were done by competent professionals. Preliminary geophysical surveying was also done to try and locate anomalies which may be caused by mineralization not evident on the surface. Our samples were sent to registered assayers in Vancouver, British Columbia. Based upon the results of the exploration, management determined, in consultation with our consultants, that the Westmoreland property did not warrant further exploration work.
Bradley Creek Property
On August 9, 2010, we entered into an agreement with Beeston Enterprises Ltd., under which Beeston granted our company an option to purchase a certain mineral property, comprising approximately 478 hectares, located in the Clinton Mining District of British Columbia, Canada, known as the Bradley Creek property. Under the terms of the option agreement, we can acquire this property from Beeston upon the payment of $2,500 (U.S.) at the time of signing and a further payment of $2,500 (U.S.) on or before August 31, 2010, which latter two cash payments have been made by our company, plus carrying out a work program of $200,000 (CAD) over a four year period thereafter. This work program requires $25,000 (CAD) of exploration work in each of the first two years, $50,000 (CAD) of exploration work in the third year and $100,000 (CAD) of exploration work in the fourth year. Upon the acquisition of the Bradley Creek property by our company, it will be subject to a royalty of 2% of net smelter returns payable to Candorado Operating Company Ltd., with a payout of $1,000,000 (CAD), and an additional royalty of 2% of net smelter returns payable to Beeston, with a payout of $2,000,000 (CAD). Our former president, Michael Upham, is also the president of Beeston.
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Very little exploration has been carried out on the Bradley Creek property to date, other than a small work program consisting of soil and rock sampling and limited geological mapping. If we feel such is warranted, we may carry out further exploration of a similar nature on those areas of the property, as determined from a review of the report of the earlier exploration, by a geologist to be retained for this purpose. We hope to be able to raise the necessary funds for any work program through the sale of additional shares of our company or by arranging some form of debt financing, although we can provide no assurances that this is possible.
Management has not received any fees for its services. The proceeds from our offering were designed primarily to fund the costs of the initial exploration program recommended by our geologist, Mr. Warner Gruenwald, for the Westmoreland property. The cost of the initial exploration work program was approximately $30,000. Management will continue to seek to acquire an interest in additional mineral properties upon which to continue with our objective of locating a mineral deposit that is commercially viable to mine. Additional funding will be required in order for us to carry out exploration on the Bradley Creek property as well as for acquiring other mineral properties. We anticipate that we will raise additional financing by way of the sale of stock or the issuance of debt in order to undertake the acquisition of any other mineral claims.
We do not intend to hire any employees at this time. Any work on any property in which we acquire an interest will be conducted by unaffiliated independent contactors that we will hire. Depending on the stage of exploration we reach on any mineral property, the independent contractors will be responsible for surveying, geology, engineering, exploration, and excavation. The geologists will evaluate the information derived from the exploration and excavation and the engineers will advise us on the economic feasibility of removing any mineralized material we may find.
Results of Operations
Results of Operations for the Three Months Ended March 31, 2011 and 2010
Our net loss and comprehensive loss for the three months ended March 31, 2011, for the three months ended March 31, 2010 and the changes between those periods for the respective items are summarized as follows:
Change Between | |||||||||
Three Months Ended | |||||||||
March 31, 2011 | |||||||||
Three Months Ended | Three Months Ended | and Three Months | |||||||
March 31, | March 31, | Ended | |||||||
2011 | 2010 | March 31, 2010 | |||||||
$ | $ | $ | |||||||
Professional fees | 6,000 | 7,405 | (1,405 | ) | |||||
Administrative expenses | 1,709 | 151 | 1,558 | ||||||
Interest, net | (1,677 | ) | (1,283 | ) | (394 | ) | |||
Foreign currency translation adjustment | (841 | ) | (499 | ) | (342 | ) | |||
Net loss applicable to common shares | (9,386 | ) | (8,839 | ) | (547 | ) | |||
Comprehensive loss | (10,277 | ) | (9,338 | ) | (889 | ) |
Our cash in the bank at March 31, 2011 was $52. For the period from inception (May 9, 2005) to March 31, 2011 we had no operating revenues and incurred net operating losses of $197,244 consisting of speculative mining expenses, general operating expenses and professional fees incurred in connection with the day-to-day operation of our business and filing of our periodic reports.
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Liquidity and Financial Condition
Working Capital
At | At | |||||
March 31, | December 31, | |||||
2011 | 2010 | |||||
Current assets | $ | 52 | $ | 58 | ||
Current liabilities | 116,685 | 108,017 | ||||
Working capital | $ | (116,633 | ) | $ | (107,959 | ) |
Cash Flows
Three Months Ended | ||||||
March 31, | March 31 | |||||
2011 | 2010 | |||||
Cash flows from (used in) operating activities | $ | (10,842 | ) | $ | (4,449 | ) |
Cash flows provided by (used in) investing activities | Nil | $ | Nil | |||
Cash flows provided by (used in) financing activities | 11,677 | $ | 4,500 | |||
Net increase (decrease) in cash during period | $ | (6 | ) | $ | (448 | ) |
Operating Activities
Net cash used in operating activities was $10,842 for the three months ended March 31, 2011 compared with cash used in operating activities of $4,449 in the same period in 2010. The increase of $6,393 used in operating activities is mainly attributable to prepaid expenses in 2010.
Investing Activities
Net cash used in investing activities was $Nil for the three months ended March 31, 2011 compared to net cash provided by investing activities of $Nil in the same period in 2010.
Financing Activities
Net cash from financing activities was $11,677 for the three months ended March 31, 2011 compared to $4,500 in the same period in 2010. The increase of $7,177 from financing activities was mainly attributable to an increase in loans.
In May, 2005, we entered into a mineral claim purchase agreement with Mr. MacInnis and Mr. Gruenwald under which we acquired a certain mineral property, comprising three mineral claims, in consideration of the payment of $40,000 CAD over a period of three years and the performance of $60,000 CAD in exploration work over a period of four years. The property was registered in the name of Mr. Birch, our former president, who held the property in trust for our company. Following managements decision not to carry out any further exploration work on this property, we terminated the mineral claim purchase agreement and the property was transferred back to the vendors by Mr. Birch. Under the terms of the mineral claim purchase agreement, we have no further obligations for exploration or purchase of the property.
We issued 75,000 shares of common stock on May 10, 2005, for a purchase price of $1,500 and 775,000 shares of common stock on July 31, 2006, for a purchase price of $15,500. All of these shares were issued pursuant to the exemption from registration set forth in section 4(2) of the Securities Act of 1933. We issued a further 2,500,000 shares of common stock on June 18, 2007, for a purchase price of $50,000 pursuant to our SB-2 offering. Michael Upham, our former president, chief executive officer, secretary and treasurer, has provided us with various loans totaling $113,687 for legal fees, audit fees, mineral property acquisition and working capital as at March 31, 2011.
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The amount owed to Mr. Upham is non-interest bearing, unsecured and due on demand. Accordingly, the loans are classified as current liabilities, and we record interest at 6% per annum as additional paid-in capital.
We completed our initial public offering, raising the minimum amount of $50,000 under our SB-2 registration statement. The offer closed June 18, 2007. Using the funds from this offering, we were able to complete our initial exploration work on the Westmoreland property that we had obtained the right to acquire from Messrs. Gruenwald and MacInnis under the mineral purchase agreement. However, based on the results of our initial exploration work, we decided not to proceed with any additional exploration on this mining property. The Westmoreland property was subsequently transferred back to Messrs. Gruenwald and MacInnis. As a result, additional funds will be required if we are to proceed further with our initial business plan. We will have to find alternative sources, such as a second public offering, a private placement of securities or loans from our officers or others.
Contractual Obligations
As a smaller reporting company, we are not required to provide tabular disclosure obligations.
Going Concern
We are a start-up, exploration stage corporation and have not yet generated or realized any revenues from our business operations.
There is a substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills. We have not generated any revenues and no revenues are anticipated until we acquire a mining property and carry out sufficient exploration and development work that would result in our being able to begin removing and selling minerals. Accordingly, we must raise cash from sources other than the sale of minerals found on any mining property we may acquire. Our only other source for cash at this time is investments by others. We must raise cash to acquire and undertake the exploration of a mining property and stay in business. We raised the minimum amount of $50,000 from our SB-2 offering, which closed on June 18, 2007. The funds raised, together with the loans and purchase of shares by the directors ($83,692 in loans and $17,000 in share purchases) provided us with sufficient funds to complete our initial exploration work program on the Westmoreland property which we had previously acquired. Based on the results from our initial exploration work program, we decided not to conduct any further exploration on this mining property. In April, 2008 we terminated the mineral purchase agreement and transferred title to the Westmoreland property back to Messrs. Gruenwald and MacInnis in accordance with the terms of the mineral purchase agreement. We have no further liability in relation to these mining properties.
We conduct research in the form of exploration of a mining property. We are currently searching for a mining property in its early stage of development upon which to conduct exploration. At the present time, we have no plans to buy or sell any plant or significant equipment during the next twelve months.
Our exploration objective is to find an ore body containing gold. We must acquire a mining property that is in the early stage of development to carry out our exploration objective. We conduct exploration to determine what amount of minerals, if any, exist on a mining property, and if any minerals which are found can be economically extracted and profitably processed. Our success depends upon finding mineralized material. Mineralized material is a mineralized body, which has been delineated by appropriate spaced drilling or underground sampling to support sufficient tonnage and average grade of metals to justify removal. If we locate mineralized material, we have to determine if it is economically feasible to remove the material. Economically feasible means that the costs associated with the removal of the mineralized material will not exceed the price at which we can sell the mineralized material. We cannot predict what the costs will be until we find mineralized material. Until we find enough mineralized material that is economically feasible to remove, we will have to continue to raise additional funds to carry out exploration of a mining property. We will try to raise additional funds from a second public offering, a private placement or loans. At the present time, we have not acquired any interest in a mining property or the right to acquire any interest in a mining property by the conduct of exploration and have not raised any additional money.
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Critical Accounting Policies
The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with the accounting principles generally accepted in the United States of America. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by managements application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our financial statements is critical to an understanding of our financial statements.
Exploration Stage Company
Our company is considered to be in the exploration stage as defined in FASC 915-10-05, Development Stage Entity, as interpreted by the Securities and Exchange Commission for mining companies in Industry Guide 7. Our company is devoting substantially all of its efforts to the execution of its business plan.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents consists principally of currency on hand, demand deposits at commercial banks, and liquid investment funds having a maturity of three months or less at the time of purchase. Our company had $52 and $58 in cash and cash equivalents as of March 31, 2011 and December 31, 2010, respectively.
Start-up Costs
In accordance with ASC 720-15-20, Start-up Activities, our company expenses all costs incurred in connection with the start-up and organization of our company.
Common Stock Issued For Other Than Cash
Services purchased and other transactions settled in our company's common stock are recorded at the estimated fair value of the stock issued if that value is more readily determinable than the fair value of the consideration received.
Our company has no potentially dilutive securities, such as options or warrants, currently issued and outstanding.
Recently Enacted Accounting Standards
In June 2009 the FASB established the Accounting Standards Codification (Codification or ASC) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in accordance with generally accepted accounting principles in the United States (GAAP). Rules and interpretive releases of the Securities and Exchange Commission (SEC) issued under authority of federal securities laws are also sources of GAAP for SEC registrants. Existing GAAP was not intended to be changed as a result of the Codification and, accordingly, the change did not impact our financial statements. The ASC does change the way the guidance is organized and presented. Accounting Standards Update (ASU) ASU No. 2009-05 (ASC Topic 820, which amends Fair Value Measurements and Disclosures Overall, ASU No. 2009-13 (ASC Topic 605), Multiple-Deliverable Revenue Arrangements, ASU No. 2009-14 (ASC Topic 985), Certain Revenue Arrangements that include Software Elements, and various other ASUs, No. 2009-2
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through ASU No. 2011-04, which contain technical corrections to existing guidance or affect guidance to specialized industries or entities, were recently issued. These updates have no current applicability to our company or their effect on the financial statements would not have been significant.
Mineral Acquisition and Exploration Costs
Our company has been in the pre-exploration and exploration stages since its formation on May 9, 2005 and has not yet realized any operating revenue from its planned operations. It is primarily engaged in the acquisition, exploration, and development of mining properties. Mineral property acquisition and exploration costs are expensed as incurred. When it has been determined that a mineral property can be economically developed as a result of establishing proven and profitable reserves, the costs incurred to develop such property are capitalized. Such costs, when capitalized, will be depreciated using the units-of-production method over the estimated life of the probable reserves.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
As a "smaller reporting company", we are not required to provide the information required by this Item.
Item 4. Controls and Procedures
Management's Report on Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms, and that such information is accumulated and communicated to our management, including our president (our principal executive officer, principal financial officer and principal accounting officer) to allow for timely decisions regarding required disclosure.
As of March 31, 2011, the end of our quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our president (our principal executive officer, principal financial officer and principal accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our president (our principal executive officer, principal financial officer and principal accounting officer) concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.
Changes In Internal Control Over Financial Reporting
There have been no changes in our internal controls over financial reporting that occurred during our quarter ended March 31, 2011 that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
We know of no material, existing or pending legal proceedings against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, executive officers or affiliates, or any registered or beneficial stockholder, is an adverse party or has a material interest adverse to our interest.
Item 1A. Risk Factors
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As a "smaller reporting company", we are not required to provide the information required by this Item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. [Removed and Reserved]
Item 5. Other Information
None.
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Item 6. Exhibits
Exhibit | Description |
No. | |
|
|
(3) | (i) Articles of Incorporation; and (ii) Bylaws |
|
|
3.1 | Articles of Incorporation (incorporated by reference to our current report on Form SB-2 filed on October 20, 2006) |
|
|
3.2 | Bylaws (incorporated by reference to our current report on Form SB-2 filed on October 20, 2006) |
|
|
3.3 | Amendment to Bylaws (incorporated by reference to our current report on Form SB-2 filed on October 20, 2006) |
|
|
(31) | Rule 13a-14(a)/15d-14(a) Certification |
|
|
31.1* | |
|
|
(32) | Section 1350 Certification |
|
|
32.1* |
* Filed herewith.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
OKANA VENTURES, INC. | |
(Registrant) | |
Dated: May 23, 2011 | /s/ Maria Peralta |
Maria Peralta | |
President, Chief Executive Officer, Chief | |
Financial Officer, Treasurer, Secretary and | |
Director | |
(Principal Executive Officer, Principal Financial | |
Officer and Principal Accounting Officer) |
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