SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Fiscal Year Ended September 30, 2000
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 Commission File No. 0-28163
Capital One Ventures Corp.
---------------------------
(Name of Small Business Issuer in its charter)
Delaware 98-0212763
------------------------ -------------------
(State of incorporation) (IRS Employer
Identification No.)
200 Burrard Street, Suite 1650
Vancouver, British Columbia V6C 3L6
-------------------------------------- -------------------
(Address of Principal Executive Office) Zip Code
Registrant's telephone number, including Area Code: (604)-689-3355
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $0.0001
-------------------------------
(Title of Class)
Check whether the Registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 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 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 the 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. [X]
The Company had no revenues during the year ended September 30, 2000.
The aggregate market value of the voting stock held by non-affiliates of the
Company, (4,170,456 shares) based upon the average bid and asked prices of the
Company's common stock on November 30, 2000 was approximately $6,005,457.
Documents incorporated by reference: Certain exhibits required by Item 13 have
been incorporated by reference from the Company's Form 10-SB filed on November
17, 1999.
As of November 30, 2000 the Company had 5,175,456 issued and outstanding shares
of common stock.
Transitional Small Business Disclosure Format: YES X NO
---- ----
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
--------------------------------
Business Development
We were incorporated in the State of Delaware on August 15, 1997, under the name
Sierra Madre Gold Corporation. On October 4, 1999, we changed our name to
Capital One Ventures Corp.
On September 16, 1997, we entered into an agreement and plan of merger with
SEIG, Inc. ("SEIG") for the purpose of changing the corporate domicile of SEIG
from the State of Colorado to the State of Delaware. SEIG was incorporated on
August 19, 1997 in the State of Colorado. SEIG was merged into us, and we were
the surviving company (the "Plan of Merger"). All outstanding shares of SEIG
were canceled pursuant to the Plan of Merger. We issued one share of our common
stock to each shareholder of SEIG's common stock providing for a total issuance
of 5,175,456 shares of our common stock to SEIG's former shareholders.
SEIG had no business prior to their merger with us. SEIG's initial plan of
business was to acquire Sierra Madre Gold de Mexico S.A. de C.V., a Mexican
corporation ("Sierra Mexico") which owned several mineral properties located in
the State of Chihuahua, Mexico. We entered into an agreement to acquire Sierra
Mexico in October 1997 in exchange for 500,000 shares of our common stock. This
transaction did not close and in January 1998, by mutual agreement, the
agreement was cancelled. We never issued any of our shares in connection with
this transaction and we never acquired title to Sierra Mexico. The reason that
the acquisition was cancelled was that our board of directors was unable to
secure financing for an exploration program on the mineral properties owned by
Sierra Mexico.
During the period from incorporation to January 31, 1998 we advanced a total of
$73,000 to Sierra Mexico by way of non-secured demand loans without interest or
specific terms of repayment. In addition, we incurred approximately $16,000 in
expenses directly related to the proposed acquisition, approximately $5,025 of
which were travel expenses and approximately $3,000 of which were legal
expenses. During this period our operations were funded by non-secured
shareholder advances without interest or specific terms of repayment. In
conjunction with the cancellation of our proposed acquisition of Sierra Mexico,
we agreed to assign to the owner of Sierra Mexico the debt of $73,000 owed to us
by Sierra Mexico in full and final settlement of $60,000 which had been advanced
to us by way of non-secured loan. This transaction resulted in a loss on
settlement of debt of $13,000. In addition, our former president advanced to us
by way of non-secured loan $16,048 during the year ended September 30, 1999.
This former officer forgave this loan effective September 30, 1999, resulting in
a gain in forgiveness of debt of $16,048.
We have not been involved in any bankruptcy, receivership or similar proceeding.
We have not been involved in any material reclassification, merger
consolidation, or purchase or sale of a significant amount of assets not in the
ordinary course of business.
Business of Issuer
Other than the attempt to acquire Sierra Mexico we have not commenced any
operational activities other than initial corporate formation and
capitalization.
We can be defined as a "shell" company whose sole purpose at this time is to
locate and consummate a merger or acquisition with an unidentified private
entity (hereinafter referred to as the "business opportunity").
2
<PAGE>
Competition
We will be at a competitive disadvantage in identifying possible business
opportunities and successfully completing a business opportunity. A large number
of established and well-financed entities, including venture capital firms, are
active in mergers and acquisitions of companies which may be desirable target
candidates for us. These entities have significantly greater experience and
financial resources, technical expertise and managerial capabilities.
Intellectual Property
We have no patents, trademarks, licenses, franchises, concessions, royalty
agreements or labor contracts.
Government Regulation
The proposed business activities described herein classify us as a "blank check"
company. Many states have enacted statutes, rules and regulations limiting the
sale of securities of "blank check" companies in their states. We do not intend
to undertake any offering of our securities, either debt or equity, until such
time as we have successfully implemented our business plan described herein.
Transferability of the shares of our common stock is very limited because a
significant number of states have enacted regulations or "blue sky" laws
restricting or, in many instances, prohibiting, the initial sale and subsequent
resale of securities of "blank check" companies, such as ours, within that
state. In addition, many states, while not specifically prohibiting or
restricting securities of "blank check" companies, would not register our
securities for sale or resale in their states. Because of these regulations, we
currently have no plan to register any of our securities in any state. To ensure
that state laws are not violated through the resale of our securities, we will
refuse to register the transfer of any of our securities to residents of any
state which prohibits such resale if no exemption is available for such resale.
We do not anticipate that a secondary trading market for our securities will
develop in any state until subsequent to consummation of a business opportunity,
if at all.
Although we will be subject to regulation under the Exchange Act, we believe
that we will not be subject to regulation under the Investment Company Act of
1940, as we will not be engaged in the business of investing or trading in
securities.
Federal and state tax consequences will likely be major considerations in any
business opportunity that we may undertake. Currently, such transactions may be
structured so as to result in tax-free treatment to both parties to the
transaction, pursuant to various federal and state tax provisions. We intend to
structure any business opportunity so as to minimize the federal and state tax
consequences to both ourselves and the target entity; however, there can be no
assurance that a business opportunity will meet the statutory requirements of a
tax-free reorganization or that the parties will obtain the intended tax-free
treatment upon a transfer of stock or assets. A non- qualifying reorganization
could result in the imposition of both federal and state taxes, which may have
an adverse effect on both parties to the transaction.
Sections 13 and 15(d) of the Exchange Act require companies subject thereto to
provide certain information about significant acquisitions, including certified
financial statements for the company acquired, covering one, two or three years,
depending on the relative size of the acquisition. The time and additional costs
that may be incurred by some target entities to prepare such statements may
preclude our consummation of a business opportunity. Acquisition prospects that
do not have or are unable to obtain the required audited financial statements
may not be available for a business opportunity as long as the reporting
requirements of the Exchange Act are applicable.
3
<PAGE>
Market Research
We have not conducted, nor have others made available to us, results of market
research indicating that market demand exists for the transactions contemplated
by us. Moreover, we do not have, and do not plan to have, and do not plan to
establish, a marketing organization. Even in the event demand is identified for
a business opportunity contemplated by us, there is no assurance that we will be
successful in completing any such business opportunity.
Offices and Employees
We currently have no full-time employees. We have no collective bargaining
agreements or employment agreements in existence. Andrew Hromyk is our sole
officer and director. Mr. Hromyk is involved in other full-time business
activities. Mr. Hromyk participates in the running of the Company on a part-time
basis as needed without compensation. We do not plan to make any change in the
number of our employees in order to evaluate business opportunities. The need
for employees and their availability will be addressed in connection with the
decision whether or not to pursue a business opportunity.
ITEM 2. DESCRIPTION OF PROPERTY
-------------------------------
We have no material assets and, as such, we neither own nor lease any real or
personal property. We currently operate out of space without charge located at
Suite 1650, Waterfront Centre, 200 Burrard Street, Vancouver, British Columbia,
Canada which is leased by a company controlled by our management. The leased
space is a total of 2900 square feet of space, of which a small portion is used
by us when needed. We believe that this space is sufficient at this time.
We have no preliminary agreements or understandings with respect to the office
facility subsequent to the completion of a business opportunity. Upon closure of
a business opportunity, we plan to relocate our office to that of the business
opportunity candidate.
We have no policy with respect to investments in real estate or interests in
real estate and no policy with respect to investments in real estate mortgages.
Further, we have no policy with respect to investments in securities of or
interests in persons primarily engaged in real estate activities.
We do not intend to have any materially important properties. We are not subject
to any competitive conditions for property and currently have no property to
insure.
ITEM 3. LEGAL PROCEEDINGS
--------------------------
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
------------------------------------------------------------
Not Applicable.
4
<PAGE>
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
-------------------------------------------------------------------------------
Market Information
Since June 2000 the Company's common stock has been quoted on the National
Association of Securities Dealers' OTC Bulletin Board under the symbol "CVCX". A
trading market did not develop until October 2000. Prior to that date there was
no public market for the Company's common stock. Set forth below are the range
of high and low bid quotations for the periods indicated as reported by the
NASD. The market quotations reflect interdealer prices, without retail mark-up,
mark-down or commissions and may not represent actual transactions.
Common Stock
Month Ended High Low
----------- ---- ---
October 31, 2000 1.125 1.125
November 30, 2000 1.125 1.125
Holders
As of November 30, 2000 there were approximately 300 stockholders of record.
This number does not include stockholders who hold the Company's stock in street
name.
Dividends
Holders of the Company's common stock are entitled to receive such dividends as
may be declared by the Board of Directors. The Board of Directors is not
obligated to declare a dividend. The Company has not paid any dividends on its
common stock and it does not have any current plans to pay any dividends in the
foreseeable future.
Capital Stock
During the Company's last fiscal year ended September 30, 2000, the Company did
not issue any securities pursuant to exemptions from registration under the
Securities Act of 1933.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
-------------------------------------------------------------------
Plan of Operation
Other than the attempt to acquire Sierra Madre Gold de Mexico S.A. de C.V., a
Mexican corporation, we have not commenced any operational activities.
Our plan of business is to seek out business opportunity candidates with the
intent to acquire or merge with one or more business ventures. The investigation
of specific business opportunities and the negotiation, drafting and execution
of relevant agreements, disclosure documents and other instruments will be done
by our management or under their direction. Management will investigate, to the
extent they believe reasonable, such potential business opportunities. Prior to
making a decision regarding a particular business opportunity, we plan to
request that we be provided with written materials regarding the business
opportunity containing such items as a description of products, services and
company history; management resumes; financial information; available
projections with related assumptions upon which they are based; evidence of
existing patents, trademarks or services marks or rights thereto; present and
proposed forms of compensation to management; a description of transactions
between the prospective entity and its affiliates during relevant periods; a
description of present and required facilities; an analysis of risk and
competitive conditions; and, other information deemed relevant.
5
<PAGE>
Upon the consummation of a transaction, we anticipate that our present
management and shareholders will no longer be in control of the Company. In
addition, our director may, as part of the terms of the business opportunity,
resign and be replaced by new directors without a vote of our shareholders.
Since we will have no funds available to us in our search for business
opportunities, we will not be able to expend significant funds on a complete
investigation of a business opportunity. We anticipate that we will incur
nominal expenses in the implementation of our business plan described herein.
Because we have no capital with which to pay these expenses, our present
management will pay any charges with their personal funds, as interest free
demand loans without specific repayment terms to the Company. The only
opportunity that we will have to repay these loans is from a prospective
business opportunity. Our management has agreed that the repayment of any loans
made on our behalf will not impede or be made conditional in any manner, to
consummation of a proposed transaction.
Management, however, has no commitment to loan funds to the Company. Such loans
will be made at the sole discretion of management. In the event management
ceases to provide loans to the Company, we will be unable to continue our search
for business opportunity candidates. The Company has not and does not plan to
consider alternate sources of funding.
We do not plan to raise any capital at the present time, by private placement,
public offerings, pursuant to Regulation S promulgated under the Act, as
amended, or by any means whatsoever. Further, we have no plans, proposals,
arrangements or understandings with respect to the sale or issuance of
additional securities prior to the location of a business opportunity.
As of September 30, 2000 we had working capital of approximately $1,672 which
was advanced from a company controlled by a director of the Company. During the
next twelve months we anticipate obtaining the additional capital which we will
require through either debt or equity financing, or a combination thereof. There
is no assurance that we will be able to obtain capital we will need or that our
estimates of our capital requirements will prove to be accurate. As of the date
of this filing we did not have any commitments from any source to provide
additional capital.
During the year ended September 30, 2000 the Company incurred general and
administrative expenses of $22,747, all of which were related to maintaining the
Company in good standing or the payment of expenses associated with reviewing or
investigating any potential business venture.
We do not plan to make any changes in the number of our employees.
Forward Looking Statements
This report contains certain forward-looking statements. The Company wishes to
advise readers that actual results may differ substantially from such
forward-looking statements. Forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially from those
expressed in or implied by the statements, including, but not limited to, the
following: the ability of the Company to search for appropriate business
opportunities and subsequently acquire or merge with such entity, to meet its
cash and working capital needs, the ability of the Company to maintain its
existence as a viable entity, and other risks detailed in the Company's periodic
report filings with the Securities and Exchange Commission.
6
<PAGE>
ITEM 7. FINANCIAL STATEMENTS
-----------------------------
The financial statements of the Company, including notes thereto, together with
the report of independent auditor thereon, are presented as an exhibit under
Item 13 beginning on page F-1.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
-------------------------------------------------------------------
AND FINANCIAL DISCLOSURE
------------------------
During the two most recent fiscal years, we have had no disagreement,
resignation or dismissal of the principal independent accountant for the
Company. N.I. Cameron, Inc., Chartered Accountants, has audited our financial
statements for the periods ending September 30, 1999 and 2000. The principal
independent accountant's report on the financial statements for either of the
past two years did not contain an adverse opinion or disclaimer of opinion, or
was modified as to uncertainty, audit scope, or accounting principles.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
----------------------------------------------------------------------
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
-------------------------------------------------
Andrew Hromyk, 34 years of age, is our only director. Mr. Hromyk has served in
this capacity with the Company during the period August 26, 1997 through
September 30, 1997 and since October 7, 1999 and his term expires at the next
annual meeting declared by our Board of Directors when successors are elected
and qualified. Mr. Hromyk is also our sole officer, holding the positions of
President, Secretary and Treasurer since October 7,1999, and his terms expire
when successors are elected and qualified.
Since November 1993, Mr. Hromyk has been the President of Century Capital
Management Ltd., a financial and business consulting firm located in Vancouver,
British Columbia. From 1984 through 1989, Mr. Hromyk studied Economics at the
University of Hawaii and the University of British Columbia.
During the past five years, Mr. Hromyk has held positions from time to time in
various other public and private companies. These companies have been engaged in
a variety of industries including, telecommunications, software development,
environmental remediation, natural resource exploration, cleaning supplies
distribution and entertainment. Some of Mr. Hromyk's positions were also in
holding companies. In each of these companies, Mr. Hromyk has served as director
and provided financial direction and strategic guidance.
We currently have no significant employees and none are anticipated. There are
no family relationships among our directors, executive officers, or nominees for
such positions. Our director and executive officer, promoters or control persons
have not been involved in any legal proceedings material to the evaluation of
the ability or integrity of any of the aforementioned persons.
Each director holds office until his successor is duly elected by the
stockholders. Executive officers serve at the pleasure of the board of
directors.
Compliance with Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the
Company's executive officers and directors, and persons who own more than 10% of
the Company's common stock, to file reports of ownership on Form 3 and changes
7
<PAGE>
in ownership on Form 4 or 5 with the Securities and Exchange Commission (the
"SEC"). Such executive officers, directors and 10% stockholders are also
required by SEC rules to furnish the Company with copies of all Section 16(a)
forms they file. Based solely upon its review of copies of such forms received
by it, or on written representations from certain reporting persons that other
filings were required for such persons, the Company believes that, during the
year ended September 30, 2000, its executive officers, directors and 10%
stockholders complied with all applicable Section 16(a) filing requirements.
ITEM 10. EXECUTIVE COMPENSATION
--------------------------------
General
There was no compensation awarded to, earned by, or paid to the executive
officers named herein or to any directors, under any plan or non-plan.
Summary Compensation Table
The following table sets forth in summary form the compensation received by our
Chief Executive Officer for the last three completed fiscal years.
<TABLE>
<CAPTION>
Name and Fiscal Other Annual Stock L/TIP All
Principal Position Year Salary Bonus Compensation Options Payouts Other
----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Andrew Hromyk,
President 2000 0 0 0 0 0 0
Pedro Villagran 2000 0 0 0 0 0 0
Garcia, President 1999 0 0 0 0 0 0
1998 0 0 0 0 0 0
</TABLE>
On October 7, 1999 Andrew Hromyk replaced Pedro Villagran Garcia as President of
the Company and on November 9, 1999 Pedro Villagran Garcia resigned as Director
of the Company.
Compensation of Directors
There are no standard arrangements pursuant to which the Company's directors are
compensated for any services provided as director. No additional amounts are
payable to the Company's directors for committee participation or special
assignments.
Employment Contracts and Termination of Employment and Change in Control
Arrangements There are no employment contracts, compensatory plans or
arrangements, including payments to be received from the Company, with respect
to any executive officer of the Company which would in any way result in
payments to any such person because of his or her resignation, retirement or
other termination of employment with the Company or any subsidiary, any change
in control of the Company, or a change in the person's responsibilities
following a change in control of the Company.
8
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
------------------------------------------------------------------------
The following table sets forth, as of November 30, 2000, information with
respect to the only persons owning beneficially 5% or more of our outstanding
common stock and the number and percentage of outstanding shares owned by each
of our directors and officers and by our officers and directors as a group.
Unless otherwise indicated, each owner has sole voting and investment powers
over his shares of common stock.
Name and Address Shares of Percent
of Beneficial Owner Common Stock of Class
------------------- ------------ --------
Andrew Hromyk 1,005,000 19%
200 Burrard Street, Suite 1650
Vancouver, B.C. V6C 3L6
Canada
There are currently no arrangements which may result in a change in control of
the Company.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
--------------------------------------------------------
A company controlled by a director of the Company has provided administrative
services and facilities to the Company for nil consideration and has paid
expenses on behalf of the Company. The amount due to this company ($55,066 at
September 30, 2000) is without interest or stated terms of repayment.
9
<PAGE>
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
------------------------------------------
The following documents are being filed as part of this report.
Financial Statements
Report of Independent Auditor F - 1
Balance Sheet F - 2
Statements of Operations F - 3
Statements of Stockholders' Deficit F - 4
Statements of Cash Flows F - 5
Notes to Financial Statements F - 6-8
Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description Location
----------- ----------- --------
<S> <C> <C>
3.1 Articles of Incorporation By-laws (as amended) Incorporated by reference to Exhibits 3(i)
and (ii) in the Company's Form 10-SB filed
on November 17, 1999.
3.2 Certificate of Amendment of Certificate of
Incorporation
----------------------------
27. Financial Data Schedule
----------------------------
</TABLE>
Reports on 8K
None
10
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized on the 11th day of December, 2000.
CAPITAL ONE VENTURES CORP.
By /s/ Andrew Hromyk
------------------------------------
Andrew Hromyk,
President, Secretary and Treasurer
Pursuant to the requirements of the Securities Exchange Act of l934,
this Report has been signed by the following persons in the capacities and on
the dates indicated.
Title Date
----- ----
/s/ Andrew Hromyk Director December 11, 2000
------------------
Andrew Hromyk
11
<PAGE>
REPORT OF INDEPENDENT AUDITOR
To the Director of
Capital One Ventures Corp.
(formerly Sierra Madre Gold Corporation)
We have audited the accompanying balance sheets of Capital One Ventures Corp. (a
development stage enterprise) as of September 30, 2000 and 1999, the related
statements of operations and cash flows for the years then ended and for each of
the periods from August 25, 1997 (date of incorporation) to September 30, 2000
and September 30, 1999 respectively and the related statement of stockholders'
equity for the period from August 25, 1997 (date of incorporation) to September
30, 2000. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform an audit
to obtain reasonable assurance about 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 audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Capital One Ventures Corp. at
September 30, 2000 and 1999, and the results of its operations and its cash
flows for the years then ended and for each of the periods from August 25, 1997
(date of incorporation) to September 30, 2000 and September 30, 1999
respectively, in conformity with accounting principles generally accepted in the
United States.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company is in the development stage, has no
established source of revenue and is dependent on its ability to raise capital
from stockholders or other sources to sustain operations. These factors, along
with other matters as set forth in Note 1, raise doubt that the Company will be
able to continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
N.I. Cameron Inc. (signed)
Vancouver, Canada, CHARTERED ACCOUNTANTS
November 15, 2000
F-1
<PAGE>
Capital One Ventures Corp.
--------------------------
(formerly Sierra Madre Gold Corporation)
----------------------------------------
(a development stage enterprise)
Balance Sheet
September 30, 2000
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
2000 1999
--------------------
ASSETS
<S> <C> <C>
CURRENT
Cash $ 1,672 $ 203
====================
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 4,585 $ --
Loan payable (Note 4) 55,066 35,435
--------------------
Total current liabilities 59,651 35,435
--------------------
STOCKHOLDERS' DEFICIT
Share capital (Note 3)
Common stock - $0.0001 par value
30,000,000 authorized; 5,175,456 issued and outstanding 518 518
Preferred stock - $0.0001 par value
5,000,000 authorized
Additional paid-in capital 4,657 4,657
Deficit accumulated in the development stage (63,154) (40,407)
--------------------
(57,979) (35,232)
--------------------
$ 1,672 $ 203
====================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
Capital One Ventures Corp.
--------------------------
(formerly Sierra Madre Gold Corporation)
----------------------------------------
(a development stage enterprise)
Statements of Operations
For the Years Ended September 30, 2000 and 1999
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
Period from Period from
August 25, 1997 August 25, 1997
(date of (date of
Year Ended Year Ended incorporation) to incorporation) to
September 30, September 30, September 30, September 30,
2000 1999 2000 1999
---------------------------------------------------------------------------
OPERATING EXPENSES
<S> <C> <C> <C> <C>
Office and miscellaneous $ 12,902 $ 9,395 $ 28,676 $ 15,774
Professional fees 9,845 -- 24,533 14,688
Travel and entertainment -- -- 5,025 5,025
Consulting -- -- 2,793 2,793
-----------------------------------------------------------------------
LOSS FROM OPERATIONS (22,747) (9,395) (61,027) (38,280)
-----------------------------------------------------------------------
OTHER INCOME (EXPENSES)
Gain on forgiveness of debt by
a stockholder (Note 4) -- 16,048 16,048 16,048
Loss on settlement of debt (Note 4) -- (13,000) (13,000) (13,000)
Organization expense -- -- (5,000) (5,000)
Loss on investment -- -- (175) (175)
-----------------------------------------------------------------------
-- 3,048 (2,127) (2,127)
-----------------------------------------------------------------------
NET LOSS FOR THE PERIOD $(22,747) $ (6,347) $(63,154) $(40,407)
=======================================================================
LOSS PER SHARE $ (0.004) $ (0.001)
===========================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
Capital One Ventures Corp.
--------------------------
(formerly Sierra Madre Gold Corporation)
----------------------------------------
(a development stage enterprise)
Statement of Stockholders' Deficit
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional in the
Number of Paid-in development
Shares Amount Capital stage Total
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Issuance of common stock 5,175,456 $ 518 $ 4,657 $ -- $ 5,175
------------------------------------------------------------------------------
Balance September 30, 1997 5,175,456 518 4,657 -- 5,175
Loss for the year -- -- -- (34,060) (34,060)
------------------------------------------------------------------------------
Balance September 30, 1998 5,175,456 518 4,657 (34,060) (28,885)
Loss for the year -- -- -- (6,347) (6,347)
------------------------------------------------------------------------------
Balance September 30, 1999 5,175,456 518 4,657 (40,407) (35,232)
Loss for the year -- -- -- (22,747) (22,747)
------------------------------------------------------------------------------
Balance September 30, 2000 5,175,456 $ 518 $ 4,657 $ (63,154) $ (57,979)
==============================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
Capital One Ventures Corp.
--------------------------
(formerly Sierra Madre Gold Corporation)
----------------------------------------
(a development stage enterprise)
Statements of Cash Flows
(expressed in U.S. dollars)
<TABLE>
<CAPTION>
Period from Period from
August 25, 1997 August 25, 1997
(date of (date of
Year Ended Year Ended incorporation) to incorporation) to
September 30, September 30, September 30, September 30,
2000 1999 2000 1999
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Operating activities
Loss for the period $(22,747) $ (6,347) $(63,154) $(40,407)
Add (deduct) net changes in non-cash items
Accounts payable and accrued liabilities 4,585 -- 4,585 --
-------------------------------------------------------------------
Net cash used in operating activities (18,162) (6,347) (58,569) (40,407)
-------------------------------------------------------------------
Investing activities
Decrease in loan receivable -- 73,000 -- --
-------------------------------------------------------------------
Net cash provided by investing activities -- 73,000 -- --
-------------------------------------------------------------------
Financing activities
Advances to stockholders -- (69,905) -- --
Increase in loan payable 19,631 -- 55,066 35,435
Issuance of share capital -- -- 5,175 5,175
-------------------------------------------------------------------
Net cash provided by (used in)
financing activities 19,631 (69,905) 60,241 40,610
-------------------------------------------------------------------
Net change in cash during the period 1,469 (3,252) -- --
Cash at beginning of period 203 3,455 -- --
-------------------------------------------------------------------
Cash at end of period $ 1,672 $ 203 $ 1,672 $ 203
===================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements
F-5
<PAGE>
Capital One Ventures Corp.
--------------------------
(formerly Sierra Madre Gold Corporation)
----------------------------------------
(a development stage enterprise)
Notes to Financial Statements
September 30, 2000
(expressed in U.S. dollars)
1. FORMATION AND BUSINESS OF THE COMPANY
Capital One Ventures Corp. (the "Company") was incorporated in Delaware on
August 25, 1997 as Sierra Madre Gold Corporation and changed its name on
October 4, 1999.
Prior to the merger (as defined below), the Company and SIEG Inc. were
companies under common control.
On September 16, 1997, SIEG Inc. ("SIEG") was merged into the Company on
the basis of one share of SIEG for one share of the Company's common stock.
The Company issued 5,175,456 shares of its common stock to the former
stockholders of SIEG in connection with this merger.
The merger has been accounted for in a manner similar to a pooling of
interests. SIEG had not conducted any operations prior to the merger with
the Company. The share capital of the Company has been presented giving
affect to the exchange of shares from incorporation.
The Company is a development stage company and its sole purpose at this
time is to locate and consummate a merger or acquisition with an as yet
unidentified private entity. Prior to the end of the six month period ended
March 31, 1998, the Company was engaged in the business of acquiring
mineral resource properties. The Company was unable to acquire any such
properties and this plan of business was abandoned.
Going concern
The accompanying consolidated financial statements have been presented
assuming the Company will continue as a going concern. At September 30,
2000, the Company had accumulated $63,154 in losses and had no material
revenue producing operations. At the date of this report, the Company's
ability to continue as a going concern is dependent upon its ability to
raise additional capital.
Since incorporation, a related company (see note 4(a)) provided
administrative services and facilities to the Company for nil consideration
and paid for expenses on behalf of the Company. It is anticipated that the
Company will continue to receive non-interest bearing advances from this
related party to pay for future expenses as incurred.
F-6
<PAGE>
Capital One Ventures Corp.
--------------------------
(formerly Sierra Madre Gold Corporation)
----------------------------------------
(a development stage enterprise)
Notes to Financial Statements
September 30, 2000
(expressed in U.S. dollars)
2. SIGNIFICANT ACCOUNTING POLICIES
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to made estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from these estimates.
Income taxes
The Company uses the liability method of accounting for income taxes. Under
this method, deferred tax assets and liabilities are determined based on
the difference between financial statement and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that are
expected to be in effect when the differences are expected to reverse.
Deferred tax assets are reduced by a valuation allowance in respect of
amounts considered by management to be less likely than not of realization
in future periods.
Foreign currency translation
Unless otherwise stated, all amounts are in United States dollars. All
asset and liability amounts denominated in Canadian dollars have been
translated using the exchange rate as at September 30, 2000 and all
expenses have been translated using the average exchange rate for each
month. The rates used were as follows:
(equivalent Cdn $ per U.S. $) 2000 1999
-------------------------
September 30 rate .6651 .6815
3. SHARE CAPITAL
Holders of the common stock are entitled to one vote per share and share
equally in any dividends declared and distributions on liquidation.
F-7
<PAGE>
Capital One Ventures Corp.
--------------------------
(formerly Sierra Madre Gold Corporation)
----------------------------------------
(a development stage enterprise)
Notes to Financial Statements
September 30, 2000
(expressed in U.S. dollars)
4. RELATED PARTY TRANSACTIONS
(a) A company controlled by a director of the Company has provided
administrative services and facilities to the Company for nil
consideration and pays expenses on behalf of the Company. The amount
due to this company is without interest or stated terms of repayment.
It is anticipated the Company will continue to receive non interest
bearing advances from this company to pay for future expenses as
incurred.
(b) During the year ended September 30, 1999, a stockholder forgave a debt
owing to him by the Company in the amount of $16,048.
(c) During the year ended September 30, 1999, a debt owing by the Company
to a stockholder amounting to $60,000 was settled by assignment to
that stockholder of a loan receivable by the Company from a foreign
company controlled by that stockholder.
5. FINANCIAL INSTRUMENTS AND CONCENTRATIONS OF CREDIT RISK
The Company's financial instruments consist of cash and accounts payable.
It is management's opinion that the Company is not exposed to significant
interest, currency or credit risks arising from these financial
instruments. The fair value of these financial instruments approximate
their carrying values.
6. INCOME TAXES
At September 30, 2000, there were deferred income tax assets resulting
primarily from operating loss carryforwards for tax purposes totaling
approximately $20,500 less a valuation allowance of $20,500. The valuation
allowance on deferred tax assets increased by $7,700 in 2000 and $2,100 in
1999.
At September 30, 2000, the Company had net operating loss carryforwards for
tax purposes of approximately $31,600.
F-8
