Attached files
file | filename |
---|---|
EX-99.4 - CERTIFICATE 18 U.S.C. SECT 1250 D. BOZANIC, CFO - Digital Development Group Corp | certsect906bozaniccfo.htm |
EX-99.2 - CERTIFICATE 18 U.S.C. SECT 1350 J. BROOKE, CEO - Digital Development Group Corp | certsect906janebrookeceo.htm |
EX-99.3 - CERTIFICATE RULE 13A-14A D. BOZANIC. CFO - Digital Development Group Corp | certrule13a14abozaniccfo.htm |
EX-99.1 - CERTIFICATE RULE 13A-14A JANE BROOKE, CEO - Digital Development Group Corp | certrule13a14ajanebrookeceo.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
(X
)
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITES EXCHANGE ACT OF
1934
|
For
the quarter period ended March 31,
2010
|
( )
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE EXCHANGE ACT OF
1934
|
For
the transition period
form
to
|
|
Commission
File number 333-158103
|
|
REGENCY RESOURCES,
INC.
|
(Exact
name of registrant as specified in its charter)
Nevada
|
98-0515726
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification
No.)
|
11 Glouchester Ave., Flat 5, Camden Town, London,
England, NW1 7AU
|
(Address
of principal executive offices)
|
011-44-207-267-2160
|
(Registrant’s
telephone number)
|
N/A
|
(Former
name, former address and former fiscal year, if changed since last
report)
|
Indicate
by check mark whether the registrant (1) filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes [X] No
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a small reporting company. See
definition of “large accelerated filer”, “accelerated filer” and “small
reporting company” Rule 12b-2 of the Exchange Act.
Large
accelerated
filer [ ] Accelerated
filer [ ]
Non-accelerated
filer [ ] (Do not check
if a small reporting
company) Small
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 [ ]
APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS
DURING THE PROCEDING FIVE YEARS
Indicate by check mark whether the
registrant has filed all documents and reports required to be filed by Section
12, 13 or 15(d) of the Securities Exchange Act of 1934 after the distribution of
securities subsequent to the distribution of securities under a plan confirmed
by a court. Yes □ No □
APPLICABLE
ONLY TO CORPORATE ISSUERS:
Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date:
April 26,
2010: 2,450,000 common shares
-1-
Page
Number
|
||
PART
1.
|
FINANCIAL
INFORMATION
|
|
ITEM 1.
|
Financial
Statements (unaudited)
|
3
|
Balance
Sheet as at March 31, 2010 and December 31, 2009
|
4
|
|
Statement
of Operations
For
the three months ended March 31, 2010 and 2009 and for the period December
11, 2006 (Date of Inception) to March 31, 2010
|
5
|
|
Statement
of Cash Flows
For
the three months ended March 31, 2010 and 2009 and for the period December
11, 2006 (Date of Inception) to March 31, 2010
|
6
|
|
Notes
to the Financial Statements.
|
7
|
|
ITEM 2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
11
|
ITEM 3.
|
Quantitative
and Qualitative Disclosures about Market Risk
|
19
|
ITEM 4.
|
Controls
and Procedures
|
20
|
ITEM 4T.
|
Controls
and Procedures
|
21
|
PART
11.
|
OTHER
INFORMATION
|
21
|
ITEM 1.
|
Legal
Proceedings
|
21
|
ITEM 1A.
|
Risk
Factors
|
21
|
ITEM 2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
27
|
ITEM 3.
|
Defaults
Upon Senior Securities
|
27
|
ITEM 4.
|
Submission
of Matters to a Vote of Security Holders
|
27
|
ITEM 5.
|
Other
Information
|
27
|
ITEM 6.
|
Exhibits
|
27
|
SIGNATURES.
|
28
|
|
-2-
PART
1 – FINANCIAL INFORMATION
ITEM
1. FINANCIAL STATEMENTS
The
accompanying balance sheets of Regency Resources, Inc. (Pre-exploration stage
company) at March 31, 2010 (with comparative figures as at December 31, 2009)
and the statement of operations for the three months ended March 31, 2010 and
2009 and for the period from December 11, 2006 (date of incorporation) to March
31, 2010 and the statement of cash flows for the three months ended March 31,
2010 and 2009 and for the period from December 11, 2006 (date of incorporation)
to March 31, 2010 have been prepared by the Company’s management in conformity
with accounting principles generally accepted in the United States of
America. In the opinion of management, all adjustments considered
necessary for a fair presentation of the results of operations and financial
position have been included and all such adjustments are of a normal recurring
nature.
Operating
results for the three months ended March 31, 2010 are not necessarily indicative
of the results that can be expected for the year ending December 31,
2010.
-3-
REGENCY
RESOURCES, INC.
(Pre-exploration
Stage Company)
BALANCE
SHEETS
(Unaudited
– Prepared by Management)
March
31, 2010
|
December
31, 2009
|
|
ASSETS
|
||
CURRENT
ASSETS
|
|
|
Cash
|
$ 2,488
|
$ 424
|
Total Current
Assets
|
$ 2,488
|
$ 424
|
LIABILITIES
AND STOCKHOLDERS’ DEFICIENCY
|
||
CURRENT
LIABILITIES
|
||
Accounts payable
|
$ 10,708
|
$ 12,278
|
Accounts payable – related
parties
|
40,800
|
31,625
|
Total Current
Liabilities
|
51,508
|
43,903
|
STOCKHOLDERS’
DEFICIENCY
|
||
Common
stock
|
||
200,000,000 shares authorized, at
$0.001 par value;
|
||
2,450,000 shares issued and
outstanding
|
2,450
|
2,450
|
Capital in excess of par
value
|
39,200
|
39,200
|
Deficit accumulated during the
pre-exploration stage
|
(90,670)
|
(85,129)
|
Total Stockholders’
Deficiency
|
(49,020)
|
(43,479)
|
$ 2,488
|
$ 424
|
The
accompanying notes are an integral part of these unaudited financial
statements.
-4-
REGENCY
RESOURCES, INC.
(Pre-exploration
Stage Company)
STATEMENT
OF OPERATIONS
For three
months ended March 31, 2010 and 2009 and for the period from December 11, 2006
(date of inception) to March 31, 2010
(Unaudited
– Prepared by Management)
Three
month ended
March 31, 2010
|
Three
months ended
March 31, 2009
|
From
December 11, 2006
(date
of inception) to
March 31, 2010
|
|
|
|||
REVENUES
|
$ -
|
$ -
|
$ -
|
EXPENSES
|
|||
Accounting
and auditing
|
1,125
|
1,550
|
15,712
|
Bank
charges and interest
|
36
|
195
|
857
|
Consulting
|
-
|
5,000
|
25,000
|
Edgarizing
|
368
|
368
|
2,179
|
Exploration
and staking
|
-
|
-
|
14,646
|
Filing
fees
|
-
|
-
|
991
|
Incorporation
costs
|
-
|
-
|
620
|
Legal
|
-
|
2,000
|
2,000
|
Management
fees
|
3,000
|
3,000
|
21,000
|
Office
|
112
|
148
|
784
|
Rent
|
900
|
900
|
4,800
|
Transfer
agent’s fees
|
-
|
-
|
2,081
|
NET
LOSS FROM OPERATIONS
|
$ (5,541)
|
$(13,161)
|
$ (90,670)
|
NET
LOSS PER COMMON SHARE
|
|||
Basic
and diluted
|
$ (0.00)
|
$ (0.01)
|
|
AVERAGE
OUTSTANDING SHARES
|
|||
Basic
|
2,450,000
|
2,450,000
|
The
accompanying notes are an integral part of these unaudited financial
statements.
-5-
REGENCY
RESOURCES, INC.
(Pre-exploration
Stage Company)
STATEMENT
OF CASH FLOWS
For the
three months ended March 31, 2010 and 2009 and for the period from December 11,
2006 (date of inception) to March 31, 2010
(Unaudited
– Prepared by Management)
Three
months ended
March 31, 2010
|
Three
months ended
March 31, 2009
|
From
Dec. 11, 2006
(date
of inception) to
March 31, 2010
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|||
Net
loss
|
$ (5,541)
|
$
(13,161)
|
$ (90,670)
|
Adjustments
to reconcile net loss to net cash
provided
by operating activities:
|
|||
Changes
in accounts payable
|
(1,570)
|
18
|
10,708
|
Net
Cash Provided (Used) in Operations
|
(7,111)
|
(13,143)
|
(79,962)
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
-
|
-
|
-
|
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|||
Proceeds from loan from related
party
|
9,175
|
5,648
|
40,800
|
Proceeds from issuance of common
stock
|
-
|
-
|
41,650
|
9,175
|
5,648
|
82,450
|
|
Net
(Decrease) Increase in Cash
|
2,064
|
(7,495)
|
2,488
|
|
|||
Cash
at Beginning of Period
|
424
|
7,540
|
-
|
CASH
AT END OF PERIOD
|
$
2,488
|
$
45
|
$ 2,488
|
The
accompanying notes are an integral part of these unaudited financial
statements
-6-
REGENCY
RESOURCES, INC.
(Pre-exploration
Stage Company)
NOTES
TO FINANCIAL STATEMENTS
March 31,
2010
(Unaudited
– Prepared by Management)
1. ORGANIZATION
The
Company, Regency Resources Inc., was incorporated under the laws of the State of
Nevada on December 11, 2006 with the authorized capital stock of 200,000,000
shares at $0.001 par value.
The
Company was organized for the purpose of acquiring and developing mineral
properties. At the report date mineral claims, with unknown reserves,
had been acquired. The Company has not established the existence of a
commercially minable ore deposit and therefore has not reached the development
stage and is considered to be in the pre-exploration stage.
2. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
Accounting
Methods
The
Company recognizes income and expenses based on the accrual method of
accounting.
Dividend
Policy
The
Company has not yet adopted a policy regarding payment of
dividends.
|
Basic and Diluted Net
Income (loss) Per Share
|
|
Basic
net income (loss) per share amounts are computed based on the weighted
average number of shares actually outstanding. Diluted
net income (loss) per share amounts are computed using the weighted
average number of common and common equivalent shares outstanding as if
shares had been issued on the exercise of the common share rights unless
the exercise becomes antidulutive and then only the basic per share
amounts are shown in the report.
|
Evaluation of Long-Lived
Assets
The
Company periodically reviews its long term assets and makes adjustments, if the
carrying value exceeds fair value.
-7-
REGENCY
RESOURCES, INC.
(Pre-exploration
Stage Company)
NOTES
TO FINANCIAL STATEMENTS
March 31,
2010
(Unaudited
– Prepared by Management)
2. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES - Continued
Income
Taxes
The
Company utilizes the liability method of accounting for income
taxes. Under the liability method deferred tax assets and liabilities
are determined based on differences between financial reporting and the tax
bases of the assets and liabilities and are measured using the enacted tax rates
and laws that will be in effect, when the differences are expected to be
reversed. An allowance against deferred tax assets is recorded,
when it is more likely than not, that such tax benefits will not be
realized.
On March
31, 2010 the Company had a net operating loss carry forward of $90,670 for
income tax purposes. The tax benefit of approximately $27,200 from
the loss carry forward has been fully offset by a valuation reserve because the
future tax benefit is undeterminable since the Company is unable to establish a
predictable projection of operating profits for future years. Losses
will expire in 2031.
Foreign Currency
Translations
Part of
the transactions of the Company were completed in Canadian dollars and have been
translated to US dollars as incurred, at the exchange rate in effect at the
time, and therefore, no gain or loss from the translation is
recognized. The functional currency is considered to be US
dollars.
Revenue
Recognition
Revenue
is recognized on the sale and delivery of a product or the completion of a
service provided.
Advertising and Market
Development
The company expenses advertising and
market development costs as incurred.
Financial
Instruments
|
The
carrying amounts of financial instruments are considered by management to
be their fair value due to their short term
maturities.
|
Estimates and
Assumptions
Management
uses estimates and assumptions in preparing financial statements in accordance
with general accepted accounting principles. Those estimates and
assumptions affect the reported amounts of the assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and
expenses. Actual results could vary from the estimates that
were assumed in preparing these financial statements.
|
|
-8-
REGENCY RESOURCES, INC.
(Pre-exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31,
2010
(Unaudited
– Prepared by Management)
2. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES - Continued
|
Statement of Cash
Flows
|
|
For
the purposes of the statement of cash flows, the Company considers all
highly liquid investments with a maturity of three months or less to be
cash equivalents.
|
Unproven Mining Claim
Costs
Cost of
acquisition, exploration, carrying and retaining unproven properties are
expensed as incurred.
|
Environmental
Requirements
|
|
At
the report date environmental requirements related to the mineral claim
acquired are unknown and therefore any estimate of any future cost cannot
be made.
|
Recent Accounting
Pronouncements
The
Company does not expect that the adoption of other recent accounting
pronouncements will have a material impact on its financial
statements.
3. AQUISITION
OF MINERAL CLAIM
|
On
February 15, 2007, the Company acquired the Mara Gold Claim located in the
Republic of Fiji from The Mara Group LLC., an unrelated company, for the
consideration of $7,000. The Mara Gold Claim is located 20 km
North West of the city Suva, Fiji. Under Fijian law, the claim
remains in good standing as long as the Company has an interest in
it. There is no annual maintenance fee or minimum
exploration work required on the
Claim.
|
|
On
July 1, 2008, the Company acquired the La Trinidad Gold Claim located in
the Republic of the Philippines from Kalibo Resources Inc., an unrelated
company, for the consideration of $5,000. Under Philippine
mining laws, the claim remains in good standing as long as the Company has
an interest in it.
|
4. SIGNIFICANT
TRANSACTIONS WITH RELATED PARTY
Officers-directors
and their families have acquired 67% of the common stock issued and have made no
interest, demand loans to the Company of $40,800.
-9-
|
REGENCY
RESOURCES, INC.
|
(Pre-exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31,
2010
(Unaudited
– Prepared by Management)
5. CAPITAL
STOCK
On April
15, 2007, Company completed a private placement consisting of 1,650,000 common
shares sold to directors and officers at a price of $0.001 per share for a total
consideration of $1,650. On October 31, 2008, the Company completed a
private placement of 800,000 common shares at $0.05 per share for a total
consideration of $40,000.
6.
|
GOING
CONCERN
|
|
The
Company will need additional working capital to service its debt and to
develop the mineral claims acquired, which raises substantial doubt about
its ability to continue as a going concern. Continuation
of the Company as a going concern is dependent upon obtaining additional
working capital and the management of the Company has developed a
strategy, which it believes will accomplish this objective through
additional equity funding, and long term financing, which will enable the
Company to operate for the coming
year.
|
7. SUBSEQUENT
EVENTS
|
The
Company has evaluated subsequent events from the balance sheet date to
April 25, 2010 and has found no material subsequent events to
report.
|
-10-
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The
following discussion should be read in conjunction with the information
contained in the financial statements of Regency Resources, Inc. (“Regency” or
the “Company”) and the notes which form an integral part of the financial
statements which are attached hereto.
The
financial statements mentioned above have been prepared in conformity with
accounting principles generally accepted in the United States of America and are
stated in United States dollars.
Regency
was incorporated under the laws of the State of Nevada on December 11, 2006
under the name of Regency Resources Inc. (“Regency”). Our fiscal year end is
December 31. Our executive offices are located at 11 Glouchester Ave,
Flat 5, Camden Town, London, NW1 7AU, England.
We do not
have any subsidiaries, affiliated companies or joint venture
partners.
We are a
start-up mineral company in the pre-exploration stage and have not generated any
operating revenues since inception. We have incurred losses since
inception and our auditors have issued a going concern opinion since we must
raise additional capital, through the sale of our securities, in order to fund
our operations. There can be no assurance we will be able to raise
this capital.
On
February 15, 2007 Regency purchased a 100% interest in the Mara Gold Claim (the
“Mara Claim”) from The Mara Group LLC., an unrelated company, for $7,000. The
Mara Claim consists of one 8 unit claim block containing 122.5 hectares
(approximately 307 acres) located about 20 km North West of the city of Suva, in
the Republic of Fiji. The Mara Claim is a gold exploration
project.
On July
1st,
2008 we acquired a 100% interest in the La Trinidad Gold Claim (the “La
Trinidad Claim”) from an unrelated mineral exploration company, Kalibo Resources
Inc., for the sum of $5,000. The La Trinidad Claim, a gold
exploration project, covers approximately 94.5 hectares (233.5 acres) located 45
kilometers North East of the city of Lingayen in the Republic of the
Philippines. The ‘La Trinidad Claim’ and the “Mara Claim” are
sometimes referred to herein collectively as the “Regency Claims”
There can
be no assurance that a commercially viable mineral deposit, an ore reserve,
exists on either of the Regency Claims or can be shown to exist unless and until
sufficient and appropriate exploration work is carried out and a comprehensive
evaluation of such work concludes economic and legal
feasibility. Such work could take many years of exploration and
would require expenditure of very substantial amounts of capital, capital we do
not presently have and may never be able to raise. To date, we have
not conducted any exploration work on either of the Regency Claims.
We have
no full-time employees and management of Regency devote a very small percentage
of their time to the affairs of the Company. While neither of our officers and
directors is a director or officer of any other company involved in the mining
industry there can be no assurance such involvement will not occur in the
future. Such involvement could create a conflict of
interest.
Foreign Currency and Exchange
Rates
Our
mineral properties are located in the, case of the La Trinidad Property, the
Republic of Philippines and the Mara Gold Claim, the Republic of Fiji. Costs expressed in the
geological reports on these mineral properties are expressed in the local
currency, Philippine Pesos (“PHP”) in the case of the La Trinidad Property, and
Fijian dollars (“FJD”), in the case of the Mara Gold Claim. For purposes of
consistency and to express United States Dollars throughout this Form 10-Q,
Philippine Pesos have been converted into United States currency at the rate of
US $1.00 being approximately equal to PHP 48.75 or PHP 1.00 being
approximately equal US $ 0.0205; and Fijian Dollars have been converted into
United States
currency
at the rate of US $1.00 being approximately equal to FJD $2.02 or FJD $ 1.00
being approximately equal US $ 0.46 which is the exchange rate as at March 31,
2010.
-11-
DESCRIPTION
OF THE PROPERTY
Provided
we have sufficient funds to do so, we intend to undertake exploration work on
both of the Regency Claims. The Regency Claims were selected for acquisition due
to previously recorded exploration work and because the claims are not located
in an environmentally sensitive region. However, at present we do not have funds
available to undertake only Phase I work on the La Trinidad Claim as described
below.
We are
presently in the pre-exploration stage and there is no assurance that
mineralized material with any commercial value exits on either of our
properties.
We do not
have any ore body and have not generated any revenues from our
operations. Our planned exploration work is exploratory in
nature. There can be no assurance that a commercially viable mineral
deposit, an ore reserve, exists on either of the Regency Claims or can be shown
to exist unless and until sufficient and appropriate exploration work is carried
out and a comprehensive evaluation of such work concludes economic and legal
feasibility. Such work could take many years of exploration and
would require expenditure of very substantial amounts of capital, capital we do
not presently have and may never be able to raise. To date, we have
not conducted any exploration work on either of the Regency Claims. We presently do not have
funds sufficient to complete even Phase 1 of a two-phase exploration program
recommended for the la Trinidad Gold Claim.
Descriptions
of the Regency Claims, our two exploration property interests, are as
follows:
La
Trinidad Claim
Location
and Access
Regency
is the registered and beneficial owner of a 100% interest in the La Trinidad
Claim, located in the Republic of Philippines. The La Trinidad Claim covers an
area of approximately 94.5 hectares (approximately 233.5 acres) and is located
about 45 km North East of the city of Lingayen and 35 km South West of the city
of San Fernanda. The claim is accessible by all-weather government-maintained
roads to the towns of Lingayen and to San Fernanda. Year-round deep sea port
facilities exist at Lingayen. As well, Lingayen has an experienced
work force and will provide all the necessary services needed for an exploration
and development operation, including police, hospitals, groceries, fuel,
helicopter services, hardware and other necessary items. Drilling companies and
assay facilities are also present in Lingayen.
The
topography and relief of the La Trinidad Claim is fairly rugged. The claim falls
within the so-called tropical climate zone, a zone characterized by high
temperatures the whole year round, relatively high rainfall and lush vegetation.
Rainfall can occur in every month, but the wettest months are October, November
and December. Annual rainfall is approximately 1.5
meters. Due to the steep, deforested, mountains on average 60 percent
of the rainwater quickly runs off the claim area, with the remaining 40% quickly
evaporating or seeping into underground aquifers. Exploration work
can be undertaken year round on the La Trinidad Claim.
Property
Geology
The La
Trinidad Claim is underlain by Precambrian rocks, sediments and volcanics,
exposed along a wide axial plain. The volcanics are hornfelsed and
commonly contain minor pyrite, pyrrhotite. To the east of the
claim are intrusives consisting of rocks such as tonalite, monzonite, and gabbro
while on the western most point of the claim the intrusives also consist of a
large mass of granodiorite.
-12-
In
general the intrusive volcanics culminate with effluents of hydrothermal
solutions that carry precious metals in the form of naked elements, oxides or
sulphides. These hydrothermal solutions intrude into the older
rocks as quartz veins. These rocks may be broken due to mechanical and chemical
weathering into sand size particles and carried by streams and channels. Gold
occurs also in these sands as placers.
Recent
exploration for gold occurrences in the area immediately surrounding the La
Trinidad Claim has been encouraging. This area is well know for
numerous productive mineral occurrences including the Cabarroguis Gold Mine
located approximately 55 kilometers (34 miles) to the west of our
claim.
Previous
Exploration
The La
Trinidad Claim has
seen very limited historical exploration. Several properties to the
west of our claim have been drilled by junior exploration
companies. We have not yet undertaken any work on the La Trinidad
Claim and there is no known mineralization on the La Trinidad
Claim.
Plan of Operation: Proposed Exploration
Work
Mr.
Roberto Cua, P. Geo., authored the "Summary of Exploration on The La Trinidad
Property, La Trinidad, Philippines” dated July 7, 2008 (the “Cua Report”), in
which he recommended a phased exploration program to properly evaluate the
potential of the La Trinidad Claim. We must conduct exploration to determine
what minerals exist on our property and whether they can be economically
extracted and profitably processed. Subject to having funds sufficient to do so,
we plan to proceed with exploration of the La Trinidad Claim, in the manner
recommended in the Cua Report, to determine the potential for discovering
commercially exploitable deposits of gold.
We do not
have any ores or reserves whatsoever at this time on the La Trinidad Claim. Our
planned work is exploratory in nature.
Mr. Cua
is, and has since 1998 been, a registered Professional Geologist in good
standing in the Geological Society of Philippines. He graduated from the
University of far east, Manila, with a degree in geology (B. Sc.,1981) and a
Master’s degree (M. Sc.) in 1986 from the same university.
The Cua
Report concludes that:
- the
area of the La Trinidad Claim is well known for numerous productive mineral
occurrences;
- the
locale of the La Trinidad Gold Claim is underlain by the units of the
Precambrian rocks that are found at those mineral occurrence sites.
- these
rocks consisting of cherts and argillites (sediments) and andesitic to basaltic
volcanic have been intruded by granodiorite.
- structures
and mineralization probably related to this intrusion are found throughout the
region and occur on the claim. They are associated with all the major mineral
occurrences and deposits in the area.
- mineralization
found on the claim is consistent with that found associated with zones of
extensive mineralization. Past work however has been limited and sporadic and
has not tested the potential of the property.
- potential
for significant amounts of mineralization to be found exists on the property and
it merits intensive exploration.
-13-
The Cua
Report recommends a two-phase exploration program to properly evaluate the
potential of the claims. We anticipate, based on the budgets
set forth in the Cua Report, that Phase I work will cost $12,700 (PHP
602,000).
Phase I
work will include establishing a grid and the creation of maps showing the
location of all roads in and near the perimeter of the Regency
Claims. The laying out of a grid and line cutting involves the
physical cutting of the underbrush and overlay to establish an actual grid on
the ground whereby items can be related one to another more easily and with
greater accuracy. When we map, we essentially generate a drawing of the physical
features of the land we are interested in as well as a depiction of what may
have been found in relation to the boundaries of the property. So we will
actually draw a scale map of the area and make notes on it as to the location
where anything was found that was of interest or not. In the process
we will also identify any showings which appear to warrant sampling, i.e. any
rock formations that appear to warrant our taking soil and rock samples from the
claims to a laboratory where a determination of the elemental make up of the
sample and the exact concentrations of gold and/or uranium and other indicator
minerals can be made.
The work
is phased in such a manner as to allow decision points to ensure that future
work has a value and will provide better or additional information as to the
viability of the claim. By utilizing a multi-phase work program, at the end of
each phase a decision can be made as to whether the phase has provided the
necessary information to increase the viability of the project. If the
information obtained as a result of any phase indicates that there is no
increased probability of finding an economically viable deposit at the end of
the project, a determination would be made that the work should cease at that
point.
Assuming
the results of the Phase I work identify suitable targets, thus indicating
further exploration of the La Trinidad Claim is warranted, we intend, provided
we are able to raise funds to do so, to undertake a Phase II geochemical
surveying and surface sampling program at a cost of approximately $25,260 (PHP
1,205,000). Assuming the results of a Phase II trenching
program identify suitable drill targets a Phase III drilling program could be
undertaken. Once again, our ability to conduct such Phase III work is
subject to our ability to raise funds to do so.
Mara
Claim
Location
and Access
The Mara
Claim gold exploration project consists of 1 unpatented mineral claim, covering
122.5 hectares (approximately 303 acres) located 20 kilometers (approximately
12.5 miles) North West of the town of Suva, Fiji. The claim was assigned to
Regency by The Mara Group LLC., an unaffiliated seller, and the said
assignment was filed with the Mineral Resources Department of the Ministry of
Energy and Mineral Resources of the Government of the Republic of
Fiji. Regency owns a 100% interest in the property.
The Mara
Claim is accessible from Suva, Fiji by traveling on the country’s only highway
system which for the most part consists of one lane in each direction and by
taking an all weather gravel road. The town of Suva has an experienced work
force and will provide all the necessary services needed for an exploration and
development operation, including police, hospitals, groceries, fuel, helicopter
services, hardware and other necessary items. Drilling companies and assay
facilities are present in Suva.
The Mara
Claim lies at an elevation of 1,650 feet near the northeast end of the Nakanai
Mountain Range. The main mountain ridge has a maximum peak of 2,642 feet with
steep east facing slopes.
Tropical
mountain forests grow at lower elevations in the northwest corner of the claim
and good rock exposure is found along the peaks and ridges in the eastern
portion of the claim. The climate is mild year round with the rainy season
falling from May to October.
-14-
There are
no known environmental concerns or parks designated for any area contained
within the claims.
The
property has no encumbrances. As and when advanced exploration is
contemplated there may be bonding requirements for reclamation.
Property
Geology
The
property is underlain by rocks of the Savura Volcanic Group and is derived from
a potassium-rich magma of shoshonite association evolving from an absarokite
parent magma to shoshonite, bankite and monzonite derivates. The Savura Volcanic
Group consists of interlayered chert, argillite and massive andesitic to
basaltic volcanics. The volcanics are hornfelsed, commonly contain minor pyrite,
pyrrhotite.
Previous
Exploration
Fijian
and British prospectors first reported gold in the area of the Mara Claim over
60 years ago. Mineral lode claims were recorded in 1947 in the surrounding
areas. Numerous showings of mineralization have been discovered in
the area and six prospects have achieved significant production, with the nearby
Tradewinds Gold Mine (25 kilometers away) producing 155,000 ounces of gold
annually. During the 1990’s junior mineral exploration companies
drilled several properties west of the Mara Claim.
Past work
on the Mara Claim since 2000 has indicated the presence of sulphide
mineralization containing gold and silver values. No mineralization has been
reported for the area of the property but structures and shear zones affiliated
with mineralization on adjacent properties pass through it. Previous exploration
work has not, to the knowledge of Mr. Robards, included any attempt to drill the
structure on Mara Gold Claim. Records indicate that no detailed exploration has
been completed on the property.
Subject
to raising the necessary capital, Regency Resources Inc. is prepared to conduct
preliminary exploration work on the property.
Plan of Operation: Proposed Exploration
Work
A two
phased mineral exploration program, consisting of air photo interpretation,
geological mapping, geochemical soil sampling and geophysical surveying to
identify targets for diamond drilling, has been recommended by Peter Robads, P.
Geol., in his report titled “Summary Of Exploration On The Mara Property, Suva
Fiji” (the “Robard’s Report”).
In his
report Mr. Robards, who vsited the Mara Claim on February 5th-8th
2008, observed that (i) the area is well known for numerous productive mineral
occurrences (including the Tradewinds Gold Mines some 25 kilometers
(approximately 15.5 miles) to the east) and, (ii) that the locale of the Mara
Claim is underlain by the same rock units of the Savura Volcanic Group that are
found at those mineral occurrence sites.
Phase I
work would consist of air photo interpretation of the structures, geological
mapping, both regionally and detailed on the area of the main showings,
geophysical survey using both magnetic and electromagnetic instrumentation in
detail over the area of the showings and in a regional reconnaissance survey and
geochemical soil sample surveying regionally to identify other areas on the
claim that are mineralized and in detail on the known areas of mineralization.
The effort of this exploration work is to define and enable interpretation of a
follow-up (i.e. Phase II) diamond drill program, so that the known
mineralization and the whole property can be thoroughly evaluated with the most
up to date exploration techniques.
-15-
A phased
exploration program to further delineate the mineralized system currently
recognized on Mara Gold Claim is recommended.
The
proposed budget for Phase I work is as follows:
1. Geological
Mapping $ 4,000
2. Geophysical
Surveying $ 3,315
3. Geochemical
surveying and surface
sampling $ 13,100
(includes
sample collection and assaying)
TOTAL
PHASE
I $ 20,415
We
currently have no funds available to undertake any portion of Phase I work on
the Mara Claim. Unless and until we are able to raise additional funds (through
the issuance of additional shares, debt securities or loan advances from our
President in addition to the $60,000 already committed to) we will be unable to
undertake any exploration work on the Mara Gold Claim.
General
Particularly
since we have a limited operating history, no reserves and no revenue, our
ability to raise additional funds might be limited. If we are unable
to raise the necessary funds, we would be required to suspend Regency’s
operations and liquidate our company.
There are
no permanent facilities, plants, buildings or equipment on the Regency
Claims.
Government
Regulation
Exploration
activities are subject to various national, state, foreign and local laws and
regulations in the Philippines and Fiji, which govern prospecting, development,
mining, production, exports, taxes, labor standards, occupational health, waste
disposal, protection of the environment, mine safety, hazardous substances and
other matters. We believe that we are in compliance in all material respects
with applicable mining, health, safety and environmental statutes and the
regulations passed thereunder in the Philippines and Fiji.
Environmental
Regulation
Our
exploration activities are subject to various federal, state and local laws and
regulations governing protection of the environment. These laws are continually
changing and, as a general matter, are becoming more restrictive. Our policy is
to conduct business in a way that safeguards public health and the environment.
We believe that our exploration activities are conducted in material compliance
with applicable laws and regulations.
Changes
to current local, state or federal laws and regulations in the jurisdictions
where we operate could require additional capital expenditures and increased
operating and/or reclamation costs. Although we are unable to predict what
additional legislation, if any, might be proposed or enacted, additional
regulatory requirements could render certain exploration activities
uneconomic.
Competition
We
compete with other exploration companies searching for gold and other precious
metals properties. There is competition for the limited number of gold
acquisition opportunities, some of which is with other companies having
substantially greater financial resources than we do. As a result, we may have
difficulty acquiring attractive exploration properties.
We
believe no single company has sufficient market power to affect the price or
supply of gold in the world market.
-16-
Employees
We intend to continue to use the
services of consultants for exploration work on our properties. At
present, we have no employees as such although each of our officers and
directors devotes a portion of his time to the affairs of the
Company. None of our officers and directors has an employment
agreement with us. We presently do not have pension, health, annuity, insurance,
profit sharing or similar benefit plans; however, we may adopt such plans in the
future. There are presently no personal benefits available to any
employee.
As
indicated above we will hire subcontractors on an as needed basis. We have not
entered into negotiations or contracts with any of potential
subcontractors. We do not intend to initiate negotiations or hire
anyone until we are nearing the time of commencement of our planned exploration
activities.
LIQUIDITY
AND CAPITAL RESOURCES
Since
inception we have raised the capital through private placements of common stock
as follows:
Since
inception, in addition to cash advances aggregating $40,800 made by our
President, on April 15, 2007 the officers and directors of the Company completed
a private placement pursuant to Regulation S of the Securities Act of 1933,
whereby 1,650,000 shares of common stock were sold at the price of $0.001 per
share to raise $1,650. On October 31, 2008 Regency completed a
further private placement pursuant to Regulation S of the Securities Act of
1933, whereby 800,000 common shares were sold at the price of $0.05 per share to
raise $40,000.
As of
March 31, 2010, our total assets were $2,488 and our total liabilities were
$51,508 including $40,800 to related parties.
As of
March 31, 2010, we had cash reserves of $2,488 and unpaid accounts payable of
$10,708 not including $40,800 to related parties leaving a total amount of
$49,020 in working capital deficit. In addition, under the terms of
the President’s Loan Agreement, the Company has access to up to $60,000 in cash
of which $40,800 has been advanced to date. These advances are on an ‘as needed’
basis to meet our anticipated expenses over the twelve months as itemized
below:
Expense
|
Ref.
|
Estimated
Amount
|
Accounting
and audit
|
(i)
|
$ 8,050
|
Bank
charges
|
150
|
|
Exploration
costs – La Trinidad Gold Claim
|
(ii)
|
12,700
|
Filing
fees – Nevada; Sec of State
|
(iii)
|
375
|
Management
fees
|
(iv)
|
12,000
|
Office
and general expenses
|
(v)
|
1,000
|
Rent
|
(vi)
|
3,600
|
Transfer
agent fees
|
(vii)
|
1,000
|
Estimated
expenses
|
38,875
|
|
Account
payable – unrelated parties at March 31, 2010
|
(viii)
|
10,708
|
Estimated
funds before cash on hand
|
49,583
|
|
Cash
on hand as at March 31, 2010
|
(2,488)
|
|
Estimate
cash requirements over the next twelve months
|
$
47,095
|
-17-
(i) Accounting
and audit
|
Relates
to fees in connection with the preparation of quarterly and annual
financial statements and filings on Forms 10-K and 10-Q as
follows:
|
Period
|
Form
|
Accountant
|
Auditor
|
Amount
|
March
31, 2010
|
10-Q
|
750
|
600
|
1,350
|
June
30 , 2010
|
10-Q
|
750
|
600
|
1,350
|
September
30, 2010
|
10-Q
|
750
|
600
|
1,350
|
December
31, 2010
|
10-K
|
1,250
|
2,750
|
4,000
|
Estimated total
|
$ 3,500
|
$ 4,550
|
$ 8,050
|
(ii) Exploration
costs
|
The
projection of cash required over the next twelve months has assumed that
Phase I of the recommended work program, set out in the Cua Report on La
Trinidad claim, will be completed at an estimated cost of
$12,700. The exploration budget for the Mara claims will be
deferred until the late fall of
2010.
|
(iii)
|
Filing
fees in Nevada
|
|
To
maintain the Company in good standing in the State of Nevada an annual fee
of approximately $375 including a business
license.
|
(iv) Management
fees
The Company has agreed to pay the
President’s brother, Gordon Brooke, $1,000 per month.
(v) Office
and general
|
We
have estimated a cost of approximately $1,000 for photocopying, printing,
fax and delivery.
|
(vi) Rent
The
Company has agreed to pay Gordon Brooke, the brother of the President $300 per
month for the use of his residence as an office.
(vii) Transfer
agent
The annual fee from Action Stock
Transfer Inc. to act as transfer agent for us is $1,000
(viii). Accounts
payable – unrelated parties
The
amount outstanding as at March 31, 2010 was $10,706 which (i) consists of the
following amounts:
Independent
accountant
|
$ 600
|
In-house
accountant
|
9,791
|
Photocopies,
fax and delivery
|
317
|
Total
|
$
10,708
|
Our
future operations are dependent upon our ability to obtain third party financing
in the form of debt and equity and ultimately to generate future profitable
operations. As of the date of this Form 10-Q, we have not generated revenues,
and have experienced negative cash flow from operations. We may look to secure
additional funds through future debt, equity financings or advances from our
officers and directors. These sources of financing may not be available or may
not be available on reasonable terms.
The
Three Months Ended March 31, 2010.
We
incurred accumulated net losses since inception of $90,670. For
individual figures of expenses comprising this amount refer to Statement of
Operations included in this Form 10-Q.
-18-
Balance
Sheet
Total
cash and cash equivalents, as at March 31, 2010 and 2009, were respectively
$2,488 and $424. Our working capital deficit as at March 31, 2010 and
2009 were respectively, $49,020 and $43,479. If amounts owed to
related parties are excluded there was a negative working capital position as at
March 31, 2010 of $8,220; and as at March 31, 2009 negative working capital of
$11,854.
Our
working capital is attributable to the completion of an initial capital
contribution on April 15, 2007, which raised $1,650, a private placement on
October 31, 2008, which raised a further $40,000 together with cash advances
from our President aggregating $40,800. No revenue was
generated during these periods.
Total
shareholders’ deficiency as at March 31, 2010 was $49,020.
As of
March 31, 2010 shares of common stock outstanding was 2,450,000.
We have
no plant or significant equipment to sell, nor are we going to buy any plant or
significant equipment during the next twelve months. We will not buy any
equipment until we have located a body of ore and we have determined it is
economical to extract the ore from our claim.
Limited Operating History; Need for
Additional Capital
There is
no historical financial information about us upon which to base an evaluation of
our performance as an exploration corporation. We are a pre-exploration stage
company and have not generated any revenues from our exploration activities.
Further, we have not generated any revenues since our formation on December 11,
2006. We cannot guarantee we will be successful in our exploration
activities. Our business is subject to risks inherent in the establishment of a
new business enterprise, including limited capital resources, possible delays in
the exploration of our properties, and possible cost overruns due to price and
cost increases in services.
Should we
be successful in our initial exploration activities, in order to become
profitable and competitive, we anticipate the need to invest considerable time
and capital in the exploration of our property before we could start production
of any minerals we may find. We must obtain additional equity or debt financing
to provide the capital required to fully implement our phased exploration
program. We
have no assurance that financing will be available to us on acceptable terms. If
financing is not available on satisfactory terms, we may be unable to commence,
continue, develop or expand our exploration activities. Even if available,
equity financing could result in additional dilution to existing
shareholders.
ITEM
3.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
We
believe that there have been no significant changes in our market risk exposures
for the three months ended March 31, 2010.
There are
no shares being offered to the public other than indicated in our effective
registration statement and no shares have been offered pursuant to an employee
benefit plan or dividend reinvestment plan.
Our
shares do not trade on any exchange or quotation system We are
eventually hoping to be quoted on the OTC Bulletin Board (“OTCBB”) but as yet
have not made an application through a market maker under Form
211. Although the OTCBB does not have any listing requirements per
se, to be eligible for quotation on the OTCBB, we must remain current in our
filings with the SEC; being as a minimum Forms 10-Q and
10-K. Securities already quoted on the OTCBB that become delinquent
in their required filings will be removed following a 30 or 60 day grace period
if they do not make their filing during that time.
-19-
When our
share are eventually quoted on the OTCBB, if they ever are, our common stock
trading price might be volatile with wide fluctuations. Things that
could cause wide fluctuations in our trading price of our stock could be due to
one of the following or a combination of several of them:
●
|
our
variations in our operations results, either quarterly or
annually;
|
●
|
trading
patterns and share prices in other exploration companies which our
shareholders consider similar to ours;
|
●
|
the
exploration results on the Regency Claims, and
|
●
|
other
events which we have no control
over.
|
In
addition, the stock market in general, and the market prices for thinly traded
companies in particular, have experienced extreme volatility that often has been
unrelated to the operating performance of such companies. These wide
fluctuations may adversely affect the trading price of our shares regardless of
our future performance. In the past, following periods of volatility
in the market price of a security, securities class action litigation has often
been instituted against such companies. Such litigation, if
instituted, whether successful or not, could result in substantial costs and a
diversion of management’s attention and resources, which would have a material
adverse effect on our business, results of operations and financial
conditions.
Trends
We are in
the pre-explorations stage, have not generated any revenue and have no prospects
of generating any revenue in the foreseeable future. We are unaware
of any known trends, events or uncertainties that have had, or are
reasonably likely to have, a material impact on our business or income, either
in the long term of short term.
ITEM
4. CONTROLS
AND PROCEDURES
It is
management’s responsibility for establishing and maintaining adequate internal
control over financial reporting. Under the supervision and with the
participation of our management, including Jane Brooke, Chief Executive Officer
and Dragan Bozanic, Chief Accounting Officer, they have evaluated the
effectiveness of Stanford’s disclosure controls and procedures as required by
the Exchange Act Rule 13a-15(d) as at March 31, 2010 (the “Evaluation
Date”). Based on the evaluation by management, they have concluded
these disclosure controls and procedures were not effective as of the Evaluation
Date as a result of material weaknesses in internal control over financial
reporting as more fully discussed below.
Under
Rule 13a-15(e)/15d-15(e); Regulation S-K, Item 307, the SEC states that
“disclosure controls and procedures” have the following
characteristics:
●
|
designed
to ensure disclosure of information that is required to be disclosed in
the reports that Stanford files or submits under the Exchange
Act;
|
●
|
recorded,
processed, summarized and reported with the time period required by the
SEC’s rules and forms; and
|
●
|
accumulated
and communicated to management to allow them to make timely decisions
about the required disclosures.
|
As of
March 31, 2010, the management of Regency assessed the effectiveness of the
Company’s internal control over financial reporting based on the criteria for
effective internal control over financial reporting established in Internal
Control—Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission (“COSO”) and SEC guidance on conducting such
assessments.
-20-
Management
concluded, during the three months ended March 31, 2010, internal controls and
procedures were not effective to detect the inappropriate application of US GAAP
rules. Management realized there are deficiencies in the design
or operation of the Company’s internal control that adversely affected the
Company’s internal controls which management considers to be material
weaknesses.
Material
Weaknesses
Management
assessed the effectiveness of our internal control over financial reporting as
of the Evaluation Date and identified the following material
weaknesses:
●
|
As
at March 31, 2010, Regency did not have an audit committee which complies
to the requirements of an audit committee since it did not have an
independent “financial expert” on the committee. Even though it
has a Code of Ethics it does not emphasize fraud and methods to avoid
it. Due to the small size of Regency a whistleblower
policy is not necessary.
|
●
|
Due
to a significant number and magnitude of out-of-period adjustments
identified during the year-end closing process, management has concluded
that the controls over the period-end financial reporting process were not
operating effectively. A material weakness in the
period-end financial reporting process could result in Regency not been
able to meet its regulatory filing deadlines and, if not remedied, has the
potential to cause a material misstatement or to miss a filing deadline in
the future. Management override of existing controls is
possible given the small size of the organization and lack of
personnel.
|
●
|
There
is no system in place to review and monitor internal control over
financial reporting. This is due to Regency maintaining an
insufficient complement of personal to carry out ongoing monitoring
responsibilities and ensure effective internal control over financial
reporting.
|
ITEM
9A(T)
|
CONTROLS
AND PROCEDURES
|
There
were no changes in Regency’s internal controls over financial reporting during
the three months ended March 31, 2010 that have materially affected, or are
reasonably likely to material affect, Regency’s internal control over financial
reporting. Nevertheless, management will have to introduce the above
mentioned changes in internal control and procedures to protect Regency’s
assets.
ITEM
1. LEGAL
PROCEEDINGS
There are
no legal proceedings to which Regency is a party or to which the Regency Claim
is subject, nor to the best of management’s knowledge are any material legal
proceedings contemplated.
ITEM
1A. RISK
FACTORS
An
investment in our securities involves an exceptionally high degree of risk and
is extremely speculative. In addition to the other information regarding Regency
contained in this Form 10-Q, you should consider many important factors in
determining whether to purchase the shares in our Company. The following risk
factors reflect the potential and substantial material risks that could be
involved if you decide to purchase shares in our Company.
-21-
Risks
Associated with our Company:
1.
|
Because our auditors have
issued a going concern opinion and because our officers and directors may
not loan any additional money to us, we may not be able to achieve our
objectives and may have to suspend or cease exploration
activity.
|
Our
auditors' report on our December 31, 2009 financial statements expressed an
opinion that substantial doubt exists as to whether we can continue as an
ongoing business for the next twelve months. Because our officers and directors
maybe unwilling to commit to loan or advance additional capital to us, (beyond
the $60,000 already committed to by our President, we believe that if we do not
raise additional capital through the issuance of treasury shares or debt
securities, we will be unable to conduct exploration activity (beyond the
initial work on the La Trinidad Claim budgeted for in this Form 10-Q) and may
have to cease operations and go out of business.
2.
|
Because
the probability of an individual prospect ever having reserves is
extremely remote, in all probability our property does not contain any
reserves, and any funds spent on exploration will be
lost.
|
Because
the probability of an individual prospect ever having reserves is extremely
remote, in all probability our mineral properties, the Regency Claims, do not
contain any reserves, and any funds spent on exploration will be lost. If we
cannot raise further funds as a result, we may have to suspend or cease
operations entirely which would result in the loss of your
investment.
3.
|
We
lack an operating history and have losses which we expect to continue into
the future. As a result, we may have to suspend or cease exploration
activity or cease operations.
|
We were
incorporated on December 11, 2006, have not yet conducted any exploration
activities and have not generated any revenues. We have no exploration history
upon which to properly evaluate the likelihood of our future success or
failure. Our net loss from inception to March 31, 2010, the date of
our most recent audited financial statements $90,670. Our ability to
achieve and maintain profitability and positive cash flow in the future is
dependent upon
*
|
our
ability to locate a profitable mineral property
|
|
*
|
our
ability to locate an economic ore reserve
|
|
*
|
our
ability to generate revenues
|
|
*
|
our
ability to reduce exploration
costs.
|
Based
upon current plans, we expect to incur operating losses in future periods. This
will happen because there are expenses associated with the research and
exploration of our mineral property. We cannot guarantee we will be successful
in generating revenues in the future. Failure to generate revenues will cause us
to go out of business.
4.
|
Because
our officers and directors do not have technical training or experience in
starting, and operating an exploration company nor in managing a public
company, we will have to hire qualified personnel to fulfill these
functions. If we lack funds to retain such personnel, or cannot locate
qualified personnel, we may have to suspend or cease exploration activity
or cease operations that will result in the loss of your
investment.
|
Because
our officers and directors are inexperienced with exploring for minerals and
starting, and operating a mineral exploration company, we will have to hire
qualified persons to perform surveying, exploration, and excavation of our
property. Our officers and directors have no direct training or
experience in these areas and as a result may not be fully aware of many of the
specific requirements related to working within the industry. Their decisions
and choices may not take into account standard engineering or managerial
approaches, mineral exploration companies commonly use. Consequently our
exploration, earnings and ultimate financial success could suffer irreparable
harm due to certain of management's lack of experience in this
industry. Additionally, our officers and directors have no
direct training or experience in managing and fulfilling the regulatory
reporting obligations of a ‘public company’ like Regency. Unless our
two part time officers are willing to spend more time addressing these matters,
we will have to hire professionals to undertake these filing requirements for
Regency and this will increase the overall cost of operations. As a result we
may have to suspend or cease exploration activity, or cease operations
altogether, which will result in the loss of our shareholders’
investment.
-22-
5.
|
We
have no known ore reserves. Without ore reserves we cannot generate income
and if we cannot generate income we will have to cease exploration
activity which will result in the loss of your
investment.
|
We have
no known ore reserves. Even if we find gold mineralization we
cannot guarantee that any gold mineralization will
be of sufficient quantity so as to warrant recovery. Additionally, even if we
find gold mineralization in
sufficient quantity to warrant recovery, we cannot guarantee that the ore will
be recoverable. Finally, even if any gold mineralization is
recoverable, we cannot guarantee that this can be done at a profit. Failure to
locate gold deposits in economically recoverable quantities will mean we cannot
generate income. If we cannot generate income we will have to cease
exploration activity, which will result in the loss of our shareholders’
investment.
6.
|
If
we don't raise enough money for ongoing exploration, we will have to delay
exploration or go out of business, which will result in the loss of your
investment.
|
We are in
the very early pre-exploration stage. We need to raise additional
capital to undertake exploration activity beyond Phase I work planned for the
Regency Claims. We do not have sufficient cash on hand to continue
operations for more than twelve months. Without loan advances from
our officers and directors and/or the issuance of treasury shares, we will not
be able to complete even Phase I of our planned exploration
activity. You may be investing in a company that will not have the
funds necessary to conduct any meaningful exploration activity due to our
inability to raise additional capital. If that occurs we will have to delay
exploration or cease our exploration activity and go out of business which will
result in the loss of our shareholders’ investment.
|
7.
|
Because we
are small and do not have much capital, we must limit our exploration and
as a result may not find an ore body. Without an
ore body, we cannot generate revenues and you will lose your
investment.
|
Provided
we undertake our planned exploration activity, any potential development of and
production from the Regency Claims depends upon the results of exploration
programs and/or feasibility studies and the recommendations of duly qualified
engineers and geologists. Because we are small and do not have much capital, we
must limit our exploration activity unless and until we raise additional
capital. Any decision to expand our operations on our exploration
property will involve the consideration and evaluation of several significant
factors including, but not limited to:
●
|
Costs
of bringing the properties into production including exploration
|
preparation
of production feasibility studies, and construction of
|
|
production
facilities;
|
|
●
|
Availability
and cost of financing;
|
●
|
Ongoing
costs of production;
|
●
|
Market
prices for the minerals to be produced;
|
●
|
Environmental
compliance regulations and restraints; and
|
●
|
Political
climate and/or governmental regulations and
controls.
|
-23-
Such
programs will require very substantial additional funds. Because we may have to
limit our exploration, we may not find an ore body, even though our properties
may contain mineralized material. Without an ore body, we cannot generate
revenues and our shareholders might lose their entire investment in our
company.
|
8.
|
We
may not have access to all of the supplies and materials we need to begin
exploration which could cause us to delay or suspend exploration
activity.
|
Provided
we have sufficient funds to carry out exploration activity, competition and
unforeseen limited sources of supplies in the industry could result in
occasional spot shortages of supplies, such as dynamite, and certain equipment
such as bulldozers and excavators that we might need to conduct exploration. We
have not attempted to locate or negotiate with any suppliers of products,
equipment or materials. We will attempt to locate products, equipment and
materials as and when we are able to raise the requisite capital. If
we cannot find the products and equipment we need, we will have to suspend our
exploration plans until we do find the products and equipment we
need.
|
9.
|
Because our
officers and directors have other outside business activities and may not
be in a position to devote a majority of their time to our exploration
activity, our exploration activity may be sporadic which may result in
periodic interruptions or suspensions of
exploration.
|
Our
President and CEO, will be devoting only a small part of her time, approximately
10 hours per month, to our operations of our business. Our CFO and
Secretary-Treasurer will be devoting only approximately 10 hours per month to
our operations. As a consequence our business may
suffer. For example, because our officers and directors have other
outside business activities and may not be in a position to devote a majority of
their time to our exploration activity, our exploration activity may be sporadic
or may be periodically interrupted or suspended. Such
suspensions or interruptions may cause us to cease operations altogether and go
out of business.
|
10.
Because mineral exploration and development activities are inherently
risky, we may be exposed to environmental liabilities. If such an event
were to occur it may result in a loss of your
investment.
|
The
business of mineral exploration and extraction involves a high degree of risk.
Few properties that are explored are ultimately developed into production. At
present, the Regency Claims, our only properties, do not have a known body of
commercial ore. Unusual or unexpected formations, formation pressures, fires,
power outages, labor disruptions, flooding, explosions, cave-ins, landslides and
the inability to obtain suitable or adequate machinery, equipment or labor are
other risks involved in extraction operations and the conduct of exploration
programs. We do not carry liability insurance with respect to our mineral
exploration operations and we may become subject to liability for damage to life
and property, environmental damage, cave-ins or hazards. There are also physical
risks to the exploration personnel working in the rugged terrain of the Regency
Claims, often in poor climatic conditions. Previous mining exploration
activities may have caused environmental damage to the Regency Claims. It may be
difficult or impossible to assess the extent to which such damage was caused by
us or by the activities of previous operators, in which case, any indemnities
and exemptions from liability may be ineffective. If the Regency Claims are
found to have commercial quantities of ore, we would be subject to additional
risks respecting any development and production activities. Most exploration
projects do not result in the discovery of commercially mineable deposits of
ore.
-24-
|
11.
No matter how much money is spent on the Regency Claims, the risk is that
we might never identify a commercially viable ore
reserve.
|
No matter
how much money is spent over the years on the Regency Claims, we might never be
able to find a commercially viable ore reserve. Over the coming
years, we could spend a great deal of money on the Regency Claims without
finding anything of value. There is a high probability the Regency
Claims do not contain any reserves so any funds spent on exploration will
probably be lost.
|
12.
Even with positive results during exploration, the Regency Claims might
never be put into commercial production due to inadequate tonnage, low
metal prices or high extraction
costs.
|
Even if,
as a result of future exploration programs, we are successful in identifying a
source of minerals of good grade we might still fail to find such minerals in
the quantity, the tonnage, required to make commercial production
feasible. If the cost of extracting any minerals that might be found
on the Regency Claims is in excess of the selling price of such minerals, we
would not be able to develop the Regency Claims. Accordingly even if
ore reserves were found on the Regency Claims, without sufficient tonnage we
would still not be able to economically extract the minerals from the Regency
Claims in which case we would have to abandon the Regency Claims and seek
another mineral property to develop, or cease operations
altogether.
|
13.
Because we have not put a mineral deposit into production before, we will
have to acquire outside expertise. If we are unable to acquire such
expertise we may be unable to put our properties into production and you
may lose your investment.
|
We have
no experience in placing mineral deposit properties into production, and our
ability to do so will be dependent upon using the services of appropriately
experienced personnel or entering into agreements with other major resource
companies that can provide such expertise. There can be no assurance that we
will have available to us the necessary expertise when and if we place a mineral
deposit into production.
|
14.
Our directors and officers control a substantial number of our outstanding
shares and will be able to effect corporate transactions without further
shareholder approval.
|
Our
directors and officers own 67.35% of our outstanding shares. Because
of their control, they will be able to approve certain corporate transactions
without seeking further shareholder approval. In addition, because of
their control, it will be harder to change the board of directors and
management.
Risks
Associated with Our Shares:
|
15. Without a
public market there is no liquidity for our shares and our shareholders
may never be able to sell their shares that would result in a total loss
of their investment.
|
Our
common shares are not listed on any exchange or quotation system and do not have
a market maker which results in no market for our
shares. Therefore, our shareholders will not be able to sell
their shares in an organized market place unless they sell their shares
privately. If this happens, our shareholders might not receive a
price per share that they might have received had there been a public market for
our shares. Once this registration statement becomes effective, it is
our intention to apply for a quotation on the OTCBB whereby:
-25-
●
|
We
will have to be sponsored by a participating market maker who will file
a
Form 211 on our behalf since we will not have direct access to the
FINRA
personnel;
and
|
●
|
We
will not be quoted on the OTCBB unless we are current in our periodic
reports;
being at a minimum Forms 10-K and 10-Q; filed with the
SEC
or other regulatory authorities.
|
Presently,
we estimate the time it will take us to become public on the OTCBB and our share
quoted thereon will be a minimum of six months. However, we cannot be
sure we will be able to obtain a participating market maker or be approved for a
quotation on the OTCBB. If this is the case, there will be no
liquidity for the shares of our shareholders.
16.
|
Even if a market develops for our shares our
shares may be thinly traded, with wide share price fluctuations, low share
prices and minimal
liquidity.
|
If a
market for our shares develops, the share price may be volatile with wide
fluctuations in response to several factors, including:
●
|
Potential
investors’ anticipated feeling regarding our results of
operations;
|
●
|
Increased
competition and/or variations in mineral prices;
|
●
|
Our
ability or inability to generate future revenues; and
|
●
|
Market
perception of the future of the mineral exploration
industry.
|
In
addition, if our shares are traded on the OTCBB, our share price may be impacted
by factors that are unrelated or disproportionate to our operating
performance. Our share price might be affected by general economic,
political and market conditions, such as recessions, interest rates or
international currency fluctuations. In addition, even if our stock
is approved for quotation by a market maker through the OTCBB, stocks traded
over this quotation system are usually thinly traded, highly volatile and not
followed by analysts. These factors, which are not under our control,
may have a material effect on our share price.
|
17.
We anticipate the need to sell additional treasury shares in the future
meaning that there will be a dilution to our existing shareholders
resulting in their percentage ownership in the Company being reduced
accordingly.
|
We expect
that the only way we will be able to acquire additional funds is through the
sale of our common stock. This will result in a dilution effect to
our shareholders whereby their percentage ownership interest in the Company is
reduced. The magnitude of this dilution effect will be determined by
the number of shares we will have to issue in the future to obtain the funds
required.
|
18. Because our
securities are subject to penny stock rules, you may have difficulty
reselling your shares.
|
Our
shares will be considered, if and when they are ever quoted, to be "penny
stocks" and therefore are covered by Section 15(g) of the Securities Exchange
Act of 1934 which imposes additional sales practice requirements on
broker/dealers who sell the Company's securities including the delivery of a
standardized disclosure document; disclosure and confirmation of quotation
prices; disclosure of compensation the broker/dealer receives; and, furnishing
monthly account statements. For sales of our securities, the broker/dealer must
make a special suitability determination and receive from its customer a written
agreement prior to making a sale. The imposition of the foregoing additional
sales practices could adversely affect a shareholder's ability to dispose of his
stock.
-26-
ITEM
2. UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
There has been no change in our
securities since the fiscal year ended December 31, 2009.
ITEM
3. DEFAULTS
UPON SENIOR SECURITIES
None
ITEM
4. SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
There have been no matters brought
forth to the securities holders to vote upon during this quarter.
ITEM
5. OTHER
INFORMATION
None
ITEM
6. EXHIBITS
(a) (3) Exhibits
The
following exhibits are included as part of this report by
reference:
3.1
|
Certificate
of Incorporation (incorporated by reference from Regency’s Registration
Statement on Form S-1 filed on March 19, 2009 Registration No.
333-158103)
|
|
3.2
|
Articles
of Incorporation (incorporated by reference from Regency’s Registration
Statement on Form S-1 filed on March 19, 2009, Registration
No.333-158103)
|
|
3.3
|
Certificate
of Correction (incorporated by reference from Regency’s Registration
Statement on Form S-1 filed on March 19, 2009, Registration No.
333-158103)
|
|
3.4
|
By-laws
(incorporated by reference from Regency’s Registration Statement on Form
S-1 filed on March 19, 2009, Registration No.
333-158103)
|
|
4
|
Stock
Specimen (incorporated by reference from Regency’s Registration Statement
on Form S-1 filed on March 19, 2009, Registration No.
333-158103)
|
|
10.1
|
Transfer
Agent and Registrar Agreement (incorporated by reference from Regency’s
Registration Statement on Form S-1 filed on March 31, 2009 Registration
No. 333-158103)
|
-27-
SIGNATURES
Pursuant to the requirements 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.
REGENCY RESOURCES, INC.
|
|
(Registrant)
|
|
Date:
April 27, 2010
|
JANE C.H. BROOKE
|
Jane
C. H. Brooke
Chief
Executive Officer, President and Director
|
|
Date:
April 27, 2010
|
DRAGAN BOZANIC
|
Dragan
Bozanic
Chief
Financial Officer, Chief Accounting
Officer,
Secretary and Director
|
-28-