<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[X] Quarterly Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended July 31, 2000
[ ] Transition Report pursuant to 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period to
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Commission File Number 0-27295
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ADVENTURE MINERALS INC.
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(Exact name of small Business Issuer as specified in its charter)
Nevada 98-0208988
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organisation)
Suite 414, 1859 Spyglass Place
Vancouver, British Columbia, Canada V6Z 4K6
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: 604-872-4107
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None
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(Former name, former address and former fiscal year,
if changed since last report)
State the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
10,165,000 Shares of $.001 par value Class A Common Stock outstanding
as of September 10, 2000.
Transitional Small Business Disclosure Format (check one):
[ ] Yes [X] No
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PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
The accompanying un-audited financial statements have been prepared
in accordance with the instructions to Form 10-QSB and Item 310 (b)
of Regulation S-B, and, therefore, do not include all information and
footnotes necessary for a complete presentation of financial
position, results of operations, cash flows, and stockholders' equity
in conformity with generally accepted accounting principles. In the
opinion of management, all adjustments considered necessary for a
fair presentation of the results of operations and financial position
have been included and all such adjustments are of a normal recurring
nature. Operating results for the three months ended July 31, 2000
are not necessarily indicative of the results that can be expected
for the year ending April 30, 2001.
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ADVENTURE MINERALS INC.
(Formerly Magic Bag Corporation)
(An Exploration Stage Company)
FINANCIAL STATEMENTS
JULY 31, 2000
(Unaudited)
(Stated in U.S. Dollars)
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ADVENTURE MINERALS INC.
(Formerly Magic Bag Corporation)
(An Exploration Stage Company)
BALANCE SHEET
JULY 31, 2000
(Unaudited)
(Stated in U.S. Dollars)
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JULY 31 APRIL 30
2000 2000
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ASSETS
Current
Cash $ 1,817 $ 9,985
Mineral Property (Note 4) 1,681 1,681
Exploration Advance (Note 5) 8,299 8,299
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$ 11,797 $ 19,965
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LIABILITIES
Current
Accounts payable $ 9,187 $ 4,542
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SHAREHOLDERS' EQUITY
Share Capital
Authorized:
25,000,000 Common shares,
par value $0.001 per share
Issued and outstanding:
10,165,000 Common shares 2,033 2,033
Additional paid in capital 52,217 52,217
Deficit Accumulated During The
Exploration Stage (51,640) (38,827)
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2,610 15,423
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$ 11,797 $ 19,965
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Contingencies (Note 6)
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ADVENTURE MINERALS INC.
(Formerly Magic Bag Corporation)
(An Exploration Stage Company)
STATEMENT OF LOSS AND DEFICIT
JULY 31, 2000
(Unaudited)
(Stated in U.S. Dollars)
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For The For The
Three Three Inception
Months Months February 17
Ended Ended 1999
July 31 July 31 To July 31
2000 1999 2000
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Expenses
Office administration
and sundry $ 2,571 $ 2,297 $ 13,333
Mineral property
exploration
expenditures - - 1,495
Professional fees 8,390 2,777 32,976
Stock transfer expenses 1,695 - 2,355
Regulatory 157 - 1,481
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Net Loss For The Period 12,813 5,074 $ 51,460
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Deficit Accumulated During
The Exploration Stage,
Beginning Of Period 38,827 4,078
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Deficit Accumulated
During The Exploration
Stage, End Of Period $ 51,640 $ 9,152
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Net Loss Per Share $ 0.01 $ 0.01
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Weighted Average Number
of Shares Outstanding 10,165,000 10,165,000
=======================================================================
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ADVENTURE MINERALS INC.
(Formerly Magic Bag Corporation)
(An Exploration Stage Company)
STATEMENT OF CASH FLOWS
JULY 31, 2000
(Unaudited)
(Stated in U.S. Dollars)
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For The For The
Three Three Inception
Months Months February 17
Ended Ended 1999
July 31 July 31 To July 31
2000 1999 2000
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Cash Flow From Operating
Activities
Net loss for the period $ (12,813) $ (5,074) $ (51,640)
Adjustments To Reconcile
Net Loss To Net Cash Used
By Operating Activities
Change in accounts
Payable 4,645 1,958 9,187
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(8,168) (3,116) (42,453)
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Cash Flow From Investing
Activities
Mineral property - - (1,681)
Exploration advance - - (8,299)
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- - (9,980)
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Cash Flow From Financing
Activities
Share capital issued - - 54,250
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Increase (Decrease) In Cash (8,168) (3,116) 1,817
Cash, Beginning Of Period 9,985 42,954 -
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Cash, End Of Period $ 1,817 $ 39,838 $ 1,817
=======================================================================
<PAGE>
ADVENTURE MINERALS INC.
(Formerly Magic Bag Corporation)
(An Exploration Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
JULY 31, 2000
(Unaudited)
(Stated in U.S. Dollars)
Common Stock
----------------------------
Additional
Paid-in
Shares Amount Capital Deficit Total
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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 - - - (38,827) (38,827)
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Balance, April 30, 2000 2,033,000 2,033 52,217 (38,827) 15,723
Increase in issued
shares as a result of
a 5 for 1 stock split 8,132,000 - - - -
Net loss for the period - - - (12,813) (12,813)
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Balance July 31, 2000 10,165,000 $ 2,033 $ 52,217 $(51,640) $ 2,610
==================================================
7
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ADVENTURE MINERALS INC.
(Formerly Magic Bag Corporation)
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2000
(Unaudited)
(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.
8
<PAGE>
ADVENTURE MINERALS INC.
(Formerly Magic Bag Corporation)
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2000
(Unaudited)
(Stated in U.S. Dollars)
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
b) Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities, and disclosure of
contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues
and expenses for the reporting period. Actual results could
differ from these estimates.
c) 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.
d) 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.
e) 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.
9
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ADVENTURE MINERALS INC.
(Formerly Magic Bag Corporation)
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2000
(Unaudited)
(Stated in U.S. Dollars)
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
f) 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.
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 payments totalling CDN $2,500 (paid)
Exploration expenditures totalling CDN $150,000 by
April 1, 2001 with an additional CDN $150,000 in
exploration expenditures to be incurred by April 1,
2002
Consideration paid to date (CDN $2,500) $ 1,681
=========
4. EXPLORATION ADVANCE
The Company has advanced $8,299 in connection with an
exploration program which is to commence subsequent to July 31,
2000.
5. SHARE CAPITAL
During the period, the Company increased its issued and
outstanding share capital by way of a five for one split of the
Company's common stock. The stock split was effected by the
completion of a stock dividend to each of the Company's
shareholders of four common shares for every one common share
held.
10
<PAGE>
ADVENTURE MINERALS INC.
(Formerly Magic Bag Corporation)
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2000
(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 3.
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. 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.
11
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of
Operations
Business
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 platinum and 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.
The Company is presently in negotiations for the potential
acquisition of a proprietary technology based business. No
definitive agreement has been signed as of the date hereof and
the Company has not entered into any letter of intent or other
interim agreement. The Company anticipates, however, that if an
agreement is concluded, the Company will acquire the business in
consideration for restricted shares of the Company's common
stock. In addition, the agreement may require the Company to
complete a financing of its equity securities in order to fund
the business acquired. If an agreement is concluded, the Company
will be required to file a Form 8-K with the Securities and
Exchange Commission that will disclose the material terms of the
agreement. There is no assurance that the Company will enter
into any agreement for the acquisition of the technology-based
business. If an agreement is entered into, there is no assurance
that the conditions of the agreement will be satisfied. The
Company is considering the acquisition of a technology based
business in view of the depressed market for mineral resources
and the difficulty perceived by management in financing mineral
exploration companies in the current market.
Kukagami Lake Property Option Agreement
The Company owns 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. The consideration paid by the Company to
Excellerated for the grant of the Option was $1,500 CDN.
The Option is exercisable by the Company incurring the following
minimum cumulative exploration expenditures on the Kukagami Lake
Property:
$13,500 CDN (equal to approximately $9,138 US as at September 11,
2000) of exploration expenditures by July 31, 1999 (which
expenditures have been incurred);
$136,500 CDN (equal to approximately $92,397 US as at September
11, 2000) of exploration expenditures by April 1, 2001; and
$150,000 CDN (equal to approximately $101,535 US as at September
11, 2000) of exploration expenditures by April 1, 2002.
12
<PAGE>
The Company negotiated an amendment to the Option Agreement in
March 2000 that gave the Company a one-year extension on the
dates required to meet the exploration expenditures. The date
for incurring $136,500 CDN of exploration expenditures was
extended from April 1, 2000 to April 1, 2001 and the date for
incurring $150,000 CDN of exploration expenditures was extended
from April 1, 2001 to April 1, 2002.
Employees
The Company currently has no employees, other than its sole
officer, Mr. Grayson Hand, a director and President, Secretary
and Treasurer of the Company, and does not expect to hire any
employees in the foreseeable future. The Company conducts its
business through agreements with consultants and arms-length
third parties.
Company's Plan of Operation
The Company is proceeding with phase one of a recommended work
program on the Kukagami Lake Property. The recommended work
program will be undertaken by Excellerated on the Kukagami Lake
Property and on adjacent properties owned by Excellerated. The
Company will fund its proportionate share of this exploration
program. 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 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 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 is continuing its negotiations for the potential
acquisition of a proprietary technology based business. No
definitive agreement has been signed as of the date hereof and
the Company has not entered into any letter of intent or other
interim agreement. The Company anticipates, however, that if an
agreement is concluded, the Company will acquire the business in
consideration for restricted shares of the Company's common
stock. In addition, the agreement may require the Company to
complete a financing of its equity securities in order to fund
the business acquired. There can be no assurance that the
Company will enter into any agreement for the acquisition of the
technology based business. The Company is considering the
acquisition of a technology based business in view of the
depressed market for mineral resources and the difficulty
perceived by management in financing mineral exploration
companies in the current market.
Results Of Operations
The Company did not earn any revenues during the three months
ended July 31, 2000. The Company does not anticipate earning
revenues until such time as the Company enters into commercial
production of the Company's mineral properties. The Company is
presently in the exploration stage of its development and there
is no assurance that the Company will discover commercially
exploitable levels of mineral resources on its properties, or if
such resources are discovered, that the Company will enter into
commercial production of its mineral properties.
The Company incurred operating expenses in the amount of $12,813
for the three months ended July 31, 2000, compared to operating
expenses in the amount of $5,074 for the three months ended July
31, 1999. These operating expenses included an amount of $2,250
paid pursuant to the Company's management agreement with WFC
Management Corporation, a company controlled by Mr. Grayson Hand,
a director and President of the Company. These operating
expenses also included $8,390 in professional fees that were
primarily attributable the Company's ongoing obligations as a
reporting issuer under the Securities Exchange Act of 1934. The
Company did not incur any mineral property exploration
expenditures during the three months ended July 31, 2000.
13
<PAGE>
The Company incurred a loss of $12,813 for the three months ended
July 31, 2000, compared to a loss of $5,074 for the three months
ended July 31, 1999. The increased loss was primarily
reflective of increased professional fees.
Liquidity And Capital Resources
The Company had cash of $1,817 as of July 31, 2000 and a working
capital deficit of $7,370 as of July 31, 2000.
The Company requires additional funding in order to continue its
business operations and to fund its current working capital
deficit. The Company has borrowed $4,000 from Susan Hand, the
wife of Grayson Hand, the President of the Company. The Company
has also borrowed $6,000 CDN (equal to approximately $4,061 as at
September 11, 2000) from a third party. Each loan is a demand
loan bearing interest at the rate of 10% per annum. There is no
assurance that the Company will be able to obtain additional
loans from these parties in order to continue business
operations.
The Company's current cash reserves are insufficient to enable
the Company to pay for the legal and accounting expense of
complying with the Company's obligations as a reporting issuer
under the Securities Exchange Act of 1934 or to meet its
obligations under the management agreement with WFC Management
Corporation. The Company anticipates that it will require funds
of approximately $25,000 over the next twelve months to fund its
legal and accounting expenses and its obligations to WFC
Management Corporation.
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 or to acquire the proprietary technology
based business. The anticipated cost of the Company's share of
phase two of the exploration program is approximately $10,700 US
that is in excess of the current cash reserves of the Company.
The Company anticipates that any additional funding will be in
the form of equity financing from the sale of the Company's
common stock. The Company does not have any arrangements in
place for future equity financing of the Company and there is no
assurance that the Company will be able to achieve additional
sales of its common stock. The Company believes that debt
financing will not be an alternative for funding its mineral
exploration business.
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 $195,135
US as at June 13, 2000) of exploration expenditures, in
aggregate, on the Kukagami Lake Property by April 1, 2002. 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 $196,453 US as at
June, 2000) of exploration expenditures on the Kukagami Lake
Property by April 1, 2001. The Company will consider bringing
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.
The Company has not purchased or sold any plant or significant
equipment and does not expect to do so in the foreseeable future.
14
<PAGE>
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS
OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
From time to time, the Company will make written and oral
forward-looking statements about matters that involve risk and
uncertainties that could cause actual results to differ
materially from projected results. Important factors that could
cause actual results to differ materially include, among others:
* Fluctuations in the market prices of platinum and paladium
* General domestic and international economic and political
conditions
* Unexpected geological conditions or unfavourable results of
exploration
* Difficulties associated with managing complex operations in
remote areas
* Unanticipated milling and other processing problems
* The speculative nature of mineral exploration
* Environmental risks
* Changes in laws and government regulations, including those
relating to taxes and the environment
* The availability and timing of receipt of necessary
governmental permits and approval relating to operations,
expansion of operations, and financing of operations
* Fluctuations in interest rates and other adverse financial
market conditions
* Other unanticipated difficulties in obtaining necessary
financing
* The failure of equipment or processes to operate in accordance
with specifications or expectations
* Labor relations
* Accidents
* Unusual weather or operating conditions
* Force majeure events
* Other risk factors described from time to time in the
Company's filings with the Securities and Exchange Commission.
Many of these factors are beyond the Company's ability to control
and predict. Investors are cautioned not to place undue reliance
on forward-looking statements. The Company disclaims any intent
or obligation to update its forward-looking statements, whether
as a result of receiving new information, the occurrence of
future events, or otherwise.
15
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K.
(a) None
(b) Reports on Form 8-K--None
16
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities and
Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned,
thereunto duly authorised.
ADVENTURE MINERALS INC.
Date: September 11, 2000
By: /s/ Grayson Hand
----------------
GRAYSON HAND
Director, President & Chief Executive Officer
17
