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EX-23.1 - CONSENT OF ACCOUNANT - Red Giant Entertainment, Inc.casls1a4_27may11x231.txt


As  filed  with  the Securities and Exchange Commission on May 27, 2011
File No. 333-169764


                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                               Amendment No. 4 to
                                   Form S-1/A
            REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933


                             CASTMOR RESOURCES LTD.
             (Exact name of registrant as specified in its charter)

                                     Nevada
         (State or Other Jurisdiction of Incorporation or Organization)

                                      1000
            (Primary Standard Industrial Classification Code Number)

                                   98-0471928
                      (I.R.S. Employer Identification No.)

                         427 Princess Street, Suite 406
                             Kingston, ON  K7L 5S9
                                  613.617.5107
         (Address and telephone number of principal executive offices)

                             Laughlin International
                               2533 Carson Street
                           Carson City, Nevada 89706
                                  775.883.8484
           (Name, address and telephone number of agent for service)

APPROXIMATE  DATE  OF  PROPOSED SALE TO THE PUBLIC: As soon as practicable after
the  effective  date  of  this  registration  statement.

If  any  of  the securities being registered on this Form are to be offered on a
delayed  or  continuous  basis  pursuant to Rule 415 under the Securities Act of
1933,  please  check  the  following  box:  [  ]

If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the  Securities  Act  registration  statement  number  of  the earlier effective
registration  statement  for  the  same  offering.  [  ]

If  this  Form is a post-effective amendment filed pursuant to Rule 462(c) under
the  Securities  Act,  check  the  following  box  and  list  the Securities Act
registration  statement  number  of the earlier effective registration statement
for  the  same  offering.  [  ]

If  this  Form is a post-effective amendment filed pursuant to Rule 462(d) under
the  Securities  Act,  check  the  following  box  and  list  the Securities Act
registration  statement  number  of the earlier effective registration statement
for  the  same  offering.  [  ]

Indicate  by  check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.  See
the  definitions  of "large accelerated filer," "accelerated filer" and "smaller
reporting  company"  in  Rule  12b-2  of  the  Exchange  Act.  (Check  one):

[   ]  Large Accelerated Filer   [   ]  Accelerated Filer
[   ]  Non-accelerated Filer     [ X ]  Smaller reporting company

                        CALCULATION OF REGISTRATION FEE
===========================================================================

                  Proposed         Proposed      Proposed
Title of          Maximum          Maximum       Maximum
Each Class of     Number of        Offering      Aggregate     Amount of
Securities to     Shares to be     Price per     Offering      Registration
be Registered     Registered       Share         Price (1)     Fee
---------------------------------------------------------------------------

Common Stock        20,000,000        $0.005      $100,000            $7.13
---------------------------------------------------------------------------
(1)  Based  upon  20,000,000 shares of common stock to be sold in this offering.

THE  REGISTRANT  HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS  MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A  FURTHER  AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL  THEREAFTER  BECOME  EFFECTIVE  IN  ACCORDANCE  WITH  SECTION  8(A) OF THE
SECURITIES  ACT  OF  1933  OR  UNTIL  THIS  REGISTRATION  STATEMENT SHALL BECOME
EFFECTIVE  ON  SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A)
MAY  DETERMINE.


PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION CASTMOR RESOURCES LTD. 12,000,000 TO 20,000,000 SHARES OF COMMON STOCK PRICE: $0.005 PER SHARE This is a public offering of shares of common stock of Castmor Resources Ltd. We will be selling a minimum of 12,000,000 and a maximum of 20,000,000 shares of our common stock in this offering at $0.005 per share. The shares will be sold by our President on a best efforts basis. No subscriptions will be accepted until the minimum offering is subscribed. Once accepted, subscriptions are irrevocable and cannot be withdrawn by the subscriber. Proceeds from this offering will not be deposited into an escrow, trust or similar account, but will instead be deposited in a separate bank account under our name held at the Canadian Imperial Bank of Commerce of Toronto, Ontario, administered by our directors. If the minimum offering is not completed within 90 days, all funds will be promptly returned to subscribers without interest or deductions. Subscriptions may be accepted or rejected for any reason or for no reason. This offering will remain open until the earlier of the date that all the offered shares are sold and 120 days after the date of this prospectus; provided that, the minimum subscription is sold within 90 days. There will be no extension of the offering period. This offering may be terminated at any time for any reason whatsoever. No broker-dealer is participating in this offering and no sales commission will be paid to any person in connection with this offering. There is no established market for our securities. The offering price for our common stock was arbitrarily determined and may not reflect the market price of our shares after the offering. Prospective investors should rely only on the information contained in this prospectus or any prospectus supplement or amendment thereto. We have not authorized anyone to provide investors with different information. This prospectus may only be used where it is legal to sell these securities. The information in this prospectus is only accurate on the date of this prospectus, regardless of the time of any sale of securities. We have earned no revenue since inception. We have also incurred significant operating losses since inception and we expect to continue to incur losses to implement our business plan. Our auditors have expressed substantial doubt about our ability to continue as a going concern. If we cannot continue as a going concern, then our stockholders may lose all of their investment. AN INVESTMENT IN OUR STOCK IS EXTREMELY SPECULATIVE AND INVOLVES SEVERAL SIGNIFICANT RISKS. PROSPECTIVE INVESTORS ARE CAUTIONED NOT TO INVEST UNLESS THEY CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT. WE URGE ALL PROSPECTIVE INVESTORS TO READ THE "RISK FACTORS" SECTION OF THIS PROSPECTUS BEGINNING ON PAGE 5 AND THE REST OF THIS PROSPECTUS BEFORE MAKING AN INVESTMENT DECISION. Information contained herein is subject to completion or amendment. A registration statement concerning the offered shares has been filed with the Securities and Exchange Commission. The offered shares may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus shall not constitute an offer to sell or the solicitation of any offer to buy nor shall there by any sale of the offered shares in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. ---------------------------------------------------------------- PRICE TO UNDERWRITING PROCEEDS PUBLIC DISCOUNTS AND TO THE PER SHARE COMMISSIONS COMPANY (1) ---------------------------------------------------------------- Per Share $ 0.005 Nil $ 0.005 Minimum 12,000,000 shares $ 0.005 Nil $60,000 Maximum 20,000,000 shares $ 0.005 Nil $100,000 ================================================================ (1) Proceeds to Castmor Resources Ltd. are shown before deducting offering expenses estimated at $5,000 (including legal and accounting fees). NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this prospectus is May 27, 2011. 1
TABLE OF CONTENTS PAGE PROSPECTUS SUMMARY 3 RISK FACTORS 5 FORWARD-LOOKING STATEMENTS 10 USE OF PROCEEDS 11 DETERMINATION OF OFFERING PRICE 11 DILUTION 11 MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 12 DESCRIPTION OF BUSINESS 13 PROPERTY 20 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONS 22 LEGAL PROCEEDINGS 23 DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS 24 EXECUTIVE COMPENSATION 25 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 25 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 26 PLAN OF DISTRIBUTION 26 DESCRIPTION OF CAPITAL STOCK 28 DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES 29 LEGAL MATTERS 30 EXPERTS 30 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 30 AVAILABLE INFORMATION 30 INDEX TO FINANCIAL STATEMENTS F-1 2
PROSPECTUS SUMMARY THE FOLLOWING SUMMARY IS NOT COMPLETE AND DOES NOT CONTAIN ALL OF THE INFORMATION THAT MAY BE IMPORTANT TO PROSPECTIVE INVESTORS. EACH PROSPECTIVE INVESTOR IS URGED TO READ THIS PROSPECTUS IN ITS ENTIRETY BEFORE MAKING AN INVESTMENT DECISION TO PURCHASE OUR COMMON STOCK. As used in this prospectus, unless the context otherwise requires, "the Company", "we", "us", "our" or "Castmor" refers to Castmor Resources Ltd. "SEC" refers to the Securities Exchange Commission. "Securities Act" refers to the Securities Act of 1933, as amended. "Exchange Act" refers to the Securities Exchange Act of 1934, as amended. "NRS" refer to the Nevada Revised Statutes, as amended. OUR BUSINESS Castmor Resources Ltd. is an exploration stage mineral exploration company formed on June 27, 2005, under the law of the State of Nevada. We own a 100% undivided mineral interest in two non-contiguous mineral exploration licenses (license numbers 017985M and 017987M) comprising 17 claims located along south-eastern coastal Labrador (the "White Bear Arm Property"), approximately 13 kilometers northeast of the community of Charlottetown in Labrador, Canada, having a total area of 425 hectares (1,054.8 acres). Our claims give us the exclusive right to any of the mineral deposits situated on the White Bear Arm Property. Our auditors have expressed substantial doubt about our ability to continue as a going concern. If we cannot continue as a going concern, then investors may lose all of their investment. Our business plan is to explore the White Bear Arm Property for commercially exploitable reserves of valuable minerals. The White Bear Arm Property has no proven or probable mineral reserves, and there is no assurance that it contains commercially exploitable reserves of valuable minerals. All of our claims are presently in good standing. We intend to explore the White Bear Arm Property in two phases. The first phase will consist of expanded geological mapping, and geochemical sampling that will cover previously established grid areas, as well as other prospective sites that may be developed to delineate either base metals or industrial minerals. Geochemical sampling will include rock, stream sediment and till sampling. Several airborne electromagnetic anomalies will be re-verified on the ground and mapped for size and extent. If Phase I results in sufficient indication of economic geological value to support further exploration, then we will proceed with the second phase of the proposed exploration program, consisting of 800 to 1000 metres of diamond drilling, mobilized to the nearest road by truck, then helicopter-supported from that point. We anticipate that the first phase of our exploration program will cost approximately $26,680 while the second phase will cost approximately $195,500. To date, we have not commenced exploration on the White Bear Arm Property. We have sufficient working capital to maintain our present level of operations for the next 12 months and to complete Phase I of our proposed exploration program, but not Phase II. Furthermore, the proceeds from this offering will not be sufficient to fund Phase II. We will be required to seek additional funding in order to complete Phase II of our exploration program. We anticipate that any additional funding that we require will be in the form of equity financing from the sale of our common stock. There is no assurance, however, that we will be able to raise sufficient funding from the sale of our common stock. The risky nature of this enterprise and lack of tangible assets places debt financing beyond the credit-worthiness required by most banks or typical investors of corporate debt until such time as an economically viable mine can be demonstrated. We do not have any arrangements in place for any future equity financing. If we are unable to secure additional funding, we may cease or suspend operations. We have no plans, arrangements or contingencies in place in the event that we cease operations. If we discontinue our exploration of the White Bear Arm Property, we may seek to acquire other natural resource exploration properties. Any such acquisition will involve due diligence costs in addition to the acquisition cost. We will also have an ongoing obligation to maintain our periodic filings with the appropriate regulatory authorities, which will involve legal and accounting costs. In the event that our available capital is insufficient to acquire an alternative resource property and sustain minimum operations, we will need to secure additional funding or else we will be compelled to discontinue our business. We have earned no revenue since inception. From June 27, 2005 (inception) through August 31, 2010, we incurred a net loss of $91,976 with accumulated shareholder's equity of $37,904. Further losses are anticipated in the development of our business. We have limited financial resources and require additional financing to fund our operations. These factors raise substantial doubt about our ability to continue as a going concern. Our ability to achieve and maintain profitability and positive cash flow is dependent upon our ability to locate commercially exploitable reserves of valuable minerals. Our sole officer and director does not have any professional training or technical credentials in the exploration, development, or operation of mines. We therefore intend to retain qualified persons on a contract basis to perform the surveying, exploration, and excavating of the property as needed. We do not have any verbal or written agreement regarding the retention of any qualified engineer or geologist for our exploration program. 3
We currently have no employees other than our sole officer and director, who devotes six hours per week to our operations. We do not intend to hire any employees for the next twelve months or until we have proven mineral reserves. Please carefully read both this prospectus and any prospectus supplement together with the additional information described below under the section entitled "Available Information". Our principal executive offices are located at 427 Princess Street, Suite 406, Kingston, ON K7L 5S9. Our telephone number is (613) 617-5107. Our facsimile number is: (613) 383-0247. THE OFFERING Securities Offered: A minimum of 12,000,000 and a maximum of 20,000,000 shares of common stock, par value $0.0001 Offering price: $0.005 per share Offering period: The offering will remain open until the earlier of the date that all shares offered are sold and 120 days after the date of this prospectus, except that we will have only 90 days to sell at least the first 12,000,000 shares. Net proceeds to us: Minimum: Approximately $55,000, after estimated expenses of $5,000 assuming sale of 12,000,000 shares Maximum: Approximately $95,000, after estimated expenses of $5,000 assuming sale of 20,000,000 shares Use of proceeds: We will use the proceeds to pay for debt repayment, prospecting, professional fees and working capital. Number of shares outstanding 12,487,000 before the offering: Number of shares outstanding Minimum: 24,487,000 assuming after the offering: sale of 12,000,000 shares Maximum: 32,487,000 assuming sale of 20,000,000 shares SUMMARY OF SELECTED FINANCIAL DATA We are an exploration stage company. From the date of our inception on June 27, 2005 we have not generated any revenue or earnings from operations. As of August 31, 2010 our financial data is as follows: ----------------------------------------------------------------- As at or for the period from June 27, 2005 (inception) to August 31, 2010 ----------------------------------------------------------------- Operations Data Revenue: $ - Net Loss: 91,976 Balance Sheet Data Total Assets: 92,838 Total Liabilities: 54,934 Net Tangible Book Value: 37,904 Net Tangible Book Value Per Share: (0.00) ----------------------------------------------------------------- 4
RISK FACTORS Any investment in our company involves a high degree of risk. In addition to the other information in this prospectus, the following risk factors should be carefully considered in evaluating an investment in our common stock. If any of the following risks occur, our business, operating results and financial condition could be seriously harmed and our stockholders could lose all or part of their investment. This discussion also identifies important cautionary factors that could cause our actual results to differ materially from those we currently anticipate. (1) IT IS IMPOSSIBLE TO EVALUATE THE INVESTMENT MERITS OF CASTMOR BECAUSE WE HAVE NO OPERATING HISTORY. We are an exploration stage company with no operating history upon which an evaluation of our future success or failure can be made. Thus far, our activities have been primarily limited to organizational matters, acquiring our mineral claims, researching our claims, raising capital and the preparation of our securities filings, including the registration statement of which this prospectus forms a part. As a start-up enterprise, we are subject to all the risks inherent in the initial organization, financing, expenditures, complications and delays inherent in a new business. Investors should evaluate an investment in our company in light of the uncertainties encountered by start-up companies in a competitive environment. There can be no assurance that our business will be successful or that we will be able to attain profitability. Our future viability, profitability and growth will depend upon our ability to successfully implement our business plan and to expand our operations. There can be no assurance that any of our efforts will prove successful or that we will not continue to incur operating losses in the future. (2) SINCE MINERAL EXPLORATION IS A HIGHLY SPECULATIVE VENTURE, ANYONE PURCHASING OUR STOCK WILL LIKELY LOSE THEIR ENTIRE INVESTMENT. Potential investors should be aware of the difficulties normally encountered by new mineral exploration companies and the high rate of failure of such enterprises. Exploration for minerals is a speculative venture necessarily involving substantial risk. The expenditures to be made by us on our exploration program may not result in the discovery of commercially exploitable reserves of valuable minerals. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the exploration of the mineral properties that we plan to undertake. The probability of a mineral claim ever having commercially exploitable reserves is extremely remote, and in all probability our mineral claims do not contain any reserves. Any funds spent on the exploration of these claims will probably be lost. Problems such as unusual or unexpected formations and other conditions are involved in mineral exploration and often result in unsuccessful exploration efforts. We may also become subject to significant liability for pollution, cave-ins or hazards, which we cannot insure or which we may elect not to insure. In such a case, we would be unable to complete our business plan and our shareholders may lose their entire investment. (3) SINCE OUR MINERAL PROPERTY HAS NOT BEEN PHYSICALLY EXAMINED BY A PROFESSIONAL GEOLOGIST OR MINING ENGINEER, WE FACE A SIGNIFICANT RISK THAT THE PROPERTY WILL NOT CONTAIN COMMERCIALLY VIABLE DEPOSITS OF MINERALS. We have not had a professional geologist or mining engineer physically examine the White Bear Arm Property in the field. Furthermore, our sole officer and director has not visited White Bear Arm Property. As a result, we face an enhanced risk that, upon physical examination of the mineral property, no commercially viable deposits of minerals will be located. In the event that our planned exploration of the mineral property reveals that no commercially viable deposits exist on the site, our business will likely fail. (4) BECAUSE ACCESS TO OUR MINERAL CLAIMS MAY BE RESTRICTED BY INCLEMENT WEATHER WE MAY BE DELAYED IN OUR EXPLORATION Access to the White Bear Arm Property may be restricted through some of the year due to weather in the local area. As a result, any attempt to test or explore the property is largely limited to the times when weather permits such activities. These limitations can result in significant delays in exploration efforts. Such delays can have a significant negative effect on our results of operations. (5) IF WE DO NOT OBTAIN ADDITIONAL FINANCING, OUR BUSINESS MAY FAIL. We do not have sufficient capital to commence exploration of our mineral claims. As of August 31, 2010, we had cash on hand of $29,032. Our business plan calls for significant expenses in connection with the exploration of our mineral property. Phase I of the proposed exploration program on our claims is estimated to cost $26,680. We will require additional financing in order to complete Phase II, which is estimated to cost $195,500. The proceeds from this offering will not be sufficient to complete Phase II. If our exploration program is successful in discovering commercially exploitable reserves of valuable minerals, we will require additional funds in order to place our mineral claim into commercial production. While we do not presently have sufficient information about the claims to estimate the amount required to place the mineral claims into commercial production, there is a risk that we may not be able to obtain whatever financing is required. Obtaining additional financing will depend on a number of factors, including market prices for minerals, investor acceptance of our properties, and investor sentiment. These factors may make the timing, amount, terms or conditions of additional financing impracticable. If we are unsuccessful in obtaining additional financing when we need it, our business may fail before we ever become profitable and our shareholders may lose their entire investment. 5
(6) SINCE MARKET FACTORS IN THE MINING BUSINESS ARE OUT OF OUR CONTROL, WE MAY NOT BE ABLE TO PROFITABLY SELL ANY MINERALS THAT WE FIND. If we are successful in locating a commercially exploitable reserve of valuable minerals, we can provide no assurance that we will be able to sell it. Numerous factors beyond our control may affect the marketability of any minerals discovered. These factors include fluctuations in the market price of such minerals due to changes in supply or demand, the proximity and capacity of processing facilities for the discovered minerals, government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. The precise effect of these factors cannot be accurately predicted, but the combination of these factors may result in us not receiving an adequate return on invested capital so that our investors may lose their entire investment. (7) IF WE CANNOT COMPETE SUCCESSFULLY WITH OTHER EXPLORATION COMPANIES, OUR EXPLORATION PROGRAM MAY SUFFER AND OUR SHAREHOLDERS MAY LOSE THEIR INVESTMENT. We are an exploration stage company engaged in the business of exploring for commercially producible quantities of minerals. We compete with other mineral resource exploration stage companies for financing from a limited number of investors that are prepared to make investments in mineral resource exploration stage companies. The presence of competing mineral resource exploration stage companies may impede our ability to raise additional capital in order to fund our property acquisitions and exploration programs if investors are of the view that investments in competitors are more attractive based on the merit of the mineral properties under investigation and the price of the investment offered to investors. Many of the resource exploration stage companies with whom we compete have greater financial and technical resources than we do. Accordingly, these competitors may be able to spend greater amounts on the acquisition of properties of merit and on exploration. In addition, they may be able to afford greater geological expertise in the targeting and exploration of resource properties. As a result, our competitors will likely have resource properties of greater quality and interest to prospective investors who may finance additional exploration and to senior exploration stage companies that may purchase resource properties or enter into joint venture agreements with junior exploration stage companies. This competition could adversely impact our ability to finance the exploration of our mineral property. (8) COMPLIANCE WITH GOVERNMENT REGULATIONS IN THE COURSE OF EXPLORING OUR MINERAL PROPERTY MAY INCREASE THE ANTICIPATED TIME AND COST OF OUR EXPLORATION PROGRAM SO THAT WE ARE UNABLE TO COMPLETE THE PROGRAM OR ACHIEVE PROFITABILITY. Exploration and exploitation activities are subject to federal, provincial and local laws, regulations and policies, including laws regulating the removal of natural resources from the ground and the discharge of materials into the environment. Exploration and exploitation activities are also subject to federal, provincial, and local laws and regulations which seek to maintain health and safety standards by regulating the design and use of drilling methods and equipment. We will be subject to the Mining Act of Newfoundland as we carry out our exploration program. We may be required to obtain work permits, post bonds, and perform remediation work for any physical disturbance to the land in order to comply with these regulations. While our planned exploration program provides for regulatory compliance, there is a risk that new regulations could increase our time and costs of doing business and prevent us from carrying out our exploration program. If we are unable to complete our exploration program or achieve profitability, our investors may lose their entire investment. (9) WE ARE A SHELL COMPANY UNDER THE FEDERAL SECURITIES LAWS WHICH WILL SUBJECT US TO ADDITIONAL COSTS AND DISCLOSURE REQUIREMENTS. Under Rule 405 of the Securities Act of 1933, as amended, and Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as amended, a shell company is any company with nominal operations and assets consisting of cash and nominal other assets. We are a shell company under federal securities laws. Applicable securities rules prohibit shell companies from using (i) a Form S-8 registration statement to register securities pursuant to employee compensation plans for so long as we are a shell company and for a period of 60 days thereafter and (ii) Form S-3 for the registration of a primary offering of securities for so long as we are a shell company and for 12 months thereafter. Additionally, Form 8-K requires shell companies to provide more detailed disclosure upon completion of a transaction that causes it to cease being a shell company. To the extent that we acquire a business in the future, we must file a current report on Form 8-K containing the financial and other information required in a registration statement on Form 10 within four business days following completion of such a transaction. 6
To the extent that we are required to comply with additional disclosure as we are a shell company, we may be delayed in executing any mergers or acquiring other assets that would cause us to cease being a shell company. In addition, under Rule 144 of the Securities Act, a holder of restricted securities of a "shell company" may not be allowed to resell their securities in reliance upon Rule 144. Preclusion from any prospective purchase using the exemptions from registration afforded by Rule 144 may make it more difficult for us to sell equity securities in the future, and the inability to utilize registration statements on Forms S-8 and S-3 would likely increase our cost to register securities in the future. Additionally, the loss of the use of Rule 144 and Forms S-3 and S-8 may make investments in our securities less attractive to investors and may make the offering and sale of our securities to employees, directors and others under compensatory arrangements more expensive and less attractive to recipients. (10) OUR SOLE OFFICER AND DIRECTOR AND OUR CONTROLLING STOCKHOLDER HAVE EACH BEEN INVOLVED WITH PUBLIC START-UP MINING COMPANIES THAT HAVE CHANGED THEIR BUSINESS PLANS. We are informed by the SEC that there have been acquisitions or business combinations involving public start-up mining companies which have no reserves. We are further informed by the SEC that at least some of these acquisitions or combinations appear to result in the change of the business initially described in the prospectus filed by the start-up company with the SEC. Our sole officer and director and our controlling stockholder have each been involved with start-up mining companies having no reserves that have completed acquisitions or business combinations resulting in a change of the business initially described in the prospectus filed by the start-up company with the SEC. (11) SINCE OUR SOLE OFFICER HAS OTHER BUSINESS INTERESTS, HE WILL ONLY BE DEVOTING SIX HOURS PER WEEK TO OUR OPERATIONS, WHICH MAY RESULT IN PERIODIC INTERRUPTIONS OR SUSPENSIONS OF EXPLORATION. Our sole officer has other outside business activities and will only be devoting six hours per week, to our operations. As a result, our operations may be sporadic and occur at times that are convenient to him. Consequently, our business activities may be periodically interrupted or suspended. (12) SINCE SUBSTANTIALLY ALL OF OUR ASSETS AND OUR SOLE DIRECTOR AND OFFICER IS LOCATED OUTSIDE THE UNITED STATES, IT MAY BE DIFFICULT FOR INVESTORS TO ENFORCE WITHIN THE UNITED STATES ANY JUDGMENTS OBTAINED AGAINST US OR ANY OF OUR DIRECTORS OR OFFICERS. Substantially all of our assets are located outside the United States and we do not currently maintain a permanent place of business within the United States. We were incorporated in the State of Nevada and have an agent for service in Carson City, Nevada. Our agent for service will accept on our behalf the service of any legal process and any demand or notice authorized by law to be served upon a corporation. Our agent for service will not, however, accept service on behalf of our sole officer and director. Our sole officer and director is a resident of Canada and does not have an agent for service in the United States. Therefore, it may be difficult for investors to enforce within the United States any judgments obtained against us or sole officer and director, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof. (13) SINCE OUR SOLE EXECUTIVE OFFICER HAS NO EXPERIENCE IN MINERAL EXPLORATION AND DOES NOT HAVE FORMAL TRAINING SPECIFIC TO MINERAL EXPLORATION, THERE IS A HIGHER RISK THAT OUR BUSINESS WILL FAIL. Our sole executive officer has no experience in mineral exploration and does not have formal training in geology or in the technical aspects of management of a mineral exploration company. This inexperience presents a higher risk that we will be unable to complete our business plan for the exploration of our mineral claims. In addition, we will have to rely on the technical services of others with expertise in geological exploration in order for us to carry our planned exploration program. If we are unable to contract for the services of such individuals, it will make it difficult and may be impossible to pursue our business plan. There is thus a higher risk that our operations, earnings and ultimate financial success could suffer irreparable harm and that our investors will lose all of their investment. (14) IF WE ARE UNABLE TO HIRE AND RETAIN KEY PERSONNEL, WE MAY NOT BE ABLE TO IMPLEMENT OUR BUSINESS PLAN AND OUR BUSINESS WILL FAIL. We will compete with other mining companies in the recruitment and retention of qualified managerial and technical employees. Our success will be largely dependent upon our ability to hire highly qualified personnel. This is particularly true in highly technical businesses such as mineral exploration. These individuals may be in high demand and we may not be able to attract the staff we need. In addition, we may not be able to afford the high salaries and fees demanded by qualified personnel, or may lose such employees after they are hired. Currently, we have not hired any key personnel and we do not intend to do so for the next 12 months and until we have proved mineral reserves. If we are unable to hire key personnel when needed, our exploration program may be slowed down or suspended. 7
(15) IF WE ARE UNABLE TO HIRE AND RETAIN KEY PERSONNEL, WE MAY NOT BE ABLE TO IMPLEMENT OUR BUSINESS PLAN AND OUR BUSINESS MAY FAIL. Our future success depends, to a significant extent, on our ability to attract, train and retain capable technical, sales and managerial personnel. Recruiting and retaining capable personnel, particularly those with expertise with mineral exploration, is vital to our success. There is substantial competition for qualified technical and managerial personnel, and there can be no assurance that we will be able to attract or retain the necessary persons. If we are unable to attract and retain qualified employees, our business may fail and our investors could lose their investment. (16) CERTAIN PROVISIONS OF OUR ARTICLES OF INCORPORATION AND BYLAWS MAY DISCOURAGE MERGERS AND OTHER TRANSACTIONS. Certain provisions of our certificate of incorporation and bylaws may make it more difficult for someone to acquire control of Castmor. These provisions may make it more difficult for stockholders to take certain corporate actions and could delay or prevent someone from acquiring our business. These provisions could limit the price that certain investors might be willing to pay for shares of our common stock. These provisions, and others, may be beneficial to our management and the board of directors in a hostile tender offer, and could have an adverse impact on stockholders who may want to participate in such tender offer, or who may want to replace some or all of the members of the board of directors. (17) WE MAY, IN THE FUTURE, ISSUE ADDITIONAL COMMON SHARES, WHICH WOULD REDUCE THE PERCENTAGE OF OWNERSHIP OF OUR STOCKHOLDERS AND MAY DILUTE OUR SHARE VALUE. Our Articles of Incorporation authorize the issuance of 900,000,000 shares of common stock, par value $0.0001. The future issuance of common stock may result in substantial dilution in the percentage of our common stock held by our then existing shareholders. We may value any common stock issued in the future on an arbitrary basis. The issuance of common stock for future services or acquisitions or other corporate actions may have the effect of diluting the value of the shares held by our investors, and might have an adverse effect on any trading market for our common stock. (18) WE MAY ISSUE SHARES OF PREFERRED STOCK WITH GREATER RIGHTS THAN OUR COMMON STOCK, WHICH MAY ENTRENCH MANAGEMENT AND RESULT IN DILUTION OF OUR SHAREHOLDERS' INVESTMENT. Our Articles of Incorporation authorize the issuance of up to 100,000,000 shares of preferred stock, par value $0.0001 per share. The authorized but unissued preferred stock may be issued by our board of directors from time to time on any number of occasions, without stockholder approval, as one or more separate series of shares comprised of any number of the authorized but unissued shares of preferred stock, designated by resolution of our board of directors stating the name and number of shares of each series and setting forth separately for such series the relative rights, privileges and preferences thereof, including, if any: (i) the rate of dividends payable thereon; (ii) the price, terms and conditions of redemption; (iii) voluntary and involuntary liquidation preferences; (iv) provisions of a sinking fund for redemption or repurchase; (v) terms of conversion to common stock, including conversion price, and (vi) voting rights. Such preferred stock may enable our board of directors to hinder or discourage any attempt to gain control of us by a merger, tender offer at a control premium price, proxy contest or otherwise. Consequently, the preferred stock could entrench our management. The market price of our common stock could be depressed to some extent by the existence of the preferred stock. As of the date of this prospectus, no shares of preferred stock have been issued. (19) SINCE OUR BOARD OF DIRECTORS DOES NOT INTEND TO PAY DIVIDENDS ON OUR COMMON STOCK IN THE FORESEEABLE FUTURE, IT IS LIKELY THAT INVESTORS WILL ONLY BE ABLE TO REALIZE A RETURN ON THEIR INVESTMENT BY RESELLING SHARES PURCHASED THROUGH THIS OFFERING. We have not paid any cash dividends on our common stock since our inception and we do not anticipate paying cash dividends in the foreseeable future. We intend to retain our earnings, if any, to provide funds for reinvestment in our acquisition and exploration activities. The payment of dividends, if any, in the future is within the discretion of the board of directors and will depend on our earnings, if any, our capital requirements, financial condition and other relevant factors. (20) INVESTORS MAY NOT BE ABLE TO RESELL ANY SHARES THEY PURCHASE THROUGH THIS OFFERING BECAUSE WE DO NOT INTEND TO REGISTER OUR SHARES FOR SALE IN ANY STATE AND THERE IS NO ESTABLISHED PUBLIC TRADING MARKET FOR OUR COMMON STOCK. It may be difficult or impossible for investors to sell our common stock or for them to sell our common stock for more than the offering price even if our operating results are positive. We do not intend to register our common stock with any State. Therefore, investors will not be able to resell their shares in any State unless the resale is exempt under the Blue Sky laws of the State in which the shares are to be sold. While our common stock is presently quoted on the Pink Sheets, there is no established trading market for it. Most of our common stock will be held by a small number of investors that will further reduce the liquidity of our common stock. Furthermore, the offering price of our common stock was arbitrarily determined by us, without considering assets, earnings, book value, net worth or other economic or recognized criteria or future value of our common stock. Market fluctuations and volatility, as well as general economic, market and political conditions, could reduce our market price. 8
(21) THE LEVEL OF TRADING ACTIVITY IN OUR STOCK MAY BE REDUCED BECAUSE WE ARE SUBJECT TO THE "PENNY STOCK" RULES. Broker-dealer practices in connection with transactions in "penny stocks" are regulated by penny stock rules adopted by the Securities and Exchange Commission. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on some national securities exchanges or quoted on NASDAQ). The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and, if the broker-dealer is the sole market maker, the broker-dealer must disclose this fact and the broker-dealer's presumed control over the market, and monthly account statements showing the market value of each penny stock held in the customer's account. In addition, broker-dealers who sell these securities to persons other than established customers and "accredited investors" must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. Consequently, these requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security subject to the penny stock rules, and investors in our common stock may find it difficult to sell their shares. (22) SINCE THERE IS NO ESCROW, TRUST OR SIMILAR ACCOUNT, OUR SUBSCRIBERS' INVESTMENT COULD BE SEIZED BY CREDITORS OR BY A TRUSTEE IN BANKRUPTCY, RESULTING IN THE LOSS OF THE INVESTMENT. Proceeds from this offering will not be deposited into an escrow, trust or similar account, but will instead be deposited in a separate bank account under our name. Only our officers and directors will have access to the account. Investors will not have the right to withdraw their funds during the offering. Investors will only receive their funds back if we do not raise the minimum amount of the offering within 90 days. As a result, if we are sued for any reason and a judgment is rendered against us, all proceeds from this offering could be seized. If we file a voluntary bankruptcy petition or our creditors file an involuntary bankruptcy petition, our assets will be seized by the bankruptcy trustee, including the proceeds from this offering, and used to pay our creditors. If that happens, our investors will lose their investment, even if we fail to raise the minimum amount in this offering. 9
FORWARD-LOOKING STATEMENTS Information in this prospectus contains "forward looking statements" which can be identified by the use of forward-looking words such as "believes", "estimates", "could", "possibly", "probably", "anticipates", "estimates", "projects", "expects", "may", or "should" or other variations or similar words. No assurance can be given that the future results anticipated by the forward-looking statements will be achieved. These statements constitute cautionary statements identifying important factors with respect to those forward-looking statements, including certain risks and uncertainties that could cause actual results to vary materially from the future results anticipated by those forward-looking statements. Such statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section titled "Risk Factors". Among the key factors that have a direct bearing on our results of operations are the effects of various governmental regulations, the fluctuation of our direct costs and the costs and effectiveness of our operating strategy. Other factors could also cause actual results to vary materially from the future results anticipated by those forward-looking statements. The forward-looking statements are based upon management's current views and assumptions regarding future events and operating performance, and are applicable only as of the dates of such statements. We do not have any intention or obligation to update publicly any forward-looking statements, whether as a result of new information, future events, changes in assumptions, or otherwise. 10
USE OF PROCEEDS Our offering is being made on a $60,000 minimum and $100,000 maximum, best efforts, self-underwritten basis. The table below sets forth the use of proceeds if 60% (minimum) and 100% (maximum) of the offering is sold. ------------------------------------------------------------- IF MINIMUM SOLD IF MAXIMUM SOLD $ 60,000 % $ 100,000 % ------------------------------------------------------------- Offering expenses 5,000 10 5,000 5 Total Proceeds $ 55,000 90 $ 95,000 95 Debt Repayment(1) 55,000 90 55,000 55 Prospecting - 22,500 23 Consulting Geologist - 4,400 4 Accounting Fees - 5,000 5 Legal fees - 5,000 5 Working Capital(2) - 3,100 3 ------------------------------------------------------------- Total Use of Proceeds $ 60,000 100 $ 100,000 100 ============================================================= (1) "Debt Repayment" refers to the repayment of trade debt and a loan of $50,000 from Moneris Capital L.P., plus projected interest at the rate of 20% per annum. (2) "Working Capital" includes office expenses and contingencies, such as unanticipated exploration costs and professional fees. No proceeds from this offering will be paid to our officers or directors. DETERMINATION OF OFFERING PRICE There is no established public market for the shares of common stock being registered. As a result, the offering price and other terms and conditions relative to the shares of common stock offered hereby have been arbitrarily determined by us and do not necessarily bear any relationship to assets, earnings, book value or any other objective criteria of value. In addition, no investment banker, appraiser or other independent, third party has been consulted concerning the offering price for the shares or the fairness of the price used for the shares. DILUTION The investment by any purchaser of the offered shares of common stock will be diluted immediately to the extent of the difference between the public offering price per share and the net tangible book value per share of common stock immediately after this offering. The Net tangible book value as of February 28, 2011, was $(50,564) or approximately ($0.004) per common share. Net tangible book value per share is determined by dividing tangible shareholders' equity, which is total tangible assets less total liabilities, by the aggregate number of shares of common stock outstanding. Tangible assets represent total assets excluding goodwill and other intangible assets. Dilution in net tangible book value per share represents the difference between the amount per share paid by purchasers of shares of our common stock in this offering and the net tangible book value per share of our common stock immediately after the closing of this offering. All of our current shareholders will realize an immediate increase of $0.004 per share in the net tangible book value of their shares held prior to the offering if the minimum is sold, and an increase of $0.006 per share if the maximum is sold. Purchasers of the offered shares will realize an immediate dilution of $0.005 per share in the net tangible book value of their shares if the minimum is sold, and an immediate dilution of $0.003 per share if the maximum is sold. The following table illustrates the increase to existing shareholders and the dilution to purchasers of the offered shares in their net tangible book value per share, before deducting estimated offering expenses: 11
------------------------------------------------------------------------------- MINIMUM MAXIMUM ------------------------------------------------------------------------------- Number of shares sold 12,000,000 20,000,000 Gross proceeds $ 60,000 $ 100,000 ------------------------------------------------------------------------------- Offering price per share $ 0.005 $ 0.005 Net tangible book value per share at February 28, 2011 $ 0.004 $ 0.004 Increase in net tangible book value per share attributable to the sale of $ 0.004 $ 0.006 12,000,000 (minimum) and 20,000,000 (maximum) shares Net tangible book value per share at February 28, 2011 $ 0.000 $ 0.002 Dilution per share to new investors in this offering $ 0.005 $ 0.003 =============================================================================== We may seek additional equity financing in the future, which may cause additional dilution to investors in this offering, and a reduction in their equity interest. The holders of the shares purchased in this offering will have no pre-emptive rights to purchase any shares we issue in the future in connection with any additional equity financing. The table below sets forth as of February 28, 2011, the difference between the number of shares purchased and total consideration paid for those shares by existing shareholders, compared to shares purchased by new investors in this offering without taking into account any offering expenses. If the minimum number of shares is sold in this offering, purchasers will contribute 32% of our share capital and will collectively own 49% of our issued and outstanding shares. If the maximum number of shares is sold in this offering, purchasers will contribute 44% of our share capital and will collectively own 62% of our issued and outstanding shares. ------------------------------------------------------------------------------------------------------------------ TOTAL NUMBER OF SHARES PURCHASED TOTAL CONSIDERATION AND AVERAGE PER SHARE PRICE MINIMUM MAXIMUM MINIMUM MAXIMUM PERCENT PERCENT AMOUNT PERCENT AVERAGE AMOUNT PERCENT AVERAGE NUMBER (%) NUMBER (%) ($) (%) ($) ($) (%) ($) ------------------------------------------------------------------------------------------------------------------ Existing shareholders 12,487,000 51 12,487,000 38 129,880 68 0.01 129,880 56 0.01 New shareholders 12,000,000 49 20,000,000 62 60,000 32 0.005 100,000 44 0.005 ------------------------------------------------------------------------------------------------------------------ Total 24,487,000 100 32,487,000 100 189,880 100 0.01 229,880 100 0.01 ================================================================================================================== We may choose to raise additional capital due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. To the extent that additional capital is raised through the sale of equity or convertible debt securities, the issuance of these securities could result in further dilution to our shareholders. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Our common stock is quoted on the OTCQB operated by OTC Markets Group Inc. under the symbol "CASL". Trading of our stock is sporadic and does not constitute an established public market for our shares. HOLDERS On December 1, 2010, the stockholders' list of our shares of common stock showed 41 registered holders of our shares of common stock and 12,487,000 shares of common stock outstanding. The number of record holders was determined from the records of our transfer agent and does not include beneficial owners of shares of common stock whose shares are held in the names of various security brokers, dealers, and registered clearing agencies. DIVIDEND POLICY We have not declared or paid any cash dividends on our common stock. We currently intend to retain future earnings, if any, to finance the expansion of our business. As a result, we do not anticipate paying any cash dividends in the foreseeable future. 12
CONVERTIBLE SECURITIES We have not issued and do not have outstanding any other securities convertible into shares of our common stock or any rights convertible or exchangeable into shares of our common stock. DESCRIPTION OF BUSINESS CORPORATE HISTORY We were incorporated in the State of Nevada on June 27, 2005, as a mineral exploration company. By a Transfer of Mineral Disposition dated November 7, 2005, from Thomas Mills, we acquired a 100% interest in the White Bear Arm Property: two non-contiguous mineral exploration licenses (license numbers 011117M and 011400M) comprising 17 claims located along south-eastern coastal Labrador, approximately 13 kilometers northeast of the community of Charlottetown in Labrador, Canada, having a total area of 425 hectares (1,054.8 acres). One of the licenses (license number 011300M), comprising eight claims, was inadvertently allowed to expire and was cancelled on January 24, 2007. We reacquired a 100% interest in the same eight claims under a new mineral license (license number 013632M) by a Transfer of Mineral Disposition dated July 16, 2007, from Mr. Mills. In 2009, due to a lack of capital we allowed our mineral claims to expire and they were subsequently cancelled. In February 2010, our management was approached by Cage Wars Championship Ltd., a company organized under the laws of the United Kingdom ("Cagewars") about the prospect of merging Cagewars with Castmor. Cagewars is engaged in the business of organizing and promoting mixed martial-arts competitions throughout the United Kingdom. Given our lack of capital at the time, our management determined that it would be in the shareholders' best interests to agree to the merger. On March 8, 2010, we entered into a material definitive agreement with Christopher Kelly and Patrick Mooney, both of Northern Ireland, to acquire all the issued and outstanding shares of Cagewars. The closing of the acquisition was to take place on April 19, 2010. Prior to closing, our management determined that it would be in the best interests of our shareholders for Castmor to continue pursuing its mineral exploration business. On April 15, 2010, we mutually agreed with Cagewars to cancel the merger and rescind the material definitive agreement. On September 20, 2010, we reacquired a 100% interest in the 17 mineral claims originally composing the White Bear Arm Property under new mineral licenses (license nos. 017985M and 017987M) by a Transfer of Mineral Disposition dated September 20, 2010, from Thomas Mills. The mineral licenses underlying our claims are registered with the Government of Newfoundland and Labrador and are presently in good standing. We have no subsidiaries. Our office is located at 427 Princess Street, Suite 406, Kingston, ON K7L 5S9. Our telephone number is 613.617.5107. Our facsimile number is 613.383.0247. OUR BUSINESS We are an exploration stage company in that we are engaged in the search for mineral deposits that are not in either the development or production stage, with a view to exploiting any mineral deposits we discover that demonstrate economic feasibility. Since we are an exploration stage company, there is no assurance that commercially exploitable reserves of valuable minerals exist on our property. We need to do further exploration before a final evaluation of the economic and legal feasibility of our future exploration is determined. We have not commenced business operations. To date, our activities have been limited to organizational matters, acquiring our mineral claims, researching our claims, raising capital and the preparation of our securities filings, including the registration statement of which this prospectus forms a part. Our assets are limited to our mineral claims, the acquisition of which have been capitalized in accordance with our accounting policy. Mineral property exploration is typically conducted in phases. Each subsequent phase of exploration work is recommended by a geologist based on the results from the most recent phase of exploration. We have not yet commenced the initial phase of exploration on the White Bear Arm Property. Upon completion of each phase of exploration, we will make a decision as to whether or not we will proceed with each successive phase based upon the analysis of the results of that program. Our Board of Directors will make this decision based upon the recommendations of an independent geologist who will oversee the program and record the results. 13
We presently have no known reserves of any type of mineral. We plan to conduct appropriate exploration work on the White Bear Arm Property in order to ascertain whether it possesses commercially exploitable reserves of valuable minerals. There can be no assurance that commercially exploitable reserves of valuable minerals exist on the White Bear Arm Property or that we will discover them, if they exist. If we are unable to find reserves of valuable minerals or we cannot remove the minerals because we either do not have the capital to do so, or because it is not economically feasible to do so, then we may cease operations and our shareholders may lose their investment. Even if Phase I of our exploration program identifies high priority geological targets suitable for a Phase II diamond drilling program, we will need to raise additional funding to finance the Phase II drilling program and any additional drilling and engineering studies that are required before we will know if we have commercially exploitable reserves of valuable minerals. The proceeds from this offering will not be sufficient to fund Phase II. We anticipate that any additional funding that we require will be in the form of equity financing from the sale of our common stock. There is no assurance, however, that we will be able to raise sufficient funding from the sale of our common stock. The risky nature of this enterprise and lack of tangible assets places debt financing beyond the credit-worthiness required by most banks or typical investors of corporate debt until such time as an economically viable mine can be demonstrated. We do not have any arrangements in place for any future equity financing. If we are unable to secure additional funding, we may cease or suspend operations. We have no plans, arrangements or contingencies in place in the event that we cease operations. MINERAL CLAIMS The White Bear Arm Property consists of two non-contiguous mineral exploration licenses comprising a total of 17 claims having a total area of 425 hectares (mineral rights licence numbers 017985M and 017987M), wholly owned by us. We hold all of our mineral titles free and clear of any encumbrances or liens. The following table sets out all the mineral exploration licenses that currently compose the White Bear Arm Property. ------------------------------------------------------------------------------------------------- MINERAL NATIONAL EXPLORATION NUMBER TOPOGRAPHIC LICENSE OF AREA SERIES MAP NUMBER LICENSEE HOLDER CLAIMS (HECTARES) SHEET ISSUANCE DATE ------------------------------------------------------------------------------------------------- 017985M Castmor Resources Ltd. (100%) 9 225 13A/16 October 4, 2010 017987M Castmor Resources Ltd. (100%) 8 200 13A/16, 3D13 October 4, 2010 ------------------------------------------------------------------------------------------------- TOTALS 17 425 (1,054.8 acres) ================================================================================================= Our mineral exploration licenses entitle us to explore the claims composing the White Bear Arm Property subject to the laws and regulations of the Province of Newfoundland and Labrador. Title to mineral claims are issued and administered by the Mineral Lands Division of the Ministry of Natural Resources, and title must comply with all provisions under the Mineral Act of Newfoundland and Labrador. Under Newfoundland law, our mineral licenses may be held for one year after the date of Issuance Date, and thereafter from year to year if, on or before the anniversary date, we perform assessment work on the underlying claims having a minimum value of not less than C$200 per claim in the first year, C$250 per claim in the second year, and C$300 per claim in the third year. If we are unable to complete the assessment work required to be done in any twelve month period, we can maintain our claims in good standing by posting a cash security deposit for the amount of the deficiency. When the deficient work is completed and accepted the security deposit will be refunded. Otherwise, the security deposit will be forfeited. If we do not comply with these maintenance requirements, then we will forfeit our claims at the end of the anniversary date for each respective claim. All of our claims are presently in good standing. GLOSSARY OF TECHNICAL TERMS The following are the definitions of certain technical and geological terms used in this registration statement: AMPHIBOLE: Family of silicate minerals forming prism or needle-like crystals. Amphibole minerals generally contain iron, magnesium, calcium and aluminum in varying amounts, along with water. AMPHIBOLITE: A dark-colored metamorphic rock of mafic composition consisting mainly of the minerals hornblende and plagioclase. 14
ANATECTIC: Having melted from pre-existent rock. ASSAY: A chemical analysis that determines the amount of easily extractable elements in a sample (of rock, soil, till, silt, etc.). The concentrations of precious metals such as gold and silver are typically reported as grams of metal per tonne of rocks; base metal assays (copper, lead, zinc, etc.) are given in weight percent. Assay sheets from laboratories typically give gold concentrations in parts per billion (ppb). 1000 ppb equals 1 part per million (ppm), equals 1 gram/tonne (there are about 34 grams in an ounce). Base metal assays are typically measured in ppm (10,000 ppm equals one percent). BIOTITE: common rock-forming mineral of the mica family. Biotite is a black or dark brown silicate rich in iron, magnesium, potassium, aluminum, and, of course, silica. Like other micas, it forms flat book-like crystals that peel apart into individual sheets on cleavage planes. BOREAL: Referring to the northern forests. CO: The chemical symbol for Cobalt. CONTACT: The surface of delimitation between a vein and its wall, or country rock. CU: The chemical symbol for Copper. DERIVATIVE: A rock composed of materials derived from the weathering of older rocks, a sedimentary rock, or a rock formed of material that has not been in a state of fusion immediately before its accumulation. DYKES: Tabular igneous intrusions that cut across the bedding or foliation of the country rock. ECOCLIMATE: Climate operating as an ecological factor. The sum of the meteorological factors within a habitat. ESKERS: A long, narrow ridge of coarse gravel deposited by a stream flowing in or under a decaying glacial ice sheet. FACIES: The overall characteristics of a rock unit that reflect its origin and differentiate the unit from others around it. Mineralogy and sedimentary source, fossil content, sedimentary structures and texture distinguish one facies from another. FELSIC: Igneous rock composed principally of feldspars and quartz. FERROMAGNESION: Containing iron and magnesium. FLUVIOGLACIAL: Pertaining to the meltwater streams flowing from wasting glacier ice and esp. To the deposits and landforms produced by such streams, as kame terraces and outwash plains; relating to the combined action of glaciers and streams. FOLIATED: Of a planar structure or any planar set of minerals in metamorphic rocks that formed from direct pressure during deformation. GABBRO: Coarse grained mafic intrusive rock composed mainly of plagioclase and pyroxene. GABBROIC: Having the quality of gabbro GABBRONORITE: Gabbro containing orthopyroxene and labradorite, a plagioclasic feldspar. GARNET: Any of a group of hard silicate minerals having the general formula asb2(sio4)3, occurring chiefly as well-formed crystals in metamorphic rocks. GARNETIFEROUS: Containing garnets. GEOPHYSICS: The study of the physical properties of the earth and the composition and movement of its component rock. Geophysics is used extensively in mineral exploration to detect mineralized rocks characterized by any one or more of their physical properties. GNEISS: A layered or banded crystalline metamorphic rock, the grains of which are aligned or elongated into a roughly parallel arrangement. 15
GOSSAN: A rusty rock in which iron-bearing sulphide minerals have been oxidized by air and water. Gossans may overlie a significant sulphide body. GRANITE: Medium to coarse-grained felsic intrusive rock. GRANITE: An igneous (formed from molten material) rock that solidified within the Earth's crust and is principally composed of quartz, feldspar, and biotite. GRANITIC: See Granitoid. GRANITOID: Pertaining to or composed of granite. GRANULITE: A relatively coarse, granular rock formed at high pressures and temperatures, which may exhibit a crude gneissic structure due to the parallelism of flat lenses of quartz or feldspar. GRAPHITE: Native carbon mineral often with high conductance properties. IGNEOUS: Rock or material, which solidified from molten material. INTRUSION: A mass of rock that has been forced into or between other rocks. INTRUSIVE: A body of igneous rock formed by the consolidation of magma intruded into other rocks, in contrast to lavas, which are extruded upon the surface. LITHOLOGY: The character of a rock described in terms of its structure, color, mineral composition, grain size, and arrangement of its component parts; all those visible features that in the aggregate impart individuality to the rock. MAFIC: Pertaining to or composed of the ferromagnesian rock-forming silicates, said of some igneous rocks and their constituent minerals. MAGMA: Molten rock, formed within the inner parts of the Earth, which crystallizes to form an igneous rock. MAGMATIC SULPHIDE DEPOSIT: A deposit - usually of nickel, copper, cobalt or platinum group elements - that is found in mafic or ultramafic igneous rocks. MAGNETITE: Magnetic iron ore, being a black iron oxide containing 72.4% iron when pure. MASL: Metres above sea level. MASS: A large irregular deposit of ore, which cannot be recognized as a vein or bed. METAMORPHIC: A rock that has been altered by physical and chemical processes including heat, pressure, and fluids. METASEDIMENTARY: Having the quality of a sediment or sedimentary rock that shows evidence of having been subjected to metamorphism. MIGMATITIC: Having the quality of a composite rock composed of igneous or igneous-appearing and metamorphic materials that are generally distinguishable megascopically. MONZONITE: A granular plutonic rock containing approximately equal amounts of orthoclase and plagioclase, and thus intermediate between syenite and diorite. MORAINAL: Have the quality of a mass of rocks, gravel, sand, clay, etc., carried and deposited directly by a glacier. NI: The chemical symbol for Nickel. OLIVINE: A naturally occurring mineral (magnesium-iron silicate) that is usually olive green. PARAGNEISS: A gneiss formed by the metamorphism of a sedimentary rock. PELITIC: A fine-grained sedimentary rock composed of more or less hydrated aluminum silicates with which are mingled small particles of various other minerals. 16
PLAGIOCLASE: Any of a series of triclinic minerals of the feldspar family, ranging in composition from albite to anorthite and found in many rocks. PSAMMITIC: Of or having the quality of fine-grained, clayey sandstone. PYRITE: Iron sulphide. QUARTZOFELDSPATHIC: Composition of a rock particularly rich in silica and feldspar. SULPHIDE: Minerals in which the metallic elements are chemically bound to sulphur. TERRACE: A raised portion of an ancient riverbed or a bank on which alluvial deposits may be found. TROCTOLITE: Igneous rock, found in the lunar highlands, composed of plagioclase and olivine. ULTRAMAFIC: An igneous rock composed chiefly of mafic minerals. HISTORY OF THE CLAIMS Previous exploration work in the area of the White Bear Arm Property extends back to the 1950s, when various reconnaissance missions were performed throughout the Province of Newfoundland and Labrador. Documented field work is found back to the mid 1990s, when the massive Voisey's Bay nickel-copper deposits were discovered, spurring an exploration rush throughout much of Labrador. In the immediate area of the White Bear Arm Property, detailed mineral exploration work was completed by Noranda Mining and Exploration Inc. in 1995 and 1996. Geological mapping, prospecting, geochemical sampling, airborne electromagnetics, and ground geophysics are some of the many surveys completed over the property. Noranda explored the area for its magmatic Ni-Cu sulphide potential. Geological mapping and compilation was conducted by the Newfoundland and Labrador Department of Mines and Energy. In the most recent mapping, completed in 1988, the White Bear Arm Complex ("WBAC") is described as being composed of gabbronorite, olivine gabbronorite and troctolite, together with lesser monzonite and metamorphic derivatives that in the south are strongly deformed and metamorphosed to amphibolite intercalated with metasedimentary gneiss of the Paradise River Metasedimentary Gneiss Belt (PRMBGB). Pronounced Ni, Co and Cu lake bottom anomalies were also noted in the eastern end of the WBAC An assay of 0.15% Cu and 0.13% Ni was historically returned from a gossan at Mountain Brook in the WBAC. LOCATION AND ACCESS The White Bear Arm Property is located approximately 13 kilometers northeast of the community of Charlottetown, Labrador, Canada. The mineral licenses composing the White Bear Arm Property straddle the boundary between National Topographic Series map sheets 13A/16 and 3D/13. The property is approximately five kilometers from tidewater. Charlottetown, located 290 kilometers east-southeast of the town of Goose Bay, has a gravel air strip for scheduled air traffic, and is serviced by chartered float plane and scheduled coastal boat traffic during ice free months (June to October). The town has a motel, and some supplies and services can be procured there. The White Bear Arm Property is accessible by helicopter for the purpose of an initial assessment. TOPOGRAPHIC AND PHYSICAL ENVIRONMENT The area is moderately to heavily wooded, with some open barren areas on ridges and hilltops, and underlain by a thick layer of muskeg and caribou moss. The topography of the area is locally rugged, with elevations ranging from up to 230 masl, locally. The area is heavily wooded. The White Bear Arm Property is located within the Paradise River Ecoregion, classified as having a maritime mid-boreal ecoclimate, with its forests dominated by closed stands of balsam fir and black spruce. The region is dominated by northwest trending lakes and bays that mimic the structural grain of the bedrock. Relief is locally rugged, with elevations reaching 300 meters above sea level. The area is heavily wooded, with some open barren areas on ridges and hilltops. 17
Composed of granites, gneisses, and gabbroic intrusive rocks, the area is generally rough and undulating with deeply dissected coastal margins. Its surface rises rapidly from the sea coast to elevations of about 300 masl, and is covered with sandy morainal deposits of variable thickness. Fluvioglacial deposits are sporadically distributed in the form of eskers and river terraces. The general area is marked by cool, rainy summers and cold winters. The mean annual temperature is approximately 1 Celsius. The mean summer temperature is 11.5 Celsius and the mean winter temperature is -9 Celsius. The mean annual precipitation ranges 800-1100 millimeters. REGIONAL GEOLOGY The White Bear Arm Property lies within the eastern portion of the Grenville lithotectonic province of Labrador, within rocks of the PRMGB. The belt consists of sulphide-bearing pelitic, migmatitic metasedeimentary gneiss and minor psammitic gneiss at amphibolite to granulite facies, which are intercalated with granitoid and mafic-ultramafic intrusives. The latter are generally interpreted by field regional geophysics to be part of the WBAC, which has locally intruded and assimilated the PRMGB, and is interpreted to underlie it. The juxtaposition of a possible nickel source (WRAC) with sulphidic host material (PRMGB), and the presence of significant Ni-Cu-Co lake bottom anomalies provide an ideal exploration environment for Ni-Cu magmatic sulphide deposits. LOCAL GEOLOGY Detailed geology in the vicinity of the White Bear Arm Property was extrapolated from work completed by Noranda Mining and Exploration Inc. Underlying the area, the principal lithology is a quartzofeldspathic, frequently garnetiferous (some samples contain up to 50% garnet), meta-sedimentary gneiss. The gneiss is foliated uniformly, trends towards the northwest, and is steeply dipping. The outcrop consists of banded pink and black, fine-grained garnet-biotite gneiss. Locally, the spectacular flake graphite is developed, and can attain 5% of the rock over narrow widths. Additionally, disseminated pyrite, commonly 2-3% (occasionally up to 20%) as patches, occurs as rusty staining within the gneiss. Traces of chalcopynte was locally noted to occur in the area. Where exposure is adequate, amphibolite is seen to occur parallel to the foliation, as narrow (amphibole and garnet mineralogy) dykes, comprising dominantly amphibole, garnet and magnetite. Granite in the area occurs both as granitic gneiss with banding and anatectic (diffuse veining) textures, as well as totally undeformed dykes and masses with sharp contacts. These late granites are found to cross-cut both the paragneisses and amphibolites. PROPOSED EXPLORATION PROGRAM Our management intends to explore the White Bear Arm Property for commercially producible deposits of nickel, copper and industrial minerals such as garnet. We intend to implement a two-phase exploration program to further evaluate the property. An estimated budget for our exploration program is set out in the following table: -------------------------------------------------------------------------- PHASE I -------------------------------------------------------------------------- Geologist, sampling and mapping supervision $ 2,700 Geological assistant $ 1,500 Rock, stream sediment and till sampling $ 2,500 Room and board lodging in Charlottetown $ 1,000 Transportation from Goose Bay to project area $ 13,500 Permits, fees, filings, insurance and other administrative items $ 1,000 Reports and maps $ 1,000 Overhead $ 3,480 -------------------------------------------------------------------------- TOTAL PHASE I COSTS: $ 26,680 -------------------------------------------------------------------------- PHASE II -------------------------------------------------------------------------- Diamond Drilling and Core Sampling $170,000 Overhead $ 25,500 -------------------------------------------------------------------------- TOTAL PHASE II COSTS: $195,500 -------------------------------------------------------------------------- TOTAL PROGRAM COSTS: $222,180 ========================================================================== 18
Actual project costs may exceed our estimates. The Phase I field program for 2011 is intended to allow for more effective assessment of past work, geological targets and geophysical anomalies. An expanded geological mapping and geological sampling program will cover previously established grid areas, as well as other prospective sites that may be developed to delineate either base metals or industrial minerals. Geochemical sampling would include rock, stream sediment and till sampling. Several airborne electromagnetic anomalies will be re-verified on the ground and mapped for size and extent. We expect Phase I to commence in August 2011, and conclude by September 30, 2011. If the results of the Phase I exploration program identify claim positions for which there is sufficient indication of economic geological value to support further exploration ("high priority targets"), we will implement a Phase II diamond drilling program to follow-up such high priority targets. Phase II would include 800 to 1,000 metres of drilling, mobilized to the nearest road by truck, and helicopter supported from that point. Subject to financing, we expect Phase II to be completed in 2012. We have sufficient capital to complete Phase I of our exploration program, but we have insufficient funds to begin Phase II. The proceeds from this offering will not be sufficient to fund Phase II. If Phase I of our exploration program identifies high priority targets for further exploration in Phase II, then we will be required to raise additional financing to fund Phase II. Both Phases of our proposed exploration program will be conducted under the supervision and direction of an independent consulting geologist, who will determine all protocols and procedures to be followed. We do not intend to engage the services of a geologist in respect of our exploration program until July 2011. We anticipate that any additional funding that we require will be in the form of equity financing from the sale of our common stock. There is no assurance, however, that we will be able to raise sufficient funding from the sale of our common stock. The risky nature of this enterprise and lack of tangible assets places debt financing beyond the credit-worthiness required by most banks or typical investors of corporate debt until such time as an economically viable mine can be demonstrated. We do not have any arrangements in place for any future equity financing. If we are unable to secure additional funding, we will cease or suspend operations. We have no plans, arrangements or contingencies in place in the event that we cease operations. MANAGEMENT EXPERIENCE Our management has no professional training or technical credentials in the exploration, development, or operation of mines. Consequently, we may not be able to recognize or take advantage of potential acquisition and exploration opportunities in the sector without the aid of qualified geological consultants. Moreover, with no direct training or experience, our management may not be fully aware of the specific requirements related to working in this industry. They may make mistakes in their decisions and choices that could cause our operations and ultimate financial success to suffer irreparable harm. GEOLOGICAL AND TECHNICAL CONSULTANTS Since our sole officer and director is inexperienced with exploration, we intend to retain qualified persons on a contract basis to perform the surveying, exploration, and excavating of the White Bear Arm Property as needed. We do not presently have any verbal or written agreement regarding the retention of any such person for the exploration program. COMPETITIVE FACTORS The mining industry is highly fragmented and we will be competing with many other exploration companies looking for minerals. We are one of the smallest exploration companies and are an infinitely small participant in the mineral exploration business. While we will generally compete with other exploration companies, there is no competition for the exploration of minerals from our claims. We are a junior mineral exploration company. We compete with other junior mineral exploration companies for financing from a limited number of investors that are prepared to make investments in junior mineral exploration companies. The presence of competing junior mineral exploration companies may impact on our ability to raise additional capital in order to fund our exploration programs if investors are of the view that investments in competitors are more attractive based on the merit of the mineral properties under investigation and the price of the investment offered to investors. We will also be competing with other junior and senior mineral companies for available resources, including, but not limited to, professional geologists, camp staff, mineral exploration supplies and drill rigs. LOCATION CHALLENGES We do not expect any major challenges in accessing the White Bear Arm Property during the initial exploration stages. 19
REGULATIONS Our mineral exploration program is subject to the regulations of the Department of Natural Resources of the Province of Newfoundland & Labrador. In the Province of Newfoundland and Labrador, any person who intends to conduct an exploration program must submit prior notice with a detailed description of the activity to the Department. An exploration program that may result in ground disturbance or disruption to wildlife habitat must have an Exploration Approval from the Department of Natural Resources before the activity can commence. Some exploration activities, such as bulk sampling and road construction, or activities in designated sensitive areas, may require registration for environmental assessment. We will secure all necessary permits for exploration and, if development is warranted on the property, we will file final plans of operation before we start any mining operations. We anticipate no discharge of water into active stream, creek, river, lake or any other body of water regulated by environmental law or regulation. Restoration of the disturbed land will be completed according to law. All holes, pits and shafts will be sealed upon abandonment of the property. It is difficult to estimate the cost of compliance with the environmental law since the full nature and extent of our proposed activities cannot be determined until we start our operations and know what that will involve from an environmental standpoint. Exploration stage companies are not required to discuss environmental matters except as they relate to exploration activities. The only "cost and effect" of compliance with environmental regulations in Canada is returning the surface to its previous condition upon abandonment of the property. EMPLOYEES We currently have no employees other than our sole officer and director, who has not been paid for his services and will not receive compensation from the proceeds of this offering. We do not have any employment agreements with our sole officer and director. We do not presently have pension, health, annuity, insurance, stock options, profit sharing or similar benefit plans; however, we may adopt plans in the future. There are presently no personal benefits available to our officers or directors. We do not intend to hire additional employees at this time. All of the work on the property will be conducted by unaffiliated independent contractors that we will hire, including a consulting geologist and a mining engineer. The independent contractors will be responsible for surveying, geology, engineering, exploration, and excavation. The consulting geologist will evaluate the information derived from the exploration and excavation and the engineer will advise us on the economic feasibility of removing the mineralized material. PROPERTY We have a 100% interest in the White Bear Arm Property, comprising 17 mineral claims located along southeastern coastal Labrador, approximately 13 kilometers northeast of the community of Charlottetown in Labrador, Canada, having a total area of 425 hectares (1,054.8 acres). This interest only relates to the right to explore for and extract minerals from the claims. We do not own any real property interest in the claims. We do not own or lease any property other than the White Bear Arm Property. 20
MAP SHOWING THE LOCATION OF THE WHITE BEAR ARM PROPERTY [GRAPHIC OMITED] 21
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONS THE FOLLOWING DISCUSSION AND ANALYSIS OF OUR PLAN OF OPERATION SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND THE RELATED NOTES. THIS DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS BASED UPON CURRENT EXPECTATIONS THAT INVOLVE RISKS AND UNCERTAINTIES, SUCH AS OUR PLANS, OBJECTIVES, EXPECTATIONS AND INTENTIONS. OUR ACTUAL RESULTS AND THE TIMING OF CERTAIN EVENTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS, INCLUDING THOSE SET FORTH UNDER "RISK FACTORS," "DESCRIPTION OF BUSINESS" AND ELSEWHERE IN THIS PROSPECTUS. OVERVIEW Our business plan is to explore the White Bear Arm Property to determine whether it contains commercially exploitable reserves of valuable minerals. We intend to proceed with Phase I of our proposed exploration program. Phase I will consist of expanded geological mapping, and geochemical sampling that will cover previously established grid areas, as well as other prospective sites that may be developed to delineate either base metals or industrial minerals. Geochemical sampling will include rock, stream sediment and till sampling. Several airborne electromagnetic anomalies will be re-verified on the ground and mapped for size and extent. If Phase I develops any high priority targets for further exploration, then we will proceed with Phase II of the proposed exploration program, consisting of 800 to 1000 metres of diamond drilling, mobilized to the nearest road by truck, then helicopter-supported from that point. We anticipate that Phase I will cost approximately $26,680 while Phase II would cost approximately $195,500. To date, we have not commenced exploration on the White Bear Arm Property. We expect that Phase I of our exploration program will be commence in July 2011, and concluded by September 30, 2011. During Phase I we will retain a consulting geologist to review all past exploration data relating to the White Bear Arm Property and plot relevant information on a map. This is known as geological mapping. Based on this mapping, the geologist will choose property areas that are most likely to host economic mineralization. He will then conduct a sampling program focusing on these property areas by gathering rock and soil samples from the identified areas that appear to contain mineralization. The samples will be sent to a laboratory for mineral analysis. We should receive the results of the sample analysis by October 30, 2011, and be able to determine which property areas, if any, contain significant mineralization. If the results of Phase I warrant further exploration, we plan to complete Phase II of the exploration program in 2012. Phase II will take approximately three months to complete and will consist of using heavy equipment to drill up to five holes to a depth of 200 meters. Drilling locations will be determined by analyzing the results of the Phase I sampling program. Cylinders of rock will be removed from the drill holes and sent to a laboratory for mineral analysis. Results will indicate the presence of any minerals below the property surface. We have sufficient capital to complete Phase I of our exploration program, but we have insufficient funds to begin Phase II. The proceeds from this offering will not be sufficient to fund Phase II. If Phase I of our exploration program identifies high priority targets for further exploration in Phase II, then we will be required to raise additional financing to fund Phase II. Subject to financing, we expect to complete Phase II within 12 months of obtaining our Phase I results. We anticipate that any additional funding that we require will be in the form of equity financing from the sale of our common stock. There is no assurance, however, that we will be able to raise sufficient funding from the sale of our common stock. The risky nature of this enterprise and lack of tangible assets places debt financing beyond the credit-worthiness required by most banks or typical investors of corporate debt until such time as an economically viable mine can be demonstrated. We do not have any arrangements in place for any future equity financing. If we are unable to secure additional funding, we may cease or suspend operations. We have no plans, arrangements or contingencies in place in the event that we cease operations. Our sole officer and director has other outside business activities unrelated to our business and will only be devoting approximately six hours per week of his time to our business. We do not foresee this limited involvement as negatively impacting our Company over the next 12 months because all exploratory work is being performed by an outside consultant. If, however, the demands of our business require more time of our sole officer, such as raising additional capital or addressing unforeseen issues with regard to our exploration efforts, he is prepared to adjust his timetable to devote more time to our business. He may, however, not be able to devote sufficient time to the management of our business, as and when needed. We do not have any verbal or written agreement regarding the retention of any qualified engineer or geologist for our exploration program. We do not have plans to purchase any significant equipment or to hire any employees during the next 12 months, or until we have proved reserves. 22
We have not earned revenue since inception and we presently have no proven or probable mineral reserves. There is no assurance that our mineral claims contain commercially exploitable reserves of valuable minerals. Since inception, we have suffered recurring losses and net cash outflows from operations, and our activities have been financed from the proceeds of share subscriptions and loans from management and non-affiliated third parties. We expect to continue to incur substantial losses to implement our business plan. We have not established any other source of equity or debt financing and there can be no assurance that we will be able to obtain sufficient funds to implement our business plan. As a result of the foregoing, our auditors have expressed substantial doubt about our ability to continue as a going concern. If we cannot continue as a going concern, then our investors may lose all of their investment. RESULTS OF OPERATIONS Our business is in the early stage of exploration. Since inception on June 27, 2005 we have not earned any revenue and we have not identified any commercially exploitable reserves of valuable minerals on our property. We do not anticipate earning revenue until such time as we have entered into commercial production of the White Bear Arm Property. We are presently in the exploration stage of our business and we can provide no assurance that we will discover commercially exploitable reserves of valuable minerals on the White Bear Arm Property, or that if such resources are discovered that we will commercially produce them. YEAR ENDED AUGUST 31, 2010 COMPARED TO THE YEAR ENDED AUGUST 31, 2009 We posted an operating loss of $27,180 for the fiscal year ended August 31, 2010, due to consulting fees of $12,336, professional fees of $11,258, office expenses of $2,780 and other expenses of $806. This was a slight decrease from the operating loss of $28,906 for the previous fiscal year. QUARTER ENDED FEBRUARY 28, 2011 COMPARED TO THE QUARTER ENDED FEBRUARY 29, 2009 We posted an operating loss of $18,889 for the three month period ended February 28, 2011, due to consulting fees of $12,249, professional fees of $2,600, interest expenses of $2,589 and other miscellaneous expenses of $1,251. This was an increase from the operating loss of $5,515 for the same period in the previous fiscal year. LIQUIDITY AND CAPITAL RESOURCES On August 30, 2010, we received a deposit of $50,000 from Thomas Mills with respect to a private placement of 10,000,000 shares of our common stock to Mr. Mills at a price of $0.005 per share (the "Private Placement"). The closing of the Private Placement took place on September 22, 2010 with the execution of a subscription agreement by Mr. Mills. Proceeds from the private placement were used to repay debt and to pre-pay operating expenses. On August 31, 2010, we received a deposit of $50,000 with respect to a debt financing by Moneris Capital LP that closed on September 21, 2010 with the issuance by Castmor of a promissory note (the "Loan"). The Loan is due and payable on September 21, 2011 and accrues interest from September 21, 2010 at the rate of 20% per annum, calculated semi-annually, payable on the due date. We may repay the Loan in whole or in part at any time prior to the due date. As of February 28, 2011, the Loan has accrued $4,603 in interest. We have not made any payment in respect of the Loan. The Proceeds from the loan were used to pay operating expenses, to acquire our mineral property and to pre-pay professional fees. As of February 28, 2011, we had total assets of $9,277 comprised of $4,679 in cash and $4,598 in prepaid expenses. This reflects a decrease of the value of our total assets from $92,838 on August 31, 2010. As of February 28, 2011, our total liabilities increased to $59,841 from $54,934 as of August 31, 2010. The increase was primarily due to unpaid professional fees and accrued interest expenses on the Loan. As a result of our recent financing activities, we have sufficient working capital to maintain our present level of operations for the next 12 months and to complete Phase I of our proposed exploration program, but not Phase II. We will be required to seek additional funding in order to complete Phase II of our exploration program. We anticipate that any additional funding that we require will be in the form of equity financing from the sale of our common stock. There is no assurance, however, that we will be able to raise sufficient funding from the sale of our common stock. The risky nature of this enterprise and lack of tangible assets places debt financing beyond the credit-worthiness required by most banks or typical investors of corporate debt until such time as an economically viable mine can be demonstrated. We do not have any arrangements in place for any future equity financing. If we are unable to secure additional funding, we may cease or suspend operations. We have no plans, arrangements or contingencies in place in the event that we cease operations. LEGAL PROCEEDINGS No director, person nominated to become a director, executive officer, promoter or control person of our company has, during the last ten years: (i) been convicted in or is currently subject to a pending a criminal proceeding (excluding traffic violations and other minor offenses); (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to any federal or state securities or banking or commodities laws including, without limitation, in any way limiting involvement in any business activity, or finding any violation with respect to such law, nor (iii) any bankruptcy petition been filed by or against the business of which such person was an executive officer or a general partner, whether at the time of the bankruptcy or for the two years prior thereto. 23
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS The following sets forth our directors, executive officers, promoters and control persons, their ages, and all offices and positions held. Directors are elected for a period of one year and thereafter serve until their successor is duly elected by the shareholders. Officers and other employees serve at the will of the Board of Directors. -------------------------------------------------------------------------------- PERIOD SERVED AS NAME POSITION AGE DIRECTOR/OFFICER -------------------------------------------------------------------------------- Alfonso Quijada Chief Executive Officer, 39 2006 to present President, Chief Financial Officer and a director ================================================================================ Alfonso Quijada has served as a director of Castmor Resources Ltd. since 2006. In 2010, he was appointed to the additional offices of President and Treasurer. Mr. Quijada has raised millions of dollars for private and public companies, including $1.8 million for Rhino Films and $2.5 million for an oil refinery in Bulgaria. From 1994 through to 1998 he was the founder and president of New World Artist Productions Inc., an international production company, focused primarily on live-productions and music development in Japan. He was the VP of Investor Relations for Tri-Gate Entertainment Inc. from 2000 to 2003. From 2002 to 2003, Mr. Quijada also headed up investor relations for TNR Gold Corp. From 2007 to 2009, he was the President, Chief Executive Officer and a director of Pickford Minerals, Inc. Ltd, an exploration company having mineral interests in Labrador, Canada. Since 2003, Mr. Quijada has served as a self-employed independent consultant, assisting privately held companies with the development and implementation of corporate development growth plans and marketing initiatives, advising on corporate finance strategies and making recommendations on public relations activities. Mr. Quijada was a controlling shareholder of Castmor Resources Ltd. at the time of his appointment as a director and officer of the company. His experience in corporate development and finance is expected to benefit Castmor in its future capital raising activities. The mailing address for all our officers and directors is 427 Princess Street, Suite 406, Kingston, ON K7L 5S9. INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS During the past ten years none of our directors, executive officers, promoters or control persons have: (1) had any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (2) been convicted in a criminal proceeding or subject to a pending criminal proceeding; (3) been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or (4) been found by a court of competent jurisdiction in a civil action, the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated. COMMITTEES OF THE BOARD All proceedings of the board of directors for the fiscal year ended August 31, 2010 were conducted by resolutions consented to in writing by our board of directors and filed with the minutes of the proceedings of our board of directors. Castmor does not have nominating, compensation or audit committees or committees performing similar functions nor does our company have a written nominating, compensation or audit committee charter. Our board of directors does not believe that it is necessary to have such committees because it believes that the functions of such committees can be adequately performed by the board of directors. Castmor does not have any defined policy or procedure requirements for stockholders to submit recommendations or nominations for directors. The board of directors believes that, given the stage of our development, a specific nominating policy would be premature and of little assistance until our business operations develop to a more advanced level. Our company does not currently have any specific or minimum criteria for the election of nominees to the board of directors and we do not have any specific process or procedure for evaluating such nominees. The board of directors will assess all candidates, whether submitted by management or stockholders, and make recommendations for election or appointment. 24
A shareholder who wishes to communicate with our board of directors may do so by directing a written request addressed to our President, Alfonso Quijada, at the address appearing on the first page of this registration statement. AUDIT COMMITTEE FINANCIAL EXPERT We do not have a standing audit committee. Our directors perform the functions usually designated to an audit committee. Our board of directors has determined that we do not have a board member that qualifies as an "audit committee financial expert" as defined in Item 407(d)(5) of Regulation S-K, nor do we have a board member that qualifies as "independent" as the term is used in Item 7(d)(3)(iv)(B) of Schedule 14A under the Securities Exchange Act of 1934, as amended, and as defined by Rule 4200(a)(14) of the NASD Rules. We believe that our board of directors is capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. Our board of directors does not believe that it is necessary to have an audit committee because management believes that the functions of an audit committee can be adequately performed by the board of directors. In addition, we believe that retaining an independent director who would qualify as an "audit committee financial expert" would be overly costly and burdensome and is not warranted in our circumstances given the stage of our development and the fact that we have not generated any positive cash flows from operations to date. As we generate revenue in the future, we intend to form a standing audit committee and identify and appoint a financial expert to serve on our audit committee. INDEMNIFICATION Under our Articles of Incorporation and bylaws of the corporation, we may indemnify an officer or director who is made a party to any proceeding, including a law suit, because of his position, if he acted in good faith and in a manner he reasonably believed to be in our best interest. We may advance expenses incurred in defending a proceeding. To the extent that the officer or director is successful on the merits in a proceeding as to which he is to be indemnified, we must indemnify him against all expenses incurred, including attorney's fees. With respect to a derivative action, indemnity may be made only for expenses actually and reasonably incurred in defending the proceeding, and if the officer or director is judged liable, only by a court order. The indemnification is intended to be to the fullest extent permitted by the laws of the State of Nevada. Regarding indemnification for liabilities arising under the Securities Act, which may be permitted to directors or officers under Nevada law, we are informed that, in the opinion of the SEC, indemnification is against public policy, as expressed in the Securities Act and is, therefore, unenforceable. EXECUTIVE COMPENSATION To date we have no employees other than our officers and directors. No compensation has ever been awarded, earned or paid to any of our officers or directors. We have no employment agreements with our sole officer. We do not contemplate entering into any employment agreements until such time as we have positive cash flows from operations. There is no arrangement pursuant to which any of our directors has been or is compensated for services provided as one of our directors. There are no stock option plans, retirement, pension, or profit sharing plans for the benefit of our officers or directors. We do not have any long-term incentive plans that provide compensation intended to serve as incentive for performance. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth, as of May 27, 2011, information concerning ownership of the Company's securities by (i) each Director, (ii) each executive officer, (iii) all directors and executive officers as a group; and (iv) each person known to the Company to be the beneficial owner of more than five percent of each class: The number and percentage of shares beneficially owned includes any shares as to which the named person has sole or shared voting power or investment power and any shares that the named person has the right to acquire within 60 days. 25
-------------------------------------------------------------------------------- Beneficial Ownership Percentage of class if all Common Percentage offered shares Name of Beneficial Owner Shares of class are sold -------------------------------------------------------------------------------- Alfonso Quijada 1,800,000 14% 6% -------------------------------------------------------------------------------- All directors and executive officers, as a group 1,800,000 14% 6% -------------------------------------------------------------------------------- Thomas Mills 10,080,000 81% 31% -------------------------------------------------------------------------------- All beneficial owners of more than 5% of the Company's common stock, as a group 11,880,000 95% 37% ================================================================================ The mailing address for all directors, executives officers and beneficial owners of more than 5% of our common stock is 427 Princess Street, Suite 406, Kingston, ON K7L 5S9. Unless otherwise noted, we believe that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them. For purposes hereof, a person is considered to be the beneficial owner of securities that can be acquired by such person within 60 days from the date hereof, upon the exercise of warrants or options or the conversion of convertible securities. Each beneficial owner's percentage ownership is determined by assuming that any such warrants, options or convertible securities that are held by such person (but not those held by any other person) and which can be exercised within 60 days from the date hereof, have been exercised. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS On September 20, 2010, we acquired from Thomas Mills, a 100% interest in two non-contiguous mineral exploration licenses (license numbers 017985M and 017987M) comprising 17 claims located along south-eastern coastal Labrador, approximately 13 kilometers northeast of the community of Charlottetown in Labrador, Canada, having a total area of 425 hectares (1,054.8 acres). We paid Mr. Mills $10,000 for the licenses. Mr. Mills became our controlling shareholder on September 22, 2010, when he purchased 10,000,000 shares of our common stock for $50,000. The acquisition of the mineral claims from Mr. Mills and his subsequent financing of the Company were not contingent upon one another. PLAN OF DISTRIBUTION We are offering the right to subscribe for up to 20,000,000 shares of our common stock at the offering price of $0.005 per share, subject to a 12,000,000 share minimum. We are offering the shares on a self-underwritten, best-efforts basis directly through our President and director, Alfonso Quijada, who will not receive any commission or other remuneration of any kind for selling shares in this offering, except for the reimbursement of actual out-of-pocket expenses incurred in connection with the sale of the common stock. In connection with his selling efforts in this offering, Mr. Quijada will not register as broker-dealers pursuant to Section 15 of the Exchange Act, but rather will rely upon the "safe harbor" provisions of Rule 3a4-1 under the Exchange Act. Generally speaking, Rule 3a4-1 provides an exemption from the broker-dealer registration requirements of the Exchange Act for persons associated with an issuer that participate in an offering of the issuer's securities. Mr. Quijada is not subject to any statutory disqualification, as that term is defined in Section 3(a)(39) of the Exchange Act. Mr. Quijada will not be compensated in connection with his participation in this offering by the payment of commissions or other remuneration based either directly or indirectly on transactions in our securities, except for the reimbursement of actual out-of-pocket expenses incurred in connection with the sale of the common stock. Mr. Quijada is not, and has not been within the past 12 months a broker or dealer, or an associated person of a broker or dealer. At the end of this offering, Mr. Quijada will continue to primarily perform substantial duties for us or on our behalf otherwise than in connection with transactions in securities. Mr. Quijada has not and will not participate in selling an offering of securities of any issuer more than once every 12 months other than in reliance on Exchange Act Rule 3a4-1(a)(4)(i) or (iii). In connection with this offering, Mr. Quijada will restrict his participation to the following activities: 1. preparing written communication and delivering such communication through the mails or other means that does not involve oral solicitation by Mr. Quijada of a potential purchaser; 2. responding to inquiries of a potential purchaser in a communication initiated by the potential purchaser; the content of such responses being limited to information contained in the registration statement on Form S-1 filed under the Securities Act of 1933, of which this prospectus forms a part; and 26
3. performing ministerial and clerical work involved in effecting any transaction. Mr. Quijada will not purchase any of the offered common stock. PENNY STOCK REGULATION The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system). The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document prepared by the SEC, that: * contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; * contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties; * contains a brief, clear, narrative description of a dealer market, including "bid" and "ask" prices for penny stocks and the significance of the spread between the bid and ask price; * contains a toll-free telephone number for inquiries on disciplinary actions; * defines significant terms in the disclosure document or in the conduct of trading penny stocks; and * contains such other information and is in such form (including language, type, size, and format) as the Commission shall require by rule or regulation. The broker-dealer also must provide the customer with the following, prior to proceeding with any transaction in a penny stock: * bid and offer quotations for the penny stock; * details of the compensation of the broker-dealer and its salesperson in the transaction; * the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and * monthly account statements showing the market value of each penny stock held in the customer's account. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement. These disclosure requirements will have the effect of reducing the trading activity in the secondary market for our stock because it will be subject to these penny stock rules. Therefore, stockholders may have difficulty selling those securities. TERMS OF SALE OF THE SHARES This offering is being made on a best efforts basis. No subscriptions will be accepted until the minimum offering is subscribed. Once accepted, subscriptions are irrevocable and cannot be withdrawn by the subscriber. Proceeds from this offering will not be deposited into an escrow, trust or similar account, but will instead be deposited in a separate bank account under our name at the Canadian Imperial Bank of Commerce of Toronto, Ontario, administered by our board of directors. If the minimum offering is not completed within 90 days, all funds will be promptly returned to subscribers without interest or deductions. Subscriptions may be accepted or rejected for any reason or for no reason. This offering will remain open until the earlier of the date that all shares offered in this offering are sold and 120 days after the date of this prospectus; provided that, the minimum subscription is sold within 90 days. We may cease our selling efforts at any time for any reason whatsoever. Any change in the material terms of this offering after the effective date of this prospectus will terminate the original offer and will entitle any subscribers to a refund of their investment. Material changes include the following: an extension of the offering period beyond the 120 days currently contemplated; a change in the offering price; a change in the minimum purchase amount; a change to allow sales to affiliates in order to meet the minimum sales requirement; a change in the minimum amount of proceeds required to release funds from escrow; and, a change in the application of proceeds. If there is a change in the material terms of this offering, any new offering may be made by means of a post-effective amendment. 27
METHOD OF SUBSCRIBING Persons may subscribe by filling in and signing the subscription agreement, and delivering it, prior to the expiration date, to us. The subscription price of $0.005 per share must be paid in cash or by check, bank draft or postal express money order payable to our order. EXPIRATION DATE The offering will expire on the earlier of the date that all offered shares are sold and 120 days after the date of this prospectus. We shall terminate the offering 90 days from the date of this prospectus if we are unable to sell 12,000,000 of the offered shares during that period. There will be no extension of the offering period. We may terminate the offering at any time for any reason whatsoever. DESCRIPTION OF CAPITAL STOCK COMMON STOCK We are authorized to issue up to 900,000,000 shares of common stock, par value $0.0001 per share. Each outstanding share of common stock entitles the holder thereof to one vote per share on all matters submitted to a stockholder vote. Holders of our common stock do not have pre-emptive rights to purchase shares in any future issuance of our common stock. Our common stock does not carry any conversion rights and there are no redemption provisions. Our common stock does not carry any cumulative voting rights. As a result, holders of a majority of the shares of common stock voting for the election of directors can elect all of our directors. At all meetings of stockholders, except where otherwise provided by statute or by our Articles of Incorporation or by our bylaws, the presence in person or by proxy duly authorized by holders of not less than twenty percent (20%) of the outstanding shares of stock entitled to vote shall constitute a quorum for the transaction of business. A vote by the holders of a majority of our outstanding shares is required to effect certain fundamental corporate changes such as liquidation, merger or an amendment to our Articles of Incorporation. Holders of our common stock are entitled to share in all dividends that the board of directors, in its discretion, declares from legally available funds. In the event of liquidation, dissolution or winding up, each outstanding share entitles its holder to participate pro rata in all assets that remain after payment of liabilities and after providing for each class of stock, if any, having preference over the common stock. There are no provisions for a sinking fund in respect of our common stock. PREFERRED STOCK We are authorized to issue up to 100,000,000 shares of preferred stock, par value $0.0001 per share, in one or more classes or series as may be determined by our board of directors, who may establish, from time to time, the number of shares to be included in each series, may fix the designation, powers, preferences and rights of the shares of each such series and any qualifications, limitations or restrictions thereof. Any preferred stock so issued by the board of directors may rank senior to the common stock with respect to the payment of dividends or amounts upon liquidation, dissolution or winding up of us, or both. Moreover, under certain circumstances, the issuance of preferred stock or the existence of the unissued preferred stock might tend to discourage or render more difficult a merger or other change of control. No shares of our preferred stock are currently outstanding. The issuance of shares of preferred stock, while providing desirable flexibility in connection with possible acquisitions and other corporate purposes, could have the effect of making it more difficult for a third party to acquire, or of discouraging a third party from acquiring, a majority of our outstanding voting stock. ANTI-TAKEOVER EFFECTS OF OUR ARTICLES OF INCORPORATION AND BYLAWS Our Articles of Incorporation and bylaws contain certain provisions that may have anti-takeover effects, making it more difficult for or preventing a third party from acquiring control of Castmor or changing its board of directors and management. According to our bylaws and Articles of Incorporation, neither the holders of our common stock nor the holders of our preferred stock have cumulative voting rights in the election of our directors. The combination of the present ownership by a few stockholders of a significant portion of our issued and outstanding common stock and lack of cumulative voting makes it more difficult for other stockholders to replace our board of directors or for a third party to obtain control of Castmor by replacing its board of directors. 28
NEVADA ANTI-TAKEOVER LAWS BUSINESS COMBINATIONS The "business combination" provisions of Sections 78.411 to 78.444, inclusive, of the NRS, prohibit a Nevada corporation with at least 200 stockholders from engaging in various "combination" transactions with any interested stockholder: for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the transaction is approved by the board of directors prior to the date the interested stockholder obtained such status; or after the expiration of the three-year period, unless: * the transaction is approved by the board of directors or a majority of the voting power held by disinterested stockholders, or * if the consideration to be paid by the interested stockholder is at least equal to the highest of: (a) the highest price per share paid by the interested stockholder within the three years immediately preceding the date of the announcement of the combination or in the transaction in which it became an interested stockholder, whichever is higher, (b) the market value per share of common stock on the date of announcement of the combination and the date the interested stockholder acquired the shares, whichever is higher, or (c) for holders of preferred stock, the highest liquidation value of the preferred stock, if it is higher. A "combination" is defined to include mergers or consolidations or any sale, lease exchange, mortgage, pledge, transfer or other disposition, in one transaction or a series of transactions, with an "interested stockholder" having: (a) an aggregate market value equal to 5% or more of the aggregate market value of the assets of the corporation, (b) an aggregate market value equal to 5% or more of the aggregate market value of all outstanding shares of the corporation, or (c) 10% or more of the earning power or net income of the corporation. In general, an "interested stockholder" is a person who, together with affiliates and associates, owns (or within three years, did own) 10% or more of a corporation's voting stock. The statute could prohibit or delay mergers or other takeover or change in control attempts and, accordingly, may discourage attempts to acquire our company even though such a transaction may offer our stockholders the opportunity to sell their stock at a price above the prevailing market price. CONTROL SHARE ACQUISITIONS. The "control share" provisions of Sections 78.378 to 78.3793, inclusive, of the NRS, which apply only to Nevada corporations with at least 200 stockholders, including at least 100 stockholders of record who are Nevada residents, and which conduct business directly or indirectly in Nevada, prohibit an acquirer, under certain circumstances, from voting its shares of a target corporation's stock after crossing certain ownership threshold percentages, unless the acquirer obtains approval of the target corporation's disinterested stockholders. The statute specifies three thresholds: one-fifth or more but less than one-third, one-third but less than a majority, and a majority or more, of the outstanding voting power. Once an acquirer crosses one of the above thresholds, those shares in an offer or acquisition and acquired within 90 days thereof become "control shares" and such control shares are deprived of the right to vote until disinterested stockholders restore the right. These provisions also provide that if control shares are accorded full voting rights and the acquiring person has acquired a majority or more of all voting power, all other stockholders who do not vote in favor of authorizing voting rights to the control shares are entitled to demand payment for the fair value of their shares in accordance with statutory procedures established for dissenters' rights. TRANSFER AGENT Our transfer agent and registrar is Holladay Stock Transfer, Inc., located at 2939 North 67th Place, Scottsdale, Arizona 85251. DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES Our directors and officers are indemnified as provided by the NRS, our Articles of Incorporation and our bylaws. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to our Articles of Incorporation or provisions of the Nevada Business Corporations Act, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by us in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question, whether or not such indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. 29
LEGAL MATTERS The validity of the shares of common stock offered by us was passed upon by Conrad C. Lysiak, Attorney and Counsellor at law in Spokane, Washington. EXPERTS Our financial statements as of August 31, 2010 appearing in this prospectus and registration statement have been audited by Chang Lee LLP, Chartered Accountants, an independent registered public accounting firm and are included in reliance upon the report therein included, given on the authority of such firm as experts in auditing and accounting. No expert named in the offering statement, nor any partner, officer, director or employee thereof, has a material interest in the issuer or any of its parents or subsidiaries or was connected with the issuer or any of its subsidiaries as a promoter, underwriter, voting trustee, director, officer or employee. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE In March 2008, we engaged the services of Chang Lee LLP (formerly Vellmer & Chang) Chartered Accountants, of Vancouver, British Columbia, to provide an audit of our financial statements for the period from June 27, 2005 (inception) to August 31, 2007. This is our first auditor. We have no disagreements with our auditor through the date of this prospectus. AVAILABLE INFORMATION We have filed a registration statement on Form S-1 under the Securities Act with the SEC with respect to the shares of our common stock offered through this prospectus. This prospectus is filed as a part of that registration statement and does not contain all of the information contained in the registration statement and exhibits. For a more complete description of matters involving us, please refer to our registration statement and each exhibit attached to it. Anyone may inspect the registration statement and exhibits and schedules filed with the SEC at its principal office in Washington, D.C. Copies of all or any part of the registration statement may be obtained from the Public Reference Section of the Securities and Exchange Commission, 100 F Street, NE, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference rooms. The SEC also maintains a web site at http://www.sec.gov that contains reports, proxy statements and information regarding registrants that file electronically with the SEC. In addition, we will file electronic versions of our annual and quarterly reports on the SEC's Electronic Data Gathering Analysis and Retrieval, or EDGAR System. Our registration statement and the referenced exhibits can also be found on this site as well as our quarterly and annual reports. We will not send the annual report to our stockholders unless requested by the individual stockholders. 30
INDEX TO FINANCIAL STATEMENTS CASTMOR RESOURCES LTD. (AN EXPLORATION STAGE COMPANY) Financial Statements for the Three and Six Month Periods Ended February 28, 2011 and 2010 (Unaudited) Balance Sheets F-2 Statements of Stockholders' Equity F-3 Statements of Operations F-4 Statements of Cash Flows F-5 Notes to Financial Statements F-6 thru F-9 Financial Statements for the Years Ended August 31, 2010 and 2009 Report of Independent Registered Public Accounting Firm F-10 Balance Sheets F-11 Statements of Stockholders' Equity F-12 Statements of Operations F-13 Statements of Cash Flows F-14 Notes to Financial Statements F-15 thru F-20 F-1
CASTMOR RESOURCES LTD. (An exploration stage company) Balance Sheets (Unaudited - Prepared by Management) (Expressed in U.S. Dollars) ----------------------------------------------------------------------------------------------------------------- February 28, 2011 August 31, 2011 ----------------------------------------------------------------------------------------------------------------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 4,679 $ 29,032 Prepaid expenses 4,598 63,806 ----------------------------------------------------------------------------------------------------------------- TOTAL ASSETS $ 9,277 $ 92,838 ================================================================================================================= LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES CURRENT LIABILITIES Accounts payable and accrued liabilities 9,841 4,934 Promissory note - current (Note 4) 50,000 - 59,841 4,934 ----------------------------------------------------------------------------------------------------------------- LONG-TERM LIABILITIES Promissory note (Note 4) - 50,000 ----------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES 59,841 54,934 ----------------------------------------------------------------------------------------------------------------- STOCKHOLDERS' EQUITY (DEFICIT) SHARE CAPITAL Authorized: 100,000,000 preferred shares at a par value of $0.0001 per share Issued and outstanding: Nil 900,000,000 common shares with a par value of $0.0001 per share Issued and outstanding: 12,487,000 common shares 1,249 249 (August 31, 2010: 2,487,000) ADDITIONAL PAID-IN CAPITAL 128,631 79,631 SHARE SUBSCRIPTIONS RECEIVED - 50,000 (DEFICIT) ACCUMULATED DURING THE EXPLORATION STAGE (180,444) (91,976) ----------------------------------------------------------------------------------------------------------------- TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (50,564) 37,904 ----------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 9,277 $ 92,838 ================================================================================================================= The accompanying notes are an integral part of these financial statements. F-2
CASTMOR RESOURCES LTD. (An exploration stage company) Statements of Stockholders' Equity For the period from June 27, 2005 (inception) to February 28, 2011 (Unaudited - Prepared by Management) (Expressed in U.S. Dollars) ------------------------------------------------------------------------------------------------------------------------------------ Deficit accumulated Total Additional Share during stockholders' Preferred Stock Common Stock paid-in subscriptions exploration equity Shares Amount Shares Amount capital received stage (deficiency) ------------------------------------------------------------------------------------------------------------------------------------ Issuance of common stock for settlement of debt July 16, 2005 ($0.0001 per share) - - 2,060,000 206 $ 824 - - 1,030 Loss and comprehensive loss for the period - - - - - - (1,914) (1,914) ------------------------------------------------------------------------------------------------------------------------------------ Balance, August 31, 2005 - - 2,060,000 $ 206 $ 824 $ - $ (1,914) $ (884) ------------------------------------------------------------------------------------------------------------------------------------ Issuance of common stock for cash October 25, 2005 ($0.02 per share) - - 150,000 15 $ 14,985 - - 15,000 Issuance of common stock for settlement of debt October 31, 2005 ($0.02 per share) - - 36,000 4 $ 3,596 - - 3,600 Loss and comprehensive loss for the year - - - - - - (9,537) (9,537) ------------------------------------------------------------------------------------------------------------------------------------ Balance, August 31, 2006 - $ - 2,246,000 $ 225 $ 19,405 $ - $ (11,451) $ 8,179 ------------------------------------------------------------------------------------------------------------------------------------ Loss and comprehensive loss for the year - - - - - - (5,404) (5,404) ------------------------------------------------------------------------------------------------------------------------------------ Balance, August 31, 2007 - $ - 2,246,000 $ 225 $ 19,405 $ - $ (16,855) $ 2,775 ------------------------------------------------------------------------------------------------------------------------------------ Issuance of common stock for cash, November 30, 2007 ($0.05 per share) - - 241,000 24 60,226 - - 60,250 Loss and comprehensive loss for the year - - - - - - (19,035) (19,035) ------------------------------------------------------------------------------------------------------------------------------------ Balance, August 31, 2008 - $ - 2,487,000 $ 249 $ 79,631 $ - $ (35,890) $ 43,990 ------------------------------------------------------------------------------------------------------------------------------------ Loss and comprehensive loss for the year - - - - - - (28,906) (28,906) ------------------------------------------------------------------------------------------------------------------------------------ Balance, August 31, 2009 - $ - 2,487,000 $ 249 $ 79,631 $ - $ (64,796) $ 15,084 ------------------------------------------------------------------------------------------------------------------------------------ Share subscriptions received - - - - - 50,000 - 50,000 Loss and comprehensive loss for the year - - - - - - (27,180) (27,180) ------------------------------------------------------------------------------------------------------------------------------------ Balance, August 31, 2010 - $ - 2,487,000 $ 249 $ 79,631 $ 50,000 $ (91,976) $ 37,904 ------------------------------------------------------------------------------------------------------------------------------------ Issuance of common stock for cash, September 22, 2010 ($0.005 per share) - - 10,000,000 1,000 49,000 (50,000) - - Loss and comprehensive loss for the period - - - - - - (88,468) (88,468) ------------------------------------------------------------------------------------------------------------------------------------ Balance, February 28, 2011 - $ - 12,487,000 $1,249 $ 128,631 $ - $ (180,444) $ (50,564) ==================================================================================================================================== The accompanying notes are an integral part of these financial statements F-3
CASTMOR RESOURCES LTD. (An exploration stage company) Statements of Operations and Comprehensive Loss (Unaudited - Prepared by Management) (Expressed in U.S. Dollars) ------------------------------------------------------------------------------------------------------------------ Cumulative from June 27, 2005 Six months ended Three months ended (inception) to February 28, February 28, February 28, 2011 2011 2010 2011 2010 ------------------------------------------------------------------------------------------------------------------ EXPENSES Bank charges $ 516 $ 78 $ 63 $ (8) $ 18 Consulting fees 37,097 23,398 4,112 12,249 4,112 Interest 6,939 4,603 - 2,589 - Office expenses 11,174 1,295 64 1,259 64 Professional fees 99,386 49,114 6,212 2,600 1,171 Resource property exploration costs 5,000 - - - - Transfer expenses 2,558 275 150 200 150 Write-off mineral deposit 17,774 9,705 - - - ------------------------------------------------------------------------------------------------------------------ LOSS FROM OPERATIONS 180,444 88,468 10,601 18,889 5,515 ------------------------------------------------------------------------------------------------------------------ NET LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD $ (180,444) $ (88,468) $ (10,601) $ (18,889) $ (5,515) ================================================================================================================== BASIC AND DILUTED LOSS PER SHARE $ (0.01) $ (0.00) $ (0.00) $ (0.00) ================================================================================================================== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - basic and diluted 11,278,209 2,487,000 12,487,000 2,487,000 ================================================================================================================== The accompanying notes are an integral part of these financial statements F-4
CASTMOR RESOURCES LTD. (An exploration stage company) Statements of Cash Flows (Unaudited - Prepared by Management) (Expressed in U.S. Dollars) ------------------------------------------------------------------------------------------ Cumulative from June 27, 2005 Six months ended (inception) to February 28, February 28, 2011 2011 2010 ------------------------------------------------------------------------------------------ CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES Net (Loss) for the period $ (180,444) $ (88,468) $ (5,086) Adjustment for item not involving cash: - Accrued interest of promissory note - - - Changes in operating assets and liabilities - increase (decrease) in prepaid expenses (4,598) 59,208 - - accounts payable and accrued liabilities 9,841 4,907 4,925 ------------------------------------------------------------------------------------------ NET CASH USED IN OPERATING ACTIVITIES (175,201) ( 24,353) (161) ------------------------------------------------------------------------------------------ CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES Proceeds from promissory note 50,000 - - Proceeds from issuance of common stock 129,880 - - ------------------------------------------------------------------------------------------ NET CASH PROVIDED BY FINANCING ACTIVITIES 179,880 - - ------------------------------------------------------------------------------------------ INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 4,679 (24,353) (161) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD - 29,032 17,707 ------------------------------------------------------------------------------------------ CASH AND CASH EQUIVALENTS, END OF PERIOD $ 4,679 $ 4,679 $ 17,546 ========================================================================================== SUPPLEMENTAL CASH FLOW INFORMATION ========================================================================================== Interest paid $ 4,603 $ 4,603 $ - ========================================================================================== Income taxes paid $ - $ - $ - ========================================================================================== The accompanying notes are an integral part of these financial statements F-5
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS Castmor Resources Ltd. (hereinafter "the Company") was incorporated in the State of Nevada, U.S.A., on June 27, 2005. The Company's fiscal year end is August 31. The Company has been in the exploration stage since its formation and has not yet realized any revenues from its operations. It is primarily engaged in the acquisition and exploration of mining properties. Upon location of a commercially minable reserve, the Company expects to actively prepare the site for its extraction and enter a development stage. In 2005, the Company acquired mineral interests in two non-contiguous properties located along southeastern coastal Labrador, approximately 13 kilometers northeast of the community of Charlottetown, Labrador, Canada. In 2009, the Company's interest in these mineral properties were forfeited. On September 20, 2010, the Company reacquired its interest in the mineral properties. These financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America applicable to a going concern which assume that the Company will realize its assets and discharge its liabilities in the normal course of business. The Company has incurred accumulated losses of $180,444 since inception and has no source of revenue. The future of the Company is dependent upon its ability to obtain financing and upon future acquisition. These factors create doubt as to the ability of the Company to continue as a going concern. Realization values may be substantially different from the carrying values as shown in these financial statements should the Company be unable to continue as a going concern. Management is in the process of identifying sources for additional financing to fund the ongoing development of the Company's business. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the Company have been prepared in accordance with the generally accepted accounting principles in the United States of America. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates that have been made using careful judgment. The financial statements have, in management's opinion been properly prepared within reasonable limits of materiality and within the framework of the significant accounting policies summarized below: Accounting Method The Company's financial statements are prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. Cash and Cash Equivalents For purposes of the statement of cash flows, the Company considers all highly liquid investments and short-term debt instruments with original maturities of three months or less to be cash equivalents. As at February 28, 2011 and August 31, 2010, there were no cash equivalents. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses for the reporting period. Actual results could differ from these estimates. Concentration of Credit Risk The Company places its cash and cash equivalents with high credit quality financial institutions. There is no deposit insurance on the Company's accounts. F-6
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Foreign Currency Transactions The Company is located and operating outside of the United States of America. The Company's functional currency and reporting currency, is U.S. Dollars. At the transaction date, each asset, liability, revenue and expense is translated into U.S. dollars by the use of the exchange rate in effect at that date. At the period end, monetary assets and liabilities are re-measured by using the exchange rate in effect at that date. The resulting foreign exchange gains and losses are included in operations. Fair Value of Financial Instruments ASC 820 "Fair Value Measurements and Disclosures" requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value: Level 1 - Quoted prices in active markets for identical assets or liabilities; Level 2 - Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable; and Level 3 - Unobservable inputs that are supported by little or no market activity, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing. The Company's financial instruments include cash and cash equivalents, accounts payable and accrued liabilities and promissory notes. Fair values were assumed to approximate carrying value for these financial instruments, except where noted. Management is of the opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments. The Company is operating outside the United States of America and has significant exposure to foreign currency risk due to the fluctuation of currency in which the Company operates and U.S. dollars. Mineral Property Payments and Exploration Costs Mineral property acquisition costs are initially capitalized as tangible assets when purchased. The Company assesses the carrying costs for impairment when indicators of impairment exist. If proven and probable reserves are established for a property and it has been determined that a mineral property can be economically developed, costs will be amortized using the units-of-production method over the estimated total recoverable proven and probable reserves.. Mineral property exploration and development costs are expensed as incurred until the establishment of economically viable reserves. Long-lived Assets Impairment Long-lived assets of the Company are reviewed for impairment whenever events or circumstances indicate that the carrying amount of assets may not be recoverable, pursuant to guidance established in ASC 360, Property, Plant and Equipment. Management considers assets to be impaired if the carrying value exceeds the future projected cash flows from related operations (undiscounted and without interest charges). If impairment is deemed to exist, the assets will be written down to fair value. Fair value is generally determined using a discounted cash flow analysis. Assets Retirement Obligations The Company has adopted ASC 410, Asset Retirement and Environmental Obligations, which requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred. ASC 410 requires the Company to record a liability for the present value of the estimated site restoration costs with corresponding increase to the carrying amount of the related long-lived assets. The liability will be accreted and the asset will be depreciated over the life of the related assets. Adjustments for changes resulting from the passage of time and changes to either the timing or amount of the original present value estimate underlying the obligation will be made. As at February 28, 2011 and August 31, 2010, the Company does not have any asset retirement obligations. Costs associated with environmental remediation obligations will be accrued when it is probable that such costs will be incurred and they can be reasonably estimated. F-7
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Stock-Based Compensation The Company adopted ASC 718, Compensation - Stock-Based Compensation, to account for its stock options and similar equity instruments issued. Accordingly, compensation costs attributable to stock options or similar equity instruments granted are measured at the fair value at the grant date, and expensed over the expected vesting period. The Company did not grant any stock options during the periods ended February 28, 2011 and 2010. Comprehensive Income The Company adopted ASC 220, Comprehensive Income, which establishes standards for reporting and display of comprehensive income, its components and accumulated balances. The Company is disclosing this information on its Statement of Stockholders' Equity. Comprehensive income comprises equity except those resulting from investments by owners and distributions to owners. The Company has no elements of "other comprehensive income" for the periods ended February 28, 2011 and 2010. Income Taxes The Company has adopted ASC 740, Income Taxes, which requires the Company to recognize deferred tax liabilities and assets for the expected future tax consequences of events that have been recognized in the Company's financial statements or tax returns using the liability method. Under this method, deferred tax liabilities and assets are determined based on the temporary differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. Basic and Diluted Loss Per Share In accordance with ASC 260, Earnings Per Share, the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional common shares that would be outstanding if the potential common shares had been issued and if the additional common shares were dilutive. New Accounting Pronouncements In January 2010, the FASB issued an update to the Fair Value topic. This update requires new disclosures for (1) transfers in and out of levels 1 and 2, and (2) activity in level 3, by requiring the reconciliation to present separate information about purchases, sales, issuance, and settlements. Also, this update clarifies the disclosures related to the fair value of each class of assets and liabilities and the input and valuation techniques for both recurring and nonrecurring fair value measurements in levels 2 and 3. the effective date for the disclosures and clarifications is for the interim and annual reporting periods beginning after December 15, 2009 except for the disclosures about purchases, sales, issuances and settlements, which is effective for fiscal years beginning after December 15, 2010. This update is not expected to have a material impact on the Company's financial statements. In February 2010, the FASB issued ASC No. 2010-09, "Amendments to Certain Recognition and Disclosure Requirements", which eliminates the requirement for SEC filers to disclose the date through which an entity has evaluated subsequent events. ASC No. 2010-09 is effective for its fiscal quarter beginning after 15 December 2010. The adoption of ASC No. 2010-09 is not expected to have a material impact on the Company's financial statements ASU No. 2010-13 was issued in April 2010, and clarified the classification of an employee share based payment award with an exercise price denominated in the currency of a market in which the underlying security trades. This ASU will be effective for the first fiscal quarter beginning after December 15, 2010, with early adoption permitted. The adoption of ASU No. 2010-13 is not expected to have a material impact on the Company's financial statements. Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company's financial statements upon adoption. F-8
NOTE 3 - MINERAL PROPERTY INTEREST On October 31, 2005 the Company acquired a 100% interest in two non-contiguous mineral claims located along southeastern coastal Labrador, approximately 13 kilometers northeast of the community of Charlottetown, Labrador, Canada. The claims were acquired from Mr. Thomas Mills for a consideration of CAD$4,250 which covered an exploration program security deposit and staking and other related costs of $401 (CAD$450) and $3,199 (CAD$3,800), respectively. The Company expensed the staking and other related costs of $3,199 in connection with the acquisition of the mineral claims. One of the licenses comprising eight claims, was inadvertently allowed to expire and was cancelled on January 24, 2007. The Company reacquired a 100% interest in the same eight claims under a new mineral license by a Transfer of Mineral Disposition dated July 16, 2007, from Mr. Thomas Mills, for CAD$505. The Company expensed the entire cost of reacquiring the mineral claims. Up to August 31, 2009, the Company has paid $8,069 towards a security deposit on its exploration program. The Company was required to incur total exploration expenditures of CAD$13,500 for the above noted mineral claims before July 13, 2009. The Company failed to do so, or to pay any further deposit on exploration activities with the mining division of Labrador Canada. As a result, the Company has forfeited its mineral claims and wrote off the prepaid security deposit in the amount of $8,069 in 2009. On September 20, 2010, the Company reacquired a 100% interest in the same two non-contiguous mineral claims that it originally acquired on October 31, 2005 and subsequently forfeited. These two non-contiguous mineral claims located along southeastern coastal Labrador, approximately 13 kilometers northeast of the community of Charlottetown, Labrador, Canada. The claims were acquired from Mr. Thomas Mills for a cash consideration of $10,000. Mr. Mills became a controlling shareholder of the Company on September 22, 2010. NOTE 4 - PROMISSORY NOTE On August 31, 2010, the Company received advances of $50,000 from a related party, to whom the Company issued a promissory note for the same amount on September 21, 2011. The promissory note is due and payable on September 21, 2011 and accrues interest from September 21, 2010 at the rate of 20% per annum, calculated semi-annually, payable on the due date. The Company may redeem the promissory note in whole or in part at any time prior to the due date. As of February 28, 2011, the Company has paid $4,603 in respect of accrued interest on the promissory note, the principal of which remains unpaid and outstanding. NOTE 5 - RELATED PARTY TRANSACTIONS See Note 3, 4 and Note 6. The prepaid expenses represents the amount advanced to a related party as at February 28, 2011, Moneris Corporate Services Ltd. ("Moneris"), a consulting firm controlled by mother of the major shareholder (after the private placement on September 22, 2010). Included in the accounts payable and accrued liabilities as of February 28, 2011 $nil (August 31, 2010 - $1,229) was due to Moneris and $nil (August 31, 2010 - $1,852) was due to the major shareholder for the advanced operating expenses. As of February 28, 2011, included in the consulting expenses and office expenses, the amount $6,695 and $2,092 was incurred by Moneris. NOTE 6 - PREFERRED AND COMMON STOCK The Company has 100,000,000 shares of preferred stock authorized and none issued. The Company has 900,000,000 shares of common stock authorized, of which 12,487,000 shares are issued and outstanding. All shares of common stock are non-assessable and non-cumulative, with no preemptive rights. On September 22, 2010, the Company completed a private placement of 10,000,000 shares of the Company's common stock to Thomas Mills at a price of $0.005 per share for gross proceeds of $50,000. NOTE 7 - SEGMENT INFORMATION The Company currently conducts all of its operations in Canada. F-9
CHANG LEE LLP Chartered Accountants 606-815 Hornby Street Vancouver, B.C., V6Z 2E6 Tel: 604-687-3776 Fax: 604-688-3373 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of CASTMOR RESOURCES LTD. (An exploration stage company) We have audited the accompanying balance sheets of Castmor Resources Ltd. (an exploration stage company) as at August 31, 2010 and 2009 and the related statements of stockholders' equity, operations and comprehensive loss, and cash flows for the years then ended and for the period from June 27, 2005 (date of inception) to August 31, 2010. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as at August 31, 2010 and 2009 and the results of its operations and its cash flows for the years then ended and for the period from June 27, 2005 (date of inception) to August 31, 2010, in conformity with accounting principles generally accepted in the United States of America. The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company incurred losses from operations since inception, has not attained profitable operations and is dependent upon obtaining adequate financing to fulfil its exploration activities. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also discussed in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Vancouver, Canada "Chang Lee LLP" November 26, 2010 Chartered Accountants F-10
CASTMOR RESOURCES LTD. (An exploration stage company) Balance Sheets August 31, 2010 (Expressed in U.S. Dollars) ------------------------------------------------------------------------------------------- August 31 August 31 2010 2009 ------------------------------------------------------------------------------------------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 29,032 $ 17,707 Prepaid expenses 63,806 - ------------------------------------------------------------------------------------------- TOTAL ASSETS $ 92,838 $ 17,707 =========================================================================================== LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES CURRENT LIABILITIES Accounts payable and accrued liabilities $ 4,934 $ 2,623 Long-term Liabilities PROMISSORY NOTE (NOTE 4) 50,000 - ------------------------------------------------------------------------------------------- TOTAL LIABILITIES 54,934 2,623 ------------------------------------------------------------------------------------------- STOCKHOLDERS' EQUITY SHARE CAPITAL Authorized: 100,000,000 preferred shares at a par value of $0.0001 per share Issued and outstanding: Nil 900,000,000 common shares with a par value of $0.0001 per share Issued and outstanding: 2,487,000 common shares 249 249 (August 31, 2009: 2,487,000) ADDITIONAL PAID-IN CAPITAL 79,631 79,631 SHARE SUBSCRIPTIONS RECEIVED 50,000 - (DEFICIT) ACCUMULATED DURING THE EXPLORATION STAGE (91,976) (64,796) ------------------------------------------------------------------------------------------- TOTAL STOCKHOLDERS' EQUITY 37,904 15,084 ------------------------------------------------------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 92,838 $ 17,707 =========================================================================================== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS. F-11
CASTMOR RESOURCES LTD. (An exploration stage company) Statements of Stockholders' Equity For the period from June 27, 2005 (inception) to August 31, 2010 (Expressed in U.S. Dollars) ------------------------------------------------------------------------------------------------------------------------------------ Deficit accumulated Total Additional Share during stockholders' Preferred Stock Common Stock paid-in subscriptions exploration equity Shares Amount Shares Amount capital received stage (deficiency) ------------------------------------------------------------------------------------------------------------------------------------ Issuance of common stock for settlement of debt July 16, 2005 ($0.0001 per share) - $ - 2,060,000 $ 206 $ 824 $ - $ - $ 1,030 Loss and comprehensive loss for the period - - - - - - (1,914) (1,914) ------------------------------------------------------------------------------------------------------------------------------------ Balance, August 31, 2005 - - 2,060,000 $ 206 $ 824 $ - $ (1,914) $ (884) ------------------------------------------------------------------------------------------------------------------------------------ Issuance of common stock for cash October 25, 2005 ($0.02 per share) - $ - 150,000 $ 15 $ 14,985 $ - $ - $ 15,000 Issuance of common stock for settlement of debt October 31, 2005 ($0.02 per share) - $ - 36,000 $ 4 $ 3,596 $ - $ - $ 3,600 Loss and comprehensive loss for the year - - - - - - (9,537) (9,537) ------------------------------------------------------------------------------------------------------------------------------------ Balance, August 31, 2006 - $ - 2,246,000 $ 225 $ 19,405 $ - $(11,451) $ 8,179 ------------------------------------------------------------------------------------------------------------------------------------ Loss and comprehensive loss for the year - - - - - - (5,404) (5,404) ------------------------------------------------------------------------------------------------------------------------------------ Balance, August 31, 2007 - $ - 2,246,000 $ 225 $ 19,405 $ - $(16,855) $ 2,775 ------------------------------------------------------------------------------------------------------------------------------------ Issuance of common stock for cash November 30, 2007 ($0.05 per share) - $ - 241,000 $ 24 $ 60,226 $ - $ - $ 60,250 Loss and comprehensive loss for the year - - - - - - (5,404) (5,404) ------------------------------------------------------------------------------------------------------------------------------------ Balance, August 31, 2008 - $ - 2,487,000 $ 249 $ 79,631 $ - $(35,890) $ 43,990 ------------------------------------------------------------------------------------------------------------------------------------ Loss and comprehensive loss for the year - - - - - - (28,906) (28,906) ------------------------------------------------------------------------------------------------------------------------------------ Balance, August 31, 2009 - $ - 2,487,000 $ 249 $ 79,631 $ - $(64,796) $ 15,084 ------------------------------------------------------------------------------------------------------------------------------------ Share subscriptions received - $ - - $ - $ - $ 50,000 $ - $ 50,000 Loss and comprehensive loss for the year - - - - - - (27,180) (27,180) ------------------------------------------------------------------------------------------------------------------------------------ Balance, August 31, 2010 - $ - 2,487,000 $ 249 $ 79,631 $ 50,000 $(91,976) $ (37,904) ==================================================================================================================================== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS F-12
CASTMOR RESOURCES LTD. (A exploration stage company) Statements of Operations and Comprehensive Loss (Expressed in U.S. Dollars) ---------------------------------------------------------------------------------------------------------- Cumulative from June 27, 2005 (inception) to Year ended Year ended August 31, 2010 August 31, 2010 August 31, 2009 ---------------------------------------------------------------------------------------------------------- EXPENSES Bank charges $ 438 $ 121 $ 69 Consulting fees 13,699 12,336 965 Interest expense 2,336 - - Office expenses 9,879 2,780 944 Professional fees 50,272 11,258 18,340 Resource property exploration costs 5,000 - - Transfer expenses 2,283 685 519 Write-off mineral deposit 8,069 - 8,069 ---------------------------------------------------------------------------------------------------------- LOSS FROM OPERATIONS 91,976 27,180 28,906 ---------------------------------------------------------------------------------------------------------- NET LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD $ (91,976) $ (27,180) $ (28,906) ---------------------------------------------------------------------------------------------------------- BASIC AND DILUTED LOSS PER SHARE $ (0.01) $ (0.01) ========================================================================================================== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - basic and diluted 2,487,000 2,487,000 ========================================================================================================== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS F-13
CASTMOR RESOURCES LTD. (An exploration stage company) Statements of Cash Flows (Expressed in U.S. Dollars) ------------------------------------------------------------------------------------------------------------------------ Cumulative from June 27, 2005 (inception) to Year ended Year ended Augusts 31, 2010 August 31, 2010 August 31, 2009 ------------------------------------------------------------------------------------------------------------------------ CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES Net (Loss) for the period $ (91,976) $ (27,180) $ (28,906) Changes in operating assets and liabilities - (increase) decrease in prepaid expenses (63,806) (63,806) - - (increase) decrease in security deposit - - 8,069 - increase (decrease) in accounts payable and accrued liabilities 4,934 2,311 (3,005) ------------------------------------------------------------------------------------------------------------------------ NET CASH (USED IN) OPERATING ACTIVITIES (150,848) (88,675) (23,842) ------------------------------------------------------------------------------------------------------------------------ CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES Proceeds from promissory note 50,000 50,000 - Proceeds from share subscriptions received 50,000 50,000 - Proceeds from issuance of common stock 79,880 - - ------------------------------------------------------------------------------------------------------------------------ NET CASH PROVIDED BY FINANCING ACTIVITIES 179,880 100,000 - ------------------------------------------------------------------------------------------------------------------------ INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 29,032 11,325 (23,842) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD - 17,707 41,549 ------------------------------------------------------------------------------------------------------------------------ CASH AND CASH EQUIVALENTS, END OF PERIOD $ 29,032 $ 29,032 $ 17,707 ======================================================================================================================== SUPPLEMENTAL CASH FLOW INFORMATION Interest paid $ 2,336 $ - $ - ======================================================================================================================== Income taxes paid $ - $ - $ - ======================================================================================================================== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS F-14
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS Castmor Resources Ltd. (hereinafter "the Company") was incorporated in the State of Nevada, U.S.A., on June 27, 2005. The Company's fiscal year end is August 31. The Company has been in the exploration stage since its formation and has not yet realized any revenues from its operations. It is primarily engaged in the acquisition and exploration of mining properties. Upon location of a commercially minable reserve, the Company expects to actively prepare the site for its extraction and enter a development stage. In 2005, the Company acquired mineral interests in two non-contiguous properties located along southeastern coastal Labrador, approximately 13 kilometers northeast of the community of Charlottetown, Labrador, Canada. In 2009, the Company's interest in these mineral properties were forfeited. On September 20, 2010, the Company reacquired its interest in the mineral properties. Effective August 19, 2010, we effected a five (5) for one (1) share reverse split of our authorized and issued and outstanding common stock. As a result of the reverse split, the Company's issued and outstanding common stock was reduced from 12,435,000 shares to 2,487,000 shares. These financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America applicable to a going concern which assume that the Company will realize its assets and discharge its liabilities in the normal course of business. The Company has incurred accumulated losses of $91,976 since inception and has no source of revenue. The future of the Company is dependent upon its ability to obtain financing and upon future acquisition. These factors create doubt as to the ability of the Company to continue as a going concern. Realization values may be substantially different from the carrying values as shown in these financial statements should the Company be unable to continue as a going concern. Management is in the process of identifying sources for additional financing to fund the ongoing development of the Company's business. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the Company have been prepared in accordance with the generally accepted accounting principles in the United States of America. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates that have been made using careful judgment. The financial statements have, in management's opinion been properly prepared within reasonable limits of materiality and within the framework of the significant accounting policies summarized below: Accounting Method The Company's financial statements are prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. Cash and Cash Equivalents For purposes of the statement of cash flows, the Company considers all highly liquid investments and short-term debt instruments with original maturities of three months or less to be cash equivalents. As at August 31, 2010 and 2009, there were no cash equivalents. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses for the reporting period. Actual results could differ from these estimates. F-15
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Concentration of Credit Risk The Company places its cash and cash equivalents with high credit quality financial institutions. There is no deposit insurance on the Company's accounts. Foreign Currency Transactions The Company is located and operating outside of the United States of America. The Company's functional currency and reporting currency, is U.S. Dollars. At the transaction date, each asset, liability, revenue and expense is translated into U.S. dollars by the use of the exchange rate in effect at that date. At the period end, monetary assets and liabilities are re-measured by using the exchange rate in effect at that date. The resulting foreign exchange gains and losses are included in operations. Fair Value of Financial Instruments ASC 820 "Fair Value Measurements and Disclosures" requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value: Level 1 - Quoted prices in active markets for identical assets or liabilities; Level 2 - Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable; and Level 3 - Unobservable inputs that are supported by little or no market activity, therefore requiring an entity to develop its own assumptions about the assumptions that market participants would use in pricing. The Company's financial instruments include cash and cash equivalents, accounts payable and accrued liabilities and promissory notes. Fair values were assumed to approximate carrying value for these financial instruments, except where noted. Management is of the opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments. The Company is operating outside the United States of America and has significant exposure to foreign currency risk due to the fluctuation of currency in which the Company operates and U.S. dollars. Mineral Property Payments and Exploration Costs Mineral property acquisition costs are initially capitalized as tangible assets when purchased. The Company assesses the carrying costs for impairment when indicators of impairment exist. If proven and probable reserves are established for a property and it has been determined that a mineral property can be economically developed, costs will be amortized using the units-of-production method over the estimated life of the proven and probable reserve. Mineral property exploration and development costs are expensed as incurred until the establishment of economically viable reserves. Long-lived Assets Impairment Long-lived assets of the Company are reviewed for impairment whenever events or circumstances indicate that the carrying amount of assets may not be recoverable, pursuant to guidance established in ASC 360, Property, Plant and Equipment. Management considers assets to be impaired if the carrying value exceeds the future projected cash flows from related operations (undiscounted and without interest charges). If impairment is deemed to exist, the assets will be written down to fair value. Fair value is generally determined using a discounted cash flow analysis. F-16
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Assets Retirement Obligations The Company has adopted ASC 410, Asset Retirement and Environmental Obligations, which requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred. ASC 410 requires the Company to record a liability for the present value of the estimated site restoration costs with corresponding increase to the carrying amount of the related long-lived assets. The liability will be accreted and the asset will be depreciated over the life of the related assets. Adjustments for changes resulting from the passage of time and changes to either the timing or amount of the original present value estimate underlying the obligation will be made. As at August 31, 2010 and 2009, the Company does not have any asset retirement obligations. Costs associated with environmental remediation obligations will be accrued when it is probable that such costs will be incurred and they can be reasonably estimated. Stock-Based Compensation The Company adopted ASC 718, Compensation - Stock-Based Compensation, to account for its stock options and similar equity instruments issued. Accordingly, compensation costs attributable to stock options or similar equity instruments granted are measured at the fair value at the grant date, and expensed over the expected vesting period. The Company did not grant any stock options during the period ended August 31, 2010 and 2009. Comprehensive Income The Company adopted ASC 220, Comprehensive Income, which establishes standards for reporting and display of comprehensive income, its components and accumulated balances. The Company is disclosing this information on its Statement of Stockholders' Equity. Comprehensive income comprises equity except those resulting from investments by owners and distributions to owners. The Company has no elements of "other comprehensive income" for the years ended August 31, 2010 and 2009. Income Taxes The Company has adopted ASC 740, Income Taxes, which requires the Company to recognize deferred tax liabilities and assets for the expected future tax consequences of events that have been recognized in the Company's financial statements or tax returns using the liability method. Under this method, deferred tax liabilities and assets are determined based on the temporary differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. Basic and Diluted Loss Per Share In accordance with ASC 260, Earnings Per Share, the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional common shares that would be outstanding if the potential common shares had been issued and if the additional common shares were dilutive. New Accounting Pronouncements In April 2009, the FASB issued an update to ASC 820, "Fair Value Measurements and Disclosures", relating to providing guidance on when the volume and level of activity for the asset or liabilities have significantly decreased and identifying transactions that are not orderly. The update clarifies the methodology to be used to determine fair value when there is no active market or where the price inputs being used represent distressed sales. The update also affirms the objective of fair value measurement, as stated in ASC 820, which is to reflect how much an asset would be sold in an orderly transaction, and the need to use judgment to determine if a formerly active market has become inactive, as well as to determine fair values when markets have become inactive. The Company adopted this Statement in the current fiscal year without significant financial impact. In April 2009, the FASB issued an update to ASC 825, "Financial Instruments", to require interim disclosures about the fair value of financial instruments. This update enhances consistency in financial reporting by increasing the frequency of fair value disclosures of those assets and liabilities falling within the scope of ASC 825. The Company adopted this update in the current fiscal year without significant impact to the financial statements. F-17
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) New Accounting Pronouncements In April 2009, ASC 320, "Investments - Debt and Equity", amends current other-than-temporary guidance for debt securities through increased consistency in the timing of impairment recognition and enhanced disclosures related to credit and noncredit components impaired debt securities that are not expected to be sold. Also, the Statement increases disclosures for both debt and equity securities regarding expected cash flows, securities with unrealized losses and credit losses. The Company adopted this Statement in the current fiscal year without significant impact to the financial statements. In April 2009, the FASB issued an update to ASC 805, "Business Combinations", that clarifies and amends ASC 805, as it applies to all assets acquired and liabilities assumed in a business combination that arise from contingencies. This update addresses initial recognition and measurement issues, subsequent measurement and accounting, and disclosures regarding these assets and liabilities arising from contingencies in a business combination. The Company adopted this Statement in the current fiscal year without significant impact to the financial statements. In May 2009, the FASB issued ASC 855, "Subsequent Events". This Statement addresses accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or available to be issued. ASC 855 requires disclosure of the date through which an entity has evaluated subsequent events and the basis for that date, the date issued or date available to be issued. The Company adopted this Statement in the current fiscal year. In June 2009, the FASB issued ASC 860, "Transfers and Servicing". This Standard eliminates the concept of a qualifying special purpose entity ("QSPE") and modifies the derecognition provisions in Statement of Financial Accounting Standards No. 140. This statement is effective for financial asset transfers occurring after the beginning of an entity's first fiscal year that begins after November 15, 2009. Early application is prohibited. The Company does not anticipate any significant financial impact from adoption of ASC 860. On July 1, 2009, the FASB officially launched the FASB ASC 105, "Generally Accepted Accounting Principles", which established the FASB Accounting Standards Codification ("the Codification"), as the single official source of authoritative, nongovernmental, US GAAP, in addition to guidance issued by the Securities and Exchange Commission. The Codification is designed to simplify US GAAP into a single, topically ordered structure. All guidance contained in the Codification carries an equal level of authority. The Codification is effective for interim and annual periods ending after September 15, 2009. Accordingly, the Company refers to the Codification in respect of the appropriate accounting standards throughout this document as "ASC". Implementation of the Codification did not have any impact on the Company's financial statements. In August 2009, the FASB issued Accounting Standards Update ("ASU") No. 2009-05, "Fair Value Measurements and Disclosures (Topic 820 - Measuring Liabilities at Fair Value)". This ASU clarifies the fair market value measurement of liabilities. In circumstances where a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using one or more of the following techniques: a technique that uses quoted price of the identical or a similar liability or liabilities when traded as an asset or assets, or another valuation technique that is consistent with the principles of Topic 820 such as an income or market approach. ASU No. 2009-05 was effective upon issuance and it did not result in any significant financial impact on the Company upon adoption. In September 2009, the FASB issued ASU No. 2009-12, "Fair Value Measurements and Disclosures (Topic 820) - Investments in Certain Entities That Calculate Net Asset Value Per Share (or its equivalent)". This ASU permits use of a practical expedient, with appropriate disclosures, when measuring the fair value of an alternative investment that does not have a readily determinable fair value. ASU No. 2009-12 is effective for interim and annual periods ending after December 15, 2009, with early application permitted. Since the Company does not currently have any such investments, it does not anticipate any impact on its financial statements upon adoption. In January 2010, the FASB issued an update to the Fair Value topic. This update requires new disclosures for (1) transfers in and out of levels 1 and 2, and (2) activity in level 3, by requiring the reconciliation to present separate information about purchases, sales, issuance, and settlements. Also, this update clarifies the disclosures related to the fair value of each class of assets and liabilities and the input and valuation techniques for both recurring and nonrecurring fair value measurements in levels 2 and 3. the effective date for the disclosures and clarifications is for the interim and annual reporting periods beginning after December 15, 2009 except for the disclosures about purchases, sales, issuances and settlements, which is effective for fiscal years beginning after December 15, 2010. This update is not expected to have a material impact on the Company's financial statements. F-18
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) New Accounting Pronouncements (continued) In January 2010, the FASB issued Accounting Standards Update 2010-01, Equity (Topic 505): Accounting for Distributions to Shareholders with Components of Stock and Cash (A Consensus of the FASB Emerging Issues Task Force). This amendment to Topic 505 clarifies the stock portion of a distribution to shareholders that allows them to elect to receive cash or stock with a limit on the amount of cash that will be distributed is not a stock dividend for purposes of applying Topics 505 and 260. Effective for interim and annual periods ending on or after December 15, 2009, and would be applied on a retrospective basis. The Company does not expect the provisions of ASU 2010-01 to have a material effect on the financial position, results of operations or cash flows of the Company. In January 2010, the FASB issued Accounting Standards Update 2010-02, Consolidation (Topic 810): Accounting and Reporting for Decreases in Ownership of a Subsidiary. This amendment to Topic 810 clarifies, but does not change, the scope of current US GAAP. It clarifies the decrease in ownership provisions of Subtopic 810-10 and removes the potential conflict between guidance in that Subtopic and asset derecognition and gain or loss recognition guidance that may exist in other US GAAP. An entity will be required to follow the amended guidance beginning in the period that it first adopts FAS 160 (now included in Subtopic 810-10). For those entities that have already adopted FAS 160, the amendments are effective at the beginning of the first interim or annual reporting period ending on or after December 15, 2009. The amendments should be applied retrospectively to the first period that an entity adopted FAS 160. The Company does not expect the provisions of ASU 2010-02 to have a material effect on the financial position, results of operations or cash flows of the Company. In February 2010, the FASB issued ASC No. 2010-09, "Amendments to Certain Recognition and Disclosure Requirements", which eliminates the requirement for SEC filers to disclose the date through which an entity has evaluated subsequent events. ASC No. 2010-09 is effective for its fiscal quarter beginning after 15 December 2010. The adoption of ASC No. 2010-09 is not expected to have a material impact on the Company's financial statements ASU No. 2010-13 was issued in April 2010, and clarified the classification of an employee share based payment award with an exercise price denominated in the currency of a market in which the underlying security trades. This ASU will be effective for the first fiscal quarter beginning after December 15, 2010, with early adoption permitted. The adoption of ASU No. 2010-13 is not expected to have a material impact on the Company's financial statements. Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company's financial statements upon adoption. NOTE 3 - MINERAL PROPERTY INTEREST On October 31, 2005 the Company acquired a 100% interest in two non-contiguous mineral claims located along southeastern coastal Labrador, approximately 13 kilometers northeast of the community of Charlottetown, Labrador, Canada. The claims were acquired from Mr. Thomas Mills for a consideration of $4,250 CAD which covered an exploration program security deposit and staking and other related costs of $401 (CAD$450) and $3,199 (CAD$3,800), respectively. The Company expensed the staking and other related costs of $3,199 in connection with the acquisition of the mineral claims. One of the licenses comprising eight claims, was inadvertently allowed to expire and was cancelled on January 24, 2007. The Company reacquired a 100% interest in the same eight claims under a new mineral license by a Transfer of Mineral Disposition dated July 16, 2007, from Mr. Thomas Mills, for $505 CAD. The Company expensed the entire cost of reacquiring the mineral claims. Up to August 31, 2009, the Company has paid $8,069 towards a security deposit on its exploration program. The Company was required to incur total exploration expenditures of CAD$13,500 for the above noted mineral claims before July 13, 2009. The Company failed to do so, or to pay any further deposit on exploration activities with the mining division of Labrador Canada. As a result, the Company has forfeited its mineral claims and wrote off the prepaid security deposit in the amount of $8,069 in 2009. On September 20, 2010, the Company reacquired a 100% interest in the same two non-contiguous mineral claims that it originally acquired on October 31, 2005 and subsequently forfeited. These two non-contiguous mineral claims located along southeastern coastal Labrador, approximately 13 kilometers northeast of the community of Charlottetown, Labrador, Canada. The claims were acquired from Mr. Thomas Mills for a cash consideration of $10,000. Mr. Mills became a controlling shareholder of the Company on September 22, 2010. NOTE 4 - PROMISSORY NOTE On August 31, 2010, the Company received advances of $50,000 from a third party, to whom the Company issued a promissory note for the same amount on September 21, 2011. The promissory note is due and payable on September 21, 2011 and accrues interest from September 21, 2010 at the rate of 20% per annum, calculated semi-annually, payable on the due date. The Company may redeem the promissory note in whole or in part at any time prior to the due date. As of August 31, 2010, the Company has made no repayment in respect of the promissory note. NOTE 5 - RELATED PARTY TRANSACTIONS See Note 3 and Note 9. Included in the prepaid expenses as of August 31, 2010, $10,100 was prepaid to Moneris Corporate Services Ltd. ("Moneris"), a consulting firm controlled by mother of the major shareholders (after the private placement on September 22, 2010). Included in the accounts payable and accrued liabilities as of August 31, 2010, $1,229 (September 30, 2009 - $1,229) was due to Moneris and $1,852 (September 30, 2009 - $280) was due to the major shareholder for the advanced operating expenses. F-19
NOTE 6 - PREFERRED AND COMMON STOCK The Company has 100,000,000 shares of preferred stock authorized and none issued. The Company has 900,000,000 shares of common stock authorized, of which 2,487,000 shares are issued and outstanding. All shares of common stock are non-assessable and non-cumulative, with no preemptive rights. NOTE 7 - INCOME TAXES At August 31, 2010, the Company had deferred tax assets of approximately $32,200 principally arising from net operating loss carryforwards for income tax purposes. As our management cannot determine that it is more likely than not that we will realize the benefit of the deferred tax asset, a valuation allowance equal to the deferred tax asset has been established at August 31, 2010. A reconciliation of income taxes at statutory rates with the reported taxes is as follows: ------------------------------------------------------------------------------- August 31, 2010 August 31, 2009 ------------------------------------------------------------------------------- Net loss before income taxes $ 27,180 $ 28,905 Income tax recovery at statutory rates of 35% 9,513 10,117 Unrecognized benefits of non-capital losses (9,513) (10,117) Total income tax recovery $ - $ - ------------------------------------------------------------------------------- The significant components of the deferred tax asset at August 31, 2010 and 2009 were as follows: ------------------------------------------------------------------------------- August 31, 2010 August 31, 2009 ------------------------------------------------------------------------------- Net operating loss carryforwards $ 32,200 $ 22,700 Valuation allowance (32,200) (22,700) Net deferred tax asset $ - $ - ------------------------------------------------------------------------------- At August 31, 2010, we had net operating loss carryforwards of approximately $92,000, which expire in the year 2026 through 2030. NOTE 8 - SEGMENT INFORMATION The Company currently conducts all of its operations in Canada. NOTE 9 - SUBSEQUENT EVENTS See Note 3. On September 22, 2010, the Company completed a private placement of 10,000,000 shares of the Company's common stock to Thomas Mills at a price of $0.005 per share for gross proceeds of $50,000. F-20
20,000,000 SHARES CASTMOR RESOURCES LTD. COMMON STOCK PROSPECTUS We have not authorized any dealer, salesperson or other person to give anyone written information other than this prospectus or to make representations as to matters not stated in this prospectus. Prospective investors must not rely on unauthorized information. This prospectus is not an offer to sell these securities or a solicitation of an offer to buy the securities in any jurisdiction where that would not be permitted or legal. Neither the delivery of this prospectus nor any sales made hereunder after the date of this prospectus shall create an implication that either the information contained herein or the affairs of Castmor Resources Ltd. have not changed since the date hereof. Until ______________, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
PART II ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The following table sets forth the estimated costs and expenses we will pay in connection with the offering described in this registration statement: ------------------------------------ Amount ------------------------------------ Accounting fees and expenses 2,500 Legal fees and expenses 2,500 ------------------------------------ Total $5,000 ------------------------------------ All expenses are estimated. ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Nevada law provides for discretionary indemnification for each person who serves as one of our directors or officers. We may indemnify such individuals against all costs, expenses and liabilities incurred in a threatened, pending or completed action, suit or proceeding brought because such individual is one of our officers or directors. Such individual must have conducted himself in good faith and reasonably believed that his conduct was in, or not opposed to, our best interests. In a criminal action, he must not have had a reasonable cause to believe his conduct was unlawful. Article Twelfth of our Articles of Incorporation states that no director or officer of the Corporation shall be personally liable to the Corporation or any of its stockholders for damages for breach of fiduciary duty as a director or officer involving any act or omission of any such director or officer; provided, however, that the foregoing provision shall not eliminate or limit the liability of a director or officer (i) for acts or omissions which involve intentional misconduct, fraud or a knowing violation of law, or (ii) the payment of dividends in violation of Section 78.300 of the NRS. Any repeal or modification of this Article by the stockholders of the Corporation shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director or officer of the Corporation for acts or omissions prior to such repeal or modification. Our bylaws provide the following indemnification under Article VI: 01. INDEMNIFICATION. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that such person is or was a director, trustee, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, trustee, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgment, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation, and with respect to any criminal action or proceeding, had no reasonable cause to believe such person's conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the Corporation, and with respect to any criminal action proceeding, had reasonable cause to believe that such person's conduct was unlawful. 02. DERIVATIVE ACTION. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure a judgment in the Corporation's favor by reason of the fact that such person is or was a director, trustee, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, trustee, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorney's fees) and amount paid in settlement actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to amounts paid in settlement, the settlement of the suit or action was in the best interests of the Corporation; provided, however, that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for gross negligence or willful misconduct in the performance of such person's duty to the Corporation unless and only to the extent that, the court in which such action or suit was brought shall determine upon application that, despite circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses as such court shall deem proper. The termination of any action or suit by judgment or settlement shall not, of itself, create a presumption that the person did not act in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the Corporation. II-1
03. SUCCESSFUL DEFENSE. To the extent that a director, trustee, officer, employee or agent of the Corporation has been successful on the merits or otherwise, in whole or in part in defense of any action, suit or proceeding referred to in Sections 01 or 02 of this Article, or in defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection therewith. 04. AUTHORIZATION. Any indemnification under Sections 01 and 02 of this Article (unless ordered by a court) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of the director, trustee, officer, employee or agent is proper in the circumstances because such person has met the applicable standard of conduct set forth in Sections 01 and 02 of this Article. Such determination shall be made (a) by the Board of Directors of the Corporation by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (b) is such a quorum is not obtainable, by a majority vote of the directors who were not parties to such action, suit or proceeding, or (c) by independent legal counsel (selected by one or more of the directors, whether or not a quorum and whether or not disinterested) in a written opinion, or (d) by the stockholders. Anyone making such a determination under this Section 04 may determine that a person has met the standards therein set forth as to some claims, issues or matters but not as to others, and may reasonably prorate amounts to be paid as indemnification. 05. ADVANCES. Expenses incurred in defending civil or criminal action, suit or proceeding shall be paid by the Corporation, at any time or from time to time in advance of the final disposition of such action, suit or proceeding as authorized in the manner provided in Section 04 of this Article upon receipt of an undertaking by or on behalf of the director, trustee, officer, employee or agent to repay such amount unless it shall ultimately be by the Corporation as authorized in this Section. 06. NONEXCLUSIVITY. The indemnification provided in this Article shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any law, bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person's official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, trustee, officer, employee or agent and shall inure to the benefit of the heirs, executors, and administrators of such a person. 07. INSURANCE. The Corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was a director, trustee, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, trustee, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against any liability assessed against such person in any such capacity or arising out of such person's status as such, whether or not the Corporation would have the power to indemnify such person against such liability. 08. FURTHER BYLAWS. The Board of Directors may from time to time adopt further bylaws with specific respect to indemnification and may amend these and such bylaws to provide at all times the fullest indemnification permitted by the Nevada Revised Statutes. ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES. On September 22, 2010, we issued 10,000,000 shares of our common stock at a price of $0.005 per share to one purchaser for total cash proceeds of $50,000. The shares were issued without registration in reliance on an exemption provided by Rule 903(b)(3) of Regulation S promulgated under the Securities Act. No general solicitation was made in connection with the offer or sale of these securities. ITEM 16. EXHIBITS -------------------------------------------------------------------------------- Exhibit Document -------------------------------------------------------------------------------- 3.1 Amended and Restated Articles of Incorporation, Castmor Resources Ltd. (1) 3.2 Amended and Restated Bylaws, Castmor Resources Ltd. (1) 5.1 Legal opinion of Conrad Lysiak, Attorney and Counselor at law (2) 10.1 Mineral Claim Purchase Agreement (3) 10.2 Promissory Note issued September 21, 2010 to Moneris Capital LP (5) 23.1 Consent of Chang Lee LLP, Chartered Accountants 23.2 Consent of Conrad Lysiak, Attorney and Counselor at law (2) 99.1 Specimen Subscription Agreement (4) 99.2 Map showing the location of the White Bear Arm Property (5) -------------------------------------------------------------------------------- (1) Previously included as an exhibit to the Form 10-K filed November 29, 2010. (2) Previously included as an exhibit to the Registration Statement on Form S-1 filed October 5, 2010. (3) Previously included as an exhibit to the Form 8-K filed September 24, 2010. (4) Previously included as an exhibit to the amended Registration Statement on Form S-1 filed December 3, 2010. (5) Previously included as an exhibit to the amended Registration Statement on Form S-1 filed February 28, 2011 II-2
ITEM 17. UNDERTAKINGS. (a) The undersigned registrant hereby undertakes: 1. To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: i. To include any prospectus required by section 10(a)(3) of the Securities Act of 1933; ii. To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement. iii. To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. 2. That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. 3. To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. 4. That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: i. Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; ii. Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; iii. The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and iv. Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. (b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. II-3
(c) The undersigned registrant hereby undertakes that: 1. For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b) (1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. 2. For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Toronto, Ontario, Canada, on May 27, 2011. CASTMOR RESOURCES LTD. By: /s/ Alfonso Quijada Alfonso Quijada President, Chief Executive Officer Chief Financial Officer, Principal Accounting Officer and a director In accordance with the requirements of the Securities Act of 1933, this registration statement was signed by the following persons in the capacities and on the dates stated: By: /s/ Alfonso Quijada Alfonso Quijada President, Chief Executive Officer Chief Financial Officer, Principal Accounting Officer and a directo