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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDED FORM 10SB
GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
ADVENTURE MINERALS INC.
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(Exact name of Company as specified in its charter)
NEVADA 98-0208988
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification
No.)
Suite 414, 1859 Spyglass Place
Vancouver, British Columbia, Canada V6Z 4K6
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 604-687-7962
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SEC File No.: 0-27295
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
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None None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Shares, par value $0.001 per share
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(Title of class)
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TABLE OF CONTENTS
Page
COVER PAGE ................................................... 1
TABLE OF CONTENTS ............................................ 2
PART I ....................................................... 3
DESCRIPTION OF BUSINESS .................................. 3
DESCRIPTION OF PROPERTY .................................. 14
DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES... 14
REMUNERATION OF DIRECTORS AND OFFICERS ................... 15
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN
SECURITYHOLDERS ....................................... 16
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN
TRANSACTIONS .......................................... 16
DESCRIPTION OF SECURITIES ................................ 17
PART II ....................................................... 18
MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S
COMMON EQUITY AND OTHER STOCKHOLDER MATTERS ........... 18
LEGAL PROCEEDINGS ........................................ 18
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ............ 18
RECENT SALES OF UNREGISTERED SECURITIES .................. 18
INDEMNIFICATION OF DIRECTORS AND OFFICERS ................ 19
PART F/S ...................................................... 21
FINANCIAL STATEMENTS ..................................... 21A
PART III ...................................................... 22
INDEX TO EXHIBITS ........................................ 22
SIGNATURES .................................................... 23
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PART I
The issuer has elected to follow Form 10-SB, Disclosure Alternative 2.
Item 6. Description of Business
Organization
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Adventure Minerals Inc. (the "Company") was organized as a Nevada
corporation on February 16, 1999.
The name of the Company was changed from "Magic Bag Corporation" to
"Adventure Minerals Inc." by the filing a Certificate of Amendment of
the Articles of Incorporation with the Nevada Secretary of State
effective July 28, 1999. The Company completed the change of name in
order that the Company's name would more accurately reflect the current
business of the Company. The Company was inactive from the date of its
incorporation as "Magic Bag Corporation" to April 1, 1999, the date the
Company acquired the option to acquire an interest in a mineral
property, as discussed below.
The Company was founded and organized by Mr. Grayson Hand, the
President and a director of the Company. Mr. Hand is a promoter of the
Company.
Business
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The Company is an exploration stage company engaged in the acquisition,
exploration and development of mineral properties. The Company has an
option to acquire an interest in the property described below under the
heading "Kukagami Lake Property Option Agreement". The Company intends
to carry out exploration work on the Kukagami Lake Property in order to
ascertain whether the Kukagami Lake Property possesses commercially
exploitable quantities of copper, nickel, platinum and/or palladium.
There can be no assurance that a commercially exploitable mineral
deposit, or reserve, exists in the Kukagami Lake Property until
appropriate exploratory work is done and an economic evaluation based
on such work concludes economic feasibility.
Kukagami Lake Property Option Agreement
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The Company has acquired an option (the "Option") to acquire a 70%
interest in a certain mineral claim situated in the Sudbury Mining
District in the Province of Ontario, Canada (the "Kukagami Lake
Property"). The Company acquired the Option pursuant to an agreement
dated April 1, 1999 between the Company and Excellerated Resources Inc.
("Excellerated"). Excellerated is the owner of a 100% interest in the
Kukagami Lake Property, subject to the Company's Option and a 2% net
smelter royalty. The consideration paid by the Company to Excellerated
for the grant of the Option was $1,500 CDN (equal to approximately
$1,020 US as at October 25, 1999).
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The Option is exercisable by the Company incurring the following
minimum cumulative exploration expenditures on the Kukagami Lake
Property:
1. $13,500 CDN (equal to approximately $9,160 US as at October 25,
1999) of exploration expenditures by April 30, 1999 (the Company
and Excellerated have agreed these required exploration
expenditures have been met);
2. $136,500 CDN (equal to approximately $92,630 US as at October 25,
1999) of exploration expenditures by April 1, 2000; and
3. $150,000 CDN (equal to approximately $101,790 US as at October 25,
1999) of exploration expenditures by April 1, 2001.
In the event that the Company incurs, in any of the above periods, less
than the required exploration expenditures, the Company may, at its
option, pay to Excellerated the difference between the amount actually
spent and the required exploration expenditure in full satisfaction of
the exploration expenditures to be incurred. In the event that the
Company spends, in any period, more than the required sum, then the
excess will be carried forward and applied to the required exploration
expenditures to be incurred in subsequent periods. Property
exploration expenditures are defined in the Kukagami Lake Option
Agreement to include all costs associated with the conduct of
exploration on the Kukagami Lake Property. These costs include all
cash, expenses, obligations and liabilities of whatever kind or nature
spent or incurred directly or indirectly associated therewith in
connection with the exploration and development of the Kukagami Lake
Property.
The Company's interest in the Kukagami Lake Property is limited to an
option to acquire a 70% interest in the property. If the Company fails
to make any required payment or incur any required exploration
expenditure, the Option will terminate and the Company will have no
further rights to the Kukagami Lake Property. If the Company exercises
the Option, then the Company will become the owner of a 70% interest in
the Kukagami Lake Property and Excellerated will be the owner of the
remaining 30% interest in the Kukagami Lake Property.
The Company has entered into an arrangement with Excellerated for the
exploration of the Kukagami Lake Property. Excellerated has agreed to
include the Kukagami Lake Property in an exploration program to be
carried out by Excellerated on five properties in the vicinity of the
Kukagami Lake Property which are owned by Excellerated. The Company
has agreed to fund 10% of the cost of this exploration program. See
Item 6. "Description of Business - Plan of Operation". The Company
advanced the amount of $8,299 to Excellerated to be applied to the cost
of this exploration program prior to April 30, 1999. The Company also
paid an amount of $960 for the geological report obtained by
Excellerated on the Kukagami Lake Property and Excellerated's
neighboring properties. See Item 6. "Description of Business -
Geological Report". Excellerated has agreed to accept the payment for
the geological report and the advance of funds towards the Company's
share of the costs of the exploration program as exploration
expenditures in the amount of $13,500 CDN (equal to approximately
$9,160 US as of October 25, 1999) required to be completed on the
Kukagami Lake Property by April 30, 1999 under the Option. Excellerated
has not, as yet, performed any exploratory work per this agreement.
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The Company presently has no plans to conduct its own exploration
program on the Kukagami Lake Property. The Company has entered into an
agreement with Excellerated whereby the Company will fund its
proportionate share of the exploration program to be carried out by
Excellerated on the Kukagami Lake Property. The Company does not have
any joint venture or other agreement with Excellerated for the further
exploration or development of the Kukagami Lake Property in the event
the Option is exercised by the Company and the Company acquires a 70%
interest in the Kukagami Lake Property. There is no assurance that the
Company and Excellerated would be able to reach agreement on the
exploration or development of the Kukagami Lake Property in the event
that the Company acquires a 70% interest in the Kukagami Lake Property.
Failure to reach such an agreement with Excellerated could impair the
ability of the Company to complete further exploration or development
of the Kukagami Lake Property.
A copy of the Kukagami Lake Option Agreement is attached to this
Registration Statement as an Exhibit. The information provided in this
Registration Statement with respect to the Kukagami Lake Option
Agreement is qualified in its entirety by reference to the complete
text of that agreement.
Kukagami Lake Property
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The Kukagami Lake Property is comprised of one (1) mineral claim
located in the Sudbury Mining Division in the Township of Kelly in the
Province of Ontario, Canada (the "Mineral Claim"). The Mineral Claim is
owned by Excellerated subject to a 2% net smelter royalty in favor of
Mr. J. D. Jevning. The net smelter royalty requires the owner of the
Kukagami Lake Property to pay to Mr. Jevning an amount equal to 2% of
net smelter returns earned on the Kukagami Lake Property. Net smelter
returns are the proceeds received from the sale of resources extracted
from the Kukagami Lake Property, less all smelter and refinery charges,
transportation costs, insurance premiums and sampling and assaying
charges.
The Mineral Claim is un-patented and un-surveyed and consists of 16
units. Mineral claims in the Province of Ontario which are un-patented
entitle the holder to conduct mineral exploration but do not entitle
the holder to develop or enter into production on the property
comprising the mineral claim. In order to develop or enter into
production of a mineral claim, the claim must be a patented mineral
claim. The process of patenting a mineral claim requires that the
claim be surveyed and an application for patent be submitted to the
Ministry of Northern Development and Mines. Mineral claims which are
un-surveyed are mineral claims on which no formal survey has been
completed in order to precisely determine the boundaries of the mineral
claim. The term "units" refers to a standard measurement of area for
mineral claims in the Province of Ontario.
The Mineral Claim is adjacent to five mineral claims owned by
Excellerated in the vicinity of the Mineral Claim (these claims are
referred to as the "Excellerated Properties"). The claims comprising
the Excellerated Properties and the claim comprising the Kukagami Lake
Property were recorded on February 26, 1999.
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Geological Report
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The Company has obtained a geological report from on the Kukagami Lake
Property prepared by Mr. James G. Burns, P. Eng, of 190 Graye Crescent,
Timmins, Ontario (the "Geological Report"). The Geological Report
summarizes the exploration history of the Kukagami Lake Property and
the Excellerated Properties, the regional geology of the Kukagami Lake
Property and the Excellerated Properties and provides conclusions and
recommendations for a work program on the Kukagami Lake Property and
the Excellerated Properties. These results of the Geological Report
are summarized below.
Location of the Kukagami Lake Property
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The Kukagami Lake Property is located approximately 50 kilometers east
of Sudbury in the Township of Kelly, Province of Ontario, Canada.
Access to the Kukagami Lake Property is by secondary highway and then
via logging roads. Access is limited to snow-free months, unless
logging operations are in progress in the area. The snow-free months
are generally from mid-April through to the beginning of December of
each year. There is no infrastructure on the Kukagami Lake Property,
other than logging roads in the vicinity.
A copy of two maps showing the location and accessibility of the
Kukagami Lake Property are attached to this Registration Statement as
an Exhibit.
History of the Kukagami Lake Property
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Prospecting has been conducted in the vicinity of the Kukagami Lake
Property since the 1890's. No exploration has been conducted on the
Kukagami Lake Property.
Geology of the Kukagami Lake Property
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The Kukagami Lake Property is underlain by a sedimentary rock
formation. This sedimentary rock formation is intruded in areas by an
igneous rock formation known as the "Nippissing Gabbro". The
Geological Report confirmed the presence of the Nippissing Gabbro
formation on the Kukagami Lake Property.
The Geological Report also confirmed that there is a recognized close
spatial relationship between the Nipissing Gabbro formation and
mineralization. Minerals associated with the Nipissing Gabbro
formation include copper-nickel-platinum group elements. Platinum
group elements include platinum and palladium. The Geological Report
concluded that there are copper-nickel-platinum group element
occurrences within Nippissing Gabbro formation in the immediate area of
the Kukagami Lake Property.
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Conclusions of the Geological Report
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The Geological Report concluded that the Nippissing Gabbro intrusion
underlying the Kukagami Lake Property is considered highly prospective
for copper-nickel-platinum group element mineralization. Accordingly,
the Kukagami Lake Property warrants a more detailed examination of its
mineral potential. The Geological Report recommended a two-phase
multi-discipline exploration program to investigate the economic
potential of the Kukagami Lake Property and the Excellerated
Properties.
Recommendations
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The Geological Report identified the exploration objective for the
Kukagami Lake Property as being the copper-nickel-platinum group
element deposits which may be hosted by the Nippissing Gabbro
formation.
The Geological Report outlined a two phase exploration program for the
Kukagami Lake Property and the Excellerated Properties. The first phase
of the work program would be comprised of the following activities: (I)
geological mapping; (ii) hand collection of rock and soil samples;
(iii) analysis of rock and soil samples collected; and (iv) geological
surveys. The second phase of the work program would consist of a
diamond drilling program and additional geological surveys. The
determination on whether to proceed to the second phase of the work
program would be made based on the results of the first phase of the
work program.
In addition, the Geological Report provided a detailed budget of each
phase of the exploration program. The exploration budget for phase one
of the work program on the Excellerated Properties and the Kukagami
Lake Property is approximately $100,000 US, including an amount of
approximately $7,300 as a contingency. The exploration budget for
phase two of the work program is approximately $155,000 US, including
the amount of approximately $7,500 US as a contingency. The
exploration budget consists of estimated costs. There is no assurance
that the actual cost of the work programs will not exceed the budgeted
costs.
The Company and Excellerated have determined to proceed with phase one
of the exploration program recommended on the Excellerated Properties
and the Kukagami Lake Property. Excellerated will carry out phase one
of the exploration program. The Company has agreed to pay to
Excellerated an amount equal to 10% of the cost incurred by
Excellerated completing phase one of the exploration program.
Company's Plan of Operation
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The Company is proceeding with phase one of the recommended work
program on the Kukagami Lake Property by agreeing to fund its
proportionate share of the work program to be completed by Excellerated
on the Excellerated Properties and the Kukagami Lake Property. The
Company has advanced the amount of $8,299 US to Excellerated towards
the Company's proportionate share of the cost of phase one of the
exploration program. The Company will be
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obligated to pay to Excellerated any amount by which the
Company's share of the cost of phase one of the work program
exceeds the amount advanced.
The Company has raised sufficient funds from prior offerings of its
securities, as set forth in Item 4 of Part II of this Registration
Statement, to fund its share of phase one of the exploration program to
be carried out by Excellerated. The Company will assess whether to
proceed with further exploration programs upon completion of phase one
of the exploration program and an evaluation of the results of this
exploration program.
The Company had cash on hand in the amount of $39,838 US as of July 31,
1999. The Company has funded its share of phase one of the exploration
program. The Company believes that its cash reserves are also
sufficient to meet its obligations for the next twelve-month period,
including the legal and accounting expense of complying with its
obligations as a reporting issuer under the Securities Exchange Act of
1934, in addition to the cost of completing phase one of the
exploration program.
The Company will require additional funding in the event that the
Company determines to proceed with its share of phase two of the
exploration program. The anticipated cost of the Company's share of
phase two of the exploration program is approximately $10,700 US which
is in excess of the projected cash reserves of the Company upon
completion of phase one of the exploration program. The Company
anticipates that additional funding will be in the form of equity
financing from the sale of the Company's common stock. There is no
assurance that the Company will be able to achieve additional sales of
its common stock sufficient to fund Phase Two of the exploration
program. The Company believes that debt financing will not be an
alternative for funding Phase Two of the exploration program. The
Company does not have any arrangements in place for future equity
financing.
If the Company does not secure additional financing, the Company will
not be able to complete its share of phase two of the exploration
program or meet its obligation to Excellerated under the Option to
incur $286,500 CDN (equal to approximately $194,420 US as at October
25, 1999) of exploration expenditures, in aggregate, on the Kukagami
Lake Property by April 1, 2001. The Company will be required to
abandon the Option in the event that the Company is unable to achieve
sufficient financing as required to incur $286,500 CDN (equal to
approximately $194,420 US as at October 25, 1999) of exploration
expenditures on the Kukagami Lake Property by April 1, 2001. The
Company will consider brining in a joint venture partner for the
Kukagami Lake Property if the Company is unable to achieve sufficient
funding by itself to proceed with the required exploration expenditures
and the Company does not want to abandon the Kukagami Lake Property.
The Company will pursue acquiring interests in alternate mineral
properties in the event of termination of the Option due to a failure
to incur the required exploration expenditures.
Management Agreement
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The Company has entered into a management agreement dated April 1, 1999
with WFC Management Corporation, a company controlled by Mr. Grayson
Hand, whereby WFC Management Corporation has agreed to provide
management and administration services to the
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Company for a fee of $750 US per month for a one-year term commencing
April 1, 1999 and expiring March 31, 1999 (the "Management Agreement").
The services include the management services of Mr. Hand, reception,
secretarial services, accounting services, investor relations and
general office services. Mr. Hand founded and organized the Company.
Mr. Hand is a promoter of the Company.
A copy of the Management Agreement is attached to this Registration
Statement as an Exhibit. The information provided in this Registration
Statement with respect to the Management Agreement is qualified in its
entirety by reference to the complete text of that agreement.
Competition and Marketing
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The mining industry, in general, is intensely competitive. There can be
no assurance that even if commercial quantities of ore are discovered,
a ready market will exist for its sale. Numerous factors beyond the
control of the Company may affect the marketability of any substances
discovered. These factors include market fluctuations, the proximity
and capacity of natural resource markets and processing equipment,
government regulations, including regulations relating to prices,
taxes, royalties, land tenure, land use, importing and exporting of
minerals and environmental protection. The exact effect of these
factors cannot be accurately predicted, but the combination of these
factors may result in the Company not receiving an adequate return on
invested capital.
Compliance with Government Regulation
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The Company will be required to comply with all regulations, rules and
directives of governmental authorities and agencies applicable to the
exploration of minerals in the Province of Ontario. In addition,
production of minerals in the Province of Ontario will require prior
approval of applicable governmental regulatory agencies. There can be
no assurance that such approvals will be obtained. The cost and delay
involved in attempting to obtain such approvals cannot be known in
advance.
The Company will not be required to obtain any permit in order to
conduct preliminary exploration program on the Kukagami Lake Property.
Preliminary exploration includes activities such as diamond drilling
and limited amounts of outcrop stripping. The Company will be required
to obtain a permit from the Ministry of Northern Development and Mines
of the Province of Ontario if the Company undertakes an advanced
exploration program. An advanced exploration program includes
activities such as: (i) the excavation of an exploratory shaft, adit or
decline; (ii) the installation of a mill for test purposes; (iii)
extraction of material in excess of 500 tonnes; (iv) exploration
carried out underground; (v) surface stripping of an area in excess of
10,000 square meters or displacement of material in excess of 10,000
cubic meters; or (vi) ) surface stripping of an area in excess of 2,500
square meters of displacement of material in excess of 2,500 cubic
meters if any of the activity occurs less than 100 meters from a body
of water.
During the exploration phase of the Excellerated Properties, the
Company will be subject to regulation by the Ministry of Natural
Resources, a ministry of the Province of Ontario. The
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Company has budgeted for regulatory compliance costs in the proposed
work program recommended by the Geological Report. The Company will
have to sustain the cost of reclamation and environmental mediation
for all exploration (and development) work undertaken. The amount of
these costs is not known at this time as the Company does not know
the extent of the exploration program it will undertake, beyond
completion of the recommended work program, or if it will enter
into production on the Excellerated Properties. Because there is
presently no information on the size, tenor, or quality of any
resource or reserve, it is impossible to assess the impact of any
capital expenditures on the Company, its earnings or competitive
position in the event a potentially-economic deposit is discovered.
If the Company enters the production phase, the cost of complying with
permit and regulatory environment laws will be greater because the
impact on the project area is greater. Permits and regulations will
control all aspects of the production program if the project continues
to that stage. Examples of regulatory requirements include:
- - Water discharge will have to meet drinking water standards;
- - Dust generation will have to be minimal or otherwise re-mediated;
- - Dumping of material on the surface will have to be re-contoured
and re-vegetated with natural vegetation;
- - An assessment of all material to be left on the surface will need
to be environmentally benign;
- - Ground water will have to be monitored for any potential
contaminants;
- - The socio-economic impact of the project will have to be evaluated
and if deemed negative, will have to be re-mediated; and
- - There will have to be an impact report of the work on the local
fauna and flora including a study of potentially endangered
species.
Exploration Risk
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Exploration for minerals is a speculative venture necessarily involving
substantial risk. There is no certainty that the expenditures to be
made by the Company in the acquisition of the interests described
herein will result in discoveries of commercial quantities of ore.
Hazards such as unusual or unexpected formations and other conditions
are involved in mineral exploration and development. The Company may
become subject to liability for pollution, cave-ins or hazards against
which it cannot insure or against which it may elect not to insure.
The payment of such liabilities may have a material adverse effect on
the Company's financial position.
The Company does not presently have any liability insurance in place.
The Company anticipates acquiring liability insurance in the event that
the Company acquires a 70% interest in the
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Kukagami Lake Property and the Company determines to proceed with
further exploration or development activities. The Company does not
have any environmental liability insurance. The Company believes
that environmental liability insurance could not be obtained for
exploration or development activities on the Kukagami Lake Property.
The Company cannot give any assurance as to what would be considered a
"commercial quantity" of ore for the Excellerated Properties. A
"commercial quantity" of ore is a quantity of ore which is sufficient
to economically justify commercial exploitation. In determining
whether a body of ore economically justifies exploitation, the Company
will assess those factors which impact on the economics of production
of the Excellerated Properties, including prevailing mineral prices,
the concentration of minerals within the ore, cost of mining and
production, costs of money, costs of environmental compliance and
general economic conditions.
No Known Bodies of Ore
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There are no known bodies of ore on the Company's optioned property.
The business plan of the Company is to raise funds to carry out further
exploration with the objective of establishing ore of commercial
tonnage and grade. If the Company's exploration programs are
successful, additional funds will be required for the development of
economic reserves and to place them in commercial production. The only
source of future funds presently available to the Company is through
the sale of equity capital. Any future sales of the Company's common
stock or other equity capital could result in substantial dilution to
the shareholders of the Company. The extent of dilution to
shareholders would depend on the number of equity securities sold by
the Company and the price at which the equity securities are sold. The
only alternative for the financing of further exploration would be the
offering by the Company of an interest in its optioned property to be
earned by another party or parties carrying out further exploration or
development thereof, which is not presently contemplated.
Research and Development Expenditures
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During the past two fiscal years, the Company has not completed any
research or development expenditures.
Subsidiaries
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The Company has no subsidiaries.
Employees
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As of November 1, 1999, the Company had no employees, other than its
officers.
The Company's one officer is Mr. Grayson Hand who is President,
Secretary and Treasurer of the Company. Mr. Hand provides his services
on a part-time basis as required for the business of the Company. Mr.
Hand presently commits approximately 15% of his business time to the
business of the Company. The Company presently pays to WFC Management
Corporation, a
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company controlled by Mr. Hand, a management fee of $750
per month pursuant to the Management Agreement. Mr. Hand founded and
organized the Company. Mr. Hand is a promoter of the Company. The
Company views the compensation payable to WFC Management Corporation as
being equal to the fair market value for the services of Mr. Hand.
Mr. Hand's prior experience in mineral exploration includes acting as
president of Leigh Resources from July 7, 1995 to January 21, 1997.
Leigh Resources is a publicly traded mineral exploration company which
is traded on the Vancouver Stock Exchange. Mr. Hand supervised the
exploration activities of Leigh Resources during his tenure as
president of Leigh Resources. Mr. Hand's responsibilities included: (i)
negotiating joint venture agreements for the mineral exploration of
Leigh Resources' properties; (ii) overseeing mineral exploration
activities; (iii) hiring drilling contractors and geologists; and (iv)
financing activities for the funding of exploration. Leigh Resources
was engaged in mineral exploration activities during this period and
its activities did not extend to the development or production of its
mineral properties. Mr. Hand was appointed a director of Leigh
Resources in July, 1995 and remains a director of Leigh Resources.
The Company does not pay to its directors any compensation for each
director serving as a director on the Company's board of directors.
The Company conducts its business through agreements with consultants
and arms-length third parties.
Patents and Trademarks
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The Company does not own, either legally or beneficially, any patent or
trademark.
YEAR 2000 RISK
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Background
Computer systems, software packages, and microprocessor dependent
equipment may cease to function or generate erroneous data when the
Year 2000 arrives. The problem affects those systems or products that
are programmed to accept a two-digit code in date code fields. To
correctly identify the Year 2000, a four-digit date code field will be
required to be what is commonly termed "Year 2000 compliant."
Readiness
The Company has completed an assessment of all internal systems and
operations to determine Year 2000 compliance. The Company does not own
any computer hardware or license any computer software in its
operations as a geological exploration company. As such, the Company
does not anticipate any material adverse operational issues to arise
from the Year 2000 problem affecting internal systems and operations.
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The Company has investigated the Year 2000 compliance of all computer
hardware and computer software used by the Company's consultants in the
Company's business operations. The Company has relied upon the verbal
representations of each of its consultants that third party software
used by the consultant is Year 2000 compliant. The Company has relied
upon verbal representations by consultants that all computer hardware
purchased is Year 2000 compliant. The Company has not made any direct
inquiry of hardware or software providers to determine if the computer
hardware and software used by its consultants is Year 2000 compliant.
The Company cannot give any assurance that all computer hardware and
software used by its consultants will be Year 2000 compliant.
Accordingly, there is no assurance that the Company will not be
affected by Year 2000 problems arising from problems with the Year 2000
problems experienced by its consultants.
While the Company has completed its review of Year 2000 readiness, it
will continue to make inquiries of any future third parties with which
it has business dealings as to Year 2000 compliance of hardware and
software systems until January 1, 2000.
Risks
The Company may realize exposure and risk if the systems for which it
is dependent upon to conduct day-to-day operations are not year 2000
compliant. The Company's worst case scenario would be the loss of data
regarding its property and business operations and the inability of its
consultants to provide consultant services to the Company until such
time as computer hardware and software was upgraded. The Company has
instructed its consultants to maintain back-ups of all data relating to
the Company's operations. In the event of a worst case scenario, the
consultants would be forced to complete the necessary hardware and
software upgrades and restore the backed-up data.
Estimated Year 2000 Costs
The Company estimates that its total internal cost for ensuring Year
2000 compliance for all internal systems to date to be less than
$5,000. The Company anticipates incurring internal costs of less than
$10,000 in completing its Year 2000 compliance plan. The Company has
not incurred any external cost in ensuring Year 2000 compliance in view
of the fact that the Company has only recently commenced operations and
has relied upon representations of its consultants as to Year 2000
compliance.
Contingency Planning
The Company's contingency plan consists of a back-up of all computer
databases and documentation.
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Item 7. Description of Property
The Company has an option to acquire a 70% interest in the Mineral
Claim, as described in detail in Item 6 of Part I of this Registration
Statement under "Excellerated Properties Option Agreement". The
Company does not own or lease any property other than its option to
acquire an interest in the Kukagami Lake Property.
Item 8. Directors, Executive Officers and Significant Employees
The following information sets forth the names of the directors,
executive officers and significant employees of the Company, their
present positions with the Company, and their biographical information.
1. Directors and Officers
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Name Age Office Term of Office
- ---- --- ------ --------------
Grayson W. Hand 62 President/Secretary/ One year
Treasurer/Director
Gordon A. Keevil 47 Director One year
Mr. Grayson Hand is a director and is President of the Company. Mr.
Hand is a Vancouver businessman who has over 25 years of senior
management and executive level business experience. He has acted as a
director of Global Technologies Inc., Medical Polymers Technologies
Inc., Tanisys Technology Inc. and Leigh Resources Ltd., each of which
is a publicly traded company. Mr. Hand was president of Leigh
Resources from July 7, 1995 to January 21, 1997. Mr. Hand was
appointed a director of Leigh Resources in July, 1995 and remains a
director of Leigh Resources. Leigh Resources is a publicly traded
mineral exploration company which is traded on the Vancouver Stock
Exchange and which was involved in mineral exploration at the time Mr.
Hand was president. Mr. Hand supervised the exploration activities of
Leigh Resources during his tenure as president of Leigh Resources. Mr.
Hand's responsibilities included: (i) negotiating joint venture
agreements for the mineral exploration of Leigh Resources' properties;
(ii) overseeing mineral exploration activities; (iii) hiring drilling
contractors and geologists; and (iv) financing activities for the
funding of exploration. Leigh Resources was engaged in mineral
exploration activities during this period and its activities did not
extend to the development or production of its mineral properties.
Since 1997, Mr. Hand has acted as the president and a director of a
private company which has developed and patented a toilet retrofit
device which allows for less water to be used in new and existing
toilets. Mr. Hand continues to be involved with this private company
and is currently involved in commencing the marketing and commercial
production of the toilet retrofit device. Mr. Hand's business
experience also includes senior management positions and ownership of
companies in the communication field as well as public companies.
Mr. Gordon A. Keevil is a director of the Company. Mr. Keevil
graduated with a degree in geology from Queen's University in 1975 and
has since early 1976 worked in natural resource
14
<PAGE>
exploration and development. He has concentrated on exploration
working predominately with listed junior resource companies. He has
served as a director or officer of a number of Canadian Companies.
Between 1976 and 1988, Mr. Keevil served as a director and officer
of Quinterra Resources Inc., Seaforth Mines Ltd., Highland Crow
Resources Inc., Emerald Lake Resources Inc., all listed on the
Vancouver Stock Exchange, and Noramco Mining Corp., listed on the
Toronto Stock Exchange. From 1992 to 1993, Mr. Keevil was a director
and president of Dorado Resources, a private oil and gas company in
Calgary. Dorada Resources was involved in both the production of and
exploration for oil and natural gas in Alberta, Canada. Mr. Keevil was
responsible for overseeing the technical exploration activities of
Dorado Resources and assisted with day to day corporate management.
From 1995 to 1996, he was a consultant to Spokane Resources Ltd. and
Ivory Oils and Minerals Inc. of Vancouver, each of which were active in
mineral exploration in Canada. Mr. Keevil provided assistance to
Spokane Resources and Ivory Oils and Minerals concerning the
acquisition and evaluation of exploration prospects and assisted with
day to day operations. Since 1997, Mr. Keevil has been a director and
officer of Leigh Resource Corporation of Vancouver, Canada. Since 1997,
he has also been a director of Stealth Ventures Ltd. of Vancouver,
Canada. Leigh Resources has been involved in mineral exploration and
oil and gas exploration and production during the time of Mr. Keevil's
involvement. Mr. Keevil directs the evaluation of mineral properties
and acquisitions for Leigh Resources and directs the day to day
operations of Leigh Resources' natural resources projects. Mr. Keevil
also serves as a consultant to exploration companies active in the
mineral resource industry. Mr. Keevil has devoted the majority of his
business time to the business of Leigh Resources since February,1997.
2. Significant Employees
---------------------
The Company does not have any significant employees.
3. Term of Office
--------------
Officers and directors of the Company serve for a term of one year
until the next annual general meeting of the Company or until removed
in accordance with the by-laws of the Company.
Item 9. Remuneration of Directors and Officers
The following table sets forth certain information as to the Company's
three highest paid executive officers and directors for period from
commencement of the Company's business on April 1, 1999 to September
30, 1999 As indicated below, the Company does not presently pay any
compensation to any of its officers and directors. The Company may
during the course of the current year decide to compensate its officers
and directors for their services. No other compensation is anticipated
to be paid to any such officers other than the cash compensation set
forth below.
15
<PAGE>
- ------------------------------------------------------------------
Summary Compensation Table
- ------------------------------------------------------------------
Name Position Year Management Fee
- ---- -------- ---- --------------
Grayson Hand President 1999 $4,500
- ------------------------------------------------------------------
The services of Mr. Hand are provided pursuant to the Management
Agreement with WFC Management Corporation. See Item 6 - "Description
of Business - Management Agreement".
Item 10. Security Ownership of Management and Certain Security Holders
The following table sets forth information as of the date hereof, based
on information obtained from the persons named below, with respect to
the beneficial ownership of the Common Stock by (i) each person known
by the Company to own beneficially 5% or more of the Common Stock, (ii)
each director and officer and (iii) all directors and officers as a
group:
Name and Address Amount of Percent
Title of Class of Beneficial Owner Beneficial Ownership of Class
- -------------- ------------------- -------------------- --------
Common Stock Grayson Hand 1,200,000 59.0%
Suite 414
1859 Spyglass Place
Vancouver, BC
Canada V5Z 4K6
Common Stock Gordon A. Keevil 0 0%
3790 Southridge Avenue
West Vancouver, BC
Canada V7V 3J1
Common Stock Directors and Officers 1,200,000 59.0%
As a Group
Item 11. Interest of Management and Others in Certain Transactions
Except as set forth below, one of the directors or officers of the
Company, nor any proposed nominee for election as a director of the
Company, nor any person who beneficially owns, directly or indirectly,
shares carrying more than 10% of the voting rights attached to all
outstanding shares of the Company, nor any promoter of the Company, nor
any relative or spouse of any of the foregoing persons has any material
interest, direct or indirect, in any transaction since the date of the
Company's incorporation or in any presently proposed transaction which,
in either case, has or will materially affect the Company.
16
<PAGE>
The Company has entered into the Management Agreement with WFC
Management Corporation, a company controlled by Mr. Grayson Hand,
President of the Company. Under the Management Agreement, the Company
has agreed to pay to WFC Management Corporation a management fee of
$750 per month for a one year term in consideration for management and
administration services to be provided by WFC Management Corporation to
the Company. See Item 6 of Part I of this Registration Statement under
"Management Agreement".
Item 12. Description of Securities
Common Stock
The Company has authorized 25,000,000 common shares par value $0.001 of
Common Stock, of which 2,033,000 are currently outstanding.
Holders of Common Stock have the right to cast one vote for each share
held of record on all matters submitted to a vote of holders of Common
Stock, including the election of directors. There is no right to
cumulate votes for the election of directors. Stockholders holding a
majority of the voting power of the capital stock issued and
outstanding and entitled to vote, represented in person or by proxy,
are necessary to constitute a quorum at any meeting of the Company's
stockholders, and the vote by the holders of a majority of such
outstanding shares is required to effect certain fundamental corporate
changes such as liquidation, merger or amendment of the Company's
Certificate of Incorporation.
Holders of Common Stock are entitled to receive dividends pro rata
based on the number of shares held, when, as and if declared by the
Board of Directors, from funds legally available therefor, subject to
the rights of holders of any outstanding preferred stock. In the event
of the liquidation, dissolution or winding up of the affairs of the
Company, all assets and funds of the Company remaining after the
payment of all debts and other liabilities, subject to the rights of
the holders of any outstanding preferred stock, shall be distributed,
pro rata, among the holders of the Common Stock. Holders of Common
Stock are not entitled to pre-emptive or subscription or conversion
rights, and there are no redemption or sinking fund provisions
applicable to the Common Stock. All outstanding shares of Common Stock
are fully paid and non-assessable.
Warrants
The Company does not have any warrants to purchase securities of the
Company outstanding.
Options
The Company does not have any options to purchase securities of the
Company outstanding. The Company may in the future establish an
incentive stock option plan for its directors, officers, employees and
consultants.
Transfer Agent
Pacific Stock Transfer Company of Las Vegas, Nevada is the transfer
agent for the Shares.
17
<PAGE>
PART II
Item 1. Market Price of and Dividends on the Registrant's Common
Equity and Other Stockholder Matters
The Company anticipates applying for a listing on the OTC Bulletin
Board upon effectiveness of this Registration Statement. Currently,
there is no public market for the Company's stock and there is no
assurance that a public market will materialize.
As of the date of this Registration Statement, there were forty-seven
(47) registered shareholders in the Company. There are no dividend
restrictions in the Company.
None of the holders of the Company's common shares have any right to
require the Company to register its common shares pursuant to the
Securities Act of 1933.
The issuance of dividends to shareholders is at the discretion of the
board of directors of the Company. The Company has not issued any
dividends since its inception and does not have plans to do so in the
foreseeable future.
Item 2. Legal Proceedings
There are no legal proceedings pending or threatened against the
Corporation.
Item 3. Changes in and Disagreements with Accountants
The Company has had no changes in or disagreements with its accountants
since its inception in February 19, 1999.
Item 4. Recent Sales of Unregistered Securities
The Company completed an offering of 1,200,000 common shares at a price
of $0.005 per share on April 01, 1999 pursuant to Section 4(2) of the
Securities Act of 1933. All of these shares were sold to Grayson Hand,
the President, Secretary, Treasurer and Director of the Company, and
are "restricted shares" within the meaning of the Securities Act of
1933. All shares were issued for cash consideration.
The Company completed an offering of 800,000 common shares at a price
of $0.05 per share on April 2, 1999 to a total of thirteen (13)
investors. Each investor is an individual each of whom was known to an
officer and director of the Company prior to the commencement of the
offering. The offering was completed pursuant to Rule 504 of Regulation
D of the Act on the basis that (I) the offering was for an offering of
stock less than $1,000,000, in the aggregate; (ii) the Company had a
specific business plan at the time of the offering, being the
exploration of the Kukagami Lake Property; (iii) the Company was not
subject to the reporting requirements of the Securities and Exchange
Act of 1934 at the time of the offering. The offering was also
completed pursuant to
18
<PAGE>
exemptions provided by Section 46(j) of the Securities Act of British
Columbia. All shares were issued for cash consideration.
The Company completed an offering of 33,000 common shares at a price of
$0.25 per share on April 5, 1999 to a total of thirty three (33)
investors. Each investor is an individual each of whom was known to an
officer and director of the Company prior to the commencement of the
offering. The offering was completed pursuant to Rule 504 of Regulation
D of the Act on the basis that (I) the offering was for an offering of
stock less than $1,000,000, in the aggregate; (ii) the Company had a
specific business plan at the time of the offering, being the
exploration of the Kukagami Lake Property; (iii) the Company was not
subject to the reporting requirements of the Securities and Exchange
Act of 1934 at the time of the offering. The offering was also
completed pursuant to exemptions provided by Section 46(j) of the
Securities Act of British Columbia. All shares were issued for cash
consideration.
The aggregate of these offerings, if integrated under Rule 502 of
Regulation D of the Act is less than the $1,000,000 limit the exemption
allows.
Item 5. Indemnification of Directors and Officers
The officers and directors of the Company are indemnified as provided
under the Nevada Revised Statutes (the "NRS") and the Bylaws of the
Company.
Under the NRS, director immunity from liability to a corporation or its
shareholders for monetary liabilities applies automatically unless it
is specifically limited by a corporation's articles of incorporation
(which is not the case with the Company's Articles of Incorporation).
Excepted from that immunity are: (i) a wilful failure to deal fairly
with the corporation or its shareholders in connection with a matter in
which the director has a material conflict of interest; (ii) a
violation of criminal law (unless the director had reasonable cause to
believe that his or her conduct was lawful or no reasonable cause to
believe that his or her conduct was unlawful); (iii) a transaction from
which the director derived an improper personal profit; and (iv) wilful
misconduct.
The By-laws of the Company provide that the Company will indemnify its
directors and officers to the fullest extent not prohibited by the
Nevada General Corporation Law; provided, however, that the Company may
modify the extent of such indemnification by individual contracts with
its directors and officers; and, provided, further, that the Company
shall not be required to indemnify any director or officer in
connection with any proceeding (or part thereof) initiated by such
person unless (i) such indemnification is expressly required to be made
by law, (ii) the proceeding was authorized by the Board of Directors of
the corporation, (iii) such indemnification is provided by the Company,
in its sole discretion, pursuant to the powers vested in the
corporation under the Nevada General Corporation Law or (iv) such
indemnification is required to be made pursuant to the By-laws.
The By-laws of the Company provide that the Company will advance to any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact
that he
19
<PAGE>
is or was a director or officer, of the corporation, or is or
was serving at the request of the corporation as a director or
executive officer of another corporation, partnership, joint venture,
trust or other enterprise, prior to the final disposition of the
proceeding, promptly following request therefor, all expenses incurred
by any director or officer in connection with such proceeding upon
receipt of an undertaking by or on behalf of such person to repay said
amounts if it should be determined ultimately that such person is not
entitled to be indemnified under the By-laws of the Company or
otherwise.
The By-laws of the Company provide that no advance shall be made by the
Company to an officer of the Company (except by reason of the fact that
such officer is or was a director of the Company in which event this
paragraph shall not apply) in any action, suit or proceeding, whether
civil, criminal, administrative or investigative, if a determination is
reasonably and promptly made (i) by the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties
to the proceeding, or (ii) if such quorum is not obtainable, or, even
if obtainable, a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, that the facts known to
the decision-making party at the time such determination is made
demonstrate clearly and convincingly that such person acted in bad
faith or in a manner that such person did not believe to be in or not
opposed to the best interests of the Company.
The Company has been advised that in the opinion of the Securities and
Exchange Commission indemnification for liabilities arising under the
Securities Act is against public policy as expressed in the Securities
Act, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities, other than the payment by the
registrant of expenses incurred or paid by a director, officer, 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 Securities Act, and
will be governed by the final adjudication of such issue.
20
<PAGE>
PART F/S
FINANCIAL STATEMENTS
The Company's audited Financial Statements, as described below, are
attached hereto.
1. Audited financial statements for the period ending April 30,
1999, including:
(a) Balance Sheet;
(b) Statement of Loss and Deficit;
(c) Statement of Cash Flows;
(d) Statement of Stockholders' Equity;
(e) Notes to Financial Statements.
2. Un-audited financial statements for the period ending July 31,
1999, including:
(a) Balance Sheet;
(b) Statement of Loss and Deficit;
(c) Statement of Cash Flows;
(d) Statement of Stockholders' Equity;
(e) Notes to Financial Statements.
3. Consent of Auditor
21
<PAGE>
ADVENTURE MINERALS INC.
(Formerly MAGIC BAG CORPORATION)
(An Exploration Stage Company)
FINANCIAL STATEMENTS
APRIL 30, 1999
(Stated in U.S. Dollars)
<PAGE>
------------------------------
Morgan & Company
------------------------------
Chartered Accountants
------------------------------
P.O. Box 10007, Pacific Centre
Suite 1730 - 700 West
Georgia Street
Vancouver, B.C. V7Y 1A1
Telephone (604) 687-5841
Fax (604) 687-0075
------------------------------
AUDITORS' REPORT
To the Directors
Adventure Minerals Inc.
(Formerly Magic Bag Corporation)
We have audited the balance sheet of Adventure Minerals Inc.
(Formerly Magic Bag Corporation), (an exploration stage company)
as at April 30, 1999 and the statements of loss and deficit
accumulated during the exploration stage, cash flows and
stockholders' equity for the period then ended. 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 audit.
We conducted our audit in accordance with United States and
Canadian generally accepted auditing standards. 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, these financial statements present fairly, in all
material respects, the financial position of the Company as at
April 30, 1999 and the results of its operations and the cash
flows for the period then ended in accordance with United States
generally accepted accounting principles.
Vancouver, B.C. \s\ Morgan & Company
July 22, 1999,except as to Note 7 Chartered Accountants
which is as of October 25, 1999
<PAGE>
ADVENTURE MINERALS INC.
(Formerly MAGIC BAG CORPORATION)
(An Exploration Stage Company)
BALANCE SHEET
APRIL 30, 1999
(Stated in U.S. Dollars)
- ------------------------------------------------------------------
ASSETS
Current
Cash $ 42,954
Mineral Property (Note 3) 1,000
Exploration Advance (Note 4) 8,299
----------
$ 52,253
==================================================================
LIABILITIES
Current
Accounts payable $ 2,081
----------
SHAREHOLDERS' EQUITY
Share Capital
Authorized:
100,000,000 Common shares, par value
$0.001 per share
Issued and outstanding:
2,033,000 Common shares 2,033
Additional paid in capital 52,217
Deficit Accumulated During The Exploration Stage (4,078)
----------
50,172
----------
$ 52,253
==================================================================
Contingencies (Note 5)
Commitment (Note 6)
Approved By Directors:
- ----------------------------- -----------------------------
<PAGE>
ADVENTURE MINERALS INC.
(Formerly MAGIC BAG CORPORATION)
(An Exploration Stage Company)
STATEMENT OF LOSS AND DEFICIT
(Stated in U.S. Dollars)
- ------------------------------------------------------------------
Period From
Date Of
Organization Inception
February 17 February 17
1999 1999
To April 30 To April 30
1999 1999
- ------------------------------------------------------------------
Expenses
Office administration and sundry $ 784 $ 784
Mineral property exploration
Expenditures 963 963
Professional fees 2,331 2,331
---------- ------------
Net Loss For The Period 4,078 $ 4,078
============
Deficit Accumulated During The
Exploration Stage,
Beginning Of Period -
----------
Deficit Accumulated During The
Exploration Stage,
End Of Period $ 4,078
==========
Net Loss Per Share $0.01
=====
Weighted Average Number of Shares
Outstanding 805,905
==========
<PAGE>
ADVENTURE MINERALS INC.
(Formerly MAGIC BAG CORPORATION)
(An Exploration Stage Company)
STATEMENT OF CASH FLOWS
(Stated in U.S. Dollars)
- ------------------------------------------------------------------
Period From
Date Of
Organization Inception
February 17 February 17
1999 1999
To April 30 To April 30
1999 1999
- ------------------------------------------------------------------
Cash Flow From Operating Activities
Net loss for the period $ (4,078) $ (3,328)
Adjustments To Reconcile Net Loss To
Net Cash Used By Operating
Activities
Change in accounts payable 2,081 1,331
---------- ----------
(1,997) (1,997)
---------- ----------
Cash Flow From Investing Activities
Mineral property (1,000) (1,000)
Exploration advance (8,299) (8,299)
---------- ----------
(9,299) (9,299)
---------- ----------
Cash Flow From Financing Activities
Share capital issued 54,250 54,250
----------- -----------
Increase In Cash 42,954 42,954
Cash, Beginning Of Period - -
----------- -----------
Cash, End Of Period $ 42,954 $ 42,954
===================================================================
<PAGE>
ADVENTURE MINERALS INC.
(Formerly MAGIC BAG CORPORATION)
(An Exploration Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
APRIL 30, 1999
(Stated in U.S. Dollars)
Common Stock
--------------------------
Additional
Paid-in
Shares Amount Capital Deficit Total
------------------------------------------------
Shares issued for
cash @ $0.005 1,200,000 $ 1,200 $ 4,800 $ - $ 6,000
Shares issued for
cash @ $0.05 800,000 800 39,200 - 40,000
Shares issued for
cash @ $0.25 33,000 33 8,217 - 8,250
Net loss for the
period - - - (4,078) (4,078)
-------------------------------------------------
Balance, April 30,
1999 2,033,000 $ 2,033 $ 52,217 $(4,078) $ 50,172
=================================================
<PAGE>
ADVENTURE MINERALS INC.
(Formerly MAGIC BAG CORPORATION)
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999
(Stated in U.S. Dollars)
1. NATURE OF OPERATIONS
a) Organization
The Company was incorporated in the State of Nevada, U.S.A.
on February 17, 1999.
b) Exploration Stage Activities
The Company is in the process of exploring its mineral
property and has not yet determined whether the property
contains ore reserves that are economically recoverable.
The recoverability of the amounts shown as mineral property
is dependent upon the discovery of economically recoverable
reserves, confirmation of the Company's interest in the
underlying mineral claims and the ability of the Company to
obtain profitable production or proceeds from the
disposition thereof.
2. SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Company have been prepared in
accordance with generally accepted accounting principles in the
United States. 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 which have been made using
careful judgement.
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:
a) Mineral Property Costs
The Company capitalizes the acquisition costs of mineral
properties in which it has a continuing interest to be
amortized over the recoverable reserves when a property
reaches commercial production. On abandonment of any
property, applicable acquisition costs will be written off.
To date the Company has not established the commercial
feasibility of its mineral property therefore all
exploration expenditures are being expensed.
<PAGE>
ADVENTURE MINERALS INC.
(Formerly MAGIC BAG CORPORATION)
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999
(Stated in U.S. Dollars)
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
b) Foreign Currency Translation
The Company's functional currency is the U.S. dollar.
Transactions in foreign currency are translated into U.S.
dollars as follows:
i) monetary items at the rate prevailing at the balance sheet
date;
ii) non-monetary items at the historical exchange rate;
iii) revenue and expense at the average rate in effect during
the applicable accounting period.
Gains or losses arising in translation are included in the
results of operations.
c) Income Taxes
The Company has adopted Statement of Financial Accounting
Standards No. 109 - "Accounting for Income Taxes" (SFAS
109). This standard requires the use of an asset and
liability approach for financial accounting and reporting on
income taxes. If it is more likely than not that some
portion or all of a deferred tax asset will not be realized,
a valuation allowance is recognized.
d) Financial Instruments
The Company's financial instruments consist of cash and
accounts payable.
Unless otherwise noted, it is management's opinion that this
Company is not exposed to significant interest or credit
risks arising from these financial instruments. The fair
value of these financial instruments approximate their
carrying values, unless otherwise noted.
e) Net Loss Per Share
Net loss per share is based on the weighted average number
of common shares outstanding during the period plus common
share equivalents, such as options, warrants and certain
convertible securities. This method requires primary
earnings per share to be computed as if the common share
equivalents were exercised at the beginning of the period or
at the date of issue and as if the funds obtained thereby
were used to purchase common shares of the Company at its
average market value during the period.
<PAGE>
ADVENTURE MINERALS INC.
(Formerly MAGIC BAG CORPORATION)
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999
(Stated in U.S. Dollars)
3. MINERAL PROPERTY
The Company has entered into an option agreement dated April 1,
1999 to acquire a 70% interest in a mineral claim block located
in the Sudbury Mining District, Ontario, Canada.
In order to earn its interest, the Company must make cash
payments and incur exploration expenditures as follows:
Cash payment of CDN $1,500 (paid)
Exploration expenditures totalling CDN $150,000 by
April 1, 2000 with an additional CDN $150,000 in
exploration expenditures to be incurred by April 1,
2001
Consideration paid to date (CDN $1,500) $ 1,000
==========
4. EXPLORATION ADVANCE
The Company has advanced $8,299 in connection with an
exploration program which is to commence subsequent to April
30, 1999.
5. CONTINGENCIES
a) Mineral Property
The Company's mineral property interest has been acquired
pursuant to an option agreement. In order to retain its
interest the Company must satisfy the terms of the option
agreement described in Note 3.
<PAGE>
ADVENTURE MINERALS INC.
(Formerly MAGIC BAG CORPORATION)
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1999
(Stated in U.S. Dollars)
5. CONTINGENCIES (Continued)
b) 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. The effects of the
Year 2000 Issue may be experienced before, on, or after
January 1, 2000, and, if not addressed, the impact on
operations and financial reporting may range from minor
errors to significant systems failure which could affect an
entity's ability to conduct normal business operations. It
is not possible to be certain that all aspects of the Year
2000 Issue affecting the entity, including those related to
the efforts of customers, suppliers, or other third parties,
will be fully resolved.
6. COMMITMENT
The company has entered into an agreement with a company
controlled by its president to provide management services for
a one year term at $750 per month expiring March 31, 2000.
7. SUBSEQUENT EVENT
Subsequent to April 30, 1999 the Company's name was changed
from Magic Bag Corporation to Adventure Minerals Inc.
<PAGE>
ADVENTURE MINERALS INC.
(Formerly MAGIC BAG CORPORATION)
(An Exploration Stage Company)
FINANCIAL STATEMENTS
JULY 31, 1999
(Unaudited)
(Stated in U.S. Dollars)
<PAGE>
ADVENTURE MINERALS INC.
(Formerly MAGIC BAG CORPORATION)
(An Exploration Stage Company)
BALANCE SHEET
JULY 31, 1999
(Unaudited)
(Stated in U.S. Dollars)
- ------------------------------------------------------------------
ASSETS
Current
Cash $ 39,838
Mineral Property (Note 4) 1,000
Exploration Advance (Note 5) 8,299
----------
$ 49,137
==================================================================
LIABILITIES
Current
Accounts payable $ 4,039
----------
SHAREHOLDERS' EQUITY
Share Capital
Authorized:
100,000,000 Common shares, par value
$0.001 per share
Issued and outstanding:
2,033,000 Common shares 2,033
Additional paid in capital 52,217
Deficit Accumulated During The Exploration Stage (9,152)
----------
45,098
----------
$ 49,137
==================================================================
Contingencies (Note 6)
Commitments (Note 7)
<PAGE>
ADVENTURE MINERALS INC.
(Formerly MAGIC BAG CORPORATION)
(An Exploration Stage Company)
STATEMENT OF LOSS AND DEFICIT
JULY 31, 1999
(Unaudited)
(Stated in U.S. Dollars)
- ------------------------------------------------------------------
For the
Three Inception
Months February 17
Ended 1999
July 31 To July 31
1999 1999
- ------------------------------------------------------------------
Expenses
Office administration and sundry $ 2,297 $ 3,081
Mineral property exploration
Expenditures - 963
Professional fees 2,777 5,108
---------- ------------
Net Loss For The Period 5,074 $ 9,152
============
Deficit Accumulated During The
Exploration Stage,
Beginning Of Period 4,078
----------
Deficit Accumulated During The
Exploration Stage,
End Of Period $ 9,152
==========
Net Loss Per Share $0.01
=====
Weighted Average Number of Shares
Outstanding 2,033,000
==========
<PAGE>
ADVENTURE MINERALS INC.
(Formerly MAGIC BAG CORPORATION)
(An Exploration Stage Company)
STATEMENT OF CASH FLOWS
JULY 31, 1999
(Unaudited)
(Stated in U.S. Dollars)
- ------------------------------------------------------------------
For the
Three Inception
Months February 17
Ended 1999
July 31 To July 31
1999 1999
- ------------------------------------------------------------------
Cash Flow From Operating Activities
Net loss for the period $ (5,074) $ (9,152)
Adjustments To Reconcile Net Loss To
Net Cash Used By Operating
Activities
Change in accounts payable 1,958 4,039
---------- ----------
(3,116) (5,113)
---------- ----------
Cash Flow From Investing Activities
Mineral property - (1,000)
Exploration advance - (8,299)
---------- ----------
- (9,299)
---------- ----------
Cash Flow From Financing Activities
Share capital issued - 54,250
----------- ----------
Increase (Decrease) In Cash (3,116) 39,838
Cash, Beginning Of Period 42,954 -
----------- ----------
Cash, End Of Period $ 39,838 $ 38,839
==================================================================
<PAGE>
ADVENTURE MINERALS INC.
(Formerly MAGIC BAG CORPORATION)
(An Exploration Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
JULY 31, 1999
(Unaudited)
(Stated in U.S. Dollars)
Common Stock
--------------------------
Additional
Paid-in
Shares Amount Capital Deficit Total
------------------------------------------------
Shares issued for
cash @ $0.005 1,200,000 $ 1,200 $ 4,800 $ - $ 6,000
Shares issued for
cash @ $0.05 800,000 800 39,200 - 40,000
Shares issued for
cash @ $0.25 33,000 33 8,217 - 8,250
Net loss for the
period - - - (4,078) (4,078)
-------------------------------------------------
Balance,
April 30, 1999 2,033,000 $ 2,033 $ 52,217 $(4,078) $ 50,172
=================================================
Net loss for the
period - - - (5,074) (5,074)
-------------------------------------------------
Balance
July 31, 1999 2,033,000 $ 2,033 $ 52,217 $ (9,152) $ 45,098
==================================================
<PAGE>
ADVENTURE MINERALS INC.
(Formerly MAGIC BAG CORPORATION)
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1999
(Unaudited)
(Stated in U.S. Dollars)
1. BASIS OF PRESENTATION
The unaudited financial statements as of July 31, 1999 includes
herein have been prepared without audit pursuant to the rules
and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included
in financial statements prepared in accordance with United
States generally accepted principles have been condensed or
omitted pursuant to such rules and regulations. In the opinion
of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have
been included. It is suggested that these financial statements
be read in conjunction with the April 30, 1999 audited
financial statements and notes thereto.
2. NATURE OF OPERATIONS
a) Organization
The Company was incorporated in the State of Nevada, U.S.A.
on February 17, 1999.
b) Exploration Stage Activities
The Company is in the process of exploring its mineral
property and has not yet determined whether the property
contains ore reserves that are economically recoverable.
The recoverability of the amount shown as mineral property
is dependent upon the discovery of economically recoverable
reserves, confirmation of the Company's interest in the
underlying mineral claims and the ability of the Company to
obtain profitable production or proceeds from the
disposition thereof.
3. SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Company have been prepared in
accordance with generally accepted accounting principles in the
United States. 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 which have been made using
careful judgement.
<PAGE>
ADVENTURE MINERALS INC.
(Formerly MAGIC BAG CORPORATION)
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1999
(Unaudited)
(Stated in U.S. Dollars)
3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
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:
a) Mineral Property Costs
The Company capitalizes the acquisition costs of mineral
properties in which it has a continuing interest to be
amortized over the recoverable reserves when a property
reaches commercial production. On abandonment of any
property, applicable acquisition costs will be written off.
To date the Company has not established the commercial
feasibility of its mineral property therefore all
exploration expenditures are being expensed.
b) Foreign Currency Translation
The Company's functional currency is the U.S. dollar.
Transactions in foreign currency are translated into U.S.
dollars as follows:
i) monetary items at the rate prevailing at the balance
sheet date;
ii) non-monetary items at the historical exchange rate;
iii) revenue and expense at the average rate in effect
during the applicable accounting period.
Gains or losses arising in translation are included in the
results of operations.
c) Income Taxes
The Company has adopted Statement of Financial Accounting
Standards No. 109 - "Accounting for Income Taxes" (SFAS
109). This standard requires the use of an asset and
liability approach for financial accounting and reporting on
income taxes. If it is more likely than not that some
portion or all of a deferred tax asset will not be realized,
a valuation allowance is recognized.
d) Financial Instruments
The Company's financial instruments consist of cash and
accounts payable.
Unless otherwise noted, it is management's opinion that this
Company is not exposed to significant interest or credit
risks arising from these financial instruments. The fair
value of these financial instruments approximate their
carrying values, unless otherwise noted.
<PAGE>
ADVENTURE MINERALS INC.
(Formerly MAGIC BAG CORPORATION)
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1999
(Unaudited)
(Stated in U.S. Dollars)
3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
e) Net Loss Per Share
Net loss per share is based on the weighted average number
of common shares outstanding during the period plus common
share equivalents, such as options, warrants and certain
convertible securities. This method requires primary
earnings per share to be computed as if the common share
equivalents were exercised at the beginning of the period or
at the date of issue and as if the funds obtained thereby
were used to purchase common shares of the Company at its
average market value during the period.
4. MINERAL PROPERTY
The Company has entered into an option agreement dated April 1,
1999 to acquire a 70% interest in a mineral claim block located
in the Sudbury Mining District, Ontario, Canada.
In order to earn its interest, the Company must make cash
payments and incur exploration expenditures as follows:
Cash payment of CDN $1,500 (paid)
Exploration expenditures totalling CDN $150,000 by
April 1, 2000 with an additional CDN $150,000 in
exploration expenditures to be incurred by April 1,
2001
Consideration paid to date (CDN $1,500) $1,000
==========
5. EXPLORATION ADVANCE
The Company has advanced $8,299 in connection with an
exploration program which had not commenced at July 31, 1999.
<PAGE>
ADVENTURE MINERALS INC.
(Formerly MAGIC BAG CORPORATION)
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1999
(Unaudited)
(Stated in U.S. Dollars)
6. CONTINGENCIES
a) Mineral Property
The Company's mineral property interest has been acquired
pursuant to an option agreement. In order to retain its
interest the Company must satisfy the terms of the option
agreement described in Note 4.
b) 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. The effects of the
Year 2000 Issue may be experienced before, on, or after
January 1, 2000, and, if not addressed, the impact on
operations and financial reporting may range from minor
errors to significant systems failure which could affect an
entity's ability to conduct normal business operations. It
is not possible to be certain that all aspects of the Year
2000 Issue affecting the entity, including those related to
the efforts of customers, suppliers, or other third parties,
will be fully resolved.
7. COMMITMENT
The company has entered into an agreement with a company
controlled by its president to provide management services for
a one year term at $750 per month expiring March 31, 2000.
8. NAME CHANGE
During the period the company's name was changed from Magic Bag
Corporation to Adventure Minerals Inc.
<PAGE>
PART III
INDEX TO EXHIBITS
Exhibit 1: Articles of Incorporation
Exhibit 2: Certificate of Amendment of the Articles of Incorporation
Exhibit 3: Bylaws of the Company
Exhibit 4: Kukagami Lake Property Option Agreement
Exhibit 5: Management Contract between the Company and WFC
Management Corporation
Exhibit 6: Maps Showing Location and Accessibility of Kukagami Lake
Property
22
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this Form 10-SB registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized.
ADVENTURE MINERALS INC.
Date: November 1, 1999
\s\ Grayson Hand
By: _______________________________
GRAYSON HAND, Director, President
Chief Executive Officer
23
