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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10KSB
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended April 30, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to ____________
Commission File No. 0-27295
ADVENTURE MINERALS INC.
(Exact name of Registrant as specified in its charter)
NEVADA 98-0208988
------------------------------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Suite 414, 1859 Spyglass Place
Vancouver, British Columbia, Canada V6Z 4K6
----------------------------------- -------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 604-872-4107
------------
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12 (g) of the Act:
25,000,000 shares of common stock
Check whether the issuer (l) has filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the
past 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. [X] Yes [ ] No
Check if there is no disclosure of delinquent filers in response
to Item 405 of Regulation S-B is not contained in this form, and
no disclosure will be contained, to the best of registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]
Revenues for year ended April 30, 2000 were $NIL.
The aggregate market value of the voting stock held by non-
affiliates computed by reference to the last reported sale price
of such stock as of June 15, 2000 is $17,701,250.
The number of shares of the issuer's Common Stock outstanding as
of June 13, 2000 is 10,165,000.
Transitional Small Business Disclosure Format (check one): Yes
[ ] No [ X ]
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PART I
This report contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. Actual results could
differ materially from those projected in the forward-looking
statements as a result of the risk-related factors set forth
herein.
ITEM 1. Description of Business
Organization
Adventure Minerals Inc. (the "Company") was organized as a Nevada
corporation on February 16, 1999.
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 which 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.
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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 $9,195 US as at June 13,
2000) of exploration expenditures by April 30, 1999 (which
expenditures have been incurred);
$136,500 CDN (equal to approximately $92,970 US as at June 13,
2000) of exploration expenditures by April 1, 2001; and
$150,000 CDN (equal to approximately $102,165 US as at June 13,
2000) of exploration expenditures by April 1, 2002.
The Company negotiated an amendment to the Option Agreement in
March 2000 which 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.
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 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.
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. The Company has advanced funds to
Excellerated to be utilized as exploration expenditures in the
required amount of $13,500 CDN by April 30, 1999 in order to
maintain the Option. The Company presently has no plans to
conduct its own exploration program on the Kukagami Lake
Property.
The Company has not entered into any agreement with Excellerated
for the joint exploration of the Kukagami Lake Property. In
addition, 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
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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.
Kukagami Lake Property
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 Mineral claim
is un-patented and un-surveyed and consists of 16 units.
Geological Report
The Company has obtained a geological report from Excellerated on
the Excellerated Properties 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 Excellerated Properties, the regional geology of
the Excellerated Properties and provides conclusions and
recommendations for a work program on the Excellerated
Properties. The Geological Report confirms that there are no
known minerals deposits nor occurrences on the Excellerated
Properties, but occurrences of copper-nickel-platinum group
elements do occur in the general area of the Excellerated
Properties.
Recommendations of the Geological Report
The Geological Report concluded that the geological formations
underlying the Excellerated Properties are considered highly
prospective for copper-nickel-platinum group element
mineralization. Accordingly, the Excellerated Properties warrant
a more detailed examination of its mineral potential. The
Geological Report identified the exploration objective for the
Excellerated Properties as being copper-nickel-platinum group
element deposits hosted by geological formations located on the
Excellerated Programs.
The Geological Report recommended a two phase exploration program
to identify the potential presence of mineralization on the
property. Phase one would consist of line cutting, geological
mapping, whole rock analysis, petrographic studies, prospecting
and geophysical and geo-chemical surveys. Phase two would
include target definition, fill-in, geo-chemical and geophysical
surveys, plus approximately 2,000 meters of diamond drilling to
test anomalies identified. The budget for phase one of the
exploration program is $150,000 CDN (equal to approximately
$102,165 US as at June 13, 2000). The budget for phase two of
the exploration program is $160,000 CDN (equal to approximately
$108,796 US as at June 13, 2000). As a result of the Company's
arrangement with Excellerated, the Company would be responsible
for 10% of these exploration costs on account of the Kukagami
Lake Property if the exploration programs are proceeded with.
Employees
As of June 13, 2000, the Company had no employees, other than its
sole officer, 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
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presently pays to WFC Management Corporation, a company controlled
by Mr. Hand, a management fee of $750 per month pursuant to the
Management Agreement.
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.
Marketability of Discovered Minerals
Even if commercial quantities of ore are discovered, there can be
no assurance that 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
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.
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 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;
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* 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;
* 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
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 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
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. 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
During the past two fiscal years, the Company has not completed
any research or development expenditures.
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Subsidiaries
The Company has no subsidiaries.
Patents and Trademarks
The Company does not own, either legally or beneficially, any
patent or trademark.
ITEM 2. Description of Property
The Company has an option to acquire a 70% interest in the
Mineral Claim, as described in detail in Item 1 of this Form 10-
KSB Annual Report. The Company does not own or lease any
property other than its option to acquire an interest in the
Kukagami Lake Property.
ITEM 3. Legal Proceedings
The Company is not a party to any material legal proceedings and
to the knowledge of the Company, no such proceedings are
threatened or contemplated.
ITEM 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to our security holders for a vote
during the fiscal year ending April 30, 2000.
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PART II
ITEM 5. Market for Registrant's Common Equity and Related
Stockholders Matters
Market Information
The Company's common stock trades on the OTC BB under the symbol
"AVML". The Company was first traded on the Bulletin Board on
June 2, 2000. The high and low bid price for the Company's common
stock as quoted on the OTC BB is as follows:
Month: High Low Close
---------- ----- ----- -----
June, 2000 $4.25 $1.20 $4.25
The quotations reflect inter-dealer prices, without retail mark-
up, mark-down or commission and may not represent accrual
transactions.
As at June 13, 2000 there were forty-seven (47) registered
shareholders of the Company's common stock.
Dividends
The Company issued a stock dividend to the Company's shareholders
of record on May 22, 2000. Each shareholder of record was issued
an additional four shares of the Company's common stock for each
share held prior to the record date. The Company's common stock
commenced trading on a post-split basis on May 23, 2000. As a
result of this stock dividend, the issued and outstanding shares
of the Company's common stock increased from 2,033,000 shares to
10,165,000 shares.
The issuance of dividends to shareholders is at the discretion of
the board of directors of the Company. The Company has not
issued any cash dividends since its inception and does not have
plans to do so in the foreseeable future.
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. The Company received total
proceeds of $6,000 from this offering. No commissions or fees
were paid in connection with the offering. All of these shares
were sold to Grayson Hand, the President, Secretary, Treasurer
and Director of the Company, and were issued as "restricted
shares" within the meaning of the Securities Act of 1933.
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 of which investors was known to an officer
and director of the Company. The Company received total proceeds
of $40,000 from this offering. No commissions or fees were paid
in connection with the offering. The offering was completed
pursuant to Rule 504 of Regulation D of the Act which provides an
exemption for issues of stock up to $1,000,000, in the aggregate,
by companies with a specific business plan and that are not
subject to the reporting requirements of the Securities and
Exchange Act of 1934.
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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 of which investors was known to an
officer and director of the Company. The Company received total
proceeds of $8,250 from this offering. No commissions or fees
were paid in connection with the offering. The offering was
completed pursuant to Rule 504 of Regulation D of the Act which
provides an exemption for issues of stock up to $1,000,000, in
the aggregate, by companies with a specific business plan and
that are not subject to the reporting requirements of the
Securities and Exchange Act of 1934.
ITEM 6. Management's Discussion and Analysis or Plan of
Operation
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 has raised sufficient funds from prior offerings of
its securities, as set forth in Item 4 of Part II of the
Company's Form 10-SB 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 $9,985 US as of
April 30, 2000. 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
six month period to W.F.C. Management Corporation under the
Company's management agreement with W.F.C. Management Corporation
and to pay for 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 also plans to continue 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.
The Company incurred operating expenses in the amount of $34,749
for the year ending April 30, 2000. These operating expenses
included an amount of $9,000 paid to W.F.C. Management
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Corporation, a company controlled by Mr. Grayson Hand, a director
and President of the Company. These operating expenses also
included $22,255 in professional fees which were primarily
attributable the preparation and filing of the Company's Form 10-
SB registration statement with the Securities and Exchange
Commission.
The Company currently has no employees, other than its sole
officer, Mr. Grayson Hand, President, Secretary and Treasurer of
the Company. The Company 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.
Results Of Operations
The Company incurred a loss of $34,749 for the year ending April
30, 2000, compared to a loss of $4,078 for the period from
incorporation to April 30, 2000. The increased loss was
reflective of the increased operating expenses incurred by the
Company during the year. Operating expenses during the year
consisted primary fees payable to W.F.C. Management and
professional fees, including professional fees incurred with the
filing of the Company's Form 10-SB registration statement.
The Company did not earn any revenues during 1999. 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.
Liquidity And Capital Resources
The Company had cash of $9,985 as of April 30, 2000 and working
capital of $5,443 as of April 30, 2000.
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
which is in excess of the current cash reserves of the Company.
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 $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
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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.
Forward-Looking Statements
Many statements made in this report are forward-looking
statements that are not based on historical facts. Because these
forward-looking statements involve risks and uncertainties, there
are important factors that could cause actual results to differ
materially from those expressed or implied by these forward-
looking statements. The forward-looking statements made in this
report relate only to events as of the date on which the
statements are made.
Impact of the Year 2000 Issue
The "Year 2000 problem" arose because many existing computer
programs use only the last two digits to refer to a year.
Therefore, these computer programs were not expected to properly
recognize a year that begins with "20" instead of the familiar
"19". Many experts believed that if not corrected this problem
would lead to widespread computer failures. Since the turn of
the century, however, the Company has not experienced any adverse
effects of this Year 2000 problem.
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ITEM 7. Financial Statements
The Company's audited financial statements for the period ending
April 30, 1999 and 2000, including the following, are attached
hereto.
(a) Balance Sheets;
(b) Statements of Loss and Deficit;
(c) Statements of Cash Flows;
(d) Statement of Stockholders' Equity;
(e) Notes to Financial Statements.
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ADVENTURE MINERALS INC.
(Formerly Magic Bag Corporation)
(An Exploration Stage Company)
FINANCIAL STATEMENTS
APRIL 30, 2000 AND 1999
(Stated in U.S. Dollars)
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AUDITORS' REPORT
To the Shareholders
Adventure Minerals Inc.
(Formerly Magic Bag Corporation)
We have audited the balance sheets of Adventure Minerals Inc.
(formerly Magic Bag Corporation), (an exploration stage company)
as at April 30, 2000 and 1999 and the statements of loss and
deficit accumulated during the exploration stage, cash flows, and
stockholders' equity for the year ended April 30, 2000, and for
the period ended April 30, 1999. These financial statements are
the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits 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, 2000 and 1999, and the results of its operations and
cash flows for the year ended April 30, 2000, and for the period
ended April 30, 1999 in accordance with United States generally
accepted accounting principles.
Vancouver, B.C. /s/ Morgan & Company
June 5, 2000 Chartered Accountants
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ADVENTURE MINERALS INC.
(Formerly Magic Bag Corporation)
(An Exploration Stage Company)
BALANCE SHEETS
(Stated in U.S. Dollars)
--------------------------------------------------------------------------
APRIL 30
2000 1999
--------------------------------------------------------------------------
ASSETS
Current
Cash $ 9,985 $ 42,954
Mineral Property (Note 3) 1,681 1,000
Exploration Advance (Note 4) 8,299 8,299
------------------------
$ 19,965 $ 52,253
=========================================================================
LIABILITIES
Current
Accounts payable $ 4,542 $ 2,081
-----------------------
SHAREHOLDERS' EQUITY
Share Capital
Authorized:
100,000,000 Common shares, par value
$0.001 per share
Issued:
2,033,000 Common shares 2,033 2,033
Additional paid in capital 52,217 52,217
Deficit Accumulated During The Exploration Stage (38,827) (4,078)
-----------------------
15,423 50,172
-----------------------
$ 19,965 $ 52,253
=========================================================================
Contingencies (Note 5)
Approved by the Directors:
---------------------------- ----------------------------
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ADVENTURE MINERALS INC.
(Formerly Magic Bag Corporation)
(An Exploration Company)
STATEMENTS OF LOSS AND DEFICIT
(Stated in U.S. Dollars)
------------------------------------------------------------------------
PERIOD FROM
DATE OF
ORGANIZATION INCEPTION
YEAR FEBRUARY 17 FEBRUARY 17
ENDED 1999 TO 1999 TO
APRIL 30 APRIL 30 APRIL 30
2000 1999 2000
-------------------------------------------------------------------------
Expenses
Office administration and
Sundry $ 9,978 $ 784 $ 10,762
Mineral property exploration
Expenditures 532 963 1,495
Professional fees 22,255 2,331 24,586
Stock transfer fees 660 - 660
Travel 1,324 - 1,324
-----------------------------------
Net Loss For The Period 34,749 4,078 $ 38,827
=========
Deficit Accumulated During The
Exploration Stage, Beginning
Of Period 4,078 -
-------------------
Deficit Accumulated During The
Exploration Stage, End Of
Period $ 38,827 $ 4,078
=====================================================
Net Loss Per Share $ 0.02 $ 0.01
=====================================================
Weighted Average Number Of
Shares Outstanding 2,033,000 805,905
=====================================================
16
<PAGE>
ADVENTURE MINERALS INC.
(Formerly Magic Bag Corporation)
(An Exploration Stage Company)
STATEMENTS OF CASH FLOWS
(Stated in U.S. Dollars)
-------------------------------------------------------------------------
PERIOD FROM
DATE OF
ORGANIZATION INCEPTION
YEAR FEBRUARY 17 FEBRUARY 17
ENDED 1999 TO 1999 TO
APRIL 30 APRIL 30 APRIL 30
2000 1999 2000
-------------------------------------------------------------------------
Cash Flows From Operating
Activity
Net loss for the period $ (34,749) $ (4,078) $ (38,827)
Adjustments To Reconcile Net
Loss To Net Cash Used By
Operating Activity
Change in accounts payable 2,461 2,081 4,542
---------------------------------------
(32,288) (1,997) (34,285)
---------------------------------------
Cash Flows From Investing
Activities
Mineral property (681) (1,000) (1,681)
Exploration advance - (8,299) (8,299)
---------------------------------------
(681) (9,299) (9,980)
---------------------------------------
Cash Flows From Financing
Activity
Share capital issued - 54,250 54,250
---------------------------------------
Increase (Decrease) In Cash (32,969) 42,954 9,985
Cash, Beginning Of Period 42,954 - -
---------------------------------------
Cash, End Of Period $ 9,985 $ 42,954 $ 9,985
======================================================================
17
<PAGE>
ADVENTURE MINERALS INC.
(Formerly Magic Bag Corporation)
(An Exploration Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
APRIL 30, 2000
(Stated in U.S. Dollars)
Common Stock
----------------------------
Additional
Paid-In
Shares Amount Capital Deficit Total
--------------------------------------------------
Shares issued for cash
at $0.005 1,200,000 $ 1,200 $ 4,800 $ - $ 6,000
Shares issued for cash
at $0.05 800,000 800 39,200 - 40,000
Shares issued for cash
at $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 year - - - (34,749) (34,749)
--------------------------------------------------
Balance, April 30, 2000 2,033,000 $ 2,033 $ 52,217 $(38,827) $ 15,423
==================================================
18
<PAGE>
ADVENTURE MINERALS INC.
(Formerly Magic Bag Corporation)
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2000 AND 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.
19
<PAGE>
ADVENTURE MINERALS INC.
(Formerly Magic Bag Corporation)
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2000 AND 1999
(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.
20
<PAGE>
ADVENTURE MINERALS INC.
(Formerly Magic Bag Corporation)
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2000 AND 1999
(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 April
30, 2000.
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.
21
<PAGE>
ADVENTURE MINERALS INC.
(Formerly Magic Bag Corporation)
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 2000 AND 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. 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.
6. SUBSEQUENT EVENT
Subsequent to April 30, 2000, 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.
22
<PAGE>
ITEM 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
We have had no changes in or disagreements with our accountants
on accounting or financial disclosures.
23
<PAGE>
PART III
ITEM 9. Directors, Executive Officers, Promoters and Control
Persons; Compliance with Section 16(a) of the Exchange
Act.
Directors and Officers
The following information sets forth the names of the officers
and directors of the Company, their present positions with the
Company, and their biographical information.
Name Age Office(s) Held
--------------------- --- -------------------
Grayson W. Hand 63 Director and President,
Secretary and Treasurer
Gordon A. Keevil 47 Director
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. Mr. Hand's business experience 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
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. From 1995 to 1996, he
was a consultant to Spokane Resources Ltd. and Ivory Oils and
Minerals Inc. of Vancouver. 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. Mr. Keevil also serves as a
consultant to exploration companies active in the mineral
resource industry.
Terms of Office
Directors of the Company are appointed for a one year term to
hold office until the next annual general meeting of the holders
of the Company's Common Stock or until removed from office in
accordance with the Company's by-laws. Officers of the Company
are appointed by the Company's board of directors and hold office
until removed by the Company's board of directors.
24
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
The following persons have failed to file, on a timely basis, the
identified reports required by section 16(a) of the Exchange Act
during the most recent fiscal year.
--------------------------------------------------------------------------
Number Transactions Known Failures
of Late Not Timely To File a Required
Name and Principal Position Reports Reported Form
--------------------------------------------------------------------------
Grayson Hand, President. 1 0 None
Secretary and Treasurer
Gordon Keevil, Director 1 0 None
--------------------------------------------------------------------------
ITEM 10. Executive Compensation
Executive Compensation
The following table sets forth certain information as to the
Company's highest paid officers and directors for its fiscal year
ended April 30, 2000. No other compensation was paid to any
such officer or directors other than the cash compensation set
forth below. Compensation attributed to Grayson Hand was paid to
WFC Management Corporation. See Item 1 of this Annual Report
entitled "Description of Business - Employees".
Summary Compensation Table
Annual Compensation Long Term Compensation
------------------- ----------------------
Awards Payouts
------ -------
Other All
Annual Other
Com- Com-
pen- Restricted pen-
sa- Stock Options/* LTIP sa-
Name Title Year Salary Bonus tion Awarded SARs (#)payouts($)tion
---- ----- ---- -------- ----- ------ ------- ------- --------- ----
Grayson President 1999 $ 9,000 $ 0 $ 0 0 0 0 0
Hand Director
Gordon Director 1999 $ 0 $ 0 $ 0 0 0 0 0
Keevil
25
<PAGE>
ITEM 11. Security Ownership of Certain Beneficial Owners
and Management
The following table sets forth information as of June 13, 2000,
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 6,000,000 59.0%
Suite 414
1859 Spyglass Place
Vancouver, BC
Canada V5Z 4K6
Common Stock Gordon A. Keevil NIL NIL%
3790 Southridge Avenue
West Vancouver, BC
Canada V7V 3J1
Common Stock Directors and Officers 6,000,000 59.0%
As a Group
The percentage of shares owned by each of the above persons is
based on a total of 10,165,000 shares of the Company's common
stock issued and outstanding as of June 13, 2000.
ITEM 12. Certain Relationships and Related Transactions.
Except as set forth below, none 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.
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.
26
<PAGE>
ITEM 13. Exhibits, Financial Statement Schedules and Reports on
Form 8-K
Exhibits
Exhibit 3.1: Articles of Incorporation *
Exhibit 3.2: Certificate of Amendment of the Articles of Incorporation*
Exhibit 3.2: By-laws*
Exhibit 10.1: Kukagami Lake Property Option Agreement *
Exhibit 10.2: Management Contract between the Company and WFC
Management Corporation*
Exhibit 10.3: Management Contract between the Company and WFC
Management Corporation*
Exhibit 10.5: Amendment to Option Agreement
Exhibit 27.1: Financial Data Schedule
Exhibit 99.1: Maps Showing Location and Accessibility of Kukagami
Lake Property*
----------------
* Incorporated by reference from our registration statement on
Form 10-SB12G/A filed with the commission on November 9, 1999
(File No. 0-27295)
Financial Statements
See Part II, Item 7.
Reports on Form 8-K
None.
27
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ADVENTURE MINERALS INC.
/s/ Grayson Hand
By: ___________________________________
Grayson Hand, Director, President and
Chief Executive Officer
Date: June 15, 2000
In accordance with the Securities Exchange Act, this report has
been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
/s/ Grayson Hand
By: ___________________________________
Grayson Hand, Director, President and
Chief Executive Officer
Date: June 15, 2000
/s/ Gordon Keevil
By: ___________________________________
Gordon Keevil, Director
Date: June 15, 2000
28
