Attached files
As filed with the Securities and Exchange Commission on February 25, 2011
File No. 333-169764
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 2 to
Form S-1/A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
CASTMOR RESOURCES LTD.
(Exact name of registrant as specified in its charter)
Nevada
(State or Other Jurisdiction of Incorporation or Organization)
1000
(Primary Standard Industrial Classification Code Number)
98-0471928
(I.R.S. Employer Identification No.)
427 Princess Street, Suite 406
Kingston, ON K7L 5S9
613.617.5107
(Address and telephone number of principal executive offices)
Laughlin International
2533 Carson Street
Carson City, Nevada 89706
775.883.8484
(Name, address and telephone number of agent for service)
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after
the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box: [ ]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
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. (Check one):
[ ] Large Accelerated Filer [ ] Accelerated Filer
[ ] Non-accelerated Filer [ X ] Smaller reporting company
CALCULATION OF REGISTRATION FEE
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Proposed Proposed Proposed
Title of Maximum Maximum Maximum
Each Class of Number of Offering Aggregate Amount of
Securities to Shares to be Price per Offering Registration
be Registered Registered Share Price (1) Fee
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Common Stock 20,000,000 $0.005 $100,000 $7.13
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(1) Based upon 20,000,000 shares of common stock to be sold in this offering.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A)
MAY DETERMINE.
PRELIMINARY PROSPECTUS
SUBJECT TO COMPLETION
CASTMOR RESOURCES LTD.
12,000,000 TO 20,000,000 SHARES OF COMMON STOCK
PRICE: $0.005 PER SHARE
This is a public offering of shares of common stock of Castmor Resources Ltd.
We will be selling a minimum of 12,000,000 and a maximum of 20,000,000 shares of
our common stock in this offering at $0.005 per share. The shares will be sold
by our President on a best efforts basis. No subscriptions will be accepted
until the minimum offering is subscribed. Once accepted, subscriptions are
irrevocable and cannot be withdrawn by the subscriber.
Proceeds from this offering will not be deposited into an escrow, trust or
similar account, but will instead be deposited in a separate bank account under
our name held at the Canadian Imperial Bank of Commerce of Toronto, Ontario,
administered by our directors. If the minimum offering is not completed within
90 days, all funds will be promptly returned to subscribers without interest or
deductions. Subscriptions may be accepted or rejected for any reason or for no
reason. This offering will remain open until the earlier of the date that all
the offered shares are sold and 120 days after the date of this prospectus;
provided that, the minimum subscription is sold within 90 days. There will be no
extension of the offering period. This offering may be terminated at any time
for any reason whatsoever.
No broker-dealer is participating in this offering and no sales commission will
be paid to any person in connection with this offering. There is no established
market for our securities. The offering price for our common stock was
arbitrarily determined and may not reflect the market price of our shares after
the offering.
Prospective investors should rely only on the information contained in this
prospectus or any prospectus supplement or amendment thereto. We have not
authorized anyone to provide investors with different information. This
prospectus may only be used where it is legal to sell these securities. The
information in this prospectus is only accurate on the date of this prospectus,
regardless of the time of any sale of securities.
We have earned no revenue since inception. We have also incurred significant
operating losses since inception and we expect to continue to incur losses to
implement our business plan. Our auditors have expressed substantial doubt
about our ability to continue as a going concern. If we cannot continue as a
going concern, then our stockholders may lose all of their investment.
AN INVESTMENT IN OUR STOCK IS EXTREMELY SPECULATIVE AND INVOLVES SEVERAL
SIGNIFICANT RISKS. PROSPECTIVE INVESTORS ARE CAUTIONED NOT TO INVEST UNLESS THEY
CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT. WE URGE ALL PROSPECTIVE INVESTORS TO
READ THE "RISK FACTORS" SECTION OF THIS PROSPECTUS BEGINNING ON PAGE 5 AND THE
REST OF THIS PROSPECTUS BEFORE MAKING AN INVESTMENT DECISION.
Information contained herein is subject to completion or amendment. A
registration statement concerning the offered shares has been filed with the
Securities and Exchange Commission. The offered shares may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of any offer to buy nor shall there by any sale of the offered
shares in any state in which such offer, solicitation or sale would be unlawful
prior to registration or qualification under the securities laws of any such
state.
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PRICE TO UNDERWRITING PROCEEDS
PUBLIC DISCOUNTS AND TO THE
PER SHARE COMMISSIONS COMPANY (1)
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Per Share $ 0.005 Nil $ 0.005
Minimum 12,000,000 shares $ 0.005 Nil $60,000
Maximum 20,000,000 shares $ 0.005 Nil $100,000
================================================================
(1) Proceeds to Castmor Resources Ltd. are shown before deducting offering
expenses estimated at $5,000 (including legal and accounting fees).
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is February 25, 2011.
1
TABLE OF CONTENTS
PAGE
PROSPECTUS SUMMARY 5
RISK FACTORS 7
FORWARD-LOOKING STATEMENTS 11
USE OF PROCEEDS 12
DETERMINATION OF OFFERING PRICE 12
DILUTION 12
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 13
DESCRIPTION OF BUSINESS 14
PROPERTY 22
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULT OF OPERATIONS 24
LEGAL PROCEEDINGS 27
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS 27
EXECUTIVE COMPENSATION 29
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 29
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 29
PLAN OF DISTRIBUTION 30
DESCRIPTION OF CAPITAL STOCK 31
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES 33
LEGAL MATTERS 33
EXPERTS 33
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE 33
AVAILABLE INFORMATION 33
INDEX TO FINANCIAL STATEMENTS F-1
2
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS NOT COMPLETE AND DOES NOT CONTAIN ALL OF THE
INFORMATION THAT MAY BE IMPORTANT TO PROSPECTIVE INVESTORS. EACH PROSPECTIVE
INVESTOR IS URGED TO READ THIS PROSPECTUS IN ITS ENTIRETY BEFORE MAKING AN
INVESTMENT DECISION TO PURCHASE OUR COMMON STOCK.
As used in this prospectus, unless the context otherwise requires, "the
Company", "we", "us", "our" or "Castmor" refers to Castmor Resources Ltd. "SEC"
refers to the Securities Exchange Commission. "Securities Act" refers to the
Securities Act of 1933, as amended. "Exchange Act" refers to the Securities
Exchange Act of 1934, as amended. "NRS" refer to the Nevada Revised Statutes,
as amended.
OUR BUSINESS
Castmor Resources Ltd. is an exploration stage mineral exploration company
formed on June 27, 2005, under the law of the State of Nevada. We own a 100%
undivided mineral interest in two non-contiguous mineral exploration licenses
(license numbers 017985M and 017987M) comprising 17 claims located along
south-eastern coastal Labrador (the "White Bear Arm Property"), approximately 13
kilometers northeast of the community of Charlottetown in Labrador, Canada,
having a total area of 425 hectares (1,054.8 acres). Our claims give us the
exclusive right to any of the mineral deposits situated on the White Bear Arm
Property.
Our auditors have expressed substantial doubt about our ability to continue as a
going concern. If we cannot continue as a going concern, then investors may
lose all of their investment.
Our business plan is to explore the White Bear Arm Property for commercially
exploitable reserves of valuable minerals. The White Bear Arm Property has no
proven or probable mineral reserves, and there is no assurance that it contains
commercially exploitable reserves of valuable minerals. All of our claims are
presently in good standing.
We intend to explore the White Bear Arm Property in two phases. The first phase
will consist of expanded geological mapping, and geochemical sampling that will
cover previously established grid areas, as well as other prospective sites that
may be developed to delineate either base metals or industrial minerals.
Geochemical sampling will include rock, stream sediment and till sampling.
Several airborne electromagnetic anomalies will be re-verified on the ground and
mapped for size and extent. If Phase I results in sufficient indication of
economic geological value to support further exploration, then we will proceed
with the second phase of the proposed exploration program, consisting of 800 to
1000 metres of diamond drilling, mobilized to the nearest road by truck, then
helicopter-supported from that point. We anticipate that the first phase of our
exploration program will cost approximately $26,680 while the second phase will
cost approximately $195,500. To date, we have not commenced exploration on the
White Bear Arm Property.
We have sufficient working capital to maintain our present level of operations
for the next 12 months and to complete Phase I of our proposed exploration
program, but not Phase II. Furthermore, the proceeds from this offering will
not be sufficient to fund Phase II. We will be required to seek additional
funding in order to complete Phase II of our exploration program. We anticipate
that any additional funding that we require will be in the form of equity
financing from the sale of our common stock. There is no assurance, however,
that we will be able to raise sufficient funding from the sale of our common
stock. The risky nature of this enterprise and lack of tangible assets places
debt financing beyond the credit-worthiness required by most banks or typical
investors of corporate debt until such time as an economically viable mine can
be demonstrated. We do not have any arrangements in place for any future equity
financing. If we are unable to secure additional funding, we may cease or
suspend operations. We have no plans, arrangements or contingencies in place in
the event that we cease operations.
If we discontinue our exploration of the White Bear Arm Property, we may seek to
acquire other natural resource exploration properties. Any such acquisition
will involve due diligence costs in addition to the acquisition cost. We will
also have an ongoing obligation to maintain our periodic filings with the
appropriate regulatory authorities, which will involve legal and accounting
costs. In the event that our available capital is insufficient to acquire an
alternative resource property and sustain minimum operations, we will need to
secure additional funding or else we will be compelled to discontinue our
business.
We have earned no revenue since inception. From June 27, 2005 (inception)
through August 31, 2010, we incurred a net loss of $91,976 with accumulated
shareholder's equity of $37,904. Further losses are anticipated in the
development of our business. We have limited financial resources and require
additional financing to fund our operations. These factors raise substantial
doubt about our ability to continue as a going concern. Our ability to achieve
and maintain profitability and positive cash flow is dependent upon our ability
to locate commercially exploitable reserves of valuable minerals.
Our sole officer and director does not have any professional training or
technical credentials in the exploration, development, or operation of mines.
We therefore intend to retain qualified persons on a contract basis to perform
the surveying, exploration, and excavating of the property as needed. We do not
have any verbal or written agreement regarding the retention of any qualified
engineer or geologist for our exploration program.
3
We currently have no employees other than our sole officer and director, who
devotes six hours per week to our operations. We do not intend to hire any
employees for the next twelve months or until we have proven mineral reserves.
Please carefully read both this prospectus and any prospectus supplement
together with the additional information described below under the section
entitled "Available Information". Our principal executive offices are located at
427 Princess Street, Suite 406, Kingston, ON K7L 5S9. Our telephone number is
(613) 617-5107. Our facsimile number is: (613) 383-0247.
THE OFFERING
Securities Offered: A minimum of 12,000,000 and a maximum of
20,000,000 shares of common stock,
par value $0.0001
Offering price: $0.005 per share
Offering period: The offering will remain open until the
earlier of the date that all shares
offered are sold and 120 days after the
date of this prospectus, except that we
will have only 90 days to sell at least
the first 12,000,000 shares.
Net proceeds to us: Minimum: Approximately $55,000, after
estimated expenses of $5,000 assuming
sale of 12,000,000 shares
Maximum: Approximately $95,000, after
estimated expenses of $5,000 assuming
sale of 20,000,000 shares
Use of proceeds: We will use the proceeds to pay for debt
repayment, prospecting, professional
fees and working capital.
Number of shares outstanding 12,487,000
before the offering:
Number of shares outstanding Minimum: 24,487,000 assuming
after the offering: sale of 12,000,000 shares
Maximum: 32,487,000 assuming
sale of 20,000,000 shares
SUMMARY OF SELECTED FINANCIAL DATA
We are an exploration stage company. From the date of our inception on June 27,
2005 we have not generated any revenue or earnings from operations. As of
August 31, 2010 our financial data is as follows:
-----------------------------------------------------------------
As at or for the period from
June 27, 2005 (inception)
to August 31, 2010
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Operations Data
Revenue: $ -
Net Loss: 91,976
Balance Sheet Data
Total Assets: 92,838
Total Liabilities: 54,934
Net Tangible Book Value: 37,904
Net Tangible Book Value Per Share: (0.00)
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4
RISK FACTORS
Any investment in our company involves a high degree of risk. In addition to
the other information in this prospectus, the following risk factors should be
carefully considered in evaluating an investment in our common stock. If any of
the following risks occur, our business, operating results and financial
condition could be seriously harmed and our stockholders could lose all or part
of their investment. This discussion also identifies important cautionary
factors that could cause our actual results to differ materially from those we
currently anticipate.
(1) IT IS IMPOSSIBLE TO EVALUATE THE INVESTMENT MERITS OF CASTMOR BECAUSE WE
HAVE NO OPERATING HISTORY.
We are an exploration stage company with no operating history upon which an
evaluation of our future success or failure can be made. Thus far, our
activities have been primarily limited to organizational matters, acquiring our
mineral claims, researching our claims, raising capital and the preparation of
our securities filings, including the registration statement of which this
prospectus forms a part. As a start-up enterprise, we are subject to all the
risks inherent in the initial organization, financing, expenditures,
complications and delays inherent in a new business. Investors should evaluate
an investment in our company in light of the uncertainties encountered by
start-up companies in a competitive environment. There can be no assurance that
our business will be successful or that we will be able to attain profitability.
Our future viability, profitability and growth will depend upon our ability to
successfully implement our business plan and to expand our operations. There can
be no assurance that any of our efforts will prove successful or that we will
not continue to incur operating losses in the future.
(2) SINCE MINERAL EXPLORATION IS A HIGHLY SPECULATIVE VENTURE, ANYONE
PURCHASING OUR STOCK WILL LIKELY LOSE THEIR ENTIRE INVESTMENT.
Potential investors should be aware of the difficulties normally encountered by
new mineral exploration companies and the high rate of failure of such
enterprises. Exploration for minerals is a speculative venture necessarily
involving substantial risk. The expenditures to be made by us on our
exploration program may not result in the discovery of commercially exploitable
reserves of valuable minerals. The likelihood of success must be considered in
light of the problems, expenses, difficulties, complications and delays
encountered in connection with the exploration of the mineral properties that we
plan to undertake. The probability of a mineral claim ever having commercially
exploitable reserves is extremely remote, and in all probability our mineral
claims do not contain any reserves. Any funds spent on the exploration of these
claims will probably be lost. Problems such as unusual or unexpected formations
and other conditions are involved in mineral exploration and often result in
unsuccessful exploration efforts. We may also become subject to significant
liability for pollution, cave-ins or hazards, which we cannot insure or which we
may elect not to insure. In such a case, we would be unable to complete our
business plan and our shareholders may lose their entire investment.
(3) SINCE OUR MINERAL PROPERTY HAS NOT BEEN PHYSICALLY EXAMINED BY A
PROFESSIONAL GEOLOGIST OR MINING ENGINEER, WE FACE A SIGNIFICANT RISK THAT THE
PROPERTY WILL NOT CONTAIN COMMERCIALLY VIABLE DEPOSITS OF MINERALS.
We have not had a professional geologist or mining engineer physically examine
the White Bear Arm Property in the field. Furthermore, our sole officer and
director has not visited White Bear Arm Property. As a result, we face an
enhanced risk that, upon physical examination of the mineral property, no
commercially viable deposits of minerals will be located. In the event that our
planned exploration of the mineral property reveals that no commercially viable
deposits exist on the site, our business will likely fail.
(4) IF WE DO NOT OBTAIN ADDITIONAL FINANCING, OUR BUSINESS MAY FAIL.
We do not have sufficient capital to commence exploration of our mineral claims.
As of August 31, 2010, we had cash on hand of $29,032. Our business plan calls
for significant expenses in connection with the exploration of our mineral
property. Phase I of the proposed exploration program on our claims is estimated
to cost $26,680. We will require additional financing in order to complete
Phase II, which is estimated to cost $195,500. The proceeds from this offering
will not be sufficient to complete Phase II. If our exploration program is
successful in discovering commercially exploitable reserves of valuable
minerals, we will require additional funds in order to place our mineral claim
into commercial production. While we do not presently have sufficient
information about the claims to estimate the amount required to place the
mineral claims into commercial production, there is a risk that we may not be
able to obtain whatever financing is required. Obtaining additional financing
will depend on a number of factors, including market prices for minerals,
investor acceptance of our properties, and investor sentiment. These factors
may make the timing, amount, terms or conditions of additional financing
impracticable. If we are unsuccessful in obtaining additional financing when we
need it, our business may fail before we ever become profitable and our
shareholders may lose their entire investment.
5
(5) SINCE MARKET FACTORS IN THE MINING BUSINESS ARE OUT OF OUR CONTROL, WE
MAY NOT BE ABLE TO PROFITABLY SELL ANY MINERALS THAT WE FIND.
If we are successful in locating a commercially exploitable reserve of valuable
minerals, we can provide no assurance that we will be able to sell it. Numerous
factors beyond our control may affect the marketability of any minerals
discovered. These factors include fluctuations in the market price of such
minerals due to changes in supply or demand, the proximity and capacity of
processing facilities for the discovered minerals, government regulations,
including regulations relating to prices, taxes, royalties, land tenure, land
use, importing and exporting of minerals and environmental protection. The
precise effect of these factors cannot be accurately predicted, but the
combination of these factors may result in us not receiving an adequate return
on invested capital so that our investors may lose their entire investment.
(6) IF WE CANNOT COMPETE SUCCESSFULLY WITH OTHER EXPLORATION COMPANIES, OUR
EXPLORATION PROGRAM MAY SUFFER AND OUR SHAREHOLDERS MAY LOSE THEIR INVESTMENT.
We are an exploration stage company engaged in the business of exploring for
commercially producible quantities of minerals. We compete with other mineral
resource exploration stage companies for financing from a limited number of
investors that are prepared to make investments in mineral resource exploration
stage companies. The presence of competing mineral resource exploration stage
companies may impede our ability to raise additional capital in order to fund
our property acquisitions and exploration programs if investors are of the view
that investments in competitors are more attractive based on the merit of the
mineral properties under investigation and the price of the investment offered
to investors.
Many of the resource exploration stage companies with whom we compete have
greater financial and technical resources than we do. Accordingly, these
competitors may be able to spend greater amounts on the acquisition of
properties of merit and on exploration. In addition, they may be able to afford
greater geological expertise in the targeting and exploration of resource
properties. As a result, our competitors will likely have resource properties
of greater quality and interest to prospective investors who may finance
additional exploration and to senior exploration stage companies that may
purchase resource properties or enter into joint venture agreements with junior
exploration stage companies. This competition could adversely impact our
ability to finance the exploration of our mineral property.
(7) COMPLIANCE WITH GOVERNMENT REGULATIONS IN THE COURSE OF EXPLORING OUR
MINERAL PROPERTY MAY INCREASE THE ANTICIPATED TIME AND COST OF OUR EXPLORATION
PROGRAM SO THAT WE ARE UNABLE TO COMPLETE THE PROGRAM OR ACHIEVE PROFITABILITY.
Exploration and exploitation activities are subject to federal, 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. Exploration and exploitation activities are also subject to
federal, provincial, and local laws and regulations which seek to maintain
health and safety standards by regulating the design and use of drilling methods
and equipment.
We will be subject to the Mining Act of Newfoundland as we carry out our
exploration program. We may be required to obtain work permits, post bonds, and
perform remediation work for any physical disturbance to the land in order to
comply with these regulations. While our planned exploration program provides
for regulatory compliance, there is a risk that new regulations could increase
our time and costs of doing business and prevent us from carrying out our
exploration program. If we are unable to complete our exploration program or
achieve profitability, our investors may lose their entire investment.
(8) SINCE OUR SOLE OFFICER HAS OTHER BUSINESS INTERESTS, HE WILL ONLY BE
DEVOTING SIX HOURS PER WEEK TO OUR OPERATIONS, WHICH MAY RESULT IN PERIODIC
INTERRUPTIONS OR SUSPENSIONS OF EXPLORATION.
Our sole officer has other outside business activities and will only be devoting
six hours per week, to our operations. As a result, our operations may be
sporadic and occur at times that are convenient to him. Consequently, our
business activities may be periodically interrupted or suspended.
(9) SINCE SUBSTANTIALLY ALL OF OUR ASSETS AND OUR SOLE DIRECTOR AND OFFICER
IS LOCATED OUTSIDE THE UNITED STATES, IT MAY BE DIFFICULT FOR INVESTORS TO
ENFORCE WITHIN THE UNITED STATES ANY JUDGMENTS OBTAINED AGAINST US OR ANY OF OUR
DIRECTORS OR OFFICERS.
Substantially all of our assets are located outside the United States and we do
not currently maintain a permanent place of business within the United States.
We were incorporated in the State of Nevada and have an agent for service in
Carson City, Nevada. Our agent for service will accept on our behalf the
service of any legal process and any demand or notice authorized by law to be
served upon a corporation. Our agent for service will not, however, accept
service on behalf of our sole officer and director. Our sole officer and
director is a resident of Canada and does not have an agent for service in the
United States. Therefore, it may be difficult for investors to enforce within
the United States any judgments obtained against us or sole officer and
director, including judgments predicated upon the civil liability provisions of
the securities laws of the United States or any state thereof.
6
(10) SINCE OUR SOLE EXECUTIVE OFFICER HAS NO EXPERIENCE IN MINERAL
EXPLORATION AND DOES NOT HAVE FORMAL TRAINING SPECIFIC TO MINERAL EXPLORATION,
THERE IS A HIGHER RISK THAT OUR BUSINESS WILL FAIL.
Our sole executive officer has no experience in mineral exploration and does not
have formal training in geology or in the technical aspects of management of a
mineral exploration company. This inexperience presents a higher risk that we
will be unable to complete our business plan for the exploration of our mineral
claims. In addition, we will have to rely on the technical services of others
with expertise in geological exploration in order for us to carry our planned
exploration program. If we are unable to contract for the services of such
individuals, it will make it difficult and may be impossible to pursue our
business plan. There is thus a higher risk that our operations, earnings and
ultimate financial success could suffer irreparable harm and that our investors
will lose all of their investment.
(11) IF WE ARE UNABLE TO HIRE AND RETAIN KEY PERSONNEL, WE MAY NOT BE ABLE
TO IMPLEMENT OUR BUSINESS PLAN AND OUR BUSINESS WILL FAIL.
We will compete with other mining companies in the recruitment and retention of
qualified managerial and technical employees. Our success will be largely
dependent upon our ability to hire highly qualified personnel. This is
particularly true in highly technical businesses such as mineral exploration.
These individuals may be in high demand and we may not be able to attract the
staff we need. In addition, we may not be able to afford the high salaries and
fees demanded by qualified personnel, or may lose such employees after they are
hired. Currently, we have not hired any key personnel and we do not intend to
do so for the next 12 months and until we have proved mineral reserves. If we
are unable to hire key personnel when needed, our exploration program may be
slowed down or suspended.
(12) IF WE ARE UNABLE TO HIRE AND RETAIN KEY PERSONNEL, WE MAY NOT BE ABLE
TO IMPLEMENT OUR BUSINESS PLAN AND OUR BUSINESS MAY FAIL.
Our future success depends, to a significant extent, on our ability to attract,
train and retain capable technical, sales and managerial personnel. Recruiting
and retaining capable personnel, particularly those with expertise with mineral
exploration, is vital to our success. There is substantial competition for
qualified technical and managerial personnel, and there can be no assurance that
we will be able to attract or retain the necessary persons. If we are unable to
attract and retain qualified employees, our business may fail and our investors
could lose their investment.
(13) CERTAIN PROVISIONS OF OUR ARTICLES OF INCORPORATION AND BYLAWS MAY
DISCOURAGE MERGERS AND OTHER TRANSACTIONS.
Certain provisions of our certificate of incorporation and bylaws may make it
more difficult for someone to acquire control of Castmor. These provisions may
make it more difficult for stockholders to take certain corporate actions and
could delay or prevent someone from acquiring our business. These provisions
could limit the price that certain investors might be willing to pay for shares
of our common stock. These provisions, and others, may be beneficial to our
management and the board of directors in a hostile tender offer, and could have
an adverse impact on stockholders who may want to participate in such tender
offer, or who may want to replace some or all of the members of the board of
directors.
(14) WE MAY, IN THE FUTURE, ISSUE ADDITIONAL COMMON SHARES, WHICH WOULD
REDUCE THE PERCENTAGE OF OWNERSHIP OF OUR STOCKHOLDERS AND MAY DILUTE OUR SHARE
VALUE.
Our Articles of Incorporation authorize the issuance of 900,000,000 shares of
common stock, par value $0.0001. The future issuance of common stock may result
in substantial dilution in the percentage of our common stock held by our then
existing shareholders. We may value any common stock issued in the future on an
arbitrary basis. The issuance of common stock for future services or
acquisitions or other corporate actions may have the effect of diluting the
value of the shares held by our investors, and might have an adverse effect on
any trading market for our common stock.
(15) WE MAY ISSUE SHARES OF PREFERRED STOCK WITH GREATER RIGHTS THAN OUR
COMMON STOCK, WHICH MAY ENTRENCH MANAGEMENT AND RESULT IN DILUTION OF OUR
SHAREHOLDERS' INVESTMENT.
Our Articles of Incorporation authorize the issuance of up to 100,000,000 shares
of preferred stock, par value $0.0001 per share. The authorized but unissued
preferred stock may be issued by our board of directors from time to time on any
number of occasions, without stockholder approval, as one or more separate
series of shares comprised of any number of the authorized but unissued shares
of preferred stock, designated by resolution of our board of directors stating
the name and number of shares of each series and setting forth separately for
such series the relative rights, privileges and preferences thereof, including,
if any: (i) the rate of dividends payable thereon; (ii) the price, terms and
conditions of redemption; (iii) voluntary and involuntary liquidation
preferences; (iv) provisions of a sinking fund for redemption or repurchase; (v)
terms of conversion to common stock, including conversion price, and (vi) voting
rights. Such preferred stock may enable our board of directors to hinder or
discourage any attempt to gain control of us by a merger, tender offer at a
control premium price, proxy contest or otherwise. Consequently, the preferred
stock could entrench our management. The market price of our common stock could
be depressed to some extent by the existence of the preferred stock. As of the
date of this prospectus, no shares of preferred stock have been issued.
7
(16) SINCE OUR BOARD OF DIRECTORS DOES NOT INTEND TO PAY DIVIDENDS ON OUR
COMMON STOCK IN THE FORESEEABLE FUTURE, IT IS LIKELY THAT INVESTORS WILL ONLY BE
ABLE TO REALIZE A RETURN ON THEIR INVESTMENT BY RESELLING SHARES PURCHASED
THROUGH THIS OFFERING.
We have not paid any cash dividends on our common stock since our inception and
we do not anticipate paying cash dividends in the foreseeable future. We intend
to retain our earnings, if any, to provide funds for reinvestment in our
acquisition and exploration activities. The payment of dividends, if any, in
the future is within the discretion of the board of directors and will depend on
our earnings, if any, our capital requirements, financial condition and other
relevant factors.
(17) INVESTORS MAY NOT BE ABLE TO RESELL ANY SHARES THEY PURCHASE THROUGH
THIS OFFERING BECAUSE WE DO NOT INTEND TO REGISTER OUR SHARES FOR SALE IN ANY
STATE AND THERE IS NO ESTABLISHED PUBLIC TRADING MARKET FOR OUR COMMON STOCK.
It may be difficult or impossible for investors to sell our common stock or for
them to sell our common stock for more than the offering price even if our
operating results are positive. We do not intend to register our common stock
with any State. Therefore, investors will not be able to resell their shares in
any State unless the resale is exempt under the Blue Sky laws of the State in
which the shares are to be sold. While our common stock is presently quoted on
the Pink Sheets, there is no established trading market for it. Most of our
common stock will be held by a small number of investors that will further
reduce the liquidity of our common stock. Furthermore, the offering price of
our common stock was arbitrarily determined by us, without considering assets,
earnings, book value, net worth or other economic or recognized criteria or
future value of our common stock. Market fluctuations and volatility, as well
as general economic, market and political conditions, could reduce our market
price.
(18) THE LEVEL OF TRADING ACTIVITY IN OUR STOCK MAY BE REDUCED BECAUSE WE
ARE SUBJECT TO THE "PENNY STOCK" RULES.
Broker-dealer practices in connection with transactions in "penny stocks" are
regulated by penny stock rules adopted by the Securities and Exchange
Commission. Penny stocks generally are equity securities with a price of less
than $5.00 (other than securities registered on some national securities
exchanges or quoted on NASDAQ). The penny stock rules require a broker-dealer,
prior to a transaction in a penny stock not otherwise exempt from the rules, to
deliver a standardized risk disclosure document that provides information about
penny stocks and the nature and level of risks in the penny stock market. The
broker-dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction, 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, and monthly account statements showing the
market value of each penny stock held in the customer's account. In addition,
broker-dealers who sell these securities to persons other than established
customers and "accredited investors" must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction. Consequently, these
requirements may have the effect of reducing the level of trading activity, if
any, in the secondary market for a security subject to the penny stock rules,
and investors in our common stock may find it difficult to sell their shares.
(19) SINCE THERE IS NO ESCROW, TRUST OR SIMILAR ACCOUNT, OUR SUBSCRIBERS'
INVESTMENT COULD BE SEIZED BY CREDITORS OR BY A TRUSTEE IN BANKRUPTCY, RESULTING
IN THE LOSS OF THE INVESTMENT.
Proceeds from this offering will not be deposited into an escrow, trust or
similar account, but will instead be deposited in a separate bank account under
our name. Only our officers and directors will have access to the account.
Investors will not have the right to withdraw their funds during the offering.
Investors will only receive their funds back if we do not raise the minimum
amount of the offering within 90 days. As a result, if we are sued for any
reason and a judgment is rendered against us, all proceeds from this offering
could be seized. If we file a voluntary bankruptcy petition or our creditors
file an involuntary bankruptcy petition, our assets will be seized by the
bankruptcy trustee, including the proceeds from this offering, and used to pay
our creditors. If that happens, our investors will lose their investment, even
if we fail to raise the minimum amount in this offering.
8
FORWARD-LOOKING STATEMENTS
Information in this prospectus contains "forward looking statements" which can
be identified by the use of forward-looking words such as "believes",
"estimates", "could", "possibly", "probably", "anticipates", "estimates",
"projects", "expects", "may", or "should" or other variations or similar words.
No assurance can be given that the future results anticipated by the
forward-looking statements will be achieved. These statements constitute
cautionary statements identifying important factors with respect to those
forward-looking statements, including certain risks and uncertainties that could
cause actual results to vary materially from the future results anticipated by
those forward-looking statements. Such statements are only predictions and
involve known and unknown risks, uncertainties and other factors, including the
risks in the section titled "Risk Factors". Among the key factors that have a
direct bearing on our results of operations are the effects of various
governmental regulations, the fluctuation of our direct costs and the costs and
effectiveness of our operating strategy. Other factors could also cause actual
results to vary materially from the future results anticipated by those
forward-looking statements.
The forward-looking statements are based upon management's current views and
assumptions regarding future events and operating performance, and are
applicable only as of the dates of such statements. We do not have any
intention or obligation to update publicly any forward-looking statements,
whether as a result of new information, future events, changes in assumptions,
or otherwise.
9
USE OF PROCEEDS
Our offering is being made on a $60,000 minimum and $100,000 maximum, best
efforts, self-underwritten basis. The table below sets forth the use of
proceeds if 60% (minimum) and 100% (maximum) of the offering is sold.
-------------------------------------------------------------
IF MINIMUM SOLD IF MAXIMUM SOLD
$ 60,000 % $ 100,000 %
-------------------------------------------------------------
Offering expenses 5,000 10 5,000 5
Total Proceeds $ 55,000 90 $ 95,000 95
Debt Repayment(1) 55,000 90 55,000 55
Prospecting - 22,500 23
Consulting Geologist - 4,400 4
Accounting Fees - 5,000 5
Legal fees - 5,000 5
Working Capital(2) - 3,100 3
-------------------------------------------------------------
Total Use of Proceeds $ 60,000 100 $ 100,000 100
=============================================================
(1) "Debt Repayment" refers to the repayment of trade debt and a loan of $50,000
from Moneris Capital L.P., plus projected interest at the rate of 20% per annum.
(2) "Working Capital" includes office expenses and contingencies, such as
unanticipated exploration costs and professional fees.
No proceeds from this offering will be paid to our officers or directors.
DETERMINATION OF OFFERING PRICE
There is no established public market for the shares of common stock being
registered. As a result, the offering price and other terms and conditions
relative to the shares of common stock offered hereby have been arbitrarily
determined by us and do not necessarily bear any relationship to assets,
earnings, book value or any other objective criteria of value. In addition, no
investment banker, appraiser or other independent, third party has been
consulted concerning the offering price for the shares or the fairness of the
price used for the shares.
DILUTION
The investment by any purchaser of the offered shares of common stock will be
diluted immediately to the extent of the difference between the public offering
price per share and the net tangible book value per share of common stock
immediately after this offering. The Net tangible book value as of August 31,
2010, as adjusted for the 1-for-5 reverse stock split of September 17, 2010 and
the private placement of 10,000,000 common shares on September 22, 2010 was
$37,904 or approximately ($0.003) per common share. Net tangible book value per
share is determined by dividing tangible shareholders' equity, which is total
tangible assets less total liabilities, by the aggregate number of shares of
common stock outstanding. Tangible assets represent total assets excluding
goodwill and other intangible assets. Dilution in net tangible book value per
share represents the difference between the amount per share paid by purchasers
of shares of our common stock in this offering and the net tangible book value
per share of our common stock immediately after the closing of this offering.
All of our current shareholders will realize an immediate increase of $0.001 per
share in the net tangible book value of their shares held prior to the offering
if the minimum is sold, and an increase of $0.001 per share if the maximum is
sold. Purchasers of the offered shares will realize an immediate dilution of
$0.001 per share in the net tangible book value of their shares if the minimum
is sold, and an immediate dilution of $0.001 per share if the maximum is sold.
The following table illustrates the increase to existing shareholders and the
dilution to purchasers of the offered shares in their net tangible book value
per share, before deducting estimated offering expenses, adjusted for the
1-for-5 reverse stock split of September 17, 2010 and the private placement of
10,000,000 common shares on September 22, 2010:
10
--------------------------------------------------------------------------------
MINIMUM MAXIMUM
--------------------------------------------------------------------------------
Number of shares sold 12,000,000 20,000,000
Gross proceeds $ 60,000 $ 100,000
Offering price per share $ 0.005 $ 0.005
Net tangible book value per share at
August 31, 2010, as adjusted for the
private placement of 10,000,000 common share $ (0.003) $ (0.003)
Increase in net tangible book value
per share attributable to the sale of $ 0.001 $ 0.001
12,000,000 (minimum) and 20,000,000 (maximum) shares
Net tangible book value per share at August 31, 2010,
as adjusted for the sale of shares $ 0.004 $ 0.004
Dilution per share to new investors in this offering $ 0.001 $ 0.001
================================================================================
We may seek additional equity financing in the future, which may cause
additional dilution to investors in this offering, and a reduction in their
equity interest. The holders of the shares purchased in this offering will have
no pre-emptive rights to purchase any shares we issue in the future in
connection with any additional equity financing.
The table below sets forth as of August 31, 2010, on an adjusted basis (adjusted
for the 1-for-5 reverse stock split of September 17, 2010 and the private
placement of 10,000,000 common shares on September 22, 2010), the difference
between the number of shares purchased and total consideration paid for those
shares by existing shareholders, compared to shares purchased by new investors
in this offering without taking into account any offering expenses. If the
minimum number of shares is sold in this offering, purchasers will contribute
32% of our share capital and will collectively own 49% of our issued and
outstanding shares. If the maximum number of shares is sold in this offering,
purchasers will contribute 44% of our share capital and will collectively own
62% of our issued and outstanding shares.
------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER OF SHARES PURCHASED TOTAL CONSIDERATION AND AVERAGE PER SHARE PRICE
MINIMUM MAXIMUM MINIMUM MAXIMUM
PERCENT PERCENT AMOUNT PERCENT AVERAGE AMOUNT PERCENT AVERAGE
NUMBER (%) NUMBER (%) ($) (%) ($) ($) (%) ($)
------------------------------------------------------------------------------------------------------------------
Existing
shareholders 12,487,000 51 12,487,000 38 129,880 68 0.01 129,880 56 0.01
New shareholders 12,000,000 49 20,000,000 62 60,000 32 0.005 100,000 44 0.005
------------------------------------------------------------------------------------------------------------------
Total 24,487,000 100 32,487,000 100 189,880 100 0.01 229,880 100 0.01
==================================================================================================================
We may choose to raise additional capital due to market conditions or strategic
considerations even if we believe we have sufficient funds for our current or
future operating plans. To the extent that additional capital is raised through
the sale of equity or convertible debt securities, the issuance of these
securities could result in further dilution to our shareholders.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Our common stock is quoted on the OTCQB of Pink OTC Markets under the symbol
"CASL". Trading of our stock is sporadic and does not constitute an established
public market for our shares.
HOLDERS
On December 1, 2010, the stockholders' list of our shares of common stock showed
41 registered holders of our shares of common stock and 12,487,000 shares of
common stock outstanding. The number of record holders was determined from the
records of our transfer agent and does not include beneficial owners of shares
of common stock whose shares are held in the names of various security brokers,
dealers, and registered clearing agencies.
DIVIDEND POLICY
We have not declared or paid any cash dividends on our common stock. We
currently intend to retain future earnings, if any, to finance the expansion of
our business. As a result, we do not anticipate paying any cash dividends in the
foreseeable future.
11
CONVERTIBLE SECURITIES
We have not issued and do not have outstanding any other securities convertible
into shares of our common stock or any rights convertible or exchangeable into
shares of our common stock.
DESCRIPTION OF BUSINESS
CORPORATE HISTORY
We were incorporated in the State of Nevada on June 27, 2005, as a mineral
exploration company.
By a Transfer of Mineral Disposition dated November 7, 2005, from Thomas Mills,
we acquired a 100% interest in the White Bear Arm Property: two non-contiguous
mineral exploration licenses (license numbers 011117M and 011400M) comprising 17
claims located along south-eastern coastal Labrador, approximately 13 kilometers
northeast of the community of Charlottetown in Labrador, Canada, having a total
area of 425 hectares (1,054.8 acres).
One of the licenses (license number 011300M), comprising eight claims, was
inadvertently allowed to expire and was cancelled on January 24, 2007. We
reacquired a 100% interest in the same eight claims under a new mineral license
(license number 013632M) by a Transfer of Mineral Disposition dated July 16,
2007, from Mr. Mills.
In 2009, due to a lack of capital we allowed our mineral claims to expire and
they were subsequently cancelled.
In February 2010, our management was approached by Cage Wars Championship Ltd.,
a company organized under the laws of the United Kingdom ("Cagewars") about the
prospect of merging Cagewars with Castmor. Cagewars is engaged in the business
of organizing and promoting mixed martial-arts competitions throughout the
United Kingdom. Given our lack of capital at the time, our management determined
that it would be in the shareholders' best interests to agree to the merger. On
March 8, 2010, we entered into a material definitive agreement with Christopher
Kelly and Patrick Mooney, both of Northern Ireland, to acquire all the issued
and outstanding shares of Cagewars. The closing of the acquisition was to take
place on April 19, 2010. Prior to closing, our management determined that it
would be in the best interests of our shareholders for Castmor to continue
pursuing its mineral exploration business. On April 15, 2010, we mutually
agreed with Cagewars to cancel the merger and rescind the material definitive
agreement.
On September 20, 2010, we reacquired a 100% interest in the 17 mineral claims
originally composing the White Bear Arm Property under new mineral licenses
(license nos. 017985M and 017987M) by a Transfer of Mineral Disposition dated
September 20, 2010, from Thomas Mills. The mineral licenses underlying our
claims are registered with the Government of Newfoundland and Labrador and are
presently in good standing.
We have no subsidiaries.
Our office is located at 427 Princess Street, Suite 406, Kingston, ON K7L 5S9.
Our telephone number is 613.617.5107. Our facsimile number is 613.383.0247.
OUR BUSINESS
We are an exploration stage company in that we are engaged in the search for
mineral deposits that are not in either the development or production stage,
with a view to exploiting any mineral deposits we discover that demonstrate
economic feasibility. Since we are an exploration stage company, there is no
assurance that commercially exploitable reserves of valuable minerals exist on
our property. We need to do further exploration before a final evaluation of
the economic and legal feasibility of our future exploration is determined.
We have not commenced business operations. To date, our activities have been
limited to organizational matters, acquiring our mineral claims, researching our
claims, raising capital and the preparation of our securities filings, including
the registration statement of which this prospectus forms a part. Our assets
are limited to our mineral claims, the acquisition of which have been
capitalized in accordance with our accounting policy.
Mineral property exploration is typically conducted in phases. Each subsequent
phase of exploration work is recommended by a geologist based on the results
from the most recent phase of exploration. We have not yet commenced the
initial phase of exploration on the White Bear Arm Property. Upon completion of
each phase of exploration, we will make a decision as to whether or not we will
proceed with each successive phase based upon the analysis of the results of
that program. Our Board of Directors will make this decision based upon the
recommendations of an independent geologist who will oversee the program and
record the results.
12
We presently have no known reserves of any type of mineral. We plan to conduct
appropriate exploration work on the White Bear Arm Property in order to
ascertain whether it possesses commercially exploitable reserves of valuable
minerals. There can be no assurance that commercially exploitable reserves of
valuable minerals exist on the White Bear Arm Property or that we will discover
them, if they exist. If we are unable to find reserves of valuable minerals or
we cannot remove the minerals because we either do not have the capital to do
so, or because it is not economically feasible to do so, then we may cease
operations and our shareholders may lose their investment.
Even if Phase I of our exploration program identifies high priority geological
targets suitable for a Phase II diamond drilling program, we will need to raise
additional funding to finance the Phase II drilling program and any additional
drilling and engineering studies that are required before we will know if we
have commercially exploitable reserves of valuable minerals. The proceeds from
this offering will not be sufficient to fund Phase II. We anticipate that any
additional funding that we require will be in the form of equity financing from
the sale of our common stock. There is no assurance, however, that we will be
able to raise sufficient funding from the sale of our common stock. The risky
nature of this enterprise and lack of tangible assets places debt financing
beyond the credit-worthiness required by most banks or typical investors of
corporate debt until such time as an economically viable mine can be
demonstrated. We do not have any arrangements in place for any future equity
financing. If we are unable to secure additional funding, we may cease or
suspend operations. We have no plans, arrangements or contingencies in place in
the event that we cease operations.
MINERAL CLAIMS
The White Bear Arm Property consists of two non-contiguous mineral exploration
licenses comprising a total of 17 claims having a total area of 425 hectares
(mineral rights licence numbers 017985M and 017987M), wholly owned by us. We
hold all of our mineral titles free and clear of any encumbrances or liens.
The following table sets out all the mineral exploration licenses that currently
compose the White Bear Arm Property.
-------------------------------------------------------------------------------------------------
MINERAL NATIONAL
EXPLORATION NUMBER TOPOGRAPHIC
LICENSE OF AREA SERIES MAP
NUMBER LICENSEE HOLDER CLAIMS (HECTARES) SHEET ISSUANCE DATE
-------------------------------------------------------------------------------------------------
017985M Castmor Resources Ltd. (100%) 9 225 13A/16 October 4, 2010
017987M Castmor Resources Ltd. (100%) 8 200 13A/16, 3D13 October 4, 2010
-------------------------------------------------------------------------------------------------
TOTALS 17 425
(1,054.8 acres)
=================================================================================================
Our mineral exploration licenses entitle us to explore the claims composing the
White Bear Arm Property subject to the laws and regulations of the Province of
Newfoundland and Labrador. Title to mineral claims are issued and administered
by the Mineral Lands Division of the Ministry of Natural Resources, and title
must comply with all provisions under the Mineral Act of Newfoundland and
Labrador.
Under Newfoundland law, our mineral licenses may be held for one year after the
date of Issuance Date, and thereafter from year to year if, on or before the
anniversary date, we perform assessment work on the underlying claims having a
minimum value of not less than C$200 per claim in the first year, C$250 per
claim in the second year, and C$300 per claim in the third year. If we are
unable to complete the assessment work required to be done in any twelve month
period, we can maintain our claims in good standing by posting a cash security
deposit for the amount of the deficiency. When the deficient work is completed
and accepted the security deposit will be refunded. Otherwise, the security
deposit will be forfeited. If we do not comply with these maintenance
requirements, then we will forfeit our claims at the end of the anniversary date
for each respective claim. All of our claims are presently in good standing.
GLOSSARY OF TECHNICAL TERMS
The following are the definitions of certain technical and geological terms used
in this registration statement:
AMPHIBOLE: Family of silicate minerals forming prism or needle-like crystals.
Amphibole minerals generally contain iron, magnesium, calcium and aluminum in
varying amounts, along with water.
AMPHIBOLITE: A dark-colored metamorphic rock of mafic composition consisting
mainly of the minerals hornblende and plagioclase.
13
ANATECTIC: Having melted from pre-existent rock.
ASSAY: A chemical analysis that determines the amount of easily extractable
elements in a sample (of rock, soil, till, silt, etc.). The concentrations of
precious metals such as gold and silver are typically reported as grams of metal
per tonne of rocks; base metal assays (copper, lead, zinc, etc.) are given in
weight percent. Assay sheets from laboratories typically give gold
concentrations in parts per billion (ppb). 1000 ppb equals 1 part per million
(ppm), equals 1 gram/tonne (there are about 34 grams in an ounce). Base metal
assays are typically measured in ppm (10,000 ppm equals one percent).
BIOTITE: common rock-forming mineral of the mica family. Biotite is a black or
dark brown silicate rich in iron, magnesium, potassium, aluminum, and, of
course, silica. Like other micas, it forms flat book-like crystals that peel
apart into individual sheets on cleavage planes.
BOREAL: Referring to the northern forests.
CO: The chemical symbol for Cobalt.
CONTACT: The surface of delimitation between a vein and its wall, or country
rock.
CU: The chemical symbol for Copper.
DERIVATIVE: A rock composed of materials derived from the weathering of older
rocks, a sedimentary rock, or a rock formed of material that has not been in a
state of fusion immediately before its accumulation.
DYKES: Tabular igneous intrusions that cut across the bedding or foliation of
the country rock.
ECOCLIMATE: Climate operating as an ecological factor. The sum of the
meteorological factors within a habitat.
ESKERS: A long, narrow ridge of coarse gravel deposited by a stream flowing in
or under a decaying glacial ice sheet.
FACIES: The overall characteristics of a rock unit that reflect its origin and
differentiate the unit from others around it. Mineralogy and sedimentary source,
fossil content, sedimentary structures and texture distinguish one facies from
another.
FELSIC: Igneous rock composed principally of feldspars and quartz.
FERROMAGNESION: Containing iron and magnesium.
FLUVIOGLACIAL: Pertaining to the meltwater streams flowing from wasting glacier
ice and esp. To the deposits and landforms produced by such streams, as kame
terraces and outwash plains; relating to the combined action of glaciers and
streams.
FOLIATED: Of a planar structure or any planar set of minerals in metamorphic
rocks that formed from direct pressure during deformation.
GABBRO: Coarse grained mafic intrusive rock composed mainly of plagioclase and
pyroxene.
GABBROIC: Having the quality of gabbro
GABBRONORITE: Gabbro containing orthopyroxene and labradorite, a plagioclasic
feldspar.
GARNET: Any of a group of hard silicate minerals having the general formula
asb2(sio4)3, occurring chiefly as well-formed crystals in metamorphic rocks.
GARNETIFEROUS: Containing garnets.
GEOPHYSICS: The study of the physical properties of the earth and the
composition and movement of its component rock. Geophysics is used extensively
in mineral exploration to detect mineralized rocks characterized by any one or
more of their physical properties.
GNEISS: A layered or banded crystalline metamorphic rock, the grains of which
are aligned or elongated into a roughly parallel arrangement.
14
GOSSAN: A rusty rock in which iron-bearing sulphide minerals have been oxidized
by air and water. Gossans may overlie a significant sulphide body.
GRANITE: Medium to coarse-grained felsic intrusive rock.
GRANITE: An igneous (formed from molten material) rock that solidified within
the Earth's crust and is principally composed of quartz, feldspar, and biotite.
GRANITIC: See Granitoid.
GRANITOID: Pertaining to or composed of granite.
GRANULITE: A relatively coarse, granular rock formed at high pressures and
temperatures, which may exhibit a crude gneissic structure due to the
parallelism of flat lenses of quartz or feldspar.
GRAPHITE: Native carbon mineral often with high conductance properties.
IGNEOUS: Rock or material, which solidified from molten material.
INTRUSION: A mass of rock that has been forced into or between other rocks.
INTRUSIVE: A body of igneous rock formed by the consolidation of magma intruded
into other rocks, in contrast to lavas, which are extruded upon the surface.
LITHOLOGY: The character of a rock described in terms of its structure, color,
mineral composition, grain size, and arrangement of its component parts; all
those visible features that in the aggregate impart individuality to the rock.
MAFIC: Pertaining to or composed of the ferromagnesian rock-forming silicates,
said of some igneous rocks and their constituent minerals.
MAGMA: Molten rock, formed within the inner parts of the Earth, which
crystallizes to form an igneous rock.
MAGMATIC SULPHIDE DEPOSIT: A deposit - usually of nickel, copper, cobalt or
platinum group elements - that is found in mafic or ultramafic igneous rocks.
MAGNETITE: Magnetic iron ore, being a black iron oxide containing 72.4% iron
when pure.
MASL: Metres above sea level.
MASS: A large irregular deposit of ore, which cannot be recognized as a vein or
bed.
METAMORPHIC: A rock that has been altered by physical and chemical processes
including heat, pressure, and fluids.
METASEDIMENTARY: Having the quality of a sediment or sedimentary rock that
shows evidence of having been subjected to metamorphism.
MIGMATITIC: Having the quality of a composite rock composed of igneous or
igneous-appearing and metamorphic materials that are generally distinguishable
megascopically.
MONZONITE: A granular plutonic rock containing approximately equal amounts of
orthoclase and plagioclase, and thus intermediate between syenite and diorite.
MORAINAL: Have the quality of a mass of rocks, gravel, sand, clay, etc.,
carried and deposited directly by a glacier.
NI: The chemical symbol for Nickel.
OLIVINE: A naturally occurring mineral (magnesium-iron silicate) that is
usually olive green.
PARAGNEISS: A gneiss formed by the metamorphism of a sedimentary rock.
15
PELITIC: A fine-grained sedimentary rock composed of more or less hydrated
aluminum silicates with which are mingled small particles of various other
minerals.
PLAGIOCLASE: Any of a series of triclinic minerals of the feldspar family,
ranging in composition from albite to anorthite and found in many rocks.
PSAMMITIC: Of or having the quality of fine-grained, clayey sandstone.
PYRITE: Iron sulphide.
QUARTZOFELDSPATHIC: Composition of a rock particularly rich in silica and
feldspar.
SULPHIDE: Minerals in which the metallic elements are chemically bound to
sulphur.
TERRACE: A raised portion of an ancient riverbed or a bank on which alluvial
deposits may be found.
TROCTOLITE: Igneous rock, found in the lunar highlands, composed of plagioclase
and olivine.
ULTRAMAFIC: An igneous rock composed chiefly of mafic minerals.
HISTORY OF THE CLAIMS
Previous exploration work in the area of the White Bear Arm Property extends
back to the 1950s, when various reconnaissance missions were performed
throughout the Province of Newfoundland and Labrador. Documented field work is
found back to the mid 1990s, when the massive Voisey's Bay nickel-copper
deposits were discovered, spurring an exploration rush throughout much of
Labrador.
In the immediate area of the White Bear Arm Property, detailed mineral
exploration work was completed by Noranda Mining and Exploration Inc. in 1995
and 1996. Geological mapping, prospecting, geochemical sampling, airborne
electromagnetics, and ground geophysics are some of the many surveys completed
over the property. Noranda explored the area for its magmatic Ni-Cu sulphide
potential.
Geological mapping and compilation was conducted by the Newfoundland and
Labrador Department of Mines and Energy. In the most recent mapping, completed
in 1988, the White Bear Arm Complex ("WBAC") is described as being composed of
gabbronorite, olivine gabbronorite and troctolite, together with lesser
monzonite and metamorphic derivatives that in the south are strongly deformed
and metamorphosed to amphibolite intercalated with metasedimentary gneiss of the
Paradise River Metasedimentary Gneiss Belt (PRMBGB). Pronounced Ni, Co and Cu
lake bottom anomalies were also noted in the eastern end of the WBAC An assay
of 0.15% Cu and 0.13% Ni was historically returned from a gossan at Mountain
Brook in the WBAC.
LOCATION AND ACCESS
The White Bear Arm Property is located approximately 13 kilometers northeast of
the community of Charlottetown, Labrador, Canada. The mineral licenses
composing the White Bear Arm Property straddle the boundary between National
Topographic Series map sheets 13A/16 and 3D/13. The property is approximately
five kilometers from tidewater.
Charlottetown, located 290 kilometers east-southeast of the town of Goose Bay,
has a gravel air strip for scheduled air traffic, and is serviced by chartered
float plane and scheduled coastal boat traffic during ice free months (June to
October). The town has a motel, and some supplies and services can be procured
there.
The White Bear Arm Property is accessible by helicopter for the purpose of an
initial assessment.
TOPOGRAPHIC AND PHYSICAL ENVIRONMENT
The area is moderately to heavily wooded, with some open barren areas on ridges
and hilltops, and underlain by a thick layer of muskeg and caribou moss. The
topography of the area is locally rugged, with elevations ranging from up to 230
masl, locally. The area is heavily wooded.
The White Bear Arm Property is located within the Paradise River Ecoregion,
classified as having a maritime mid-boreal ecoclimate, with its forests
dominated by closed stands of balsam fir and black spruce. The region is
dominated by northwest trending lakes and bays that mimic the structural grain
of the bedrock. Relief is locally rugged, with elevations reaching 300 meters
above sea level. The area is heavily wooded, with some open barren areas on
ridges and hilltops.
16
Composed of granites, gneisses, and gabbroic intrusive rocks, the area is
generally rough and undulating with deeply dissected coastal margins. Its
surface rises rapidly from the sea coast to elevations of about 300 masl, and is
covered with sandy morainal deposits of variable thickness. Fluvioglacial
deposits are sporadically distributed in the form of eskers and river terraces.
The general area is marked by cool, rainy summers and cold winters. The mean
annual temperature is approximately 1 Celsius. The mean summer temperature is
11.5 Celsius and the mean winter temperature is -9 Celsius. The mean annual
precipitation ranges 800-1100 millimeters.
REGIONAL GEOLOGY
The White Bear Arm Property lies within the eastern portion of the Grenville
lithotectonic province of Labrador, within rocks of the PRMGB. The belt
consists of sulphide-bearing pelitic, migmatitic metasedeimentary gneiss and
minor psammitic gneiss at amphibolite to granulite facies, which are
intercalated with granitoid and mafic-ultramafic intrusives. The latter are
generally interpreted by field regional geophysics to be part of the WBAC, which
has locally intruded and assimilated the PRMGB, and is interpreted to underlie
it. The juxtaposition of a possible nickel source (WRAC) with sulphidic host
material (PRMGB), and the presence of significant Ni-Cu-Co lake bottom anomalies
provide an ideal exploration environment for Ni-Cu magmatic sulphide deposits.
LOCAL GEOLOGY
Detailed geology in the vicinity of the White Bear Arm Property was extrapolated
from work completed by Noranda Mining and Exploration Inc. Underlying the area,
the principal lithology is a quartzofeldspathic, frequently garnetiferous (some
samples contain up to 50% garnet), meta-sedimentary gneiss. The gneiss is
foliated uniformly, trends towards the northwest, and is steeply dipping. The
outcrop consists of banded pink and black, fine-grained garnet-biotite gneiss.
Locally, the spectacular flake graphite is developed, and can attain 5% of the
rock over narrow widths. Additionally, disseminated pyrite, commonly 2-3%
(occasionally up to 20%) as patches, occurs as rusty staining within the gneiss.
Traces of chalcopynte was locally noted to occur in the area.
Where exposure is adequate, amphibolite is seen to occur parallel to the
foliation, as narrow (amphibole and garnet mineralogy) dykes, comprising
dominantly amphibole, garnet and magnetite.
Granite in the area occurs both as granitic gneiss with banding and anatectic
(diffuse veining) textures, as well as totally undeformed dykes and masses with
sharp contacts. These late granites are found to cross-cut both the
paragneisses and amphibolites.
PROPOSED EXPLORATION PROGRAM
Our management intends to explore the White Bear Arm Property for commercially
producible deposits of nickel, copper and industrial minerals such as garnet.
We intend to implement a two-phase exploration program to further evaluate the
property. An estimated budget for our exploration program is set out in the
following table:
--------------------------------------------------------------------------
PHASE I
--------------------------------------------------------------------------
Geologist, sampling and mapping supervision $ 2,700
Geological assistant $ 1,500
Rock, stream sediment and till sampling $ 2,500
Room and board lodging in Charlottetown $ 1,000
Transportation from Goose Bay to project area $ 13,500
Permits, fees, filings, insurance and other administrative items $ 1,000
Reports and maps $ 1,000
Overhead $ 3,480
--------------------------------------------------------------------------
TOTAL PHASE I COSTS: $ 26,680
--------------------------------------------------------------------------
PHASE II
--------------------------------------------------------------------------
Diamond Drilling and Core Sampling $170,000
Overhead $ 25,500
--------------------------------------------------------------------------
TOTAL PHASE II COSTS: $195,500
--------------------------------------------------------------------------
TOTAL PROGRAM COSTS: $222,180
==========================================================================
17
Actual project costs may exceed our estimates.
The Phase I field program for 2011 is intended to allow for more effective
assessment of past work, geological targets and geophysical anomalies. An
expanded geological mapping and geological sampling program will cover
previously established grid areas, as well as other prospective sites that may
be developed to delineate either base metals or industrial minerals.
Geochemical sampling would include rock, stream sediment and till sampling.
Several airborne electromagnetic anomalies will be re-verified on the ground and
mapped for size and extent.
If the results of the Phase I exploration program identify claim positions for
which there is sufficient indication of economic geological value to support
further exploration ("high priority targets"), we will implement a Phase II
diamond drilling program to follow-up such high priority targets. Phase II
would include 800 to 1,000 metres of drilling, mobilized to the nearest road by
truck, and helicopter supported from that point. Subject to financing, we
expect Phase II to be completed later in 2011, or during 2012.
We have sufficient capital to complete Phase I of our exploration program, but
we have insufficient funds to begin Phase II. The proceeds from this offering
will not be sufficient to fund Phase II. If Phase I of our exploration program
identifies high priority targets for further exploration in Phase II, then we
will be required to raise additional financing to fund Phase II.
Both Phases of our proposed exploration program will be conducted under the
supervision and direction of an independent consulting geologist, who will
determine all protocols and procedures to be followed. We do not intend to
engage the services of a geologist in respect of our exploration program until
May 2011.
We anticipate that any additional funding that we require will be in the form of
equity financing from the sale of our common stock. There is no assurance,
however, that we will be able to raise sufficient funding from the sale of our
common stock. The risky nature of this enterprise and lack of tangible assets
places debt financing beyond the credit-worthiness required by most banks or
typical investors of corporate debt until such time as an economically viable
mine can be demonstrated. We do not have any arrangements in place for any
future equity financing. If we are unable to secure additional funding, we will
cease or suspend operations. We have no plans, arrangements or contingencies in
place in the event that we cease operations.
MANAGEMENT EXPERIENCE
Our management has no professional training or technical credentials in the
exploration, development, or operation of mines. Consequently, we may not be
able to recognize or take advantage of potential acquisition and exploration
opportunities in the sector without the aid of qualified geological consultants.
Moreover, with no direct training or experience, our management may not be fully
aware of the specific requirements related to working in this industry. They
may make mistakes in their decisions and choices that could cause our operations
and ultimate financial success to suffer irreparable harm.
GEOLOGICAL AND TECHNICAL CONSULTANTS
Since our sole officer and director is inexperienced with exploration, we intend
to retain qualified persons on a contract basis to perform the surveying,
exploration, and excavating of the White Bear Arm Property as needed. We do not
presently have any verbal or written agreement regarding the retention of any
such person for the exploration program.
COMPETITIVE FACTORS
The mining industry is highly fragmented and we will be competing with many
other exploration companies looking for minerals. We are one of the smallest
exploration companies and are an infinitely small participant in the mineral
exploration business. While we will generally compete with other exploration
companies, there is no competition for the exploration of minerals from our
claims.
We are a junior mineral exploration company. We compete with other junior
mineral exploration companies for financing from a limited number of investors
that are prepared to make investments in junior mineral exploration companies.
The presence of competing junior mineral exploration companies may impact on our
ability to raise additional capital in order to fund our exploration programs if
investors are of the view that investments in competitors are more attractive
based on the merit of the mineral properties under investigation and the price
of the investment offered to investors.
We will also be competing with other junior and senior mineral companies for
available resources, including, but not limited to, professional geologists,
camp staff, mineral exploration supplies and drill rigs.
LOCATION CHALLENGES
We do not expect any major challenges in accessing the White Bear Arm Property
during the initial exploration stages.
18
REGULATIONS
Our mineral exploration program is subject to the regulations of the Department
of Natural Resources of the Province of Newfoundland & Labrador.
In the Province of Newfoundland and Labrador, any person who intends to conduct
an exploration program must submit prior notice with a detailed description of
the activity to the Department. An exploration program that may result in ground
disturbance or disruption to wildlife habitat must have an Exploration Approval
from the Department of Natural Resources before the activity can commence. Some
exploration activities, such as bulk sampling and road construction, or
activities in designated sensitive areas, may require registration for
environmental assessment.
We will secure all necessary permits for exploration and, if development is
warranted on the property, we will file final plans of operation before we start
any mining operations. We anticipate no discharge of water into active stream,
creek, river, lake or any other body of water regulated by environmental law or
regulation. Restoration of the disturbed land will be completed according to
law. All holes, pits and shafts will be sealed upon abandonment of the
property. It is difficult to estimate the cost of compliance with the
environmental law since the full nature and extent of our proposed activities
cannot be determined until we start our operations and know what that will
involve from an environmental standpoint.
Exploration stage companies are not required to discuss environmental matters
except as they relate to exploration activities. The only "cost and effect" of
compliance with environmental regulations in Canada is returning the surface to
its previous condition upon abandonment of the property.
EMPLOYEES
We currently have no employees other than our sole officer and director, who has
not been paid for his services and will not receive compensation from the
proceeds of this offering. We do not have any employment agreements with our
sole officer and director. We do not presently have pension, health, annuity,
insurance, stock options, profit sharing or similar benefit plans; however, we
may adopt plans in the future. There are presently no personal benefits
available to our officers or directors.
We do not intend to hire additional employees at this time. All of the work on
the property will be conducted by unaffiliated independent contractors that we
will hire, including a consulting geologist and a mining engineer. The
independent contractors will be responsible for surveying, geology, engineering,
exploration, and excavation. The consulting geologist will evaluate the
information derived from the exploration and excavation and the engineer will
advise us on the economic feasibility of removing the mineralized material.
PROPERTY
We have a 100% interest in the White Bear Arm Property, comprising 17 mineral
claims located along southeastern coastal Labrador, approximately 13 kilometers
northeast of the community of Charlottetown in Labrador, Canada, having a total
area of 425 hectares (1,054.8 acres). This interest only relates to the right to
explore for and extract minerals from the claims. We do not own any real
property interest in the claims. We do not own or lease any property other than
the White Bear Arm Property.
19
MAP SHOWING THE LOCATION OF THE WHITE BEAR ARM PROPERTY
[GRAPHIC OMITED]
20
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF
OPERATIONS
THE FOLLOWING DISCUSSION AND ANALYSIS OF OUR PLAN OF OPERATION SHOULD BE READ IN
CONJUNCTION WITH THE FINANCIAL STATEMENTS AND THE RELATED NOTES. THIS DISCUSSION
CONTAINS FORWARD-LOOKING STATEMENTS BASED UPON CURRENT EXPECTATIONS THAT INVOLVE
RISKS AND UNCERTAINTIES, SUCH AS OUR PLANS, OBJECTIVES, EXPECTATIONS AND
INTENTIONS. OUR ACTUAL RESULTS AND THE TIMING OF CERTAIN EVENTS COULD DIFFER
MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A
RESULT OF CERTAIN FACTORS, INCLUDING THOSE SET FORTH UNDER "RISK FACTORS,"
"DESCRIPTION OF BUSINESS" AND ELSEWHERE IN THIS PROSPECTUS.
OVERVIEW
Our business plan is to explore the White Bear Arm Property to determine whether
it contains commercially exploitable reserves of valuable minerals. We intend
to proceed with Phase I of our proposed exploration program. Phase I will
consist of expanded geological mapping, and geochemical sampling that will cover
previously established grid areas, as well as other prospective sites that may
be developed to delineate either base metals or industrial minerals.
Geochemical sampling will include rock, stream sediment and till sampling.
Several airborne electromagnetic anomalies will be re-verified on the ground and
mapped for size and extent. If Phase I develops any high priority targets for
further exploration, then we will proceed with Phase II of the proposed
exploration program, consisting of 800 to 1000 metres of diamond drilling,
mobilized to the nearest road by truck, then helicopter-supported from that
point. We anticipate that Phase I will cost approximately $26,680 while Phase
II would cost approximately $195,500. To date, we have not commenced
exploration on the White Bear Arm Property.
We expect that Phase I of our exploration program will be concluded by July 30,
2011. During Phase I we will retain a consulting geologist to review all past
exploration data relating to the White Bear Arm Property and plot relevant
information on a map. This is known as geological mapping. Based on this
mapping, the geologist will choose property areas that are most likely to host
economic mineralization. He will then conduct a sampling program focusing on
these property areas by gathering rock and soil samples from the identified
areas that appear to contain mineralization. The samples will be sent to a
laboratory for mineral analysis. By August 31, 2011, we should receive the
results of the sample analysis and be able to determine which property areas, if
any, contain significant mineralization.
If the results of Phase I warrant further exploration, we plan to complete Phase
II of the exploration program later in 2011, or during 2012. Phase II will take
approximately three months to complete and will consist of using heavy equipment
to drill up to five holes to a depth of 200 meters. Drilling locations will be
determined by analyzing the results of the Phase I sampling program. Cylinders
of rock will be removed from the drill holes and sent to a laboratory for
mineral analysis. Results will indicate the presence of any minerals below the
property surface.
We have sufficient capital to complete Phase I of our exploration program, but
we have insufficient funds to begin Phase II. The proceeds from this offering
will not be sufficient to fund Phase II. If Phase I of our exploration program
identifies high priority targets for further exploration in Phase II, then we
will be required to raise additional financing to fund Phase II. Subject to
financing, we expect to complete Phase II within 12 months of obtaining our
Phase I results.
We anticipate that any additional funding that we require will be in the form of
equity financing from the sale of our common stock. There is no assurance,
however, that we will be able to raise sufficient funding from the sale of our
common stock. The risky nature of this enterprise and lack of tangible assets
places debt financing beyond the credit-worthiness required by most banks or
typical investors of corporate debt until such time as an economically viable
mine can be demonstrated. We do not have any arrangements in place for any
future equity financing. If we are unable to secure additional funding, we may
cease or suspend operations. We have no plans, arrangements or contingencies in
place in the event that we cease operations.
Our sole officer and director has other outside business activities unrelated to
our business and will only be devoting approximately six hours per week of his
time to our business. We do not foresee this limited involvement as negatively
impacting our Company over the next 12 months because all exploratory work is
being performed by an outside consultant. If, however, the demands of our
business require more time of our sole officer, such as raising additional
capital or addressing unforeseen issues with regard to our exploration efforts,
he is prepared to adjust his timetable to devote more time to our business. He
may, however, not be able to devote sufficient time to the management of our
business, as and when needed.
We do not have any verbal or written agreement regarding the retention of any
qualified engineer or geologist for our exploration program.
We do not have plans to purchase any significant equipment or to hire any
employees during the next 12 months, or until we have proved reserves.
21
We have not earned revenue since inception and we presently have no proven or
probable mineral reserves. There is no assurance that our mineral claims
contain commercially exploitable reserves of valuable minerals. Since
inception, we have suffered recurring losses and net cash outflows from
operations, and our activities have been financed from the proceeds of share
subscriptions and loans from management and non-affiliated third parties. We
expect to continue to incur substantial losses to implement our business plan.
We have not established any other source of equity or debt financing and there
can be no assurance that we will be able to obtain sufficient funds to implement
our business plan. As a result of the foregoing, our auditors have expressed
substantial doubt about our ability to continue as a going concern. If we
cannot continue as a going concern, then our investors may lose all of their
investment.
RESULTS OF OPERATIONS
Our business is in the early stage of exploration. Since inception on June 27,
2005 we have not earned any revenue and we have not identified any commercially
exploitable reserves of valuable minerals on our property. We do not anticipate
earning revenue until such time as we have entered into commercial production of
the White Bear Arm Property. We are presently in the exploration stage of our
business and we can provide no assurance that we will discover commercially
exploitable reserves of valuable minerals on the White Bear Arm Property, or
that if such resources are discovered that we will commercially produce them.
YEAR ENDED AUGUST 31, 2010 COMPARED TO THE YEAR ENDED DECEMBER 31, 2009
We posted an operating loss of $27,180 for the fiscal year ended August 31,
2010, due to consulting fees of $12,336, professional fees of $11,258, office
expenses of $2,780 and other expenses of $806. This was a slight decrease from
the operating loss of $28,906 for the previous fiscal year.
QUARTER ENDED NOVEMBER 30, 2010 COMPARED TO THE QUARTER ENDED NOVEMBER 30, 2009
We posted an operating loss of $70,619 for the three month period ended November
30, 2010, due to professional fees of $46,515, consulting fees of $12,189,
resource acquisition costs of $9,705, interest expenses of $2,014 and other
miscellaneous expenses of $196. This was an increase from the operating loss of
$5,086 for the previous fiscal year.
LIQUIDITY AND CAPITAL RESOURCES
On August 30, 2010, we received a deposit of $50,000 from Thomas Mills with
respect to a private placement of 10,000,000 shares of our common stock to Mr.
Mills at a price of $0.005 per share (the "Private Placement"). The closing of
the Private Placement took place on September 22, 2010 with the execution of a
subscription agreement by Mr. Mills.
On August 31, 2010, we received a deposit of $50,000 with respect to a debt
financing by Moneris Capital LP that closed on September 21, 2010 with the
issuance by Castmor of a promissory note (the "Loan"). The Loan is due and
payable on September 21, 2011 and accrues interest from September 21, 2010 at
the rate of 20% per annum, calculated semi-annually, payable on the due date.
We may repay the Loan in whole or in part at any time prior to the due date. As
of November 30, 2010, the Loan has accrued $2,014 in interest. We have not made
any payment in respect of the Loan.
As of November 30, 2010, we had total assets of $61,995 comprised of $15,671 in
cash and $13,609 in prepaid expenses. This reflects a decrease of the value of
our total assets from $92,838 on August 31, 2010.
As of November 30, 2010, our total liabilities increased to $61,995 from $54,934
as of August 31, 2010. The increase was primarily due to unpaid professional
fees.
As a result of our recent financing activities, we have sufficient working
capital to maintain our present level of operations for the next 12 months and
to complete Phase I of our proposed exploration program, but not Phase II. We
will be required to seek additional funding in order to complete Phase II of our
exploration program.
We anticipate that any additional funding that we require will be in the form of
equity financing from the sale of our common stock. There is no assurance,
however, that we will be able to raise sufficient funding from the sale of our
common stock. The risky nature of this enterprise and lack of tangible assets
places debt financing beyond the credit-worthiness required by most banks or
typical investors of corporate debt until such time as an economically viable
mine can be demonstrated. We do not have any arrangements in place for any
future equity financing. If we are unable to secure additional funding, we may
cease or suspend operations. We have no plans, arrangements or contingencies in
place in the event that we cease operations.
LEGAL PROCEEDINGS
No director, person nominated to become a director, executive officer, promoter
or control person of our company has, during the last ten years: (i) been
convicted in or is currently subject to a pending a criminal proceeding
(excluding traffic violations and other minor offenses); (ii) been a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to any federal or state securities or banking or commodities
laws including, without limitation, in any way limiting involvement in any
business activity, or finding any violation with respect to such law, nor (iii)
any bankruptcy petition been filed by or against the business of which such
person was an executive officer or a general partner, whether at the time of the
bankruptcy or for the two years prior thereto.
22
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The following sets forth our directors, executive officers, promoters and
control persons, their ages, and all offices and positions held. Directors are
elected for a period of one year and thereafter serve until their successor is
duly elected by the shareholders. Officers and other employees serve at the
will of the Board of Directors.
--------------------------------------------------------------------------------
PERIOD SERVED AS
NAME POSITION AGE DIRECTOR/OFFICER
--------------------------------------------------------------------------------
Alfonso Quijada Chief Executive Officer, 39 2006 to present
President, Chief Financial Officer
and a director
================================================================================
Alfonso Quijada has served as a director of Castmor Resources Ltd. since 2006.
In 2010, he was appointed to the additional offices of President and Treasurer.
Mr. Quijada has raised millions of dollars for private and public companies,
including $1.8 million for Rhino Films and $2.5 million for an oil refinery in
Bulgaria. From 1994 through to 1998 he was the founder and president of New
World Artist Productions Inc., an international production company, focused
primarily on live-productions and music development in Japan. He was the VP of
Investor Relations for Tri-Gate Entertainment Inc. from 2000 to 2003. From 2002
to 2003, Mr. Quijada also headed up investor relations for TNR Gold Corp. Since
2003, he has served as an independent consultant, advising companies on
corporate development and finance. From 2007 to 2009, he was the President,
Chief Executive Officer and a director of Pickford Minerals, Inc. Ltd, an
exploration company having mineral interests in Labrador, Canada. Mr. Quijada
was a controlling shareholder of Castmor Resources Ltd. at the time of his
appointment as a director and officer of the company. His experience in
corporate development and finance is expected to benefit Castmor in its future
capital raising activities.
The mailing address for all our officers and directors is 427 Princess Street,
Suite 406, Kingston, ON K7L 5S9.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
During the past ten years none of our directors, executive officers, promoters
or control persons have:
(1) had any bankruptcy petition filed by or against any business of which
such person was a general partner or executive officer either at the time of the
bankruptcy or within two years prior to that time;
(2) been convicted in a criminal proceeding or subject to a pending criminal
proceeding;
(3) been subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise limiting
his involvement in any type of business, securities or banking activities; or
(4) been found by a court of competent jurisdiction in a civil action, the
Commission or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law, and the judgment has not been
reversed, suspended, or vacated.
COMMITTEES OF THE BOARD
All proceedings of the board of directors for the fiscal year ended August 31,
2010 were conducted by resolutions consented to in writing by our board of
directors and filed with the minutes of the proceedings of our board of
directors. Castmor does not have nominating, compensation or audit committees
or committees performing similar functions nor does our company have a written
nominating, compensation or audit committee charter. Our board of directors does
not believe that it is necessary to have such committees because it believes
that the functions of such committees can be adequately performed by the board
of directors.
Castmor does not have any defined policy or procedure requirements for
stockholders to submit recommendations or nominations for directors. The board
of directors believes that, given the stage of our development, a specific
nominating policy would be premature and of little assistance until our business
operations develop to a more advanced level. Our company does not currently have
any specific or minimum criteria for the election of nominees to the board of
directors and we do not have any specific process or procedure for evaluating
such nominees. The board of directors will assess all candidates, whether
submitted by management or stockholders, and make recommendations for election
or appointment.
23
A shareholder who wishes to communicate with our board of directors may do so by
directing a written request addressed to our President, Alfonso Quijada, at the
address appearing on the first page of this registration statement.
AUDIT COMMITTEE FINANCIAL EXPERT
We do not have a standing audit committee. Our directors perform the functions
usually designated to an audit committee. Our board of directors has determined
that we do not have a board member that qualifies as an "audit committee
financial expert" as defined in Item 407(d)(5) of Regulation S-K, nor do we have
a board member that qualifies as "independent" as the term is used in Item
7(d)(3)(iv)(B) of Schedule 14A under the Securities Exchange Act of 1934, as
amended, and as defined by Rule 4200(a)(14) of the NASD Rules.
We believe that our board of directors is capable of analyzing and evaluating
our financial statements and understanding internal controls and procedures for
financial reporting. Our board of directors does not believe that it is
necessary to have an audit committee because management believes that the
functions of an audit committee can be adequately performed by the board of
directors. In addition, we believe that retaining an independent director who
would qualify as an "audit committee financial expert" would be overly costly
and burdensome and is not warranted in our circumstances given the stage of our
development and the fact that we have not generated any positive cash flows from
operations to date.
As we generate revenue in the future, we intend to form a standing audit
committee and identify and appoint a financial expert to serve on our audit
committee.
INDEMNIFICATION
Under our Articles of Incorporation and bylaws of the corporation, we may
indemnify an officer or director who is made a party to any proceeding,
including a law suit, because of his position, if he acted in good faith and in
a manner he reasonably believed to be in our best interest. We may advance
expenses incurred in defending a proceeding. To the extent that the officer or
director is successful on the merits in a proceeding as to which he is to be
indemnified, we must indemnify him against all expenses incurred, including
attorney's fees. With respect to a derivative action, indemnity may be made only
for expenses actually and reasonably incurred in defending the proceeding, and
if the officer or director is judged liable, only by a court order. The
indemnification is intended to be to the fullest extent permitted by the laws of
the State of Nevada.
Regarding indemnification for liabilities arising under the Securities Act,
which may be permitted to directors or officers under Nevada law, we are
informed that, in the opinion of the SEC, indemnification is against public
policy, as expressed in the Securities Act and is, therefore, unenforceable.
EXECUTIVE COMPENSATION
To date we have no employees other than our sole officer and director. No
compensation has been awarded, earned or paid to our sole officer and director.
We have no employment agreements with our sole officer. We do not contemplate
entering into any employment agreements until such time as we have positive cash
flows from operations.
There is no arrangement pursuant to which any of our directors has been or is
compensated for services provided as one of our directors.
There are no stock option plans, retirement, pension, or profit sharing plans
for the benefit of our officers or directors. We do not have any long-term
incentive plans that provide compensation intended to serve as incentive for
performance.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of February 25, 2011, information concerning
ownership of the Company's securities by (i) each Director, (ii) each executive
officer, (iii) all directors and executive officers as a group; and (iv) each
person known to the Company to be the beneficial owner of more than five percent
of each class:
The number and percentage of shares beneficially owned includes any shares as to
which the named person has sole or shared voting power or investment power and
any shares that the named person has the right to acquire within 60 days.
24
----------------------------------------------------------------------------
Beneficial Ownership
Common Percentage
Name of Beneficial Owner Shares of class
----------------------------------------------------------------------------
Alfonso Quijada 1,800,000 14%
----------------------------------------------------------------------------
All directors and executive officers, as a group 1,800,000 14%
----------------------------------------------------------------------------
Thomas Mills 10,080,000 81%
----------------------------------------------------------------------------
All beneficial owners of more than 5% of
the Company's common stock, as a group 11,880,000 95%
============================================================================
The mailing address for all directors, executives officers and beneficial owners
of more than 5% of our common stock is 427 Princess Street, Suite 406, Kingston,
ON K7L 5S9.
Unless otherwise noted, we believe that all persons named in the table have sole
voting and investment power with respect to all shares of common stock
beneficially owned by them. For purposes hereof, a person is considered to be
the beneficial owner of securities that can be acquired by such person within 60
days from the date hereof, upon the exercise of warrants or options or the
conversion of convertible securities. Each beneficial owner's percentage
ownership is determined by assuming that any such warrants, options or
convertible securities that are held by such person (but not those held by any
other person) and which can be exercised within 60 days from the date hereof,
have been exercised.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On September 20, 2010, we acquired from Thomas Mills, a 100% interest in two
non-contiguous mineral exploration licenses (license numbers 017985M and
017987M) comprising 17 claims located along south-eastern coastal Labrador,
approximately 13 kilometers northeast of the community of Charlottetown in
Labrador, Canada, having a total area of 425 hectares (1,054.8 acres). We paid
Mr. Mills $10,000 for the licenses. Mr. Mills became our controlling
shareholder on September 22, 2010, when he purchased 10,000,000 shares of our
common stock for $50,000. The acquisition of the mineral claims from Mr. Mills
and his subsequent financing of the Company were not contingent upon one
another.
PLAN OF DISTRIBUTION
We are offering the right to subscribe for up to 20,000,000 shares of our common
stock at the offering price of $0.005 per share, subject to a 12,000,000 share
minimum. We are offering the shares on a self-underwritten, best-efforts basis
directly through our President and director, Alfonso Quijada, who will not
receive any commission or other remuneration of any kind for selling shares in
this offering, except for the reimbursement of actual out-of-pocket expenses
incurred in connection with the sale of the common stock.
In connection with his selling efforts in this offering, Mr. Quijada will not
register as broker-dealers pursuant to Section 15 of the Exchange Act, but
rather will rely upon the "safe harbor" provisions of Rule 3a4-1 under the
Exchange Act. Generally speaking, Rule 3a4-1 provides an exemption from the
broker-dealer registration requirements of the Exchange Act for persons
associated with an issuer that participate in an offering of the issuer's
securities. Mr. Quijada is not subject to any statutory disqualification, as
that term is defined in Section 3(a)(39) of the Exchange Act. Mr. Quijada will
not be compensated in connection with his participation in this offering by the
payment of commissions or other remuneration based either directly or indirectly
on transactions in our securities, except for the reimbursement of actual
out-of-pocket expenses incurred in connection with the sale of the common stock.
Mr. Quijada is not, and has not been within the past 12 months a broker or
dealer, or an associated person of a broker or dealer. At the end of this
offering, Mr. Quijada will continue to primarily perform substantial duties for
us or on our behalf otherwise than in connection with transactions in
securities. Mr. Quijada has not and will not participate in selling an offering
of securities of any issuer more than once every 12 months other than in
reliance on Exchange Act Rule 3a4-1(a)(4)(i) or (iii).
In connection with this offering, Mr. Quijada will restrict his participation to
the following activities:
1. preparing written communication and delivering such communication through
the mails or other means that does not involve oral solicitation by Mr. Quijada
of a potential purchaser;
2. responding to inquiries of a potential purchaser in a communication
initiated by the potential purchaser; the content of such responses being
limited to information contained in the registration statement on Form S-1 filed
under the Securities Act of 1933, of which this prospectus forms a part; and
25
3. performing ministerial and clerical work involved in effecting any
transaction.
Mr. Quijada will not purchase any of the offered common stock.
PENNY STOCK REGULATION
The SEC has adopted rules that regulate broker-dealer practices in connection
with transactions in penny stocks. Penny stocks are generally equity securities
with a price of less than $5.00 (other than securities registered on certain
national securities exchanges or quoted on the NASDAQ system, provided that
current price and volume information with respect to transactions in such
securities is provided by the exchange or system).
The penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from those rules, to deliver a standardized risk
disclosure document prepared by the SEC, that:
* contains a description of the nature and level of risk in the market for
penny stocks in both public offerings and secondary trading;
* contains a description of the broker's or dealer's duties to the customer
and of the rights and remedies available to the customer with respect to a
violation of such duties;
* contains a brief, clear, narrative description of a dealer market,
including "bid" and "ask" prices for penny stocks and the significance of
the spread between the bid and ask price;
* contains a toll-free telephone number for inquiries on disciplinary
actions;
* defines significant terms in the disclosure document or in the conduct of
trading penny stocks; and
* contains such other information and is in such form (including language,
type, size, and format) as the Commission shall require by rule or
regulation.
The broker-dealer also must provide the customer with the following, prior to
proceeding with any transaction in a penny stock:
* bid and offer quotations for the penny stock;
* details of the compensation of the broker-dealer and its salesperson in
the transaction;
* the number of shares to which such bid and ask prices apply, or other
comparable information relating to the depth and liquidity of the market
for such stock; and
* monthly account statements showing the market value of each penny stock
held in the customer's account.
In addition, the penny stock rules require that prior to a transaction in a
penny stock not otherwise exempt from those rules; the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitability statement.
These disclosure requirements will have the effect of reducing the trading
activity in the secondary market for our stock because it will be subject to
these penny stock rules. Therefore, stockholders may have difficulty selling
those securities.
TERMS OF SALE OF THE SHARES
This offering is being made on a best efforts basis. No subscriptions will be
accepted until the minimum offering is subscribed. Once accepted, subscriptions
are irrevocable and cannot be withdrawn by the subscriber. Proceeds from this
offering will not be deposited into an escrow, trust or similar account, but
will instead be deposited in a separate bank account under our name at the
Canadian Imperial Bank of Commerce of Toronto, Ontario, administered by our
board of directors. If the minimum offering is not completed within 90 days,
all funds will be promptly returned to subscribers without interest or
deductions. Subscriptions may be accepted or rejected for any reason or for no
reason. This offering will remain open until the earlier of the date that all
shares offered in this offering are sold and 120 days after the date of this
prospectus; provided that, the minimum subscription is sold within 90 days. We
may cease our selling efforts at any time for any reason whatsoever.
Any change in the material terms of this offering after the effective date of
this prospectus will terminate the original offer and will entitle any
subscribers to a refund of their investment. Material changes include the
following: an extension of the offering period beyond the 120 days currently
contemplated; a change in the offering price; a change in the minimum purchase
amount; a change to allow sales to affiliates in order to meet the minimum sales
requirement; a change in the minimum amount of proceeds required to release
funds from escrow; and, a change in the application of proceeds. If there is a
change in the material terms of this offering, any new offering may be made by
means of a post-effective amendment.
26
METHOD OF SUBSCRIBING
Persons may subscribe by filling in and signing the subscription agreement, and
delivering it, prior to the expiration date, to us. The subscription price of
$0.005 per share must be paid in cash or by check, bank draft or postal express
money order payable to our order.
EXPIRATION DATE
The offering will expire on the earlier of the date that all offered shares are
sold and 120 days after the date of this prospectus. We shall terminate the
offering 90 days from the date of this prospectus if we are unable to sell
12,000,000 of the offered shares during that period. There will be no extension
of the offering period. We may terminate the offering at any time for any
reason whatsoever.
DESCRIPTION OF CAPITAL STOCK
COMMON STOCK
We are authorized to issue up to 900,000,000 shares of common stock, par value
$0.0001 per share. Each outstanding share of common stock entitles the holder
thereof to one vote per share on all matters submitted to a stockholder vote.
Holders of our common stock do not have pre-emptive rights to purchase shares in
any future issuance of our common stock. Our common stock does not carry any
conversion rights and there are no redemption provisions.
Our common stock does not carry any cumulative voting rights. As a result,
holders of a majority of the shares of common stock voting for the election of
directors can elect all of our directors. At all meetings of stockholders,
except where otherwise provided by statute or by our Articles of Incorporation
or by our bylaws, the presence in person or by proxy duly authorized by holders
of not less than twenty percent (20%) of the outstanding shares of stock
entitled to vote shall constitute a quorum for the transaction of business. A
vote by the holders of a majority of our outstanding shares is required to
effect certain fundamental corporate changes such as liquidation, merger or an
amendment to our Articles of Incorporation.
Holders of our common stock are entitled to share in all dividends that the
board of directors, in its discretion, declares from legally available funds.
In the event of liquidation, dissolution or winding up, each outstanding share
entitles its holder to participate pro rata in all assets that remain after
payment of liabilities and after providing for each class of stock, if any,
having preference over the common stock. There are no provisions for a sinking
fund in respect of our common stock.
PREFERRED STOCK
We are authorized to issue up to 100,000,000 shares of preferred stock, par
value $0.0001 per share, in one or more classes or series as may be determined
by our board of directors, who may establish, from time to time, the number of
shares to be included in each series, may fix the designation, powers,
preferences and rights of the shares of each such series and any qualifications,
limitations or restrictions thereof. Any preferred stock so issued by the board
of directors may rank senior to the common stock with respect to the payment of
dividends or amounts upon liquidation, dissolution or winding up of us, or both.
Moreover, under certain circumstances, the issuance of preferred stock or the
existence of the unissued preferred stock might tend to discourage or render
more difficult a merger or other change of control.
No shares of our preferred stock are currently outstanding. The issuance of
shares of preferred stock, while providing desirable flexibility in connection
with possible acquisitions and other corporate purposes, could have the effect
of making it more difficult for a third party to acquire, or of discouraging a
third party from acquiring, a majority of our outstanding voting stock.
ANTI-TAKEOVER EFFECTS OF OUR ARTICLES OF INCORPORATION AND BYLAWS
Our Articles of Incorporation and bylaws contain certain provisions that may
have anti-takeover effects, making it more difficult for or preventing a third
party from acquiring control of Castmor or changing its board of directors and
management. According to our bylaws and Articles of Incorporation, neither the
holders of our common stock nor the holders of our preferred stock have
cumulative voting rights in the election of our directors. The combination of
the present ownership by a few stockholders of a significant portion of our
issued and outstanding common stock and lack of cumulative voting makes it more
difficult for other stockholders to replace our board of directors or for a
third party to obtain control of Castmor by replacing its board of directors.
27
NEVADA ANTI-TAKEOVER LAWS
BUSINESS COMBINATIONS
The "business combination" provisions of Sections 78.411 to 78.444, inclusive,
of the NRS, prohibit a Nevada corporation with at least 200 stockholders from
engaging in various "combination" transactions with any interested stockholder:
for a period of three years after the date of the transaction in which the
person became an interested stockholder, unless the transaction is approved by
the board of directors prior to the date the interested stockholder obtained
such status; or after the expiration of the three-year period, unless:
* the transaction is approved by the board of directors or a majority of the
voting power held by disinterested stockholders, or
* if the consideration to be paid by the interested stockholder is at least
equal to the highest of: (a) the highest price per share paid by the
interested stockholder within the three years immediately preceding the
date of the announcement of the combination or in the transaction in which
it became an interested stockholder, whichever is higher, (b) the market
value per share of common stock on the date of announcement of the
combination and the date the interested stockholder acquired the shares,
whichever is higher, or (c) for holders of preferred stock, the highest
liquidation value of the preferred stock, if it is higher.
A "combination" is defined to include mergers or consolidations or any sale,
lease exchange, mortgage, pledge, transfer or other disposition, in one
transaction or a series of transactions, with an "interested stockholder"
having: (a) an aggregate market value equal to 5% or more of the aggregate
market value of the assets of the corporation, (b) an aggregate market value
equal to 5% or more of the aggregate market value of all outstanding shares of
the corporation, or (c) 10% or more of the earning power or net income of the
corporation.
In general, an "interested stockholder" is a person who, together with
affiliates and associates, owns (or within three years, did own) 10% or more of
a corporation's voting stock. The statute could prohibit or delay mergers or
other takeover or change in control attempts and, accordingly, may discourage
attempts to acquire our company even though such a transaction may offer our
stockholders the opportunity to sell their stock at a price above the prevailing
market price.
CONTROL SHARE ACQUISITIONS.
The "control share" provisions of Sections 78.378 to 78.3793, inclusive, of the
NRS, which apply only to Nevada corporations with at least 200 stockholders,
including at least 100 stockholders of record who are Nevada residents, and
which conduct business directly or indirectly in Nevada, prohibit an acquirer,
under certain circumstances, from voting its shares of a target corporation's
stock after crossing certain ownership threshold percentages, unless the
acquirer obtains approval of the target corporation's disinterested
stockholders. The statute specifies three thresholds: one-fifth or more but less
than one-third, one-third but less than a majority, and a majority or more, of
the outstanding voting power. Once an acquirer crosses one of the above
thresholds, those shares in an offer or acquisition and acquired within 90 days
thereof become "control shares" and such control shares are deprived of the
right to vote until disinterested stockholders restore the right. These
provisions also provide that if control shares are accorded full voting rights
and the acquiring person has acquired a majority or more of all voting power,
all other stockholders who do not vote in favor of authorizing voting rights to
the control shares are entitled to demand payment for the fair value of their
shares in accordance with statutory procedures established for dissenters'
rights.
TRANSFER AGENT
Our transfer agent and registrar is Holladay Stock Transfer, Inc., located at
2939 North 67th Place, Scottsdale, Arizona 85251.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
Our directors and officers are indemnified as provided by the NRS, our Articles
of Incorporation and our bylaws. Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to our directors, officers and
controlling persons pursuant to our Articles of Incorporation or provisions of
the Nevada Business Corporations Act, or otherwise, we have been advised that in
the opinion of the SEC such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by us in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, we will, unless in the opinion of counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question, whether or not such indemnification by us
is against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
28
LEGAL MATTERS
The validity of the shares of common stock offered by us was passed upon by
Conrad C. Lysiak, Attorney and Counsellor at law in Spokane, Washington.
EXPERTS
Our financial statements as of August 31, 2010 appearing in this prospectus and
registration statement have been audited by Chang Lee LLP, Chartered
Accountants, an independent registered public accounting firm and are included
in reliance upon the report therein included, given on the authority of such
firm as experts in auditing and accounting.
No expert named in the offering statement, nor any partner, officer, director or
employee thereof, has a material interest in the issuer or any of its parents or
subsidiaries or was connected with the issuer or any of its subsidiaries as a
promoter, underwriter, voting trustee, director, officer or employee.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
In March 2008, we engaged the services of Chang Lee LLP (formerly Vellmer &
Chang) Chartered Accountants, of Vancouver, British Columbia, to provide an
audit of our financial statements for the period from June 27, 2005 (inception)
to August 31, 2007. This is our first auditor. We have no disagreements with our
auditor through the date of this prospectus.
AVAILABLE INFORMATION
We have filed a registration statement on Form S-1 under the Securities Act with
the SEC with respect to the shares of our common stock offered through this
prospectus. This prospectus is filed as a part of that registration statement
and does not contain all of the information contained in the registration
statement and exhibits. For a more complete description of matters involving
us, please refer to our registration statement and each exhibit attached to it.
Anyone may inspect the registration statement and exhibits and schedules filed
with the SEC at its principal office in Washington, D.C. Copies of all or any
part of the registration statement may be obtained from the Public Reference
Section of the Securities and Exchange Commission, 100 F Street, NE, Washington,
D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on
the operation of the public reference rooms. The SEC also maintains a web site
at http://www.sec.gov that contains reports, proxy statements and information
regarding registrants that file electronically with the SEC. In addition, we
will file electronic versions of our annual and quarterly reports on the SEC's
Electronic Data Gathering Analysis and Retrieval, or EDGAR System. Our
registration statement and the referenced exhibits can also be found on this
site as well as our quarterly and annual reports. We will not send the annual
report to our stockholders unless requested by the individual stockholders.
29
INDEX TO FINANCIAL STATEMENTS
CASTMOR RESOURCES LTD.
(AN EXPLORATION STAGE COMPANY)
Financial Statements for the Three Month Periods Ended November 30, 2010 and
2009 (Unaudited)
Balance Sheets F-2
Statements of Stockholders' Equity F-3
Statements of Operations F-4
Statements of Cash Flows F-5
Notes to Financial Statements F-6 thru F-10
Financial Statements for the Years Ended August 31, 2010 and 2009
Report of Independent Registered Public Accounting Firm F-11
Balance Sheets F-12
Statements of Stockholders' Equity F-13
Statements of Operations F-14
Statements of Cash Flows F-15
Notes to Financial Statements F-16 thru F-21
F-1
CASTMOR RESOURCES LTD.
(An exploration stage company)
Balance Sheets
November 30, 2010
(Unaudited - Prepared by Management)
(Expressed in U.S. Dollars)
------------------------------------------------------------------------------------------------------
November 30 August 31
2010 2010
------------------------------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 15,671 $ 29,032
Prepaid expenses 14,649 63,806
------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 30,320 $ 92,838
======================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities 9,981 4,934
Promissory note - current (Note 4) 52,014 -
------------------------------------------------------------------------------------------------------
61,995 4,934
LONG-TERM LIABILITIES
Promissory note (Note 4) - 50,000
------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 61,995 54,934
------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
SHARE CAPITAL
Authorized:
100,000,000 preferred shares at a par value of $0.0001 per share
Issued and outstanding: Nil
900,000,000 common shares with a par value of $0.0001 per share
Issued and outstanding: 12,487,000 common shares 1,249 249
(August 31, 2010: 2,487,000)
ADDITIONAL PAID-IN CAPITAL 128,631 79,631
SHARE SUBSCRIPTIONS RECEIVED - 50,000
(DEFICIT) ACCUMULATED DURING THE EXPLORATION STAGE (161,555) (91,976)
------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY (31,675) 37,904
------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 30,320 $ 92,838
======================================================================================================
The accompanying notes are an integral part of these financial statements.
F-2
CASTMOR RESOURCES LTD.
(An exploration stage company)
Statements of Stockholders' Equity
For the period from June 27, 2005 (inception) to November 30, 2010
(Unaudited - Prepared by Management)
(Expressed in U.S. Dollars)
------------------------------------------------------------------------------------------------------------------------------------
Deficit
accumulated Total
Additional Share during stockholders'
Preferred Stock Common Stock paid-in subscriptions exploration equity
Shares Amount Shares Amount capital received stage (deficiency)
Issuance of common stock for settlement - $ - 2,060,000 $ 206 $ 824 $ - $ - $ 1,030
of debt July 16, 2005 ($0.0001 per share)
Loss and comprehensive loss for the period - - - - - - (1,914) (1,914)
------------------------------------------------------------------------------------------------------------------------------------
Balance, August 31, 2005 - $ - 2,060,000 $ 206 $ 824 $ - $ (1,914) $ (884)
------------------------------------------------------------------------------------------------------------------------------------
Issuance of common stock for cash - $ - 150,000 $ 15 $ 14,985 $ - $ - $ 15,000
October 25, 2005 ($0.02 per share)
Issuance of common stock for settlement - $ - 36,000 $ 4 $ 3,596 $ - $ - $ 3,600
of debt October 31, 2005 ($0.02 per share)
Loss and comprehensive loss for the year - - - - - - (9,537) (9,537)
------------------------------------------------------------------------------------------------------------------------------------
Balance, August 31, 2006 - $ - 2,246,000 $ 225 $ 19,405 $ - $ (11,451) $ 8,179
------------------------------------------------------------------------------------------------------------------------------------
Loss and comprehensive loss for the year - - - - - - (5,404) (5,404)
------------------------------------------------------------------------------------------------------------------------------------
Balance, August 31, 2007 - $ - 2,246,000 $ 225 $ 19,405 $ - $ (16,855) $ 2,775
------------------------------------------------------------------------------------------------------------------------------------
Issuance of common stock for cash, - $ - 241,000 $ 24 $ 60,226 $ - $ - $ 60,250
November 30, 2007 ($0.05 per share)
Loss and comprehensive loss for the year - - - - - - (19,035) (19,035)
------------------------------------------------------------------------------------------------------------------------------------
Balance, August 31, 2008 - $ - 2,487,000 $ 249 $ 79,631 $ - $ (35,890) $ 43,990
------------------------------------------------------------------------------------------------------------------------------------
Loss and comprehensive loss for the year - - - - - - (28,906) (28,906)
------------------------------------------------------------------------------------------------------------------------------------
Balance, August 31, 2009 - $ - 2,487,000 $ 249 $ 79,631 $ - $ (64,796) $ 15,084
------------------------------------------------------------------------------------------------------------------------------------
Share subscriptions received - $ - - $ - $ - $ 50,000 $ - $ 50,000
Loss and comprehensive loss for the year - - - - - - (27,180) (27,180)
------------------------------------------------------------------------------------------------------------------------------------
Balance, August 31, 2010 - $ - 2,487,000 $ 249 $ 79,631 $ 50,000 $ (91,976) $ 37,904
------------------------------------------------------------------------------------------------------------------------------------
Issuance of common stock for cash, - $ - 10,000,000 $ 1,000 49,000 $ (50,000) $ - $ -
September 22, 2010 ($0.005 per share)
Loss and comprehensive loss for the period - - - - - - (69,579) (69,579)
------------------------------------------------------------------------------------------------------------------------------------
Balance, November 30, 2010 - $ - 12,487,000 $ 1,249 $ 128,631 $ - $ (161,555) $ (31,675)
====================================================================================================================================
The accompanying notes are an integral part of these financial statements
F-3
CASTMOR RESOURCES LTD.
(An exploration stage company)
Statements of Operations and Comprehensive Loss
(Unaudited - Prepared by Management)
(Expressed in U.S. Dollars)
-------------------------------------------------------------------------------------------------
Cumulative from
June 27, 2005 Three months ended
(inception) to November 30 November 30
November 30, 2010 2010 2009
-------------------------------------------------------------------------------------------------
EXPENSES
Bank charges $ 524 $ 86 $ 45
Consulting fees 24,847 11,148 -
Interest 4,350 2,014 -
Office expenses 9,915 36 -
Professional fees 96,787 46,515 5,041
Resource property acquisition and exploration costs 14,705 9,705 -
Transfer Expenses 2,358 75 -
Write-off mineral deposit 8,069 - -
-------------------------------------------------------------------------------------------------
LOSS FROM OPERATIONS 161,555 69,579 5,086
-------------------------------------------------------------------------------------------------
NET LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD $ (161,555) $ (69,579) $ (5,086)
-------------------------------------------------------------------------------------------------
BASIC AND DILUTED LOSS PER SHARE $ (0.01) $ (0.01)
=================================================================================================
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
- basic and diluted 10,095,696 2,487,000
=================================================================================================
The accompanying notes are an integral part of these financial statements
F-4
CASTMOR RESOURCES LTD.
(An exploration stage company)
Statements of Cash Flows
(Unaudited - Prepared by Management)
(Expressed in U.S. Dollars)
---------------------------------------------------------------------------------------------------------
Cumulative from
June 27, 2005
(inception) to Three months ended
November 30, 2010 November 30, 2010 November 30, 2009
---------------------------------------------------------------------------------------------------------
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES
Net (Loss) for the period $ (161,555) $ (69,579) $ (5,086)
Adjustment for item not involving cash:
- Accrued interest of promissory note 2,014 2,014 -
Changes in operating assets and liabilities
- increase (decrease) in prepaid expenses (14,649) 49,157 -
- accounts payable and accrued liabilities 9,981 5,047 4,925
---------------------------------------------------------------------------------------------------------
NET CASH USED IN OPERATING ACTIVITIES (164,209) (13,361) (161)
---------------------------------------------------------------------------------------------------------
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES
Proceeds from promissory note 50,000 - -
Proceeds from issuance of common stock 129,880 - -
---------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 179,880 - -
---------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 15,671 (13,361) (161)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD - 29,032 17,707
---------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 15,671 $ 15,671 $ 17,546
=========================================================================================================
SUPPLEMENTAL CASH FLOW INFORMATION
=========================================================================================================
Interest paid $ - $ - $ -
=========================================================================================================
Income taxes paid $ - $ - $ -
=========================================================================================================
The accompanying notes are an integral part of these financial statements
F-5
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Castmor Resources Ltd. (hereinafter "the Company") was incorporated in the State
of Nevada, U.S.A., on June 27, 2005. The Company's fiscal year end is August
31.
The Company has been in the exploration stage since its formation and has not
yet realized any revenues from its operations. It is primarily engaged in the
acquisition and exploration of mining properties. Upon location of a
commercially minable reserve, the Company expects to actively prepare the site
for its extraction and enter a development stage. In 2005, the Company acquired
mineral interests in two non-contiguous properties located along southeastern
coastal Labrador, approximately 13 kilometers northeast of the community of
Charlottetown, Labrador, Canada. In 2009, the Company's interest in these
mineral properties were forfeited. On September 20, 2010, the Company
reacquired its interest in the mineral properties.
Effective August 19, 2010, the Company effected a five (5) for one (1) share
reverse split of our authorized and issued and outstanding common stock. As a
result of the reverse split, the Company's issued and outstanding common stock
was reduced from 12,435,000 shares to 2,487,000 shares.
These financial statements have been prepared in accordance with generally
accepted accounting principles in the United States of America applicable to a
going concern which assume that the Company will realize its assets and
discharge its liabilities in the normal course of business. The Company has
incurred accumulated losses of $161,555 since inception and has no source of
revenue. The future of the Company is dependent upon its ability to obtain
financing and upon future acquisition. These factors create doubt as to the
ability of the Company to continue as a going concern. Realization values may
be substantially different from the carrying values as shown in these financial
statements should the Company be unable to continue as a going concern.
Management is in the process of identifying sources for additional financing to
fund the ongoing development of the Company's business.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Company have been prepared in accordance with
the generally accepted accounting principles in the United States of America.
Because a precise determination of many assets and liabilities is dependent upon
future events, the preparation of financial statements for a period necessarily
involves the use of estimates that have been made using careful judgment. The
financial statements have, in management's opinion been properly prepared within
reasonable limits of materiality and within the framework of the significant
accounting policies summarized below:
Accounting Method
The Company's financial statements are prepared using the accrual basis of
accounting in accordance with accounting principles generally accepted in the
United States of America.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all highly
liquid investments and short-term debt instruments with original maturities of
three months or less to be cash equivalents. As at November 30, 2010 and
August 31, 2010, there were no cash equivalents.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, and disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses for the reporting period. Actual
results could differ from these estimates.
F-6
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Concentration of Credit Risk
The Company places its cash and cash equivalents with high credit quality
financial institutions. There is no deposit insurance on the Company's
accounts.
Foreign Currency Transactions
The Company is located and operating outside of the United States of America.
The Company's functional currency and reporting currency, is U.S. Dollars. At
the transaction date, each asset, liability, revenue and expense is translated
into U.S. dollars by the use of the exchange rate in effect at that date. At
the period end, monetary assets and liabilities are re-measured by using the
exchange rate in effect at that date. The resulting foreign exchange gains and
losses are included in operations.
Fair Value of Financial Instruments
ASC 820 "Fair Value Measurements and Disclosures" requires an entity to maximize
the use of observable inputs and minimize the use of unobservable inputs when
measuring fair value. ASC 820 establishes a fair value hierarchy based on the
level of independent, objective evidence surrounding the inputs used to measure
fair value. A financial instrument's categorization within the fair value
hierarchy is based upon the lowest level of input that is significant to the
fair value measurement. ASC 820 prioritizes the inputs into three levels that
may be used to measure fair value:
Level 1 - Quoted prices in active markets for identical assets or liabilities;
Level 2 - Inputs other than quoted prices included within Level 1 that are
either directly or indirectly observable; and
Level 3 - Unobservable inputs that are supported by little or no market
activity, therefore requiring an entity to develop its own assumptions about the
assumptions that market participants would use in pricing.
The Company's financial instruments include cash and cash equivalents, accounts
payable and accrued liabilities and promissory notes. Fair values were assumed
to approximate carrying value for these financial instruments, except where
noted. Management is of the opinion that the Company is not exposed to
significant interest or credit risks arising from these financial instruments.
The Company is operating outside the United States of America and has
significant exposure to foreign currency risk due to the fluctuation of currency
in which the Company operates and U.S. dollars.
Mineral Property Payments and Exploration Costs
Mineral property acquisition costs are initially capitalized as tangible assets
when purchased. The Company assesses the carrying costs for impairment when
indicators of impairment exist. If proven and probable reserves are established
for a property and it has been determined that a mineral property can be
economically developed, costs will be amortized using the units-of-production
method over the estimated total recoverable proven and probable reserves..
Mineral property exploration and development costs are expensed as incurred
until the establishment of economically viable reserves.
Long-lived Assets Impairment
Long-lived assets of the Company are reviewed for impairment whenever events or
circumstances indicate that the carrying amount of assets may not be
recoverable, pursuant to guidance established in ASC 360, Property, Plant and
Equipment.
Management considers assets to be impaired if the carrying value exceeds the
future projected cash flows from related operations (undiscounted and without
interest charges). If impairment is deemed to exist, the assets will be written
down to fair value. Fair value is generally determined using a discounted cash
flow analysis.
F-7
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Assets Retirement Obligations
The Company has adopted ASC 410, Asset Retirement and Environmental Obligations,
which requires that the fair value of a liability for an asset retirement
obligation be recognized in the period in which it is incurred. ASC 410 requires
the Company to record a liability for the present value of the estimated site
restoration costs with corresponding increase to the carrying amount of the
related long-lived assets. The liability will be accreted and the asset will be
depreciated over the life of the related assets. Adjustments for changes
resulting from the passage of time and changes to either the timing or amount of
the original present value estimate underlying the obligation will be made. As
at November 30, 2010 and August 31, 2010, the Company does not have any asset
retirement obligations.
Costs associated with environmental remediation obligations will be accrued when
it is probable that such costs will be incurred and they can be reasonably
estimated.
Stock-Based Compensation
The Company adopted ASC 718, Compensation - Stock-Based Compensation, to account
for its stock options and similar equity instruments issued. Accordingly,
compensation costs attributable to stock options or similar equity instruments
granted are measured at the fair value at the grant date, and expensed over the
expected vesting period.
The Company did not grant any stock options during the periods ended November
30, 2010 and 2009.
Comprehensive Income
The Company adopted ASC 220, Comprehensive Income, which establishes standards
for reporting and display of comprehensive income, its components and
accumulated balances. The Company is disclosing this information on its
Statement of Stockholders' Equity. Comprehensive income comprises equity except
those resulting from investments by owners and distributions to owners. The
Company has no elements of "other comprehensive income" for the periods ended
November 30, 2010 and 2009.
Income Taxes
The Company has adopted ASC 740, Income Taxes, which requires the Company to
recognize deferred tax liabilities and assets for the expected future tax
consequences of events that have been recognized in the Company's financial
statements or tax returns using the liability method. Under this method,
deferred tax liabilities and assets are determined based on the temporary
differences between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect in the years in which the
differences are expected to reverse.
Basic and Diluted Loss Per Share
In accordance with ASC 260, Earnings Per Share, the basic loss per common share
is computed by dividing net loss available to common stockholders by the
weighted average number of common shares outstanding. Diluted loss per common
share is computed similar to basic loss per common share except that the
denominator is increased to include the number of additional common shares that
would be outstanding if the potential common shares had been issued and if the
additional common shares were dilutive.
New Accounting Pronouncements
In January 2010, the FASB issued an update to the Fair Value topic. This update
requires new disclosures for (1) transfers in and out of levels 1 and 2, and (2)
activity in level 3, by requiring the reconciliation to present separate
information about purchases, sales, issuance, and settlements. Also, this
update clarifies the disclosures related to the fair value of each class of
assets and liabilities and the input and valuation techniques for both recurring
and nonrecurring fair value measurements in levels 2 and 3. the effective date
for the disclosures and clarifications is for the interim and annual reporting
periods beginning after December 15, 2009 except for the disclosures about
purchases, sales, issuances and settlements, which is effective for fiscal years
beginning after December 15, 2010. This update is not expected to have a
material impact on the Company's financial statements.
F-8
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
New Accounting Pronouncements (continued)
In February 2010, the FASB issued ASC No. 2010-09, "Amendments to Certain
Recognition and Disclosure Requirements", which eliminates the requirement for
SEC filers to disclose the date through which an entity has evaluated subsequent
events. ASC No. 2010-09 is effective for its fiscal quarter beginning after 15
December 2010. The adoption of ASC No. 2010-09 is not expected to have a
material impact on the Company's financial statements ASU No. 2010-13 was issued
in April 2010, and clarified the classification of an employee share based
payment award with an exercise price denominated in the currency of a market in
which the underlying security trades. This ASU will be effective for the first
fiscal quarter beginning after December 15, 2010, with early adoption permitted.
The adoption of ASU No. 2010-13 is not expected to have a material impact on the
Company's financial statements.
Other accounting standards that have been issued or proposed by the FASB or
other standards-setting bodies that do not require adoption until a future date
are not expected to have a material impact on the Company's financial statements
upon adoption.
NOTE 3 - MINERAL PROPERTY INTEREST
On October 31, 2005 the Company acquired a 100% interest in two non-contiguous
mineral claims located along southeastern coastal Labrador, approximately 13
kilometers northeast of the community of Charlottetown, Labrador, Canada. The
claims were acquired from Mr. Thomas Mills for a consideration of $4,250 CAD
which covered an exploration program security deposit and staking and other
related costs of $401 (CAD$450) and $3,199 (CAD$3,800), respectively. The
Company expensed the staking and other related costs of $3,199 in connection
with the acquisition of the mineral claims.
One of the licenses comprising eight claims, was inadvertently allowed to expire
and was cancelled on January 24, 2007. The Company reacquired a 100% interest
in the same eight claims under a new mineral license by a Transfer of Mineral
Disposition dated July 16, 2007, from Mr. Thomas Mills, for $505 CAD. The
Company expensed the entire cost of reacquiring the mineral claims.
Up to August 31, 2009, the Company has paid $8,069 towards a security deposit on
its exploration program. The Company was required to incur total exploration
expenditures of CAD$13,500 for the above noted mineral claims before July 13,
2009. The Company failed to do so, or to pay any further deposit on exploration
activities with the mining division of Labrador Canada. As a result, the
Company has forfeited its mineral claims and wrote off the prepaid security
deposit in the amount of $8,069 in 2009.
On September 20, 2010, the Company reacquired a 100% interest in the same two
non-contiguous mineral claims that it originally acquired on October 31, 2005
and subsequently forfeited. These two non-contiguous mineral claims located
along southeastern coastal Labrador, approximately 13 kilometers northeast of
the community of Charlottetown, Labrador, Canada. The claims were acquired from
Mr. Thomas Mills for a cash consideration of $10,000. Mr. Mills became a
controlling shareholder of the Company on September 22, 2010.
NOTE 4 - PROMISSORY NOTE
On August 31, 2010, the Company received advances of $50,000 from a third party,
to whom the Company issued a promissory note for the same amount on September
21, 2011. The promissory note is due and payable on September 21, 2011 and
accrues interest from September 21, 2010 at the rate of 20% per annum,
calculated semi-annually, payable on the due date. The Company may redeem the
promissory note in whole or in part at any time prior to the due date. As of
November 31, 2010, the Company has made no repayment in respect of the
promissory note and accrued interest of $2,014.
NOTE 5 - RELATED PARTY TRANSACTIONS
See Note 3 and Note 6.
Included in the prepaid expenses as of November 30, 2010, the amount $2,400 was
prepaid to Moneris Corporate Services Ltd. ("Moneris"), a consulting firm
controlled by the mother of the major shareholder (after the private placement
on September 22, 2010).
Included in the accounts payable and accrued liabilities as of November 30,
2010, $1,229 (August 31, 2010 - $1,229) was due to Moneris and $2,000 (August
31, 2010 - $1,852) was due to the major shareholder for the advanced operating
expenses.
Included in the consulting expenses as of November 30, 2010, the amount $7,700
was incurred to Moneris.
F-9
NOTE 6 - PREFERRED AND COMMON STOCK
The Company has 100,000,000 shares of preferred stock authorized and none
issued.
The Company has 900,000,000 shares of common stock authorized, of which
12,487,000 shares are issued and outstanding. All shares of common stock are
non-assessable and non-cumulative, with no pre-emptive rights.
On September 22, 2010, the Company completed a private placement of 10,000,000
shares of the Company's common stock to Thomas Mills at a price of $0.005 per
share for gross proceeds of $50,000.
NOTE 7 - SEGMENT INFORMATION
The Company currently conducts all of its operations in Canada.
F-10
CHANG LEE LLP
Chartered Accountants
606-815 Hornby Street
Vancouver, B.C., V6Z 2E6
Tel: 604-687-3776
Fax: 604-688-3373
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
CASTMOR RESOURCES LTD.
(An exploration stage company)
We have audited the accompanying balance sheets of Castmor Resources Ltd. (an
exploration stage company) as at August 31, 2010 and 2009 and the related
statements of stockholders' equity, operations and comprehensive loss, and cash
flows for the years then ended and for the period from June 27, 2005 (date of
inception) to August 31, 2010. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform an audit to obtain reasonable assurance whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Company as at August 31,
2010 and 2009 and the results of its operations and its cash flows for the years
then ended and for the period from June 27, 2005 (date of inception) to August
31, 2010, in conformity with accounting principles generally accepted in the
United States of America.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 1 to the financial
statements, the Company incurred losses from operations since inception, has not
attained profitable operations and is dependent upon obtaining adequate
financing to fulfil its exploration activities. These factors 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.
Vancouver, Canada "Chang Lee LLP"
November 26, 2010 Chartered Accountants
F-11
CASTMOR RESOURCES LTD.
(An exploration stage company)
Balance Sheets
August 31, 2010
(Expressed in U.S. Dollars)
-------------------------------------------------------------------------------------------
August 31 August 31
2010 2009
-------------------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 29,032 $ 17,707
Prepaid expenses 63,806 -
-------------------------------------------------------------------------------------------
TOTAL ASSETS $ 92,838 $ 17,707
===========================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 4,934 $ 2,623
Long-term Liabilities
PROMISSORY NOTE (NOTE 4) 50,000 -
-------------------------------------------------------------------------------------------
TOTAL LIABILITIES 54,934 2,623
-------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
SHARE CAPITAL
Authorized:
100,000,000 preferred shares at a par value of $0.0001 per share
Issued and outstanding: Nil
900,000,000 common shares with a par value of $0.0001 per share
Issued and outstanding: 2,487,000 common shares 249 249
(August 31, 2009: 2,487,000)
ADDITIONAL PAID-IN CAPITAL 79,631 79,631
SHARE SUBSCRIPTIONS RECEIVED 50,000 -
(DEFICIT) ACCUMULATED DURING THE EXPLORATION STAGE (91,976) (64,796)
-------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 37,904 15,084
-------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 92,838 $ 17,707
===========================================================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
F-12
CASTMOR RESOURCES LTD.
(An exploration stage company)
Statements of Stockholders' Equity
For the period from June 27, 2005 (inception) to August 31, 2010
(Expressed in U.S. Dollars)
------------------------------------------------------------------------------------------------------------------------------------
Deficit
accumulated Total
Additional Share during stockholders'
Preferred Stock Common Stock paid-in subscriptions exploration equity
Shares Amount Shares Amount capital received stage (deficiency)
------------------------------------------------------------------------------------------------------------------------------------
Issuance of common stock for settlement
of debt July 16, 2005 ($0.0001 per share) - $ - 2,060,000 $ 206 $ 824 $ - $ - $ 1,030
Loss and comprehensive loss for the period - - - - - - (1,914) (1,914)
------------------------------------------------------------------------------------------------------------------------------------
Balance, August 31, 2005 - - 2,060,000 $ 206 $ 824 $ - $ (1,914) $ (884)
------------------------------------------------------------------------------------------------------------------------------------
Issuance of common stock for cash
October 25, 2005 ($0.02 per share) - $ - 150,000 $ 15 $ 14,985 $ - $ - $ 15,000
Issuance of common stock for settlement
of debt October 31, 2005 ($0.02 per share) - $ - 36,000 $ 4 $ 3,596 $ - $ - $ 3,600
Loss and comprehensive loss for the year - - - - - - (9,537) (9,537)
------------------------------------------------------------------------------------------------------------------------------------
Balance, August 31, 2006 - $ - 2,246,000 $ 225 $ 19,405 $ - $(11,451) $ 8,179
------------------------------------------------------------------------------------------------------------------------------------
Loss and comprehensive loss for the year - - - - - - (5,404) (5,404)
------------------------------------------------------------------------------------------------------------------------------------
Balance, August 31, 2007 - $ - 2,246,000 $ 225 $ 19,405 $ - $(16,855) $ 2,775
------------------------------------------------------------------------------------------------------------------------------------
Issuance of common stock for cash
November 30, 2007 ($0.05 per share) - $ - 241,000 $ 24 $ 60,226 $ - $ - $ 60,250
Loss and comprehensive loss for the year - - - - - - (5,404) (5,404)
------------------------------------------------------------------------------------------------------------------------------------
Balance, August 31, 2008 - $ - 2,487,000 $ 249 $ 79,631 $ - $(35,890) $ 43,990
------------------------------------------------------------------------------------------------------------------------------------
Loss and comprehensive loss for the year - - - - - - (28,906) (28,906)
------------------------------------------------------------------------------------------------------------------------------------
Balance, August 31, 2009 - $ - 2,487,000 $ 249 $ 79,631 $ - $(64,796) $ 15,084
------------------------------------------------------------------------------------------------------------------------------------
Share subscriptions received - $ - - $ - $ - $ 50,000 $ - $ 50,000
Loss and comprehensive loss for the year - - - - - - (27,180) (27,180)
------------------------------------------------------------------------------------------------------------------------------------
Balance, August 31, 2010 - $ - 2,487,000 $ 249 $ 79,631 $ 50,000 $(91,976) $ (37,904)
====================================================================================================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
F-13
CASTMOR RESOURCES LTD.
(A exploration stage company)
Statements of Operations and Comprehensive Loss
(Expressed in U.S. Dollars)
----------------------------------------------------------------------------------------------------------
Cumulative from
June 27, 2005
(inception) to Year ended Year ended
August 31, 2010 August 31, 2010 August 31, 2009
----------------------------------------------------------------------------------------------------------
EXPENSES
Bank charges $ 438 $ 121 $ 69
Consulting fees 13,699 12,336 965
Interest expense 2,336 - -
Office expenses 9,879 2,780 944
Professional fees 50,272 11,258 18,340
Resource property acquisition and exploration costs 5,000 - -
Transfer expenses 2,283 685 519
Write-off mineral deposit 8,069 - 8,069
----------------------------------------------------------------------------------------------------------
LOSS FROM OPERATIONS 91,976 27,180 28,906
----------------------------------------------------------------------------------------------------------
NET LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD $ (91,976) $ (27,180) $ (28,906)
----------------------------------------------------------------------------------------------------------
BASIC AND DILUTED LOSS PER SHARE $ (0.01) $ (0.01)
==========================================================================================================
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
- basic and diluted 2,487,000 2,487,000
==========================================================================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
F-14
CASTMOR RESOURCES LTD.
(An exploration stage company)
Statements of Cash Flows
(Expressed in U.S. Dollars)
------------------------------------------------------------------------------------------------------------------------
Cumulative from
June 27, 2005
(inception) to Year ended Year ended
Augusts 31, 2010 August 31, 2010 August 31, 2009
------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES
Net (Loss) for the period $ (91,976) $ (27,180) $ (28,906)
Changes in operating assets and liabilities
- (increase) decrease in prepaid expenses (63,806) (63,806) -
- (increase) decrease in security deposit - - 8,069
- increase (decrease) in accounts payable and accrued liabilities 4,934 2,311 (3,005)
------------------------------------------------------------------------------------------------------------------------
NET CASH (USED IN) OPERATING ACTIVITIES (150,848) (88,675) (23,842)
------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES
Proceeds from promissory note 50,000 50,000 -
Proceeds from share subscriptions received 50,000 50,000 -
Proceeds from issuance of common stock 79,880 - -
------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 179,880 100,000 -
------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 29,032 11,325 (23,842)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD - 17,707 41,549
------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 29,032 $ 29,032 $ 17,707
========================================================================================================================
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid $ 2,336 $ - $ -
========================================================================================================================
Income taxes paid $ - $ - $ -
========================================================================================================================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS
F-15
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Castmor Resources Ltd. (hereinafter "the Company") was incorporated in the
State of Nevada, U.S.A., on June 27, 2005. The Company's fiscal year end is
August
31.
The Company has been in the exploration stage since its formation and has not
yet realized any revenues from its operations. It is primarily engaged in the
acquisition and exploration of mining properties. Upon location of a
commercially minable reserve, the Company expects to actively prepare the site
for its extraction and enter a development stage. In 2005, the Company acquired
mineral interests in two non-contiguous properties located along southeastern
coastal Labrador, approximately 13 kilometers northeast of the community of
Charlottetown, Labrador, Canada. In 2009, the Company's interest in these
mineral properties were forfeited. On September 20, 2010, the Company reacquired
its interest in the mineral properties.
Effective August 19, 2010, the Company effected a five (5) for one (1) share
reverse split of our authorized and issued and outstanding common stock. As a
result of the reverse split, the Company's issued and outstanding common stock
was reduced from 12,435,000 shares to 2,487,000 shares.
These financial statements have been prepared in accordance with generally
accepted accounting principles in the United States of America applicable to a
going concern which assume that the Company will realize its assets and
discharge its liabilities in the normal course of business. The Company has
incurred accumulated losses of $91,976 since inception and has no source of
revenue. The future of the Company is dependent upon its ability to obtain
financing and upon future acquisition. These factors create doubt as to the
ability of the Company to continue as a going concern. Realization values may be
substantially different from the carrying values as shown in these financial
statements should the Company be unable to continue as a going concern.
Management is in the process of identifying sources for additional financing to
fund the ongoing development of the Company's business.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Company have been prepared in accordance with
the generally accepted accounting principles in the United States of America.
Because a precise determination of many assets and liabilities is dependent upon
future events, the preparation of financial statements for a period necessarily
involves the use of estimates that have been made using careful judgment. The
financial statements have, in management's opinion been properly prepared within
reasonable limits of materiality and within the framework of the significant
accounting policies summarized below:
Accounting Method
The Company's financial statements are prepared using the accrual basis of
accounting in accordance with accounting principles generally accepted in the
United States of America.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all highly
liquid investments and short-term debt instruments with original maturities of
three months or less to be cash equivalents. As at August 31, 2010 and 2009,
there were no cash equivalents.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, and disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses for the reporting period. Actual
results could differ from these estimates.
Concentration of Credit Risk
The Company places its cash and cash equivalents with high credit quality
financial institutions. There is no deposit insurance on the Company's accounts.
Foreign Currency Transactions
The Company is located and operating outside of the United States of America.
The Company's functional currency and reporting currency, is U.S. Dollars. At
the transaction date, each asset, liability, revenue and expense is translated
into U.S. dollars by the use of the exchange rate in effect at that date. At the
period end, monetary assets and liabilities are re-measured by using the
exchange rate in effect at that date. The resulting foreign exchange gains and
losses are included in operations.
F-16
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Fair Value of Financial Instruments
ASC 820 "Fair Value Measurements and Disclosures" requires an entity to maximize
the use of observable inputs and minimize the use of unobservable inputs when
measuring fair value. ASC 820 establishes a fair value hierarchy based on the
level of independent, objective evidence surrounding the inputs used to measure
fair value. A financial instrument's categorization within the fair value
hierarchy is based upon the lowest level of input that is significant to the
fair value measurement. ASC 820 prioritizes the inputs into three levels that
may be used to measure fair value:
Level 1 - Quoted prices in active markets for identical assets or liabilities;
Level 2 - Inputs other than quoted prices included within Level 1 that are
either directly or indirectly observable; and
Level 3 - Unobservable inputs that are supported by little or no market
activity, therefore requiring an entity to develop its own assumptions about the
assumptions that market participants would use in pricing.
The Company's financial instruments include cash and cash equivalents, accounts
payable and accrued liabilities and promissory notes. Fair values were assumed
to approximate carrying value for these financial instruments, except where
noted. Management is of the opinion that the Company is not exposed to
significant interest or credit risks arising from these financial instruments.
The Company is operating outside the United States of America and has
significant exposure to foreign currency risk due to the fluctuation of currency
in which the Company operates and U.S. dollars.
Mineral Property Payments and Exploration Costs
Mineral property acquisition costs are initially capitalized as tangible assets
when purchased. The Company assesses the carrying costs for impairment when
indicators of impairment exist. If proven and probable reserves are established
for a property and it has been determined that a mineral property can be
economically developed, costs will be amortized using the units-of-production
method over the estimated life of the proven and probable reserves.
Mineral property exploration and development costs are expensed as incurred
until the establishment of economically viable reserves.
Long-lived Assets Impairment
Long-lived assets of the Company are reviewed for impairment whenever events or
circumstances indicate that the carrying amount of assets may not be
recoverable, pursuant to guidance established in ASC 360, Property, Plant and
Equipment.
Management considers assets to be impaired if the carrying value exceeds the
future projected cash flows from related operations (undiscounted and without
interest charges). If impairment is deemed to exist, the assets will be written
down to fair value. Fair value is generally determined using a discounted cash
flow analysis.
Assets Retirement Obligations
The Company has adopted ASC 410, Asset Retirement and Environmental Obligations,
which requires that the fair value of a liability for an asset retirement
obligation be recognized in the period in which it is incurred. ASC 410 requires
the Company to record a liability for the present value of the estimated site
restoration costs with corresponding increase to the carrying amount of the
related long-lived assets. The liability will be accreted and the asset will be
depreciated over the life of the related assets. Adjustments for changes
resulting from the passage of time and changes to either the timing or amount of
the original present value estimate underlying the obligation will be made. As
at August 31, 2010 and 2009, the Company does not have any asset retirement
obligations.
Costs associated with environmental remediation obligations will be accrued when
it is probable that such costs will be incurred and they can be reasonably
estimated.
Stock-Based Compensation
The Company adopted ASC 718, Compensation - Stock-Based Compensation, to account
for its stock options and similar equity instruments issued. Accordingly,
compensation costs attributable to stock options or similar equity instruments
granted are measured at the fair value at the grant date, and expensed over the
expected vesting period.
The Company did not grant any stock options during the period ended August 31,
2010 and 2009.
F-17
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Comprehensive Income
The Company adopted ASC 220, Comprehensive Income, which establishes standards
for reporting and display of comprehensive income, its components and
accumulated balances. The Company is disclosing this information on its
Statement of Stockholders' Equity. Comprehensive income comprises equity except
those resulting from investments by owners and distributions to owners. The
Company has no elements of "other comprehensive income" for the years ended
August 31, 2010 and 2009.
Income Taxes
The Company has adopted ASC 740, Income Taxes, which requires the Company to
recognize deferred tax liabilities and assets for the expected future tax
consequences of events that have been recognized in the Company's financial
statements or tax returns using the liability method. Under this method,
deferred tax liabilities and assets are determined based on the temporary
differences between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect in the years in which the
differences are expected to reverse.
Basic and Diluted Loss Per Share
In accordance with ASC 260, Earnings Per Share, the basic loss per common share
is computed by dividing net loss available to common stockholders by the
weighted average number of common shares outstanding. Diluted loss per common
share is computed similar to basic loss per common share except that the
denominator is increased to include the number of additional common shares that
would be outstanding if the potential common shares had been issued and if the
additional common shares were dilutive.
New Accounting Pronouncements
In April 2009, the FASB issued an update to ASC 820, "Fair Value Measurements
and Disclosures", relating to providing guidance on when the volume and level of
activity for the asset or liabilities have significantly decreased and
identifying transactions that are not orderly. The update clarifies the
methodology to be used to determine fair value when there is no active market or
where the price inputs being used represent distressed sales. The update also
affirms the objective of fair value measurement, as stated in ASC 820, which is
to reflect how much an asset would be sold in an orderly transaction, and the
need to use judgment to determine if a formerly active market has become
inactive, as well as to determine fair values when markets have become inactive.
The Company adopted this Statement in the current fiscal year without
significant financial impact.
In April 2009, the FASB issued an update to ASC 825, "Financial Instruments", to
require interim disclosures about the fair value of financial instruments. This
update enhances consistency in financial reporting by increasing the frequency
of fair value disclosures of those assets and liabilities falling within the
scope of ASC 825. The Company adopted this update in the current fiscal year
without significant impact to the financial statements.
In April 2009, ASC 320, "Investments - Debt and Equity", amends current
other-than-temporary guidance for debt securities through increased consistency
in the timing of impairment recognition and enhanced disclosures related to
credit and noncredit components impaired debt securities that are not expected
to be sold. Also, the Statement increases disclosures for both debt and equity
securities regarding expected cash flows, securities with unrealized losses and
credit losses. The Company adopted this Statement in the current fiscal year
without significant impact to the financial statements.
In April 2009, the FASB issued an update to ASC 805, "Business Combinations",
that clarifies and amends ASC 805, as it applies to all assets acquired and
liabilities assumed in a business combination that arise from contingencies.
This update addresses initial recognition and measurement issues, subsequent
measurement and accounting, and disclosures regarding these assets and
liabilities arising from contingencies in a business combination. The Company
adopted this Statement in the current fiscal year without significant impact to
the financial statements.
In May 2009, the FASB issued ASC 855, "Subsequent Events". This Statement
addresses accounting for and disclosure of events that occur after the balance
sheet date but before financial statements are issued or available to be issued.
ASC 855 requires disclosure of the date through which an entity has evaluated
subsequent events and the basis for that date, the date issued or date available
to be issued. The Company adopted this Statement in the current fiscal year.
F-18
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
New Accounting Pronouncements (continued)
In June 2009, the FASB issued ASC 860, "Transfers and Servicing". This Standard
eliminates the concept of a qualifying special purpose entity ("QSPE") and
modifies the derecognition provisions in Statement of Financial Accounting
Standards No. 140. This statement is effective for financial asset transfers
occurring after the beginning of an entity's first fiscal year that begins after
November 15, 2009. Early application is prohibited. The Company does not
anticipate any significant financial impact from adoption of ASC 860.
On July 1, 2009, the FASB officially launched the FASB ASC 105, "Generally
Accepted Accounting Principles", which established the FASB Accounting Standards
Codification ("the Codification"), as the single official source of
authoritative, nongovernmental, US GAAP, in addition to guidance issued by the
Securities and Exchange Commission. The Codification is designed to simplify US
GAAP into a single, topically ordered structure. All guidance contained in the
Codification carries an equal level of authority. The Codification is effective
for interim and annual periods ending after September 15, 2009. Accordingly,
the Company refers to the Codification in respect of the appropriate accounting
standards throughout this document as "ASC". Implementation of the Codification
did not have any impact on the Company's financial statements.
In August 2009, the FASB issued Accounting Standards Update ("ASU") No. 2009-05,
"Fair Value Measurements and Disclosures (Topic 820 - Measuring Liabilities at
Fair Value)". This ASU clarifies the fair market value measurement of
liabilities. In circumstances where a quoted price in an active market for the
identical liability is not available, a reporting entity is required to measure
fair value using one or more of the following techniques: a technique that uses
quoted price of the identical or a similar liability or liabilities when traded
as an asset or assets, or another valuation technique that is consistent with
the principles of Topic 820 such as an income or market approach. ASU No.
2009-05 was effective upon issuance and it did not result in any significant
financial impact on the Company upon adoption.
In September 2009, the FASB issued ASU No. 2009-12, "Fair Value Measurements and
Disclosures (Topic 820) - Investments in Certain Entities That Calculate Net
Asset Value Per Share (or its equivalent)". This ASU permits use of a practical
expedient, with appropriate disclosures, when measuring the fair value of an
alternative investment that does not have a readily determinable fair value.
ASU No. 2009-12 is effective for interim and annual periods ending after
December 15, 2009, with early application permitted. Since the Company does not
currently have any such investments, it does not anticipate any impact on its
financial statements upon adoption.
In January 2010, the FASB issued an update to the Fair Value topic. This update
requires new disclosures for (1) transfers in and out of levels 1 and 2, and (2)
activity in level 3, by requiring the reconciliation to present separate
information about purchases, sales, issuance, and settlements. Also, this
update clarifies the disclosures related to the fair value of each class of
assets and liabilities and the input and valuation techniques for both recurring
and nonrecurring fair value measurements in levels 2 and 3. the effective date
for the disclosures and clarifications is for the interim and annual reporting
periods beginning after December 15, 2009 except for the disclosures about
purchases, sales, issuances and settlements, which is effective for fiscal years
beginning after December 15, 2010. This update is not expected to have a
material impact on the Company's financial statements.
In January 2010, the FASB issued Accounting Standards Update 2010-01, Equity
(Topic 505): Accounting for Distributions to Shareholders with Components of
Stock and Cash (A Consensus of the FASB Emerging Issues Task Force). This
amendment to Topic 505 clarifies the stock portion of a distribution to
shareholders that allows them to elect to receive cash or stock with a limit on
the amount of cash that will be distributed is not a stock dividend for purposes
of applying Topics 505 and 260. Effective for interim and annual periods ending
on or after December 15, 2009, and would be applied on a retrospective basis.
The Company does not expect the provisions of ASU 2010-01 to have a material
effect on the financial position, results of operations or cash flows of the
Company.
In January 2010, the FASB issued Accounting Standards Update 2010-02,
Consolidation (Topic 810): Accounting and Reporting for Decreases in Ownership
of a Subsidiary. This amendment to Topic 810 clarifies, but does not change, the
scope of current US GAAP. It clarifies the decrease in ownership provisions of
Subtopic 810-10 and removes the potential conflict between guidance in that
Subtopic and asset derecognition and gain or loss recognition guidance that may
exist in other US GAAP. An entity will be required to follow the amended
guidance beginning in the period that it first adopts FAS 160 (now included in
Subtopic 810-10). For those entities that have already adopted FAS 160, the
amendments are effective at the beginning of the first interim or annual
reporting period ending on or after December 15, 2009. The amendments should be
applied retrospectively to the first period that an entity adopted FAS 160. The
Company does not expect the provisions of ASU 2010-02 to have a material effect
on the financial position, results of operations or cash flows of the Company.
F-19
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
New Accounting Pronouncements (continued)
In February 2010, the FASB issued ASC No. 2010-09, "Amendments to Certain
Recognition and Disclosure Requirements", which eliminates the requirement for
SEC filers to disclose the date through which an entity has evaluated subsequent
events. ASC No. 2010-09 is effective for its fiscal quarter beginning after 15
December 2010. The adoption of ASC No. 2010-09 is not expected to have a
material impact on the Company's financial statements ASU No. 2010-13 was issued
in April 2010, and clarified the classification of an employee share based
payment award with an exercise price denominated in the currency of a market in
which the underlying security trades. This ASU will be effective for the first
fiscal quarter beginning after December 15, 2010, with early adoption permitted.
The adoption of ASU No. 2010-13 is not expected to have a material impact on the
Company's financial statements.
Other accounting standards that have been issued or proposed by the FASB or
other standards-setting bodies that do not require adoption until a future date
are not expected to have a material impact on the Company's financial statements
upon adoption.
NOTE 3 - MINERAL PROPERTY INTEREST
On October 31, 2005 the Company acquired a 100% interest in two non-contiguous
mineral claims located along southeastern coastal Labrador, approximately 13
kilometers northeast of the community of Charlottetown, Labrador, Canada. The
claims were acquired from Mr. Thomas Mills for a consideration of $4,250 CAD
which covered an exploration program security deposit and staking and other
related costs of $401 (CAD$450) and $3,199 (CAD$3,800), respectively. The
Company expensed the staking and other related costs of $3,199 in connection
with the acquisition of the mineral claims.
One of the licenses comprising eight claims, was inadvertently allowed to expire
and was cancelled on January 24, 2007. The Company reacquired a 100% interest
in the same eight claims under a new mineral license by a Transfer of Mineral
Disposition dated July 16, 2007, from Mr. Thomas Mills, for $505 CAD. The
Company expensed the entire cost of reacquiring the mineral claims.
Up to August 31, 2009, the Company has paid $8,069 towards a security deposit on
its exploration program. The Company was required to incur total exploration
expenditures of CAD$13,500 for the above noted mineral claims before July 13,
2009. The Company failed to do so, or to pay any further deposit on exploration
activities with the mining division of Labrador Canada. As a result, the
Company has forfeited its mineral claims and wrote off the prepaid security
deposit in the amount of $8,069 in 2009.
On September 20, 2010, the Company reacquired a 100% interest in the same two
non-contiguous mineral claims that it originally acquired on October 31, 2005
and subsequently forfeited. These two non-contiguous mineral claims located
along southeastern coastal Labrador, approximately 13 kilometers northeast of
the community of Charlottetown, Labrador, Canada. The claims were acquired from
Mr. Thomas Mills for a cash consideration of $10,000. Mr. Mills became a
controlling shareholder of the Company on September 22, 2010.
NOTE 4 - PROMISSORY NOTE
On August 31, 2010, the Company received advances of $50,000 from a third party,
to whom the Company issued a promissory note for the same amount on September
21, 2011. The promissory note is due and payable on September 21, 2011 and
accrues interest from September 21, 2010 at the rate of 20% per annum,
calculated semi-annually, payable on the due date. The Company may redeem the
promissory note in whole or in part at any time prior to the due date. As of
August 31, 2010, the Company has made no repayment in respect of the promissory
note.
NOTE 5 - RELATED PARTY TRANSACTIONS
See Note 3 and Note 9.
Included in the prepaid expenses as of August 31, 2010, $10,100 was prepaid to
Moneris Corporate Services Ltd. ("Moneris"), a consulting firm controlled by the
mother of the major shareholder (after the private placement on September 22,
2010).
Included in the accounts payable and accrued liabilities as of August 31, 2010,
$1,229 (September 30, 2009 - $1,229) was due to Moneris and $1,852 (September
30, 2009 - $280) was due to the major shareholder for the advanced operating
expenses.
F-20
NOTE 6 - PREFERRED AND COMMON STOCK
The Company has 100,000,000 shares of preferred stock authorized and none
issued.
The Company has 900,000,000 shares of common stock authorized, of which
2,487,000 shares are issued and outstanding. All shares of common stock are
non-assessable and non-cumulative, with no pre-emptive rights.
NOTE 7 - INCOME TAXES
At August 31, 2010, the Company had deferred tax assets of approximately $32,200
principally arising from net operating loss carryforwards for income tax
purposes. As our management cannot determine that it is more likely than not
that we will realize the benefit of the deferred tax asset, a valuation
allowance equal to the deferred tax asset has been established at August 31,
2010. A reconciliation of income taxes at statutory rates with the reported
taxes is as follows:
-------------------------------------------------------------------------------
August 31, 2010 August 31, 2009
-------------------------------------------------------------------------------
Net loss before income taxes $ 27,180 $ 28,905
Income tax recovery at statutory rates of 35% 9,513 10,117
Unrecognized benefits of non-capital losses (9,513) (10,117)
Total income tax recovery $ - $ -
-------------------------------------------------------------------------------
The significant components of the deferred tax asset at August 31, 2010 and 2009
were as follows:
-------------------------------------------------------------------------------
August 31, 2010 August 31, 2009
-------------------------------------------------------------------------------
Net operating loss carryforwards $ 32,200 $ 22,700
Valuation allowance (32,200) (22,700)
Net deferred tax asset $ - $ -
-------------------------------------------------------------------------------
At August 31, 2010, we had net operating loss carryforwards of approximately
$92,000, which expire in the year 2026 through 2030.
NOTE 8 - SEGMENT INFORMATION
The Company currently conducts all of its operations in Canada.
NOTE 9 - SUBSEQUENT EVENTS
See Note 3.
On September 22, 2010, the Company completed a private placement of 10,000,000
shares of the Company's common stock to Thomas Mills at a price of $0.005 per
share for gross proceeds of $50,000.
F-21
20,000,000 SHARES
CASTMOR RESOURCES LTD.
COMMON STOCK
PROSPECTUS
We have not authorized any dealer, salesperson or other person to give anyone
written information other than this prospectus or to make representations as to
matters not stated in this prospectus. Prospective investors must not rely on
unauthorized information. This prospectus is not an offer to sell these
securities or a solicitation of an offer to buy the securities in any
jurisdiction where that would not be permitted or legal. Neither the delivery
of this prospectus nor any sales made hereunder after the date of this
prospectus shall create an implication that either the information contained
herein or the affairs of Novagen Solar Inc. have not changed since the date
hereof.
Until ______________, all dealers that effect transactions in these securities,
whether or not participating in this offering, may be required to deliver a
prospectus. This is in addition to the dealers' obligation to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
PART II
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated costs and expenses we will pay in
connection with the offering described in this registration statement:
------------------------------------
Amount
------------------------------------
Accounting fees and expenses 2,500
Legal fees and expenses 2,500
------------------------------------
Total $5,000
------------------------------------
All expenses are estimated.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Nevada law provides for discretionary indemnification for each person who serves
as one of our directors or officers. We may indemnify such individuals against
all costs, expenses and liabilities incurred in a threatened, pending or
completed action, suit or proceeding brought because such individual is one of
our officers or directors. Such individual must have conducted himself in good
faith and reasonably believed that his conduct was in, or not opposed to, our
best interests. In a criminal action, he must not have had a reasonable cause
to believe his conduct was unlawful.
Article Twelfth of our Articles of Incorporation states that no director or
officer of the Corporation shall be personally liable to the Corporation or any
of its stockholders for damages for breach of fiduciary duty as a director or
officer involving any act or omission of any such director or officer; provided,
however, that the foregoing provision shall not eliminate or limit the liability
of a director or officer (i) for acts or omissions which involve intentional
misconduct, fraud or a knowing violation of law, or (ii) the payment of
dividends in violation of Section 78.300 of the NRS. Any repeal or modification
of this Article by the stockholders of the Corporation shall be prospective
only, and shall not adversely affect any limitation on the personal liability of
a director or officer of the Corporation for acts or omissions prior to such
repeal or modification.
Our bylaws provide the following indemnification under Article VI:
01. INDEMNIFICATION. The Corporation shall indemnify any person who was or
is a party or is threatened to be made a party to any proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation) by reason of the fact that such person is or was a
director, trustee, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, trustee, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees), judgment, fines
and amounts paid in settlement actually and reasonably incurred by such person
in connection with such action, suit or proceeding if such person acted in good
faith and in a manner such person reasonably believed to be in or not opposed to
the best interests of the Corporation, and with respect to any criminal action
or proceeding, had no reasonable cause to believe such person's conduct was
unlawful. The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which such person reasonably believed to be in or not
opposed to the best interests of the Corporation, and with respect to any
criminal action proceeding, had reasonable cause to believe that such person's
conduct was unlawful.
02. DERIVATIVE ACTION. The Corporation shall indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Corporation to procure a
judgment in the Corporation's favor by reason of the fact that such person is or
was a director, trustee, officer, employee or agent of the Corporation, or is or
was serving at the request of the Corporation as a director, trustee, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorney's fees) and amount paid
in settlement actually and reasonably incurred by such person in connection with
the defense or settlement of such action or suit if such person acted in good
faith and in a manner such person reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to amounts paid in
settlement, the settlement of the suit or action was in the best interests of
the Corporation; provided, however, that no indemnification shall be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable for gross negligence or willful misconduct in the
performance of such person's duty to the Corporation unless and only to the
extent that, the court in which such action or suit was brought shall determine
upon application that, despite circumstances of the case, such person is fairly
and reasonably entitled to indemnity for such expenses as such court shall deem
proper. The termination of any action or suit by judgment or settlement shall
not, of itself, create a presumption that the person did not act in good faith
and in a manner which such person reasonably believed to be in or not opposed to
the best interests of the Corporation.
II-1
03. SUCCESSFUL DEFENSE. To the extent that a director, trustee, officer,
employee or agent of the Corporation has been successful on the merits or
otherwise, in whole or in part in defense of any action, suit or proceeding
referred to in Sections 01 or 02 of this Article, or in defense of any claim,
issue or matter therein, such person shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by such person in
connection therewith.
04. AUTHORIZATION. Any indemnification under Sections 01 and 02 of this
Article (unless ordered by a court) shall be made by the Corporation only as
authorized in the specific case upon a determination that indemnification of the
director, trustee, officer, employee or agent is proper in the circumstances
because such person has met the applicable standard of conduct set forth in
Sections 01 and 02 of this Article. Such determination shall be made (a) by the
Board of Directors of the Corporation by a majority vote of a quorum consisting
of directors who were not parties to such action, suit or proceeding, or (b) is
such a quorum is not obtainable, by a majority vote of the directors who were
not parties to such action, suit or proceeding, or (c) by independent legal
counsel (selected by one or more of the directors, whether or not a quorum and
whether or not disinterested) in a written opinion, or (d) by the stockholders.
Anyone making such a determination under this Section 04 may determine that a
person has met the standards therein set forth as to some claims, issues or
matters but not as to others, and may reasonably prorate amounts to be paid as
indemnification.
05. ADVANCES. Expenses incurred in defending civil or criminal action, suit
or proceeding shall be paid by the Corporation, at any time or from time to time
in advance of the final disposition of such action, suit or proceeding as
authorized in the manner provided in Section 04 of this Article upon receipt of
an undertaking by or on behalf of the director, trustee, officer, employee or
agent to repay such amount unless it shall ultimately be by the Corporation as
authorized in this Section.
06. NONEXCLUSIVITY. The indemnification provided in this Article shall not
be deemed exclusive of any other rights to which those indemnified may be
entitled under any law, bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in such person's official capacity and
as to action in another capacity while holding such office, and shall continue
as to a person who has ceased to be a director, trustee, officer, employee or
agent and shall inure to the benefit of the heirs, executors, and administrators
of such a person.
07. INSURANCE. The Corporation shall have the power to purchase and
maintain insurance on behalf of any person who is or was a director, trustee,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, trustee, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against any liability assessed against such person in any such capacity or
arising out of such person's status as such, whether or not the Corporation
would have the power to indemnify such person against such liability.
08. FURTHER BYLAWS. The Board of Directors may from time to time adopt
further bylaws with specific respect to indemnification and may amend these and
such bylaws to provide at all times the fullest indemnification permitted by the
Nevada Revised Statutes.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
On September 22, 2010, we issued 10,000,000 shares of our common stock at a
price of $0.005 per share to one purchaser for total cash proceeds of $50,000.
The shares were issued without registration in reliance on an exemption provided
by Rule 903(b)(3) of Regulation S promulgated under the Securities Act. No
general solicitation was made in connection with the offer or sale of these
securities.
ITEM 16. EXHIBITS
--------------------------------------------------------------------------------
Exhibit Document
--------------------------------------------------------------------------------
3.1 Amended and Restated Articles of Incorporation,
Castmor Resources Ltd. (1)
3.2 Amended and Restated Bylaws, Castmor Resources Ltd. (1)
5.1 Legal opinion of Conrad Lysiak, Attorney and Counselor at law (2)
10.1 Mineral Claim Purchase Agreement (3)
10.2 Promissory Note issued September 21, 2010 to Moneris Capital LP
23.1 Consent of Chang Lee LLP, Chartered Accountants
23.2 Consent of Conrad Lysiak, Attorney and Counselor at law (2)
99.1 Specimen Subscription Agreement (4)
99.2 Map showing the location of the White Bear Arm Property
--------------------------------------------------------------------------------
(1) Previously included as an exhibit to the Form 10-K filed November 29, 2010.
(2) Previously included as an exhibit to the Registration Statement on Form S-1
filed October 5, 2010.
(3) Previously included as an exhibit to the Form 8-K filed September 24, 2010.
(4) Previously included as an exhibit to the amended Registration Statement on
Form S-1 filed December 3, 2010.
II-2
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
i. To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
ii. To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than 20% change
in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement.
iii. To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
2. That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
3. To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
4. That, for the purpose of determining liability of the registrant
under the Securities Act of 1933 to any purchaser in the initial
distribution of the securities: The undersigned registrant undertakes
that in a primary offering of securities of the undersigned registrant
pursuant to this registration statement, regardless of the
underwriting method used to sell the securities to the purchaser, if
the securities are offered or sold to such purchaser by means of any
of the following communications, the undersigned registrant will be a
seller to the purchaser and will be considered to offer or sell such
securities to such purchaser:
i. Any preliminary prospectus or prospectus of the undersigned
registrant relating to the offering required to be filed pursuant
to Rule 424;
ii. Any free writing prospectus relating to the offering prepared by
or on behalf of the undersigned registrant or used or referred to
by the undersigned registrant;
iii. The portion of any other free writing prospectus relating to the
offering containing material information about the undersigned
registrant or its securities provided by or on behalf of the
undersigned registrant; and
iv. Any other communication that is an offer in the offering made by
the undersigned registrant to the purchaser.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-3
(c) The undersigned registrant hereby undertakes that:
1. For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to
Rule 424(b) (1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of this registration statement as of the time it was
declared effective.
2. For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Toronto, Ontario, Canada,
on February 25, 2011.
CASTMOR RESOURCES LTD.
By: /s/ Alfonso Quijada
Alfonso Quijada
President, Chief Executive Officer
Chief Financial Officer,
Principal Accounting Officer
and a director
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated:
By: /s/ Alfonso Quijada
Alfonso Quijada
President, Chief Executive Officer
Chief Financial Officer,
Principal Accounting Officer
and a directo