UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended October 31, 2009
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT
Commission file number: 333-157293
KOPR RESOURCES CORP.
(Exact name of registrant as specified in its charter)
Delaware 41-2252162
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
670 Kent Avenue
Teaneck, NJ 07666 (201) 410-9400
(Address, including zip code of (Registrant's telephone number,
principal executive offices) including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE EXCHANGE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE EXCHANGE ACT:
None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the Registrant is not required to file reports
pursuant to Section 13 of Section 15(d) of the Act. Yes [ ] No [X]
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.229.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). * Yes [ ] No [ ]
* The registrant has not yet been phased into the interactive data requirements.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and will
not be contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer", "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [X] No [ ]
Aggregate market value of the voting and non-voting stock of the registrant held
by non-affiliates of the registrant as of October 31, 2009: $0.00
As of January 29, 2010, the registrant's outstanding common stock consisted of
2,501,500 shares.
TABLE OF CONTENTS
Page
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Part I
Item 1 Business 3
Item 1A Risk Factors 7
Item 1B Unresolved Staff Comments 14
Item 2 Properties 14
Item 3 Legal Proceedings 14
Item 4 Submission of Matters to a Vote of Security Holders 14
Part II
Item 5 Market for Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities 14
Item 6 Selected Financial Data 15
Item 7 Management's Discussion and Analysis of Financial Condition
and Results of Operations 15
Item 8 Financial Statements 18
Item 9 Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 30
Item 9A Controls and Procedures 30
Item 9B Other Information 31
Part III
Item 10 Directors, Executive Officers and Corporate Governance 31
Item 11 Executive Compensation 32
Item 12 Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters 32
Item 13 Certain Relationships and Related Transactions and Director
Independence 33
Item 14 Principal Accounting Fees and Services 33
Part IV
Item 15 Exhibits, Financial Statement Schedules 34
Signatures 35
2
PART I
ITEM 1 BUSINESS
THE COMPANY
Kopr Resources Corp. (the "Company") was incorporated on July 23, 2007 in the
state of Delaware. We are engaged in the business of acquisition and exploration
of mineral properties, primarily for copper and other metals. The Company has
staked a claim on certain property located in the Osoyoos Mining Division of
British Columbia, Canada. This property consists of one claim held by Reza
Mohammed (the "Trustee") under Declaration of Trust dated November 28, 2007 in
favor of the Company and is located about 15 km north of the town of Keremeos in
south central British Columbia. We refer to this claim as the "Property" or the
"Claim" throughout this Report. We are presently in the exploration stage at the
Property. We have not generated revenue from mining operations. Our independent
auditor has issued an audit opinion which includes a statement expressing
substantial doubt as to our ability to continue as a going concern. In August of
2007 we engaged George Coetzee, an exploration and mine geologist, to assess the
Property for mineral occurrences. To date, we have incurred expenses of $5,500
for the report. The source of information contained in this discussion is our
geological report which was included as Exhibit 99.1 in our Form S-1
registration statement filed with the SEC on February 13, 2009.
Our principal offices are located at 670 Kent Avenue, Teaneck, NJ 07666. Our
telephone number is (201) 410-9400.
ACQUISITION OF THE MINERAL CLAIM
The Claim is assigned Tenure Number 541991 and is recorded in the name of Reza
Mohammed. The Claim is in good standing to January 26, 2011.
REQUIREMENTS OR CONDITIONS FOR RETENTION OF TITLE
Title to the property has been granted to Reza Mohammed, who holds the claim in
trust for the Company. To obtain a Free Miner's Certificate, which is required
to hold a mining claim in British Columbia, Section 8(1) of the B.C. Mineral
Tenure Act (MTA) stipulates that a corporation must be registered under the
British Columbia Business Corporations Act. Section 8(2) of the MTA stipulates
that an individual applicant must either be a resident of Canada or be
authorized to work in Canada. As the Company is not registered in British
Columbia, the Claim is held in trust for the Company by Mr. Mohammed who is a
Canadian citizen. The Claim was staked using the British Columbia Mineral Titles
Online computer Internet system.
All claims staked in British Columbia require $0.40 per hectare worth of
assessment work to be undertaken in year 1 through 3, followed by $0.80 per
hectare per year thereafter. In order to retain title to the Property,
exploration work costs must be recorded and filed with the British Columbia
Department of Energy Mines and Petroleum Resources ("BCDM"). The BCDM charges a
filing fee, equal to 10% of the value of the work recorded, to record the work.
PROPERTY DESCRIPTION AND LOCATION
The Property consists of one mineral claim held by the Trustee in favor of the
Company and is located in the Osoyoos Mining Division of British Columbia,
Canada covering an area of 505.292 hectares. The Property is located about 15 km
north of the town of Keremeos in south central British Columbia west of Highway
3A North, approximately 473 km east of Vancouver. The Property terrain is of
mainly steep to moderate relief, well forested and occupies the western slope of
a mountain with an elevation of 1760m. The highest mountain peak, at 2235m is
located above 4.5 km northwest of the Property.
The Property covers an area where the location of the Kopr showing has been
documented in MINFILE No. 082EDW050 by the British Columbia Ministry of Energy,
Mines and Petroleum Resources. There has been a limited amount of geological
work conducted over the years on the Property. The only recorded assessment work
3
was by Apex Exploration and Mining Co. Ltd during 1979 to 1980 in the vicinity
of an old adit which probably dates back to the early 1900s.
The underlying rocks in the Property area consist of a series of Carboniferous
to Triassic volcanic and sedimentary rocks that have been intruded by granitic
Okanagan intrusions. Larger intrusions are composed of granite and grandiorite,
while smaller stocks are composed of diorite and gabbro. Numerous sills, dikes
and apophyses are associated. Carboniferous to Triassic rocks are assigned to
the Shoemaker and Old Tom formations. These rocks form the eastern limb of a
large anticlinal fold with fold axes striking roughly north. The Shoemaker
consists of cherts, greenstone and minor argillite. A showing depicted as a
copper skarn was identified on the Property. A mineralized pyrrhotite copper
skarn zone and a few other small showings have been sampled. Due to dense
forest, the location of the old adit depicted in the MINFILE report remains
unknown.
The Company retained a consultant, George Coetzee, who has worked as an
exploration and mine geologist for 24 years. George Coetzee personally examined
the Property and the immediate surrounding area on August 31 and September 1,
2007. Mr. Coetzee graduated with a BSc (Honors) in Geology from University of
Pretoria in South Africa in 1981 and is a member of the Society of Economic
Geologists. He has worked as an exploration and mine geologist for more than 24
years in South Africa, North America and Mexico. We have a verbal agreement with
Mr. Coetzee to conduct the exploration program. However; there is the
possibility that our Claim does not contain any reserves, resulting in any funds
spent on exploration being lost.
The consultant studied a compilation of published data, maps and reports
available from the British Columbia Governmental geological database. The
consultant examined the geology of the Property and its immediate surrounding
area in August and September of 2007 to locate skarn copper occurrence and to
determine the mode of development and assess the mineral potential of the
Property. The consultant located a copper skarm occurrence but was unable to
locate the adit identified on the British Columbia Government MINFILE database
at the geographical coordinates provided. The adit may have been mismapped or
inaccurately surveyed. The consultant speculates that detail reconnaissance
would reveal the location of the adit and mineralization in the larely dense
wooded terrain.
MINERAL PROPERTY EXPLORATION
Mineral property exploration is typically conducted in phases. We have not yet
commenced the initial phase of exploration on the Property. However, our
geologist recommends the exploration work based on the results from his
assessment of the Property. After we have completed each phase of exploration
and analyzed the results, we will make a decision as to whether we will proceed
with each successive phase. The decision will be made based upon the results
obtained in the previous phase. Our goal in exploration of the Property is to
ascertain whether it possesses commercially viable metal or mineral deposits. We
cannot assure you that any economical mineral deposits exist on the Property
until appropriate exploration work is completed. Even if we complete our
proposed exploration program on the Property and we are successful in
identifying a mineral deposit, we will have to spend substantial funds on
further drilling and engineering studies before we will know if we have a
commercially viable mineral deposit.
GEOLOGICAL REPORT
We retained the services of a consultant, George Coetzee, an exploration and
mine geologist, to complete an assessment of the Claim and to prepare an
assessment report on the Claim.
Mr. Coetzee has worked as an exploration and mine geologist for more than 24
years in South Africa, Canada and Mexico. Mr. Coetzee graduated from the
University of Pretoria in South Africa in 1981 with a Bachelor of Science degree
in Geology.
Based on his review, Mr. Coetzee recommends a two-phase program of exploration
on the Property.
The first phase of exploration would include the following:
4
* Further reconnaissance prospecting entailing silt sampling of all
creeks draining the Property area;
* Geological mapping and examination of all rock outcrops for potential
sulphide mineralization; and
* Ground geological survey over the magnetic anomalies highlighted by a
previous MAG airborne survey as well as new targets identified by the
mapping program.
The first phase is estimated to cost $28,640 as described below
BUDGET - FIRST PHASE
Geologist 10 days @$500 per day $ 5,000
Two Assistants @ $400 per day 3,200
Technologist 6 days @ $300 per day 1,800
Vehicle 10 days @ $100 day 1,000
Rock Samples 30 @ $50 each 1,500
Silt Samples 40 @ $40 1,600
Lodging 10 days @$120 per day per person 3,840
Expenses, food, fuel and field supplies 2,200
Magnetometer Survey 6,000
Report 2,500
-------
$28,640
=======
After the completion of the first phase of the exploration program, we will have
review the results and conclusions and evaluate the advisability of additional
exploration work on the Property The second phase of exploration, if warranted,
would include trenching and a localized geochemical soil sampling program over
the magnetic anomalies and showings and proposed budget of $25,480.
BUDGET - SECOND PHASE
Bond $ 5,000
Geologist 7 days @$500 per day 3,500
Assistant 7 days @ $400 per day 1,400
Vehicle 7 days @ $100 day 700
Rock Samples 10 @ $50 each 500
Soil Samples 150 @ $40 6,000
Expenses, food and field supplies 1,200
Report 1,500
Lodging 7 days @$120/day/person 1,680
Trenching 4,000
-------
$25,480
=======
We would need additional financing to cover these exploration costs, although we
currently do not have any specific financing arranged except the anticipated
offering and sale of shares pursuant to a post-effective amendment of the
Company's registration statement. Further exploration would be subject to the
availability of financing.
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 British Columbia specifically.
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. Because there is presently no information on the size,
5
tenor, or quality of any resource or reserve at this time, it is impossible to
assess the impact of any capital expenditures on earnings or our competitive
position in the event a potentially economic deposit is discovered.
If we enter into production, the cost of complying with permit and regulatory
environmental laws will be greater than in the exploration phases 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. Examples of regulatory requirements
include:
- Water discharge will have to meet water standards;
- Dust generation will have to be minimal or otherwise re-mediated;
- Dumping of material on the surface will have to be re-contoured and
re-vegetated;
- All material to be left on the surface will need to be assessed to
ensure that it is environmentally benign;
- Groundwater will have to be monitored for any potential contaminants;
- The socio-economic impact of the project will have to be evaluated and
if deemed negative, will have to be re-mediated; and
- There will have to be an impact report of the work on the local fauna
and flora.
PATENTS, TRADEMARKS, FRANCHISES, CONCESSIONS, ROYALTY AGREEMENTS OR LABOR
CONTRACTS
We have no current plans for any registrations such as patents, trademarks,
copyrights, franchises, concessions, royalty agreements or labor contracts. We
will assess the need for any of these applications on an ongoing basis.
EMPLOYEES AND EMPLOYMENT AGREEMENTS
At present, we have no employees and no employment agreements. Our President
provides services on a consultant basis. We anticipate that we will be
conducting most of our business through agreement with consultants and third
parties.
REPORTS TO SECURITY HOLDERS
We make our financial information available to any interested parties or
investors through compliance with the disclosure rules of Regulation S-K for a
smaller reporting company under the Securities Exchange Act of 1934. We became
subject to disclosure filing requirements on March 9, 2009 when the SEC declared
our S-1 registration statement effective. The public may read and copy any
materials that we file with the Securities and Exchange Commission, ("SEC"), at
the SEC's Public Reference Room at 100 F Street NE, Washington, DC 20549. The
public may obtain information on the operation of the Public Reference Room by
calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site
(http://www.sec.gov) that contains reports, proxy and information statements,
and other information regarding issuers that file electronically with the SEC.
6
ITEM 1A RISK FACTORS
RISKS RELATING TO OUR COMPANY
OUR ONLY MINING PROPERTY IS ONE MINING CLAIM, THE FEASIBILITY OF WHICH HAS NOT
BEEN ESTABLISHED AS WE HAVE NOT COMPLETED EXPLORATION OR OTHER WORK NECESSARY TO
DETERMINE IF IT IS COMMERCIALLY FEASIBLE TO ACQUIRE AND DEVELOP THE PROPERTY.
We are currently an exploration stage mining company. Our only mining asset is
one mining claim on the Property. The Property does not have any proven or
probable reserves. A "reserve," as defined by the SEC, is that part of a mineral
deposit which could be economically and legally extracted or produced at the
time of the reserve determination. A reserve requires a feasibility study
demonstrating with reasonable certainty that the deposit can be economically
extracted and produced. We have not carried out any feasibility study with
regard to the Property. As a result, we currently have no reserves and there are
no assurances that we will be able to prove that there are reserves on the
Property.
WE MAY NEVER FIND COMMERCIALLY VIABLE COPPER OR OTHER RESERVES.
Mineral exploration and development involve a high degree of risk and few
properties that are explored are ultimately developed into producing mines. We
cannot assure you that any future mineral exploration and development activities
will result in any discoveries of proven or probable reserves as defined by the
SEC since such discoveries are remote. Further, we cannot provide any assurance
that, even if we discover commercial quantities of mineralization, a mineral
property will be brought into commercial production. Development of our mineral
properties will follow only upon obtaining sufficient funding and satisfactory
exploration results.
WE WILL REQUIRE SIGNIFICANT ADDITIONAL CAPITAL TO CONTINUE OUR EXPLORATION
ACTIVITIES, AND, IF WARRANTED, TO DEVELOP MINING OPERATIONS.
Exploration activities and, if warranted, development of the Property will
involve significant expenditures. We will be required to raise significantly
more capital in order to fully develop the Property for mining production
assuming that economically viable reserves exist. There is no assurance that the
exploration will disclose potential for mineral development and no assurance
that any such development would be financially productive. Our ability to obtain
necessary funding depends upon a number of factors, including the price of
copper and other base metals and minerals which we are able to mine, the status
of the national and worldwide economy and the availability of funds in the
capital markets. If we are unable to obtain the required financing for these or
other purposes, our exploration activities would be delayed or indefinitely
postponed, and this would likely, eventually, lead to failure of our Company.
Even if financing is available, it may be on terms that are not favorable to us,
in which case, our ability to become profitable or to continue operating would
be adversely affected. If we are unable to raise funds to continue our
exploration and feasibility work on the Property, or if commercially viable
reserves are not present, the market value of our securities will likely
decline, and our investors may lose some or all of their investment.
WE HAVE INCURRED LOSSES SINCE OUR INCORPORATION IN 2007 AND MAY NEVER BE
PROFITABLE WHICH RAISES SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A
GOING CONCERN.
Since the Company was incorporated July 23, 2007, we have had nominal operations
and incurred operating losses. As of October 31, 2009, our accumulated deficit
since inception is $81,681. As we are just beginning exploration activities on
the Property, we expect to incur additional losses in the foreseeable future,
and such losses may be significant. To become profitable, we must be successful
in raising capital to continue with our exploration activities, discover
economically feasible mineralization deposits and establish reserves,
successfully develop the Property and finally realize adequate prices on our
minerals in the marketplace. It could be years before we receive any revenues
from copper and mineral production, if ever. Thus, we may never be profitable.
Even if we do achieve profitability, we may not be able to sustain or increase
profitability on a long-term basis. These circumstances raise substantial doubt
about our ability to continue as a going concern as described in note 1of the
notes to financial statements on page 24. If we are unable to continue as a
going concern, investors will likely lose all of their investments in the
Company.
7
BECAUSE WE HAVE NOT YET COMMENCED BUSINESS OPERATIONS, EVALUATING OUR BUSINESS
IS DIFFICULT.
We were incorporated on July 23, 2007, and to date have been involved primarily
in organizational activities. We have not earned revenues as of the date of this
Report and have incurred total losses of $81,681from inception to October 31,
2009.
Accordingly, our business and our future prospects cannot be evaluated due to
our lack of operating history. To date, our business development activities have
consisted solely of organizational activities. Potential investors should be
aware of the difficulties normally encountered by development stage companies
and the high rate of failure of such enterprises. In addition, there is no
guarantee that we will commence business operations. Even if we do commence
operations, at present, we do not know when.
Furthermore, 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
development of the Claim and any production of minerals from the Claim, we will
not be able to earn profits or continue operations.
VERY FEW MINERAL PROPERTIES ARE ULTIMATELY DEVELOPED INTO PRODUCING MINES.
The business of exploration for minerals and mining involves a high degree of
risk. Few properties that are explored are ultimately developed into producing
mines. At present, the Claim has no known body of commercial mineralization.
Most exploration projects do not result in the discovery of commercially
mineable deposits of mineralization.
Substantial expenditures are required for the Company to establish
mineralization reserves through drilling, to develop metallurgical processes, to
extract the metal from the ore and, in the case of new properties, to develop
the mining and processing facilities and infrastructure at any site chosen for
mining.
Although substantial benefits may be derived from the discovery of a major
mineral deposit, we cannot assure you that the Company will discover minerals in
sufficient quantities to justify commercial operations or that it can obtain the
funds required for development on a timely basis. The economics of developing
precious and base metal mineral properties is affected by many factors including
the cost of operations, variations in the grade of ore mined, fluctuations in
metal markets, costs of processing equipment and other factors such as
government regulations, including regulations relating to royalties, allowable
production, importing and exporting of minerals and environmental protection.
HISTORICAL PRODUCTION OF MINERALS AT PROPERTIES IN THE AREA OF THE CLAIM MAY NOT
BE INDICATIVE OF THE POTENTIAL FOR FUTURE DEVELOPMENT OR REVENUE.
Historical production of metals and minerals from mines in the area of the Claim
cannot be relied upon as an indication that the Claim will have commercially
feasible reserves. Investors in our securities should not rely on historical
operations of mines in the area of the Claim as an indication that we will be
able to place the Property into commercial production. We expect to incur losses
unless and until such time as the Property enters into commercial production and
produces sufficient revenue to fund our continuing operations.
FLUCTUATING COPPER, METAL AND MINERAL PRICES COULD NEGATIVELY IMPACT OUR
BUSINESS PLAN.
The potential for profitability of our copper and other metal and mineral mining
operations and the value of the Property will be directly related to the market
price of copper and the metals and minerals that we mine. Historically, copper
and other mineral prices have widely fluctuated, and are influenced by a wide
variety of factors, including inflation, currency fluctuations, regional and
global demand and political and economic conditions. Fluctuations in the price
of copper and other minerals that we mine may have a significant influence on
the market price of our common stock and a prolonged decline in these prices
will have a negative effect on our results of operations and financial
condition.
8
RECLAMATION OBLIGATIONS ON THE PROPERTY AND OUR MINING OPERATIONS, IF ANY, COULD
REQUIRE SIGNIFICANT ADDITIONAL EXPENDITURES.
We are responsible for the reclamation obligations related to any exploratory
and mining activities located on the Property. Since we have only begun
exploration activities, we cannot estimate these costs at this time. We may be
required to file for a reclamation bond for any mining operations which we
conduct, and the cost of such a bond will be significant. We do not currently
have an estimate of the total reclamation costs for mining operations on the
Property. The satisfaction of current and future bonding requirements and
reclamation obligations will require a significant amount of capital. There is a
risk that we will be unable to fund these additional bonding requirements, and
further, that increases to our bonding requirements or excessive actual
reclamation costs will negatively affect our financial position and results of
operation.
TITLE TO MINERAL PROPERTIES CAN BE UNCERTAIN, AND WE ARE AT RISK OF LOSS OF
OWNERSHIP OF OUR PROPERTY.
Our ability to explore and mine the Property depends on the validity of title to
the Property. The Property consists of a mining claim. Unpatented mining claims
are effectively only a lease from the government to extract minerals; thus an
unpatented mining claim is subject to contest by third parties or the
government. These uncertainties relate to such things as the sufficiency of
mineral discovery, proper posting and marking of boundaries, failure to meet
statutory guidelines, assessment work and possible conflicts with other claims
not determinable from descriptions of record. Since a substantial portion of all
mineral exploration, development and mining now occurs on unpatented mining
claims, this uncertainty is inherent in the mining industry. We have not
obtained a title opinion on the Property. Thus, there may be challenges to the
title to the Property which, if successful, could impair development and/or
operations.
OUR ONGOING OPERATIONS ARE SUBJECT TO ENVIRONMENTAL RISKS, WHICH COULD EXPOSE US
TO SIGNIFICANT LIABILITY AND DELAY, SUSPENSION OR TERMINATION OF OUR OPERATIONS.
Mining exploration and exploitation activities are subject to national,
provincial and local laws, regulations and policies, including laws regulating
the removal of natural resources from the ground and the discharge of materials
into the environment. These regulations mandate, among other things, the
maintenance of air and water quality standards and land reclamation. They also
set forth limitations on the generation, transportation, storage and disposal of
solid and hazardous waste. Exploration and exploitation activities are also
subject to national, provincial and local laws and regulations which seek to
maintain health and safety standards by regulating the design and use of
exploration methods and equipment.
National and provincial agencies may initiate enforcement activities against our
Company. The agencies involved, generally, can levy significant fines per day of
each violation, issue and enforce orders for clean-up and removal, and enjoin
ongoing and future activities. Our inability to reach acceptable agreements with
agencies in question would have a material adverse effect on us and our ability
to continue as a going concern.
Environmental and other legal standards imposed by national, provincial or local
authorities are constantly evolving, and typically in a manner which will
require stricter standards and enforcement, and increased fines and penalties
for non-compliance. Such changes may prevent us from conducting planned
activities or increase our costs of doing so, which would have material adverse
effects on our business. Moreover, compliance with such laws may cause
substantial delays or require capital outlays in excess of those anticipated,
thus causing an adverse effect on us. Additionally, we may be subject to
liability for pollution or other environmental damages that we may not be able
to or elect not to insure against due to prohibitive premium costs and other
reasons. Unknown environmental hazards may exist on the Property or upon
properties that we may acquire in the future caused by previous owners or
operators, or that may have occurred naturally.
WEATHER INTERRUPTIONS IN THE AREA OF THE PROPERTY MAY DELAY OR PREVENT
EXPLORATION.
The terrain of the Property is of mainly steep to moderate relief and occupies
the western slope of a mountain with an elevation of 1760 meters in British
Columbia, Canada. The area is subject to extreme winter conditions which may
delay or prevent exploration of the Property during the winter months.
9
OUR INDUSTRY IS HIGHLY COMPETITIVE, ATTRACTIVE MINERAL LANDS ARE SCARCE AND WE
MAY NOT BE ABLE TO OBTAIN QUALITY PROPERTIES OR RECRUIT AND RETAIN QUALIFIED
EMPLOYEES.
We compete with many companies in the mining industry, including large,
established mining companies with capabilities, personnel and financial
resources that far exceed our limited resources. In addition, there is a limited
supply of desirable mineral lands available for claim-staking, lease or
acquisition in British Columbia, and other areas where we may conduct
exploration activities. We are at a competitive disadvantage in acquiring
mineral properties, since we compete with these larger individuals and
companies, many of which have greater financial resources and larger technical
staffs. Likewise, our competition extends to locating and employing competent
personnel and contractors to prospect, develop and operate mining properties.
Many of our competitors can offer attractive compensation packages that we may
not be able to meet. Such competition may result in our Company being unable not
only to acquire desired properties, but to recruit or retain qualified employees
or to acquire the capital necessary to fund our operation and advance our
properties. Our inability to compete with other companies for these resources
would have a material adverse effect on our results of operation and business.
BECAUSE MARKET FACTORS IN THE MINING BUSINESS ARE OUT OF OUR CONTROL, WE MAY NOT
BE ABLE TO MARKET ANY MINERALS THAT MAY BE FOUND. The mining industry, in
general, is intensely competitive and we can provide no assurance to investors
that even if minerals are discovered, a ready market will exist from the sale of
any ore found. Numerous factors beyond our control may affect the marketability
of metals. 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.
WE DEPEND ON OUR CHIEF EXECUTIVE OFFICER AND THE LOSS OF THIS INDIVIDUAL COULD
ADVERSELY AFFECT OUR BUSINESS.
Our Company is completely dependent on Andrea Schlectman, our President, Chief
Executive Officer and Director. As of the date of this Report, Andrea Schlectman
was our sole officer and director. The loss of Ms. Schlectman's services would
significantly and adversely affect our business. We have no life insurance on
the life of Andrea Schlectman.
MANAGEMENT HAS ONLY LIMITED EXPERIENCE IN RESOURCE EXPLORATION.
The Company's management, while experienced in business operations, has only
limited experience in resource exploration. Our sole director and officer of the
Company has no significant technical training or experience in resource
exploration or mining. The Company relies on the opinions of consulting
geologists that it retains from time to time for specific exploration projects
or property reviews. As a result of management's inexperience, there is a higher
risk of the Company being unable to complete its business plan. To date, the
only mining consultant retained by the Company is George Coetzee who prepared an
assessment report on the Property which was attached as Exhibit 99.1 to the
Company's registration statement on Form S-1 filed with the SEC on February 13,
2009.
THE NATURE OF MINERAL EXPLORATION AND PRODUCTION ACTIVITIES INVOLVES A HIGH
DEGREE OF RISK AND THE POSSIBILITY OF UNINSURED LOSSES THAT COULD MATERIALLY AND
ADVERSELY AFFECT OUR OPERATIONS.
Exploration for minerals is highly speculative and involves greater risk than
many other businesses. Many exploration programs do not result in the discovery
of economically feasible mineralization. Few properties that are explored are
ultimately advanced to the stage of producing mines. We are subject to all of
the operating hazards and risks normally incident to exploring for and
developing mineral properties such as, but not limited to:
* economically insufficient mineralized material;
* fluctuations in production costs that may make mining uneconomical;
10
* labor disputes;
* unanticipated variations in grade and other geologic problems;
* environmental hazards;
* water conditions;
* difficult surface or underground conditions;
* industrial accidents; personal injury, fire, flooding, cave-ins and
landslides;
* metallurgical and other processing problems;
* mechanical and equipment performance problems; and
* decreases in revenues and reserves due to lower gold and mineral
prices.
Any of these risks can materially and adversely affect, among other things, the
development of properties, production quantities and rates, costs and
expenditures and production commencement dates. We currently have no insurance
to guard against any of these risks. If we determine that capitalized costs
associated with any of our mineral interests are not likely to be recovered, we
would incur a write-down of our investment in these interests. All of these
factors may result in losses in relation to amounts spent which are not
recoverable.
OUR OPERATIONS ARE SUBJECT TO PERMITTING REQUIREMENTS WHICH COULD REQUIRE US TO
DELAY, SUSPEND OR TERMINATE OUR OPERATIONS ON OUR MINING PROPERTY.
Our operations, including our planned exploration activities on the Property,
require permits from the provincial and national governmental agencies. We may
be unable to obtain these permits in a timely manner, on reasonable terms or at
all. If we cannot obtain or maintain the necessary permits, or if there is a
delay in receiving these permits, our timetable and business plan for
exploration of the Property will be adversely affected.
MINERAL EXPLORATION INVOLVES A HIGH DEGREE OF RISK AGAINST WHICH THE COMPANY IS
NOT CURRENTLY INSURED.
Unusual or unexpected rock formations, formation pressures, fires, power
outages, labor disruptions, flooding, cave-ins, landslides and the inability to
obtain suitable or adequate machinery, equipment or labor are risks involved in
the operation of mines and the conduct of exploration programs. The Company has
relied on and will continue to rely upon consultants and others for exploration
expertise.
It is not always possible to fully insure against such risks, and the Company
may decide not to take out insurance against such risks as a result of high
premiums or other reasons. Should such liabilities arise, they could reduce or
eliminate any future profitability and result in increasing costs and a decline
in the value of the Company's shares. The Company does not currently maintain
insurance against environmental risks relating to the Claim.
BECAUSE WE WILL HOLD ALL OF OUR CASH RESERVES IN UNITED STATES DOLLARS, WE MAY
EXPERIENCE WEAKENED PURCHASING POWER IN CANADIAN DOLLAR TERMS AND MAY NOT BE
ABLE TO AFFORD TO CONDUCT OUR PLANNED EXPLORATION PROGRAM.
Any cash reserves available to the Company will be held in United States
dollars. Due to foreign exchange rate fluctuations, the value of these United
States dollar reserves can result in both translation gains and losses in
Canadian dollar terms. If there is a significant decline in the US dollar versus
the Canadian Dollar, our US dollar purchasing power in Canadian dollars would
also significantly decline. If a there is a significant decline in the US dollar
11
we would not be able to afford to conduct our planned exploration program. We
have not entered into derivative instruments to offset the impact of foreign
exchange fluctuations.
IT MAY BE DIFFICULT TO ENFORCE JUDGMENTS OR BRING ACTIONS OUTSIDE THE UNITED
STATES AGAINST US AND CERTAIN OF OUR OFFICERS AND DIRECTORS.
Our sole officer and director resides outside of the United States and the
primary assets of the Company are located outside of the United States. As a
result, it may be difficult or impossible for Company investors to (i) enforce
in courts outside the United States judgments obtained in the United States
courts based upon the civil liability provisions of the United States federal
securities laws against these persons and us; or (ii) bring in courts outside
the United States an original action to enforce liabilities based upon United
States federal securities laws against us and our officers and directors.
MINING ACCIDENTS OR OTHER MATERIAL ADVERSE EVENTS AT OUR MINING LOCATIONS MAY
REDUCE OUR PRODUCTION LEVELS.
At any one of our various mines, production may fall below historic or estimated
levels as a result of mining accidents, such as a pit wall failure in an open
pit mine, or cave-ins or flooding at underground mines. In addition, production
may be unexpectedly reduced at a location if, during the course of mining,
unfavorable ground conditions or seismic activity are encountered, ore grades
are lower than expected, the physical or metallurgical characteristics of the
ore are less amenable to mining or treatment than expected, or our equipment,
processes or facilities fail to operate properly or as expected.
THE COSTS TO MEET OUR REPORTING AND OTHER REQUIREMENTS AS A PUBLIC COMPANY
SUBJECT TO THE SECURITIES EXCHANGE ACT OF 1934 WILL BE SUBSTANTIAL AND MAY
RESULT IN US HAVING INSUFFICIENT FUNDS TO EXPAND OUR BUSINESS OR EVEN TO MEET
ROUTINE BUSINESS OBLIGATIONS.
Since having become subject to the reporting requirements of the Securities
Exchange Act of 1934, we will incur ongoing expenses associated with
professional fees for accounting, legal and a host of other expenses for annual
reports and proxy statements. We estimate that these costs will range up to
$50,000 per year for the next few years and will be higher if our business
volume and activity increases but lower during the first year of being public
because our overall business volume will be lower, and we will not yet be
subject to the requirements of Section 404 of the Sarbanes-Oxley Act of 2002.
These obligations will reduce our ability and resources to fund other aspects of
our business and may prevent us from meeting our normal business obligations.
RISKS ASSOCIATED WITH OUR COMMON STOCK
THE OFFERING PRICE OF THE SHARES IS ARBITRARY.
The Offering Price of the Shares has been determined arbitrarily by the Company
and bears no relationship to the Company's assets, book value, potential
earnings or any other recognized criteria of value.
THE COMPANY HAS A LACK OF DIVIDEND PAYMENTS.
The Company has no plans to pay any dividends in the foreseeable future.
CERTAIN COMPANY ACTIONS AND THE INTERESTS OF STOCKHOLDERS MAY DIFFER.
The voting control of the Company could discourage others from initiating a
potential merger, takeover or another change-of-control transaction that could
be beneficial to stockholders. As a result, the value of stock could be harmed.
Purchasers should be aware that as of the date of the offering there is only one
stockholder of the Company.
THE COMPANY IS SUBJECT TO RIGHTS OF PREFERRED STOCKHOLDERS INCLUDING MANDATORY
REDEMPTION.
12
The Company has authorized 75,000,000 shares of blank check preferred stock none
of which is currently outstanding. Upon issuance of any preferred stock in the
future, the rights attached to the preferred shares could affect the Company's
ability to operate, which could force the Company to seek other financing. Such
financing may not be available on commercially reasonable terms or at all and
could cause substantial dilution to existing stockholders.
CURRENTLY, THERE IS NO PUBLIC MARKET FOR OUR SECURITIES, AND WE CANNOT ASSURE
YOU THAT ANY PUBLIC MARKET WILL EVER DEVELOP AND IT IS LIKELY TO BE SUBJECT TO
SIGNIFICANT PRICE FLUCTUATIONS.
Currently, there is no public market for our stock and our stock may never be
traded on any exchange, or, if traded, a public market may not materialize. Even
if we are successful in developing a public market, there may not be enough
liquidity in such market to enable shareholders to sell their stock.
Our common stock is unlikely to be followed by any market analysts, and there
may be few or no institutions acting as market makers for the common stock.
Either of these factors could adversely affect the liquidity and trading price
of our common stock.
Until our common stock is fully distributed and an orderly market develops in
our common stock, if ever, the price at which it trades is likely to fluctuate
significantly. Prices for our common stock will be determined in the marketplace
and may be influenced by many factors, including the depth and liquidity of the
market for shares of our common stock, developments affecting our business,
including the impact of the factors referred to elsewhere in these Risk Factors,
investor perception of the Company, and general economic and market conditions.
No assurances can be given that an orderly or liquid market will ever develop
for the shares of our common stock.
OUR COMMON STOCK MAY BE SUBJECT TO "PENNY STOCK" RULES WHICH MAY BE DETRIMENTAL
TO INVESTORS.
The SEC has adopted regulations which generally define "penny stock" to be any
equity security that has a market price (as defined) of less than $5.00 per
share or an exercise price of less than $5.00 per share. Such securities are
subject to rules that impose additional sales practice requirements on
broker-dealers who sell them. For transactions covered by these rules, the
broker-dealer must make a special suitability determination for the purchaser of
such securities and have received the purchaser's written consent to the
transaction prior to the purchase. Additionally, for any transaction involving a
penny stock, unless exempt, the rules require the delivery, prior to the
transaction, of a disclosure schedule prepared by the SEC relating to the penny
stock market. The broker-dealer also must disclose the commissions payable to
both the broker-dealer and the registered representative, current quotations for
the securities and, if the broker-dealer is the sole market-maker, the
broker-dealer must disclose this fact and the broker-dealer's presumed control
over the market. Finally, among other requirements, monthly statements must be
sent disclosing recent price information for the penny stock held in the account
and information on the limited market in penny stocks. As the Shares immediately
following this Offering will likely be subject to such penny stock rules,
purchasers in this Offering will in all likelihood find it more difficult to
sell their Shares in the secondary market.
ONE SHAREHOLDER OWNS ALL OF OUR OUTSTANDING COMMON STOCK, WHICH LIMITS OTHER
SHAREHOLDERS' ABILITY TO INFLUENCE THE OUTCOME OF ANY SHAREHOLDER VOTE.
Our sole officer and director beneficially owns 100% of our outstanding common
stock as of the date of this Report. Under our Certificate of Incorporation and
the laws of the State of Delaware, the vote of a majority of the shares voting
at a meeting at which a quorum is present is generally required to approve most
shareholder action. As a result, our sole shareholder is able to control the
outcome of shareholder votes, including votes concerning the election of
directors, amendments to our Certificate of Incorporation or proposed mergers or
other significant corporate transactions.
WE HAVE NEVER PAID A DIVIDEND ON OUR COMMON STOCK AND WE DO NOT ANTICIPATE
PAYING ANY IN THE FORESEEABLE FUTURE.
We have not paid a cash dividend on our common stock to date, and we do not
intend to pay cash dividends in the foreseeable future. Our ability to pay
dividends will depend on our ability to successfully develop one or more
13
properties and generate revenue from operations. Notwithstanding, we will likely
elect to retain earnings, if any, to finance our growth. Future dividends may
also be limited by bank loan agreements or other financing instruments that we
may enter into in the future. The declaration and payment of dividends will be
at the discretion of our Board of Directors.
WE HAVE NOT VOLUNTARILY IMPLEMENTED VARIOUS CORPORATE GOVERNANCE MEASURES, IN
THE ABSENCE OF WHICH, SHAREHOLDERS MAY HAVE MORE LIMITED PROTECTIONS AGAINST
INTERESTED DIRECTOR TRANSACTIONS, CONFLICTS OF INTEREST AND SIMILAR MATTERS.
Recent U. S. legislation, including the Sarbanes-Oxley Act of 2002, has resulted
in the adoption of various corporate governance measures designed to promote the
integrity of the corporate management and the securities markets. Some of these
measures have been adopted in response to legal requirements. Others have been
adopted by companies in response to the requirements of national securities
exchanges, such as the NYSE or The NASDAQ Stock Market, on which their
securities are listed. Among the corporate governance measures that are required
under the rules of national securities exchanges and NASDAQ are those that
address board of directors' independence, audit committee oversight and the
adoption of a code of ethics. We have not yet adopted any of these corporate
governance measures and, since our securities are not listed on a national
securities exchange or NASDAQ, we are not required to do so. It is possible that
if we were to adopt some or all of these corporate governance measures,
shareholders would benefit from somewhat greater assurances that internal
corporate decisions were being made by disinterested directors and that policies
had been implemented to define responsible conduct. For example, in the absence
of audit, nominating and compensation committees comprised of at least a
majority of independent directors, decisions concerning matters such as
compensation packages to our senior officers and recommendations for director
nominees may be made by a majority of directors who have an interest in the
outcome of the matters being decided. Prospective investors should bear in mind
our current lack of corporate governance measures in formulating their
investment decisions.
ITEM 1B UNRESOLVED STAFF COMMENTS
None
ITEM 2 PROPERTIES
We do not hold ownership or leasehold interest in any property other than the
mining claim. To date, our president, Andrea Schlectman, has provided us with
office space and related office services free of charge. There is no obligation
for or guarantee that this arrangement will continue in the future.
ITEM 3 LEGAL PROCEEDINGS
There are no pending, nor to our knowledge threatened, legal proceedings against
the Company
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of the security holders during the
year ended October 31, 2009.
PART II
ITEM 5 MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES.
There is no public market for our common stock. Therefore, the current and
potential market for our common stock is limited and the liquidity of our shares
may be severely limited. To date, we have made no effort to obtain listing or
quotation of our securities on a national stock exchange or association. We have
not identified or approached any broker/dealers with regard to assisting us to
apply for such listing. We are unable to estimate if or when we expect to
undertake this endeavor. No market may ever develop for our common stock, or if
developed, may not be sustained in the future. Accordingly, our shares should be
considered totally illiquid, which inhibits investors' ability to sell their
Shares. The market price of the Shares of common stock is likely to be highly
14
volatile and may be significantly affected by factors such as actual or
anticipated fluctuations in the Company's operating results, announcements of
technological innovations, new products and/or services or new contracts by the
Company or its competitors, developments with respect to copyrights or
proprietary rights, adoption of new accounting standards or regulatory
requirements affecting the business, general market conditions and other
factors. In addition, the stock market from time to time experiences significant
price and volume fluctuations that may adversely affect the market price for the
Company's common stock. As of the date of this report, we have one shareholder
of record. We have paid no cash dividends and have no outstanding options.
PENNY STOCK REGULATION
The SEC has adopted regulations which generally define "penny stock" to be any
equity security that has a market price (as defined) of less than $5.00 per
share or an exercise price of less than $5.00 per share. Such securities are
subject to rules that impose additional sales practice requirements on
broker-dealers who sell them. For transactions covered by these rules, the
broker-dealer must make a special suitability determination for the purchaser of
such securities and have received the purchaser's written consent to the
transaction prior to the purchase. Additionally, for any transaction involving a
penny stock, unless exempt, the rules require the delivery, prior to the
transaction, of a disclosure schedule prepared by the SEC relating to the penny
stock market. The broker-dealer also must disclose the commissions payable to
both the broker-dealer and the registered representative, current quotations for
the securities and, if the broker-dealer is the sole market-maker, the
broker-dealer must disclose this fact and the broker-dealer's presumed control
over the market. Finally, among other requirements, monthly statements must be
sent disclosing recent price information for the penny stock held in the account
and information on the limited market in penny stocks. As the Shares immediately
following this Offering will likely be subject to such penny stock rules,
purchasers in this Offering will in all likelihood find it more difficult to
sell their Shares in the secondary market.
ITEM 6 SELECTED FINANCIAL DATA
The Company was organized on July 23, 2007. Our total current assets as of
October 31, 2009 were $12,795, our current liabilities including a $16,500 loan
from director were $79,476, and our total stockholder deficiency was $66,681. As
of October 31, 2009, the Company held cash and cash equivalents in the amount of
$12,295. From inception through October 31, 2009 we incurred a net loss of
$81,681. The recoverability of costs incurred for acquisition and exploration of
the Property is dependent upon the Company's discovery of economically
recoverable reserves and the Company's ability to obtain financing sufficient to
satisfy the expenditure requirements and to complete development of the Property
and pursue production and sales thereof.
The notes to the Company's financial statements express substantial doubt about
the Company's ability to continue as a going concern because of the Company's
accumulated deficit since inception of $81,681 and the further losses which are
anticipated in the development of its business. The Company's ability to
continue as a going concern is dependent upon the Company's generation of
profits in the future and/or the ability to obtain financing necessary to meet
its obligations and repay its liabilities.
During the year ended October 31, 2009, general and administrative expenses and
net loss incurred increased 33.6% or $10,969 from $32,606 during the year ended
October 31, 2008 to $43,575. This resulted from increased expenses related to
the planned registration and sale of stock.
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD LOOKING STATEMENTS
THIS REPORT CONTAINS PROJECTIONS AND STATEMENTS RELATING TO COMPANY THAT
CONSTITUTE "FORWARD-LOOKING STATEMENTS." THESE FORWARD-LOOKING STATEMENTS MAY BE
IDENTIFIED BY THE USE OF PREDICTIVE, FUTURE-TENSE OR FORWARD-LOOKING
TERMINOLOGY, SUCH AS "INTENDS," "BELIEVES," "ANTICIPATES," "EXPECTS,"
"ESTIMATES," "MAY," "WILL," OR SIMILAR TERMS. SUCH STATEMENTS SPEAK ONLY AS OF
THE DATE OF SUCH STATEMENT, AND THE COMPANY UNDERTAKES NO ONGOING OBLIGATION TO
UPDATE SUCH STATEMENTS. THESE STATEMENTS APPEAR IN A NUMBER OF PLACES IN THIS
REPORT AND INCLUDE STATEMENTS REGARDING THE INTENT, BELIEF OR CURRENT
EXPECTATIONS OF THE COMPANY, AND ITS RESPECTIVE DIRECTORS, OFFICERS OR ADVISORS
WITH RESPECT TO, AMONG OTHER THINGS: (1) TRENDS AFFECTING THE COMPANY'S
FINANCIAL CONDITION, RESULTS OF OPERATIONS OR FUTURE PROSPECTS, (2) THE
COMPANY'S BUSINESS AND GROWTH STRATEGIES AND (3) THE COMPANY'S FINANCING PLANS
15
AND FORECASTS. POTENTIAL INVESTORS ARE CAUTIONED THAT ANY SUCH FORWARD-LOOKING
STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND INVOLVE SIGNIFICANT
RISKS AND UNCERTAINTIES, AND THAT, SHOULD CONDITIONS CHANGE OR SHOULD ANY ONE OR
MORE OF THE RISKS OR UNCERTAINTIES MATERIALIZE OR SHOULD ANY OF THE UNDERLYING
ASSUMPTIONS OF THE COMPANY PROVE INCORRECT, ACTUAL RESULTS MAY DIFFER MATERIALLY
FROM THOSE PROJECTED IN THE FORWARD-LOOKING STATEMENTS AS A RESULT OF VARIOUS
FACTORS, SOME OF WHICH ARE UNKNOWN. THE FACTORS THAT COULD ADVERSELY AFFECT THE
ACTUAL RESULTS AND PERFORMANCE OF THE COMPANY INCLUDE, WITHOUT LIMITATION, THE
COMPANY'S INABILITY TO RAISE ADDITIONAL FUNDS TO SUPPORT OPERATIONS AND CAPITAL
EXPENDITURES, THE COMPANY'S INABILITY TO EFFECTIVELY MANAGE ITS GROWTH, THE
COMPANY'S INABILITY TO ACHIEVE GREATER AND BROADER MARKET ACCEPTANCE IN EXISTING
AND NEW MARKET SEGMENTS, THE COMPANY'S INABILITY TO SUCCESSFULLY COMPETE AGAINST
EXISTING AND FUTURE COMPETITORS, THE COMPANY'S RELIANCE ON INDEPENDENT
MANUFACTURERS AND SUPPLIERS, DISRUPTIONS IN THE SUPPLY CHAIN, THE COMPANY'S
INABILITY TO PROTECT ITS INTELLECTUAL PROPERTY, OTHER FACTORS DESCRIBED
ELSEWHERE IN THIS REPORT, OR OTHER REASONS. ALL FORWARD-LOOKING STATEMENTS
ATTRIBUTABLE TO THE COMPANY OR PERSONS ACTING ON ITS BEHALF ARE EXPRESSLY
QUALIFIED IN THEIR ENTIRETY BY THE FOREGOING CAUTIONARY STATEMENTS AND THE "RISK
FACTORS" DESCRIBED HEREIN.
The following discussion of our financial condition and plan of operation should
be read in conjunction with the Company's financial statements, the notes to
those statements and the information included elsewhere in this Report. This
discussion includes forward-looking statements that involve risks and
uncertainties. As a result of many factors, such as those set forth under "RISK
FACTORS" and elsewhere in this Report, our actual results may differ materially
from those anticipated in these forward-looking statements.
OVERVIEW
We are engaged in the business of acquisition and exploration of mineral
properties, primarily for copper and other metals. The Company has staked a
claim on certain property located in the Osoyoos Mining Division of British
Columbia, Canada. This property consists of one claim held by Reza Mohammed (the
"Trustee") under Declaration of Trust dated November 28, 2007 in favor of the
Company and is located about 15 km north of the town of Keremeos in south
central British Columbia. We are presently in the exploration stage at the
Property. We have not generated revenue from mining operations. In August of
2007 we engaged George Coetzee, an exploration and mine geologist, to assess the
Property for mineral occurrences.
Mr. Coetzee, who has worked as an exploration and mine geologist for 24 years,
studied a compilation of published data, maps and reports available from the
British Columbia Governmental geological database. The consultant examined the
geology of the Property and its immediate surrounding area in August and
September of 2007 to locate skarn copper occurrence and to determine the mode of
development and assess the mineral potential of the Property.
PLAN OF OPERATION
Mineral property exploration is typically conducted in phases. Based on our
consultant's studies, Mr. Coetzee recommends a two-phase program of exploration
on the Property.
The first phase of exploration estimated to cost $28,640 would include further
reconnaissance prospecting entailing silt sampling of all creeks draining the
Property area, geological mapping and examination of all rock outcrops for
potential sulphide mineralization and a ground geological survey over the
magnetic anomalies highlighted by a previous MAG airborne survey as well as new
targets identified by the mapping program.
After the completion of the first phase of the exploration program, we will have
review the results and conclusions and evaluate the advisability of additional
exploration work on the Property The second phase of exploration, if warranted,
would include trenching and a localized geochemical soil sampling program over
the magnetic anomalies and showings and a proposed budget of $25,480.
LIMITED OPERATING HISTORY; NEED FOR ADDITIONAL CAPITAL
We have not yet commenced the initial phase of exploration on the Property. We
would need additional financing to cover exploration costs, although we
currently do not have any specific financing arranged except the anticipated
16
offering and sale of shares pursuant to a post-effective amendment of the
Company's registration statement. Further exploration would be subject to
financing. Management expects to finance operating costs over the next twelve
months with existing cash on hand, loans and/or the proceeds from any stock
offering.
LIQUIDITY AND CAPITAL RESOURCES
As of October 31, 2009, our total assets were $12,795, and our total liabilities
were $79,476. From inception on July 23, 2007 through October 31, 2009, we
incurred a net loss of $81,681. As of October 31, 2009, we held cash and cash
equivalents of $12,295.
The Company has no firm cash commitments for capital expenditures and is
expending no capital pending the receipt of funds through sales of its stock, if
any. The Company intends to file a Post-Effective Amendment to its Registration
Statement on Form S-1 to extend the expiration of the offering period. The
Company expects that the minimum proceeds from the Offering to be conducted
thereunder will be sufficient to support its business plan for twelve months. If
the Company receives proceeds in excess of the Minimum Offering Amount, the pace
at which the Company can pursue its business plan will be accelerated.
Initially, the Company's sole focus will be the exploration of the Property.
If commercially viable metal or mineral reserves are found on the Property, the
Company intends to mine the reserves. The funds generated from a stock offering,
to the extent they exceed exploration costs, will support the Company's
development of the mineral reserves if any are found on the Property.
If the Company successfully mines any minerals or metals discovered on the
Property, it will explore sales opportunities for such products. The Company
intends to use a portion of the proceeds from any stock offering, to the extent
they exceed exploration costs, to develop such sales opportunities.
The Company is in its exploration stage and has not begun operations. As such,
the Company has no historical periods with which to compare anticipated capital
requirements in the future. The Company will use the proceeds from any stock
offering to support its capital requirements. To the best of the Company's
knowledge, it is not aware of any event or future trend which would cause the
Company's anticipated capital requirements to exceed the Minimum Offering
Amount.
IMPORTANT ASSUMPTIONS
Mineral exploration and development involve a high degree of risk and few
properties that are explored are ultimately developed into producing mines. At
this stage without having conducted the initial exploration phase, we are unable
to determine whether future mineral exploration and development activities will
result in any discoveries of proven or probable reserves. Even if we discover
commercial quantities of mineralization, the mineral property may never be
brought into commercial production. Our development of mineral properties will
occur only upon obtaining sufficient funding and satisfactory exploration
results.
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that is material to investors.
17
ITEM 8 FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm 19
Balance Sheets 20
Statements of Operations 21
Statements of Changes in Stockholder's Deficiency 22
Statements of Cash Flows 23
Notes to Financial Statements 24
18
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Kopr Resources Corp.
We have audited the accompanying balance sheets of Kopr Resources Corp. (an
Exploration Stage Company) ("the Company") as of October 31, 2009 and 2008 and
the related statements of operations, stockholder's deficiency and cash flows
for the years then and for the period from July 23, 2007 (inception) to October
31, 2009. 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 the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, 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 the Company as of October 31,
2009 and 2008 and the results of its operations and its cash flows for the years
then ended and for the period from July 23, 2007 (inception) to October 31, 2009
in conformity with accounting principles generally accepted in the United States
of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1, the Company
has incurred significant losses since its inception and has limited capital
resources. These conditions raise substantial doubt about the Company's ability
to continue as a going concern. Management's plans in regard to these matters
are also discussed in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Bernstein & Pinchuk LLP
------------------------------------
New York, New York
January 28, 2010
19
KOPR RESOURCES CORP.
(An Exploration Stage Company)
Balance Sheets
October 31,
---------------------------
2009 2008
-------- --------
ASSETS
Current assets
Cash and cash equivalents $ 12,295 $ 4,379
Prepaid Expense 500 --
-------- --------
Total current assets $ 12,795 $ 4,379
======== ========
LIABILITIES AND STOCKHOLDER'S DEFICIENCY
Current liabilities
Accounts payable $ 62,976 $ 27,485
Loan from director 16,500 --
-------- --------
TOTAL CURRENT LIABILITIES 79,476 27,485
-------- --------
Long term liabilities
STOCKHOLDER'S DEFICIENCY
Preferred stock $0.001 par value 75,000,000 shares authorized; none issued -- --
Common stock $0.001 par value; 150,000,000 shares authorized;
2,501,500 shares issued and outstanding for both years 2,502 2,502
Additional paid-in-capital 12,498 12,498
Deficit accumulated during exploration stage (81,681) (38,106)
-------- --------
TOTAL STOCKHOLDER'S DEFICIENCY (66,681) (23,106)
-------- --------
$ 12,795 $ 4,379
======== ========
See notes to financial statements
20
KOPR RESOURCES CORP.
(An Exploration Stage Company)
Statements of Operations
For the Period
July 23, 2007
Years Ended (Inception)
October 31, Through
------------------------------- October 31,
2009 2008 2009
---------- ---------- ----------
Revenues $ -- $ -- $ --
Cost of sales -- -- --
---------- ---------- ----------
Gross margin -- -- --
---------- ---------- ----------
Operating Expense -- -- --
General & administrative expenses 43,575 32,606 81,681
LOSS BEFORE INCOME TAX EXPENSE (43,575) (32,606) (81,681)
Income tax expense -- -- --
---------- ---------- ----------
NET LOSS $ (43,575) $ (32,606) $ (81,681)
========== ========== ==========
Loss per share basic and diluted $ (0.02) $ (0.03)
========== ==========
Weighted average number of common shares
outstanding basic and diluted 2,501,500 1,046,582
========== ==========
See notes to financial statements
21
Kopr Resources Corp.
(An Exploration Stage Company)
Statements of Changes in Shareholder's Equity (Deficiency)
For the Period from July 23, 2007(Inception) through October 31, 2008
Deficit
Accumulated
Common Stock Additional During Total
--------------------- Paid-in Exploration Stockholders'
Shares Amount Capital Stage Equity
------ ------ ------- ----- ------
September 25, 2007 stock issued for cash 1,500 $ 2 $ 9,998 $ -- $ 10,000
Net loss (5,500) (5,500)
----------- -------- -------- --------- ---------
Balance October 31, 2007 1,500 2 9,998 (5,500) 4,500
=========== ======== ======== ========= =========
June 1, 2008 stock issued for cash 2,500,000 2,500 2,500 5,000
Net loss (32,606) (32,606)
----------- -------- -------- --------- ---------
Balance October 31, 2008 2,501,500 2,502 12,498 (38,106) (23,106)
=========== ======== ======== ========= =========
Net loss (43,575) (43,575)
----------- -------- -------- --------- ---------
BALANCE OCTOBER 31, 2009 2,501,500 $ 2,502 $ 12,498 $ (81,681) $ (66,681)
=========== ======== ======== ========= =========
See notes to financial statements
22
KOPR RESOURCES CORP.
(An Exploration Stage Company)
Statements of Cash Flows
For the Period
July 23, 2007
Years Ended (Inception)
October 31, Through
--------------------------- October 31,
2009 2008 2009
-------- -------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(43,575) $(32,606) $(81,681)
Adjustments to reconcile net loss to net
cash used in operating activities
Changes in operating assets and liabilities
Pre-paid expense (500) -- (500)
Accounts payable 35,491 21,985 62,976
-------- -------- --------
NET CASH USED IN OPERATING ACTIVITIES (8,584) (10,621) (19,205)
-------- -------- --------
CASH FLOW FROM INVESTING ACTIVITIES -- -- --
-------- -------- --------
NET CASH USED IN INVESTING ACTIVITIES -- -- --
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Loan from director 16,500 -- 16,500
Proceeds from sale of common stock -- 5,000 15,000
-------- -------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 16,500 5,000 31,500
-------- -------- --------
Net increase (decrease) in cash and cash equivalents 7,916 (10,621) 12,295
Cash and cash equivalents at beginning of period 4,379 10,000 --
-------- -------- --------
Cash and cash equivalents at end of period $ 12,295 $ 4,379 $ 12,295
======== ======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest $ -- $ -- $ --
======== ======== ========
Income Taxes $ -- $ -- $ --
======== ======== ========
See notes to financial statements
23
Kopr Resources Corp.
(An Exploration Stage Company)
Notes to Financial Statements
(Stated in U.S. Dollars)
1. NATURE AND CONTINUANCE OF OPERATIONS
Kopr Resources Corp., ("the Company") was incorporated under the laws of the
State of Delaware on July 23, 2007. The Company is in the exploration stage of
its resource business and it was generally inactive during the period July 23,
2007 (inception) to October 31, 2009. During the year ended October 31, 2008 the
Company commenced its limited activities by issuing shares and acquiring a
mineral property located in the Osoyoos Mining Division of British Columbia,
Canada. The Company has not yet determined whether this property contains
reserves that are economically recoverable. The recoverability of costs incurred
for acquisition and exploration of the property will be dependent upon the
discovery of economically recoverable reserves, confirmation of the Company's
interest in the underlying property, the ability of the Company to obtain
necessary financing to satisfy the expenditure requirements under the property
agreement and to complete the development of the property and upon future
profitable production or proceeds for the sale thereof.
The Company's tax reporting year end is October 31.
These financial statements have been prepared on a going concern basis which
assumes the Company will be able to realize its assets and discharge its
liabilities in the normal course of business for the foreseeable future. The
Company has incurred losses since inception resulting in an accumulated deficit
during the exploration stage of $81,681 as of October 31, 2009 and further
losses are anticipated in the development of its business raising substantial
doubt about the Company's ability to continue as a going concern. The ability to
continue as a going concern is dependent upon the Company generating profitable
operations in the future and/or to obtain the necessary financing to meet its
existing obligations and repay its liabilities arising from normal business
operations when they come due. Management intends to finance operating costs
over the next twelve months with existing cash on hand and loans from directors
and or private placement of common stock.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The financial statements of the Company have been prepared in accordance with
generally accepted accounting principles in the United States of America. All
amounts are presented in U.S. dollars.
EXPLORATION STAGE COMPANY
The Company complies with Accounting Standards Codification ("ASC") 915-235-50
and Securities and Exchange Commission Act Guide 7 for it's characterization of
the Company as an exploration stage enterprise.
MINERAL INTERESTS
Mineral property acquisition, exploration and development costs are expensed as
incurred until such time as economic reserves are quantified. To date, the
Company has not established any proven or probable reserves on its mineral
24
properties. The Company has adopted the provisions of SFAS No. 143 "Accounting
for Asset Retirement Obligations" which establishes standards for the initial
measurement and subsequent accounting for obligations associated with the sale,
abandonment, or other disposal of long -lived tangible assets arising from the
acquisition, construction or development and for normal operations of such
assets. As at October 31, 2009, any potential costs relating to the future
retirement of the Company's mineral property have not yet been determined.
USE OF ESTIMATES AND ASSUMPTIONS
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 during the period. Actual results
could differ from those estimates.
FOREIGN CURRENCY TRANSLATION
The financial statements are presented in United States dollars. In accordance
with Statement of Financial Accounting Standards No. 52 "Foreign Currency
Translation," foreign denominated monetary assets and liabilities are translated
into their United States dollar equivalents using foreign exchange rates which
prevailed at the balance sheet date. Non monetary assets and liabilities are
translated at the exchange rates prevailing on the transaction date. Revenue and
expenses are translated at average rates of exchange during the year. Gains or
losses resulting from foreign currency transactions are included in results of
operations.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of cash and accounts payable and accrued liabilities
approximates their fair value because of the short maturity of these
instruments. Unless otherwise noted, it is management's opinion the Company is
not exposed to significant interest currency or credit risks arising from these
financial instruments.
ENVIRONMENT COSTS
Environmental expenditures that relate to current operations are expensed or
capitalized as appropriate. Expenditures that relate to an existing condition
caused by past operations, and which do not contribute to current or future
revenue generation, are expensed. Liabilities are recorded when environmental
assessments and/or remedial efforts are probably, and the cost can be reasonably
estimated. Generally, the timing of these accruals coincides with the earlier of
completion of a feasibility study or the Company's commitments to plan of action
based on the then known facts.
INCOME TAXES
The Company follows the accrual method of accounting for income taxes. Under
this method, deferred income tax assets and liabilities are recognized for the
estimated tax consequences attributable to differences between the financial
statement carrying values and their respective income tax basis (temporary
differences). The effect on the deferred income tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
At October 31, 2009 a full deferred tax asset valuation allowance has been
provided and no deferred tax asset has been recorded.
25
BASIC AND DILUTED LOSS PER SHARE
The Company computes loss per share in accordance with ASC 260-10-45. "Earnings
per Share", (SFAS 128) which requires presentation of both basic and diluted
earnings per share on the face of the statement of operations. Basic loss per
share is computed by dividing net loss available to common shareholders by the
weighted average number of outstanding common shares during the period. Diluted
loss per share gives effect to all dilutive potential common shares outstanding
during the period. Dilutive loss per share excludes all potential common shares
if their effect is anti-dilutive.
The Company has no potential dilutive instruments. Basic loss and diluted loss
per share are equal.
STOCK BASED COMPENSATION
In December 2004, the FASB issued SFAS No. 123R, "Share-Based Payments," which
replaced SFAS No. 123, "Accounting for Stock-Based Compensation" and superseded
APB Opinion No. 25, "Accounting for Stock Issued to Employees." In January 2005,
the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin
("SAB") No. 107, "Share-Based Payment," which provides supplemental
implementation guidance for SFAS No. 123R SFAS No. 123R requires all share based
payments to employees , including grants of employee stock options, to be
recognized in the financial statements based on the grant date fair value of the
award. SFAS No. 123R was to be effective for interim or annual reporting periods
beginning on or after June 15, 2005, but in April 2005, the SEC issued a rule
that will permit most registrants to implement SFAS No. 123R at the beginning of
their next fiscal year, instead of the next reporting period as required by SFAS
No. 123R. The pro-forma disclosures previously permitted under SFAS No. 123R no
longer will be an alternative to financial statement recognition. Under SFAS No.
123R, the Company must determine the appropriate fair value model to be used for
valuing share-based payments, the amortization method for compensation costs and
the transition method to be used at date of adoption.
The transition methods include prospective and retroactive adoption options.
Under the retroactive options, prior periods may be restated either as of the
beginning of the year of adoption or for all periods presented. The prospective
method requires that compensation expense be recorded for all unvested stock
options and restricted stock at the beginning of the first quarter of adoption
of SFAS No. 123R, while the retroactive methods would record compensation
expense for all unvested stock options and restricted stock beginning with the
first period restated. The Company adopted the modified prospective approach of
SFAS No 123R for the period ended October 31, 2009. The Company did not record
any compensation expense for the period ended October 31, 2009 because there
were no stock options outstanding prior to, or at October 31, 2009.
RECENT ACCOUNTING PRONOUNCEMENTS
In September 2009, we adopted the Financial Accounting Standards Board ("FASB")
Accounting Standards Codification ("ASC") 105-10, "Generally Accepted Accounting
Principles." ASC 105-10 establishes the FASB Accounting Standards
Codification(TM) ("Codification") as the source of authoritative accounting
principles recognized by the FASB to be applied by nongovernmental entities in
the preparation of financial statements in conformity with GAAP for SEC
registrants. All guidance contained in the Codification carries an equal level
of authority. The Codification supersedes all existing non-SEC accounting and
reporting standards. The FASB will now issue new standards in the form of
Accounting Standards Updates ("ASUs"). The FASB will not consider ASUs as
authoritative in their own right. ASUs will serve only to update the
Codification, provide background information about the guidance and provide the
26
bases for conclusions on the changes in the Codification. References made to
FASB guidance have been updated for the Codification throughout this document.
In June 2009, the FASB issued Statement of Financial Accounting Standards No.
165, "Subsequent Events" (ASC Topic 855). SFAS 165 establishes general standards
of accounting for and disclosure of events that occur after the balance sheet
date but before financial statements are issued or are available to be issued.
SFAS 165 applies to both interim financial statements and annual financial
statements. SFAS 165 is effective for interim or annual financial periods ending
after June 15, 2009. SFAS 165 does not have a material impact on our financial
statements (see Note 1).
In June 2009, the FASB issued Statement of Financial Accounting Standards No.
168, "The FASB Accounting Standards Codification and the Hierarchy of Generally
Accepted Accounting Principles" (ASC Topic 105). SFAS 168 replaces FASB
Statement No. 162, "The Hierarchy of Generally Accepted Accounting Principles",
and establishes the FASB Accounting Standards Codification ("Codification") as
the source of authoritative accounting principles recognized by the FASB to be
applied by nongovernmental entities in the preparation of financial statements
in conformity with generally accepted accounting principles ("GAAP"). SFAS 168
is effective for interim and annual periods ending after September 15, 2009. The
Company will begin to use the new Codification when referring to GAAP in its
annual report on Form 10-K for the fiscal year ending January 3, 2010. This will
not have an impact on the consolidated results of the Company.
In April 2009, the FASB issued FASB Staff Position 107-1 (ASC Topic 825) and
Accounting Principles Board 28-1 (ASC Topic 270), "Interim Disclosures about
Fair Value of Financial Instruments". FSP 107-1 amends SFAS No. 107,
"Disclosures About Fair Value of Financial Instruments," to require disclosures
about fair value of financial instruments for interim reporting periods of
publicly traded companies as well as in annual financial statements. FSP 107-1
also amends APB Opinion No. 28, "Interim Financial Reporting," to require those
disclosures in summarized financial information at interim reporting periods.
FSP 107-1 is effective for interim reporting periods ending after June 15, 2009.
FSP107-1 does not require disclosures for earlier periods presented for
comparative purposes at initial adoption. In periods after initial adoption,
this FSP requires comparative disclosures only for periods ending after initial
adoption. The Company adopted FSP 107-1 in the second quarter of 2009. FSP 107-1
did not have a material impact on the financial statements.
In April 2009, the FASB issued FASB Staff Position 157-4, "Determining Fair
Value When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly" (ASC
Topic 820). FSP 157-4 provides additional guidance for estimating fair value in
accordance with SFAS No. 157, "Fair Value Measurements," when the volume and
level of activity for the asset or liability have significantly decreased. FSP
157-4 also includes guidance on identifying circumstances that indicate a
transaction is not orderly. FSP 157-4 is effective for interim and annual
reporting periods ending after June 15, 2009. The Company adopted FSP 157-4 in
the second quarter of 2009. FSP 107-1 did not have a material impact on the
financial statements.
The Company does not expect the adoption of recently issued accounting
pronouncements to have any significant impact on the Company's results of
operations, financial position or cash flow.
As new accounting pronouncements are issued, the Company will adopt those that
are applicable under the circumstances.
27
3. COMMON STOCK TRANSACTIONS
The total number of common shares authorized that may be issued by the Company
is 150,000,000 shares and 75,000,000 preferred shares each with a par value of
$.001 per share. No other class of shares is authorized.
On July 23, 2007, the Company issued 1,500 shares of common stock to the
Director, for total cash proceeds of $10,000.
On June 1, 2008, the Company issued 2,500,000 of common stock to the Director
for total proceeds of $5,000.
At October 31, 2009, there were no shares of preferred stock, stock options or
warrants issued.
4. MINERAL INTERESTS
On November 28, 2007, the Company entered into a purchase and sale agreement to
acquire a 100% interest in one mining claim of approximately 505 hectares
located in the mining division approximately 15 kilometers north of the town of
Keremos, in South Central British Columbia, Canada.
The mineral interest is held in trust for the Company by the vendor of the
property. Upon request from the Company, the title will be changed to the name
of the Company with the appropriate mining recorder. The Claim is assigned
Tenure Number 541991 and is recorded in the name of Reza Mohammed. The Claim is
in good standing to January 26, 2011.
5. INCOME TAXES
As of October 31, 2009, the Company had a net operating loss carry forwards of
approximately $38,100 that may be available to reduce future years' taxable
income through 2029. Future tax benefits which may arise as a result of these
losses have not been recognized in these financial statements, as their
realization is determined not likely to occur and accordingly, the Company has
not recorded a valuation allowance for the deferred tax asset relating to this
tax loss carry forward.
6. RELATED PARTY TRANSACTIONS - LOANS FROM DIRECTORS
On July 31, 2007, in connection with its organization, the Company issued 1,500
shares of common stock to Andrea Schlectman, the sole shareholder, director and
officer of the Company, for consideration of $10,000.
On June 1, 2008, the Company issued 2,500,000 shares of common stock at $.002
per share for a total of $5,000 to Andrea Schlectman as reimbursement for Ms.
Schlectman's payment of $5,000 on behalf of the Company for its mining claim.
Andrea Schlectman may in the future, become involved in other business
opportunities as they may become available, thus she may face a conflict in
selecting between the Company and her other business opportunities. The Company
has not formulated a policy for the resolution of such a conflict.
While the Company is seeking additional funds, the director has loaned monies to
pay for certain expenses incurred. These loan(s) are interest free and there is
no specific time for repayment. The balance due the director as of October 31,
2009 is $16,500.
28
7. SUBSEQUENT EVENTS
The Company has evaluated events subsequent to October 31, 2009 to assess the
need for potential recognition or disclosure in this report. Such events were
evaluated through January 28, 2010, the date these financial statements were
issued. Based upon this evaluation, it was determined that no subsequent events
occurred that require recognition or disclosure in the financial statements.
29
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
There have been no changes in, or disagreements with the Company's principal
independent registered public accounting firm for the two-year period ended
December 31, 2009.
ITEM 9A CONTROLS AND PROCEDURES
As of the end of the period covered by this Annual Report, our sole officer and
director performed an evaluation of the effectiveness of our disclosure controls
and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act.
Based on the evaluation and the identification of the material weaknesses in
internal control over financial reporting described below, our sole officer and
director concluded that, as of October 31, 2009, the Company's disclosure
controls and procedures were not effective.
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management is responsible for establishing and maintaining adequate internal
control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of
the Exchange Act. Internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements in accordance with GAAP.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projection of any evaluation of
effectiveness to future periods is subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
Andrea Schlectman, our President and sole director has conducted an assessment
of our internal control over financial reporting as of October 31, 2009.
Management's assessment of internal control over financial reporting was
conducted using the criteria in Internal Control over Financial Reporting -
Guidance for Smaller Public Companies issued by the Committee of Sponsoring
Organizations of the Treadway Commission ("COSO").
A material weakness is a deficiency, or a combination of deficiencies, in
internal control over financial reporting, such that there is a reasonable
possibility that a material misstatement of the Company's annual or interim
financial statements will not be prevented or detected on a timely basis. In
connection with management's assessment of our internal control over financial
reporting as required under Section 404 of the Sarbanes-Oxley Act of 2002, we
identified the following material weaknesses in our internal control over
financial reporting as of October 31, 2009:
1. The Company has not established adequate financial reporting monitoring
procedures to mitigate the risk of management override, specifically because
there are no employees and only one officer and director with management
functions and therefore there is lack of segregation of duties. In addition, the
Company does not have accounting software to prevent erroneous or unauthorized
changes to previous reporting periods or to provide an adequate audit trail of
entries. However, although our controls are not effective, these significant
weaknesses did not result in any material misstatements in our financial
statements.
2. In addition, there is insufficient oversight of accounting principles
implementation and insufficient oversight of external audit functions.
3. There is a strong reliance on the external auditors to review and adjust
the annual and quarterly financial statements, to monitor new accounting
principles, and to ensure compliance with GAAP and SEC disclosure requirements.
4. There is a strong reliance on the external attorneys to review and edit
the annual and quarterly filings and to ensure compliance with SEC disclosure
requirements.
Because of the material weaknesses noted above, management has concluded that we
did not maintain effective internal control over financial reporting as of
October 31, 2009, based on Internal Control over Financial Reporting - Guidance
for Smaller Public Companies issued by COSO.
30
REMEDIATION OF MATERIAL WEAKNESSES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
As a small business, without a viable business and revenues, the Company does
not have the resources to install a dedicated staff with deep expertise in all
facets of SEC disclosure and GAAP compliance. As is the case with many small
businesses, the Company will continue to work with its external auditors and
attorneys as it relates to new accounting principles and changes to SEC
disclosure requirements. The Company has found that this approach worked well in
the past and believes it to be the most cost effective solution available for
the foreseeable future.
The Company will conduct a review of existing sign-off and review procedures as
well as document control protocols for critical accounting spreadsheets. The
Company will also increase management's review of key financial documents and
records.
As a small business, the Company does not have the resources to fund sufficient
staff to ensure a complete segregation of responsibilities within the accounting
function. However, Company management does review, and will increase the review
of, financial statements on a monthly basis, and the Company's external auditor
conducts reviews on a quarterly basis. These actions, in addition to the
improvements identified above, will minimize any risk of a potential material
misstatement occurring.
This Annual Report does not include an attestation report of the Company's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the Company's
registered public accounting firm pursuant to temporary rules of the SEC that
permit the Company to provide only management's report in this annual report.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no changes in our internal control over financial reporting during
the period ended October 31, 2009 that materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.
ITEM 9B OTHER INFORMATION
REGISTRATION OF SECURITIES
On February 13, 2009, the Company filed a registration statement (the
"Registration Statement") on Form S-1 for the registration and sale of up to
1,000,000 shares of its common stock at a price of $0.01 per share. The SEC
declared the Company's registration statement effective on March 9, 2009. Under
the terms of the prospectus which was a part of the registration statement, the
offering period was to expire 180 days following the date the SEC declared the
registration statement effective, or September 5, 2009.
The Company sold no securities under the registration statement during the
offering period. Concurrently with the filing of this Report, the Company
intends to file a withdrawal request with respect to the Registration Statement
and thereafter file a new registration statement.
PART III
ITEM 10 DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The directors of the Company hold office for annual terms and will remain in
their positions until successors have been elected and qualified. The officers
are appointed by the board of directors of the Company and hold office until
their death, resignation or removal from office. The ages, positions held, and
duration of terms of the directors and executive officers are as follows:
Name Age Position
---- --- --------
Andrea Schlectman 37 President, Chief Executive Officer and Director
31
ANDREA SCHLECTMAN, PRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR
Andrea Schlectman has been President, Secretary, Treasurer, CEO, CFO and sole
Director of the Company since inception. Ms. Schlectman has a Bachelor's Degree
in Sociology and Criminal Justice from William Paterson University, Wayne NJ.
She has been an independent business consultant for the past eight years. Her
experience includes working with management of privately-held companies to
maximize productivity as well as general corporate matters. Ms. Schlectman also
has experience in various industries in the areas of marketing, sales and
finance. For several years she assisted the Regional Sales Manager of Washington
Mutual Financial Services and most recently was involved in sales and marketing
for a charter jet company in New York.
ITEM 11 EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and long-term
compensation earned by the Company's principal executive officer, each of our
two most highly compensated executive officers who were serving as executive
officers as of the date of this Report.
Change in
Pension
Value and
Non-Equity Nonqualified
Incentive Deferred
Stock Option Plan Compensation All Other
Salary Bonus Awards Awards Compensation Earnings Compensation Total
Name and Principal Position Year ($) ($) ($) ($) ($) ($) ($) ($)
--------------------------- ---- ------ ----- ------ ------ ------------ -------- ------------ -----
Andrea Schlectman 2009 Nil Nil Nil Nil Nil Nil Nil Nil
President, Chief Executive
Officer and Director
There are no employment agreements or consulting agreements with our current
directors and executive officers. There are no arrangements or plans in which we
provide pension, retirement or similar benefits for directors or executive
officers. We do not have any material bonus or profit sharing plans pursuant to
which cash or non-cash compensation is or may be paid to our directors or
executive officers, except that stock options may be granted at the discretion
of our board of directors from time to time. We have no plans or arrangements in
respect of remuneration received or that may be received by our executive
officers to compensate such officers in the event of termination of employment
(as a result of resignation, retirement, change of control) or a change of
responsibilities following a change of control.
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The following table sets forth certain information as of the date of this Report
with respect to the beneficial ownership of the outstanding common stock of the
Company by (i) any holder of more than five (5%) percent; (ii) each of the
Company's executive officers and directors; and (iii) the Company's directors
and executive officers as a group. Unless otherwise indicated below, the persons
and entities named in the table have sole voting and sole investment power with
respect to all shares beneficially owned. The percentage of class is based on
2,501,500 shares of common stock issued and outstanding as of the date of this
Report. The address for the individual identified below is 670 Kent Avenue,
Teaneck, NJ 07666.
Name and Address Amount of Percentage
of Beneficial Owner Beneficial Ownership of Class
------------------- -------------------- --------
Andrea Schlectman 2,501,500 100%
President, Chief Executive Officer
and Director
Directors and Executive Officers
as a Group (1 person) 2,501,500 100%
32
CAPITAL STOCK
The authorized capital stock of the Company is 150,000,000 shares of common
stock, with a par value of $0.001 per share, and 75,000,000 shares of blank
check preferred stock, with a par value of $0.001 per share.
As of the date of this Report, there are 2,501,500 shares of common stock issued
outstanding. There is no preferred stock outstanding.
As of the date of this Report, there is one (1) holder of record of the
Company's common stock, who is an affiliate of the Company.
OPTIONS AND WARRANTS
There are no outstanding options or warrants or other securities that are
convertible into our common stock.
VOTING RIGHTS
Each shareholder is entitled to one (1) vote for each share of voting stock.
DIVIDEND POLICY
We intend to retain and use any future earnings for the development and
expansion of our business and do not anticipate paying any cash dividends in the
foreseeable future.
TRANSFER AGENT
The registrar and transfer agent for our common stock will be Empire Stock
Transfer Inc. upon completion of the Company' stock offering. Its address and
telephone number are 1859 Whitney Mesa Drive, Henderson, NV 89014, (702)
818-5898. Until the present time and until the completion of the stock offering,
we have acted and will act as our own registrar and transfer agent.
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
Since inception, the following transactions were entered into with our sole
shareholder.
On July 23, 2007, 1,500 shares were issued to our sole shareholder, Andrea
Schlectman, in connection with the organization of the Company. On June 1, 2008,
2,500,000 shares were issued to Andrea Schlectman as reimbursement for Ms.
Schlectman's payment of $5,000 on behalf of the Company for its mining claim. In
each instance, Ms. Schlectman acquired her shares with the intent to hold the
shares for investment purposes and not with a view to further resale or
distribution, except as permitted under exemptions from registration
requirements under applicable securities laws.
Each of the certificates issued to Ms. Schlectman contain a restrictive legend
with respect to the issuance of securities pursuant to exemptions from
registration requirements under the Securities Act.
ITEM 14 PRINCIPAL ACCOUNTING FEES AND SERVICES
For the year ended October 31, 2009, the total audit services fees for the
Company is estimated to be $7,500, for audit-related services were $Nil, for tax
services were $Nil and for other services were $Nil.
For the year ended October 31, 2008, the total fees charged to the Company for
audit services were $10,000, for audit-related services were $Nil for tax
services were Nil and for other services were $Nil.
33
PART IV
ITEM 15 EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Exhibit No. Description
----------- -----------
3.1 Certificate of Incorporation*
3.2 Amended Certificate of Incorporation*
3.3 By-Laws*
4.1 Specimen common stock certificate*
10.1 Declaration of Trust dated November 28, 2007 *
31 Certification of Principal Executive Officer and Principal
Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
32 Certification of Principal Executive Officer and Principal
Financial Officer to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
99.1 Assessment Report of George Coetzee *
----------
* Incorporated herein by reference from the Company's Registration Statement
on Form S-1 filed with the Securities and Exchange Commission on February
13, 2009
34
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
KOPR RESOURCES CORP.
Date: January 29, 2010 By /s/ Andrea Schlectman
-------------------------------------
Andrea Schlectman
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated:
/s/ Andrea Schlectman President, Chief Executive Officer January 29, 2010
--------------------------------- and Director
Andrea Schlectman (Principal Executive Officer)
(Principal Financial and Accounting Officer)
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO
SECTION 15(D) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES
PURSUANT TO SECTION 12 OF THE ACT
The registrant has not furnished to its security holders an annual report
covering its fiscal year ended October 31, 2009 or any proxy material with
respect to any annual or other meeting of security holders, nor will the
registrant furnish such material to its security holders subsequent to the
filing of its annual report on this Form 10-K.
35