Attached files

file filename
EX-23.1 - CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (FURNISHED) - Canwealth Minerals Corpcwm_ex23z1.pdf
EX-5.1 - OPINION - Canwealth Minerals Corpcwm_ex5z1.htm
EX-21.1 - SUBSIDIARIES - Canwealth Minerals Corpcwm_ex21z1.htm
EXCEL - IDEA: XBRL DOCUMENT - Canwealth Minerals CorpFinancial_Report.xls
EX-23.1 - CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM - Canwealth Minerals Corpcwm_ex23z1.htm

As filed with the Securities and Exchange Commission on __________, 2013


Registration No. 333-______

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM S-1

 

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

    

 

CANWEALTH MINERALS CORPORATION

[cwm_s1002.gif]

 (Exact name of registrant as specified in its charter)

 

Delaware

  

1040

  

27-2288541

(State or other jurisdiction

of incorporation or organization)

  

(Primary Standard Industrial

Classification Code Number)

  

(I.R.S. Employer

Identification Number)

 

1376 Perrot Boulevard, Ile Perrot, Quebec, Canada J7V 7P2

(514) 425-2020

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)


Garth McIntosh

Chief Executive Officer

Canwealth Minerals Corporation

1376 Perrot Boulevard, Ile Perrot, Quebec, Canada J7V 7P2

(514) 425-2020

 (Name, address, including zip code, and telephone number, including area code, of agent for service)


With copies to:

Alan C. Ederer, Esq.

Westerman Ball Ederer Miller & Sharfstein, LLP

1201 RXR Plaza

Uniondale, NY 11556

Telephone: (516) 622-9200

Facsimile: (516) 622-9212

 

Approximate date of commencement of proposed sale to the public: As soon as practical after this registration statement is declared effective by the SEC.

 

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, check the following box.  þ


If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

 

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨

 

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  ¨



820014



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  ¨

  

Smaller reporting company  þ

  

  

  

  

(Do not check if a smaller reporting

company)

  

  





CALCULATION OF REGISTRATION FEE

 

Title of each class of securities to be registered

 

Number of shares to be registered (1)

 

Proposed maximum offering price per share (2)

 

Proposed maximum aggregate offering price (2)

 

Amount of registration fee

Common stock,
par value $0.0001 per share

 

15,000,000

 

$0.10

 

$1,500,000

 

$204.60


(1)  

Pursuant to Rule 416 under the Securities Act of 1933, as amended, this registration statement also covers such additional shares of common stock as may be issued as a result of stock splits, dividends and combinations.


(2)  

Estimated solely for purposes of calculating the registration fee in accordance with Rule 457(a) under the Securities Act of 1933, as amended.


The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.


We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act (“JOBS Act”), and will therefore be subject to reduced public company reporting requirements. Investing in our securities involves a high degree of risk. See Risk Factors, beginning on page 3.







 

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.  THE SELLING STOCKHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE.  THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING OFFERS TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE OF THESE SECURITIES IS NOT PERMITTED.

 


SUBJECT TO COMPLETION DATED JULY 8, 2013


PRELIMINARY PROSPECTUS



CANWEALTH MINERALS CORPORATION


Up to 15,000,000 Shares of Common Stock



We are selling up to 15,000,000 shares of our common stock, par value $0.0001 per share.


This is our initial public offering, and no public market currently exists for our common stock. The securities being registered in this offering may not be liquid since they are not listed on any exchange or quoted on an OTC market such as OTC-Quotation Board (OTC), and a market for these securities may not develop. The offering price may not reflect the market price of our shares after the offering. Because there is currently no active trading market, we will sell at a stated fixed price of $[_____] per share until securities are quoted on the OTC and thereafter, the shares will be sold at the prevailing market prices or other privately negotiated prices. However, there is no guarantee that our shares will ever be quoted on the OTC.


We have not authorized anyone to provide information different from that contained in this prospectus. The information in this prospectus is not complete and may be changed.  A registration statement relating to these securities has been filed with the Securities and Exchange Commission. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.


We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act (“JOBS Act”), and will therefore be subject to reduced public company reporting requirements.


An investment in our common stock involves a high degree of risk. We urge you to read carefully the “Risk Factors” section beginning on page 3, where we describe specific risks associated with an investment in Canwealth Minerals Corporation and these securities, before you make your investment decision.


NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS.  ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.


The date of this prospectus is __________, 2013.

  [cwm_s1004.gif]






TABLE OF CONTENTS


 

PROSPECTUS SUMMARY

  

1

  

  

 

RISK FACTORS

  

3

  

  

 

USE OF PROCEEDS

  

9

 

 

 

DETERMINATION OF OFFERING PRICE

 

9

 

 

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

  

10

  

  

 

DESCRIPTION OF BUSINESS

  

11

  

  

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

  

17

  

  

 

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

23

 

 

 

MANAGEMENT

  

24

  

  

 

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

  

25

  

  

 

PLAN OF DISTRIBUTION

 

25

 

 

 

DESCRIPTION OF SECURITIES

  

28

  

  

 

INTEREST OF NAMED EXPERTS AND COUNSEL

  

28

  

  

 

DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES

  

29

  

  

 

ABOUT THIS PROSPECTUS

  

29

  

  

 

WHERE YOU CAN FIND MORE INFORMATION

  

29

  

  

 

VALIDITY OF COMMON STOCK

  

30

  

  

 

TRANSFER AGENT

  

30

  

  

 

EXPERTS

  

30

  

  

 

INCORPORATION BY REFERENCE

  

30

  

  

 

FINANCIAL STATEMENTS

  

F-1






PROSPECTUS SUMMARY  


This summary provides a brief overview of the key aspects of this offering.  Because it is only a summary, it does not contain all of the detailed information contained elsewhere in this prospectus or in the documents incorporated by reference into this prospectus or included as exhibits to the registration statement that contains this prospectus.  This summary may not contain all of the information that may be important to you.  We urge you to read this entire prospectus carefully, including the risks of investing in our common stock discussed under “Risk Factors” and the financial statements and other information attached to this prospectus, before making an investment decision. 


All references in this prospectus to “Canwealth,” “we,” “us,” “our,” “the Company” or “our Company” refer to Canwealth Minerals Corporation.


Our Company and Predecessor

 

USG1, Inc., or USG1, is the predecessor to Canwealth.  USG1 was formed on February 27, 2010 under the laws of the State of Delaware to engage in any lawful corporate undertaking, including selected mergers and acquisitions.  USG1 registered its common stock on a Form 10 registration statement filed pursuant to the Securities Exchange Act of 1934, as amended, or the Exchange Act, and Rule 12(g) thereof.


Canwealth Minerals Corporation (Canada), or Canwealth Canada, was formed on February 1, 2006 under the laws of the Canada Business Corporations Act.  Canwealth Canada’s mission is to develop the mining concessions it has registered in various areas of Northern Quebec, which based on assay reports of preliminary samples taken from these sites, has shown to contain traces of various elements such as gold, silver, copper, rare earth and other such minerals.  


Prior to the consummation of the merger described in the following paragraph, the stockholders of Canwealth Canada contributed their shares of Canwealth Canada to the Company in exchange for shares of the Company’s common stock.  Accordingly, Canwealth Canada became a wholly-owned subsidiary of the Company.


On February 11, 2013, USG1 and the Company consummated a merger whereby the existing shares of the Company’s common stock converted into USG1 common stock, and the existing USG1 stockholders continued to hold their shares of USG1 common stock.


USG1 succeeded to the mining business and operations of the Canwealth entities and, contemporaneously with the merger, the corporate name “USG1, Inc.” was changed to “Canwealth Minerals Corporation.”


Description of Business

 

We are a federally chartered, multi-element mineral exploration and mining company located in Quebec, Canada with a focus on gold. Our primary function is to search for viable mineral deposits in the Province of Quebec.

 

At the present time we hold 9 properties in the lower Grenville province, Abitibi region and the James Bay basin of Quebec. We have a total of 38,573 acres under management. We are engaged in grass roots mineral exploration which includes conventional prospecting, geological and geophysical surveys, applied research and core drilling.


The focused activity of the Company is to search for viable mineral deposits in Quebec under a Phase 1 program.  Phase 2 will be to stake claims, joint venture or option properties in other mining jurisdictions in Canada. Phase 3 will be to take the Company on an international level in a quest for viable mineral deposits. A leadership team will be assembled over the coming year in the form of a geological team which will be actively conducting fieldwork, assessments and assembling data to support new approaches that will expand the scope of our exploration projects. This exploration team will consist of a core group of experienced geologists and geoscientists, consultants and mineral research institutions, all committed to the quest of determining the mineral source(s) of our gold properties. The primary metals include gold, silver, platinum, palladium and base metals and the secondary element






is REE (rare earth elements). The minerals are mined from underground or by open pit methods. The minerals are prepared as a concentrate or as a refined product and shipped to local and overseas markets.


Risk Factors


An investment in the shares of our common stock involves a high degree of risk and may not be an appropriate investment for persons who cannot afford to lose their entire investment.  For a discussion of some of the risks you should consider before purchasing shares of our common stock, you are urged to carefully review and consider the section entitled “Risk Factors” beginning on page 3 of this prospectus.


The Offering


We are offering a total of up to 15,000,000 shares of our common stock.  For a complete description of the terms and conditions of our common stock, you are referred to the section in this prospectus entitled “Description of Securities.”


Shares of Common Stock offered

 

 

15,000,000

 

  

 

 

 

 

Shares of Common Stock outstanding before the offering (1)

 

  50,769,231

 

  

 

 

 

 

Shares of Common Stock outstanding after the offering

 

  65,769,231

 

 

(1)

This number does not include 100,000 shares of our common stock issuable upon conversion of an outstanding convertible promissory note issued by us.


The offering will terminate on the date on which all of the issued and outstanding shares of our common stock being offered hereby have been sold hereunder.


Use of Proceeds


We expect to use the proceeds that we receive from the sale of securities offered hereby for general working capital purposes.


Principal Office, Telephone Number and Internet Address


Our principal executive office is located at 1376 Perrot Boulevard, Ile Perrot, Quebec, Canada J7V 7P2.  Our telephone number is (514) 425-2020 and our internet address is www.canwealthminerals.com.



2





RISK FACTORS

 

The purchase of shares of our common stock is very speculative and involves a very high degree of risk.  An investment in our company is suitable only for the persons who can afford the loss of their entire investment.  Accordingly, investors should carefully consider the following risk factors, as well as other information set forth herein, in making an investment decision with respect to our securities. We have sought to identify what we believe to be all material risks to our business, but we cannot predict whether, or to what extent, any of such risks may be realized nor can we guarantee that we have identified all possible risks that might arise.

 

Risks Relating to Our Business


We are an exploratory stage company and have a limited history of operations, making an evaluation of us extremely difficult. At this stage, even with our good faith efforts, there is nothing on which to base an assumption that we will become profitable or generate any significant amount of revenues.


We have only a limited operating history on which you can evaluate our business, financial condition and operating results. We have not yet recognized revenues from our operations, and since our inception we have incurred significant operating losses and negative cash flows.  We have been focused on organizational, start-up activities and business plan development since we incorporated.  There is nothing at this time on which to base an assumption that our business operations will prove to be successful or that we will ever be able to operate profitably. Our future operating results will depend on many factors, including our ability to raise adequate working capital, demand for our product, the level of our competition and our ability to attract and maintain key management and employees.


Our independent auditors have expressed substantial doubt about our ability to continue as a going concern, which may hinder our ability to obtain future financing.


The report of our independent auditors dated July 3, 2013 on our consolidated financial statements for the year ended December 31, 2012 included an explanatory paragraph indicating that there is substantial doubt about our ability to continue as a going concern. Our auditors’ doubts are based on our incurring significant losses from operations and our working capital deficit position. Our ability to continue as a going concern will be determined by our ability to obtain additional funding in the short term to enable us to realize the commercialization of our planned business operations. Our financial statements do not include any adjustments that might result from the outcome of this uncertain.


We are an “emerging growth company” under the JOBS Act, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.


We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.


In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, or the Securities Act, for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are choosing to take advantage of the extended transition period for



3




complying with new or revised accounting standards.  As a result, our financial statements may not be comparable to those of companies that comply with public company effective dates.


We will remain an “emerging growth company” for up to five years, although we will lose that status sooner if our revenues exceed $1 billion, if we issue more than $1 billion in non-convertible debt in a three year period, or if the market value of our common stock that is held by non-affiliates exceeds $700 million.


Our sources may be subject to substantial environmental and other regulatory requirements and such regulations may become more stringent. Non-compliance with such regulations, either through current or future operations or a pre-existing condition could materially adversely affect our ability to purchase gold and other precious metals.


Our sources for gold and other precious metals are subject to environmental regulations in the jurisdiction in which they operate. Environmental legislation is evolving in a manner that will require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors, and employees. There can be no assurance that future changes in environmental regulation, if any, will not be materially adverse to our operations.


Our sources may have properties which contain environmental hazards, and are presently unknown to the third party, which have been caused by previous or existing owners or operators of the properties. If these properties do contain such hazards, this could lead to us being unable to utilize the third party as a source of goods for resale.


Government approvals and permits are sometimes required in connection with mining operations. Obtaining or renewing approvals or permits can be a complex and time-consuming process. There can be no assurance that our third party sources will be able to obtain or renew the necessary approvals and permits on acceptable terms, in a timely manner, or at all. To the extent such approvals are required and not obtained; we may be delayed or prohibited from acquiring sufficient goods for resale.


Decrease in value of gold could result in decreased revenues.


While we intend to eventually purchase other precious metals, our business is currently focused on purchasing gold for resale. Thus, in the event the price of gold decreases, our revenues and/or profit margins could likewise decrease.


We will be competing with better established companies.


We will not be the first company to attempt to resell gold and other precious metals. There are other companies whose contacts and expertise may be more advanced than ours, and whose methods of marketing and resale may be more cost-effective. Further, we will be facing competition from better established companies, which may have better local, regional and national connections, and whose efforts produce larger sales and revenues.


Competition in the gold and precious metals industry is intense, and we have limited financial and personnel resources with which to compete.


Competition in the gold and precious metals industry for desirable quantities, quality, investment capital and personnel is intense. Numerous companies headquartered in the United States, Canada and elsewhere throughout the world compete for gold and other precious metals on a global basis. We are an insignificant participant in the gold industry due to our limited financial and personnel resources. We presently operate with a sole employee, and anticipate that we will compete with other companies in our industry to hire additional qualified personnel which will be required to successfully operate our Company. We may be unable to attract the necessary investment capital or personnel to fully develop our marketing and business plan. Consequently, our revenues, operations and financial condition could be materially adversely affected.


Gold prices and natural resources in general, are volatile and there can be no assurance that a profitable market for gold and other precious metals will exist.




4




The gold and metals industry is intensely competitive, and there is no assurance that, even if we have the ability to market commercial quantities of gold and other mineral resources, a profitable market will exist for the sale of those resources. There can be no assurance that gold prices will remain at such levels or be such that we can sell at a profit. Factors beyond our control may affect the marketability of any minerals purchased. Gold prices are subject to volatile changes resulting from a variety of factors including international, economic and political trends, expectations of inflation, global and regional supply and demand and consumption patterns, metal stock levels maintained by producers and others, the availability and cost of metal substitutes, currency exchange fluctuations, inflation rates, interest rates, speculative activities and increased production due to improved mining and production methods.


Our present limited operations have not yet proven profitable.

 

To date we have not shown a profit in our operations. We cannot assure that we will achieve or attain profitability in 2013 or at any other time. If we cannot achieve operating profitability, we may not be able to meet our working capital requirements, which will have a material adverse effect on our business operating results and financial condition.


The loss or unavailability to the Company of Mr. McIntosh’s services would have an adverse effect on our business, operations and prospects in that we may not be able to obtain new management under the same financial arrangements, which could result in a loss of your investment.


Our business plan is significantly dependent upon the abilities and continued participation of Garth McIntosh, our president and chief executive officer. It would be difficult to replace Mr. McIntosh at such an early stage of development. The loss by or unavailability to us of Mr. McIntosh’s services would have an adverse effect on our business, operations and prospects, in that our inability to replace Mr. McIntosh could result in the loss of one’s investment. There can be no assurance that we would be able to locate or employ personnel to replace Mr. McIntosh, should his services be discontinued.  In the event that we are unable to locate or employ personnel to replace Mr. McIntosh, we would be required to cease pursuing our business opportunity, which would result in a loss of your investment.


Mr. McIntosh’s lack of experience in operating a public company could impact your return on investment, if any.


As a result of our reliance on Mr. McIntosh, and his lack of experience in operating a public company, our investors are at risk in losing their entire investment. Mr. McIntosh intends to hire personnel in the future, when sufficiently capitalized, who would have the experience required to manage our Company. Such management is not anticipated until the occurrence of future financing. Since this offering will not sufficiently capitalize our company, future offerings will be necessary to satisfy capital needs. Until such a future offering occurs, and until such management is in place, we are reliant upon Mr. McIntosh to make the appropriate management decisions.


We will require additional financing in order to implement our business plan. In the event we are unable to acquire additional financing, we may not be able to implement our business plan resulting in a loss of revenues and ultimately the loss of your investment.


To fully implement our business plan, we will require substantial additional funding following this offering. We plan to raise additional funds through private placements, registered offerings, debt financing or other sources to maintain and expand our operations. Adequate funds for this purpose on terms favorable to us may not be available, and if available, on terms significantly more adverse to us than are manageable. Without new funding, we may be only partially successful or completely unsuccessful in implementing our business plan, and our stockholders will lose part or all of their investment.


There is no current public market for our common stock; therefore you may be unable to sell your securities at any time, for any reason, and at any price, resulting in a loss of your investment.


As of the date of this prospectus, there is no public market for our common stock. Although we plan, in the future, to contact an authorized OTC market maker for sponsorship of our securities on the OTC there can be no assurance that our attempts to do so will be successful. Furthermore, if our securities are not quoted on the OTC or



5




elsewhere, there can be no assurance that a market will develop for the common stock or that a market in the common stock will be maintained. As a result of the foregoing, investors may be unable to liquidate their investment for any reason. We have not originated contact with a market maker at this time, and do not plan on doing so until completion of this offering.


We may acquire or make investments in companies that could cause loss of value to our stockholders and disruption of our business.

 

Subject to our capital constraints, we intend to continue to explore opportunities to acquire companies in the future. Entering into an acquisition entails many risks, any of which could adversely affect our business, including:

 

·

Failure to integrate the acquired assets and/or companies with our current business;


·

The price we pay may exceed the value we eventually realize;


·

Loss of share value to our existing stockholders as a result of issuing equity securities as part or all of the purchase price;


·

Potential loss of key employees from either our current business or the acquired business;


·

Entering into markets in which we have little or no prior experience;


·

Diversion of management's attention from other business concerns;


·

Assumption of unanticipated liabilities related to the acquired assets; and


·

The business we acquire or in which we invest may have limited operating histories, may require substantial working capital, and may be subject to many of the same risks we are.


We have limited resources and we may be unable to effectively support our operations.


We must continue to develop and expand our operations in order to remain competitive. We expect this thesis to place strain on our managerial, operational and financial resources. We may be unable to develop and expand our operations for one or more of the following reasons:


·

We may not be able to retain at reasonable compensation rates qualified managers and other employees necessary to expand our capacity on a timely basis;


·

We may not be able to dedicate the capital necessary to effectively develop and expand our operations; and


·

We may not be able to expand our service, billing and other related support systems.


If we cannot manage our operations effectively, our business and operating results will suffer.


A significant amount of our common stock is held by a few stockholders.


As of the date of this prospectus, ICBS, Ltd. and Radcor Inc. hold 38,648,077 (or approximately 76.12%) and 5,521,154 (or approximately 10.88%), respectively, of our outstanding shares of common stock and could, therefore, have a significant influence on us. Garth McIntosh, our President, Chief Executive Officer and Chairman of the Board, is the president, director and a principal shareholder of ICBS, Ltd.


Limitation of Liability and Indemnification of Officers and Directors.


Our officers and directors are required to exercise good faith and high integrity in the management of our affairs. Our certificate of incorporation provides, however, that our officers and directors shall have no personal liability to



6




us or our stockholders for damages for any breach of duty owed to us or our stockholders, unless they breached their duty of loyalty, did not act in good faith, knowingly violated a law, or received an improper personal benefit.  Our certificate of incorporation and bylaws also provide for the indemnification by us of our officers and directors against any losses or liabilities they may incur by reason of their serving in such capacitates, provided that they do not breach their duty of loyalty, act in good faith, do not knowingly violate a law, and do not received an improper personal benefit.

 

Disclosure controls and procedures and potential inability to make required public filings.


We currently have no full-time employees other than our Chief Executive Officer, although we intend to add personnel following this offering. Given our limited personnel, we may be unable to maintain effective controls to insure that we are able to make all required public filings in a timely manner. If we are successful in having our common stock listed on a stock exchange or quotation services, and if we do not make all public filings in a timely manner, our shares of common stock may be delisted and we could also be subject to regulatory action and/or lawsuits by stockholders.


Risks Relating to Our Common Stock


Resale of shares offered by this prospectus could adversely affect the market price of our common stock and our ability to raise additional equity capital

 

The sale or availability for sale, of common stock in the public market pursuant to this prospectus may adversely affect the prevailing market price of our common stock and may impair our ability to raise additional capital by selling equity or equity-linked securities.  This prospectus covers the resale of a significant number of shares of our common stock. In fact, the Registration Statement will make publicly available for resale up to 15,000,000 shares of our common stock. This figure represents approximately 23% of the shares of our common stock outstanding immediately after the effectiveness of this Registration Statement (assuming the issuance of all of the shares registered under this Registration Statement).  The resale of a substantial number of shares of our common stock in the public market pursuant to this offering, and afterwards, could adversely affect the market price for our common stock and make it more difficult for you to sell our shares at times and prices that you feel are appropriate. Furthermore, we expect that, because there are a large number of shares offered hereby, we will continue to offer shares covered by this prospectus for a significant period of time, the precise duration of which we cannot predict. Accordingly, the adverse market and price pressures resulting from this offering may continue for an extended period of time and continued negative pressure on the market price of our common stock could have a material adverse effect on our ability to raise additional equity capital.


Further issuances of equity securities may be dilutive to current stockholders.


It is likely that we will be required to seek additional capital in the future. This capital funding could involve one or more types of equity securities, including convertible debt, common or convertible preferred stock and warrants to acquire common or preferred stock. Such equity securities could be issued at or below the then-prevailing market price for our common stock. Any issuance of additional shares of our common stock will be dilutive to existing stockholders and could adversely affect the market price of our common stock.


Our certificate of incorporation grants the board of directors the power to designate and issue additional shares of preferred stock

 

Our certificate of incorporation grants our board of directors authority to, without any action by our stockholders, designate and issue, from our authorized capital, shares in such classes or series as it deems appropriate and establish the rights, preferences, and privileges of such shares, including dividends, liquidation and voting rights. The rights of holders of classes or series of preferred stock that may be issued could be superior to the rights of the common stock offered hereby.  Our board of directors’ ability to designate and issue shares could impede or deter an unsolicited tender offer or takeover proposal. Further, the issuance of additional shares having preferential rights could adversely affect other rights appurtenant to the shares of common stock offered hereby. Any such issuances will dilute the percentage of ownership interest of our stockholders and may dilute our book value.




7




Because our common stock is deemed a low-priced “penny stock,” an investment in our common stock should be considered high risk and subject to marketability restrictions


Since our common stock is a penny stock, as defined in Rule 3a51-1 under the Exchange Act, it will be more difficult for investors to liquidate their investment even if and when a market develops for the common stock. Until the trading price of the common stock rises above $5.00 per share, if ever, trading in the common stock is subject to the penny stock rules of the Exchange Act specified in rules 15g-1 through 15g-10. Those rules require broker-dealers, before effecting transactions in any penny stock, to:


·

Deliver to the customer, and obtain a written receipt for, a disclosure document;


·

Disclose certain price information about the stock;


·

Disclose the amount of compensation received by the broker-dealer or any associated person of the broker-dealer;


·

Send monthly statements to customers with market and price information about the penny stock; and


·

In some circumstances, approve the purchaser’s account under certain standards and deliver written statements to the customer with information specified in the rules.


Consequently, the penny stock rules may restrict the ability or willingness of broker-dealers to sell the common stock and may affect the ability of holders to sell their common stock in the secondary market and the price at which such holders can sell any such securities. These additional procedures could also limit our ability to raise additional capital in the future.


The trading price of our common stock may fluctuate significantly due to factors beyond our control.


The trading price of our common stock will be subject to significant fluctuations in response to numerous factors, including:


·

Variations in anticipated or actual results of operations;


·

Announcements of new products or technological innovations by us or our competitors;


·

Changes in earnings estimates of operational results by analysts;


·

Inability of market makers to combat short positions on the stock;


·

Inability of the market to absorb large blocks of stock sold into the market; and


·

Comments about us or our markets posted on the Internet.


Moreover, the stock market from time to time has experienced extreme price and volume fluctuations, which have particularly affected the market prices for emerging growth companies and which often have been unrelated to the operating performance of the companies. These broad market fluctuations may adversely affect the market price of our common stock. If our stockholders sell substantial amounts of their common stock in the public market, the price of our common stock could fall. These sales also might make it more difficult for us to sell equity or equity related securities in the future at a price we deem appropriate.

 

We do not intend to pay dividends on our common stock.

 

We have never paid or declared any cash dividends on our common stock and intend to retain any future earnings to finance the development and expansion of our business. We do not anticipate paying any cash dividends on our



8




common stock in the foreseeable future. Unless we pay dividends, our stockholders will not be able to receive a return on their shares of common stock unless they sell them.

 

Sarbanes-Oxley and federal securities laws reporting requirements can be expensive.


As a public reporting company, we will be subject to the Sarbanes-Oxley Act of 2002, as well as the information and reporting requirements of the Exchange Act, and other federal securities laws. The costs of compliance with the Sarbanes-Oxley Act and of preparing and filing annual and quarterly reports, proxy statements and other information with the SEC, and furnishing audited reports to stockholders, are significant and may increase in the future.



USE OF PROCEEDS


We will receive net proceeds from this offering of approximately $_________, assuming an initial public offering price of $____ per share and after deducting estimated offering expenses.


We expect to use the proceeds that we receive from the sale of securities offered hereby for general working capital purposes.



DETERMINATION OF OFFERING PRICE


The offering price of the shares has been determined arbitrarily by us.  The price does not bear any relationship to our assets, book value, potential earnings, or other established criteria for valuing a company. However, in determining the initial public offering price of the shares we considered several factors including the following:


·

our start up status;


·

prevailing market conditions, including the history and prospects for the industry in which we compete;


·

our future prospects;


·

our capital structure;


·

cash on hand; and


·

the amount of money needed to implement our business plans.


Therefore, the public offering price of the shares does not necessarily bear any relationship to established valuation criteria and may not be indicative of prices that may prevail at any time or from time to time in the public market for our common stock.  You cannot be sure that a public market for any of our securities will develop and continue or that the securities will ever trade at a price at or higher than the offering price in this offering.



9





CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

This prospectus contains “forward-looking statements,” as that term is used in federal securities laws, about our financial condition, results of operations and business.  Forward-looking statements may be identified by words such as “believes”, “expects”, “anticipates”, “estimates”, “projects”, “intends”, “should”, “seeks”, “future”, continue”, or the negative of such terms, or other comparable terminology.


Forward-looking statements are made pursuant to the safe harbor provisions of Section 27A of the Securities Act, and Section 21E of the Exchange Act, and are based on our beliefs as well as assumptions made by and information currently available to us.  Factors that could cause actual results to differ materially include, but are not limited to:


·

adverse economic conditions,


·

inability to raise sufficient additional capital to operate our business,


·

unexpected costs, lower than expected sales and revenues, and operating deficits,


·

adverse results of any legal proceedings,


·

the volatility of our operating results and financial condition,


·

inability to attract or retain qualified senior management personnel, including sales and marketing personnel,


·

Inability to achieve anticipated product sales, and


·

other specific risks that may be referred to in this prospectus.


These forward-looking statements are subject to numerous assumptions, risks and uncertainties that may cause our actual results to be materially different from any future results expressed or implied in those statements.


Because these statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied.  We caution you not to put undue reliance on these statements, which speak only as of the date of this prospectus.  Further, the information contained in this document is a statement of our present intention and is based on present facts and assumptions, and may change at any time and without notice, based on changes in such facts or assumptions.


Unless otherwise required by applicable law, we do not undertake, and specifically disclaim any obligation, to update any forward-looking statements to reflect occurrences, developments, unanticipated events or circumstances after the date of such statement.



10





DESCRIPTION OF BUSINESS


The following discussion should be read in conjunction with the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section and the consolidated financial statements and related notes thereto included in this prospectus.


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS


With the exception of historical matters, the matters discussed herein are forward-looking statements that involve risks and uncertainties. Forward-looking statements include, but are not limited to, statements concerning anticipated trends in revenues and net income, projections concerning operations and available cash flow. Our actual results could differ materially from the results discussed in such forward-looking statements. The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes thereto appearing elsewhere herein.


Description of our Company and Predecessor

 

USG1, Inc., the predecessor to Canwealth, was formed on February 27, 2010 under the laws of the State of Delaware to engage in any lawful corporate undertaking, including selected mergers and acquisitions.  USG1 had been in the developmental stage since inception and its operations had been limited to issuing shares to its original stockholders and filing a registration statement with the SEC.  USG1 registered its common stock on a Form 10 registration statement filed pursuant to the Securities Exchange Act of 1934, as amended, or the Exchange Act, and Rule 12(g) thereof.


Canwealth Minerals Corporation (Canada), was formed on February 1, 2006 under the laws of the Canada Business Corporations Act.  Canwealth Canada’s mission is to develop the mining concessions it has registered in various areas of Northern Quebec, which based on assay reports of preliminary samples taken from these sites, has shown to contain traces of various elements such as gold, silver, copper, rare earth and other such minerals.  


Prior to the consummation of the merger described in the following paragraph, the stockholders of Canwealth Canada contributed their shares of Canwealth Canada to the Company in exchange for shares of the Company’s common stock.  Accordingly, Canwealth Canada became a wholly-owned subsidiary of the Company.


On August 10, 2012, USG1 entered into an Agreement and Plan of Merger, as amended, or the Merger Agreement, with the Company and Kimi Royer as representative of the USG1 stockholders, pursuant to which the Company would merge with and into USG1 at the closing.  The merger contemplated by the Merger Agreement occurred on February 11, 2013. Upon the closing, the existing shares of Canwealth Delaware common stock converted into 44,169,231 shares of USG1 common stock. The existing USG1 stockholders continued to hold 6,600,000 shares of USG1 common stock.  As consideration for the merger, the Company agreed to pay $50,000 in the aggregate to the participating stockholders of USG1, which shall be payable as follows:


·

$10,000 will be payable upon a registration statement on Form S-1 filed by USG1 being declared effective by the SEC; and


·

$40,000 will be payable upon (i) the filing of a Form 15c2-11 (allowing the submission and publication of quotations by brokers and dealers for certain over-the-counter equity securities) with the SEC by USG1 and (ii) the shares of USG1 common stock being actively traded on a stock exchange or quotation service.


As a result of the merger, USG1 succeeded to the mining business and operations of the Canwealth entities and, contemporaneously with the merger, the corporate name “USG1, Inc.” was changed to “Canwealth Minerals Corporation.”  Prior to the merger, there were no material relationships between USG1 and the Company or between our respective affiliates, directors or officers.  All USG1 pre-merger liabilities were settled prior to closing. Upon



11




the effectiveness of the merger, the existing directors and officers of USG1 each resigned and Garth McIntosh was elected as the sole officer and director of USG1.


Description of Business

 

Canwealth Minerals Corporation is a federally chartered, multi-element mineral exploration and mining company located in Quebec with a focus on gold with our main office located in Ile Perrot, Quebec, Canada. Our primary function is to search for viable mineral deposits in the Province of Quebec..

 

At the present time, there are 9 mineral properties under our management which are located in the lower Grenville province, Abitibi region and the James Bay basin of Quebec. We have a total of 38,573 acres under management. We are engaged in grass roots mineral exploration which includes conventional prospecting, geological and geophysical surveys, applied research and core drilling.

 

The focused activity of the company is to search for viable mineral deposits in Quebec under a Phase 1 program. Phase 2 will be to stake claims, joint venture or option properties in other mining jurisdictions in Canada. Phase 3 will be to take the company on an international level in a quest for viable mineral deposits. A leadership team will be assembled over the coming year in the form of a geological team which will be actively conducting fieldwork, assessments and assembling data to support new approaches that will expand the scope of our exploration projects. This exploration team will consist of a core group of experienced geologists and geoscientists, consultants and mineral research institutions, all committed to the quest of determining the mineral source(s) of our gold properties. The primary metals include gold, silver, platinum, palladium and base metals and the secondary element is REE (rare earth elements). The minerals are mined from underground or by open pit methods. The minerals are prepared as a concentrate or as a refined product and shipped to local and overseas markets.


Short-Term Goals

 

We will continue to seek out properties for staking land claims, and to perform Phase 1 drilling for core samples on its current mining claims. The focus is to develop a mining plan in which the current resources are best used to bring the most value to the Company. We are looking to prioritize our claims, and devote resources according to this ranking. As wealth builds, this translates into accumulating more resources to devote to the development of the other claims, as all of our claims have merit, however, as we are in the start-up phase, investment resources are our current limiting factor. Outside investors may also be sought to help achieve these goals.


Mid-Term Goals


As we grow and build our name in our industry, we anticipate seeking partnerships with other mining corporations in order to move into full scale mining projects. It takes significant capital to move into this phase in the mining industry, and we realize it will be a huge undertaking to develop all the properties we currently own without outside help. We believe it is better to be part of successful venture by sharing what we currently own, as bringing in other expertise and resources will speed the process. This will elevate our company to new levels by becoming a known supplier to the world of natural resources, both on the open markets and to users of such materials like lithium or barium, which cover the electronics industry, medicine, military and many other industries.


Long-Term Goals


Our long-term goal is to develop different branches to our operations, including building a consulting division which will help other start-up companies looking to break into the mining industry. We feel that once we master the knowledge and experience of building a mining company, we will want to work with others, and thereby become the go-to entity for startups. We believe we will be well positioned to become their initial partners and help these companies attain their goals.




12




Description of our Properties


The Company currently holds the following 9 mining projects in Canada.


East Bay Gold Camp

 

The East Bay Gold Camp is located in the James Bay Basin approximately 70 kilometers west of the Elenore, Opinaca Reservoir and 800 kilometers north of Montreal. The claim is 100% owned by Canwealth Minerals Corporation. It is comprised of 6 claim cells totaling 316 hectares or 782 acres. The East Bay Gold camp is located in the Superior Craton of Quebec in a known geological area in the Abitibi Greenstone belt and consists of numerous underlying faults that developed during the Archean period 3.8-2.5 Ga (billion years) these distinct tectonic events host a variety of orogenic gold deposits across the Province of Quebec. The East Bay property is located in close proximity to 2 major gold mining companies with proven reserves. This porphyry mineralized geology is considered highly favorable for the exploration of gold, copper and molybdenum. The East Bay Gold camp is located at GPS location -77 35 29.0 52 18 45.01 and is in an ideal location of a porphyry Copper-gold-molybdenum deposits. This location has opportunity for further expansion for additional claim staking to the west, east and south.

 

The East Bay Gold camp location was chosen for its lithology and geology. In recent studies by the Ministère des Ressources naturelles et de la Faune significant mineralized zones were identified in the region. Our decision to stake in this region is further supported by the presence of some of the largest gold mining companies in Quebec such as Eastmain Resources Inc. to the north and Resources Minieres Augyva inc, CHS Resources and Exploration Dios Inc. to the west.

 

Golden Bear

 

The Golden Bear property is located in the Township of La Vallée-de-la-Gatineau. The Golden Bear claim is owned 100% by Canwealth Minerals Corporation. It is comprised of 9 claim cells totaling 537 hectares or 1327 acres. The 9 claim cells are located in the zone of the Grenville orogeny. This geological formation is considered a highly favorable site for exploration for gold, silver, copper, nickel, PGE (platinum group elements) and REE (rare earth elements).

 

The Golden Bear property primarily consists of Calc-silicate rocks, marble, dolostone, schist and quartzite geology of the Proterozoic period 2.5 Ga (billion years) to 520 ma (million years). It is classed as a sedimentary rock lithology. Proterozoic type geology dating back to about 2.5 Ga (billion years) to 520 Ma (million years) In contrast to Proterozoic rocks, Archean rocks are often heavily metamorphized deep-water sediments, such as greywacke, mudstone, volcanic sediments and banded iron formations and may contain a variety of base metals rare earth elements. Greenstone belts are typical Archean formations, consisting of alternating units of metamorphosed mafic igneous and sedimentary rocks. The meta-igneous rocks were derived from volcanic island arcs, while the metasediments represent deep-sea sediments eroded from the neighboring island arcs and deposited in a forearc basin Greenstone belts represent sutures between protocontinents.

 

Golden Ridge

 

The Golden Ridge property is located in the Townships of Languedoc and Disson approximately 52 kilometers northwest of Amos Quebec in the prolific Abitibi Greenstone Belt. The claim is owned 100% by Canwealth Minerals Corporation. It is comprised of 4 claim cells totaling 227 hectares or 560 acres. The 4 claim cells are located well within the Abitibi Green Stone belt zone of the Grenville province. This orogenic geological structure is considered a highly favorable site for exploration of gold and copper. A recent chip sample program showed a high assay result of .40 gram per/ton of gold and 85.3 ppm copper with other metal anomalies.

 

The Golden Ridge property is located at GPS location -78 40 15.027 48 51 30.015 and is in an ideal location for orogenic type gold deposits. This location has opportunity for further expansion for additional claim staking to the north, east and west.

 



13




The Golden Ridge property is located in an Archean and/or Proterozoic type geology dating back to about 3.8-2.5 Ga (billion years). In contrast to Proterozoic rocks, Archean rocks are often heavily metamorphized deep-water sediments, such as greywacke, mudstone, volcanic sediments, and banded iron formations that contain a variety of base metals rare earth elements. Greenstone belts are typical Archean formations, consisting of alternating units of metamorphosed mafic igneous and sedimentary rocks. The meta-igneous rocks were derived from volcanic island arcs, while the metasediments represent deep-sea sediments eroded from the neighboring island arcs and deposited in a forearc basin Greenstone belts represent sutures between protocontinents.

 

Highland Gold

 

The Highland Gold property is located in the Townships of Poirier and Dalet approximately 78 kilometers north of Amos Quebec in the prolific Abitibi Greenstone Belt. The claim is 100% owned by Canwealth Minerals Corporation. It is comprised of 40 claim cells totaling 2248 hectares or 5555 acres. The 40 claim cells are located well within the Abitibi Green Stone belt zone of the Superior geological Province. This orogenic geological structure also known as an epithermal or mesothermal vein structure is considered a highly favorable site for exploration of gold.

 

The Highland Gold property consists of 36 claim cells located at GPS location -78 19 29.972 49 16 15.012 and 4 additional claim cells located at -78 0 30.036 49 17 37.487. It is in an ideal location for high favorability of porphyry (Copper-gold-molybdenum) deposits and orogenic gold and VMS (volcanogenic massive sulfide) deposits. This location has opportunity for further expansion for additional claim staking to the west east and south.

 

The Highland Gold property is an ideal location for high favorability of porphyry (Copper-gold-molybdenum) deposits and orogenic gold and VMS (volcanogenic massive sulfide) deposits. This location has opportunity for further expansion for additional claim staking to the east, west and north. The Highland Gold property’s 4 additional claims are located in a chosen area for its lithology and geology. It recent studies by the Ministère des Ressources naturelles et de la Faune identified significant mineralized zones in the region. Our decision to stake in this region is further supported by the presence of some of the biggest gold mining companies in Quebec such as Mines NAP Quebec Ltee (North American Palladium) to the south, Giant Exploration Inc. to the south and Mineraux Maudore Ltee to the west.

 

Highland Gold #2

 

The Highland Gold 2 property is located in the Township of Rainboth approximately 90 kilometers north of Amos Quebec in the prolific Abitibi Greenstone Belt. The claim is owned 100% by Canwealth Minerals Corporation. It is comprised of 14 claim cells totaling 786 hectares or 1942 acres. The 14 claim cells are located well within the Abitibi Green Stone belt zone of the Superior geological Province. These orogenic structures also known as an epithermal or mesothermal vein structure is considered a highly favorable geology for exploration of gold, platinum and palladium. There has been documented historical grades in the range of 5-30 g/T. Gold-bearing veins exhibit variable enrichments of As, B, Bi, Hg, Sb, Te, W; Cu, Pb and Zn.

 

The Highland Gold 2 property consists of 14 claim cells located at GPS location -78 28 26.879 49 21 16.693 and is in an ideal location for high favorability of orogenic gold, platinum and palladium. This location has opportunity for further expansion for additional claim staking to the east, west, north and south.

  

The Highland Gold property location was chosen for its lithology and geology. Recent studies by the Ministère des Ressources naturelles et de la Faune identified significant mineralized zones in the region. Our decision to stake in this region is further supported by the presence of some of the biggest gold mining companies in Quebec such as Bold Ventures Inc to the east, Enterprises Minieres Globex Inc to the northeast and Explo-Zinc Inc to the northeast.

 

Lake View

 

The Lake View gold project is located in the Regional county of Abitibi 55 kilometers northwest of Amos Quebec in the prolific Abitibi Greenstone Belt. The Lake view claim is owned 100% by Canwealth Minerals Corporation. It is comprised of 64 claim cells totaling 3622 hectares or 8951 acres. The 64 claim cells are located



14




well within the Abitibi Green Stone belt zone of the Grenville orogeny. This VMS (Volcanogenic massive sulfide) formation is considered a highly favorable site for exploration for gold, silver, copper, nickel and PGE (platinum group elements).

 

The Lake View property consists of 64 claim cells located at GPS location -78 33 15.006 48 54 30.003 and is highly favorability for porphyry (Copper-gold-molybdenum) deposits and orogenic gold, platinum and palladium and VMS (volcanogenic massive sulfide) deposits. This location has opportunity for further expansion for additional claim staking to the south and east.

 

The Lake View property location was chosen for its lithology and geology. Recent studies by the Ministère des Ressources naturelles et de la Faune identified significant mineralized zones in the region. Our decision to stake in this region is further supported by the presence of some of the biggest gold mining companies in Quebec such as Visible Gold Inc to the west, Sementiou to the north and Entreprises Minieres Globex Inc to the south.

 

Shadow Mountain

 

The Shadow Mountain project is located in the Township of Ripon. The Shadow Mountain claim is owned 100% by Canwealth Minerals Corporation. It is comprised of 90 claim cells totaling 5400 hectares or 13344 acres. The 90 claim cells are located well within a VMS (Volcanogenic massive sulphide) zone of the Grenville orogeny. This geological formation is considered a highly favorable site for exploration for gold, silver, copper, nickel, PGE (platinum group elements) and REE.

 

The Shadow Mountain property is located at GPS -75 10 7.841 45 45 35.402 and within a few kilometers to the northeast of Atocha Resources Inc and to the west of Standard Graphite Corp.

 

Shining Star

 

The Shining Star project is located in the Township of Sainte-Dominique-du-Rosaire, north of Amos Quebec in the prolific Abitibi Greenstone Belt. The Shining Star claim is owned 100% by Canwealth Minerals Corporation. It is comprised of 24 claim cells totaling 1440 hectares or 3560 acres. The 24 claim cells are located well within the Abitibi Green Stone belt zone of the Grenville orogeny. This geological formation is considered a highly favorable site for exploration for gold, silver, copper, nickel and PGE.

 

The Shining Star property is located at GPS location -78 40 15.027 48 51 30.015 and is in an ideal location of orogenic gold deposits. This location has opportunity for further expansion for additional claim staking to the north and west.

 

The Shining Star property location was chosen for its lithology and geology. Recent studies by the Ministère des Ressources naturelles et de la Faune identified significant mineralized zones in the region. Our decision to stake in this region is further supported by the presence of some of the biggest gold mining companies in Quebec such as Visible Gold Mines Inc and Diagnos Inc Tres-or Resources Ltd.

 

Winsome Lake

 

The Winsome Lake project is located in the Township of Antoine-Labelle. The Winsome Lake claim is owned 100% by Canwealth Minerals Corporation. It is comprised of 18 claim cells totaling 1060 hectares or 2620 acres. The 18 claim cells are located well within a VMS (Volcanogenic massive sulphide) zone of the Grenville orogeny. This geological formation is considered a highly favorable site for exploration for gold, silver, copper, nickel, PGE and REE.

 

The Winsome Lake property is located at GPS -78 39 14.98 46 49 0.01 and is fully accessible by gravel and ATV roads. The claim is located within a few kilometers to the north of Consolidated Thompson (Formerly Quinto Mining Corp) iron mine.

  



15




Emerging Growth Company

 

We qualify as an “emerging growth company” under the JOBS Act. As a result, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements. For so long as we are an emerging growth company, we will not be required to:

 

·

have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;


·

comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis);


·

submit certain executive compensation matters to shareholder advisory votes, such as “say-on-pay” and “say-on-frequency;” and


·

disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the Chief Executive’s compensation to median employee compensation.


In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period.

 

We will remain an “emerging growth company” for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our total annual gross revenues exceed $1 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, which would occur if the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period.


Legal Proceedings

 

There are no material pending legal proceedings, other than ordinary routine litigation incidental to the business, to which we or any of our subsidiaries is a party or of which any of their property is the subject.



Market Price and Dividends on Common Equity and Related Stockholder Matters

 

On October 20, 2012, we issued to a non-affiliate third party a 20% interest bearing convertible note for CAD20,000 ($20,102) due on January 20, 2013.  Subsequently, on May 11, 2013, the maturity of the note was extended to June 30, 2013.  The note is convertible at any time into 100,000 shares of our common stock.  As of March 31, 2013, the principal balance of the note and accrued interest was $20,102 and $4,000, respectively.  Other than the shares of common stock issuable upon conversion of the note, none of our shares are subject to outstanding options or warrants to purchase, or securities convertible or exchangeable into, our common equity.


As of July 8, 2013, there were approximately 46 holders of record of our common stock.


We do not have an equity compensation plan in effect as of the date hereof.



16




MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Results of Operations


Comparison of Results of Operations for the three months ended March 31, 2013 and 2012


We reported a net loss of $35,350 during the three months ended March 31, 2013 and a net income of $201 during the three months ended March 31, 2012.


General and administrative expenses were $34,818 for the three months ended March 31, 2013. General and administrative expenses for the three months ended March 31, 2012 were $nil. During the three month period ended March 31, 2013, Canwealth Minerals Corporation completed the merger with USG1, and as a result, incurred legal and professional fees. The $34,818 of operating expenses was primarily due to legal and accounting fees. In the prior year, there were very little transactions that occurred during the same three month period ended March 31, 2012.


The following chart summarizes operating expenses and other income and expenses for the three months ended March 31, 2013 and the three months ended March 31, 2012:


 

 

 

 

 

 

 

 

 

 

 

For the three months
ended
March 31, 2013

 

 

For the three months
ended
March 31, 2012

 

Revenue

$

 

 

 

$

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

34,818 

 

 

 

 

Total operating expenses

 

 

34,818 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(34,818) 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE):

 

 

 

 

 

 

 

 

Interest (expense) income

 

 

(532) 

 

 

 

201 

 

 

 

 

 

 

 

 

 

 

(Loss) income before provision for income taxes

 

 

(35,350) 

 

 

 

201 

 

Provision for income taxes :

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

 

Deferred

 

 

 

 

 

 

Total income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET (LOSS) INCOME

$

 

(35,350) 

 

 

$

201 

 

Cumulative translation gain (loss)

 

 

4,475 

 

 

 

(1,557) 

 

 

 

 

 

 

 

 

 

 

Comprehensive loss

$

 

(30,875) 

 

 

$

(1,356) 

 



Comparison of Results of Operations for the Years Ended December 31, 2012 and 2011

 

We have received no income and have incurred operating expenses for general corporate upkeep and accounting fees. Since there is minimal cash on hand, we will be reliant on the additional capital from existing shareholders or will need to issue more shares to continue as a going concern.

 

General and administrative expenses for the year ended December 31, 2012 totaled $164,946 compared to $18,597 for the year ended December 31, 2011. The increase resulted primarily from an increase in business taxes as



17




well as an increase in professional fees incurred in 2012 related to our public company filing obligations and management fees.


Interest expense for the year ended December 31, 2012 was $4,115 as compared to $23 for the year ended December 31, 2011. The increase was due to interest on a new loan in 2012.


The following chart summarizes operating expenses and other income and expenses for the years ended December 31, 2012 and 2011:

 

 

 

 

 

 

 

 

 

 

 

For the year
ended
December 31, 2012

 

 

For the year
ended
December 31, 2011

 

Revenue

$

 

 

 

$

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

164,946 

 

 

 

18,597 

 

Total operating expenses

 

 

164,946 

 

 

 

18,597 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(164,946) 

 

 

 

(18,597) 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE):

 

 

 

 

 

 

 

 

Interest expense

 

 

(4,115) 

 

 

 

(23) 

 

 

 

 

 

 

 

 

 

 

(Loss) income before provision for income taxes

 

 

(169,061) 

 

 

 

(18,620) 

 

Provision for income taxes :

 

 

 

 

 

 

 

 

Current

 

 

 

 

 

 

Deferred

 

 

 

 

 

 

Total income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET (LOSS) INCOME

$

 

(169,061) 

 

 

$

(18,620) 

 

Cumulative translation (loss) gain

 

 

(1,324) 

 

 

 

295 

 

 

 

 

 

 

 

 

 

 

Comprehensive loss

$

 

(170,385) 

 

 

$

(18,325) 

 



Liquidity and Capital Resources


The accompanying unaudited consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern. As of March 31, 2013, the Company had a deficit accumulated during exploration stage of $245,317 and we have incurred significant operating losses and negative cash flows. For the three months ended March 31, 2013, the Company sustained a net loss of $35,350 compared to a net income of $201 for the three months ended March 31, 2012.


We have not yet recognized revenues from our operations. We will need additional financing which may take the form of equity or debt. In the event we are not able to increase our working capital, we will not be able to implement or may be required to delay all or part of our business plan, and our ability to attain profitable operations, generate positive cash flows from operating and investing activities and materially expand the business will be materially adversely affected.


Off-Balance Sheet Arrangements


There are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources, that is material to investors.




18




Inflation

 

We do not believe our business and operations have been materially affected by inflation.


Critical Accounting Policies


Financial Reporting Release No. 60, published by the SEC, recommends that all companies include a discussion of critical accounting policies used in the preparation of their financial statements. While all these significant accounting policies impact our consolidated financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our consolidated financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates.

 

We believe that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause a material effect on our consolidated results of operations, financial position or liquidity for the periods presented in this report.

 

Our critical accounting policies are as follows:


Revenue Recognition

 

The Company will recognize revenue in accordance with Accounting Standards Codification subtopic 605-10, Revenue Recognition (“ASC 605-10”) which requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management's judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded.

 

ASC 605-10 incorporates Accounting Standards Codification subtopic 605-25, Multiple-Element Arraignments (“ASC 605-25”). ASC 605-25 addresses accounting for arrangements that may involve the delivery or performance of multiple products, services and/or rights to use assets. There was no effect of implementing 605-25 on the Company's financial position and results of operations.


Use of Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles in the Unites States of America 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 revenue and expenses during the reporting period. Accordingly, actual results could differ from those estimates.

 

Cash and Cash Equivalent

 

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. At March 31, 2013 and December 31, 2012 cash consists of a checking account.

 

Mine Exploration and Development Costs

 

The Company accounts for mine exploration costs in accordance with Accounting Standards Codification 932, Extractive Activities. All exploration expenditures are expensed as incurred. Mine development costs are capitalized until production, other than production incidental to the mine development process, commences and are amortized on a units of production method based on the estimated proven and probable reserves. Mine development costs represent costs incurred in establishing access to mineral reserves and include costs associated with sinking or driving shafts and underground drifts, permanent excavations, roads and tunnels. The end of the development phase and the beginning of the production phase takes place when construction of the mine for economic extraction is



19




substantially complete. Coal extracted during the development phase is incidental to the mine’s production capacity and is not considered to shift the mine into the production phase. Amortization of capitalized mine development is computed based on the estimated life of the mine and commences when production, other than production incidental to the mine development process, begins. From February 1, 2006 (date of inception) through March 31, 2012, the Company had not incurred any mine development costs.

 

Mine Properties

 

The Company accounts for mine properties in accordance with Accounting Standard Codification 930, Extractive Activities-Mining. Costs of acquiring mine properties are capitalized by project area upon purchase of the associated claims. Mine properties are periodically assessed for impairment of value and any diminution in value. There were nine mineral properties as of March 31, 2013 and December 31, 2012, respectively presented as intangible asset of $13,138.


Share-Based Payments

 

The Company accounts for its stock based compensation under ASC 718 “Compensation - Stock Compensation” using the fair value based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an entity exchanges it equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. To date, the Company has not adopted a stock option plan nor granted any stock options.

 

Income Taxes

 

Income taxes are accounted for under the assets and liabilities method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled.

 

Net Loss Per Share, basic and diluted

 

The Company has adopted Accounting Standards Codification Subtopic 260-10, Earnings Per Share (“ASC 260-10) specifying the computation, presentation and disclosure requirements of earning per share information. Basic loss per share has been computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding for the period. There were no diluted shares as of March 31, 2013 and December 31, 2012.

 

Derivative Instruments

 

The Company accounts for derivative instruments in accordance with Accounting Standards Codification 815, Derivatives and Hedging (“ASC 815”), which   establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. They require that an entity recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value.

 

If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (i) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (ii) the earnings effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change.

 



20




At March 31, 2013 and December 31, 2012, the Company has not engaged in any transactions that would be considered derivative instruments or hedging activities.


Fair Value of Financial Instruments

 

The Company's financial instruments, as defined by Accounting Standard Codification subtopic 825-10, Financial Instrument (“ASC 825-10), include cash, accounts payable and convertible note payable. All instruments are accounted for on a historical cost basis, which, due to the short maturity of these financial instruments, approximates fair value at March 31, 2013 and December 31, 2012.

 

FASB ASC 820 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. ASC 820 establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value as follows:


Level 1: Observable inputs such as quoted prices in active markets;

Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

Level 3: Unobservable inputs in which there is little or no market data, which requires the reporting entity to develop its own assumptions

 

The Company does not have any assets or liabilities measured at fair value on a recurring basis at March 31, 2013 and December 31, 2012. The Company did not have any fair value adjustments for assets and liabilities measured at fair value on a nonrecurring basis during the year ended March 31, 2013 and December 31, 2012.

 

Foreign Currency Translation and Comprehensive Income (Loss)


The functional currency of Canwealth is the Canadian Dollar (“CAD”). For financial reporting purposes, CAD were translated into United States Dollars (“USD” or “$”) as the reporting currency. Assets and liabilities are translated at the exchange rate in effect at the balance sheet date. Revenues and expenses are translated at the average rate of exchange prevailing during the reporting period.

 

Translation adjustments arising from the use of different exchange rates from period to period are included as a component of stockholders’ equity as “Accumulated other comprehensive income”. Gains and losses resulting from foreign currency transactions are included in the results of operations. There has been no significant fluctuation in the exchange rate for the conversion of CAD to USD after the balance sheet date.

 

The Company uses Accounting Standard Codification 220 “Comprehensive Income”. Comprehensive income is comprised of net income and all changes to the statements of stockholders’ equity, except those due to investments by stockholders, changes in paid-in capital and distributions to stockholders. Comprehensive income for the year ended December 31, 2012 and 2011, for the three months ended March 31, 2013 and 2012 and for the period February 1, 2006 (date of inception) through March 31, 2013 consisted of net loss and foreign currency translation adjustments.

 

The exchange rates used to translate amounts in CAD into USD for the purposes of preparing the financial statements were as follows:

 

 

 

March 31, 2013

 

December 31, 2012

 

 

March 31, 2012

December 31, 2011

 

Period-end CAD: USD exchange rate

 

$  0.9830

 

$  1.0051

 

 

$  1.0040

$  0.9833

 

Average Period CAD: USD exchange rate

 

$  1.0250

 

$  1.0040

 

 

$  0.9939

$  0.9891

 


Concentration and Credit Risk

 

The Company’s principal operations are all carried out in Canada. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in



21




Canada, and by the general state of Canadian economy. The Company’s operations in Indonesia are subject to specific considerations and significant risks not typically associated with companies in North America. These include risks associated with, among others, the political, economic and legal environments and foreign currency exchange. The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

 

Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, consist primarily of cash, cash equivalents and trade receivables. The Company places its cash and temporary cash investments with high credit quality institutions. At times, such investments may be in excess of the FDIC insurance limit.

 

Research and Development

 

The Company accounts for research and development costs in accordance with Accounting Standards Codification subtopic 730-10, Research and Development (“ASC 730-10”). Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and development costs are expensed when the contracted work has been performed or as milestone results have been achieved as defined under the applicable agreement. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. The Company did not incur any research and development expenses from February 1, 2006 (date of inception) through March 31, 2013.

 

Reliance on Key Personnel and Consultants

 

The Company employs three executive officers. The Company is heavily dependent on the continued active participation of these current executive officers, employees and key consultants. The loss of any of the senior management or key consultants could significantly and negatively impact the business until adequate replacements can be identified and put in place.


Reclassification


Certain reclassifications have been made to prior periods’ data to conform to the current period’s presentation. These reclassifications had no impacts on the reported net loss.


 

Recently Issued Accounting Pronouncements

 

The Company has adopted all recently issued accounting pronouncements. The adoption of the accounting pronouncements, including those not yet effective, is not anticipated to have a material effect on the financial position or results of operations of the Company.

 

Financial Statement Presentation

 

The Company’s financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.





22




CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE


The Company determined on April 11, 2013 to dismiss its then accountants, KCCW Accountancy Corp., or KCCW.


During the period from February 27, 2010 (inception) through April 11, 2013, the Company had no disagreements on any matter of accounting principle or practice, financial statement disclosure, or auditing scope or procedure and the former accountant's report on the financial statements for the past two years and from February 27, 2010 (inception) through December 31, 2011 did not contain an adverse opinion or disclaimer of opinion nor was qualified or modified as to uncertainty, scope or accounting principles, except for the substantial doubt about the Company's ability to continue as a going concern. KCCW furnished a letter dated April 11, 2013 to the SEC stating that KCCW agrees with the statements noted above.


Simultaneously on April 11, 2013, the Company engaged the accounting firm of RBSM, LLP ("RBSM"), 805 Third Avenue, Suite 902 New York, New York, 10022.


During the period from February 27, 2010 (inception) through April 11, 2013, the Company did not consult with RBSM regarding (i) the application of accounting principles, (ii) the type of audit opinion that might be rendered by RBSM, or (iii) any other matter that was the subject of a disagreement between us and our former auditor or was a reportable event (as described in Items 304(a)(1)(iv) or Item 304(a)(1)(v) of Regulation S-K, respectively).



23




MANAGEMENT

 

Executive Officers and Directors

 

The biographies of each of our current executive officers, directors and significant employees below contain information regarding the person’s positions with the Company, business experience, director positions held currently or at any time during the last five years, information regarding involvement in certain legal or administrative proceedings, if applicable, and, for directors, the experiences, qualifications, attributes or skills that led to the conclusion that the person should serve as a director for the Company.


The name, age and positions of our sole executive officer and director as of the date of this prospectus are as follows:

 

Name

 

Age

 

Position

 

 

 

 

 

Garth McIntosh

 

67

 

Chairman of the Board, Chief Executive Officer and President

 

Mr. McIntosh has over 40 years of extensive experience working as a business analyst and consultant for a variety of private and public corporations. He developed a series of unique diagnostic tools for businesses to identify the operational areas that could be improved so as to reduce costs and improve efficiency. Mr. McIntosh also has a strong background in strategic consulting, acquisitions and mergers and corporate turn-arounds with private and public companies.


Executive Compensation

 

The Company has not paid any executive compensation in the two most recent fiscal years.

 

Outstanding Equity Awards at Fiscal Year-End

 

The Company did not have any equity incentive plan awards outstanding as of the end of its last completed fiscal year.

 

Director Compensation

 

The Company has not paid any director compensation in the two most recent fiscal years.


Security Ownership of Certain Beneficial Owners and Management

 

The following table sets forth information regarding the beneficial ownership of our common stock as of the date of this prospectus by (a) each person who is known by us to beneficially own 5% or more of our common stock, (b) each of our directors and executive officers, and (c) all of our directors and executive officers as a group.

 

Name

 

Number of

 Shares

 Beneficially

 Owned

 

 

Percentage of

 Shares

 Beneficially

 Owned

 

ICBS, Ltd. (1)

 

 

38,648,077

 

 

 

76.12

%

Radcor Inc.

 

 

5,521,154

 

 

 

10.88

%

Garth McIntosh

 

 

0

(1)

 

 

-

 

Directors and Officers as a Group (one person)

 

 

0

(1)

 

 

-

 


(1)  Mr. McIntosh is the president, director and a principal shareholder of ICBS, Ltd.  Mr. McIntosh disclaims beneficial ownership of the shares of common stock held by ICBS, Ltd.



24





CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS


Mr. Garth McIntosh, the Company’s Chairman of the Board, Chief Executive Officer and President, is also a majority shareholder of ICBS Ltd. which is the largest shareholder of Canwealth Minerals Corporation. As of March 31, 2013 and December 31, 2012, Canwealth Canada has taken loans from the Company or its shareholders of $78,162 and $80,474, respectively in the aggregate. No formal repayment terms or arrangements existed. The entire above loan are non-interest bearing and payable on demand.

 

ICBS Ltd. has given a loan to the Company and also transferred the assets worth $51,960 as of March 31, 2013. As of March 31, 2013, the Company acquired intangible assets of $13,138 through loans from related parties.



PLAN OF DISTRIBUTION


We are offering to the public up to 15,000,000 shares of common stock, at $____ per share.  This is our initial public offering, and no public market currently exists for our shares. The offering price may not reflect the market price of our shares after the offering.  There has been no arrangement to place funds in an escrow, trust, or similar account.


Upon acceptance of a subscription for shares, our transfer agent will issue the shares to the purchasers. We may continue to offer shares for an indefinite period of time after commencement of this offering or until we have sold all of the shares offered in this prospectus. During the offering period, no subscriber will be entitled to any refund of any subscription.


We will sell the shares primarily through our President and Chief Executive Officer, Garth McIntosh, who may be considered an underwriter as that term is defined in Section 2(a) (11). Mr. McIntosh will not receive any commission in connection with the sale of shares, although we may reimburse him for expenses incurred in connection with the offer and sale of the shares. Mr. McIntosh intends to sell the shares being registered according to the following plan of distribution:


§

Shares will be offered to friends, family and other associates of Mr. McIntosh through personal contacts; there will be no direct mail or advertising associated with this offering; and


§

Shares will be offered to individuals who have expressed interest to Mr. McIntosh in regards to investing in a start-up venture.


Mr. McIntosh will be relying on, and complying with, Rule 3a4-1(a) of the Exchange Act as a “safe harbor” from registration as a broker-dealer in connection with the offer and sales of the shares. In order to rely on such “safe harbor” provisions provided by Rule 3a4-1(a), he must be in compliance with all of the following:


§

he must not be subject to a statutory disqualification;


§

he must not be compensated in connection with such selling participation by payment of commissions or other payments based either directly or indirectly on such transactions;


§

he must not be an associated person of a broker-dealer;


§

he must primarily perform, or is intended primarily to perform at the end of the offering, substantial duties for or on behalf of Canwealth otherwise than in connection with transactions in securities; and


§

he must perform substantial duties for Canwealth after the close of the offering not connected with transactions in securities, and not have been associated with a broker or dealer for the preceding 12 months, and not participate in selling an offering of securities for any issuer more than once every 12 months.




25




Mr. McIntosh will comply with the guidelines enumerated in Rule 3a4-1(a). Neither Mr. McIntosh, nor any affiliates will be purchasing shares in the offering.


Since there is no active trading market for these securities, we will sell at a stated fixed price until securities are quoted on the OTC. Thereafter they will be sold at the prevailing market price or privately negotiated prices.


You may purchase shares by completing and manually executing a subscription agreement and delivering it with your payment in full for all shares, which you wish to purchase, to our offices. Your subscription shall not become effective until accepted by us and approved by our counsel. Acceptance will be based upon confirmation that you have purchased the shares in a state providing for an exemption from registration. Our subscription process is as follows:


§

a prospectus, with subscription agreement, is delivered by Canwealth to each offeree;


§

the subscription is completed by the offeree, and submitted with check to Canwealth where the subscription and a copy of the check is reviewed by securities counsel;


§

each subscription is reviewed by counsel for Canwealth to confirm the subscribing party completed the form, and to confirm the state of acceptance;


§

once approved by counsel, the subscription is accepted by Mr. McIntosh, and the funds deposited into an account labeled: Canwealth Minerals Corporation, within four (4) days of acceptance;


§

subscriptions not accepted, are returned with the check un-deposited within 24 hours of determination of non-acceptance.


Penny Stock Rules

 

You should note that our common stock is a penny stock covered by Rules 15g-1 through 15g-6 and 15g-9 promulgated under the Exchange Act. Under those Rules, a “penny stock” is generally defined to be any equity security that has a market price (as defined) of less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Those Rules impose additional sales practice requirements on broker-dealers who sell penny stocks to persons other than established customers and “accredited investors”. The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The 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 in a form prepared by the SEC which 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 monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the Rules require that prior to a transaction in a penny stock not otherwise exempt from these 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 agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these Rules. Consequently, these Rules may affect the ability of broker-dealers to trade our shares of our common stock. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock and may also affect your ability to resell your shares of common stock due to broker-dealer reluctance to undertake the above described regulatory burdens.


Shares Eligible for Future Sale

 

Upon completion of this offering, there will be 65,769,231shares of our common stock issued and outstanding.  The shares purchased in this offering will be freely tradable without registration or other restriction



26




under the Securities Act, except for any shares purchased by an “affiliate” of our Company (as defined under the Securities Act).

 

Our currently outstanding shares of common stock that were issued in reliance upon the “private placement” exemptions under the Securities Act are deemed “restricted securities” within the meaning of Rule 144 under the Securities Act.  Restricted securities may not be sold unless they are registered under the Securities Act or are sold pursuant to an applicable exemption from registration, including an exemption under Rule 144.

 

In general, under Rule 144, any person (or persons whose shares are aggregated) including persons deemed to be affiliates, whose restricted securities have been fully paid for and held for at least six months from the later of the date of issuance by us or acquisition from an affiliate, may sell such securities in broker’s transactions or directly to market makers, provided, in the case of sales by an affiliate, that the number of shares sold in any three-month period may not exceed the greater of one percent of the then-outstanding shares of our common stock or the average weekly trading volume of our shares of common stock in the over-the-counter market during the four calendar weeks preceding the sale.  Sales under Rule 144 are also subject to the availability of current public information about our Company and, with respect to affiliates, certain notice requirements.  After one year has elapsed from the later of the issuance of restricted securities by us or their acquisition from an affiliate, such securities may be sold without limitation by persons who are not affiliates under the rule.

 

We are unable to predict with certainty the effect which sales of the shares of common stock offered by this prospectus might have upon our ability to raise additional capital.  Nevertheless, it is possible that the resale of shares offered hereby could adversely affect the trading price of our common stock.

   




27




DESCRIPTION OF SECURITIES

 

Our authorized capital stock consists of 120,000,000 shares, consisting of 100,000,000 shares of our common stock, par value $0.0001 per share, or Common Stock, and 20,000,000 shares of our preferred stock, par value $0.0001 per share, or Preferred Stock.  The Common Stock is registered under Section 12(g) of the Exchange Act.  


Common Stock


Voting Rights.  A holder of Common Stock is entitled to one vote per share of Common Stock on all matters submitted for action by the stockholders.  A quorum for the transaction of business at any meeting of the holders of Common Stock is the majority of the votes of all shares issued and outstanding. All shares of Common Stock are equal to each other with respect to the election of directors.  Our certificate of incorporation does not allow for cumulative voting.


Liquidation.  Upon our liquidation, dissolution or winding-up, the holders of our Common Stock are entitled to share ratably in all of our assets which are legally available for distribution, after payment of or provision for all liabilities and the preferences of any then outstanding shares of Preferred Stock.

 

Other.  The holders of our Common Stock have no preemptive, subscription, redemption or conversion rights.  All issued and outstanding shares of our Common Stock are fully-paid and non-assessable.


Preferred Stock


Under our certificate of incorporation, the board of directors has the power, without further action by the holders of the Common Stock, to designate the relative rights and preferences of the Preferred Stock, and to issue the Preferred Stock in one or more series as designated by the board of directors. The designation of rights and preferences could include preferences as to liquidation, redemption and conversion rights, voting rights, dividends or other preferences, any of which may be dilutive of the interest of the holders of the Common Stock or the Preferred Stock of any other series. The issuance of Preferred Stock may have the effect of delaying or preventing a change in control of the Company without further stockholder action and may adversely affect the rights and powers, including voting rights, of the holders of the Common Stock.


We have not designated or issued any shares of our Preferred Stock to date.



INTEREST OF NAMED EXPERTS AND COUNSEL

 

None of our experts or counsel have any equity or other interests in the Company.




28




DISCLOSURE OF COMMISSION POSITION ON

INDEMNIFICATION FOR SECURITIES ACT LIABILITIES


Section 145 of the Delaware General Corporation Law, or the DGCL, provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with any threatened, pending or completed actions, suits or proceedings in which such person is made a party by reason of such person being or having been a director, officer, employee or agent to such corporation. The DGCL provides that Section 145 is not exclusive of other rights to which those seeking indemnification may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise.


Our certificate of incorporation provides for indemnification of our directors, officers, agents and employees to the fullest extent permitted by the DGCL.  Our bylaws provide that, to the extent permitted by applicable law, we will generally indemnify any director, officer, agent or employee of the Company for judgments, fines, amounts paid in settlement or expenses (including attorneys’ fees) actually and reasonably incurred by such indemnified person, provided he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the Company and, with respect to any criminal action or proceeding, he or she had no reason to believe his or her conduct was unlawful.


Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and persons controlling our Company pursuant to the foregoing provisions, we have been informed 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 of expenses incurred or paid by a director, officer or controlling person of our Company in the successful defense of any action, suit or proceeding) is asserted by any of our directors, officers or controlling persons in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of that issue.



ABOUT THIS PROSPECTUS


This prospectus is not an offer or solicitation in respect to these securities in any jurisdiction in which such offer or solicitation would be unlawful.  This prospectus is part of a registration statement that we filed with the SEC.  The registration statement that contains this prospectus (including the exhibits to the registration statement) contains additional information about our company and the securities offered under this prospectus.  That registration statement can be read at the SEC’s website or offices indicated under the section of this prospectus entitled “Where You Can Find More Information.”  We have not authorized anyone else to provide you with different information or additional information.  You should not assume that the information in this prospectus, or any supplement or amendment to this prospectus, is accurate at any date other than the date indicated on the cover page of such documents.



WHERE YOU CAN FIND MORE INFORMATION


Federal securities laws require us to file information with the SEC concerning our business and operations. Accordingly, we file annual, quarterly, and special reports and other information with the SEC. You may read and copy any of this material at the Public Reference Room maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. You may receive information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. The SEC also maintains an Internet site at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding companies that, like us, file information electronically with the SEC.  Upon written request delivered to Canwealth Minerals Corporation, 1376 Perrot Boulevard, Ile



29




Perrot, Quebec, Canada J7V 7P2, Attention: Garth McIntosh, we will send to any security holder a copy of our annual report, complete with audited financial statements, at no charge to the security holder.


VALIDITY OF COMMON STOCK


Legal matters in connection with the validity of the shares offered by this prospectus will be passed upon by Westerman Ball Ederer Miller & Sharfstein, LLP, of Uniondale, New York.



TRANSFER AGENT


The current transfer agent for the shares of our Common Stock is American Stock Transfer & Trust Company, LLC, 6201 15th Avenue, Brooklyn, NY 11219.



EXPERTS

 

The financial statements of the Company as of December 31, 2012 and December 31, 2011, and for the years then ended, included in this prospectus and registration statement, have been included herein in reliance on the reports of RBSM, LLP, independent registered certified public accounting firm, given on the authority of that firm as experts in accounting and auditing.



INCORPORATION BY REFERENCE


We maintain an internet site at www.canwealthminerals.com which contains information concerning our Company. The information contained on our internet site is not incorporated by reference in this prospectus and should not be considered a part of this prospectus.




30




CANWEALTH MINERALS CORPORATION

(An Exploratory Stage Company)


INDEX TO FINANCIAL STATEMENTS

 

 

Page

 

 

Report of Independent Registered Public Accounting Firm

F-1

 

 

Financial Statements:

 

 

 

Balance Sheets as of December 31, 2012 and 2011

F-2

 

 

Statements of Operations for the years ended December 31, 2012 and 2011 and for the period from February 1, 2006 (date of inception) through December 31, 2012

F-3

 

 

Statement of Changes in Stockholders’ Deficit for the period from February 1, 2006 (date of inception) through December 31, 2012

F-4

 

 

Statements of Cash Flows for the years ended December 31, 2012 and 2011 and for the period from February 1, 2006 (date of inception) through December 31, 2012

F-5

 

 

Notes to Financial Statements

F-6

 

 

Unaudited Condensed Consolidated Balance Sheets as of March 31, 2013 and December 31, 2012

F-15

 

 

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three Months Ended March 31, 2013 and 2012 and for the period from February 1, 2006 (date of inception) through March 31, 2013

F-16

 

 

Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Deficit for the period from February 1, 2006 (date of inception) through March 31, 2013

F-17

 

 

Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2013 and 2012 and for the period from February 1, 2006 (date of inception) through March 31, 2013

F-18

 

 

Notes to Interim Unaudited Condensed Consolidated Financial Statements

F-19











REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Stockholders of

Canwealth Minerals Corporation



We have audited the accompanying balance sheet of Canwealth Minerals Corporation (the “Company”), an exploration stage company as of December 31, 2012 and the related statements of operations, stockholders’ equity and cash flows for the year ended December 31, 2012 and for the period from February 1, 2006 (date of inception) through December 31, 2012. 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 have conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide 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 Canwealth Minerals Corporation as of December 31, 2012, and the results of their operations and their cash flows for the year ended December 31, 2012 and for the period from February 1, 2006 (date of inception) through December 31, 2012, 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 4 to the accompanying financial statements, the Company is an exploration stage company and has not commenced its planned principal operations, has suffered recurring losses since inception and is experiencing difficulty in generating sufficient cash flow to sustain its operations, which raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to this matter are described in Note 4. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.



/s/ RBSM LLP


New York, New York

July 3, 2013




F-1





 CANWEALTH MINERALS CORPORATION

 (An Exploratory Stage Company)

BALANCE SHEETS AS OF

 

 

 

December 31, 2012

 

 

December 31, 2011

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalent

 

$

424

 

 

$

57

 

Other current assets

 

 

3,601

 

 

 

3,874

 

Total current assets

 

 

4,025

 

 

 

3,931

 

 

 

 

 

 

 

 

 

 

Property and equipment

 

 

51,960

 

 

 

50,833

 

 

 

 

 

 

 

 

 

 

Other assets:

 

 

 

 

 

 

 

 

Intangible assets

 

 

13,138

 

 

 

12,095

 

Total other assets

 

 

13,138

 

 

 

12,095

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

69,123

 

 

$

66,859

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

165,711

 

 

$

2,654

 

Loans private individual

 

 

20,102

 

 

 

-   

 

Loans from related parties

 

 

80,474

 

 

 

90,984

 

Total current liabilities

 

 

266,287

 

 

 

93,638

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Stockholders' deficit:

 

 

 

 

 

 

 

 

Preferred stock; $0.0001 par value, 20,000,000 shares authorized, none issued and outstanding as of December 31, 2012 and 2011

 

 

-

 

 

 

-

 

Common stock; $0.0001 par value, 100,000,000 shares authorized 44,169,231 shares issued and outstanding as of December 31, 2012 and 2011

 

 

4,417

 

 

 

4,417

 

Additional paid in capital

 

 

-

 

 

 

-

 

Other comprehensive (loss) income

 

 

(795)

 

 

 

529

 

Deficit accumulated during the exploratory stage                 

 

 

(200,787)

 

 

 

(31,726)

 

Total stockholders' deficit

 

 

(197,164)

 

 

 

(26,779)

 

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders' deficit

 

$

69,123

 

 

$

66,859

 

 

 

The accompanying notes are an integral part of these financial statements



F-2






CANWEALTH MINERALS CORPORATION

 (An Exploratory Stage Company)

STATEMENTS OF OPERATIONS

 

 

 

 

For the year

ended

December 31, 2012

 

 

For year

ended

December 31, 2011

 

 

For the period

February 1, 2006

(date of inception)

through

December 31, 2012

 

Revenue

 

$               -

 

 

$               -

 

 

$              -

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

 164,946

 

 

 

18,597

 

 

 

192,195

 

Total operating expenses

 

 

164,946

 

 

 

18,597

 

 

 

192,195

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(164,946)

 

 

 

(18,597)

 

 

 

(192,195)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE):

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(4,115)

 

 

 

(23)

 

 

 

(4,276)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before provision for income taxes

 

 

(169,061)

 

 

 

(18,620)

 

 

 

(196,471)

 

Provision for income taxes :

 

 

 

 

 

 

 

 

 

 

 

 

Current

 

 

-

 

 

 

-

 

 

 

-

 

Deferred

 

 

-

 

 

 

-

 

 

 

-

 

Total income taxes

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET LOSS

 

$

(169,061)

 

 

$

(18,620)

 

 

$

(196,471)

 

Loss per share, basic and diluted

 

$

(0.00)

 

 

$

(0.00)

 

 

 

 

 

Weighted average shares, basic and diluted

 

 

44,169,231

 

 

 

44,169,231

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

(169,061)

 

 

 

(18,620)

 

 

 

(196,471)

 

Cumulative translation (loss) gain

 

 

(1,324)

 

 

 

295

 

 

 

(795)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive loss

 

$

(170,385)

 

 

$

(18,325)

 

 

$

(197,266)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements.



F-3





CANWEALTH MINERALS CORPORATION

(An Exploratory Stage Company)

STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT

For the Period February 1, 2006 (date of inception) through December 31, 2012

 

 

 

Common Stock

 

 

 

 

 

Deficit Accumulated During

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Other comprehensive income

 

 

Exploratory Stage

 

 

Total

 

Balance at date of inception, February 1, 2006

 

 

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

Issuance of shares for seed capital

 

 

44,169,231

 

 

 

4,417

 

 

 

-

 

 

 

(4,317)

 

 

 

100

 

Cumulative translation gain

 

 

-

 

 

 

-

 

 

 

25

 

 

 

-

 

 

 

25

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(262)

 

 

 

(262)

 

Balance, December 31, 2009

 

 

44,169,231

 

 

 

4,417

 

 

 

25

 

 

 

(4,579)

 

 

 

(137)

 

Cumulative translation gain

 

 

-

 

 

 

-

 

 

 

209

 

 

 

-

 

 

 

209

 

Net loss for the year ended December 31, 2010

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(8,527)

 

 

 

(8,527)

 

Balance, December 31, 2010

 

 

44,169,231

 

 

 

4,417

 

 

 

234

 

 

 

(13,106)

 

 

 

(8,455)

 

Cumulative translation gain

 

 

-

 

 

 

-

 

 

 

295

 

 

 

-

 

 

 

295

 

Net loss for the year ended December 31, 2011

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(18,620)

 

 

 

(18,620)

 

Balance, December 31, 2011

 

 

44,169,231

 

 

 

4,417

 

 

 

529

 

 

 

(31,726)

 

 

 

26,780

 

Cumulative translation loss

 

 

-

 

 

 

-

 

 

 

(1,324)

 

 

 

-

 

 

 

(1,324)

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(169,061)

 

 

 

(169,061)

 

Balance, December 31, 2012

 

 

44,169,231

 

 

$

4,417

 

 

$

(795)

 

 

$

(200,787)

 

 

$

(197,164)

 

 

The accompanying notes are an integral part of these financial statements.



F-4





CANWEALTH MINERALS CORPORATION

(An Exploratory Stage Company)

STATEMENTS OF CASH FLOWS

   

 

For the year

ended

December 31, 2012

 

 

For year

December 31, 2011

 

 

For the period

February 1, 2006

(date of inception)

through

December 31, 2012

 

CASH FLOWS FROM OPERATING ACTIVITIES :

 

 

 

 

 

 

 

 

 

Net loss

 

$

(169,061)

 

 

$

(18,620)

 

 

$

(196,471)

 

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses incurred by related parties on behalf of the Company

 

 

--

 

 

 

20,507

 

 

 

28,056

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Other current assets

 

 

273

 

 

 

(3,170)

 

 

 

(3,601)

 

Accounts payable and accrued liabilities

 

 

163,057

 

 

 

1,045

 

 

 

165,711

 

Net cash used in operating activities

 

 

(5,731)

 

 

 

(238)

 

 

 

(6,304)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 -

 

 

 

 

 

 

 -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 

 

Capital contribution

 

 

-

 

 

 

-

 

 

 

101

 

Repayment of loan from related party

 

 

(11,553)

 

 

 

-

 

 

 

(11,553)

 

Proceeds from issuance of convertible note payable

 

 

20,102

 

 

 

-

 

 

 

20,102

 

Net cash provided by financing activities

 

 

8,549

 

 

 

-

 

 

 

8,650

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effect of foreign exchange gain (loss)

 

 

(2,451)

 

 

 

295

 

 

 

(1,922)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

 

367

 

 

 

57

 

 

 

424

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

 

57

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

 

$

424

 

 

$

57

 

 

$

424

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

 

 

 

 

 

 

 

 

 

 

 

 

Cash paid during the period for interest

 

$

-

 

 

$

-

 

 

$

-

 

Cash paid during the period for income taxes

 

$

-

 

 

$

-

 

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NONCASH INVESTING AND FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 

 

Property and equipment purchased through loans from related parties

 

$

-

 

 

$

50,833

 

 

$

50,833

 

Intangible assets purchased through loans from related parties

 

$

1,043

 

 

$

12,095

 

 

$

13,138

 

Recapitalization effect

 

$

4,317

 

 

$

-

 

 

$

4,317

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of these financial statements.



F-5



CANWEALTH MINERALS CORPORATION

(An Exploratory Stage Company)

Notes to Financial Statements

December 31, 2012 and 2011




NOTE 1 - NATURE OF OPERATIONS

 

Canwealth Minerals Corporation was organized on February 1, 2006 under the laws of the Canada Business Corporations Act.

 

Canwealth’s mission is to develop the mining concessions it has registered in various areas of Northern Quebec, which based on assay reports of preliminary samples taken from these sites, has shown to contain traces of various elements such as gold, silver, copper, rare earth and other such minerals.

 

The Company, when presented with the opportunity to do so, will seek to register additional land claims in other regions of Quebec, however it is not limited to only that region of North America, or any other area where opportunities may present themselves.  Upon entering into agreements to acquire concessions, the Company will market the properties to mining companies and other interested parties.

  

The Company’s year end is December 31.

 

The Company is in the exploratory stage as defined by Accounting Standards Codification subtopic 915-10 Development stage Entities (“ASC 915-10”) with its efforts principally devoted to developing a platform of prime quality energy assets. To date, the Company, has incurred expenses and has sustained losses. Consequently, its operations are subject to all the risks inherent in the establishment of a new business enterprise. For the period from inception through December 31, 2012, the Company has accumulated losses of $200,787. The Company also owns as of December 31, 2012, mining equipment with an associated cost of $51,960 and mining concessions at a cost of $13,138.

 

NOTE 2 - MERGER AND RECAPITALIZATION

 

On August 10, 2012, USG1, Inc., a Delaware corporation (“USG1”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Canwealth Minerals Corporation, a Delaware corporation (“Canwealth Delaware”), and Kimi Royer as representative of the USG1 stockholders, pursuant to which Canwealth Delaware would merge with and into USG1 at the closing, as contemplated by the Merger Agreement. The merger contemplated by the Merger Agreement occurred on February 11, 2013. Upon the closing, the existing shares of Canwealth Delaware common stock were converted into 44,169,231 shares of USG1 common stock. The existing USG1 stockholders continued to hold 6,600,000 shares of USG1 common stock. As consideration for the merger, Canwealth Delaware shall pay the stockholder representative of USG1 an aggregate of Fifty Thousand Dollars ($50,000) (the “Merger Consideration”), who shall be solely responsible to distribute such Merger Consideration among the non-dissenting stockholders of USG1 on a pro rata basis relative to the number of shares of USGI Stock held by each such non-dissenting stockholder prior to the merger. The Merger Consideration shall be paid by Canwealth Delaware as follows:


(A)

Ten Thousand Dollars ($10,000) shall be payable upon a Registration Statement on Form S-1 filed by the surviving company of the merger being declared effective by the Securities and Exchange Commission; and


(B)

Forty Thousand Dollars ($40,000) shall be payable upon (i) the filing of a Form 15c2-11 by the surviving company of the merger and (ii) the shares of the surviving company stock being actively traded on a stock exchange or quotation service.


Prior to the merger, the stockholders of Canwealth Minerals Corporation, a company organized on February 1, 2006 under the laws of the Canada Business Corporations Act (“Canwealth Quebec”), contributed their shares of Canwealth Quebec to Canwealth Delaware in exchange for shares of Canwealth Delaware common stock. As a result of the foregoing, Canwealth Quebec is a wholly-owned subsidiary of Canwealth Delaware. Following the merger, USG1 succeeded to the mining business and operations of Canwealth Quebec. 




F-6



CANWEALTH MINERALS CORPORATION

(An Exploratory Stage Company)

Notes to Financial Statements

December 31, 2012 and 2011




Prior to the merger, there were no material relationships between USG1 and Canwealth Delaware or Canwealth Quebec or between Company’s respective affiliates, directors or officers. All USG1 pre-merger liabilities were settled prior to closing. Upon the effectiveness of the merger, the existing directors and officers of USG1 each resigned and Garth McIntosh was elected as the sole officer and director of USG1.


Due to a conflict of interest, on November 24, 2012, one of the shareholders and directors of the Corporation sold his 20% interest back to the Corporation for $20 and he resigned from his position on the Board of Directors, all in accordance with the non-concurrence agreements signed by all shareholder and directors. The remaining shareholders and directors approved the transaction on behalf of the company. These 20 shares were re-issued to the remaining shareholders in accordance with their percentage interest in the Company.


Contemporaneously with the merger, the corporate name “USG1, Inc.” was changed to “Canwealth Minerals Corporation”. As a result of the merger, Canwealth Quebec became a wholly-owned subsidiary of Canwealth Minerals Corporation (Delaware) and, accordingly, USG1 succeeded to the mining business and operations of the Canwealth entities.


USG1 is a publicly registered corporation with no significant operations prior to the merger. For accounting purposes, Canwealth Delaware shall be the surviving entity. The transaction is accounted for using the purchase method of accounting. As a result of the recapitalization and change in control, Canwealth Delaware is the acquiring entity in accordance with ASC 805, Business Combinations. The accumulated losses of Canwealth Delaware were carried forward after the completion of the Merger. Operations prior to the Merger were those of Canwealth Delaware.


NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


A summary of significant accounting policies applied in the presentation of financial statements are as follows:

 

Revenue Recognition

 

The Company will recognize revenue in accordance with Accounting Standards Codification subtopic 605-10, Revenue Recognition (“ASC 605-10”) which requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management's judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded.

 

ASC 605-10 incorporates Accounting Standards Codification subtopic 605-25, Multiple-Element Arraignments (“ASC 605-25”). ASC 605-25 addresses accounting for arrangements that may involve the delivery or performance of multiple products, services and/or rights to use assets. There was no effect of implementing 605-25 on the Company's financial position and results of operations.

 

Use of Estimates

 

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States 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 amount of revenue and expenses during the reported period. Actual results could differ materially from the estimates.




F-7



CANWEALTH MINERALS CORPORATION

(An Exploratory Stage Company)

Notes to Financial Statements

December 31, 2012 and 2011




Cash and Cash Equivalent

 

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. At December 31, 2012 cash consists of a checking account.

 

Mine Exploration and Development Costs

 

The Company accounts for mine exploration costs in accordance with Accounting Standards Codification 932, Extractive Activities. All exploration expenditures are expensed as incurred. Mine development costs are capitalized until production, other than production incidental to the mine development process, commences and are amortized on a units of production method based on the estimated proven and probable reserves. Mine development costs represent costs incurred in establishing access to mineral reserves and include costs associated with sinking or driving shafts and underground drifts, permanent excavations, roads and tunnels. The end of the development phase and the beginning of the production phase takes place when construction of the mine for economic extraction is substantially complete. Coal extracted during the development phase is incidental to the mine’s production capacity and is not considered to shift the mine into the production phase. Amortization of capitalized mine development is computed based on the estimated life of the mine and commences when production, other than production incidental to the mine development process, begins. From February 1, 2006 (date of inception) through December 31, 2012, the Company had not incurred any mine development costs.

 

Mine Properties

 

The Company accounts for mine properties in accordance with Accounting Standard Codification 930, Extractive Activities-Mining. Costs of acquiring mine properties are capitalized by project area upon purchase of the associated claims. Mine properties are periodically assessed for impairment of value and any diminution in value. There were nine mineral properties as of December 31, 2012 presented as intangible asset of $13,138.

 

 Income Taxes

 

The Company has adopted Accounting Standards Codification subtopic 740-10, Income Taxes (“ASC 740-10”) which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statement or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Temporary differences between taxable income reported for financial reporting purposes and income tax purposes consist primarily of timing differences such as deferred officers’ compensation and stock compensation accounting versus tax differences.

 

Net Loss Per Share, basic and diluted

 

The Company has adopted Accounting Standards Codification Subtopic 260-10, Earnings Per Share (“ASC 260-10) specifying the computation, presentation and disclosure requirements of earning per share information. Basic loss per share has been computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding for the period. There were no diluted shares as of December 31, 2012 and 2011.

 

Derivative Instruments

 

The Company accounts for derivative instruments in accordance with Accounting Standards Codification 815, Derivatives and Hedging (“ASC 815”), which   establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. They require that an entity recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value.



F-8



CANWEALTH MINERALS CORPORATION

(An Exploratory Stage Company)

Notes to Financial Statements

December 31, 2012 and 2011




 

If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (i) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (ii) the earnings effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change.

 

At December 31, 2012 and 2011, the Company has not engaged in any transactions that would be considered derivative instruments or hedging activities.

 

Fair Value of Financial Instruments

 

The Company's financial instruments, as defined by Accounting Standard Codification subtopic 825-10, Financial Instrument (“ASC 825-10), include cash, accounts payable and convertible note payable. All instruments are accounted for on a historical cost basis, which, due to the short maturity of these financial instruments, approximates fair value at December 31, 2012.

 

FASB ASC 820 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. ASC 820 establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value as follows:


Level 1: Observable inputs such as quoted prices in active markets;

Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

Level 3: Unobservable inputs in which there is little or no market data, which requires the reporting entity to develop its own assumptions

 

The Company does not have any assets or liabilities measured at fair value on a recurring basis at December 31, 2012 and 2011. The Company did not have any fair value adjustments for assets and liabilities measured at fair value on a nonrecurring basis during the year ended December 31, 2012 and 2011.

 

Foreign Currency Translation and Comprehensive Income (Loss)


The functional currency of Canwealth is the Canadian Dollar (“CAD”). For financial reporting purposes, CAD were translated into United States Dollars (“USD” or “$”) as the reporting currency. Assets and liabilities are translated at the exchange rate in effect at the balance sheet date. Revenues and expenses are translated at the average rate of exchange prevailing during the reporting period.

 

Translation adjustments arising from the use of different exchange rates from period to period are included as a component of stockholders’ equity as “Accumulated other comprehensive income”. Gains and losses resulting from foreign currency transactions are included in the results of operations. There has been no significant fluctuation in the exchange rate for the conversion of CAD to USD after the balance sheet date.

 

The Company uses Accounting Standard Codification 220 “Comprehensive Income”. Comprehensive income is comprised of net income and all changes to the statements of stockholders’ equity, except those due to investments by stockholders, changes in paid-in capital and distributions to stockholders. Comprehensive income for the year ended December 31, 2012 and 2011 and for the period February 1, 2006 (date of inception) through December 31, 2012 consisted of net loss and foreign currency translation adjustments.

 

The exchange rates used to translate amounts in CAD into USD for the purposes of preparing the financial statements were as follows:

 



F-9



CANWEALTH MINERALS CORPORATION

(An Exploratory Stage Company)

Notes to Financial Statements

December 31, 2012 and 2011







 

 

December 31, 2012

 

 

December 31, 2011

 

Period-end CAD: USD exchange rate

 

$  1.0051

 

 

$  0.9833

 

Average Period CAD: USD exchange rate

 

$  1.0040

 

 

$  0.9891

 


Stock Based Compensation

 

The Company follows Accounting Standards Codification subtopic 718-10, Compensation (“ASC 718-10”) which requires that all share-based payments to both employees and non-employees be recognized in the income statement based on their fair values.

 

As of December 31, 2012 and 2011, the Company did not have any issued or outstanding stock options.


Concentration and Credit Risk

 

The Company’s principal operations are all carried out in Canada. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in Canada, and by the general state of Canadian economy. The Company’s operations in Indonesia are subject to specific considerations and significant risks not typically associated with companies in North America. These include risks associated with, among others, the political, economic and legal environments and foreign currency exchange. The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

 

Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, consist primarily of cash, cash equivalents and trade receivables. The Company places its cash and temporary cash investments with high credit quality institutions. At times, such investments may be in excess of the FDIC insurance limit.

 

Research and Development

 

The Company accounts for research and development costs in accordance with Accounting Standards Codification subtopic 730-10, Research and Development (“ASC 730-10”). Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and development costs are expensed when the contracted work has been performed or as milestone results have been achieved as defined under the applicable agreement. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. The Company did not incur any research and development expenses from February 1, 2006 (date of inception) through December 31, 2012.

 

Reliance on Key Personnel and Consultants

 

The Company employs three executive officers. The Company is heavily dependent on the continued active participation of these current executive officers, employees and key consultants. The loss of any of the senior management or key consultants could significantly and negatively impact the business until adequate replacements can be identified and put in place.


Reclassification


Certain reclassifications have been made to prior periods’ data to conform to the current period’s presentation. These reclassifications had no impacts on the reported net loss.

 



F-10



CANWEALTH MINERALS CORPORATION

(An Exploratory Stage Company)

Notes to Financial Statements

December 31, 2012 and 2011




Impact of New Accounting Standards

 

The Company has reviewed all other recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on its results of operation, financial position or cash flows. Based on that review, the Company believes that none of these pronouncements will have a significant effect on its financial statements.

 

NOTE 4 - GOING CONCERN MATTERS


The accompanying financial statements have been prepared on a basis that assumes the Company will continue as a going concern. As of December 31, 2012, the Company has a deficit accumulated during exploration stage of $200,787 and has incurred significant operating losses and negative cash flows. For the year ended December 31, 2012, the Company sustained a net loss of $169,061 compared to a net loss of $18,620 for the year ended December 31, 2011. The Company will need additional financing which may take the form of equity or debt. In the event the Company are not able to increase its working capital, the Company will not be able to implement or may be required to delay all or part of its business plan, and their ability to attain profitable operations, generate positive cash flows from operating and investing activities and materially expand the business will be materially adversely affected. The accompanying financial statements do not include any adjustments relating to the classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the company be unable to continue in existence.



NOTE 5 – PROPERTY AND EQUIPMENT


Property and equipment at December 31, 2012 and 2011 are as follows:

 

 

December 31, 2012

December 31, 2011

Mining machinery and equipment

$     51,960

$         50,833

Total

$     51,960

$         50,833


No depreciation has been charged for the years ended December 31, 2012 and 2011, since the Company is in assembly and testing mode, not in operations.


The above assets has been transferred from ICBS Ltd, a related party (refer note 7).

   

NOTE 6 - CAPITAL STOCK


Preferred Stock


The Company is authorized to issue 20,000,000 shares of preferred stock, par value of $0.0001.


As of December 31, 2012 and 2011, no preferred stock was issued and outstanding.


Common Stock


The Company is authorized to issue 100,000,000 shares of common stock with par value of $0.0001 per share.


As noted earlier in note 2, on February 11, 2013, the Company consummated the transactions contemplated by the Merger Agreement that resulted in a reverse merger and a change in control of the Company. The 6,600,000 shares of the Company outstanding prior to the closing of the merger are treated as having been issued as of February 11,



F-11



CANWEALTH MINERALS CORPORATION

(An Exploratory Stage Company)

Notes to Financial Statements

December 31, 2012 and 2011




2013 (subsequent to the date of financial statements), whereas the 44,169,231 shares issued in connection with the merger are treated as having been issued since inception for all periods presented.


All reference to common stock shares and per share amounts have been retroactively restated to effect the reverse merger as if the transaction had taken place as of the beginning of the earliest period presented.


Prior to the closing of the merger, USG1 had 6,600,000 shares of common stock issued and outstanding which were treated as having been issued as of February 11, 2013.


In February 2013, in connection with the reverse merger transaction, the Company issued an aggregate of 44,169,231 shares of its common stock in exchange for existing shares of Canwealth Delaware, which are treated as having been issued since inception for all periods presented.


As of December 31, 2012 and 2011, there were 44,169,231 shares of common stock issued and outstanding.


NOTE 7 - RELATED PARTY TRANSACTIONS

 

Mr. Garth McIntosh, the Company’s Chairman of the Board, Chief Executive Officer and President, is also a majority shareholder of ICBS Ltd. which is the largest shareholder of Canwealth Minerals Corporation. As of December 31, 2012 and 2011, the Company has taken loans from shareholders of $80,474 and $90,984, respectively. No formal repayment terms or arrangements existed. The entire above loan are non-interest bearing and payable on demand.

 

ICBS Ltd. has given a loan to the Company and also transferred the assets worth $51,960 as of December 31, 2012. As of December 31, 2012, the Company acquired intangible asset of $13,138 through loans from related parties.

 

NOTE 8 – CONVERTIBLE NOTE PAYABLE


On October 20, 2012, the Company entered into an agreement with a third party non-affiliate to a 20% interest bearing convertible note for CAD20,000 ($20,102) due on January 20, 2013, with the conversion features commencing immediately. The note is convertible into 100,000 shares of common stock of the Company.


As of December 31, 2012, the balance in the note and accrued interest was $20,102 and $4,000, respectively. There was no such convertible note outstanding as of December 31, 2011.


Subsequent to the date of the financial statements, on May 11, 2013, the note was extended to June 30, 2013.


NOTE 9 – INCOME TAXES

 

The Company follows Accounting Standards Codification subtopic 740-10, Income Taxes (“ASC 740-10”) which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statement or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between financial statements and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Temporary differences between taxable income reported for financial reporting purposes and income tax purposes include, but not limited to, accounting for intangibles, debt discounts associated with convertible debt, equity based compensation and depreciation and amortization.

 

At December 31, 2012, the Company has available for federal income tax purposes a net operating loss carry forward of approximately $196,000, which expires in the year 2032, that may be used to offset future taxable income. The Company has provided a valuation reserve against the full amount of the net operating loss benefit, since in the opinion of management based upon the earnings history of the Company; it is more likely than not that the benefits will not be realized. Based upon the change in ownership rules under section 382 of the Internal



F-12



CANWEALTH MINERALS CORPORATION

(An Exploratory Stage Company)

Notes to Financial Statements

December 31, 2012 and 2011




Revenue Code of 1986, if in the future the Company issues common stock or additional equity instruments convertible in common shares which result in an ownership change exceeding the 50% limitation threshold imposed by that section, all of the Company’s net operating losses carry forwards may be significantly limited as to the amount of use in a particular years. All or portion of the remaining valuation allowance may be reduced in future years based on an assessment of earnings sufficient to fully utilize these potential tax benefits.

 

NOTE 9 – INCOME TAXES (CONTINUED)

 

At December 31, 2012, the significant components of the deferred tax assets (liabilities) are summarized below:

 

Net operating loss carry forwards expiring through 2032

 

$

196,000

 

 

 

 

 

 

Tax Asset

 

 

39,200

 

Less valuation allowance

 

 

(39,200)

 

Balance

 

$

 

 

 

 

 

 

Net operating loss carry forwards 2012 (estimated)

 

$

196,000

 

Balance

 

$

196,000

 

 

The Company recognizes interest and penalties related to uncertain tax positions in general and administrative expenses. As of December 31, 2012, the Company has no unrecognized tax benefit from uncertain tax positions, including interest and penalties.

 

The difference between income tax expense computed by applying the federal statutory corporate tax rate and actual income tax expense is as follows:

 

Statutory federal (CDN) income tax rate

 

 

11.0%

 

Provincial (CDN) income taxes and other

 

 

9.0%

 

 

 

 

 

 

Effective tax rate

 

 

20.0%

 

 

Deferred income taxes result from temporary differences in the recognition of income and expenses for the financial reporting purposes and for tax purposes. The tax effect of these temporary differences representing deferred tax asset and liabilities result principally from the following:

 

Deferred Tax Asset: (Liability)

 

 

 

 

 

 

 

Net operating loss carry forward

 

$

196,000

 

Subtotal

 

 

196,000

 

Valuation allowance

 

 

(196,000)

 

 

 

 

 

 

Net Deferred Tax Asset (Liability)

 

$

 

 



F-13



CANWEALTH MINERALS CORPORATION

(An Exploratory Stage Company)

Notes to Financial Statements

December 31, 2012 and 2011





NOTE 10- COMMITMENTS AND CONTINGENCIES


Operating lease

 

The Company does not currently lease facilities.

 

Litigation

 

The Company may be subject to legal proceedings and claims which arise in the ordinary course of its business. Although occasional adverse decisions or settlements may occur, the Company believes that the final disposition of such matters should not have a material adverse effect on its financial position, results of operations or liquidity. The Company had no pending legal proceedings or claims other than described above as of December 31, 2012.

 




F-14





CANWEALTH MINERALS CORPORATION

 (An Exploratory Stage Company)

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

March 31,
2013

 

 

December 31, 2012 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalent

 

$

1,349

 

 

$

424

 

Other current assets

 

 

-

 

 

 

3,601

 

Total current assets

 

 

1,349

 

 

 

4,025

 

 

 

 

 

 

 

 

 

 

Property and equipment

 

 

51,960

 

 

 

51,960

 

 

 

 

 

 

 

 

 

 

Other assets:

 

 

 

 

 

 

 

 

Intangible assets

 

 

13,138

 

 

 

13,138

 

Total other assets

 

 

13,138

 

 

 

13,138

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

66,447

 

 

$

69,123

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

198,702

 

 

$

165,711

 

Convertible note payable

 

 

20,102

 

 

 

20,102

 

Loans from related parties

 

 

78,162

 

 

 

80,474

 

Total current liabilities

 

 

296,966

 

 

 

266,287

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Stockholders' deficit:

 

 

 

 

 

 

 

 

Preferred stock; $0.0001 par value, 20,000,000 shares authorized, none issued and outstanding as of March 31, 2013 and December 31, 2012

 

 

-

 

 

 

-

 

Common stock; $0.0001 par value, 100,000,000 shares authorized

 

 

 

 

 

 

 

 

50,769,231  and 44,169,231 shares issued and outstanding as of March 31, 2013 and December 31, 2012, respectively

 

 

5,077

 

 

 

4,417

 

Additional paid in capital

 

 

6,041

 

 

 

-

 

Other comprehensive income (loss)

 

 

3,680

 

 

 

(795)

 

Deficit accumulated during the exploratory stage                 

 

 

(245,317)

 

 

 

(200,787)

 

Total stockholders' deficit

 

 

(230,519)

 

 

 

(197,164)

 

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders' deficit

 

$

66,447

 

 

$

69,123

 


The accompanying notes are an integral part of these interim unaudited condensed consolidated financial statements.



F-15






CANWEALTH MINERALS CORPORATION

 (An Exploratory Stage Company)

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

 

 

 

 

For the three months

ended

March 31, 2013

 

 

For the three months

ended

March 31, 2012

 

 

For the period

February 1, 2006

(date of inception)

through

March 31, 2013

 

Revenue

 

$

-

 

 

$

-

 

 

$

-

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

34,818

 

 

 

-

 

 

 

227,013

 

Total operating expenses

 

 

34,818

 

 

 

-

 

 

 

227,013

 

Loss from operations

 

 

(34,818)

 

 

 

-

 

 

 

(227,013)

 

OTHER INCOME (EXPENSE):

 

 

 

 

 

 

 

 

 

 

 

 

Interest (expense) income

 

 

(532)

 

 

 

201

 

 

 

(4,808)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) income before provision for income taxes

 

 

(35,350)

 

 

 

201

 

 

 

(231,821)

 

Provision for income taxes :

 

 

 

 

 

 

 

 

 

 

 

 

Current

 

 

-

 

 

 

-

 

 

 

-

 

Deferred

 

 

-

 

 

 

-

 

 

 

-

 

Total income taxes

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET (LOSS) INCOME

 

$

(35,350)

 

 

$

201

 

 

$

(231,821)

 

(Loss) Earnings per common share, basic and diluted

 

$

(0.00)

 

 

$

0.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares, basic and diluted

 

 

50,769,231

 

 

 

44,169,231

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income

 

 

(35,350)

 

 

 

201

 

 

 

(231,821)

 

Cumulative translation gain (loss)

 

 

4,475

 

 

 

(1,557)

 

 

 

3,680

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive loss

 

$

(30,875)

 

 

$

(1,356)

 

 

$

(228,141)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


The accompanying notes are an integral part of these interim unaudited condensed consolidated financial statements.



F-16






CANWEALTH MINERALS CORPORATION

(An Exploratory Stage Company)

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIT

For the Period February 1, 2006 (date of inception) through March 31, 2013

 

 

 

 



Common Stock

 

 

 

 

 


(Deficit) Accumulated During

Exploratory Stage

 

 

 

 

 

Shares

 

Amount

 

Additional paid in capital

Other comprehensive income

 

 

Total

 

Balance at date of inception, February 1, 2006

 

-

 

$

-

 

 $

-

$

-

 

$

-

 

$

-

 

Issuance of shares for seed capital

 

44,169,231

 

 

4,417

 

 

-

 

-

 

 

(4,317)

 

 

100

 

Cumulative translation gain

 

-

 

 

-

 

 

-

 

25

 

 

-

 

 

25

 

Net loss

 

-

 

 

-

 

 

-

 

-

 

 

(262)

 

 

(262)

 

Balance, December 31, 2009

 

44,169,231

 

 

4,417

 

 

-

 

25

 

 

(4,579)

 

 

(137)

 

Cumulative translation gain

 

-

 

 

-

 

 

-

 

209

 

 

-

 

 

209

 

Net loss for the year ended December 31, 2010

 

-

 

 

-

 

 

-

 

-

 

 

(8,527)

 

 

(8,527)

 

Balance, December 31, 2010

 

44,169,231

 

 

4,417

 

 

-

 

234

 

 

(13,106)

 

 

(8,455)

 

Cumulative translation gain

 

-

 

 

-

 

 

-

 

295

 

 

-

 

 

295

 

Net loss for the year ended December 31, 2011

 

-

 

 

-

 

 

-

 

-

 

 

(18,620)

 

 

(18,620)

 

Balance, December 31, 2011

 

44,169,231

 

 

4,417

 

 

-

 

529

 

 

(31,726)

 

 

26,780

 

Cumulative translation loss

 

-

 

 

-

 

 

-

 

(1,324)

 

 

-

 

 

(1,324)

 

Net loss

 

-

 

 

-

 

 

 

 

-

 

 

(169,061)

 

 

(169,061)

 

Balance, December 31, 2012

 

44,169,231

 

 

4,417

 

 

-

 

(795)

 

 

(200,787)

 

 

(197,164)

 

Effect of reverse acquisition, February 11, 2013

 

6,600,000

 

 

660

 

 

-

 

-

 

 

(9,180)

 

 

(8,520)

 

Capital contribution

 

-

 

 

-

 

 

6,041

 

-

 

 

-

 

 

6,041

 

Foreign currency translation gain

 

-

 

 

-

 

 

-

 

4,475

 

 

-

 

 

4,475

 

Net loss for three months ended March 2013

 

-

 

 

-

 

 

-

 

-

 

 

(35,350)

 

 

(35,350)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance March 31, 2013

 

50,769,231

 

$

5,077

 

$

6,041

$

3,780

 

$

(245,317)

 

$

(230,519)

 

 

 

The accompanying notes are an integral part of these interim unaudited condensed consolidated financial statements

 










F-17






CANWEALTH MINERALS CORPORATION

(An Exploratory Stage Company)

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

For the three months

ended

March 31, 2013

 

 

For the three months

March 31, 2012

 

 

For the period

February 1, 2006

(date of inception)

through

March 31, 2013

CASH FLOWS FROM OPERATING ACTIVITIES :

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(35,350)

 

 

$

201

 

 

$

(231,821)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

 

 

 

Operating expenses incurred by related parties on behalf of the Company

 

 

-

 

 

 

2,207

 

 

 

28,056

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

 

 

 

Other current assets

 

 

3,601

 

 

 

(232)

 

 

 

-

Accounts payable and accrued liabilities

 

 

24,389

 

 

 

36

 

 

 

190,101

Net cash (used in) provided by operating activities

 

 

(7,360)

 

 

 

2,140

 

 

 

(13,664)

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 -

 

 

 

 

 

 

 -

 

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 

Proceeds from issuance of convertible note payable

 

 

-

 

 

 

-

 

 

 

20,102

Cash acquired on acquisition

 

 

82

 

 

 

-

 

 

 

82

Repayment of related party loans

 

 

(2,312)

 

 

 

-

 

 

 

(13,865)

Capital contribution

 

 

6,041

 

 

 

-

 

 

 

6,142

Net cash provided by financing activities

 

 

3,811

 

 

 

-

 

 

 

12,461

 

 

 

 

 

 

 

 

 

 

 

 

Effect of foreign exchange gain (loss)

 

 

4,474

 

 

 

(2,157)

 

 

 

2,552

 

 

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

 

925

 

 

 

(17)

 

 

 

1,349

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

 

424

 

 

 

57

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

 

$

1,349

 

 

$

40

 

 

$

1,349

 

 

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

 

 

 

 

 

 

 

 

 

 

 

Cash paid during the period for interest

 

$

-

 

 

$

-

 

 

$

-

Cash paid during the period for income taxes

 

$

-

 

 

$

-

 

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

NONCASH INVESTING AND FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 

Property and equipment purchased through loans from related parties

 

$

-

 

 

$

-

 

 

$

50,833

Intangible assets purchased through loans from related parties

 

$

-

 

 

$

876

 

 

$

13,138

Recapitalization effect on reverse acquisition

 

$

9,180

 

 

$

-

 

 

$

9,180


The accompanying notes are an integral part of these interim unaudited condensed consolidated financial statements.



F-18



CANWEALTH MINERALS CORPORATION

(An Exploratory Stage Company)

Notes to Interim Unaudited Condensed Consolidated Financial Statements

March 31, 2013




 

NOTE 1 - NATURE OF OPERATIONS

 

Canwealth Minerals Corporation was organized on February 1, 2006 under the laws of the Canada Business Corporations Act.

 

Canwealth’s mission is to develop the mining concessions it has registered in various areas of Northern Quebec, which based on assay reports of preliminary samples taken from these sites, has shown to contain traces of various elements such as gold, silver, copper, rare earth and other such minerals.

 

The Company, when presented with the opportunity to do so, will seek to register additional land claims in other regions of Quebec, however it is not limited to only that region of North America, or any other area where opportunities may present themselves.  Upon entering into agreements to acquire concessions, the Company will market the properties to mining companies and other interested parties.

  

The Company’s year end is December 31.

 

The Company is in the exploratory stage as defined by Accounting Standards Codification subtopic 915-10 Development stage Entities (“ASC 915-10”) with its efforts principally devoted to developing a platform of prime quality energy assets. To date, the Company has incurred expenses and has sustained losses. Consequently, its operations are subject to all the risks inherent in the establishment of a new business enterprise. For the period from inception through March 31, 2013, the Company has accumulated deficit during exploratory stage of $245,317. The Company also owns as of March 31, 2013, mining equipment with an associated cost of $51,960 and mining concessions at a cost of $13,138.

 

NOTE 2 - MERGER AND RECAPITALIZATION

 

On August 10, 2012, USG1, Inc., a Delaware corporation (“USG1”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Canwealth Minerals Corporation, a Delaware corporation (“Canwealth Delaware”), and Kimi Royer as representative of the USG1 stockholders, pursuant to which Canwealth Delaware would merge with and into USG1 at the closing, as contemplated by the Merger Agreement. The merger contemplated by the Merger Agreement occurred on February 11, 2013. Upon the closing, the existing shares of Canwealth Delaware common stock were converted into 44,169,231 shares of USG1 common stock. The existing USG1 stockholders continued to hold 6,600,000 shares of USG1 common stock. As consideration for the merger, Canwealth Delaware shall pay the stockholder representative of USG1 an aggregate of Fifty Thousand Dollars ($50,000) (the "Merger Consideration"), who shall be solely responsible to distribute such Merger Consideration among the non-dissenting stockholders of USG1 on a pro rata basis relative to the number of shares of USGI Stock held by each such non-dissenting stockholder prior to the merger. The Merger Consideration shall be paid by Canwealth Delaware as follows:


(C)

Ten Thousand Dollars ($10,000) shall be payable upon a Registration Statement on Form S-1 filed by the surviving company of the merger being declared effective by the Securities and Exchange Commission; and


(D)

Forty Thousand Dollars ($40,000) shall be payable upon (i) the filing of a Form 15c2-11 by the surviving company of the merger and (ii) the shares of the surviving company stock being actively traded on a stock exchange or quotation service.


Prior to the merger, the stockholders of Canwealth Minerals Corporation, a company organized on February 1, 2006 under the laws of the Canada Business Corporations Act (“Canwealth Quebec”), contributed their shares of Canwealth Quebec to Canwealth Delaware in exchange for shares of Canwealth Delaware common stock. As a result of the foregoing, Canwealth Quebec is a wholly-owned subsidiary of Canwealth Delaware. Following the merger, USG1 succeeded to the mining business and operations of Canwealth Quebec.



F-19



CANWEALTH MINERALS CORPORATION

(An Exploratory Stage Company)

Notes to Interim Unaudited Condensed Consolidated Financial Statements

March 31, 2013




Prior to the merger, there were no material relationships between USG1 and Canwealth Delaware or Canwealth Quebec or between Company’s respective affiliates, directors or officers. All USG1 pre-merger liabilities were settled prior to closing. Upon the effectiveness of the merger, the existing directors and officers of USG1 each resigned and Garth McIntosh was elected as the sole officer and director of USG1.


Due to a conflict of interest, on November 24, 2012, one of the shareholders and directors of the Corporation sold his 20% interest back to the Corporation for $20 and he resigned from his position on the Board of Directors, all in accordance with the non-concurrence agreements signed by all shareholder and directors. The remaining shareholders and directors approved the transaction on behalf of the company. These 20 shares were re-issued to the remaining shareholders in accordance with their percentage interest in the Company.


Contemporaneously with the merger, the corporate name “USG1, Inc.” was changed to “Canwealth Minerals Corporation”. As a result of the merger, Canwealth Quebec became a wholly-owned subsidiary of Canwealth Minerals Corporation (Delaware) and, accordingly, USG1 succeeded to the mining business and operations of the Canwealth entities.


USG1 is a publicly registered corporation with no significant operations prior to the merger. For accounting purposes, Canwealth Delaware shall be the surviving entity. The transaction is accounted for using the purchase method of accounting. As a result of the recapitalization and change in control, Canwealth Delaware is the acquiring entity in accordance with ASC 805, Business Combinations. The accumulated losses of Canwealth Delaware were carried forward after the completion of the Merger. Operations prior to the Merger were those of Canwealth Delaware.


NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


A summary of significant accounting policies applied in the presentation of financial statements are as follows:

 

Revenue Recognition

 

The Company will recognize revenue in accordance with Accounting Standards Codification subtopic 605-10, Revenue Recognition (“ASC 605-10”) which requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management's judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded.

 

ASC 605-10 incorporates Accounting Standards Codification subtopic 605-25, Multiple-Element Arraignments (“ASC 605-25”). ASC 605-25 addresses accounting for arrangements that may involve the delivery or performance of multiple products, services and/or rights to use assets. There was no effect of implementing 605-25 on the Company's financial position and results of operations.

 

Use of Estimates

 

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States 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 amount of revenue and expenses during the reported period. Actual results could differ materially from the estimates.




F-20



CANWEALTH MINERALS CORPORATION

(An Exploratory Stage Company)

Notes to Interim Unaudited Condensed Consolidated Financial Statements

March 31, 2013



Cash and Cash Equivalent

 

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. At March 31, 2013 cash consists of a checking account.

 

Mine Exploration and Development Costs

 

The Company accounts for mine exploration costs in accordance with Accounting Standards Codification 932, Extractive Activities. All exploration expenditures are expensed as incurred. Mine development costs are capitalized until production, other than production incidental to the mine development process, commences and are amortized on a units of production method based on the estimated proven and probable reserves. Mine development costs represent costs incurred in establishing access to mineral reserves and include costs associated with sinking or driving shafts and underground drifts, permanent excavations, roads and tunnels. The end of the development phase and the beginning of the production phase takes place when construction of the mine for economic extraction is substantially complete. Coal extracted during the development phase is incidental to the mine’s production capacity and is not considered to shift the mine into the production phase. Amortization of capitalized mine development is computed based on the estimated life of the mine and commences when production, other than production incidental to the mine development process, begins. From February 1, 2006 (date of inception) through March 31, 2013, the Company had not incurred any mine development costs.

 

Mine Properties

 

The Company accounts for mine properties in accordance with Accounting Standard Codification 930, Extractive Activities-Mining. Costs of acquiring mine properties are capitalized by project area upon purchase of the associated claims. Mine properties are periodically assessed for impairment of value and any diminution in value. There were nine mineral properties as of March 31, 2013 presented as intangible assets of $13,138.

 

 Income Taxes

 

The Company has adopted Accounting Standards Codification subtopic 740-10, Income Taxes (“ASC 740-10”) which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statement or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Temporary differences between taxable income reported for financial reporting purposes and income tax purposes consist primarily of timing differences such as deferred officers’ compensation and stock compensation accounting versus tax differences.

 

Net Loss Per Share, basic and diluted

 

The Company has adopted Accounting Standards Codification Subtopic 260-10, Earnings Per Share (“ASC 260-10) specifying the computation, presentation and disclosure requirements of earning per share information. Basic loss per share has been computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding for the period. There were no diluted shares as of March 31, 2013 and 2012.

 

Derivative Instruments

 

The Company accounts for derivative instruments in accordance with Accounting Standards Codification 815, Derivatives and Hedging (“ASC 815”), which   establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. They require that an entity recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value.

 



F-21



CANWEALTH MINERALS CORPORATION

(An Exploratory Stage Company)

Notes to Interim Unaudited Condensed Consolidated Financial Statements

March 31, 2013



If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (i) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (ii) the earnings effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change.

 

At March 31, 2013 and December 31, 2012, the Company has not engaged in any transactions that would be considered derivative instruments or hedging activities.

 

Fair Value of Financial Instruments

 

The Company's financial instruments, as defined by Accounting Standard Codification subtopic 825-10, Financial Instrument (“ASC 825-10), include cash, accounts payable and convertible note payable. All instruments are accounted for on a historical cost basis, which, due to the short maturity of these financial instruments, approximates fair value at March 31, 2013.

 

FASB ASC 820 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. ASC 820 establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value as follows:

Level 1: Observable inputs such as quoted prices in active markets;

Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

Level 3: Unobservable inputs in which there is little or no market data, which requires the reporting entity to develop its own assumptions

 

The Company does not have any assets or liabilities measured at fair value on a recurring basis at March 31, 2013 and December 31, 2012. The Company did not have any fair value adjustments for assets and liabilities measured at fair value on a nonrecurring basis during the year ended March 31, 2013 and December 31, 2012.

 

Foreign Currency Translation and Comprehensive Income (Loss)


The functional currency of Canwealth is the Canadian Dollar (“CAD”). For financial reporting purposes, CAD were translated into United States Dollars (“USD” or “$”) as the reporting currency. Assets and liabilities are translated at the exchange rate in effect at the balance sheet date. Revenues and expenses are translated at the average rate of exchange prevailing during the reporting period.

 

Translation adjustments arising from the use of different exchange rates from period to period are included as a component of stockholders’ equity as “Accumulated other comprehensive income”. Gains and losses resulting from foreign currency transactions are included in the results of operations. There has been no significant fluctuation in the exchange rate for the conversion of CAD to USD after the balance sheet date.

 

The Company uses Accounting Standard Codification 220 “Comprehensive Income”. Comprehensive income is comprised of net income and all changes to the statements of stockholders’ equity, except those due to investments by stockholders, changes in paid-in capital and distributions to stockholders. Comprehensive income for the three months ended March 31, 2013 and 2012 and for the period February 1, 2006 (date of inception) through March 31, 2013 consisted of net income and foreign currency translation adjustments.

 

The exchange rates used to translate amounts in CAD into USD for the purposes of preparing the financial statements were as follows:

 

 

 

March 31, 2013

 

 

December 31, 2012

 

March 31, 2012

Period-end CAD: USD exchange rate

 

$

0.9830

 

 

$

1.0051

 

 $     1.0040

Average Period CAD: USD exchange rate

 

$

1.0250

 

 

$

1.0040

 

 $    0.9939



F-22



CANWEALTH MINERALS CORPORATION

(An Exploratory Stage Company)

Notes to Interim Unaudited Condensed Consolidated Financial Statements

March 31, 2013







Stock Based Compensation

 

The Company follows Accounting Standards Codification subtopic 718-10, Compensation (“ASC 718-10”) which requires that all share-based payments to both employees and non-employees be recognized in the income statement based on their fair values.

 

As of March 31, 2013 and December 31, 2012, the Company did not have any issued or outstanding stock options.

 

Concentration and Credit Risk

 

The Company’s principal operations are all carried out in Canada. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in Canada, and by the general state of Canadian economy. The Company’s operations in Indonesia are subject to specific considerations and significant risks not typically associated with companies in North America. These include risks associated with, among others, the political, economic and legal environments and foreign currency exchange. The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

 

Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, consist primarily of cash, cash equivalents and trade receivables. The Company places its cash and temporary cash investments with high credit quality institutions. At times, such investments may be in excess of the FDIC insurance limit.

 

Research and Development

 

The Company accounts for research and development costs in accordance with Accounting Standards Codification subtopic 730-10, Research and Development (“ASC 730-10”). Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and development costs are expensed when the contracted work has been performed or as milestone results have been achieved as defined under the applicable agreement. Company-sponsored research and development costs related to both present and future products are expensed in the period incurred. The Company did not incur any research and development expenses from February 1, 2006 (date of inception) through March 31, 2013.

 

Reliance on Key Personnel and Consultants

 

The Company employs three executive officers. The Company is heavily dependent on the continued active participation of these current executive officers, employees and key consultants. The loss of any of the senior management or key consultants could significantly and negatively impact the business until adequate replacements can be identified and put in place.

 

Reclassification

 

Certain reclassifications have been made to prior periods’ data to conform to the current period’s presentation. These reclassifications had no impacts on the reported net loss.


Impact of New Accounting Standards

 

The Company has reviewed all other recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on its results of operation, financial position or cash flows. Based on that review, the Company believes that none of these pronouncements will have a significant effect on its unaudited condensed consolidated financial statements.



F-23



CANWEALTH MINERALS CORPORATION

(An Exploratory Stage Company)

Notes to Interim Unaudited Condensed Consolidated Financial Statements

March 31, 2013



 

NOTE 4 - GOING CONCERN MATTERS


The accompanying unaudited condensed consolidated financial statements have been prepared on a basis that assumes the Company will continue as a going concern. As of March 31, 2013, the Company has a deficit accumulated during exploration stage of $245,317 and has incurred significant operating losses and negative cash flows. For the three months ended March 31, 2013, the Company sustained a net loss of $35,350 compared to a net income of $201 for the three months ended March 31, 2012. The Company will need additional financing which may take the form of equity or debt and the Company has converted certain liabilities into equity. In the event the Company are not able to increase its working capital, the Company will not be able to implement or may be required to delay all or part of its business plan, and their ability to attain profitable operations, generate positive cash flows from operating and investing activities and materially expand the business will be materially adversely affected. The accompanying unaudited condensed consolidated financial statements do not include any adjustments relating to the classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the company be unable to continue in existence.


NOTE 5 – PROPERTY AND EQUIPMENT


Property and equipment at March 31, 2013 and December 31, 2012 are as follows:

 

 

March 31, 2013

December 31, 2012

Mining machinery and equipment

$     51,960

$         51,960

Total

$     51,960

$         51,960


No depreciation has been charged for the three months ended March 31, 2013 and 2012, since the Company is in assembly and testing mode, not in operations.


The above assets has been transferred from ICBS Ltd, a related party (refer note 7).

   

NOTE 6 - CAPITAL STOCK


Preferred Stock


The Company is authorized to issue 20,000,000 shares of preferred stock, par value of $0.0001.

As of March 31, 2013 and December 31, 2012, no preferred stock was issued and outstanding.


Common Stock


The Company is authorized to issue 100,000,000 shares of common stock with par value of $0.0001 per share.

 

As noted earlier, on February 11, 2013, the Company consummated the transactions contemplated by the Merger Agreement that resulted in a reverse merger and a change in control of the Company. The shares of the Company outstanding prior to the closing of the merger are treated as having been issued as of that date, whereas the shares issued in connection with the merger are treated as having been issued since inception for all periods presented.


All reference to common stock shares and per share amounts have been retroactively restated to effect the reverse merger as if the transaction had taken place as of the beginning of the earliest period presented.


Prior to the merger, USG1 had 6,600,000 shares of common stock issued and outstanding.


During the three months ended March 31, 2013, the Company received a capital contribution of $6,041.



F-24



CANWEALTH MINERALS CORPORATION

(An Exploratory Stage Company)

Notes to Interim Unaudited Condensed Consolidated Financial Statements

March 31, 2013




In February 2013, in connection with the reverse merger transaction, the Company issued an aggregate of 44,169,231 shares of its common stock in exchange for existing shares of Canwealth Delaware.


As of March 31, 2013 and December 31, 2012, there were 50,769,231 and 44,169,231 shares of common stock issued and outstanding, respectively.

 

NOTE 7 - RELATED PARTY TRANSACTIONS

 

Mr. Garth McIntosh, the Company’s Chairman of the Board, Chief Executive Officer and President, is also a majority shareholder of ICBS Ltd. which is the largest shareholder of Canwealth Minerals Corporation. As of March 31, 2013 and December 31, 2012, the Company has taken loans from shareholders of $78,162 and $80,474, respectively. No formal repayment terms or arrangements existed. The entire above loan are non-interest bearing and payable on demand.

 

ICBS Ltd. has given a loan to the Company and also transferred the assets worth $51,960 as of March 31, 2013. As of March 31, 2013, the Company acquired intangible asset of $13,138 through loans from related parties.

 

NOTE 8 – CONVERTIBLE NOTE PAYABLE


On October 20, 2012, the Company entered into an agreement with a third party non-affiliate to a 20% interest bearing convertible note for $20,000 due on January 20, 2013, with the conversion features commencing immediately. The note is convertible into 100,000 shares of common stock of the Company.


As of March 31, 2013 and December 31, 2012, the balance in the note and accrued interest was $20,102 and $4,000, respectively.


Subsequent to the date of the financial statements, on May 11, 2013, the note was extended to June 30, 2013.


NOTE 9- COMMITMENTS AND CONTINGENCIES


Operating lease

 

The Company does not currently lease facilities.

 

Litigation

 

The Company may be subject to legal proceedings and claims which arise in the ordinary course of its business. Although occasional adverse decisions or settlements may occur, the Company believes that the final disposition of such matters should not have a material adverse effect on its financial position, results of operations or liquidity. The Company had no pending legal proceedings or claims other than described above as of March 31, 2013.





F-25

























CANWEALTH MINERALS CORPORATION

 



PRELIMINARY PROSPECTUS


Up to 15,000,000 Shares


Common Stock



____________________, 2013


  

[cwm_s1006.gif]

  

 








PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

 

Item 13.  Other Expenses of Issuance and Distribution

 

The registrant estimates that expenses payable by the registrant in connection with the offering described in this registration statement will be as follows:


SEC registration fee

  

$

204.60

 

Legal fees and expenses

  

$

[____]

 

Accounting fees and expenses

  

$

[____]

 

Printing and engraving expenses

  

$

[____]

 

Miscellaneous

  

$

[____]

 

Total

  

$

[____]

 


 

Item 14.  Indemnification of Directors and Officers

 

Delaware General Corporation Law

 

Section 145 of the Delaware General Corporation Law, or the DGCL, provides that a corporation may indemnify directors and officers as well as other employees and individuals against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with any threatened, pending or completed actions, suits or proceedings in which such person is made a party by reason of such person being or having been a director, officer, employee or agent to such corporation. The DGCL provides that Section 145 is not exclusive of other rights to which those seeking indemnification may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise.


Section 102(b)(7) of the DGCL permits a corporation to provide in its certificate of incorporation that a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for unlawful payments of dividends or unlawful stock repurchases, redemptions or other distributions, or (iv) for any transaction from which the director derived an improper personal benefit. Our certificate of incorporation provides for such limitation of liability.


We intend to enter into indemnification agreements with each of our directors and executive officers. These agreements, among other things, will require us to indemnify each director and executive officer to the fullest extent permitted by Delaware law, including indemnification for expenses such as attorneys’ fees, judgments, fines and settlement amounts incurred by the director or executive officer in any action or proceeding, including any action or proceeding by or in right of the Registrant, arising out of the person’s services as a director or executive officer.


Our Articles of Incorporation and Bylaws


Our certificate of incorporation provides for indemnification of our directors, officers, agents and employees to the fullest extent permitted by the DGCL.  Our bylaws provide that, to the extent permitted by applicable law, we will generally indemnify any director, officer, agent or employee of the Company for judgments, fines, amounts paid in settlement or expenses (including attorneys’ fees) actually and reasonably incurred by such indemnified person, provided he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the Company and, with respect to any criminal action or proceeding, he or she had no reason to believe his or her conduct was unlawful.





II-1





Item 15.  Recent Sales of Unregistered Securities

 

For each of the following transactions, we relied upon the exemptions from registration provided by 4(2) of the Securities Act and Rule 506 promulgated thereunder, based upon (i) the fact that each investor was an accredited or sophisticated investor with experience in investing in securities such that it could evaluate merits and risks related  to our securities; (ii) that no general solicitation of the securities was made by us; (iii) the securities issued were “restricted securities” as that term is defined under Rule 144 promulgated under the Securities Act; and (iv) we placed appropriate restrictive legends on the certificates representing the securities regarding the restricted nature of these securities.


On February 11, 2013, the merger contemplated by the Merger Agreement dated August 10, 2012, among USG1, Inc., Canwealth Delaware and Kimi Royer (as representative of the USG1 stockholders) was consummated.  Upon the closing, the existing shares of Canwealth Delaware common stock converted into 44,169,231 shares of USG1 common stock. The shares were issued upon reliance on the exemption from the registration requirements of the Securities Act provided in Section 4(2) thereof.



II-2





Item 16.   Exhibits and Financial Statement Schedules

 

The following Exhibits are filed as part of this Registration Statement:


Exhibit No.

  

Description

  

  

  

3.1

  

Certificate of Incorporation of the Registrant, incorporated by reference to Exhibit 3.1 to the Registrant’s Registration Statement on Form 10, filed on October 26, 2011.

  

  

  

3.2

  

By-Laws of the Registrant, incorporated by reference to Exhibit 3.2 to the Registrant’s Registration Statement on Form 10, filed on October 26, 2011.

  

  

 

3.3

  

Specimen stock certificate of the Registrant, incorporated by reference to Exhibit 3.3 to the Registrant’s Registration Statement on Form 10, filed on October 26, 2011.

  

  

 

3.4

  

Certificate of Merger, incorporated by reference to Exhibit 3.3 to the Registrant’s Current Report on Form 8-K, filed February 15, 2013.

  

  

 

5.1

  

Opinion of Westerman Ball Ederer Miller & Sharfstein, LLP.*

  

  

  

10.1

  

Agreement and Plan of Merger, dated August 10, 2012, by and among Canwealth Minerals Corporation, USG1, Inc. and Kimi Royer, as representative of the USG1 Stockholders, incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on August 14, 2012.

  

  

 

10.2

  

First Amendment to Agreement and Plan of Merger, incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed February 15, 2013.

  

  

 

10.3

  

Second Amendment to Agreement and Plan of Merger, incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K, filed February 15, 2013.

 

 

 

16.1

 

Letter of KCCW Accountancy Corp. to the Securities and Exchange Commission regarding change in independent registered accounting firm, incorporated by reference to Exhibit 16.1 to the Registrant’s Current Report on Form 8-K, filed April 12, 2013.

  

  

 

21.1

  

Subsidiaries of the Registrant.*

  

  

  

23.1

  

Consent of RBSM, LLP*

  

  

  

24.1

  

Powers of Attorney (included in signature page to this Registration Statement).

 

* Filed herewith



II-3





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;

 

(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 this 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 a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

 

(iii)  To include any material information with respect to the plan of distribution not previously disclosed in this registration statement or any material change to such information in this registration statement.

 

(2)  That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; and

 

(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 purposes of determining liability under the Securities Act to any purchaser:


                           

(i)  If the Registrant is relying on Rule 430B:


(A)  Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and


(B)  Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration



II-4





statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; or

  

(ii)  If the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) As part of a registration statement relating to an offering, other than registration Statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.


(5)  That, for the purpose of determining liability of the registrant under the Securities Act 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.

 

 



II-5





SIGNATURES

 

Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant hereby certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-1 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Montreal, Canada, on July 8, 2013.

 

CANWEALTH MINERALS CORPORATION

  

     

By:   

/s/ Garth McIntosh

  

Garth McIntosh

  

Chief Executive Officer and Chief Financial Officer

 

Each person whose signature to this Registration Statement appears below hereby constitutes and appoints Garth McIntosh as his true and lawful attorney-in-fact and agent, with full power of substitution, to sign on his behalf individually and in the capacity stated below and to perform any acts necessary to be done in order to file all amendments to this Registration Statement and any and all instruments or documents filed as part of or in connection with this Registration Statement or the amendments thereto and each of the undersigned does hereby ratify and confirm all that said attorney-in-fact and agent, or his substitutes, shall do or cause to be done by virtue hereof.

 

Pursuant to the requirements of the Securities Act of 1933, as amended this Registration Statement has been signed by the following persons on July 8, 2013 in the capacities stated:

 

Name

  

Title

  

  

  

  

  

/s/ Garth McIntosh

  

Chief Executive Officer (Principal Executive Officer), Chief Financial Officer (Principal Financial Officer), and Director

  

Garth McIntosh

  

  

  

  

  

  

  




  








EXHIBIT INDEX

 

Exhibit

No.

 

Description

 

 

 

  

  

  

3.1

  

Certificate of Incorporation of the Registrant, incorporated by reference to Exhibit 3.1 to the Registrant’s Registration Statement on Form 10, filed on October 26, 2011.

  

  

  

3.2

  

By-Laws of the Registrant, incorporated by reference to Exhibit 3.2 to the Registrant’s Registration Statement on Form 10, filed on October 26, 2011.

  

  

 

3.3

  

Specimen stock certificate of the Registrant, incorporated by reference to Exhibit 3.3 to the Registrant’s Registration Statement on Form 10, filed on October 26, 2011.

  

  

 

3.4

  

Certificate of Merger, incorporated by reference to Exhibit 3.3 to the Registrant’s Current Report on Form 8-K, filed February 15, 2013.

  

  

 

5.1

  

Opinion of Westerman Ball Ederer Miller & Sharfstein, LLP.*

  

  

  

10.1

  

Agreement and Plan of Merger, dated August 10, 2012, by and among Canwealth Minerals Corporation, USG1, Inc. and Kimi Royer, as representative of the USG1 Stockholders, incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed on August 14, 2012.

  

  

 

10.2

  

First Amendment to Agreement and Plan of Merger, incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K, filed February 15, 2013.

  

  

 

10.3

  

Second Amendment to Agreement and Plan of Merger, incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K, filed February 15, 2013.

 

 

 

16.1

 

Letter of KCCW Accountancy Corp. to the Securities and Exchange Commission regarding change in independent registered accounting firm, incorporated by reference to Exhibit 16.1 to the Registrant’s Current Report on Form 8-K, filed April 12, 2013.

  

  

 

21.1

  

Subsidiaries of the Registrant.*

  

  

  

23.1

  

Consent of RBSM, LLP*

  

  

  

24.1

  

Powers of Attorney (included in signature page to this Registration Statement).

 

* Filed herewith