<PAGE> 1
As filed with the Securities Registration No.
and Exchange Commission on 333-94631
___________________.
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM SB-2/A-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
PALAL MINING CORPORATION
(Name of small business issuer in its charter)
Nevada 1081 88-0435904
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(State or Other (Primary Standard (IRS Employer
Jurisdiction of Industrial Identification #)
Organization) Classification Code)
PALAL MINING CORPORATION Conrad C. Lysiak, Esq.
1160 1040 West Georgia St. 601 West First Avenue, Suite 503
Vancouver, B.C., Canada V6E 4H1 Spokane, Washington 99201
(604) 605-0885 (509) 624-1475
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(Address and telephone of (Name, address and telephone
registrant's executive office) number of agent for service)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this
Registration Statement.
If this Form is filed to register additional common stock for an
offering under Rule 462(b) of the Securities Act, please check the
following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same
offering.
If this Form is a post-effective amendment filed under Rule 462(c) of
the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective
registration statement for the same offering.
If this Form is a post-effective amendment filed under Rule 462(d) of
the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made under Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
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Offering Aggregate
Securities Amount To Be Price Offering Registration
To Be Registered Registered Per Share Price Fee [1]
Common Stock: 2,000,000 Shares $0.10 $200,000 $ 100.00
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[1] Estimated solely for purposes of calculating the registration
fee under Rule 457(c).
REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON DATES AS
MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN
ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933, OR UNTIL
THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON DATES AS THE
COMMISSION, ACTING UNDER SAID SECTION 8(a), MAY DETERMINE.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR
AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS
BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE
SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED BEFORE
THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS
PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION
OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN
ANY STATE IN WHICH OFFERS, SOLICITATIONS OR SALES WOULD BE UNLAWFUL
BEFORE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY
THE STATES.
<PAGE> 3
Prospectus
PALAL MINING CORPORATION
Shares of Common Stock
No Minimum - 2,000,000 Maximum
Before this offering, there has been no public market
for the common stock.
We are offering up to a total of 2,000,000 shares of common
stock on a best efforts, no minimum, 2,000,000 shares maximum. The
offering price is $0.10 per share. There is no minimum number of
shares that we have to sell. There will be no escrow account. All
money received from the offering will be immediately used by us and
there will be no refunds. The offering will be for a period of 90
days from the effective date and may be extended for an additional 90
days if we so choose to do so.
Investing in our common stock involves risks. See "Risk
Factors" starting at page 6.
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Price Aggregate Proceeds
Per Share Offering Price to Us
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Common Stock $0.10 $200,000 $150,000
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Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities
or determined if this prospectus is truthful or complete. It's
illegal to tell you otherwise.
The date of this prospectus is _________________, 2000.
<PAGE> 4
TABLE OF CONTENTS
Page No.
Summary of Prospectus . . . . . . . 5
Risk Factors . . . . . . . . . 6
Risks Associated with Our Company . . . . 6
Risks Associated with this Offering . . . . 8
Use of Proceeds . . . . . . . . 9
Determination of Offering Price . . . . . 10
Capitalization . . . . . . . . . 10
Dilution of the Price You Pay for Your Shares . . . 11
Plan of Distribution; Terms of the Offering . . . 14
Business . . . . . . . . . . 16
Management's Discussion and Analysis of
Financial Condition and Results of Operations. . . 20
Management . . . . . . . . . . 23
Executive Compensation . . . . . . . 25
Principal Shareholders . . . . . . . 25
Description of Securities . . . . . . . 26
Certain Transactions . . . . . . . 28
Litigation . . . . . . . . . . 28
Experts . . . . . . . . . . 28
Legal Matters . . . . . . . . . 28
Financial Statements . . . . . . . . 29
<PAGE> 5
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SUMMARY OF OUR OFFERING
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This summary highlights important information about our business
and about this offering. Because it is a summary, it doesn't contain
all the information you should consider before investing in the
common stock. So please read the entire prospectus.
Our Business
We are an exploration stage company. We own one
property. We intend to explore for gold on our property.
Our administrative office is located at 1160-1040 West
Georgia Street, Vancouver, British Columbia, Canada V6E 4H1 ,
telephone (604) 605-0885 and our registered statutory office is
located at 5844 South Pecos Road, Suite D, Las Vegas, Nevada 89120.
Our fiscal year end is June 30.
The Offering
Following is a brief summary of this offering:
Securities being offered . . . Up to 2,000,000 shares of
common stock, par value
$0.00001.
Offering price per share . . $ 0.10
Offering period . . . . The shares are being offered
for a period not to exceed 90
days, unless extended by our
board of directors for an
additional 90 days.
Net proceeds to our company . . Approximately $150,000.
Use of proceeds . . . . We will use the proceeds to
pay for offering expenses,
research and exploration.
Number of shares outstanding
before the offering . . . 5,000,000
Number of shares outstanding
after the offering . . . 7,000,000
<PAGE> 6
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RISK FACTORS
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Please consider the following risk factors before deciding to
invest in our common stock
Risks Associated with Our Company:
1. We expect losses to continue, and the failure to
generate revenues could cause us to go out of business.
We were incorporated in September 1999 and we have not started
our proposed business operations or realized any revenues. We have no
operating history upon which an evaluation of our future success or
failure can be made. Our net loss since inception is $292,824. Our
ability to achieve and maintain profitability and positive cash flow
is dependent upon
* our ability to locate a profitable mineral property
* our ability to generate revenues
* our ability to reduce exploration stage costs.
Based upon current plans, we expect to incur operating losses in
future periods. This will happen because there are expenses
associated with the research and exploration of our mineral
properties. We cannot guarantee that we will be successful in
generating revenues in the future. Failure to generate revenues will
cause us to go out of business.
2. We are subject to risks inherent in the establishment of
a new business enterprise.
We are subject to risks inherent in the establishment of a new
business enterprise including limited capital resources, possible
delays in the exploration of our properties, and possible cost
overruns. If we are not able to address these events, should they
occur, we may have to curtail or suspend our operations.
3. We have no known mineral reserves and if cannot find any we
will have to cease operations.
We have no mineral reserves. If we do not find a mineral
reserve containing gold or if we cannot develop the mineral reserve,
either because we do not have money to do it or because it will not
be economically feasible to do it, we will have to cease operations
an you will loose your investment.
4. Weather interruptions in the province of British Columbia
may affect and delay our proposed exploration operations.
Our proposed exploration work can only be performed
approximately five to six months out of the year. This is because
rain and snow cause roads leading to our claims to be impassible
during four months of the year. When roads are impassible, we are
unable to work and generate income.
<PAGE> 7
5. Because we are small and do not have much capital, we must
limit our exploration.
Because we are small and do not have much capital, we must limit
our exploration. There are other larger exploration companies that
could and probably would spend more time and money exploring our
property.
6. We will have to suspend our exploration plans if we do
not have access to all of the supplies and materials we need.
Competition and unforeseen limited sources of supplies in the
industry could result in occasional spot shortages of supplies,
like dynamite, and equipment like bulldozers and
excavators that we might need to conduct exploration. We have not
attempted to locate or negotiate with any suppliers of products,
equipment or materials. We will attempt to locates products,
equipment and materials after this offering is complete. If we
cannot find the products and equipment we need, we will have to
suspend our exploration plans until we do find the products and
equipment we need.
7. People we do business with may not be year 2000 compliant.
We are year 2000 compliant. We do not know if people we will be
doing business with in the future are year 2000 compliant. If
someone we do business with is not year 2000 compliant, the services
or products he furnishes to us could be interrupted. If the services
or products are interrupted, we may have to suspend operations while
he corrects his year 2000 compliance.
8. We may not have enough money to complete our exploration .
We may not have enough money to complete the exploration of our
property. If it turns our that we have not raised enough money to
complete our exploration program, we will try to raise additional
funds from a second public offering, a private placement or loans.
At the present time, we have not made any plans to raise additional
money and there is no assurance that we would be able to raise
additional money in the future. In we need additional money and
can't raise it, we will have to suspend or cease operations.
9. Our officers and directors have conflicts of interest in
that they are officers and directors of other mining companies.
Our officers and directors have conflicts of interest in that
they are officers and directors of other mining companies. At the
present time we do not foresee a direct conflict of interest because
we do not intend to acquire any additional mining properties. In the
future, if we decide to acquire a mining property which is also
sought by one of the companies which Mr. Grenfal or Mr. Stetsenko are
officers or directors, a direct conflict of interest could result.
<PAGE> 8
Risks Associated with This Offering:
10. Because we are a penny stock, you may not be able to
resell our shares.
Our common stock is defined as a "penny stock" under the
Securities and Exchange Act of 1934, and its rules. Because we are a
penny stock, you may be unable to resell our shares. This is because
the Exchange Act and the penny stock rules impose additional sales
practice and disclosure requirements on broker-dealers who sell our
securities to persons other than certain accredited investors. As a
result, fewer broker/dealers are willing to make a market in our
stock.
11. After this offering, control of the company will
remain with Messrs. Grenfal and Stetsenko which may inhibit a change
of control.
Even if we sell all 2,000,000 shares of common stock in this
offering, Messrs. Grenfal and Stetsenko will still own 5,000,000
shares and will continue to control us. As a result, after
completion of this offering, regardless of the number of shares we
sell, Messrs. Grenfal and Stetsenko will be able to elect all of our
directors and control our operations and your ability to cause a
change in the course of our operations is eliminated. Our articles
of incorporation do not provide for cumulative voting. Cumulative
voting is a process that allows a shareholder to multiply the number
of shares he owns times the number of directors to be elected. That
number is the total votes a person can cast for all of the directors.
Those votes can be allocated in any manner to the directors being
elected. Cumulative voting, in some cases, will allow a minority
group to elect at least one director to the board.
12. Messrs. Grenfal and Stetsenko's control can have a
depressive effect on the market price of stock.
Because Messrs. Grenfal and Stetsenko will control us after the
offering, regardless of the number of shares sold, the value
attributable to the right to vote is gone. This could result in a
reduction in the market value to the shares you own because of the
ineffective voting power.
13. Messrs. Grenfal and Stetsenko will receive a
substantial benefit from your investment.
Messrs Grenfal and Stetsenko, our only shareholders will receive
a substantial benefit from your investment. They are supplying the
property to be explored which is valued at $2,644, cash of $133 and a
loan of $12,500 which has to be repaid. You, on the other hand, will
be providing all of the cash for our operations. AS a result, if we
cease operations for any reason, you will loose your investment while
Messrs Grenfal and Stetsenko will loose only approximately $15,000.
<PAGE> 9
14. Because there is no public trading market for our
common stock, you may not be able to resell your shares.
There is currently no public trading market for our common
stock. Therefore there is no central place,
like a stock
exchange or electronic trading system, to resell your shares. If
you do want to resell your shares, you will have to locate a buyer
and negotiate your own sale. Therefore, you may not be able to
resell your shares.
15. There is no minimum number of shares that must be sold and
we will not refund any funds to you.
There is no minimum number of shares that must be sold in this
offering, even if we raise a nominal amount of money. Any money we
receive will be immediately appropriated by us. We may not raise
enough money to start or complete exploration. No money will be
refunded to you under any circumstances.
16. You may be investing in a company that does not have
adequate funds to conduct its operations.
Because there is no minimum number of shares that must be sold
and we will not refund any funds to you, it is possible that we may
not raise enough funds to conduct our operations. If that happens,
you will suffer a loss in the amount of your investment.
17. Sales of common by our officers and directors will likely
cause the market price for the common stock to drop.
A total of 5,000,000 shares of stock were issued to our two
officers and directors. They paid an average price of $0.055 .
They will likely sell a portion of their stock if the market price
goes above $0.10. If they do sell there stock into the market, the
sales may cause the market price of the stock to drop.
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USE OF PROCEEDS
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Our offering is being made on a best efforts - no minimum basis.
The net proceeds to us after deducting offering expenses of $50,000
will be $150,000 if all of the shares are sold. The first $50,000
raised will be used offering expenses. We will use the net proceeds
as follows:
Amount raised $ 50,000 $100,000 $150,000 $200,000
Allocation
Offering expenses $ 50,000 $ 50,000 $ 50,000 $ 50,000
Exploration $ 0 $ 50,000 $ 100,000 $ 140,000
Working capital $ 0 $ 0 $ 0 $ 10,000
<PAGE> 10
We have allocated a wide range of money for exploration. That
is because we do not know how much will ultimately be needed for
exploration. If we are successful in immediately finding gold, we
will stop exploring and go on to develop the property. Costs of
exploring will then cease. On the other hand if we do not
immediately find gold, we will continue to explore for gold on the
property. If we have to continue to explore for gold, the costs of
exploration will increase.
While we currently intend to use the proceeds of this offering
substantially in the manner set forth above, we reserve the right to
reassess and reassign the use if, in the judgement of our
board of directors, changes are necessary or advisable. At present,
no material changes are contemplated. Should there be any material
changes in the above projected use of proceeds in connection with
this offering, we will issue an amended prospectus reflecting the
same.
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DETERMINATION OF OFFERING PRICE
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The price of the shares we are offering was arbitrarily
determined in order for us to raise up to a total of $200,000 in this
offering. The offering price bears no relationship whatsoever to our
assets, earnings, book value or other criteria of value. Among the
factors considered were:
* our lack operating history
* the proceeds to be raised by the offering
* the amount of capital to be contributed by purchasers in
this offering in proportion to the amount of stock to be
retained by our existing Stockholders, and
* our relative cash requirements.
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CAPITALIZATION
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The following table sets forth our capitalization at March 31,
2000, on a historical basis and as adjusted to reflect the sale of
the shares.
This table should be read in conjunction with the section
entitled, Management's Discussion and Analysis of Financial Condition
and Results of Operations our Financial Statements and Notes; and
other financial and operating data included elsewhere in this
prospectus.
<PAGE> 11
03/31/00 As Adjusted After Offering
Actual 25% 50% 75% 100%
Stockholder's Equity:
Common Stock: 100,000,000
shares authorized,
par value $0.00001
5,000,000 issued and
outstanding $ 50
5,500,000 issued and
outstanding $ 55
6,000,000 issued and
outstanding $ 60
6,500,000 issued and
outstanding $ 65
7,000,000 issued and
outstanding $ 70
Additional Paid-in
Capital $ 275,202 $ 275,197 $ 325,192 $ 375,187 $ 425,182
Deficit accumulated
during the
exploration stage $ (292,824) $ (292,824) $ (292,824) $ (292,824) $ (292,824)
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TOTAL STOCKHOLDERS'
EQUITY (deficit) $ (17,572) $ (17,572) $ 32,428 $ 82,428 $ 132,428
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DILUTION OF THE PRICE YOU PAY FOR YOUR SHARES
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Dilution represents the difference between the offering price
and the net tangible book value per share immediately after
completion of this offering. Net tangible book value is the amount
that results from subtracting total liabilities and intangible assets
from total assets. Dilution arises mainly as a result of our
arbitrary determination of the offering price of the shares being
offered. Dilution of the value of the shares you purchase is also a
result of the lower book value of the shares held by our existing
stockholders.
As of March 31, 2000, the net tangible book value of our shares
of common stock was a deficit of $(17,572) or approximately $(0.003)
per share based upon 5,000,000 shares outstanding.
Upon completion of this offering, in the event all of the shares
are sold, the net tangible book value of the 7,000,000 shares to be
outstanding will be $132,428, or approximately $0.02. The net
tangible book value of the shares held by our existing stockholders
will be increased by $0.023 per share without any additional
investment on their part. You will incur an immediate dilution from
$0.10 per share to $0.02 per share.
<PAGE> 12
Upon completion of this offering, in the event 75% of the shares
are sold, the net tangible book value of the 6,500,000 shares to be
outstanding will be $82,428, or approximately $0.013 per share. The
net tangible book value of the shares held by our existing
stockholders will be increased by $0.016 per share without any
additional investment on their part. You will incur an immediate
dilution from $0.10 per share to $0.013 per share.
Upon completion of this offering, in the event 50% of the shares
are sold, the net tangible book value of the 6,000,000 shares to be
outstanding will be $32,428, or approximately $0.005 per share. The
net tangible book value of the shares held by our existing
stockholders will be increased by $0.008 per share without any
additional investment on their part. You will incur an immediate
dilution from $0.10 per share to $0.005 per share.
Upon completion of this offering, in the event 25% of the shares
are sold, the net tangible book value of the 5,500,000 shares to be
outstanding will be $(17,572), or approximately $(0.003) per share.
The net tangible book value of the shares held by our existing
stockholders will be increased by $-0- per share without any
additional investment on their part. You will incur an immediate
dilution from $0.10 per share to $(0.003) per share.
After completion of this offering, if 2,000,000 shares are sold,
you will own approximately 28.57% of the total number of shares then
outstanding shares for which you will have made a cash investment of
$200,000, or $0.10 per share. Our existing stockholders will own
approximately 71.43% of the total number of shares then outstanding,
for which they have made contributions of cash and/or services and/or
other assets, totaling $275,000, or approximately $0.055 per share.
After completion of this offering, if 1,500,000 shares are sold,
you will own approximately 23.08% of the total number of shares then
outstanding shares for which you will have made a cash investment of
$150,000, or $0.10 per share. Our existing stockholders will own
approximately 76.92% of the total number of shares then outstanding,
for which they have made contributions of cash and/or services and/or
other assets, totaling $275,000, or approximately $0.055 per share.
After completion of this offering, if 1,000,000 shares are sold,
you will own approximately 16.67% of the total number of shares then
outstanding shares for which you will have made a cash investment of
$100,000, or $0.10 per share. Our existing stockholders will own
approximately 83.33% of the total number of shares then outstanding,
for which they have made contributions of cash and/or services and/or
other assets, totaling $275,000, or approximately $0.055 per share.
<PAGE> 13
After completion of this offering, if 500,000 shares are sold,
you will own approximately 9.09% of the total number of shares then
outstanding shares for which you will have made a cash investment of
$50,000, or $0.10 per share. Our existing stockholders will own
approximately 90.91% of the total number of shares then outstanding,
for which they have made contributions of cash and/or services and/or
other assets, totaling $275,000, or approximately $0.055 per share.
The following table compares the differences of your investment
in our shares with the investment of our existing stockholders.
Existing Stockholders
Price per share . . . . . . . $ 0.055
Net tangible book value per share before offering . $ (17,572)
Net tangible book value per share after offering $ 132,428
Increase to present stockholders in net tangible book
value per share after offering . . . . $ 0.023
Capital contributions . . . . . . $ 275,000
Number of shares outstanding before the offering 5,000,000
Number of shares after offering
held by existing stockholders . . . . 5,000,000
Percentage of ownership after offering . . . 71.43%
Purchasers of Shares in this Offering if all Shares Sold
Price per share . . . . . . . $ 0.10
Dilution per share . . . . . . . $ 0.08
Capital contributions . . . . . . $ 200,000
Number of shares after offering held
by public investors . . . . . . 2,000,000
Percentage of ownership after offering . . . 28.57%
Purchasers of Shares in this Offering if 75% of Shares Sold
Price per share . . . . . . . $ 0.10
Dilution per share . . . . . . . $ 0.087
Capital contributions . . . . . . $ 150,000
Number of shares after offering held
by public investors . . . . . . 1,500,000
Percentage of ownership after offering . . . 23.08%
Purchasers of Shares in this Offering if 50% of Shares Sold
Price per share . . . . . . . $ 0.10
Dilution per share . . . . . . . $ 0.095
Capital contributions . . . . . . $ 100,000
Number of shares after offering held
by public investors . . . . . . 1,000,000
Percentage of ownership after offering . . . 16.67%
<PAGE> 14
Purchasers of Shares in this Offering if 25% of Shares Sold
Price per share . . . . . . . $ 0.10
Dilution per share . . . . . . . $ 0.103
Capital contributions . . . . . . $ 50,000
Number of shares after offering held
by public investors . . . . . . 500,000
Percentage of ownership after offering . . . 9.09%
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PLAN OF DISTRIBUTION; TERMS OF THE OFFERING
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Offering Will Be Sold By One of Our Officers
We are offering up to a total of 2,000,000 shares of common
stock on a best efforts, no minimum, 2,000,000 shares maximum. The
offering price is $0.10 per share. There is no minimum number of
shares that we have to sell. There will be no escrow account. All
money received from the offering will be immediately used by us and
there will be no refunds. The offering will be for a period of 90
days from the effective date and may be extended for an additional 90
days if we so choose to do so.
There is no minimum number of shares that must be sold in this
offering. Any money we receive will be immediately appropriated by
us for the uses set forth in the Use of Proceeds section of this
prospectus. No funds will be placed in an escrow account during the
offering period and no money will be returned once the subscription
has been accepted by us.
We will sell the shares in this offering through Sergei
Stetsenko, one of our officers and directors. Mr. Stetsenko will
receive no commission from the sale of any shares. Mr. Stetsenko
will not register as a broker-dealer under Section 15 of the
Securities Exchange Act of 1934 in reliance upon Rule 3a4-1. Rule
3a4-1 sets forth those conditions under which a person associated
with an issuer may participate in the offering of the issuer's
securities and not be deemed to be a broker-dealer. The conditions
are that:
1. The person is not subject to a statutory disqualification, as
that term is defined in Section 3(a)(39) of the Act, at the time of
his participation; and,
2. The person is not compensated in connection with his
participation by the payment of commissions or other remuneration
based either directly or indirectly on transactions in securities;
and
3. The person is not at the time of their participation, an
associated person of a broker-dealer; and,
<PAGE> 15
4. The person meets the conditions of Paragraph (a)(4)(ii) of
Rule 3a4-1 of the Exchange Act, in that he (A) primarily performs, or
is intended primarily to perform at the end of the offering,
substantial duties for or on behalf of the Issuer otherwise than in
connection with transactions in securities; and (B) is not a broker
or dealer, or an associated person of a broker or dealer, within the
preceding twelve (12) months; and (C) do not participate in selling
and offering of securities for any Issuer more than once every twelve
(12) months other than in reliance on Paragraphs (a)(4)(i) or
(a)(4)(iii).
Mr. Stentsko is not subject to disqualification, is not being
compensated, and is not associated with a broker-dealer. Mr.
Stentsko is and will continue to be one of our officers and directors
at the end of the offering and has not been during the last twelve
months and is currently not a broker/dealer or associated with a
broker/dealer. Mr. Stentsko has not during the last twelve months
and will not in the next twelve months offer or sell securities for
another corporation.
Only after our registration statement is declared effective by
the SEC, we intend to advertise, through tombstones, and hold
investment meetings in various states where the offering will be
registered. We will not utilize the Internet to advertise our
offering. We will also distribute the prospectus to potential
investors at the meetings and to our friends and relatives who are
interested in us and a possible investment in the offering.
Offering Period and Expiration Date
This offering will start on the date of this prospectus
and continue for a period of 90 days. We may extend the offering
period for an additional 90 days, or unless the offering is completed
or otherwise terminated by us.
Procedures for Subscribing
If you decide to subscribe for any shares in this offering, you
must
1. execute and deliver a subscription agreement
2. deliver a check or certified funds to us for acceptance or
rejection.
All checks for subscriptions must be made payable to "Palal Mining
Corporation."
Right to Reject Subscriptions
We have the right to accept or reject subscriptions in whole or
in part, for any reason or for no reason. All monies from rejected
subscriptions will be returned immediately by us to the subscriber,
without interest or deductions. Subscriptions for securities will be
accepted or rejected within 48 hours after we receive them.
<PAGE> 16
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BUSINESS
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General
We were incorporated in the State of Nevada on September 2,
1999. We are engaged in the acquisition and exploration of mining
properties. We maintain our statutory registered agent's office at
5844 South Pecos Road, Suite D, Las Vegas, Nevada 89120 and our
business office is located at 1160 - 1040 West Georgia Street,
Vancouver, British Columbia, Canada V6E 4H1. Our telephone
number is (604) 605-0885. Our offices are leased from Callinan Mines
Ltd. on a month to month basis and our monthly rental is $-0-.
Background
In September 1999, Hugh Grenfal our President and a member of
the board of directors, acquired one mineral property containing ten
mining claims in British Columbia, Canada by arranging the staking of
the same through a third party. Mr. Grenfal paid $2,644 to stake
the claims. The claims are recorded in Mr. Grenfal's name to a avoid
paying additional fees, however, title to the claims has been
conveyed to us by an unrecorded deed. An unrecorded deed is one
which title to the property has been transferred to us, but the deed
has not been filed with the British Columbia office of records.
Title to the property is superior to all other unrecorded deeds.
Should Mr. Grenfal transfer title to another person and that deed is
recorded before recording our deed, that person will have superior
title and we will have none. If that event occurs, however, Mr.
Grenfal will be liable to us for monetary damages for breach of his
warranty of title. Under British Columbia provincial law, if
the deed is recorded in our name, we will have to pay a minimum of
$500.00 and file other documents since we are a foreign corporation
in Canada. We have decided that if gold is discovered on the property
and it is economical to remove the gold, we will record the deed, pay
the additional tax, and file as a foreign corporation. We are in
possession of the unrecorded deed and the decision to record or not
record the deed is solely within our province.
To date we have not performed any work on our property. We are
presently in the exploration stage and there is no assurance that a
commercially viable mineral deposit, a reserve, exists in our
property until further exploration is done and a comprehensive
evaluation concludes economic and legal feasibility.
Location and Access
The Mak Sikker property consists of 10 claims totaling
approximately 625 acres. The claims are on the western slope of Mt.
Kobau, northwest from the village of Creston, in south-central
British Columbia. Highway 3 runs immediately south of the property
and there is good road access to the top of Mt. Kobau.
<PAGE> 17
Physiography
The property is situated in the Similkameen Valley within the
southern central interior of British Columbia. Elevations range from
1,800 feet in the southwest to 6,000 feet on Mt. Kobau. The
relatively flat summit of Mt. Kobau is at the southern end of a north
ridge. The west side of this ridge falls steeply toward the
Similkameen Valley. The slope drained by Manery Creek is fairly
steep and rugged.
Vegetation consists mainly of open grasslands with some
Ponderosa Pine and fir. The Similkameen bottomland is cultivated and
used for grazing. The climate features warm summers and mild
winters. Water is not plentiful, as the flow in Manery Creek is
intermittent. Water for exploration purposes would have to be
brought from the Similkameen River or one of the small ponds
northwest of the peak of Mount Kobau.
Property Geology
The major type of rock found on the property is quartz.
Gold, silver and copper are found in quartz veins. We have
determined that there are quartz veins on the property. We have not
determined if there is any gold, silver or copper in the quartz
veins.
MAP SUPPLIED SUPPLEMENTALLY.
Our Proposed Exploration Program
We must conduct exploration to determine what amount of
minerals, if any, exist on our properties and if any minerals which
are found can be economically extracted and profitably processed.
Our exploration program is designed to economically explore and
evaluate our properties.
We do not claim to have any minerals or reserves
whatsoever at this time on any of our properties.
We intend to implement an exploration program and intend to
proceed in the following three phases:
Phase 1 will begin with research of the available geologic
literature, personal interviews with geologists, mining engineers and
others familiar with the prospect sites. We have recently begun this
phase of the exploration process on our properties.
When the research is completed, our initial work will be
augmented with geologic mapping, geophysical testing and geochemical
testing of our claims. When available, existing workings, like
trenches, prospect pits, shafts or tunnels will be examined. If
an apparent mineralized zone is identified and narrowed down to a
specific area by the studies, we will to begin trenching the area.
<PAGE> 18
Trenches are generally approximately 150 ft. in length and 10-20 ft.
wide. These dimensions allow for a thorough examination of the
surface of the vein structure types generally encountered in the
area. They also allow easier restoration of the land to its pre-
exploration condition when we conclude our operations. Once
excavation of a trench is completed, samples are taken and then
analyzed for economically potential minerals that are known to have
occurred in the area. Careful interpretation of this available data
collected from the various tests aid in determining whether or not
the prospect has current economic potential and whether further
exploration is warranted.
Phase 1 will take about 3 months and cost up to $20,000.
Phase 2 involves an initial examination of the underground
characteristics of the vein structure that was identified by Phase 1
of exploration. Phase 2 is aimed at identifying any mineral deposits
of potential economic importance. The methods employed are
* more extensive trenching
* more advanced geophysical work
* drift driving
Drift driving is the process of constructing a tunnel to take samples
of minerals for testing. Later, the tunnel can be used for
mining minerals . The geophysical work gives a general
understanding of the location and extent of mineralization at depths
that are unreachable by surface excavations and provides a target for
more extensive trenching and core drilling. Trenching identifies the
continuity and extent of mineralization, if any, below the surface.
After a thorough analysis of the data collected in Phase 2, we will
decide if the property warrants a Phase 3 study.
Phase 2 will take about 3 months and cost up to $20,000.
Phase 3 is aimed at precisely defining the depth, the width, the
length, the tonnage and the value per ton of any mineral
body. This is accomplished through extensive drift driving. Phase
3 will take about 6 months and cost up to $80,000.
We do not intend to interest other companies in the property if
we find mineralized materials. We intend to try to develop the
reserves ourselves.
Competitive Factors
The gold mining industry is fragmented. We compete with other
exploration companies looking for gold. We are one of the smallest
exploration companies in existence. We are an infinitely small
participant in the gold mining market. While we compete with other
exploration companies, there is no competition for the exploration or
removal or mineral from out property. Readily available
gold markets exist in Canada and around the world for the sale of
gold. Therefore , we will be able to sell any gold that we
are able to recover.
<PAGE> 19
Regulations
Our mineral exploration program is subject to the Canadian
Mineral Tenure Act Regulation. This act sets forth rules for
* locating claims
* posting claims
* working claims
* reporting work performed
We are also subject to the British Columbia Mineral Exploration
Code which tells us how and where we can explore for minerals. We
must comply with these laws to operate our business. Compliance
with these rules and regulations will not adversely affect our
operations.
Environmental Law
We are also subject to the Health, Safety and Reclamation Code
for Mines in British Columbia. This code deals with environmental
matters relating to the exploration and development of mining
properties. Its goals are to protect the environment through a
series of regulations affecting:
1. Health and Safety
2. Archaeological Sites
3. Exploration Access
We are responsible to provide a safe working environment, not
disrupt archaeological sites, and conduct our activities to
prevent unnecessary damage to the property.
We will secure all necessary permits for exploration and, if
development is warranted on the property, will file final plans of
operation before we start any mining operations. We
anticipate no discharge of water into active stream, creek, river,
lake or any other body of water regulated by environmental law or
regulation. No endangered species will be disturbed.
Restoration of the disturbed land will be completed according to law.
All holes, pits and shafts will be sealed upon abandonment of the
property. It is difficult to estimate the cost of compliance
with the environmental law since the full nature and extent of our
proposed activities cannot be determined until we start our
operations and know what that will involve from an environmental
standpoint.
We are in compliance with the act and will continue to comply
with the act in the future. We believe that compliance with the act
will not adversely affect our business operations in the future.
<PAGE> 20
Employees
Initially, we intend to use the services of subcontractors for
manual labor exploration work on our properties. Our only technical
employees will be Hugh Grenfal and Sergei Stetsenko, our officers and
directors.
Employees and Employment Agreements
At present, we have no employees, other than Messrs. Grenfal and
Stetsenko, our officers and directors, who were compensated for
their services. Messrs. Grenfal and Stetsenko do not have employment
agreements with us. We presently do not have pension, health,
annuity, insurance, stock options, profit sharing or similar benefit
plans; however, we may adopt plans in the future. There are
presently no personal benefits available to any employees.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
--------------------------------------------------------------------
This section of the prospectus includes a number of forward-
looking statements that reflect our current views with respect to
future events and financial performance. Forward-looking statements
are often identified by words like: believe, expect, estimate,
anticipate, intend, project and similar expressions, or words which,
by their nature, refer to future events. You should not unduly rely
on these forward-looking statements, which apply only as of the date
of this prospectus. These forward-looking states are subject to
certain risks and uncertainties that could cause actual results to
differ materially from historical results or out predictions.
We are a start-up, exploration stage company and have not yet
generated or realized any revenues from our business operations.
Our auditors have issued a going concern opinion. This means
that our auditors believe there is doubt that we can continue as an
on-going business for the next twelve months unless we obtain
additional capital to pay our bills. This is because we have not
generated any revenues and no revenues are anticipated until we begin
removing and selling minerals. Accordingly, we must raise cash from
sources other than the sale of minerals found on our property. That
cash must be raised from other sources. Our only other source for
cash at this time is investments by others in our company. We must
raise cash to implement our project and stay in business.
To meet our need for cash we are attempting to raise money from
this offering. There is no assurance that we will be able to raise
enough money through this offering to stay in business. What ever
money we do raise, will be applied first to exploration and then to
development, if development is warranted. If we do not raise all of
<PAGE> 21
the money we need from this offering, we will have to find
alternative sources, like a second public offering, a
private placement of securities, or loans from our officers or
others. We have discussed this matter with our officers, however,
our officers are unwilling to make any commitment to loan us any
money at this time. At the present time, we have not made any
arrangements to raise additional cash, other than through this
offering. If we need additional cash and can't raise it we will
either have to suspend operations until we do raise the cash, or
cease operations entirely.
We will be conducting research in connection with the
exploration of our property. We are not going to buy or sell any
plant or significant equipment. We do not expect a change in our
number of employees.
Limited Operating History; Need for Additional Capital
There is no historical financial information about our company
upon which to base an evaluation of our performance. We are an
exploration stage company and have not generated any revenues from
operations. We cannot guarantee we will be successful in our business
operations. Our business is subject to risks inherent in the
establishment of a new business enterprise, including limited capital
resources, possible delays in the exploration of our properties, and
possible cost overruns due to price and cost increases in services.
To become profitable and competitive, we conduct into the
research and exploration of our properties before we start
production of any minerals we may find. We are seeking equity
financing to provide for the capital required to implement our
research and exploration phases.
We have no assurance that future financing will be available to
us on acceptable terms. If financing is not available on
satisfactory terms, we may be unable to continue, develop or expand
our operations. Equity financing could result in additional dilution
to existing shareholders.
Results of Operations
From Inception on September 2, 1999
We just recently acquired our first property and are commencing
the research and exploration stage of our mining operations on that
property at this time.
Since inception, we have used our common stock to raise money
for our property acquisition, for corporate expenses and to repay
outstanding indebtedness. Net cash provided by financing activities
from inception on September 2, 1999 to March 31, 2000 was $132, as a
result of proceeds received from advances. In addition a related
party paid expenses in the amount of $17,684 directly to providers,
and must be paid back.
<PAGE> 22
Liquidity and Capital Resources
As of the date of this registration statement, we have yet to
generate any revenues from our business operations.
We issued 5,000,000 shares of common stock through a Section
4(2) offering in September 1999. This was accounted for as a
compensation expense of $273,586 and advances and reimbursement
expenses of $1,414.
Since our inception, Mr. Grenfal, has paid expenses from us
in the total sum of $17,684, which included organizational and
start-up costs and operating capital. The loans do not bear interest
and have not been paid as of the date hereof. There are no documents
reflecting the loan and they are not due on a specific date. Mr.
Grenfal will accept repayment from us when money is available.
As of March 31, 2000, our total assets were $135 and our total
liabilities were $17,707.
Year 2000 Compliance
The Year 2000 issue is the result of computer programs using two
digits rather than four to define the applicable year. Date-sensitive
software may recognize a date using "00" as the year 1900 rather than
the year 2000. This could result in system failures or
miscalculations, causing disruptions of operations, including, among
others, a temporary inability to process transactions, send invoices
or engage in similar normal business activities.
Year 2000 State of Readiness
To address Year 2000 issues, we developed and implemented a
plan to become Year 2000 ready. The Year 2000 Plan covers the
computers and technology which we use in the research and exploration
of our properties. We have reviewed our technology consisting of
computer hardware and software systems and found them to be Year 2000
ready. Since we do not have any vendors we cannot make any
assessment of third parties. In the future, we intend to evaluate
and assess the systems of any third party providers with whom we do
business.
Year 2000 Costs
To date, we have incurred no historical costs associated with
our Year 2000 readiness and the magnitude of any future costs will
depend upon the nature and extent of any problems that are
identified.
Year 2000 Risks
Our failure to correct a material Year 2000 problem could result
in a complete failure or degradation of the performance of our
computers which will interrupt our operations.
<PAGE> 23
Presently, however, we believe that our most reasonably likely
worst case scenario related to the Year 2000 issue is associated with
potential concerns with third party providers' services or products.
In the future, we will be dependent on third-party vendors to provide
manual labor, research data and studies on our properties. A
significant Year 2000-related disruption to one of these vendor's
computer software and/or equipment could cause a delay in our
proposed research and explorations which in turn could materially and
adversely affect our results of operations, liquidity and financial
condition. Since we have not started business, we have not hired any
third party vendors. Therefore we are not presently aware
of any vendor-related Year 2000 issues that are likely to result in
a disruption. There is no assurance that Year 2000 third party
vendors will not occur in the future.
Year 2000 Contingency Plans
Since our equipment is Year 2000 ready, we have not adopted any
Year 2000 contingency plans.
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MANAGEMENT
--------------------------------------------------------------------
Officers and Directors
Each of our directors is elected by the stockholders to a term
of one year and serves until his or her successor is elected and
qualified. Each of our officers is elected by the board of directors
to a term of one year and serves until his or her successor is duly
elected and qualified, or until he or she is removed from office. The
board of directors has no nominating, auditing or compensation
committees.
The names, addresses, ages and positions of our present officers
and directors are set forth below:
Name and Address Age Positions
Hugh Grenfal 30 President, Treasurer, Principal
3337 West 30th Ave. Accounting Officer and a member of
Vancouver, B.C. the Board of Directors
Canada V6S 1W3
Sergei Stetsenko 29 Secretary and a member of the
704 - 1155 Beach Ave. Board of Directors
Vancouver, B.C.
Canada V6E 1V2
The persons named above have held their offices/positions since
inception of our company and are expected to hold their
offices/positions until the next annual meeting of our stockholders.
<PAGE> 24
Background of Officers and Directors
Hugh Grenfal has been our President, Treasurer, Principal
Accounting Officer and a member of our board of directors since
inception. From January 1991 to June 1996 , Mr. Grenfal was
President of Booker Gold Explorations Ltd., a mining and exploration
corporation located in Vancouver, British Columbia. Since October
1996, Mr. Grenfal has been a Director of Callinan Mines Ltd., a
mining and exploration corporation located in Vancouver, British
Columbia with revenue producing copper and zinc properties located in
Manitoba, Canada. Since June 1999, Mr. Grenfal has been President
of Paxton Mining Corporation located in Vancouver, British Columbia.
Paxton Mining Corporation is a mining company. Since September 1999,
Mr. Grenfal has been President of Ancona Mining Corporation located
in Vancouver, British Columbia. Ancona Mining is a mining company.
Since September 1999, Mr. Grenfal has been President of Camden Mining
Corporation located in Vancouver, British Columbia. Camden Mining is
a mining company. Mr. Grenfal is currently not a full-time employee
with another entity.
Sergei Stetsenko has been our Secretary and a member of our
board of directors since inception. From December 1994 to June 1996,
Mr. Stetsenko was the operations manager of Booker Gold Explorations
Ltd. His responsibilities included overseeing and implementation of
exploration programs and a member of the Hearne Hill copper deposit
discovery team. From October 1996 to the present, Mr. Stetsenko was
the operations manager of exploration for Callinan Mines Limited.
Since September 1999, Mr. Stetsenko has been Secretary of Ancona
Mining Corporation located in Vancouver, British Columbia. Ancona
Mining Corporation is a mining company. Since September 1999, Mr.
Stetsenko has been Secretary of Camden Mining Corporation located in
Vancouver, British Columbia. Camden Mining Corporation is a mining
company. Mr. Stetsenko is currently not a full-time employee with
another entity.
Conflicts of Interest
We believe that Hugh Grenfal and Sergei Stetsenko will be
subject to conflicts of interest. The conflicts of interest arise
from Messrs. Grenfal and Stetsenko's relationships with other mining
corporations. In the future, Messrs. Grenfal and Stetsenko will
continue to be involved in the mining business for other entities and
their involvement could create conflicts of interest. At
the present time, we do not foresee a direct conflict of interest
because we do not intend to acquire any additional mining properties.
The only conflicts that we foresee are Messrs. Grenfal and
Stetsenko's devotion of time to mining projects that do not involve
us.
Specifically, Hugh Grenfal is an officer and director of
Callinan Mines Ltd., Ancona Mining Corporation, Paxton Mining
Corporation and Camden Mining Corporation, all of which are engaged
in the mining business. Mr. Stetsenko is an officer of Ancona Mining
Corporation and Camden Mining Corporation; and, operations manager
for Callinan Mines Ltd., all of which are engaged in the mining
<PAGE> 25
business. Presently, none of the foregoing operate mines or receive
royalties from properties operated by others with the exception of
Callinan Mines Ltd. which receives CDN$149,000 annually from a copper
zinc mine in Flin Flon, Manitoba operated by Hudson Bay & Smelting
Co. Neither we nor our officers are affiliated with Hudson Bay &
Smelting Co. In the future, however, corporations could begin
operating mines.
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EXECUTIVE COMPENSATION
--------------------------------------------------------------------
Messrs. Grenfal and Stetsenko, our officers and directors, were
compensated in shares of common stock in the amount of $273,586 for
their services and there are no plans to compensate them in the near
future, unless and until we begin to realize revenues and become
profitable in our business operations.
Indemnification
Under our Articles of Incorporation and Bylaws of the
corporation, we may indemnify an officer or director who is made a
party to any proceeding, including a law suit, because of his
position, if he acted in good faith and in a manner he reasonably
believed to be in our best interest. We may advance expenses
incurred in defending a proceeding. To the extent that the
officer or director is successful on the merits in a proceeding as
to which he is to be indemnified, we must indemnify him against all
expenses incurred, including attorney's fees. With respect to a
derivative action, indemnity may be made only for expenses actually
and reasonably incurred in defending the proceeding, and if the
officer or director is judged liable, only by a court order. The
indemnification is intended to be to the fullest extent permitted by
the laws of the State of Nevada.
Regarding indemnification for liabilities arising under the
Securities Act of 1933, which may be permitted to directors or
officers under Nevada law, we are informed that, in the
opinion of the Securities and Exchange Commission, indemnification
is against public policy, as expressed in the Act and is, therefore,
unenforceable.
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PRINCIPAL STOCKHOLDERS
--------------------------------------------------------------------
The following table sets forth, as of the date of this
prospectus, the total number of shares owned beneficially by each of
our directors, officers and key employees, individually and as a
group, and the present owners of 5% or more of our total outstanding
shares. The table also reflects what their ownership will be
assuming completion of the sale of all shares in this offering . The
stockholder listed below has direct ownership of his shares and
possesses sole voting and dispositive power with respect to the
shares.
<PAGE> 26
Name and Address Number of Number Percentage of
Beneficial Shares Before of Shares of Ownership
Owner [1] Offering After Offering After Offering
Hugh Grenfal 2,500,000 2,500,000 35.71%
3337 West 30th Ave.
Vancouver, B.C.
Canada V6S 1W3
Sergei Stetsenko 2,500,000 2,500,000 35.71%
704 - 1155 Beach Ave.
Vancouver, B.C.
Canada V6E 1V2
---------------------
All Officers and
Directors as a
Group (2 persons) 5,000,000 5,000,000 71.43%
[1] The persons named above may be deemed to be a parent and
promoter of our company by virtue of his/its direct and
indirect stock holdings. Messrs. Grenfal and Stetsenko are the
only promoters of our company.
Future Sales by Existing Stockholders
A total of 5,000,000 shares of common stock were issued to the
existing stockholders, all of which are restricted securities, as
defined in Rule 144 of the Rules and Regulations of the SEC
promulgated under the Securities Act. Under Rule 144, the
shares can be publicly sold, subject to volume restrictions and
restrictions on the manner of sale, commencing one year after their
acquisition.
Shares purchased in this offering, which will be immediately
resalable, and sales of all of our other shares after applicable
restrictions expire, could have a depressive effect on the market
price, if any, of our common stock and the shares we are offering.
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DESCRIPTION OF SECURITIES
--------------------------------------------------------------------
Common Stock
Our authorized capital stock consists of 100,000,000 shares of
common stock, par value $0.00001 per share. The holders of our common
stock:
* have equal ratable rights to dividends from funds legally
available if and when declared by our board of directors;
* are entitled to share ratably in all of our assets
available for distribution to holders of common stock upon
liquidation, dissolution or winding up of our affairs;
<PAGE> 27
* do not have preemptive, subscription or conversion rights
and there are no redemption or sinking fund provisions or
rights; and
* are entitled to one non-cumulative vote per share on all
matters on which stockholders may vote.
All shares of common stock now outstanding are fully paid for and
non-assessable and all shares of common stock which are the subject
of this offering, when issued, will be fully paid for and
non-assessable. We refer you to our Articles of Incorporation, Bylaws
and the applicable statutes of the State of Nevada for a more
complete description of the rights and liabilities of holders of our
securities.
Non-cumulative Voting
Holders of shares of our common stock do not have cumulative
voting rights, which means that the holders of more than 50% of the
outstanding shares, voting for the election of directors, can elect
all of the directors to be elected, if they so choose, and, in
that event, the holders of the remaining shares will not be able
to elect any of our directors. After this offering is completed, the
present stockholders will own approximately 71.43% of our outstanding
shares.
Cash Dividends
As of the date of this prospectus, we have not paid any cash
dividends to stockholders. The declaration of any future cash
dividend will be at the discretion of our board of directors and will
depend upon our earnings, if any, our capital requirements and
financial position, our general economic conditions, and other
pertinent conditions. It is our present intention not to pay any cash
dividends in the foreseeable future, but rather to reinvest earnings,
if any, in our business operations.
Reports
After we complete this offering, we will not be required to
furnish you with an annual report. Further, we will not voluntarily
send you an annual report. We will be required to file reports with
the SEC under section 15(d) of the Securities Act. The reports will
be filed electronically. The reports we will be required to file are
Forms 10-KSB, 10-QSB, and 8-K. You may read copies of any materials
we file with the SEC at the SEC's Public Reference Room at 450 Fifth
Street, N.W., Washington, D.C. 20549. You may obtain information on
the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. The SEC also maintains an Internet site that will
contain copies of the reports we file electronically. The address
for the Internet site is www.sec.gov.
<PAGE> 28
Stock Transfer Agent
Our stock transfer agent for our securities is Pacific Stock
Transfer Company, 5844 South Pecos Road, Suite D, Las Vegas, Nevada
89120 and its telephone number is (702) 361-3033.
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CERTAIN TRANSACTIONS
--------------------------------------------------------------------
In September 1999, we issued a total of 5,000,000 shares of
restricted common stock to Hugh Grenfal and Sergei Stetsenko,
officers and directors of our company. This was accounted for as a
compensation expense of $273,586 and advances and reimbursement
expenses of $1,414.
Since our inception, Mr. Grenfal, advanced loans to us in the
total sum of $12,500, which were used for organizational and start-up
costs and operating capital. The loans do not bear interest and have
not been paid as of the date hereof. There are no documents
reflecting the loan and they are not due on a specific date .
Mr. Grenfal will accept repayment from us when money is available.
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LITIGATION
--------------------------------------------------------------------
We are not a party to any pending litigation and none is
contemplated or threatened.
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EXPERTS
--------------------------------------------------------------------
Our financial statements for the period from inception to March
31, 2000, included in this prospectus have been audited by Williams
and Webster, P.C., Independent Certified Public Accountants, Seafirst
Financial Center, 601 West Riverside Avenue, Suite 1940, Spokane,
Washington 99201, as set forth in their report included in this
prospectus.
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LEGAL MATTERS
--------------------------------------------------------------------
Conrad C. Lysiak, Attorney at Law, 601 West First Avenue, Suite
503, Spokane, Washington 99201, telephone (509) 624-1475 has acted as
legal counsel for our company.
<PAGE> 29
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FINANCIAL STATEMENTS
--------------------------------------------------------------------
Our fiscal year end is June 30. We will provide audited
financial statements to our stockholders on an annual basis; the
statements will be prepared by an Independent Certified Public
Accountant.
Our audited financial statement from inception to December
31,1999 immediately follows:
INDEPENDENT AUDITOR'S REPORT F-1
FINANCIAL STATEMENTS
Balance Sheet F-2
Statement of Operations F-3
Statement of Stockholders' Equity F-4
Statement of Cash Flows F-5
NOTES TO THE FINANCIAL STATEMENTS F-6
<PAGE> 30
Board of Directors
Palal Mining Corporation
Vancouver, BC
CANADA
INDEPENDENT AUDITOR'S REPORT
We have audited the accompanying balance sheet of Palal Mining
Corporation, (an exploration stage enterprise), as of March 31, 2000,
and the related statements of operations, stockholders' equity
(deficit) and cash flows for the period from September 2, 1999
(inception) to March 31, 2000. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the 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 audit provides 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 Palal
Mining Corporation, as of March 31, 2000, and the results of its
operations and its cash flows for the period from September 2, 1999
(inception) to March 31, 2000, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 2,
the Company has been in the exploration stage since its inception on
September 2, 1999. Realization of a major portion of the assets is
dependent upon the Company's ability to meet its future financing
requirements, and the success of future operations. These factors
raise substantial doubt about the Company's ability to continue as a
going concern. Management's plans regarding those matters also are
described in Note 2. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Williams & Webster, P.S.
Williams & Webster, P.S.
Certified Public Accountants
Spokane, Washington
May 9, 2000
F-1
<PAGE> 31
PALAL MINING CORPORATION
(An Exploration Stage Company)
BALANCE SHEET
March 31, 2000
ASSETS
CURRENT ASSETS
Cash $ 71
----------
Total Current Assets 71
----------
OTHER ASSETS
Mining claims 64
----------
TOTAL ASSETS $ 135
==========
LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 23
Related party payable 17,684
----------
Total Current Liabilities 17,707
----------
COMMITMENTS AND CONTINGENCIES -
----------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock,100,000,000 shares authorized,
$0.00001 par value; 5,000,000 shares
issued and outstanding 50
Additional paid-in-capital 275,202
Deficit accumulated during
the exploration stage (292,824)
----------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (17,572)
----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 135
==========
The accompanying notes are an integral part of these financials
statements.
F-2
<PAGE> 32
PALAL MINING CORPORATION
(An Exploration Stage Company)
STATEMENT OF OPERATIONS
For the Period from September 2, 1999 (Inception) to March 31, 2000
REVENUES $ -
----------
EXPENSES
Consulting services provided by directors 273,586
General and administrative expense 61
Legal and accounting 17,684
Mining exploration 1,241
----------
TOTAL EXPENSES 292,572
----------
NET LOSS FROM OPERATIONS (292,572)
OTHER INCOME (EXPENSE)
Interest expense (252)
----------
NET LOSS $ (292,824)
==========
NET LOSS PER COMMON SHARE,
BASIC AND DILUTED $ (0.06)
==========
WEIGHTED AVERAGE NUMBER OF
COMMON STOCK SHARES OUTSTANDING,
BASIC AND DILUTED 5,000,000
==========
The accompanying notes are an integral part of these financials
statements.
F-3
<PAGE> 33
PALAL MINING CORPORATION
(An Exploration Stage Company)
STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
For the Period from September 2, 1999 (Inception) to March 31, 2000
Deficit
Accumulated Total
Common Stock Additional during the Stockholders'
Number Paid-In Exploration Equity
of Shares Amount Capital Stage (Deficit)
Issuance of common
stock for mining
claims and executive
compensation at $0.055
per share 5,000,000 $ 50 $ 274,950 $ - $ 275,000
Contribution of capital
by shareholders in the
form of foregone
interest - - 252 - 252
Net loss for the period
ending March 31, 2000 - - - (292,824) (292,824)
--------- ---- --------- ---------- ----------
Balance
March 31, 2000 5,000,000 $ 50 $ 275,202 $ (292,824) $ (17,572)
========= ==== ========= ========== ==========
The accompanying notes are an integral part of these financials
statements.
F-4
<PAGE> 34
PALAL MINING CORPORATION
(An Exploration Stage Company)
STATEMENT OF CASH FLOWS
For the Period from September 2, 1999 (Inception) to March 31, 2000
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (292,824)
Adjustments to reconcile net loss to net
cash used by operating activities:
Payment of expenses from issuance of stock 274,804
Payment of expenses by shareholder 17,684
Payment of expense through contribution
of additional paid in capital 252
Increase in:
Accounts payable 23
----------
Net cash provided by (used in) operating
activities (61)
----------
CASH FLOWS FROM INVESTING ACTIVITIES -
----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from advances 132
----------
Increase in cash 71
Cash, beginning of period -
----------
Cash, end of period $ 71
==========
SUPPLEMENTAL DISCLOSURES:
Interest paid $ -
==========
Income taxes paid $ -
==========
NON-CASH TRANSACTIONS:
Stock issued in payment of expenses $ 274,804
Stock issued in payment of advances $ 132
Stock issued in payment of mining claims $ 64
Loan from shareholder through payment
of operating expenses $ 17,684
The accompanying notes are an integral part of these financials
statements.
F-5
<PAGE> 35
PALAL MINING CORPORATION
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 2000
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Palal Mining Corporation (hereinafter "the Company") filed for
incorporation on September 2, 1999 under the laws of the state of
Nevada primarily for the purpose of acquiring, exploring, and
developing mineral properties. The Company's fiscal year end is June
30.
The Company is actively seeking additional capital and management
believes that the Company can develop mineral properties, which it has
acquired in British Columbia. However, there are inherent
uncertainties in mining operations and management cannot provide
assurances that it will be successful in this endeavor. Furthermore,
the Company is in the exploration stage, as it has not realized any
significant revenues from its planned operations.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of the Company is
presented to assist in understanding the Company's financial
statements. The financial statements and notes are representations of
the Company's management which is responsible for their integrity and
objectivity. These accounting policies conform to generally accepted
accounting principles and have been consistently applied in the
preparation of the financial statements.
Exploration Stage Activities
The Company has been in the exploration stage since its formation in
September 1999 and has not yet realized any revenues from its planned
operations. It is primarily engaged in the acquisition, exploration
and development of mining properties. Upon location of a commercial
minable reserve, the Company expects to actively prepare the site for
its extraction and enter a development stage.
Going Concern
The Company's financial statements have been presented on a going
concern basis that contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. As shown
in the accompanying financial statements, the Company incurred a net
loss of $292,824 for the period ended March 31, 2000, and had no sales.
These conditions raise substantial doubt about the Company's ability to
continue as a going concern. Management has plans to seek additional
capital through a private placement and public offering of its common
stock. The financial statements do not include any adjustments
relating to the recoverability and classification of recorded assets,
or the amounts and classifications of liabilities that might be
necessary in the event the Company cannot continue in existence.
F-6
<PAGE> 36
PALAL MINING CORPORATION
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Accounting Method
The Company's financial statements are prepared using the accrual
method of accounting.
Basic and Diluted Loss Per Share
Loss per share was computed by dividing the net loss by the weighted
average number of shares outstanding during the period. The weighted
average number of shares was calculated by taking the number of shares
outstanding and weighting them by the amount of time that they were
outstanding. Basic and diluted loss per share were the same, as there
were no common stock equivalents outstanding.
Cash and Cash Equivalents
For purposes of the Statement of Cash Flows, the Company considers all
short-term debt securities purchased with a maturity of three months or
less to be cash equivalents.
Provision for Taxes
At March 31, 2000, the Company had a net operating loss of
approximately $292,000. No provision for taxes or tax benefit has been
reported in the financial statements, as there is not a measurable
means of assessing future profits or losses.
Use of Estimates
The process of preparing financial statements in conformity with
generally accepted accounting principles requires the use of estimates
and assumptions regarding certain types of assets, liabilities,
revenues, and expenses. Such estimates primarily relate to unsettled
transactions and events as of the date of the financial statements.
Accordingly, upon settlement, actual results may differ from estimated
amounts.
Impaired Asset Policy
In March 1995, the Financial Accounting Standards Board issued a
statement titled "Accounting for Impairment of Long-live Assets." In
complying with this standard, the Company reviews its long-lived assets
quarterly to determine if any events or changes in circumstances have
transpired which indicate that the carrying value of its assets may not
be recoverable. The Company determines impairment by comparing the
undiscounted future cash flows estimated to be generated by its assets
to their respective carrying amounts. The Company does not believe any
adjustments are needed to the carrying value of its assets at March 31,
2000.
F-7
<PAGE> 37
PALAL MINING CORPORATION
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Concentration of Risk
The Company maintains its cash accounts in primarily one commercial
bank in Vancouver, British Columbia, Canada. The Company's cash
account is a business checking account maintained in U.S. dollars,
which totaled $71 as of March 31, 2000. This amount is not insured by
the FDIC.
Exploration Costs
In accordance with generally accepted accounting principles, the
Company will expense exploration costs as incurred.
Foreign Currency Translation
The Company has adopted Financial Accounting Standard No. 52. There
were no foreign currency translation adjustments required at March 31,
2000. The Company will record future foreign currency translation
results as a separate component of stockholders' equity.
Derivative Instruments
In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 133,
"Accounting for Derivative Instruments and Hedging Activities." This
standard establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities. It requires
that an entity recognize all derivatives as either assets or
liabilities in the balance sheet and measure those instruments at
fair value.
At March 31, 2000, the Company has not engaged in any transactions that
would be considered derivative instruments or hedging activities.
NOTE 3 - COMMITMENTS AND CONTINGENCIES
The Company is engaged in the exploration and development of mineral
properties. At present there are no feasibility studies establishing
proven and probable reserves.
Although the minerals exploration and mining industries are inherently
speculative and subject to complex environmental regulations, the
Company is unaware of any pending litigation or of any specific past or
prospective matters which could impair the value of its mining claims.
F-8
<PAGE> 38
PALAL MINING CORPORATION
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 2000
NOTE 3 - COMMITMENTS AND CONTINGENCIES (continued)
The Company is presently undertaking the required steps to register as
a publicly traded company. In this regard, the Company has signed a
contract with a securities attorney to assist in this matter. The
total fees to be paid to the attorney amount to $25,000. Of this
amount, $12,500 has been paid and is recorded as professional fees.
The remaining $12,500 will be due when the Company's registration
statement is declared effective by the Securities and Exchange
Commission.
NOTE 4 - COMMON STOCK
On September 2, 1999, 5,000,000 shares of common stock were issued to
officers and directors only. There was no public offering of any
securities. The above referenced shares were issued in payment for
consulting services in the amount of $273,586 and repayment for mining
claim recording fees of $64, expenses of $1,218 and advances of $132.
These shares were issued pursuant to exemption from registration
contained in Section 4(2) of the Securities Act of 1933.
In September 1999, the Company, through Mr. Hugh Grenfal, president and
a member of the Board of Directors, acquired ten Mak mining claims
located in the Osoyoos Mining Division of British Columbia, Canada.
NOTE 5 - RELATED PARTIES
An officer of the Company has advanced monies to the Company for the
payment of legal fees. This amount is uncollateralized and has been
recorded as a short-term loan, bearing no interest and having no
specific due date. As of March 31, 2000, the Company has recorded
interest expense in the amount of $252. The imputed interest rate for
this note was 6.45%, and was recorded as a contribution of additional
paid-in capital by the stockholders.
F-9
<PAGE> 39
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The only statute, charter provision, bylaw, contract, or other
arrangement under which any controlling person, director or officer
of the Registrant is insured or indemnified in any manner
against any liability which he may incur in his capacity as such, is as
follows:
1. Article XII of the Articles of Incorporation of the company,
filed as Exhibit 3.1 to the Registration Statement.
2. Article XI of the Bylaws of the company, filed as Exhibit 3.2
to the Registration Statement.
3. Nevada Revised Statutes, Chapter 78.
The general effect of the foregoing is to indemnify a control
person, officer or director from liability, thereby making the company
responsible for any expenses or damages incurred by such control
person, officer or director in any action brought against them
based on their conduct in such capacity, provided they did not
engage in fraud or criminal activity.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses of the offering (assuming all shares are
sold), all of which are to be paid by the registrant, are as follows:
SEC Registration Fee . . . . . . $ 100.00
Printing Expenses . . . . . . . 6,500.00
Accounting Fees and Expenses . . . . . 5,000.00
Legal Fees and Expenses . . . . . . 25,000.00
Blue Sky Fees/Expenses . . . . . . 5,000.00
Transfer Agent Fees . . . . . . 3,000.00
Miscellaneous Expenses . . . . . . 5,400.00
------------
TOTAL $ 50,000.00
============
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
During the past three years, the Registrant has sold the
following securities which were not registered under the
Securities Act of 1933, as amended.
<PAGE> 40
Name and Address Date Shares Consideration
------------------ --------- --------- ----------------
Hugh Grenfal 9/07/99 2,500,000 Services valued at
3337 W. 30th Avenue $136,793 and advances of
Vancouver, British Columbia $707.00
Canada V7S 1W3
Sergei Stetsenko 9/07/99 2,500,000 Services valued at
704 -1155 Beach Avenue $136,793 and advances of
Vancouver, British Columbia $707.00
Canada V6E 1V2
We issued the foregoing restricted shares of common stock to
Messrs. Grenfal and Stetsenko under Section 4(2) of the
Securities Act of 1933. Messrs. Grenfal and Stetsenko are
sophisticated investors, are officers and directors of the company, and
where in possession of all material information relating to the
company. Further, no commissions were paid to anyone in connection
with the sale of the shares and general solicitation was made to
anyone.
ITEM 27. EXHIBITS.
The following Exhibits are filed as part of this Registration
Statement, pursuant to Item 601 of Regulation K. All Exhibits have
been previously filed unless otherwise noted.
Exhibit No. Document Description
3.1 * Articles of Incorporation.
3.2 * Bylaws.
4.1 * Specimen Stock Certificate.
5.1 * Opinion of Conrad C. Lysiak, Esq. regarding the legality
of the Securities being registered.
10.1 * Mak 1 Claim.
10.2 * Mak 2 Claim.
10.3 * Mak 3 Claim.
10.4 * Mak 4 Claim.
10.5 * Mak 5 Claim.
10.6 * Mak 6 Claim.
10.7 * Mak 7 Claim.
10.8 * Mak 8 Claim.
10.9 * Mak 9 Claim.
10.10 * Mak 10 Claim.
10.11 * Statement of Trustee.
10.12 Deed.
23.5 Consent of Williams & Webster, P.S., Certified Public
Accountants.
23.6 Consent of Conrad C. Lysiak, Esq.
27.2 * Financial Data Schedule.
99.1 * Subscription Agreement.
* Previously Filed
<PAGE> 41
ITEM 28. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification
by it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
a. To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
b. To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
c. To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any change to such information in the registration
statement.
2. That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
3. To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
<PAGE> 42
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing of this Form SB-2/A-2
Registration Statement and has duly caused this Form SB-2/A-2
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in Vancouver, British Columbia, on this 1st
day of August, 2000.
PALAL MINING CORPORATION
BY: /s/ Hugh Grenfal
Hugh Grenfal,
President, Chief Executive Officer
and Principal Accounting Officer
KNOW ALL MEN BY THESE PRESENT, that each person whose signature
appears below constitutes and appoints Hugh Grenfal, as true and lawful
attorney-in-fact and agent, with full power of substitution, for his
and in his name, place and stead, in any and all capacities, to sign
any and all amendment (including post-effective amendments) to this
registration statement, and to file the same, therewith, with the
Securities and Exchange Commission, and to make any and all state
securities law or blue sky filings, granting unto said attorney-in-fact
and agent, full power and authority to do and perform each and every
act and thing requisite or necessary to be done in about the premises,
as fully to all intents and purposes as he might or could do in person,
hereby ratifying the confirming all that said attorney-in-fact and
agent, or any substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Form SB-2/A-2 Registration Statement has been signed by the following
persons in the capacities and on the dates indicated:
Signature Title Date
/s/ Hugh Grenfal President, Chief Executive 08/01/2000
Hugh Grenfal Officer, Treasurer, Principal
Accounting Officer and a member
of the Board of Directors
/s/ Sergei Stetsenko Secretary and a member 08/01/2000
Sergei Stetsenko of the Board of Directors
