<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
COYOTE VENTURES CORP.
(Exact name of Registrant as specified in its charter)
NEVADA 52-2268239
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Scott Houghton
T9 - 1501 Howe Street, Vancouver, BC V6Z 2P8
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(Name and address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (604) 408-7691
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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 securities for an
offering pursuant to Rule 462(b) under 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 pursuant to Rule
462(c) under 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 pursuant to Rule
462(d) under 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 pursuant to Rule
434, check the following box. |__|
CALCULATION OF REGISTRATION FEE
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TITLE OF EACH PROPOSED PROPOSED
CLASS OF MAXIMUM MAXIMUM
SECURITIES OFFERING AGGREGATE AMOUNT OF
TO BE AMOUNT TO BE PRICE PER OFFERING REGISTRATION
REGISTERED REGISTERED UNIT (1) PRICE (2) FEE (2)
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Common Stock 4,070,000 shares $0.10 $407,000 $108
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(1) Based on last sales price on August 31, 2000
(2) Estimated solely for the purpose of calculating the registration
fee in accordance with Rule 457 under the Securities Act.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR 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 SUCH DATE AS THE
COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY DETERMINE.
COPIES OF COMMUNICATIONS TO:
Michael A. Cane, Esq.
2300 W. Sahara Blvd., Suite 500
Las Vegas, NV 89102
(702) 312-6255
Agent for Service of Process
<PAGE>
SUBJECT TO COMPLETION, Dated December 11, 2000
PROSPECTUS
COYOTE VENTURES CORP.
4,070,000 SHARES
COMMON STOCK
----------------
The selling shareholders named in this prospectus are offering all of
the shares of our common stock offered through this prospectus. See
the section entitled "Selling Shareholders." The shares were
acquired by the selling shareholders directly from us in two private
offerings that were exempt from registration under the US securities
laws.
Our common stock is presently not traded on any market or securities
exchange.
----------------
The purchase of the securities offered through this prospectus
involves a high degree of risk. See section entitled "Risk Factors"
on pages 3 - 7.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities
or passed upon the adequacy or accuracy of this prospectus. Any
representation to the contrary is a criminal offense.
----------------
The Date Of This Prospectus Is: December 11, 2000
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TABLE OF CONTENTS
PAGE
----
Summary ............................................................. 2
Risk Factors ........................................................ 3
Use of Proceeds ..................................................... 7
Determination of Offering Price ..................................... 7
Dilution ............................................................ 8
Selling Shareholders ................................................ 8
Plan of Distribution ................................................ 12
Legal Proceedings ................................................... 13
Directors, Executive Officers, Promoters and Control Persons ........ 13
Security Ownership of Certain Beneficial Owners and Management ...... 15
Description of Securities ........................................... 15
Interests of Named Experts and Counsel .............................. 17
Disclosure of Commission Position of Indemnification for
Securities Act Liabilities ........................................ 17
Organization Within Last Five Years ................................. 17
Description of Business ............................................. 17
Plan of Operation ................................................... 22
Description of Property ............................................. 23
Certain Relationships and Related Transactions ...................... 23
Market for Common Equity and Related Stockholder Matters ............ 23
Executive Compensation .............................................. 25
Index to Financial Statements ....................................... 26
Changes in and Disagreements with Accountants Disclosure ............ 26
Available Information ............................................... 26
Financial Statements ................................................ F-1
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SUMMARY
The following summary is only a shortened version of the more
detailed information, exhibits and financial statements appearing
elsewhere in this prospectus. Prospective investors are urged to
read this prospectus in its entirety.
Coyote Ventures Corp.
We are in the business of mineral exploration. We have acquired an
option to acquire a 100% interest in a mineral claim located in the
Slocan Mining Division in the Province of British Columbia, Canada.
Our objective is to conduct mineral exploration activities on the
mineral claim in order to assess whether it possesses commercially
exploitable reserves of silver, gold, lead or zinc. Our plan is to
carry out an exploration program on the mineral claim in order to
make an assessment of the commercial potential of these mineral
claims.
Coyote Ventures Corp. is a Nevada corporation incorporated on May 26,
2000. Our principal offices are located at T9 - 1501 Howe Street,
Vancouver, BC V6Z 2P8.
The Offering
Securities Being Offered Up to 4,070,000 shares of common stock. See
section entitled Description of Securities to be
Registered.
Securities Issued
And to be Issued There are 11,575,000 shares of our common
stock issued and outstanding as of the date of
this prospectus. Existing shareholders will
sell all of the shares or our common stock to be
sold under this prospectus. See section entitled
Description of Securities to be Registered.
Use of Proceeds We will not receive any proceeds from the
sale of the common stock by the selling
shareholders. See section entitled Use of
Proceeds.
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RISK FACTORS
An investment in our common stock involves a high degree of risk.
You should carefully consider the risks described below and the other
information in this prospectus and any other filings we may make with
the United States Securities and Exchange Commission in the future
before investing in our common stock. If any of the following risks
occur, our business, operating results and financial condition could
be seriously harmed. The trading price of our common stock could
decline due to any of these risks, and you may lose all or part of
your investment.
RISKS RELATED TO OUR FINANCIAL CONDITION AND BUSINESS MODEL
If We Do Not Obtain Additional Financing, Our Business Will Fail
We had cash in the amount of $47,122 as of August 31, 2000. Our
business plan calls for significant expenses in connection with the
development and exploration of our optioned mineral claims. We will
require additional financing in order to complete these activities in
the event we proceed to phase 2 of our business plan or initial
expenses are greater than anticipated. In addition, we will require
additional financing to sustain our business operations if we are not
successful in earning revenues once exploration and development is
complete. We do not currently have any arrangements for financing
and we can provide no assurance to investors that we will be able to
find such financing if required. Obtaining additional financing
would be subject to a number of factors, including market prices for
molybdenum and tungsten, investor acceptance of our property, and
investor sentiment. These factors may make the timing, amount, terms
or conditions of additional financing unavailable to us.
The only source of future funds presently available to us is through
the sale of equity capital. Any sale of share capital will result in
dilution to existing shareholders. The only other alternative for
the financing of further exploration would be the offering by us of
an interest in our properties to be earned by another party or
parties carrying out further exploration or development thereof,
which is not presently contemplated.
Because We Have Only Recently Commenced Business Operations, We Face
A High Risk of Business Failure
We were incorporated in May 2000 and to date have been involved
primarily in organizational activities and the acquisition of the
optioned mineral claims. We have not earned any revenues as of the
date of this prospectus. Potential investors should be aware of the
difficulties normally encountered by new mineral exploration
companies and the high rate of failure of such enterprises. The
likelihood of success must be considered in light of the problems,
expenses, difficulties, complications and delays encountered in
connection with the exploration of the mineral properties that we
plan to undertake. These potential problems include, but are not
limited to, unanticipated problems relating to exploration and
development, and additional costs and expenses that may exceed
current estimates. We have no history upon which to base any
assumption as to the likelihood that our business will prove
successful, and we can provide no assurance to investors that we will
generate any operating revenues or ever achieve profitable
operations. If we are unsuccessful in addressing these risks, our
business will most likely fail.
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Because We Have Only Recently Commenced Business Operations, We
Expect to Incur Operating Losses For The Foreseeable Future
We have never earned revenues and we have never been profitable.
Prior to completion of our exploration stage, we anticipate that we
will incur increased operating expenses without realizing any
revenues. We therefore expect to incur significant losses into the
foreseeable future. We recognize that if we are unable to generate
significant revenues from the exploration and development of our
optioned mineral claims, we will not be able to achieve profitability
or continue operations.
Because of the Speculative Nature of Exploration of Mining
Properties, There is Substantial Risk That No Commercially
Exploitable Minerals Will Be Found And This Business Will Fail
We can provide investors with no assurance that the mineral claims
that we have optioned contain commercially exploitable reserves of
molybdenum or tungsten. Exploration for minerals is a speculative
venture necessarily involving substantial risk. The expenditures to
be made by us in the exploration of the optioned mineral properties
may not result in the discovery of commercial quantities of ore.
Hazards such as unusual or unexpected formations and other conditions
are involved in mineral exploration and development and often result
in unsuccessful exploration efforts. We may also become subject to
liability for pollution, cave-ins or hazards against which we cannot
insure or against which we may elect not to insure. The payment of
such liabilities may have a material adverse effect on our financial
position.
If We Discover Commercial Reserves Of Precious Metals On Our Optioned
Mineral Properties, We Can Provide No Assurance That We Will Be Able
To Successfully Place The Mineral Claims Into Commercial Production
The optioned mineral properties do not contain any known bodies of
ore. If our exploration programs are successful in establishing ore
of commercial tonnage and grade, we will require additional funds in
order to place the mineral claims into commercial production. In
such an event, we may be unable to do so.
RISKS RELATED TO OUR MARKET AND STRATEGY
If We Are Unable To Hire And Retain Key Personnel, We May Not Be Able
To Implement Our Business Plan And Our Business Will Fail
Our success will be largely dependent on our ability to hire highly
qualified personnel. This is particularly true in highly specialized
businesses such as mineral exploration. These individuals may be in
high demand and we may not be able to attract the staff we need. In
addition, we may not be able to afford the high salaries and fees
demanded by qualified personnel, or may lose such employees after
they are hired. Currently, we have not hired any key personnel. Our
failure to hire key personnel when needed would have a significant
negative effect on our business.
If We Do Not Obtain Clear Title to the Mining Properties, Our
Business May Fail
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While we have obtained geological reports with respect to the
optioned mineral properties, this should not be construed as a
guarantee of title. The properties may be subject to prior
unregistered agreements or transfers or native land claims, and title
may be affected by undetected defects. Our optioned mining
properties have not been surveyed and therefore, the precise
locations and areas of the properties may be in doubt.
Because Market Factors in the Mining Business Are Largely Out of Our
Control, We May Not Be Able To Market Any Ore That May Be Found
The mining industry, in general, is intensively competitive and we
can provide no assurance to investors even if commercial quantities
of ore are discovered that a ready market will exist for the sale of
any ore found. Numerous factors beyond our control may affect the
marketability of any substances discovered. These factors include
market fluctuations, the proximity and capacity of natural resource
markets and processing equipment, government regulations, including
regulations relating to prices, taxes, royalties, land tenure, land
use, importing and exporting of minerals and environmental
protection. The exact effect of these factors cannot be accurately
predicted, but the combination of these factors may result in our not
receiving an adequate return on invested capital.
RISKS RELATED TO LEGAL UNCERTAINTY
If We Become Subject To Burdensome Government Regulation Or Other
Legal Uncertainties, Our Business Will Be Negatively Effected
To date, there are several governmental regulations that have
materially restricted the use and development of ore. In addition,
the legal and regulatory environment that pertains to the exploration
of ore is uncertain and may change. Uncertainty and new regulations
could increase our costs of doing business and prevent us from
exploring or developing ore deposits. The growth of demand for ore
may also be significantly slowed. This could delay growth in
potential demand for and limit our ability to generate revenues. In
addition to new laws and regulations being adopted, existing laws may
be applied to mining that have not as yet been applied. These new
laws may increase our cost of doing business with the result that our
financial condition and operating results may be harmed.
RISKS RELATED TO THIS OFFERING
Because Our Directors and Officers, Mr. Scott Houghton, Mr. John
Manker and Mr. Joseph Galat Own 64.8% Of Our Outstanding Common
Stock, Investors May Find That Future Corporate Decisions Are
Controlled By Our Directors and Officers Who May Use This Control To
Advance Their Own Interests At The Expense Of Other Stockholders
Mr. Scott Houghton, our director and President, owns approximately
21.6% of the outstanding shares of our common stock. Accordingly, he
will have a significant influence in determining the outcome of all
corporate transactions or other matters, including mergers,
consolidations and the sale of all or substantially all of our
assets, and also the power to prevent or cause a change in control.
The interests of Mr. Houghton may differ from the interests of the
other stockholders. Factors that could cause the
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interests of Mr. Houghton to differ from the interest of other
stockholders include the impact of a corporate transaction on the
business time Mr. Houghton must devote to our business and the ability
of Mr. Houghton to continue to manage our business.
Mr. Houghton is presently required to spend 15% of his business time on
business management services for our company. While Mr. Houghton
presently possesses adequate time to attend to our interests, it is
possible that the demands on Mr. Houghton from his other obligations
could increase with the result that he would no longer be able to
devote sufficient time to the management of our business. In addition,
Mr. Houghton may not possess sufficient time for our business if the
demands of managing our business increased substantially beyond current
levels. Competing demands on Mr. Houghton's business time may cause
Mr. Houghton to have differing interests in approving significant
corporate transactions than other stockholders.
Mr. John Manker, our director and Vice-President, owns approximately
21.6% of the outstanding shares of our common stock. Accordingly, he
will have a significant influence in determining the outcome of all
corporate transactions or other matters, including mergers,
consolidations and the sale of all or substantially all of our
assets, and also the power to prevent or cause a change in control.
The interests of Mr. Manker may differ from the interests of the
other stockholders. Factors that could cause the interests of Mr.
Manker to differ from the interest of other stockholders include the
impact of a corporate transaction on the business time Mr. Manker
must devote to our business and the ability of Mr. Manker to continue
to manage our business.
Mr. Manker is presently required to spend 5% of his business time on
business management services for our company. While Mr. Manker
presently possesses adequate time to attend to our interests, it is
possible that the demands on Mr. Manker from his other obligations
could increase with the result that he would no longer be able to
devote sufficient time to the management of our business. In addition,
Mr. Manker may not possess sufficient time for our business if the
demands of managing our business increased substantially beyond current
levels. Competing demands on Mr. Manker's business time may cause Mr.
Manker to have differing interests in approving significant corporate
transactions than other stockholders.
Mr. Joseph Galat, our director and Secretary and Treasurer, owns
approximately 21.6% of the outstanding shares of our common stock.
Accordingly, he will have a significant influence in determining the
outcome of all corporate transactions or other matters, including
mergers, consolidations and the sale of all or substantially all of
our assets, and also the power to prevent or cause a change in
control. The interests of Mr. Galat may differ from the interests of
the other stockholders. Factors that could cause the interests of
Mr. Galat to differ from the interest of other stockholders include
the impact of a corporate transaction on the business time Mr. Galat
must devote to our business and the ability of Mr. Galat to continue
to manage our business.
Mr. Galat is presently required to spend 5% of his business time on
business management services for our company. While Mr. Galat
presently possesses adequate time to attend to our interests, it is
possible that the demands on Mr. Galat from his other obligations
could increase with the result that he would no longer be able to
devote sufficient time to the management of our business. In
addition, Mr. Galat may not possess sufficient time for our business
if the demands of managing our business increased substantially
beyond current levels. Competing demands on Mr. Galat's business
time may cause Mr. Galat to have differing interests in approving
significant corporate transactions than other stockholders.
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<PAGE>
If A Market For Our Common Stock Develops, Our Stock Price May Be
Volatile.
There is currently no market for our common stock and we can provide
no assurance to investors that a market will develop. If a market
does develop, however, we anticipate that the market price of our
common stock will be subject to wide fluctuations in response to
several factors, including:
(1) actual or anticipated variations in our results of
operations;
(2) our ability or inability to generate new revenues;
(3) increased competition; and
(4) conditions and trends in the mining industry.
Further, if our common stock is traded on the NASD over the counter
bulletin board, our stock price may be impacted by factors that are
unrelated or disproportionate to our operating performance. These
market fluctuations, as well as general economic, political and
market conditions, such as recessions, interest rates or
international currency fluctuations may adversely affect the market
price of our common stock.
We can provide no assurance to investors that our common stock will
be traded on the over the counter bulletin board.
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that involve
risks and uncertainties. We use words such as anticipate, believe,
plan, expect, future, intend and similar expressions to identify such
forward-looking statements. You should not place too much reliance
on these forward-looking statements. Our actual results could differ
materially from those anticipated in these forward-looking statements
for many reasons, including the risks faced by us described in the
Risk Factors section and elsewhere in this prospectus.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the common stock
offered through this prospectus by the selling shareholders.
DETERMINATION OF OFFERING PRICE
We will not determine the offering price of the common stock. The
offering price will be determined by market factors and the
independent decisions of the selling shareholders.
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<PAGE>
DILUTION
The common stock to be sold by the selling shareholders is common
stock that is currently issued and outstanding. Accordingly, there
will be no dilution to our existing shareholders.
SELLING SHAREHOLDERS
The selling shareholders named in this prospectus are offering all of
the 4,070,000 shares of common stock offered. The shares include the
following:
(A) 4,000,000 shares of our common stock that the selling
shareholders acquired from us in an offering completed on
July 25, 2000 that was exempt from registration under
Regulation S of the Securities Act of 1933; and
(B) 70,000 shares of our common stock that the selling
shareholders acquired from us in an offering completed on
August 31, 2000 that was exempt from registration under
Regulation S of the Securities Act of 1933.
The following table provides as of December 11, 2000, information
regarding the beneficial ownership of our common stock held by each
of the selling shareholders, including:
(A) the number of shares owned by each prior to this offering;
(B) the total number of shares that are to be offered for each;
(C) the total number of shares that will be owned by each upon
completion of the offering;
(D) the percentage owned by each upon completion of the
offering; and
(E) the identity of the beneficial holder of any entity that
owns the shares.
To the best of our knowledge, the named parties in this table
beneficially own and have sole voting and investment power over all
shares or rights to their shares. Also in calculating the number of
shares that will be owned upon completion of this offering, we have
assumed that none of the selling shareholders sells shares of common
stock not being offered in this prospectus or purchases additional
shares of common stock, and have assumed that all shares offered are
sold. We have based the percentage owned by each on 11,575,000
shares of common stock outstanding on December 11, 2000.
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Total Total
Number Of Shares
Shares To To Be Percent
Be Offered Owned Upon Owned Upon
Shares Owned For Selling Completion Completion
Name and Address Of Prior To This Shareholders Of This Of This
Selling Stockholder Offering Account Offering Offering
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Dale White 425,000 425,000 None None
RR1, S14, C19
Maderia, BC,
Canada, V2V 5M2
Shawn MacPherson 425,000 425,000 None None
24 - 9267 Shook Road
Hatzik, BC,
Canada, V2V 5M2
Barbara MacPherson 485,000 485,000 None None
RR1, S8, C8
Nakusp, BC,
Canada, V0G 1R0
George Bryan-Orr 495,000 495,000 None None
#1 White Hart Court
North Parade
Norsham, England
Rod Morreau 450,000 450,000 None None
106 - 25 Richmond
Street
New Westminster, BC,
Canada, V3L 5P9
Ted Olynyk 470,000 470,000 None None
1 - 910 West 71st
Street
Vancouver, BC,
Canada, V6P 3A4
Jules McNeill 395,000 395,000 None None
4480 Irmin Street
Burnaby, BC,
Canada, V5J 1X7
Massimo Piscopo 455,000 455,000 None None
508 - 1177 Hornby
Street
Vancouver, BC
Canada, V6Z 2E9
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-Table continued-
Total Total
Number Of Shares
Shares To To Be Percent
Be Offered Owned Upon Owned Upon
Shares Owned For Selling Completion Completion
Name and Address Of Prior To This Shareholders Of This Of This
Selling Stockholder Offering Account Offering Offering
----------------------------------------------------------------------------
Tim Plommer 400,000 400,000 None None
1105 - 1238 Seymour
Street
Vancouver, BC,
Canada, V6B 6J3
Peter Deacey 5,000 5,000 None None
50 Vicking Place
Dollard Des Armaux
PQ, Canada, H9G 2P1
L.A. Hammett 5,000 5,000 None None
Box 42256 South Oak PO
Vancouver, BC,
Canada, V6P 6T2
Dimitrios Kerasiotis 5,000 5,000 None None
3205 W. Broadway
Vancouver, BC,
Canada, V6K 2h5
Nick Kerasiotis 5,000 5,000 None None
2427 McMullen Avenue
Vancouver, BC,
Canada, V6B 3E1
R. Keith McLennan 5,000 5,000 None None
8045 Lorenzen Lane
Lantzville, BC,
Canada V0R 2H0
Kenneth Waters 5,000 5,000 None None
Suite 416, 8th Street
East
Saskatoon, SK,
Canada, S7H 0P7
Terence Waters 5,000 5,000 None None
2118, 102nd Crescent
North Battleford,
SK,
Canada, S9A 1J5
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-Table continued-
Total Total
Number Of Shares
Shares To To Be Percent
Be Offered Owned Upon Owned Upon
Shares Owned For Selling Completion Completion
Name and Address Of Prior To This Shareholders Of This Of This
Selling Stockholder Offering Account Offering Offering
----------------------------------------------------------------------------
Shane Epp 5,000 5,000 None None
1203 - 283 Davie
Street
Vancouver, BC,
Canada, V6B 5TA6
Kerry Ryan 5,000 5,000 None None
7676 Morrison
Crescent
Langley, BC,
Canada, V2Y 2E7
John Chow 5,000 5,000 None None
2136 East Pender
Street
Vancovuer, BC,
Canada, V5L 1X2
Artin Deyrmenjian 5,000 5,000 None None
#318 - 470 Granville
Street
Vancouver, BC,
Canada, V6C 1V5
David K. Ryan 5,000 5,000 None None
19838 43rd Avenue
Langley, BC,
Canada, V3A 6R4
Philip Yee 5,000 5,000 None None
8882 - 133A Street
Surrey, BC,
Canada, V3V 7 W4
Ignatios Paschalidis 5,000 5,000 None None
2455 Waterloo Street
Vancouver, BC,
Canada, V6J 2H3
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To our knowledge, none of the selling shareholders:
(1) has had a material relationship with Coyote other than as a
shareholder as noted above at any time within the past three
years; or
(2) has ever been an officer or director of Coyote.
The following selling shareholders are related to the directors or
officers as follows:
1. Kenneth Waters is the brother-in-law of Scott Houghton.
2. Terence Waters is the father-in-law of Scott Houghton.
PLAN OF DISTRIBUTION
The selling shareholders have not informed us of how they plan to
sell their shares. However, they may sell some or all of their
common stock in one or more transactions, including block
transactions:
(1) on such public markets or exchanges as the common stock may
from time to time be trading;
(2) in privately negotiated transactions;
(3) through the writing of options on the common stock;
(4) in short sales; or
(5) in any combination of these methods of distribution.
The sales price to the public may be:
(1) the market price prevailing at the time of sale;
(2) a price related to such prevailing market price; or
(3) such other price as the selling shareholders determine from
time to time.
The shares may also be sold in compliance with the Securities and
Exchange Commission's Rule 144.
The selling shareholders may also sell their shares directly to
market makers acting as principals or brokers or dealers, who may act
as agent or acquire the common stock as a principal. Any broker or
dealer participating in such transactions as agent may receive a
commission from the selling shareholders, or, if they act as agent
for the purchaser of such common stock, from such purchaser. The
selling shareholders will likely pay the usual and customary
brokerage fees for such services. Brokers or dealers may agree with
the selling shareholders to sell a specified number of shares at a
stipulated price per share and, to the extent such broker or dealer
is unable to do so acting as agent for the selling shareholders, to
purchase, as principal, any unsold shares at the price required to
fulfill the respective broker's or dealer's commitment to the selling
shareholders. Brokers or dealers who acquire shares as principals may
thereafter resell such shares from time to time in transactions in a
market or on an exchange, in negotiated transactions or otherwise, at
market prices prevailing at the time of sale or at negotiated prices,
and in connection with such re-sales may pay or receive commissions
to or from the purchasers of such shares. These transactions may
involve cross and block transactions that may
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involve sales to and through other brokers or dealers. If applicable,
the selling shareholders also may have distributed, or may distribute,
shares to one or more of their partners who are unaffiliated with us.
Such partners may, in turn, distribute such shares as described above.
We can provide no assurance that all or any of the common stock offered
will be sold by the selling shareholders.
We are bearing all costs relating to the registration of the common
stock. Any commissions or other fees payable to brokers or dealers
in connection with any sale of the common stock, however, will be
borne by the selling shareholders or other party selling such common
stock.
The selling shareholders must comply with the requirements of the
Securities Act of 1933 and the Securities Exchange Act of 1934 in the
offer and sale of their common stock. In particular, during such
times as the selling shareholders may be deemed to be engaged in a
distribution of the common stock, and therefore be considered to be
an underwriter, they must comply with applicable law and may, among
other things:
(1) not engage in any stabilization activities in connection
with our common stock;
(2) furnish each broker or dealer through which common stock
may be offered, such copies of this prospectus, as amended
from time to time, as may be required by such broker or
dealer; and
(3) not bid for or purchase any of our securities or attempt to
induce any person to purchase any of our securities other
than as permitted under the Securities Exchange Act.
LEGAL PROCEEDINGS
We are not currently a party to any legal proceedings.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Our executive officer and directors and their respective ages as of
December 11, 2000 is as follows:
Directors:
Name of Director Age
---------------------- -----
Scott Houghton 32
John Manker 32
Joseph Galat 32
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Executive Officers:
Name of Officer Age Office
-------------------- --- -------
Scott Houghton 32 President
John Manker 32 Vice-President
Joseph Galat 32 Secretary and Treasurer
Set forth below is a brief description of the background and business
experience of Mr. Houghton, Mr. Manker and Mr. Galat for the past
five years.
Mr. Scott Houghton is our president and is one of our directors. Mr.
Houghton was appointed as a director and as president on May 26,
2000. Mr. Houghton holds a Mechanical Engineering degree from the
University of New Brunswick. In the last four years, Mr. Houghton
has been the founding director of Universal Domains Incorporated
(formerly Four Crown Foods Inc.) a public company that trades on the
OTC Bulletin Board. He was employed as an investor relations
consultant for several companies. Previous to this, Mr. Houghton
worked in the engineering and manufacturing divisions of Spar
Aerospace Ltd. Mr. Houghton provides his services to us on a part-
time basis. Mr. Houghton presently devotes approximately 15% of his
time to our business.
Mr. John Manker is our vice-president and is one of our directors.
Mr. Manker was appointed as a director and vice-president on May 27,
2000. Mr. Mr. Manker received a Bachelor of Science in Geology from
the University of Concordia in 1996 and an Economics Degree from the
Western Washington University in 1998. Mr. Manker was employed in
1999 as an electronic technician for Q.M.W. Telecom. He is presently
employed as an electronic technician at Lucent. Mr. Manker provides
his services to us on a part-time basis. Mr. Manker presently
devotes approximately 5% of his time to our business.
Joseph Galat is our secretary and treasurer and one of our directors.
Mr. Galat was appointed as a director and officer on August 21,
2000. Mr. Galat has worked as a teacher of Science, Computer
Science, History and Physical Education at St. Thomas Aquinas High
School in North Vancouver, BC since 1995. Mr. Galat is also the head
of the school's computer science department. Mr. Galat holds
Bachelor of Arts (Geography) and Bachelor of Education degrees from
the University of British Columbia. Mr. Galat provides his services
to us on a part-time basis. Mr. Galat presently devotes
approximately 5% of his time to our business.
Term of Office
Our directors are elected for one-year terms, to hold office until
the next annual general meeting of the shareholders, or until removed
from office in accordance with our bylaws. Our officers are
appointed by our board of directors and hold office until removed by
the board.
Significant Employees
We have no significant employees other than the officers and
directors described above.
-14-
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of December 11, 2000, the
beneficial ownership of our common stock by each of our officers and
directors, by each person known by us to beneficially own more than
5% of our common stock and by our officers and directors as a group.
Except as otherwise indicated, all shares are owned directly and the
percentage shown is based on 11,575,000 shares of common stock issued
and outstanding on December 11, 2000.
Name and address Number of Shares Percentage of
Title of class of beneficial owner of Common Stock Common Stock
-------------- ------------------- ---------------- -------------
Common Stock Scott Houghton 2,500,000 21.6%
202 - 1201 West
Pender Street
Vancouver, BC,
Canada, V6E 2V2
Director and President
Common Stock John Manker 2,500,000 21.6%
1205 - 1238 Melville Street
Vancouver, BC,
Canada, V6E 4N2
Director and Vice-President
Common Stock Joseph Galat 2,505,000 21.6%
3475 Windermere Street
Vancouver, BC,
Canada, V5M 3R6
Director, Secretary and
Treasurer
Common Stock Directors and Officers 7,505,000 64.8%
(3 Persons)
DESCRIPTION OF SECURITIES
General
The securities being offered are the shares of our common stock, par
value $0.001 per share. Under our articles of incorporation, the
total number of shares of all classes of stock that we are authorized
to issue is 100,000,000 shares of common stock, par value $0.001 per
share. As of December 11, 2000, a total of 11,575,000 shares of
common stock were issued and outstanding. All issued and outstanding
shares of our common stock are fully paid and non-assessable.
-15-
<PAGE>
Common Stock
Holders of common stock have the right to cast one vote for each
share held of record on all matters submitted to a vote of the
stockholders, including the election of directors. Holders of common
stock do not have cumulative voting rights in the election of
directors. Holders of a majority of the voting power of the capital
stock issued and outstanding and entitled to vote, represented in
person or by proxy, are necessary to constitute a quorum at any
meeting of our stockholders, and a vote by the holders of a majority
of such outstanding shares is required to effect certain fundamental
corporate changes such as liquidation, merger or amendment of our
articles of incorporation.
Holders of common stock are entitled to receive dividends pro rata
based on the number of shares held, when, as and if declared by the
board of directors, from funds legally available therefore. In the
event of our liquidation, dissolution or winding up, all assets and
funds remaining after the payment of all debts and other liabilities
shall be distributed, pro rata, among the holders of the common
stock. There are no redemption or sinking fund provisions applicable
to the common stock. All outstanding shares of common stock are
fully paid and non-assessable.
Dividend Policy
We have never declared or paid any cash dividends on our common
stock. We currently intend to retain future earnings, if any, to
finance the expansion of our business. As a result, we do not
anticipate paying any cash dividends in the foreseeable future.
Share Purchase Warrants
We have not issued and do not have outstanding any warrants to
purchase shares of our common stock.
Options
We have not issued and do not have outstanding any options to
purchase shares of our common stock.
Convertible Securities
We have not issued and do not have outstanding any securities
convertible into shares of our common stock or any rights convertible
or exchangeable into shares of our common stock.
-16-
<PAGE>
INTERESTS OF NAMED EXPERTS AND COUNSEL
No expert or counsel named in this prospectus as having prepared or
certified any part of this prospectus or having given an opinion upon
the validity of the securities being registered or upon other legal
matters in connection with the registration or offering of our common
stock was employed on a contingency basis, or had, or is to receive,
in connection with the offering, a substantial interest, direct or
indirect, in the registrant or any of its parents or subsidiaries.
Nor was any such person connected with the registrant or any of its
parents or subsidiaries as a promoter, managing or principal
underwriter, voting trustee, director, officer, or employee.
Michael A. Cane of Cane & Company, LLC, our independent counsel, has
provided an opinion on the validity of our common stock.
The financial statements included in this prospectus and the
registration statement have been audited by Morgan and Company,
chartered accountants, to the extent and for the periods set forth in
their report appearing elsewhere in this document and in the
registration statement filed with the SEC, and are included in
reliance upon such report given upon the authority of said firm as
experts in auditing and accounting.
DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR SECURITIES
ACT LIABILITIES
Our directors and officers are indemnified as provided by the Nevada
Revised Statutes and our bylaws. We have been advised that in the
opinion of the Securities and Exchange Commission indemnification for
liabilities arising under the Securities Act is against public policy
as expressed in the Securities Act, and is, therefore, unenforceable.
In the event that a claim for indemnification against such
liabilities is asserted by one of our directors, officers, or
controlling persons in connection with the securities being
registered, we will, unless in the opinion of our legal counsel the
matter has been settled by controlling precedent, submit the question
of whether such indemnification is against public policy to a court
of appropriate jurisdiction. We will then be governed by the court's
decision.
ORGANIZATION WITHIN LAST FIVE YEARS
We are a Nevada corporation incorporated on May 26, 2000.
Our principal executive offices are located at T9 - 1501 Howe Street,
Vancouver, BC, Canada. Our telephone number is (604) 408-7691.
DESCRIPTION OF BUSINESS
We are an exploration stage company engaged in the acquisition,
exploration and development of mineral properties. We have acquired
the option to earn a 100% interest in the mineral claim described
below under the heading "Option Agreement". The mineral claim is in
the Slocan Mining Division of the Province of British Columbia in the
country of Canada and is referred to by us as the Flint mineral
-17-
<PAGE>
claim. Our business plan is to carry out exploration work on the
Flint mineral claim in order to ascertain whether it possesses
commercially developable quantities of gold, silver, lead or zinc.
We can provide no assurance that a commercially viable mineral
deposit, or reserve, exists in Flint mineral claim until appropriate
exploratory work is done and a comprehensive evaluation based on such
work concludes legal and economic feasibility.
Option Agreement
We have entered into an option agreement dated July 15, 2000 with
John D. MacPherson. Under the option agreement, we are granted the
exclusive right and option to acquire a 100% interest in certain
mineral claims in the Slocan Mining Division of the Province of
British Columbia for a total consideration of $565,000 US plus the
payment of exploration and development expenditures on the Flint
mineral claim totaling $112,000 US.
We made a cash payment of $5,000 to John D. MacPherson under the
option agreement upon execution of the option agreement. In order to
exercise the Option we must pay an additional $560,000 US as follows:
(1) an additional $10,000 US on or before June 30, 2001;
(2) an additional $50,000 US on or before December 31, 2001;
(3) an additional $500,000 US on or before December 31, 2002.
In addition, we must incur expenditures in the exploration of the
Flint mineral claim in the following amounts by the following dates
in order to exercise the option:
(1) $2,000 US by December 31, 2000;
(2) an additional $10,000 US by June 30, 2001;
(3) an additional $100,000 US by December 31, 2001.
If we incur any exploration expenditures in excess of the requirement
in any period the excess may be carried forward and applied to
expenditures required in succeeding periods.
Location and Access of the Flint Mineral Claim
The mineral claim comprising the Flint Claim consists of a mineral
claim covering approximately 556 acres located in the Slocan Mining
Division in the Province of British Columbia, Canada. The claim is
comprised of the mineral claim number 257117.
-18-
<PAGE>
The property is located in the Slocan Mining Division of Southwest
British Columbia on the slopes of Mount Carlyle approximately seven
(7) miles west of the town of Kaslo, British Columbia and is
accessible by vehicle from Kaslo via the Kaslo-New Denver paved
highway about 4 miles west of Kaslo, thence by the Keen Creek road,
westerly for about 4.5 miles, then by 4-wheel drive road up the
valley of Carlyle Creek to the old workings of the Martin and Flint
veins.
Prior Exploration of the Flint Mineral Claim
Mineralization has been known in the Mount Carlyle area since the
late 1890's. The Flint vein was staked in 1898 and the Martin
prospect was located in 1902.
Several individuals operated the Flint Mine discontinuously between
1905 and 1953. It has been reported that a total of 339 tons of ore
were produced from this mine. This consisted of 11,450 ounces of
Silver, 149,279 pounds of Lead and 11,672 pounds of Zinc.
The Martin Mines situated in the southeast corner of the Flint
mineral claims, operated between 1915 and 1924 and produced 59 tons
containing 3268 ounces of Silver, 62,582 pounds Lead and 4368 pounds
Zinc.
Moderate amounts of work including road building and some mining were
carried out in recent years. However, it appears that little or no
development has been done and no shipments have been made from the
property.
From April to September 1979, Keen Creek Developments Ltd. mined
about 1600 tons of ore from the Last Chance claim located some 2000
feet south east of the Flint claim.
A diamond drill hole in 1987 is reported to have intersected
argillites, limestone and granodiorite porphyry and a 4 to 5 foot
section containing sulphides. Apparently, no assays were taken.
We know of no other work that was carried out on the site.
Geological Report and Recommended Work Program
We have obtained a geological property evaluation report on the Flint
mineral claim. The property report was prepared by Mr. William G.
Timmins, P.Eng, and is dated June 2000. The geological report
summarizes the geology and the prior exploration of the mineral
claims, gives conclusions as to the results of the prior exploration
and makes a recommendation to conduct further geological exploration
on the Flint mineral claim.
Generally, we hold a claim consisting of nine units, located at
Carlyle Creek in the Slocan Mining Division of Southern British
Columbia, Canada. The property hosts mineralized vein structures with
significant silver, lead and zinc values from numerous old workings.
The geological report recommends a three-phased exploration program,
each phase subject to results of the preceding phase. The program
consists of reconnaissance of the property to determine location and
-19-
<PAGE>
condition of underground workings, check geological samples, compile
data, perform surface and underground mapping, and do sampling and
prospecting followed by diamond drilling.
The following outlines the phases and estimated costs of this
recommended work program:
PHASE I
-------
Reconnaissance including location and condition
of workings and check sampling $ 5,000
PHASE II
--------
1. Data compilation and preparation of composite map $ 5,000
2. Surface geological mapping, prospecting, sampling $ 15,000
3. Underground geological mapping and sampling $ 10,000
4. Transportation, truck, rental, gas, supplies $ 4,000
5. Accommodation, meals, etc. $ 5,000
6. Engineering, supervision, reports $ 6,000
--------
Contingency $ 5,000
--------
TOTAL PHASE II $ 50,000
========
PHASE III
---------
Phase III work is dependent upon results of Phase II, but would
likely consist of diamond drilling.
Preliminary Allowance, 3000 feet at $25/ft $ 75,000
--------
TOTAL PHASE III $ 75,000
========
TOTAL (EST.) COST ALL PHASES $130,000
========
The report also advises that additional work could be designed
following the above phases.
Administration
We have entered into a management agreement dated December 1, 1999
with Scott Houghton, a director and our president. Under the
management agreement, Mr. Houghton is to provide office
administration services to us for a fee of $1,000 US per month for a
one year term commencing October 1, 2000 and ending on September 30,
2001.
Compliance with Government Regulation
We will be required to comply with all regulations, rules and
directives of governmental authorities and agencies applicable to the
exploration of minerals in Canada generally, and in the Province of
British
-20-
<PAGE>
Columbia, specifically. In addition, production of minerals
in the Province of British Columbia will require prior approval of
applicable governmental regulatory agencies. We can provide no
assurance to investors that such approvals will be obtained. The
cost and delay involved in attempting to obtain such approvals cannot
be known at this time.
We have budgeted for regulatory compliance costs in the proposed work
program recommended by the geological report. We will have to
sustain the cost of reclamation and environmental mediation for all
exploration (and development) work undertaken. The amount of these
costs is not known at this time as we do not know the extent of the
exploration program that will be undertaken beyond completion of the
recommended work program. Because there is presently no information
on the size, tenor, or quality of any resource or reserve at this
time, it is impossible to assess the impact of any capital
expenditures on earnings, our competitive position or us in the event
a potentially economic deposit is discovered.
If we enter into production, the cost of complying with permit and
regulatory environment laws will be greater than in phase one because
the impact on the project area is greater. Permits and regulations
will control all aspects of any production program if the project
continues to that stage because of the potential impact on the
environment.
Employees
We have no employees, other than its officers, as of the date of this
prospectus.
Our officers are Mr. Scott Houghton who is our president, Mr. John
Manker who is our vice-president and Mr. Joseph Galat who is our
secretary and treasurer. Mr. Houghton is also one of our directors.
Mr. Houghton provides his services on a part-time basis as required
for our business pursuant to a Management Services Agreement. Mr.
Houghton presently commits approximately 15% of his business time to
our business. We presently pay Mr. Houghton a management fee for his
management services in the amount of $1,000 per month pursuant to the
management agreement.
We do not pay any compensation to our other officers and directors
solely for serving as a directors on our board of directors.
We conduct our business largely through agreements with consultants
and arms-length third parties.
Research and Development Expenditures
We have not incurred any research or development expenditures since
our incorporation.
Subsidiaries
We do not have any subsidiaries.
Patents and Trademarks
We do not own, either legally or beneficially, any patent or
trademark.
-21-
<PAGE>
PLAN OF OPERATION
Our business plan is to proceed with the exploration of the Flint
mineral claim to determine if it contains commercially exploitable
reserves of silver, gold, lead or zinc. We have decided to proceed
with phase one of the exploration program recommended by the
geological report. We will assess whether to proceed to phase two
of the recommended geological work program upon completion of an
assessment of the results of phase one of the geological work
program.
We anticipate that phase one of the recommended geological work
program will cost approximately $5,000. We had approximately $47,000
in cash reserves as of August 31, 2000. We anticipate that we have
sufficient funds to complete phase one of the geological work
program. This expenditure will also enable us to meet the
exploration expenditure requirement under the option agreement for
the period through June 30, 2001.
We believe that our cash reserves are also sufficient to meet our
obligations for the next twelve month period to Mr. Houghton under
his management agreement and to pay for the legal and accounting
expense of complying with our obligations as a reporting issuer under
the Securities Exchange Act of 1934. These expenses will be in
addition to the cost of completing phase one of the exploration
program.
We will require additional funding in the event that we decide to
proceed with phase two of the exploration program. The anticipated
cost of the phase two exploration program is $50,000 which is in
excess of our projected cash reserves remaining upon completion of
phase one of the exploration program. We anticipate that additional
funding will be in the form of equity financing from the sale of our
common stock. However, we cannot provide investors with any
assurance that we will be able to raise sufficient funding from the
sale of our common stock to fund phase two of the exploration
program. We believe that debt financing will not be an alternative
for funding phase two of the exploration program. We do not have any
arrangements in place for any future equity financing.
We will require additional funding in the event that we decide to
proceed with phase three of the exploration program. The anticipated
cost of the phase three exploration program is $75,000 which is in
excess of our projected cash reserves remaining upon completion of
phase one of the exploration program. We anticipate that additional
funding will be in the form of equity financing from the sale of our
common stock. However, we cannot provide investors with any
assurance that we will be able to raise sufficient funding from the
sale of our common stock to fund phase three of the exploration
program. We believe that debt financing will not be an alternative
for funding phase three of the exploration program. We do not have
any arrangements in place for any future equity financing.
If we do not make the required exploration expenditures of $10,000 by
June 30, 2001 or $112,000 in aggregate by December 31, 2001, or the
option payments of $10,000 by June 30, 2001 or $65,000 in aggregate
by December 31, 2001, then our option in will terminate and we will
lose all our rights and interest in the Flint mineral claim. If we do
not secure additional financing to incur the required exploration
expenditures, we may consider bringing in a joint venture partner to
provide the required funding. We have not undertaken any efforts to
locate a joint venture partner. In addition, we cannot provide
investors with any assurance that we will be able to locate a joint
venture partner who will
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<PAGE>
assist us in funding the exploration of the
Flint mineral claim. We may also pursue acquiring interests in
alternate mineral properties in the future.
DESCRIPTION OF PROPERTY
We have an option to acquire a 100% interest in the Flint mineral
claim, as described in the section above entitled Description of
Business. We do not own or lease any property other than our option
to acquire an interest in the Flint mineral claim.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Other than set forth in this section below, none of the following
parties has, since our date of incorporation, any material interest,
direct or indirect, in any transaction with us or in any presently
proposed transaction that has or will materially affect us:
* Any of our directors or officers;
* Any person proposed as a nominee for election as a director;
* Any person who beneficially owns, directly or indirectly, shares
carrying more than 10% of the voting rights attached to our
outstanding shares of common stock;
* Any of our promoters;
* Any relative or spouse of any of the foregoing persons who has
the same house as such person.
We have entered into a management agreement with Mr. Scott Houghton,
our president and a director, whereby Mr. Houghton provides
management services to us in consideration for the payment of a
management fee of $1,000 per month.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
No Public Market for Common Stock
There is presently no public market for our common stock. We
anticipate applying for listing of our common stock on the NASD over
the counter bulletin board upon the effectiveness of the registration
statement of which this prospectus forms a part. However, we can
provide investors with no assurance that our shares will be traded on
the bulletin board or, if traded, that a public market will
materialize.
Holders of Our Common Stock
As of the date of this registration statement, we have 26 registered
shareholders.
Registration Rights
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<PAGE>
We have not granted registration rights to the selling shareholders
or to any other persons.
Dividends
There are no restrictions in our articles of incorporation or bylaws
that restrict us from declaring dividends. The Nevada Revised
Statutes, however, do prohibit us from declaring dividends where,
after giving effect to the distribution of the dividend:
(1) we would not be able to pay our debts as they become due in
the usual course of business; or
(2) our total assets would be less than the sum of our total
liabilities, plus the amount that would be needed to
satisfy the rights of shareholders who have preferential
rights superior to those receiving the distribution.
We have not declared any dividends. We do not plan to declare any
dividends in the foreseeable future.
Rule 144 Shares
A total of 7,500,000 shares of our common stock will be available for
resale to the public after May 30, 2001 in accordance with the volume
and trading limitations of Rule 144 of the Act. In general, under
Rule 144 as currently in effect, a person who has beneficially owned
shares of a company's common stock for at least one year is entitled
to sell within any three month period a number of shares that does
not exceed the greater of:
1. 1% of the number of shares of the company's common stock then
outstanding, which equals approximately 115,750 shares in our company
as of the date of this prospectus; or
2. the average weekly trading volume of the company's common stock
during the four calendar weeks preceding the filing of a notice on
form 144 with respect to the sale.
Sales under Rule 144 are also subject to manner of sale provisions
and notice requirements and to the availability of current public
information about the company.
Under Rule 144(k), a person who is not one of the company's
affiliates at any time during the three months preceding a sale, and
who has beneficially owned the shares proposed to be sold for at
least 2 years, is entitled to sell shares without complying with the
manner of sale, public information, volume limitation or notice
provisions of Rule 144.
As of the date of this prospectus, officers and directors of our
company hold all 7,500,000 shares that may be sold pursuant to Rule
144 after May 30, 2001.
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<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The table below summarizes the compensation earned for services
rendered for the fiscal period ended August 31, 2000 by all our
officers and directors..
Annual Compensation Long Term Compensation
------------------- ----------------------
Other Restricted All
Annual Stock Options/* LTIP Other
Name Title Year Salary Bonus Compen- Awarded SARs (#) pay- Compen-
sation outs($) sation
---- --------- ---- ------ ----- ------ ---------- ------- ------- -------
Scott President 2000 $1,000 0 0 0 0 0 0
Houghton and
Director
John
Manker Vice- 2000 $ 0 0 0 0 0 0 0
President
and
Director
Joseph
Galat Secretary,2000 $ 0 0 0 0 0 0 0
Treasurer
and
Director
Stock Option Grants
We did not grant any stock options to the executive officers during
our most recent fiscal year ended August 31, 2000. We have also not
granted any stock options to the executive officers since August 31,
2000.
Employment Agreements
We have a management services agreement with Mr. Scott Houghton, our
president and a director. Mr. Houghton provides his services to us
on a part-time basis. We pay him a fee of $1,000 per month for these
services.
We do not have an employment or consultant agreement with Mr. John
Manker or Mr. Joseph Galat, our other officers and directors. We did
not pay any salary or consulting fees to Mr. John Manker or Mr.
Joseph Galat.
Mr. John Boschert resigned as one of our directors on August 17, 2000.
We did not pay any salary or consulting fee to Mr. Boschert and did
not have an employment or consultant agreement with him.
-25-
<PAGE>
INDEX TO FINANCIAL STATEMENTS
1. Auditors' Report
2. Audited Financial Statements:
a. Balance Sheet as of August 31, 2000
b. Statement of Loss and Deficit for the period ending August
31, 2000
c. Statement of Cash Flows for the period ending August 31, 2000
d. Statement of Stockholders Equity for the period ending August
31, 2000
e. Notes to Audited Financial Statements
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
We have had no changes in or disagreements with our accountants.
AVAILABLE INFORMATION
We have filed a registration statement on Form SB-2 under the
Securities Act with the Securities and Exchange Commission with
respect to the shares of our common stock offered by this prospectus.
This prospectus was filed as a part of that registration statement
but does not contain all of the information contained in the
registration statement and exhibits. Reference is thus made to the
omitted information. Statements made in this prospectus are
summaries of the material terms of contracts, agreements and
documents and are not necessarily complete; however, all information
we considered material has been disclosed. Reference is made to each
exhibit for a more complete description of the matters involved and
these statements are qualified in their entirety by the reference.
You may inspect the registration statement, exhibits and schedules
filed with the Securities and Exchange Commission at the Securities
and Exchange Commission's principle office in Washington, D.C.
Copies of all or any part of the registration statement may be
obtained from the Public Reference Section of the Securities and
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549.
The Securities and Exchange Commission also maintains a web site
(http://www.sec.gov) that contains this filed registration statement,
reports, proxy statements and information regarding us that we have
filed electronically with the Commission. For more information
pertaining to our company and the common stock offered in this
prospectus, reference is made to the registration statement.
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<PAGE>
COYOTE VENTURES CORP.
(An Exploration Stage Company)
FINANCIAL STATEMENTS
AUGUST 31, 2000
(Stated in U.S. Dollars)
<PAGE>
AUDITORS' REPORT
To the Directors
Coyote Ventures Corp.
We have audited the balance sheet of Coyote Ventures Corp. (an
exploration stage company) as at August 31, 2000 and the
statements of loss and deficit accumulated during the exploration
stage, cash flows, and stockholders' equity for the period then
ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion
on these financial statements based on our audit.
We conducted our audit in accordance with United States and
Canadian generally accepted auditing standards. Those standards
require that we plan and perform an audit to obtain reasonable
assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, these financial statements present fairly, in all
material respects, the financial position of the Company as at
August 31, 2000 and the results of its operations and cash flows
for the period then ended in accordance with United States
generally accepted accounting principles.
Vancouver, B.C. /s/ Morgan & Company
October 4, 2000 Chartered Accountants
<PAGE>
COYOTE VENTURES CORP.
(An Exploration Stage Company)
BALANCE SHEET
(Stated in U.S. Dollars)
---------------------------------------------------------------------------
AUGUST 31
2000
---------------------------------------------------------------------------
ASSETS
Current
Cash $ 47,122
Mineral Property (Note 3) 5,000
----------
$ 52,122
===========================================================================
LIABILITIES
Current
Accounts payable $ 10,049
SHAREHOLDERS' EQUITY
Share Capital
Authorized:
100,000,000 Common shares, par value
$0.001 per share
Issued and outstanding:
11,575,000 Common shares 11,575
Additional paid in capital 43,425
Deficit Accumulated During The Exploration Stage (12,927)
----------
42,073
----------
$ 52,122
===========================================================================
Approved by the Directors:
__________________________________ __________________________________
<PAGE>
COYOTE VENTURES CORP.
(An Exploration Stage Company)
STATEMENT OF LOSS AND DEFICIT
(Stated in U.S. Dollars)
---------------------------------------------------------------------------
PERIOD
FROM
DATE OF
ORGANIZATION
MAY 26, 2000
TO AUGUST 31
2000
---------------------------------------------------------------------------
Expenses
Mineral property exploration expenditures $ 1,365
Professional fees 10,659
Stock transfer fees 903
------------
Net Loss For The Period 12,927
Deficit Accumulated During The Exploration Stage,
Beginning Of Period -
------------
Deficit Accumulated During The Exploration Stage,
End Of Period $ 12,927
===========================================================================
Net Loss Per Share $ 0.001
===========================================================================
Weighted Average Number of Shares Outstanding 9,481,794
===========================================================================
<PAGE>
COYOTE VENTURES CORP.
(An Exploration Stage Company)
STATEMENT OF CASH FLOWS
(Stated in U.S. Dollars)
---------------------------------------------------------------------------
PERIOD
FROM
DATE OF
ORGANIZATION
MAY 26, 2000
TO AUGUST 31
2000
---------------------------------------------------------------------------
Cash Flow From Operating Activity
Net loss for the period $ (12,927)
Adjustments To Reconcile Net Loss To Net Cash Used
By Operating Activity
Accounts payable 10,049
------------
(2,878)
------------
Cash Flow From Investing Activity
Mineral property (5,000)
Cash Flow From Financing Activity
Share capital issued 55,000
------------
Increase In Cash 47,122
Cash, Beginning Of Period -
------------
Cash, End Of Period $ 47,122
===========================================================================
<PAGE>
COYOTE VENTURES CORP.
(An Exploration Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
AUGUST 31, 2000
(Stated in U.S. Dollars)
Common Stock
----------------------------
Additional
Paid-In
Shares Amount Capital Deficit Total
----------------------------------------------
Shares issued for cash
at $0.001 7,500,000 $ 7,500 $ - $ - $ 7,500
Shares issued for
cash at $0.01 4,000,000 4,000 36,000 - 40,000
Shares issued for
cash at $0.10 75,000 75 7,42 5 - 7,500
Net loss for the
Period - - - (12,927) (12,927)
--------------------------------------------------
Balance,
August 31, 2000 11,575,000 $ 11,575 $ 43,425 $ (12,927)$ 42,073
==================================================
<PAGE>
COYOTE VENTURES CORP.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2000
(Stated in U.S. Dollars)
1. NATURE OF OPERATIONS
a) Organization
The Company was incorporated in the State of Nevada, U.S.A.
on May 26, 2000.
b) Exploration Stage Activities
The Company is in the process of exploring its mineral
property and has not yet determined whether the property
contains ore reserves that are economically recoverable.
The recoverability of amounts shown as mineral property and
related deferred exploration expenditures is dependent upon
the discovery of economically recoverable reserves,
confirmation of the Company's interest in the underlying
mineral claims and the ability of the Company to obtain
profitable production or proceeds from the disposition
thereof.
2. SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Company have been prepared in
accordance with generally accepted accounting principles in the
United States. Because a precise determination of many assets
and liabilities is dependent upon future events, the
preparation of financial statements for a period necessarily
involves the use of estimates which have been made using
careful judgement.
The financial statements have, in management's opinion, been
properly prepared within reasonable limits of materiality and
within the framework of the significant accounting policies
summarized below:
a) Mineral Property Costs
The Company capitalizes the acquisition costs of mineral
properties in which it has a continuing interest to be
amortized over the recoverable reserves when a property
reaches commercial production. On abandonment of any
property, applicable acquisition costs will be written off.
To date, the Company has not established the commercial
feasibility of its mineral property, therefore, all
exploration expenditures are being expensed.
<PAGE>
COYOTE VENTURES CORP.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2000
(Stated in U.S. Dollars)
2. SIGNIFICANT ACCOUNTING POLICIES (Continued)
b) Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities, and disclosure of
contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues
and expenses for the reporting period. Actual results could
differ from these estimates.
c) Foreign Currency Translation
The Company's functional currency is the U.S. dollar.
Transactions in foreign currency are translated into U.S.
dollars as follows:
i) monetary items at the rate prevailing at the balance
sheet date;
ii) non-monetary items at the historical exchange rate;
iii) revenue and expense at the average rate in effect
during the applicable accounting period.
d) Income Taxes
The Company has adopted Statement of Financial Accounting
Standards No. 109 - "Accounting for Income taxes" (SFAS
109). This standard requires the use of an asset and
liability approach for financial accounting, and reporting
on income taxes. If it is more likely than not that some
portion or all of a deferred tax asset will not be realized,
a valuation allowance is recognized.
e) Net Loss Per Share
Net loss per share is based on the weighted average number
of common shares outstanding during the period plus common
share equivalents, such as options, warrants and certain
convertible securities. This method requires primary
earnings per share to be computed as if the common share
equivalents were exercised at the beginning of the period or
at the date of issue and as if the funds obtained thereby
were used to purchase common shares of the Company at its
average market value during the period.
<PAGE>
COYOTE VENTURES CORP.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2000
(Stated in U.S. Dollars)
3. MINERAL PROPERTY
The Company has entered into an option agreement dated July 15,
2000 to acquire a 100% interest in a mineral claim block
located in the Slocan Mining Division of British Columbia.
In order to earn its interest, the Company must make cash
payments and incur exploration expenditures as follows:
Cash payments:
- $5,000 on execution of the agreement
- $10,000 by June 30, 2001
- $50,000 by December 31, 2001
- $500,000 by December 31, 2002
Exploration expenditures:
- $2,000 by December 31, 2000
- A further $10,000 by June 30, 2001
- A further $100,000 by December 31, 2001
Balance, August 31, 2000 $ 5,000
=========
4. CONTINGENCY
Mineral Property
The Company's mineral property interest has been acquired
pursuant to an option agreement. In order to retain its
interest the Company must satisfy the terms of the option
agreement described in Note 3.
5. UNCERTAINTY DUE TO THE YEAR 2000 ISSUE
The Year 2000 Issue arises because many computerized systems
use two digits rather than four to identify a year. Date-
sensitive systems may recognize the year 2000 as 1900 or some
other date, resulting in errors when information using year
2000 dates is processed. In addition, similar problems may
arise in some systems which use certain dates in 1999 to
represent something other than a date. Although the change in
date has occurred, it is not possible to conclude that all
aspects of the Year 2000 Issue that may affect the entity,
including those related to customers, suppliers, or other
third parties, have been fully resolved.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our officers and directors are indemnified as provided by the Nevada
Revised Statutes and our bylaws.
Under the NRS, director immunity from liability to a company or its
shareholders for monetary liabilities applies automatically unless it
is specifically limited by a company's articles of incorporation that
is not the case with our articles of incorporation. Excepted from
that immunity are:
(1) a willful failure to deal fairly with the company or its
shareholders in connection with a matter in which the
director has a material conflict of interest;
(2) a violation of criminal law (unless the director had
reasonable cause to believe that his or her conduct was
lawful or no reasonable cause to believe that his or her
conduct was unlawful);
(3) a transaction from which the director derived an improper
personal profit; and
(4) willful misconduct.
Our bylaws provide that we will indemnify our directors and officers
to the fullest extent not prohibited by Nevada law; provided,
however, that we may modify the extent of such indemnification by
individual contracts with our directors and officers; and, provided,
further, that we shall not be required to indemnify any director or
officer in connection with any proceeding (or part thereof) initiated
by such person unless:
(1) such indemnification is expressly required to be made by
law;
(2) the proceeding was authorized by our Board of Directors;
(3) such indemnification is provided by us, in our sole
discretion, pursuant to the powers vested us under Nevada
law; or
(4) such indemnification is required to be made pursuant to the
bylaws.
Our bylaws provide that we will advance all expenses incurred to any
person who was or is a party or is threatened to be made a party to
any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason
of the fact that he is or was our director or officer, or is or was
serving at our request as a director or executive officer of another
company, partnership, joint venture, trust or other enterprise, prior
to the final disposition of the proceeding, promptly following
request. This advanced of expenses is to be made upon receipt of an
undertaking by or on behalf of such person to repay said amounts
should it be ultimately determined that the person was not entitled
to be indemnified under our bylaws or otherwise.
Our bylaws also provide that no advance shall be made by us to any
officer in any action, suit or proceeding, whether civil, criminal,
administrative or investigative, if a determination is reasonably and
promptly made: (a) by the board of directors by a majority vote of a
quorum consisting of directors who were not parties to the
proceeding; or (b) if such quorum is not obtainable, or, even if
obtainable, a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, that the
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<PAGE>
facts known to the decision-making party at the time such determination
is made demonstrate clearly and convincingly that such person acted in
bad faith or in a manner that such person did not believe to be in or not
opposed to our best interests.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated costs of this offering are as follows:
Securities and Exchange Commission registration fee* $ 108
Federal Taxes $ NIL
State Taxes and Fees $ NIL
Transfer Agent Fees $ 1,000
Accounting fees and expenses $ 5,000
Legal fees and expenses $20,000
Blue Sky fees and expenses $ 2,000
Miscellaneous $ NIL
-------
Total $28,108
=======
--------------------------------------------------------------------------
* All amounts are estimates other than the Commission's registration fee.
We are paying all expenses of the offering listed above. No portion
of these expenses will be borne by the selling shareholders. The
selling shareholders, however, will pay any other expenses incurred
in selling their common stock, including any brokerage commissions or
costs of sale.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
We completed the issuance of 7,500,000 shares of our common stock
pursuant to Section 4(2) of the Securities Act of 1933 on May 30,
2000. We received proceeds of $7,500 from the offering. No
commissions or fees were paid in connection with the offering. All
shares were issued to our officers and directors, at a price of
$0.001 per share. The 7,500,000 shares of common stock are restricted
shares, as defined in the Securities Act.
We completed a private placement of 4,000,000 shares of our common
stock pursuant to Regulation S of the 1933 Act on July 25, 2000. All
shares were issued at a price of $0.01 per share. We received
proceeds of $40,000 from the offering. Each purchaser represented to
us that the purchaser was a Non-US Person as defined in Regulation S.
We did not engage in a distribution of this offering in the United
States. Each purchaser represented their intention to acquire the
securities for investment only and not with a view toward
distribution. Appropriate legends were affixed to the stock
certificates issued in accordance with Regulation S. All purchasers
were given adequate access to sufficient information about us to make
an informed investment decision. None of the securities were sold
through an underwriter and accordingly, there were no underwriting
discounts or commissions involved. The selling shareholders named in
this prospectus include all of the purchasers who purchased shares
pursuant to this Regulation S offering.
We completed a private placement of 75,000 shares of our common stock
pursuant to Regulation S of
-28-
<PAGE>
the 1933 Act on August 31, 2000. All
shares were issued at a price of $0.10 per share. We received
proceeds of $7,500 from the offering. Each purchaser represented to
us that the purchaser was a Non-US Person as defined in Regulation S.
We did not engage in a distribution of this offering in the United
States. Each purchaser represented their intention to acquire the
securities for investment only and not with a view toward
distribution. Appropriate legends were affixed to the stock
certificates issued in accordance with Regulation S. All purchasers
were given adequate access to sufficient information about us to make
an informed investment decision. None of the securities were sold
through an underwriter and accordingly, there were no underwriting
discounts or commissions involved. The selling shareholders named in
this prospectus include all of the purchasers who purchased shares
pursuant to this Regulation S offering.
ITEM 27. EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION
-------- -----------
3.1 Articles of Incorporation
3.2 By-Laws
4.1 Share Certificate
5.1 Opinion of Cane & Company, LLC, with consent to use
10.1 Option Agreement
10.2 Management Services Agreement
23.1 Consent of Morgan & Company
23.2 Consent of Geologist to use of name
27.1 Financial Data Schedule
ITEM 28. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(A) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement to:
(1) include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(2) reflect in the prospectus any facts or events arising
after the effective date of this registration statement,
or most recent post-effective amendment, which,
individually or in the aggregate, represent a
fundamental change in the information set forth in this
registration statement; and
(3) include any material information with respect to the
plan of distribution not previously disclosed in this
registration statement or any material change to such
information in the registration statement.
-29-
<PAGE>
(B) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment
shall be deemed to be a new registration statement relating
to the securities offered herein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide offering thereof.
(C) To remove from registration by means of a post-effective
amendment any of the securities being registered hereby
which remain unsold at the termination of the offering.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to our directors, officers and
controlling persons pursuant to the provisions above, or otherwise,
we have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act, and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities,
other than the payment by us of expenses incurred or paid by one of
our directors, officers, or controlling persons in the successful
defense of any action, suit or proceeding, is asserted by one of our
directors, officers, or controlling person sin connection with the
securities being registered, we 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 is against public policy as expressed in the
Securities Act, and we will be governed by the final adjudication of
such issue.
-30-
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1933, the registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form SB-2
and authorized this registration statement to be signed on its behalf
by the undersigned in the City of Vancouver, Province of British
Columbia on December 11, 2000.
COYOTE VENTURES CORP.
By: /s/ Scott Houghton
__________________________
Scott Houghton, President
POWER OF ATTORNEY
ALL MEN BY THESE PRESENT, that each person whose signature appears
below constitutes and appoints Scott Houghton, his true and lawful
attorney-in-fact and agent, with full power of substitution and re-
substitution, for him and in his name, place and stead, in any and
all capacities, to sign any and all pre- or post-effective amendments
to this Registration statement, and to file the same with all
exhibits thereto, and other documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-
in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be
done in and about the premises, as fully to all intents and purposes
as he might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or any one of them, or
their or his substitutes, may lawfully do or cause to be done by
virtue hereof.
In accordance with the requirements of the Securities Act of 1933,
this registration statement has been signed below by the following
persons in the capacities indicated and on the dates stated.
SIGNATURE CAPACITY IN WHICH SIGNED DATE
/s/ Scott C. Houghton President and Director December 11, 2000
---------------------
Scott C. Houghton
/s/ John Manker Vice-President and Director December 11, 2000
---------------------
John Manker
Secretary, Treasurer
/s/ Joseph Galat and Director December 11, 2000
---------------------
Joseph Galat
