SCHEDULE 14C
(Rule 14c-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the
Securities Exchange Act of 1934
Check the appropriate box:
( ) Preliminary Information Statement
( ) Confidential, for Use of the Commission Only
(x) Definitive Information Statement
Leopard Capital, Inc. (formerly Canadian Northern Lites, Inc.)
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
(_) $125 per Exchange Act Rules 0-11c(1)(ii), or 14c-5(g).
(x) No fee required.
(_) Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
(_) Fee paid previously with preliminary materials.
(_) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
LEOPARD CAPITAL, INC.
Suite U-13-601-W.Broadway
Vancouver, B.C. V5Z-4C2
Telephone (604) 879-9001
INFORMATION STATEMENT
This Information Statement is being mailed to the Stockholders Of Leopard
Capital Inc. a Nevada Corporation ("LC") or (the "Company") on or about December
18, 2000, in connection with action taken by the Board of Directors and the
Written Consent of the holders of at least a majority of the shares entitled to
vote. Accordingly, all necessary corporate approvals in connection with the
matters referred to herein have been obtained, and this Information Statement is
furnished solely for the purpose of informing stockholders, in the manner
required under the Securities Exchange Act of 1934, as amended, of these
corporate actions before they take effect.
The Board of Directors of the Corporation has fixed the close of business on
December 1, 2000, as the record date for determination of the shareholders of
record as set forth herein (the "Record Date").
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
FORWARD LOOKING STATEMENTS
Some of the information in this information statement contains forward-looking
statements that involve substantial risks and uncertainties. A reader can
identify these statements by forward-looking words such as "may," "will,"
"expect," "anticipate," "believe," "intend," "estimate" and "continue" or
similar words. A reader should read statements that contain these words
carefully for the following reasons:
- the statements discuss the Company's future expectations;
- the statements contain projections of the Company's future earnings or of its
financial condition; and
- the statements state other "forward-looking" information.
The Company believes it is important to communicate expectations to its
shareholders. There may be events in the future, however, that the Company is
not accurately able to predict or over which it has no control. Various risks,
uncertainties and events may cause actual results to differ materially from the
expectations described in forward-looking statements. You should be aware that
the occurrence of other events that the Company has not predicted or assessed
could have a material adverse effect on its earnings, financial condition and
business. If unpredicted events occur, then the trading price of the Company's
common stock could decline and a stockholder may lose all or part of his or her
investment.
(1)
<PAGE>
(1) NAME CHANGE
Canadian Northern Lites Inc.'s Board of Directors and holders of more than a
majority of its voting common stock have determined that it would be in the best
interest of Canadian Northern Lites Inc. and its stockholders to change Canadian
Northern Lites Inc.'s name to "Leopard Capital Inc." Accordingly, on July 11,
2000, the Company's name was changed to "Leopard Capital, Inc." See discussion
below.
Reasons for the Name Change
The Board of Directors unanimously believes that the benefits clearly outweigh
the very modest costs of changing the Company's name to Leopard Capital, Inc.
Management believes the benefits of the name change are: A new name parallels
the Company's current focus on rebuilding itself; embarking on a fresh start in
terms of building a reputation based on business actions in year 2000 and
beyond. A new corporate name is consistent with the Management's objective of
focusing investor and shareholder attention on putting the Company's past
failures behind it, attempt to locate new financing to restructure the Company,
and concentrate on the Company's future.
Possible Disadvantages
Management has determined that certain disadvantages from a name change could
arise and include the following: administrative expenditures for notification
costs of various persons, companies, stock exchanges and regulatory agencies
that a name change has occurred. The foregoing may require additional compliance
if the Company is to utilize its new name.
STOCKHOLDER APPROVAL PREVIOUSLY OBTAINED: A CONSENT IN LIEU OF A SHAREHOLDERS
MEETING HAS BEEN RECEIVED FROM SHAREHOLDERS OWINING A MAJORITY OF THE
OUTSTANDING VOTING SHARES.
As of July 10, 2000 the Company had 19,131,000 issued and outstanding shares of
Voting Common Stock, each of which is entitled one vote on any matter brought to
a vote of the Company's stockholders. At July 10, 2000, a group of 5
shareholders owned in the aggregate 9,981,000 shares of Voting Common Stock
(52.2% of the issued and outstanding shares of Common Voting Stock). By Written
Consent In Lieu of Meeting, dated July 10, 2000, those 5 shareholders approved
the Name Change of Canadian Northern Lites Inc., to Leopard Capital Inc., a
Nevada corporation. Management believes such action by written consent is
sufficient to satisfy the applicable requirements of Nevada law that a corporate
name change be approved by a majority of stockholders. Accordingly, the
stockholders will not be asked to take further action on the corporate name
change.
(2) REVERSE SPLIT
The Company's Board of Directors and holders of more than a majority of its
voting common stock have determined that it would be in the best interest of
Leopard Capital, Inc. and its stockholders to consummate a reverse split of the
Company's shares (whether voting or non-voting) such that for every 25 common
shares of Leopard Capital Inc. currently held, a shareholder would receive 1 new
(2)
<PAGE>
share (25 old shares exchanged for 1 new share). Effective the Record Date, the
Board of Directors approved a reverse stock split of 1 share for every 25 shares
then held, such that each 25 issued and outstanding shares of the stock of the
Company, $0.001 par value share, were exchanged, in a tax-free transaction, into
1 share of stock, $0.001 par value. Any fractional shares of common stock
resulting from the reverse split will "round up" to the nearest whole number. No
cash will be paid to any holders of fractional interests in the company. As a
result of this reverse split, the total amount of the issued and outstanding
voting stock of the Company will be reduced from 19,131,000 to 765,240. In
addition the Company's outstanding non-voting common stock will be reduced in
the same proportion, that is, 40,000,000 shares outstanding reduced to 1,600,000
shares outstanding. In addition the 3 year warrants to purchase 20,000,000
non-voting common shares at $0.01 per share will be reduced to warrants to
purchase 800,000 non-voting shares with a concomitant increase in the exercise
price to $0.25 per share.
STOCKHOLDER APPROVAL PREVIOUSLY OBTAINED A CONSENT IN LIEU OF A SHAREHOLDERS
MEETING HAS BEEN RECEIVED FROM SHAREHOLDERS OWINING A MAJORITY OF THE
OUTSTANDING VOTING SHARES.
As of the Record Date, the Company had 19,131,000 issued and outstanding shares
of Voting Common Stock, each of which is entitled one vote on any matter brought
to a vote of the Company's stockholders. As of the Record Date, a group of 5
shareholders owns in the aggregate 9,981,000 shares of Common Stock (52.2% of
the issued and outstanding shares of Common Stock). By Written Consent In Lieu
of Meeting, dated November 17, 2000, those 5 shareholders approved a reverse
split of Leopard Capital, Inc.'s shares (voting or non-voting), on the basis of
25 shares being exchanged for 1 new share. Such action by written consent is
sufficient to satisfy the applicable requirements of Nevada law that a Reverse
Split be approved by the stockholders. Accordingly, the stockholders will not be
asked to take further action on the Reverse Split at any future meeting.
Upon the record date each outstanding share of the Company will automatically be
converted into one-twenty-fifth share and the outstanding warrants will be
converted to warrants to purchase one-twenty-fifth as many shares as prior to
this reverse split.
IT WILL NOT BE NECESSARY FOR SHAREHOLDERS OF THE COMPANY TO EXCHANGE THEIR
EXISTING STOCK CERTIFICATES .
(3) REORGANIZATION OF DAKOTA MINING & DEVELOPMENT, LTD.
Over the past year the Company's Board of Directors conducted an intensive
review of the Company's prospects for the future, with a view to finding the
most effective way to enable the Company to survive and be a viable,
actively-traded public company. However, the ability of the Company to survive
as a mining company is in significant doubt, given steep declines in commodity
prices, the disappearance of investment capital for undercapitalized exploration
companies, potential environmental liabilities, and restrictive listing
requirements to obtain and maintain a quotation on the OTC Bulletin Board.
Management believes that the survival of the Company requires a reorganization
of the Company. The Company's Board of Directors has determined that it would be
in the best interest of the Company and its stockholders to distribute to the
Company's shareholders as of the Record Date, on a pro-rata basis, all of the
outstanding shares of Dakota Mining & Development Ltd. (a wholly-owned
(3)
<PAGE>
subsidiary of Leopard Capital, Inc.) (abbreviated to "Dakota"). This type of
transaction is commonly referred to as a "spinoff". Following this spin-off, the
Company will no longer own any shares of Dakota. The Company intends to register
Dakota so that it will be a fully independent, publicly traded company
registered under the Securities and Exchange Act of 1934. The shares distributed
to Company stockholders will not be registered under the Securities Act of 1933
or Canadian Securities laws.
The share distribution of Dakota common stock is based upon shares owned in the
Company after taking account the one for twenty-five reverse stock split
discussed in (2) above.
The spin-off will be effected by distributing Dakota's common stock (whether
voting or non-voting) to each stockholder in the Company as follows: Company
shareholders holding non-voting shares will receive 2,369,826 Class C non-voting
Dakota shares; and, Company shareholders holding voting shares will receive
1,265,710 Class A voting Dakota shares. As a result of the foregoing
reorganization, the Company's shareholders will receive 3,635,536 shares of
Dakota Common Stock, which will represent 100% of the then outstanding shares of
Dakota. The distribution will be payable to Company stockholders as of the
Record Date, upon completion of necessary requirements to register such
distribution with the U.S. Securities & Exchange Commission and/or applicable
"Blue Sky" or Canadian Law (the "registration").
Dakota is a wholly-owned subsidiary of the Company. Dakota's primary business
was to explore Canadian mining properties located near the town of Vernon,
British Columbia, Canada. The mineral properties are currently dormant, and
consist of a 100% interest in each of the Way 1, Banjo I and Banjo II Mineral
Properties. Dakota's financial statements, as of January 31, 2000 are attached
as Appendix I.
Under Dakota's Amended and Restated Certificate of Incorporation, the authorized
capital stock is 10,000,000 Class A common shares, voting, no par value;
10,000,000 Class B common shares, voting, no par value; 10,000,000 Class C
common shares, non-voting, no par value; and 10,000,000 Class D preferred
shares, non-voting, redeemable preferred shares par value $10.00. As of the
Record Date, there were 1,265,710 Class A common shares outstanding and
2,369,826 Class C shares outstanding. There are no Class B common shares
outstanding. There are no Class D shares outstanding.
Dakota's principal office is located at Suite U-13 Broadway Plaza, 601 West
Broadway, Vancouver, British Columbia V5Z 4C2. The officers and directors of the
Company are: Larry Low, Director; Cam Dalgleish, Secretary and Director; and
T.G. Cook, President and Director. The contact person is T.G. Cook, President
and a member of the Board of Directors. The telephone number is (604) 640-8992;
the facsimile number is (604) 879-9004. The Company currently does not maintain
a website.
Leopard Capital, Inc.'s Board of directors determined that it would be in the
best interests of Leopard Capital, Inc. and its stockholders to separate Dakota
from Leopard Capital, Inc. No vote of Leopard Capital, Inc. stockholders is
required in connection with the Dakota spin-off. Therefore, you are not required
to take any action. We are sending you this Information Statement, which
contains additional information about the terms of the spin-off, Dakota and
Dakota common stock, for your information only.
(4)
<PAGE>
Neither the Securities and Exchange Commission nor any state or Canadian
securities regulators have approved the Dakota common stock to be issued to
Company shareholders pursuant to the "spin-off" or determined if this
Information Statement is accurate or adequate. Any representation to the
contrary is a criminal offense. The common stock of Dakota is not currently
traded.
INFORMATION ABOUT THE DAKOTA SPIN-OFF
Mechanics of Distribution
The Company will distribute the Dakota common stock by releasing the shares to
Madison Stock Transfer Inc., the Company's transfer agent, pending completion of
all necessary registration requirements for the securities distribution. The
Transfer Agent will then (after registration of the distribution) mail share
certificates to Company stockholders (as of the Record Date).
The Transfer Agent will not deliver any fractional shares of Dakota common stock
in connection with the spin-off. Instead, the Transfer Agent will "round up" to
the nearest whole number, all fractional shares. No cash will be paid to any
holders of fractional interests in the Company. Subsequent to the registration
of the distribution of Dakota shares, it is estimated that it will take about
two to three weeks for the Transfer Agent to complete these mailings. Expenses
incurred in carrying out the plan, including expenses incurred in issuing new
share certificates, will be borne and paid for by the Company.
The plan of recapitalization is intended to qualify as a tax-free reorganization
within the meaning of Section 386(a)(1) of the Internal Revenue Code of 1986, as
amended.
U.S. Federal Income Tax Consequences
The Company has not requested nor will it seek a private letter ruling from the
U.S. Internal Revenue Service ("IRS") nor Revenue Canada stating that the
distribution of Dakota common stock to Company stockholders in connection with
the spin-off will be tax-free for U.S. federal income tax purposes or Canadian
tax laws. Company stockholders are urged to consult with their own tax,
financial, or investment adviser or legal counsel experienced in these matters.
It is Management's opinion that:
Leopard Capital, Inc. common stockholders will not recognize a gain or loss
by reason of the receipt of whole shares of Dakota common stock as a result
of the spin-off; and
Leopard Capital, Inc. will not recognize a gain or loss as a result of the
spin-off.
If the IRS subsequently held the spin-off to be taxable, the above consequences
would not apply and both Leopard Capital, Inc. and its common stock holders
could be subject to tax by U.S. and/or Canadian taxing authorities. Company
stockholders should consult their own tax advisor regarding the state, local and
foreign tax consequences of receipt of Dakota common stock.
(5)
<PAGE>
U.S. Treasury regulations require each stockholder to attach a detailed
statement setting forth certain information regarding the distribution with a
U.S. federal income tax return for the year in which the spin-off occurs. Within
a reasonable time after completion of the spin-off, the Company will provide the
information necessary to comply with that requirement. A stockholder should
retain this statement so it can be completed and attached to a U.S. federal tax
return.
The summary of U.S. federal income tax consequences set forth above is for
general information purposes only and may not be applicable to stockholders who
are not citizens or residents of the United States or who are otherwise subject
to special treatment under the Internal Revenue Code. All stockholders should
consult their own tax advisors as to the particular tax consequences to them of
the spin-off, including the state, local and (if applicable) foreign tax
consequences.
Dakota Transfer Agent
The transfer agent and registrar for Dakota common stock is Madison Stock
Transfer, Inc. All correspondence should be sent to the following address:
Madison Stock Transfer, Inc.
P.O. Box 290-145
Brooklyn, NY
11229-0145
STOCKHOLDER APPROVAL HAS PREVIOUSLY BEEN OBTAINED: A CONSENT IN LIEU OF A
SHAREHOLDERS MEETING HAS BEEN RECEIVED FROM SHAREHOLDERS OWINING A MAJORITY OF
THE OUTSTANDING SHARES.
As of the Record Date, the Company had 19,131,000 issued and outstanding shares
of Voting Common Stock, each of which is entitled one vote on any matter brought
to a vote of the Company's stockholders. As of the Record Date, a group of 5
shareholders owned in the aggregate 9,981,000 shares of Common Stock (52.2% of
the issued and outstanding shares of Common Stock). By a Written Consent In Lieu
of Meeting dated November 17, 2000, those 5 shareholders approved the Dividend
Distribution Of Dakota Shares To Shareholders. Management believes such action
by written consent is sufficient to satisfy the applicable requirements of
Nevada law that a Distribution be approved by the stockholders. Accordingly, the
stockholders will not be asked to take further action on the spin-off
Distribution at any future meeting.
Proposals by Security Holders
No Company stockholders of the Company have submitted any proposal for action
nor any intention to present a proposal for action.
Interest of Certain Persons in the Transactions
The interest, direct or indirect, by stockholdings or otherwise, of officers and
directors of the Company, is as follows: Larry Low, Director: 0 shares; Cam
Dalgleish, Secretary and Director: 0 shares; T.G. Cook, President and Director,
5,686,000 voting common shares; 40,000,000 non-voting common shares; and 3 year
(6)
<PAGE>
warrants to purchase 20,000,000 non-voting, $.001 par value, common shares at an
exercise price of $0.01 per share. Most of these shares are held indirectly
through a company controlled by T.G. Cook, namely Hudson Capital Corporation, a
Canadian (Alberta) corporation.
The Officers and Directors of the Company and Dakota are identical. Companies
controlled by T.G. Cook accrue management fees for services rendered to Dakota.
As of the Record Date, total accrued management fees outstanding to such
companies were approximately $42,893 USD. Those companies are Westridge Capital
Inc., a Canadian (British Columbia) corporation, and Hudson Capital Corporation,
a Canadian (Alberta) corporation. Hudson Capital Corporation also loaned cash
advances to the Company for the benefit of Dakota for its ongoing expenses. Most
of the advances were converted into equity of the Company, leaving a remaining
balance outstanding of $7205 USD which is non-interest bearing and has no fixed
terms of repayment.
There are no directors who opposed any action taken herein.
Information about the Company
Leopard Capital, Inc. is subject to the informational reporting requirements of
the Securities Exchange Act of 1934, as amended, and accordingly, the Company
files registration statements, reports, proxy statements and other information
with the SEC, including financial statements. The Company has been subject to
the Securities Exchange Act Reporting requirements for at least 90 days and is
current in its reporting obligations.
Anyone may read and copy any documents the Company files, at the SEC's public
reference rooms in Washington, DC, New York, NY and Chicago,IL. Please call the
SEC at 1-800-SEC-0330 for further information on the public reference rooms. The
Company's SEC filings are also available to the public from the SEC's web site
at http://www.sec.gov. The Company's file number is File No. 000-30644. In
addition, proxy and information statements and other information about the
Company can be inspected at the offices of the National Association of
Securities Dealers, Inc., 1735 R Street, N.W., Washington, D.C. 20006.
By order of the Board of Directors,
/s/ T.G. Cook
T.G. COOK, President
December 18, 2000
(7)
<PAGE>
Appendix I
FINANCIAL STATEMENTS
--------------------
The Company's financial statements are stated in Canadian Dollars (CDN$) and are
prepared in accordance with Canadian Generally Accepted Accounting Principles
(GAAP), the application of which, in the case of the Company, conforms in all
material respects for the periods presented with United States GAAP. The value
of the U.S. Dollar in relationship to the Canadian Dollar was 1.4872 as of
01/31/00. The audit report of McLean Majdanski, Chartered Accountants, for the
audited financial statements for Fiscal 2000, Fiscal 1999 and notes thereto are
included herein immediately preceding the audited financial statements.
(A) The financial statements and notes thereto are attached hereto and found
immediately following the text of this Registration Statement. The audit report
of McLean Majdanski, Chartered Accountants, for the audited financial statements
for Fiscal 2000, 1999 and notes thereto are included herein immediately
preceding the audited financial statements.
(A-1) Audited Financial Statements: January 31, 2000 and January 31, 1999
Auditor's Report, dated March 27, 2000 (Except for the matter referred to in
the last paragraph of Note 3 as to which the date is October 11, 2000)
Balance Sheets at January 31, 2000 and January 31, 1999
Statements of Operations for the Years Ended January 31, 2000 and
1999
Statements of Shareholders' Deficit From Inception on
January 12, 1994 Through January 31, 2000
Statements of Cash Flows for the Years Ended January 31, 2000 and
1999
Notes to Financial Statements
<PAGE>
(A-1)
DAKOTA MINING & EXPLORATION LTD.
(A Development Stage Company)
FINANCIAL STATEMENTS
JANUARY 31, 2000 AND 1999
[S] [C]
Auditors' Report To The Shareholders F-1
Consolidated Balance Sheets As Of January 31, 2000 And 1999 F-2
Consolidated Statements Of Operations For The Years Ended
January 31, 2000 And 1999 And From Inception Through
January 31, 2000 F-3
Consolidated Statement Of Shareholders' Deficit From
Inception Through January 31, 2000 F-4
Consolidated Statements Of Cash Flows For The Years Ended
January 31, 2000 And 1999 And From Inception Through
January 31, 2000 F-5
Notes To Consolidated Financial Statements F-6 to F-15
<PAGE>
F-1
AUDITORS' REPORT
RE: JANUARY 31, 2000 AND 1999
FINANCIAL STATEMENTS
To the Shareholders of
Dakota Mining & Exploration Ltd.
We have audited the accompanying balance sheets of Dakota Mining & Exploration
Ltd. (A Development Stage Company) as of January 31, 2000 and January 31, 1999,
and the related statements of operations, shareholders' deficit and cash flows
for the years then ended and from inception to January 31, 2000. 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 generally accepted auditing standards
in the 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 our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements present fairly, in all material
respects, the financial position of Dakota Mining & Exploration Ltd. (A
Development Stage Company) as of January 31, 2000 and 1999 and the results of
operations, changes in shareholders' deficit and changes in cash flows for the
years then ended and from inception to January 31, 2000 in accordance with
generally accepted accounting principles in the United States.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company's net capital deficiency, with no mining
operations to generate cash, raise substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters are
also discussed in Note 1. The consolidated financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/s/ McLean Majdanski
Chartered Accountants
Vancouver, B.C.
March 27, 2000 (Except for the matter referred to in the last paragraph of
Note 3 as to which the date is October 11, 2000)
(McLean Majdanski is a joint venture of incorporated professionals)
<PAGE>
<TABLE>
F-2
DAKOTA MINING & EXPLORATION LTD.
(A Development Stage Company)
BALANCE SHEET
JANUARY 31, 2000 AND 1999
<CAPTION>
JANUARY 31, 2000 January 31, 1999
<S> <C> <C>
ASSETS
CURRENT
Cash (Note 9) $3,011 $32,200
Canadian goods and services tax receivable 2,169 2,099
Total current assets 5,180 34,299
INVESTMENT IN JOINT VENTURE (Note 5) 1 1
MINERAL PROPERTIES (Note 5) 1 1
Total assets $5,182 $34,301
LIABILITIES AND SHAREHOLDERS' DEFICIT
LIABILITIES
CURRENT
Accounts payable and accrued liabilities (Notes 6 and 9) $88,543 $32,037
Advances from parent company (Notes 2,3,5,6 and 9) 186,919 0
Total current liabilities 275,462 32,037
ADVANCES FROM PARENT COMPANY (Notes 2,3,5, 6, and 9) 0 186,921
Total liabilities 275,462 218,958
SHAREHOLDERS' DEFICIT
Share capital (Note 8) 1,376,428 1,376,428
Deficit
Balance, beginning of period (1,561,085) (1,395,073)
Net loss (85,623) (166,012)
Balance, end of period (1,646,708) (1,561,085)
Total shareholders' deficit (270,280) (184,657)
Total liabilities and shareholders' deficit $5,182 $34,301
(See accompanying notes)
</TABLE>
<PAGE>
<TABLE>
F-3
DAKOTA MINING & EXPLORATION LTD.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JANUARY 31, 2000 AND 1999
AND FROM INCEPTION ON JANUARY 12, 1994 THROUGH JANUARY 31, 2000
<CAPTION>
Cumulative For the For the
Total Since Year Ended Year Ended
Inception Jan. 31, 2000 Jan. 31, 1999
<S> <C> <C> <C>
EXPLORATION AND DEVELOPMENT EXPENSES
Professional fees $3,782 $0 $0
Exploration and development 19,323 0 0
Write off of investment in joint venture (Note 5) 84,600 0 84,600
Write off of development & property costs (Note 5) 610,335 0 38,997
Total exploration and development expenses 718,040 0 123,597
MARKETING EXPENSES (Note 6)
Advertising 3,595 0 0
Courier and postage 10,104 0 0
Meetings 1,850 0 0
Printing 26,109 0 0
Promotion and entertainment 22,561 42 0
Services 37,913 0 0
Telephone and fax 30,699 0 0
Travel 56,320 0 0
Total marketing expenses 189,151 42 0
ADMINISTRATIVE EXPENSES (Note 6)
Accounting and audit fees 40,246 19,403 8,500
Automobile 3,666 0 0
Bank charges and interest (recovery) 2,888 396 (667)
Computer servicing 13,406 0 0
Incorporation expenses written off 1,219 0 0
Insurance 1,150 0 0
Interest on long term debt (Note 6) 5,341 5,341 0
Legal 192,108 6,140 5,378
Management and consulting fees (Notes 2 and 6) 209,946 36,000 27,000
Office supplies and service (Note 2) 90,478 1,476 2,584
Rent 12,370 0 0
Telephone and fax 9,628 320 0
Transfer agent fees 4,762 488 816
Travel 46,567 195 882
U.S. financial services 54,891 16,251 0
Wages and benefits 35,650 0 1,651
Total administrative expenses 724,316 86,010 46,144
LOSS BEFORE OTHER INCOME (LOSS) (1,631,507) (86,052) (169,741)
OTHER INCOME (LOSS)
Interest income 1,182 429 753
Gain (loss) on disposal of assets (19,321) 0 38
Gain (loss) on settlement of debt 2,938 0 2,938
NET INCOME (LOSS) ($1,646,708) ($85,623) ($166,012)
(See accompanying notes)
</TABLE>
<PAGE>
<TABLE>
F-4
DAKOTA MINING & EXPLORATION LTD.
(A Development Stage Company)
STATEMENT OF SHAREHOLDERS' DEFICIT
FROM INCEPTION ON JANUARY 12, 1994 THROUGH JANUARY 31, 2000
<CAPTION>
Deficit
Accumulated
Common Stock During The
Per Paid-up Development
Share Shares Capital Stage
<S> <C> <C> <C> <C>
Issuance of common stock for cash $1.00 200 $200
Net loss, year ended January 31, 1995 ($1,381)
Balance at January 31, 1995 200 200 (1,381)
Issuance of common stock for cash 200.00 25 5,000
Issuance of common stock for cash 240.00 125 30,000
Issuance of common stock for cash 44.44 225 10,000
Issuance of common stock for cash 1,254.50 100 125,450
Issuance of common stock for cash 0.01 2,400 24
Issuance of common stock for cash 0.01 850 9
Issuance of common stock for cash 0.01 500 5
Issuance of common stock for cash 0.01 500 5
Issuance of common stock for cash 0.01 200 2
Issuance of common stock for cash 16.00 2,500 40,000
Issuance of common stock for cash 0.01 250 2
Issuance of common stock for cash 0.01 100 1
Issuance of common stock for cash 0.01 25 0
Issuance of common stock for cash 0.01 2,000 20
Net loss, year ended January 31, 1996 (107,844)
Balance at January 31, 1996 10,000 210,718 (109,225)
Net loss, year ended January 31, 1997 (573,226)
Balance at January 31, 1997 10,000 210,718 (682,451)
Net loss, year ended January 31, 1998 (712,622)
Balance at January 31, 1998 10,000 210,718 (1,395,073)
Issuance of common stock in exchange
for cancelling $1,165,710 of debt
owing to the parent company 10.00 116,571 1,165,710
Net loss, year ended January 31, 1999 (166,012)
Balance at January 31, 1999 126,571 1,376,428 (1,561,085)
Net loss, year ended January 31, 2000 (85,623)
Balance at January 31, 2000 126,571 1,376,428 (1,646,708)
Subsequent Event
Stock split in which 10 shares were
issued for each share, effective
February 1, 2000
Net addition to outstanding shares 1,139,139 0
Balance after stock split 1,265,710 1,376,428
Issuance of common stock in exchange
for cancelling $186,919 of debt
owing to the parent company 0.10 1,869,192 186,919
Balance at February 1, 2000 3,134,902 $1,563,347 ($1,646,708)
(See accompanying notes)
</TABLE>
<PAGE>
<TABLE>
F-5
DAKOTA MINING & EXPLORATION LTD.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JANUARY 31, 2000 AND 1999
AND FROM INCEPTION ON JANUARY 12, 1994 THROUGH JANUARY 31, 2000
<CAPTION>
Cumulative For the For the
Total Since Year Ended Year Ended
Inception Jan. 31, 2000 Jan. 31, 1999
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) ($1,646,708) ($85,623) ($166,012)
Items not involving an outlay of cash
Loss (gain) on disposal of capital assets 19,320 0 (38)
Write off of incorporation costs 1,219 0 0
Write down of investment in joint venture 84,600 0 84,600
Write down of development and property costs 610,335 0 38,997
SUB TOTAL (931,234) (85,623) (42,453)
Change in working capital items
Canadian goods and services tax receivable (2,169) (70) 31,157
Accounts payable and accrued liabilities 88,542 56,504 9,284
Net cash flows from operating activities (844,861) (29,189) (2,012)
CASH FLOWS FROM FINANCING ACTIVITIES
Share capital 210,718 0 0
Advances from parent company 1,352,631 0 67,249
Net cash flows from financing activities 1,563,349 0 67,249
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of capital assets (28,209) 0 0
Proceeds from disposal of capital assets 8,889 0 6,038
Incorporation costs (1,219) 0 0
Purchase of mineral property (694,938) 0 (39,000)
Net cash (used in) received from investing activities (715,477) 0 (32,962)
NET INCREASE (DECREASE) IN CASH
(BANK INDEBTEDNESS) 3,011 (29,189) 32,275
CASH (BANK INDEBTEDNESS) AT
BEGINNING OF YEAR 32,200 (75)
CASH (BANK INDEBTEDNESS) AT
END OF PERIOD $3,011 $3,011 $32,200
SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING ACTIVITIES
Shares Issued to Repay Portions of Parent Company Debt
Share Capital Issued $1,165,710 $0 $1,165,710
Advances from parent company repaid $1,165,710 $0 $1,165,710
Interest In Joint Venture Sold For Return Of
Parent Company Shares
Proceeds from disposal of interest in joint venture $1 $1 $0
Reduction in advance from parent company $1 $1 $0
(See accompanying notes)
</TABLE>
<PAGE>
F-6
DAKOTA MINING & EXPLORATION LTD.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 2000 AND 1999
1. BASIS OF FINANCIAL STATEMENT PRESENTATION
The financial statements are stated in Canadian Dollars (CDN$) and are
prepared in accordance with Canadian Generally Accepted Accounting Principles
(GAAP), the application of which, in the case of the Company, conforms
in all material respects for the periods presented with United States GAAP.
2. BASIS OF PRESENTATION FOR A COMPANY IN THE DEVELOPMENT STAGE
The Company was incorporated on January 12, 1994 under the Company Act of
British Columbia and changed its name to Dakota Mining & Exploration Ltd.
("Dakota") from Eagle Ridge Manufacturing Ltd. on October 27, 1995. The
Company's purpose is to explore and develop mining properties in Canada.
The Company is in the development stage because its activities have consisted
of the purchase of interests in mining properties and some exploration and
development. Dakota has not yet developed any mining properties into a
producing mine, nor has it earned revenue in any other manner.
The Company's operations have been financed by its parent company which has
sold shares and received loans to generate capital and then advanced the
proceeds to Dakota to allow it to carry on its activities. The parent
company has not charged interest on its advances, nor has it requested any
repayment of principal.
The cumulative statements of operations, cash flows and deficit accumulated
during the development stage reflect the balances of Dakota from inception.
The cumulative balance for office supplies and service is net of $29,700
of consulting revenue, received by Dakota in 1994, because the revenue was
incidental to the development stage.
As at January 31, 2000, neither Dakota's parent company nor the Company have
sufficient cash to cover current liabilities. Future activities require cash
being provided to the Company by investors or lenders. As stated in Note 6,
companies controlled by the president of the Company are currently funding,
and plan to continue to fund, the administrative expenses incurred by the
Company. In addition, these related parties do not currently intend to
receive cash for the management fees of $3,000 per month that they charge the
Company. These efforts are part of a long range strategy to restructure the
Company's affairs, arrange for new long term financing and continue to locate
and develop income producing properties.
<PAGE>
F-7
DAKOTA MINING & EXPLORATION LTD.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 2000 AND 1999
2. BASIS OF PRESENTATION FOR A COMPANY IN THE DEVELOPMENT STAGE
(Continued)
The financial statements are prepared on the assumption that the entity is a
going concern, meaning it will continue in operation for the foreseeable
future and will be able to realize its assets and discharge its liabilities
through the normal course of operations. Because the Company has no cash and
has not yet developed any producing mines, its ability to realize assets and
discharge its liabilities through the normal course of its operations is
dependent on continued funding from companies controlled by the president,
the receipt of additional funds from investors and the establishment of
successful operations.
3. PLAN OF REORGANIZATION AND ACQUISITION
On April 26, 1996, the Company acquired, through a "reverse take-over",
Canadian Northern Lites, Inc., a Texas Corporation pursuant
to a Plan Of Reorganization And Acquisition with that company. As a result
of that transaction, Dakota became a legal subsidiary of Canadian Northern
Lites, Inc. However in the consolidated financial statements of the parent
company, which have been prepared to include these statements, Dakota is
accounted for as the acquirer.
On October 11, 2000, Canadian Northern Lites, Inc. merged with Leopard
Capital Inc., a Nevada corporation with the surviving company being Leopard
Capital Inc., a Nevada corporation.
The agreement of April 26, 1996 acknowledged that Dakota had certain
interests, expertise, fund raising capabilities concerning exploration and
development of mineral properties/joint ventures and that Dakota wished to
acquire a public company which could raise the capital required to carry out
their operations.
After the acquisition, the companies followed the agreement in their
operating activities. Canadian Northern Lites, Inc. raised capital through
loans and the issue of share capital. That company then advanced the funds
to Dakota to carry out the operations in Canada. Pursuant to the agreement,
all assets and expenses are recorded in the financial statements of Dakota,
regardless of which company was billed, as the two companies' directors
operated on the basis of the Plan Of Reorganization And Acquisition and
conducted all the Canadian business affairs in Dakota.
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a)Investment in Joint Venture
The investment in the Ewer/Klinker mineral properties joint venture was
accounted for at the lower of cost and fair market value because the joint
venture had not commenced operating and had not provided any financial
information due to a dispute between the joint venture partners.
<PAGE>
F-8
DAKOTA MINING & EXPLORATION LTD.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 2000 AND 1999
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(b)Use Of Estimates
Preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and
assumptions. These estimates or assumptions affect reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and reported amounts of expenses
and gains during the reporting periods. Actual results could differ from
estimates.
(c)Canadian Goods And Services Tax Receivable
The Canadian Goods And Services Tax is a seven percent tax charged on most
goods and services rendered in Canada. Commercial enterprises are
required to charge the tax on the goods and services it sells. This tax
is then reduced for any taxes that are paid on goods and services
purchased. Because the Company is a development stage enterprise, it has
not yet provided goods and services that would be subject to the tax and
therefore it is entitled to a refund of taxes paid.
The Canadian Goods And Services Tax receivable is recorded when the
expenditures, which give rise to the refundable tax, are recorded in the
financial statements.
(d)Mineral Properties
Mineral properties are recorded at cost. In the event that one of the
properties commences production, it will be depleted on a
unit-of-production basis over the proven, developed reserves of the
property. To date, no properties have commenced commercial production.
<PAGE>
F-9
DAKOTA MINING & EXPLORATION LTD.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 2000 AND 1999
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(d)Mineral Properties (Continued)
The carrying values of the properties are reviewed for possible impairment
whenever events or changes in circumstances indicate. Change in
management is one circumstance in which the carrying values of all
properties are reviewed to determine if there has been any impairment in
the carrying value.
The cost of properties that are abandoned are written off in the year the
decision to make no further expenditures on the property is made. When
impairment is indicated, the carrying amounts of assets are written down
to fair value, usually determined on the basis of a consulting geologist
report. In the absence of such a report, the properties are written down
to a nominal value of $1.00.
(e)Nonmonetary Transactions
Nonmonetary transactions in which shares were issued to pay for services
rendered or to repay an amount owing are valued at the billed amount for
services or the principal amount of the debt owing if bills are rendered
or cash is advanced.
(f)Donated Services
The fair value of services donated to the Company are expensed or
capitalized and treated as a contribution of capital. If the fair value
of the services is considered immaterial, then no amount is recorded.
(g)Related Party Transactions
Related parties include current and former directors and officers and
those entities that hold more than 5% of the shares. The Company
discloses all transactions, other than those in the ordinary course of
business, with these related parties.
Assets acquired from significant shareholders are recorded at the net book
value to the shareholder and the difference between the purchase price and
cost is treated as a reduction or increase in paid up capital. In the
case of the 1998 property acquisition, the significant shareholder of the
Company's parent company reduced the price and amount of the promissory
note from the Company's parent company to the net book value of the
property.
<PAGE>
F-10
DAKOTA MINING & EXPLORATION LTD.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 2000 AND 1999
4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(h)Income Taxes
The Company utilizes the liability method of accounting for income taxes.
Deferred income taxes are determined based on the estimated future tax
effects of differences between the financial and tax bases of assets and
liabilities given the provision of the enacted tax laws. The Company is a
development stage enterprise and accordingly has not commenced operations
that would generate taxable income. For that reason, the Company has a
valuation reserve equal to the amount of the deferred income tax assets
and has no net provision for income tax recovery in its consolidated
statements of operations.
(i)Development Stage Enterprise
The Company is a development stage enterprise that presents its financial
statements in conformity with the generally accepted accounting principles
that apply to established operating enterprises. As such, the Company
charges all exploration, marketing and administrative expenses to
operations in the year they occur. The Company capitalizes only those
costs that it expects to recover through future operations and those costs
are subject to a regular review for possible impairment.
As a development stage enterprise, the Company discloses the deficit
accumulated during the development stage and the cumulative statement of
operations and cash flows from inception.
(j)Foreign Currency Translation
Monetary assets and liabilities denominated in foreign currencies are
translated at the rate of exchange prevailing at the balance sheet date.
Non-monetary items are translated at the rates in effect at the dates the
assets were acquired or obligations incurred. Revenue and expense items
are translated at the average rate during the year. Gains or losses
arising from changes in exchange rates are included in the statement of
operations.
5. MINERAL PROPERTIES AND INVESTMENT IN JOINT VENTURE
(a)Ewer/Klinker Mineral Properties
On April 10, 1996, the Company's parent company entered into an agreement
which was an Option To Purchase certain mineral claims, located near
Vernon, British Columbia, from a Vernon mining company. This agreement
was pursuant to a Letter Of Intent between the Vernon mining company and
the Company's parent company that was signed in January, 1996. The
payments made by the Company to the Vernon company pursuant to the Letter
Of Intent in January 1996 are reflected as an asset in the 1996 financial
statements. The Company paid $90,000 prior to the agreement and $560,000
pursuant to the agreement. These funds were advanced to the Company's
parent company by individuals, who were directors and shareholders at the
time. These advances were eventually repaid by issuing 4,000,000 shares
of the parent company.
This option agreement originally gave the Company's parent an option to
acquire a 100% interest in the property but that option expired
unexercised on January 15, 1998 and a joint venture was then created. The
Company received a 20% joint venture interest in the mineral claims and
the Vernon mining company had the remaining 80% interest.
<PAGE>
F-11
DAKOTA MINING & EXPLORATION LTD.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 2000 AND 1999
5. MINERAL PROPERTIES AND INVESTMENT IN JOINT VENTURE (Continued)
In 1997, the mineral property was written down to its estimated net
realizable value of $84,600 based on the "worst case" estimate determined
by a consultant geologist. This write down was initiated by the new
management after the review of the geologist's report and after protracted
negotiations with the joint venture partner to attempt to settle the
unresolved legal matters.
In 1997, the Joint Venture Partner filed a statement of claim in the
Supreme Court of British Columbia alleging that an amount of $46,860
was due for work done, goods supplied and accounts incurred and that claim
was disputed by the Company.
In 1998, the mineral property became an investment in a joint venture and
was written down to a value of $1.00 because of continued protracted
negotiations with the joint venture partner meant the Company had no
access to information to make an updated valuation of the property based
on discounted cash flows and had no information to assess the 80% joint
venture partner's ability to fund the mining operations.
In March 2000, the Company reached a formal agreement with the former
Joint Venture Party to return its 20% interest in the joint venture in
exchange for the Joint Venture Party returning 2,080,000 shares of the
Company's parent company back to the Company's parent company and
releasing the Company from any claim arising from the Option agreement or
the British Columbia Supreme Court Action. The Consent Dismissal Order
has now been filed and the shares have now been returned.
(b)Way1, Banjo I & II Mineral Properties
Jan. 31, 2000 Jan. 31, 1999
$1.00 $1.00
The Company purchased mineral properties from a director who is also a
significant shareholder in the Company's parent, for a price of $78,500
($50,000 U.S.) and the purchase was paid with a promissory note payable by
the Company's parent, Canadian Northern Lites, Inc. as disclosed in
Note 6(c). There is no independent appraisal supporting the value of the
property, nor was any other detailed analysis done to determine the value.
Instead, the directors arbitrarily set the value after considering the
consulting geologist's report on neighbouring properties and the possible
strategic role of this assembly of properties in a larger development.
Because this asset was purchased from a director and significant
shareholder in the Company's parent company, the asset was recorded at the
shareholder's net book value of $39,000 ($24,841 U.S.) and the difference
of $39,500 ($25,159 U.S.) has been treated as a reduction of the note
payable with the approval of the director and significant shareholder in
the Company's parent company.
<PAGE>
F-12
DAKOTA MINING & EXPLORATION LTD.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 2000 AND 1999
5. MINERAL PROPERTIES (Continued)
(b)Way1, Banjo I & II Mineral Properties (Continued)
In 1998 the property was written down to $1.00 to recognize the Company's
inability to prepare an updated valuation on the property owned in the
joint venture which is adjacent to this property. This property was
purchased as a possible strategic role as part of a larger development
incorporating the joint venture property.
6. RELATED PARTIES
(a)Advances From Parent Company
The amount due to the parent company is unsecured, non-interest bearing
and has no specific terms of repayment. This amount was reflected as a
long term liability because the shareholder, who advanced the balances,
had agreed to not request a cash payment of any of the balances
outstanding nor settle any advances in exchange for the issuance of shares
for at least one year from the January 31, 1999 balance sheet date. As
stated in Note 8(b), the balance of the debt was retired on February 1,
2000 by issuing additional share capital.
(b)Management Fees
Commencing in fiscal 1999, management fees of $3,000 per month are charged
by companies controlled by the president of the Company. Since that time,
these companies have been funding the administrative expenses of the
Company and its parent. The accounts payable and accrued liabilities as
at January 31, 2000 includes $65,699(January 31, 1999-$21,537) payable to
these related parties.
<PAGE>
F-13
DAKOTA MINING & EXPLORATION LTD.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 2000 AND 1999
6. RELATED PARTIES (Continued)
(c)Purchase Of Mineral Properties From A Director
The Company's parent purchased mineral properties from a company
controlled by a director, for a price of $78,500 ($50,000 U.S.)and the
purchase was paid for by Canadian Northern Lites Inc., the Company's
parent, by issuing a $78,500 ($50,000 U.S.) promissory note.
The property was recorded at the $39,000 ($24,841 U.S.) cost to the
director and the principal of the note payable was reduced by the director
from $78,500 ($50,000 U.S.)to $39,000 ($24,841 U.S.).
The Company accrues interest at a rate of 8% on the above mentioned note
payable. Because the related party is continuing to assist the Company to
reorganize its financial affairs as explained in Note 2, the accrued
interest has not been paid. Accordingly, accounts payable and accrued
liabilities includes $5,341 at January 31, 2000 (January 31, 1999 - $Nil)
of accrued interest payable to this related party.
(d)Accounting Services
In the 1998 fiscal year, accounting services were provided by a former
director and shareholder of the Company's parent company. No fees were
paid for these services. There is a $3,000 charge to operations in 1998
for the fair market value of these services offset by an increase in the
advance from the parent company of the same amount.
(e)Other Expenses
Most other marketing and administrative expenses were reimbursements to
former directors and officers for expenses incurred in their efforts to
develop the Company's business.
7. INCOME TAX
(a)Income Tax Provision
The Company is in the development stage and has not yet earned any revenue
or income. No provision for additional income tax recovery is recorded by
the Company due to its history of losses indicating that, more likely than
not, none of the deferred income tax assets will be realized.
(b)Effective Income Tax Rate
Because the Company has not yet earned any revenue or income, it has an
effective tax rate of zero per cent.
(c)Canadian Development Expense
Per the Canadian Income Tax Act ("ITA"), the cost of any rights to
prospect, explore, drill or mine for minerals is included in the Canadian
Development Expense. The Company's balance of Canadian Development
Expense is $493,997 and per the ITA, the company may deduct 30% of the
year end balance of the cumulative Canadian Development Expense before
the current year deduction.
(d)Income Tax Loss Carry Forwards
In addition to the Canadian development expense referred to in Note 7(c)
above, the Company has losses available for deduction against future
taxable incomes until the years indicated. No benefit from these losses
has been reported in the financial statements because the Company believes
there is a 50% or greater chance the carry forward will expire unused.
<PAGE>
F-14
DAKOTA MINING & EXPLORATION LTD.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 2000 AND 1999
7. INCOME TAX (Continued)
(d)Income Tax Loss Carry Forwards (Continued)
Expiry years: 2002 $ 1,381
2003 107,844
2004 563,582
2005 329,861
2006 52,009
2007 85,674
$1,140,351
8. SHARE CAPITAL
(a)Authorized
10,000,000 Class A Voting common shares without par value
10,000,000 Class B Voting common shares without par value
10,000,000 Class C Non-Voting common shares without par value
10,000,000 Class D Non-Voting redeemable preferred shares with a par value
of $10.00 each
(b)Issued And Outstanding SHARE CAPITAL
Class A Class A
# of Shares $ Value
January 31, 1999 126,571 1,376,428
January 31, 2000 126,571 1,376,428
(c)Net Earnings (Loss) Per Share
Year ended Year ended
Jan. 31, 2000 Jan. 31, 1999
Net earnings (loss) ($85,623) ($166,012)
Common shares issued
Average outstanding shares
(Weighted average after
giving retroactive effect
to February 1, 2000 stock
split) 1,265,710 345,917
Net earnings (loss) per share ($0.07) ($0.48)
There are no outstanding options so fully diluted net earnings (loss) per
share are not provided.
<PAGE>
F-15
DAKOTA MINING & EXPLORATION LTD.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 2000 AND 1999
9. FINANCIAL INSTRUMENTS
(a)Fair Value
The Company's financial instruments consist of cash, accounts payable and
accrued liabilities, and advances from the parent company. At January 31,
2000 the carrying values reported in the balance sheet for these financial
instruments approximate their fair values except for the advances from the
parent company. No interest is charged or paid on these balances, so the
fair values would be less than the carrying values.The impact on the
financial statements is not significant.
(b)Interest Rate Risk
The Company is not exposed to interest rate risk because the interest rate
on the note payable to related party is fixed. The Company pays the
interest on this loan as part of its operating agreement with its parent
company as disclosed in Note 3.
(c)Foreign Currency Risk
The Company has a U.S. dollar bank account. As a result, the Company is
exposed to foreign exchange rate fluctuations. The balance is the U.S.
dollar bank account is not significant, therefore, the Company's exposure
is not material at January 31, 2000. The following are the balances at
January 31, 2000:
Canadian$ Translation US$
U.S. Dollar Bank Account $3,011 ($928) $2083
10. UNCERTAINTY DUE TO THE YEAR 2000 ISSUE
The year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize
the year 2000 as 1900 or some other date, resulting in errors when
information using year 2000 dates is processed. In addition similar
problems may arise in some systems which use certain dates in 1999 to
represent something other than a date. Although the change in date has
occurred, it is not possible to conclude that all aspects of the Year 2000
Issue that may affect the entity, including those related to customers,
suppliers, or other third parties, have been fully resolved.
