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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
AMENDMENT #4 - SEC FILE NO.: 333-137519
GEOPULSE EXPLORATION INC.
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(Exact name of Registrant as specified in its charter)
NEVADA 1000 Applied For
----------------- --------------------------------- --------------------
(State or other Standard Industrial Classification IRS Employer
jurisdiction of Identification Number
incorporation or
organization)
GEOPULSE EXPLORATION INC.
Tim Sun, President
1055 West Hastings Street, Suite 1980
Vancouver, British Columbia
Canada V6E 2E9
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(Name and address of principal (Zip Code)
executive offices)
Registrant's telephone and fax number,
including area code: Telephone: (778) 318-4988
Fax: (604) 688-8030
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EMPIRE STOCK TRANSFER INC.
2470 St. Rose Parkway, Suite 304
Henderson, Nevada,
Telephone: (702) 818-5898 89128
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(Name, address and telephone number (Zip Code)
of agent for service)
Approximate date of commencement of
Proposed sale to the public: as soon as practicable after the effective
date of this registration statement.
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. |__|
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |__|
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |__|
If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following. |__|
CALCULATION OF REGISTRATION FEE
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TITLE OF AMOUNT TO PROPOSED PROPOSED AMOUNT OF
EACH CLASS BE MAXIMUM MAXIMUM REGISTRATION
OF REGISTERED OFFERING AGGREGATE FEE (2)
SECURITIES PRICE PER OFFERING
TO BE SHARE (1) PRICE (2)
REGISTERED
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Common Stock 1,680,000 shares $0.05 $84,000 $8.99
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(1) Based on the last sales price on January 20, 2006.
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 under the Securities Act.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.
SUBJECT TO COMPLETION, May 29, 2007
Agent for service of process: Empire Stock Transfer Inc.
2470 St. Rose Parkway, Suite 304
Henderson, NV 89074
PROSPECTUS
GEOPULSE EXPLORATION INC.
1,680,000 SHARES
COMMON STOCK
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The selling shareholders named in this prospectus are offering all of the shares
of common stock offered through this prospectus.
Our common stock is presently not traded on any market or securities exchange.
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The purchase of the securities offered through this prospectus involves a high
degree of risk. SEE SECTION ENTITLED "RISK FACTORS ON PAGES 7-10
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. 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.
The selling shareholders will sell our shares at $0.05 per share until our
shares are quoted on the OTC Bulletin Board, and thereafter at prevailing market
prices or privately negotiated prices. There is no guarantee that our common
stock will be quoted for trading on the OTC Bulletin Board. We determined this
offering price based upon the price of the last sale of our common stock to
investors.
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.
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The Date of This Prospectus Is: May 29, 2007
Table Of Contents
PAGE
Summary ....................................................... 5
Risk Factors .................................................. 6
- If we do not obtain additional financing, our business
will fail ................................................ 6
- Because we have not commenced business operations, we face
a high risk of business failure .......................... 7
- Because of the speculative nature of exploration of mining
properties, there is substantial risk that our business
will fail ................................................ 7
- We need to continue as a going concern if our business is
to succeed. Our independent auditor has raised doubt about
our ability to continue as a going concern................ 7
- Because of the inherent dangers involved in mineral
exploration, there is a risk that we may incur liability or
damages as we conduct our business ....................... 8
- Even if we discover commercial reserves of precious metals
on the CATHI 1 claim, we may not be able to
successfully commence commercial production .............. 8
- Because our president and secretary have other business
interests, they may not be able or willing to devote a
sufficient amount of time to our business operations,
causing our business to fail.............................. 8
- Because our management has only limited experience in
mineral exploration, our business has a higher risk of
failure................................................... 8
- If a market for our common stock does not develop,
shareholders may be unable to sell their shares ......... 8
- A purchaser is purchasing penny stock which limits the
sell the ability to stock ................................ 8
Forward-Looking Statements..................................... 9
Use of Proceeds ............................................... 9
Determination of Offering Price ............................... 9
Dilution ...................................................... 9
Selling Shareholders .......................................... 9
Plan of Distribution .......................................... 12
Legal Proceedings ............................................. 16
Directors, Executive Officers, Promoters and Control Persons.. 16
Security Ownership of Certain Beneficial Owners and Management 17
Description of Securities ..................................... 18
Interest of Named Experts and Counsel ......................... 19
Disclosure of Commission Position of Indemnification for
Securities Act Liabilities .................................... 19
Organization Within Last Five Years ........................... 20
Description of Business ....................................... 20
Plan of Operations ............................................ 25
Description of Property ....................................... 26
Certain Relationships and Related Transactions ................ 26
Market for Common Equity and Related Stockholder Matters ...... 27
Executive Compensation ........................................ 28
Financial Statements .......................................... 29
Changes in and Disagreements with Accountants ................. 40
Summary
Prospective investors are urged to read this prospectus in its entirety.
We intend to be in the business of mineral property exploration. To date, we
have not conducted any exploration on our sole mineral property, the CATHI 1
claim, located in British Columbia, Canada. We own a 100% interest in the CATHI
1 mineral claim. We purchased this claim from Albert Ablett of Kamloops, British
Columbia for a cash payment of $5,000.
Our objective is to conduct mineral exploration activities on the CATHI 1 claim
in order to assess whether it possesses economic reserves of gold, silver and
molybdenum. We have not yet identified any economic mineralization on the
property. Our proposed exploration program is designed to search for an economic
mineral deposit.
There is currently no public market for our common stock and no certainty that a
market will develop. If no market is ever developed for our shares, it will be
difficult for shareholders to sell their stock. In such a case, shareholders may
find that they are unable to achieve benefits from their investment.
We were incorporated on August 13, 2004 under the laws of the state of Nevada.
Our principal offices are located at 1055 West Hastings Street, Suite 1980,
Vancouver, British Columbia, Canada. Our telephone number is (778)318-4988.
The Offering:
Securities Being Offered Up to 1,680,000 shares of common stock.
Offering Price The selling shareholders will sell our shares
at $0.05 per share until our shares are
quoted on the OTC Bulletin Board, and
thereafter at prevailing market prices or
privately negotiated prices. There is no
guarantee that our common stock will be
quoted for trading on the OTC Bulletin Board.
We determined this offering price based upon
the price of the last sale of our common
stock to investors.
Terms of the Offering The selling shareholders will determine when
and how they will sell the common stock
offered in this prospectus.
Termination of the Offering The offering will conclude when all of the
1,680,000 shares of common stock have been
sold, the shares no longer need to be
registered to be sold or we decide to
terminate the registration of the shares.
Securities Issued and to be Issued 2,380,000 shares of our common stock are
issued and outstanding as of the date of
this prospectus. All of the common stock to
be sold under this prospectus will be sold by
existing shareholders.
5
Use of Proceeds We will not receive any proceeds from the
sale of the common stock by the selling
shareholders.
Summary Financial Information
Balance Sheet January 31, 2007 January 31, 2006
(audited) (audited)
Cash $25,290 $41,821
Total Assets $25,290 $41,821
Liabilities $ 945 $
6,500
Total Stockholders' Equity $24,345 $35,321
Statement of Loss and Deficit
From Incorporation on August 13, 2004 (inception) to January 31, 2007 (audited)
Revenue $ 0
Net Loss ($18,655)
Risk Factors
An investment in our common stock involves a high degree of risk. You should
carefully consider the risks described below and the other information in this
prospectus before investing in our common stock. If any of the following risks
occur, our business, operating results and financial condition could be
seriously harmed. The trading price of our common stock could decline due to any
of these risks, and you may lose all or part of your investment.
IF WE DO NOT OBTAIN ADDITIONAL FINANCING, OUR BUSINESS WILL FAIL.
Our current operating funds are less than necessary to complete all intended
exploration of the CATHI 1 claim, and therefore we will need to obtain
additional financing in order to complete our business plan. We currently do not
have any operations and we have no income. As well, we will not receive any
funds from this registration.
Our business plan calls for significant expenses in connection with the
exploration of the CATHI 1 claim. While we have sufficient funds to conduct the
proposed initial phase of exploration on the property, estimated to cost $7,400,
we will require additional financing in order to determine whether the property
contains economic mineralization. Even after completing all proposed
exploration, we will not know if we have a commercially viable mineral deposit.
We will require additional financing to sustain our business operations if we
are not successful in earning revenues once exploration is complete. We do not
currently have any arrangements for financing and may not be able to find such
financing if required. Obtaining additional financing would be subject to a
number of factors, including the market price for metals and investor acceptance
of our property and general market conditions. These factors may make the
timing, amount, terms or conditions of additional financing unavailable to us.
6
The most likely source of future funds presently available to us is through the
sale of equity capital. Any sale of share capital will result in dilution to
existing shareholders. The only other anticipated alternative for the financing
of further exploration would be our sale of a partial interest in the CATHI 1
claim to a third party in exchange for cash or exploration expenditures, which
is not presently contemplated.
BECAUSE WE HAVE NOT COMMENCED BUSINESS OPERATIONS, WE FACE A HIGH RISK OF
BUSINESS FAILURE.
We have not yet commenced exploration on the CATHI 1 claim. Accordingly, we have
no way to evaluate the likelihood that our business will be successful. We were
incorporated on August 13, 2004 and to date have been involved primarily in
organizational activities and the acquisition of our mineral property. We have
not earned any revenues as of the date of this prospectus. Potential investors
should be aware of the difficulties normally encountered by new mineral
exploration companies and the high rate of failure of such enterprises. The
likelihood of success must be considered in light of the problems, expenses,
difficulties, complications and delays encountered in connection with the
exploration of the mineral properties that we plan to undertake. These potential
problems include, but are not limited to, unanticipated problems relating to
exploration, and additional costs and expenses that may exceed current
estimates.
Prior to completion of our exploration stage, we anticipate that we will incur
increased operating expenses without realizing any revenues. We therefore expect
to incur significant losses into the foreseeable future. We recognize that if we
are unable to generate significant revenues from development of the CATHI 1
claim and the production of minerals from the claims, we will not be able to
earn profits or continue operations.
There is no history upon which to base any assumption as to the likelihood that
we will prove successful, and it is doubtful that we will generate any operating
revenues or ever achieve profitable operations. If we are unsuccessful in
addressing these risks, our business will most likely fail. If we determine that
the CATHI 1 claim does not contain any reserves and that we are unable to
complete our business plan with respect to the claims, we intend to acquire an
interest or interests in additional mineral claims for exploration purposes.
Additional acquisitions will depend upon our ability to raise additional funding
through our sale of common stock.
BECAUSE OF THE SPECULATIVE NATURE OF EXPLORATION OF MINING PROPERTIES, THERE IS
A SUBSTANTIAL RISK THAT OUR BUSINESS WILL FAIL.
The search for valuable minerals as a business is extremely risky. The
likelihood of our mineral claims containing economic mineralization or reserves
is extremely remote. Exploration for minerals is a speculative venture
necessarily involving substantial risk. In all probability, the CATHI 1 claim
does not contain any reserves and funds that we spend on exploration will be
lost. As well, problems such as unusual or unexpected formations and other
conditions are involved in mineral exploration and often result in unsuccessful
exploration efforts. In such a case, we would be unable to complete our business
plan.
WE NEED TO CONTINUE AS A GOING CONCERN IF OUR BUSINESS IS TO SUCCEED. OUR
INDEPENDENT AUDITOR HAS RAISED DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING
CONCERN.
7
The Independent Auditor's Report to our audited financial statements for the
period ended January 31, 2006 indicates that there are a number of factors that
raise substantial doubt about our ability to continue as a going concern. Such
factors identified in the report are that we have no source of revenue and our
dependence upon obtaining adequate financing. If we are not able to continue as
a going concern, it is likely investors will lose all of their investment.
BECAUSE OF THE INHERENT DANGERS INVOLVED IN MINERAL EXPLORATION, THERE IS A RISK
THAT WE MAY INCUR LIABILITY OR DAMAGES AS WE CONDUCT OUR BUSINESS.
The search for valuable minerals involves numerous hazards. As a result, we may
become subject to liability for such hazards, including pollution, cave-ins and
other hazards against which we cannot insure or against which we may elect not
to insure. The payment of such liabilities may have a material adverse effect on
our financial position.
EVEN IF WE DISCOVER COMMERCIAL RESERVES OF PRECIOUS METALS ON THE CATHI 1 CLAIM,
WE MAY NOT BE ABLE TO SUCCESSFULLY COMMENCE COMMERCIAL PRODUCTION.
The CATHI 1 claim does not contain any known bodies of mineralization. If our
exploration programs are successful in establishing zinc, silver and gold of
commercial tonnage and grade, we will require additional funds in order to place
the property into commercial production. We may not be able to obtain such
financing.
BECAUSE OUR PRESIDENT AND SECRETARY HAVE OTHER BUSINESS INTERESTS, THEY MAY NOT
BE ABLE OR WILLING TO DEVOTE A SUFFICIENT AMOUNT OF TIME TO OUR BUSINESS
OPERATIONS, CAUSING OUR BUSINESS TO FAIL.
Our president, Dr. Tim Sun spends approximately 20% his business time, or
approximately six hours per week, providing his services to us. Our secretary,
Ms. Mar Bergstrom spends only about 10% of her business, or approximately three
hours per week, time providing her services to us. We do not compensate our
directors for the services that they provide to us.
IF A MARKET FOR OUR COMMON STOCK DOES NOT DEVELOP, SHAREHOLDERS MAY BE UNABLE TO
SELL THEIR SHARES.
There is currently no market for our common stock and no certainty that a market
will develop. We have applied for quotation of our common stock on the over the
counter bulletin board upon the effectiveness of the registration statement, of
which this prospectus forms a part. Our shares may never trade on the bulletin
board. If no market is ever developed for our shares, it will be difficult for
shareholders to sell their stock. In such a case, shareholders may find that
they are unable to achieve benefits from their investment.
A PURCHASER IS PURCHASING PENNY STOCK WHICH LIMITS HIS OR HER ABILITY TO SELL
THE STOCK.
8
The shares offered by this prospectus constitute penny stock under the Exchange
Act. The shares will remain penny stock for the foreseeable future. The
classification of penny stock makes it more difficult for a broker-dealer to
sell the stock into a secondary market, thus limiting investment liquidity. Any
broker-dealer engaged by the purchaser for the purpose of selling his or her
shares in our company will be subject to rules 15g-1 through 15g-10 of the
Exchange Act. Rather than creating a need to comply with those rules, some
broker-dealers will refuse to attempt to sell penny stock.
Please refer to the "Plan of Distribution" section for a more detailed
discussion of penny stock and related broker-dealer restrictions.
Forward-Looking Statements
This prospectus contains forward-looking statements that involve risks and
uncertainties. We use words such as anticipate, believe, plan, expect, future,
intend and similar expressions to identify such forward-looking statements. You
should not place too much reliance on these forward-looking statements. Our
actual results may differ materially from those anticipated in these
forward-looking statements for many reasons, including the risks faced by us
described in the "Risk Factors" section and elsewhere in this prospectus.
Use Of Proceeds
We will not receive any proceeds from the sale of the common stock offered
through this prospectus by the selling shareholders.
Determination of Offering Price
The selling shareholders will sell our shares at $0.05 per share until our
shares are quoted on the OTC Bulletin Board, and thereafter at prevailing market
prices or privately negotiated prices. There is no guarantee that our common
stock will be quoted on the OTC Bulletin Board. We determined this offering
price, based upon the price of the last sale of our common stock to investors.
Dilution
The common stock to be sold by the selling shareholders is common stock that is
currently issued and outstanding. Accordingly, there will be no dilution to our
existing shareholders.
Selling Shareholders
The selling shareholders named in this prospectus are offering all of the
1,680,000 shares of common stock offered through this prospectus. These shares
were acquired from us in private placements that were exempt from registration
under Regulation S of the Securities Act of 1933. The shares include the
following:
1. 1,200,000 shares of our common stock that the selling shareholders acquired
from us in an offering that was exempt from registration under Regulation S of
the Securities Act of 1933 and was completed on November 28, 2005; and
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2. 480,000 shares of our common stock that the selling shareholders
acquired from us in an offering that was exempt from registration under
Regulation S of the Securities Act of 1933 and was completed on January 20,
2006.
The following table provides as of the date of this prospectus, information
regarding the beneficial ownership of our common stock held by each of the
selling shareholders, including:
1. the number of shares owned by each prior to this offering
2. the total number of shares that are to be offered for each;
3. the total number of shares that will be owned by each upon completion of the
offering; and
4. the percentage owned by each upon completion of the offering
Name of Selling Shares Owned Total Number of Total Shares Percent
Owned Stockholder Prior To This Shares To Be Owned Upon Upon
Completion Offering Offered For Selling Completion Of This
Offering Shareholders of this
Account Offering
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Hang Pan
1380 Spring Avenue
Burnaby, BC 100,000 100,000 Nil Nil
Wei Gao
6390 Willingdon Ave, Suite 317 100,000 100,000 Nil Nil
Burnaby, BC
Xiao Dong Liu
6119 Cooney Road, Suite 1203 100,000 100,000 Nil Nil
Richmond, BC
Jane Liu
6088 Willingdon Avenue 100,000 100,000 Nil Nil
Burnaby, BC
Huoqi Chen
Floor 8, Xueyuan Tower 100,000 100,000 Nil Nil
No. 1 Zhichun Rd.
Beijing,China
Xueying Zeng
602-Unit 1, Building 15
Jianshe Rd., Kunming 100,000 100,000 Nil Nil
Yunnan, China
Tianying Zheng
#8-88th Street, Xiaohe 100,000 100,000 Nil Nil
Weiyuan, Sichuan, China
Helen Gao
2288 West 40th Ave, Suite 802 100,000 100,000 Nil Nil
Vancouver, BC
10
Shi You Liu 100,000 100,000 Nil Nil
201 - Building 7 West
Wangjia District, Yueyang
Hunan, China
Mattew Liang
8385 Roseberry Avenue 100,000 100,000 Nil Nil
Burnaby, BC
Zhiquan Cai
9 Zhichuan Rd. 100,000 100,000 Nil Nil
Haidian District
Beijing, China
Yanxia Liu
10280 2nd Avenue 100,000 100,000 Nil Nil
Richmond, BC
David Lee Bergstrom
2919 West 13th Avenue 16,000 16,000 Nil Nil
Vancouver, BC
Steven Bergstrom
2919 West 13th Avenue 16,000 16,000 Nil Nil
Vancouver, BC
Weidong Yu
4339 Granville Street 16,000 16,000 Nil Nil
Vancouver, BC
Tianyu Zhang
4339 Granville Street 16,000 16,000 Nil Nil
Vancouver, BC
Jun Yao 16,000 16,000 Nil Nil
5700 Arcadia Road, Suite 126
Richmond, BC
Eric Hsu 16,000 16,000 Nil Nil
4157 Cambridge Street
Burnaby, BC
Chong Chuen Chung 16,000 16,000 Nil Nil
8062 17th Avenue
Burnaby, BC
Saibao Li
2133 West 57th Avenue 16,000 16,000 Nil Nil
Vancouver, BC
11
Demi Zeng 16,000 16,000 Nil Nil
1689 East 37th Avenue
Vancouver, BC
Xianfeng Liu 16,000 16,000 Nil Nil
201 - Building 7 West
Wangjia District, Yueyang
Hunan, China
Hui Zhao 16,000 16,000 Nil Nil
1730 E Eglington Ave. Ste 705
North York, ON
Yuping Liu 16,000 16,000 Nil Nil
220 Mayor Street
Toronto, ON
Cheng Han Li 16,000 16,000 Nil Nil
2130 Adanac Street
Vancouver, BC
Yue Yao 16,000 16,000 Nil Nil
2130 Adanac Street
Vancouver, BC
Nancy Ho 16,000 16,000 Nil Nil
1450 West 40th Avenue
Vancouver, BC
Greta S.F. Ho 16,000 16,000 Nil Nil
2130 Adanac Street
Vancouver, BC
Patrick Wong 16,000 16,000 Nil Nil
808 West 40th Avenue
Vancouver, BC
Jesse Chan 16,000 16,000 Nil Nil
12451 Jensen Drive
Richmond, BC
Bei Zhou 16,000 16,000 Nil Nil
4411 Beatrice Street
Vancouver, BC
Da Xin Ma 16,000 16,000 Nil Nil
6081 No. 3 Road, Suite 826
Richmond, BC
12
Haipei Sun 16,000 16,000 Nil Nil
8180 Granville Avenue, Ste 1108
Richmond, BC
Xuedong Zhang
725 Edgewood Road 16,000 16,000 Nil Nil
North Vancouver, BC
Limei Zhou 16,000 16,000 Nil Nil
725 Edgewood Road
North Vancouver, BC
Dwayne Yaretz 16,000 16,000 Nil Nil
939 Homer Street, Suite 3302
Vancouver, BC
Alex Von Kleist 16,000 16,000 Nil Nil
5401 Greentree Road
West Vancouver, BC
Ben Zhang 16,000 16,000 Nil Nil
6390 Willingdon Ave, Suite 317
Burnaby, BC
Kwok Sing Wu 16,000 16,000 Nil Nil
6226 Dunsmuir Crescent
Richmond, BC
Zhen Hao Yin 16,000 16,000 Nil Nil
8860 Main Street, Suite 190
Vancouver, BC
Polo (Canada) Investment & Management 16,000 16,000 Nil Nil
Corp
1050 Kingsway, Suite 202
Vancouver, BC
Yanhui Guo 16,000 16,000 Nil Nil
5750 Larch Street, Suite 405
Vancouver, BC
The named party beneficially owns and has sole voting and investment over all
shares or rights to these shares. The numbers in this table assume that none of
the selling shareholders sells shares of common stock not being offered in this
prospectus or purchases additional shares of common stock, and assumes that all
shares offered are sold. The percentages are based on 1,680,000 shares of common
stock outstanding on the date of this prospectus.
13
None of the selling shareholders:
(1) has had a material relationship with us other than as a shareholder at
any time within the past three years;
(2) has ever been one of our officers or directors.
(3) has been a registered broker-dealer or an affiliate of a registered
broker-dealer.
Plan Of Distribution
The selling shareholders may sell some or all of their common stock in one or
more transactions, including block transactions.
The selling shareholders will sell our shares at $0.05 per share until our
shares are quoted on the OTC Bulletin Board, and thereafter at prevailing market
prices or privately negotiated prices. We determined this offering price
arbitrarily based upon the price of the last sale of our common stock to
investors. The shares may also be sold in compliance with the Securities and
Exchange Commission's Rule 144.
The selling shareholders may also sell their shares directly to market makers
acting as principals, brokers or dealers, who may act as agent or acquire the
common stock as principal. Any broker or dealer participating in such
transactions as agent may receive a commission from the selling shareholders,
or, if they act as agent for the purchaser of such common stock, from such
purchaser. The selling shareholders will likely pay the usual and customary
brokerage fees for such services. Brokers or dealers may agree with the selling
shareholders to sell a specified number of shares at a stipulated price per
share and, to the extent such broker or dealer is unable to do so while acting
as agent for the selling shareholders, to purchase, as principal, any unsold
shares at the price required to fulfill the respective broker's or dealer's
commitment to the selling shareholders.
Brokers or dealers who acquire shares as principals may thereafter resell such
shares from time to time in transactions in a market or on an exchange, in
negotiated transactions or otherwise, at market prices prevailing at the time of
sale or at negotiated prices, and in connection with such re-sales may pay or
receive commissions to or from the purchasers of such shares. These transactions
may involve cross and block transactions that may involve sales to and through
other brokers or dealers. If applicable, the selling shareholders may distribute
shares to one or more of their partners who are unaffiliated with us. Such
partners may, in turn, distribute such shares as described above. We can provide
no assurance that all or any of the common stock offered will be sold by the
selling shareholders.
We are bearing all costs relating to the registration of the common stock. These
are estimated to be $25,008.99. The selling shareholders, however, will pay any
commissions or other fees payable to brokers or dealers in connection with any
sale of the common stock.
The selling shareholders must comply with the requirements of the Securities Act
and the Exchange Act in the offer and sale of the common stock. In particular,
during such times as the selling shareholders may be deemed to be engaged in a
distribution of the common stock, and therefore be considered to be an
underwriter, they must comply with applicable law and may, among other things:
1. Not engage in any stabilization activities in connection with our common
stock;
14
2. Furnish each broker or dealer through which common stock may be offered, such
copies of this prospectus, as amended from time to time, as may be required by
such broker or dealer; and
3. Not bid for or purchase any of our securities or attempt to induce any person
to purchase any of our securities other than as permitted under the Exchange
Act.
The Securities Exchange Commission has also adopted rules that regulate
broker-dealer practices in connection with transactions in penny stocks. Penny
stocks are generally equity securities with a price of less than $5.00 (other
than securities registered on certain national securities exchanges or quoted on
the Nasdaq system, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
system).
The penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from those rules, deliver a standardized risk
disclosure document prepared by the Commission, which:
* contains a description of the nature and level of risk in the market for
penny stocks in both
public offerings and secondary trading;
* contains a description of the broker's or dealer's duties to the customer
and of the rights and remedies available to the customer with respect to
a violation of such duties;
* contains a brief, clear, narrative description of a dealer market,
including "bid" and "ask" prices for penny stocks and the significance of
the spread between the bid and ask price;
* contains a toll-free telephone number for inquiries on disciplinary
actions;
* defines significant terms in the disclosure document or in the conduct
of trading penny stocks; and
* contains such other information and is in such form (including language,
type, size, and format) as the Commission shall require by rule or
regulation;
The broker-dealer also must provide, prior to proceeding with any transaction in
a penny stock, the customer:
* with bid and offer quotations for the penny stock;
* details of the compensation of the broker-dealer and its salesperson in
the transaction;
* the number of shares to which such bid and ask prices apply, or other
comparable information relating to the depth and liquidity of the market
for such stock; and
* monthly account statements showing the market value of each penny stock
held in the customer's account.
In addition, the penny stock rules require that prior to a transaction in a
penny stock not otherwise exempt from those rules; the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitability statement.
These disclosure requirements will have the effect of reducing the trading
activity in the secondary market for our stock because it will be subject to
these penny stock rules. Therefore, stockholders may have difficulty selling
those securities.
15
Legal Proceedings
We are not currently a party to any legal proceedings. Our address for service
of process in Nevada is 7251 West Lake Mead Boulevard, Suite 300, Las Vegas, NV
89128.
Directors, Executive Officers, Promoters And Control Persons
Our executive officers and directors and their respective ages as of the date of
this prospectus are as follows:
Directors:
Name of Director Age
Tim Sun 45
Mar Bergstrom 55
Executive Officers:
Name of Officer Age Office
--------------------- ----- -------
Tim Sun 45 President, Chief Executive Officer
Chief Financial Officer and Director
Mar Bergstrom 55 Secretary, Treasurer and Director
Biographical Information
Set forth below is a brief description of the background and business experience
of each of our executive officers and directors for the past five years.
Dr. Tim Sun has acted as our President, Chief Executive Officer, Chief Financial
Officer and as a director from our incorporation on August 13, 2004. From July
2005 to present, Dr. Sun has acted as president and CEO of Canadian Sinosun
Energy Inc., a private company involved in coal mining in Canada and China. From
January 2003 to July 2005, Dr. Sun acted as Chief Representative in China for
Ivanhoe Mines Ltd., located in Vancouver, BC. Dr. Sun was in charge of business
development in China for this Canadian mining company. He developed the
company's engineering, procurement, and logistics team in China for its
copper-gold project in Mongolia and established connections with Chinese
government, mining corporations and banks.
From May 2001 to January 2003, Dr. Sun acted as an Investment Consultant & Vice
President of Wanbao Resources Corp., located in Beijing, China. Dr. Sun was
responsible for developing relationships with government and mining companies
and was in charge of the full feasibility study and engineering design for a
copper and cobalt metallurgical plant in Congo.
From January 2000 to May 2001, Dr. Tim Sun acted as President of Sinosun
Enterprises Inc., located in Burnaby, British Columbia where he developed
investment projects related to Canada, China and Africa. He also acted as
consultant for an overseas mining company involved in mineral investment in
Tibet.
Dr. Tim Sun earned his Ph. D. and Certificate of Professional Supervisor from
Queen's University, Kingston, Ontario, Canada in September 1993. In 1985, he
received his Master of Science degree at the Beijing General Research Institute
of Mining and Metallurgy in Beijing, China. In 1982, he received his Bachelor of
Science degree from Northeast University in Shenyang, China.
Dr. Sun devotes 20% of his business time, or approximately six hours per week,
to our affairs. The balance of his business time is focused on Canadian Sinosun
Energy Inc.
16
Ms. Mar Bergstrom has acted as our Secretary, Treasurer and as a director from
our incorporation on August 13, 2004. Since 1997, Ms. Bergstrom has been an
independent consultant to public companies through LGM Lions Gate
Management Ltd., a private British Columbia company. She has provided
administration, regulatory and corporate compliance services to public companies
and private companies for over 20 years.
From March 2003 to June 2005, Ms. Bergstrom was corporate secretary for Minco
Mining & Metals Corporation, a TSX listed company. During February to July 2005,
she also held the same position with IMA Exploration Inc., a TSX Venture
Exchange and American Stock Exchange listed company. From August 2005 to
present, she has acted as corporate secretary of East Energy Corporation, a
Canadian report company.
Ms. Bergstrom does not have any professional training or technical credentials
in the exploration, development and operation of mines.
Ms. Bergstrom devotes 10% of her business time, or approximately three hours per
week, to our affairs. The balance of her business time is focused on LGM Lions
Gate Management Ltd.
Term of Office
Our directors are appointed for a one-year term to hold office until the next
annual general meeting of our shareholders or until removed from office in
accordance with our bylaws. Our officers are appointed by our board of directors
and hold office until removed by the board.
Significant Employees
We have no significant employees. Our officers and directors voluntarily provide
their services to us without compensation.
Conflicts of Interest
Both of our directors are involved in non-company business ventures that involve
mineral properties and exploration. As our present business plan is focused
entirely on the CATHI 1 property, there is no expectation of any conflict
between our business interests and those of our directors. However, possible
conflicts may arise in the future if we seek to acquire interests in additional
mineral properties.
Our bylaws provide that each officer who holds another office or possesses
property whereby, whether directly or indirectly, duties or interests might be
created in conflict with his duties or interests as our officer shall, in
writing, disclose to the president the fact and the nature, character and extent
of the conflict and abstain from voting with respect to any resolution in which
the officer has a personal interest. For example, if we propose to enter into a
transaction in which our president, Dr. Sun, has a direct interest, he must
disclose this interest to our other director, Ms. Bergstrom, at the board
meeting to consider the transaction. Dr. Sun must then abstain from voting on
the resolution to approve the transaction. Accordingly, in order for us to
approve the transaction, Ms. Bergstrom would have to approve it. In making this
decision, Ms. Bergstrom is required to act in the best interests of the company.
Security Ownership Of Certain Beneficial Owners And Management
The following table provides the names and addresses of each person known to us
to own more than 5% of our outstanding common stock as of the date of this
prospectus, and by the officers and directors, individually and as a group.
Except as otherwise indicated, all shares are owned directly.
Title of Class Name and address Amount of beneficial Percent of
of beneficial owner ownership Class
Common Stock Tim Sun 350,000 14.7%
President, Chief Executive Officer
Chief Financial Officer,
and Director
2423 Granville Street,
Vancouver, BC, Canada
Common Stock Mar Bergstrom 350,000 14.7%
Secretary, Treasurer and Director
2919 West 13th Avenue
Vancouver, BC, Canada
Common Stock All officers and directors as a group 700,000 29.4%
that consists of two people
17
The percent of class is based on 2,380,000 shares of common stock issued and
outstanding as of the date of this prospectus.
Description Of Securities
General
Our authorized capital stock consists of 75,000,000 shares of common stock at a
par value of $0.001 per share.
Common Stock
As of May 29, 2007 there were 2,380,000 shares of our common stock issued
and outstanding that are held by 44 stockholders of record.
Holders of our common stock are entitled to one vote for each share on all
matters submitted to a stockholder vote. Holders of common stock do not have
cumulative voting rights. Therefore, holders of a majority of the shares of
common stock voting for the election of directors can elect all of the
directors. A vote by the holders of a majority of our outstanding shares is
required to effectuate certain fundamental corporate changes such as
liquidation, merger or an amendment to our articles of incorporation.
Holders of common stock are entitled to share in all dividends that the board of
directors, in its discretion, declares from legally available funds. In the
event of a liquidation, dissolution or winding up, each outstanding share
entitles its holder to participate pro rata in all assets that remain after
payment of liabilities and after providing for each class of stock, if any,
having preference over the common stock.
Holders of our common stock have no pre-emptive rights, no conversion rights and
there are no redemption provisions applicable to our common stock.
Preferred Stock
We do not have an authorized class of preferred stock.
Dividend Policy
We have never declared or paid any cash dividends on our common stock. We
currently intend to retain future earnings, if any, to finance the expansion of
our business. As a result, we do not anticipate paying any cash dividends in the
foreseeable future.
18
Share Purchase Warrants
We have not issued and do not have outstanding any warrants to purchase shares
of our common stock.
Options
We have not issued and do not have outstanding any options to purchase shares of
our common stock.
Convertible Securities
We have not issued and do not have outstanding any securities convertible into
shares of our common stock or any rights convertible or exchangeable into shares
of our common stock.
Interests Of Named Experts And Counsel
No expert or counsel named in this prospectus as having prepared or certified
any part of this prospectus or having given an opinion upon the validity of the
securities being registered or upon other legal matters in connection with the
registration or offering of the common stock was employed on a contingency
basis, or had, or is to receive, in connection with the offering, a substantial
interest, direct or indirect, in the registrant. Nor was any such person
connected with the registrant as a promoter, managing or principal underwriter,
voting trustee, director, officer, or employee.
Marquis & Aurbach, Attorneys At Law, have provided an opinion on the valid
issuance of our common stock.
The financial statements included in this prospectus and the registration
statement have been audited by DMCL, Chartered Accountants LLP, to the extent
and for the periods set forth in their report appearing elsewhere in this
document and in the registration statement filed with the SEC, and are included
in reliance upon such report given upon the authority of said firm as experts in
auditing and accounting.
Disclosure Of Commission Position Of Indemnification For Securities Act
Liabilities
Our directors and officers are indemnified as provided by the Nevada Revised
Statutes and our Bylaws. These provisions provide that we shall indemnify a
director or former director against all expenses incurred by him by reason of
him acting in that position. The directors may also cause us to indemnify an
officer, employee or agent in the same fashion.
We have been advised that in the opinion of the Securities and Exchange
Commission indemnification for liabilities arising under the Securities Act is
against public policy as expressed in the Securities Act, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities is asserted by one of our directors, officers, or controlling
persons in connection with the securities being registered, we will, unless in
the opinion of our legal counsel the matter has been settled by controlling
precedent, submit the question of whether such indemnification is against public
policy to a court of appropriate jurisdiction. We will then be governed by the
court's decision.
19
Organization Within Last Five Years
We were incorporated on August 13, 2004 under the laws of the state of Nevada.
On that date, Tim Sun was appointed as our President, Chief Executive Officer,
Chief Financial Officer and director and Mar Bergstrom was appointed as
Secretary, Treasurer and director. Dr. Sun acts as our sole promoter. He was
responsible for founding and organizing our business.
Dr. Sun has not received, and has no agreement to receive, anything of value,
directly or indirectly, from us.
Description Of Business
In General
We are an exploration stage company. We are engaged in the acquisition and
exploration of mineral properties with a view to exploiting any mineral deposits
we discover that demonstrate economic feasibility. We own a 100% interest in one
mineral claim known as the CATHI 1 claim. There is no assurance that a
commercially viable mineral deposit exists on the property. Further exploration
will be required before a final evaluation as to the economic and legal
feasibility is determined.
Our plan of operation is to conduct exploration work on the CATHI 1 claim in
order to ascertain whether it possesses economic quantities of gold, silver and
molybdenum. There can be no assurance that economic mineral deposits or reserves
exist on the CATHI 1 claim until appropriate exploration work is done and an
economic evaluation based on such work concludes that production of minerals
from the property is economically feasible.
Even if we complete our proposed exploration programs on the CATHI 1 claim and
they are successful in identifying a mineral deposit, we will have to spend
substantial funds on further drilling and engineering studies before we will
know if we have a commercially viable mineral deposit.
Description, Location and Access
The CATHI 1 claim is located approximately 25 kilometers northwest of Little
Fort, British Columbia and is accessible by Highway 24 from Little Fort, then by
the Deer Lake Forest Access Road northwest to Monticola Lake. The claim is
accessible by surrounding logging roads on the west, north and east of the
property and limited access by overgrown logging roads west and southwest of the
claim. The claim consists of eight units totaling 450 hectares. Logging is
taking place in the eastern part of the claim.
Mineralization
The following technical terms in this section have the following meaning:
20
Augite is a dark-green to black glassy mineral of the pyroxene group containing
large amounts of aluminum and iron and magnesium.
Basalt is a heavy, dark-colored rock that has cooled from molten material, that
may occur in or on the earth's surface.
Breccia is rock composed of angular fragments of older rocks melded together.
Andesite is a gray, fine-grained volcanic rock
Chert is a siliceous rock containing microcrystalline quartz. Chert usually
occurs in round form but may be deposited in layers. Dark gray chert is called
flint.
Siltstone is a fine-grained rock of consolidated silt.
Shale is a fissile rock composed of layers of claylike, fine-grained sediments.
Porphyry is a very hard igneous rock consisting of large-grained crystals. The
traditional term "Porphyry" refers to a purple-red stone valued for its
appearance. Feldspar refers to a group of rock-forming minerals which make up
about 60% of the earth's crust.
Calcite is a common mineral consisting of crystallized calcium carbonate; a
major constituent of limestone.
Claim Location Map see attached PDF file 99.1
A vein is a regularly shaped and lengthy occurrence of an aggregate of minerals.
They are formed by fluids carrying mineral constituents into a rock mass as a
consequence of some form of hydraulic flow within the rock.
Pyrite, also known as "fool's gold" is a common mineral containing mainly iron
disulfide that is pale yellow in color.
The northeastern half of the CATHI 1 claim is underlain by mainly augite basalt,
breccia, and small amounts of andesite. The southwestern half of the claim
contains an abundant amount of black chert, dark siltstone and shale. These
rocks are volcanic and sedimentary rocks of the Nicola Group, which host
significant deposits of copper porphyry, such as feldspar or quartz, dispersed
in a fine-grained feldspathic matrix (groundmass).
Quartz-calcite veins along the CATHI 1 claim property are narrow, ranging from
three to six centimeters wide, the widest being a quartz-calcite-pyrite vein.
Some of the quartz-pyrite veins within augite basalt minerals contain a slightly
elevated value in silver. Almost half of the veins contain small amounts of
pyrite. Other veins contain small amounts of gold, silver, zinc, copper and
lead.
Claim Acquisition
21
On August 13, 2004, we executed a Bill of Sale Absolute with Albert Ablett of
Kamloops, British Columbia, whereby he sold a 100% interest in the CATHI 1
mineral claim to us. In order to acquire the 100% interest in this claim, we
paid $5,000 to Mr. Ablett.
Exploration History
The British Columbia Geological Survey, a branch of the British Columbia
government, has compiled exploration information on the CATHI 1 claim. Analysis
of the claim area has demonstrated that the property contains rock types
consistent with similar types that have hosted significant copper deposits.
In the southwestern area of the CATHI 1, samples anomalous in silver, gold,
copper, zinc, chromium and molybdenum were taken and analyzed. The samples
contain moderately elevated values in silver, gold and molybdenum.
This exploration work included geochemical surveying and geological mapping.
Geochemical surveying involves gathering chip samples and grab samples from
property areas with the most potential to host economically significant
mineralization based on past exploration results. All samples gathered are sent
to a laboratory where they are crushed and analysed for metal content. The grab
samples are soil samples or pieces of rock that appear to contain precious
metals such as gold and silver, or industrial metals such as copper and
molybdenum. Geological mapping involves plotting previous exploration data
relating to a property on a map in order to determine the best property
locations to conduct subsequent exploration work.
Geological Assessment Report
We have obtained a geological summary report on the CATHI 1 claim that was
prepared by Dr. Kenneth Murray Dawson, a professional geologist, of North
Vancouver, British Columbia. Dr. Dawson is a member of the Association of
Professional Engineers and Geoscientists of British Columbia, a member of the
Canadian Institute of Mining and Metallurgy, a member of the Mineralogical
Association of Canada and a corresponding member of the Russian Academy of
Science. His report discusses the geology of the area surrounding and particular
to the CATHI 1 claim, and makes a recommendation for further exploration work.
In his report, Dr. Dawson concludes that the CATHI 1 claim has the potential to
contain notable silver, gold, zinc and copper mineralization within quartz
veins. Geochemical studies released by the BC Geological Survey Branch indicate
a modest potential for zinc, silver, gold and molybdenum. Dr. Dawson is of the
opinion that this data, along with geophysical and geochemical maps showing soil
anomalies and magnetic anomalies, provides enough information to warrant further
investigation to confirm the work and showings noted to date.
Conclusions
Dr. Dawson, the author of the geological report on the CATHI 1 claim, recommends
that the southwestern half of the claim should be prospected and geochemically
sampled. He is of the opinion, based on the results from the work report, that
we purchase or option the adjoining properties from the current owners for the
purpose of carrying out regional geochemical and prospecting surveys.
Prospecting involves analyzing rocks on the property surface with a view to
discovering indications of potential mineralization. Geochemical sampling
involves gathering chip samples and grab samples from property areas with the
most potential to host economically significant mineralization based on past
exploration results. Grab samples are soil samples or pieces of rock that appear
to contain metals such as gold, silver, copper and nickel. All samples gathered
will be sent to a laboratory where they are crushed and analysed for metal
content.
22
Exploration Budget
Our proposed exploration budget for the recommended phase one exploration
program, consisting of geochemical sampling and prospecting, is as follows:
Geologist $2,500
Technician $1,000
Room and board $400
Supplies $400
Assays $1,200
Report $1,500
Filing Fees $400
Total: $7,400
Following the completion of the phase one exploration program and a review of
the results, our consulting geologist will then provide us with recommendations
and a budget for a phase two exploration program on the CATHI 1 property.
Compliance with Government Regulation
We will be required to comply with all regulations, rules and directives of
governmental authorities and agencies applicable to the exploration of minerals
in Canada generally, and in the Province of British Columbia, specifically. The
governmental agencies responsible for overseeing the exploration of minerals in
Canada are primarily the Ministry of Natural Resources Canada and the Ministry
of the Environment. In British Columbia, the responsible government agency is
the Ministry of Energy, Mines and Petroleum Resources.
Under these laws, prior to production, we have the right to explore the
property, subject only to a notice of work which may entail posting a bond. In
addition, production of minerals in the Province of British Columbia will
require prior approval of applicable governmental regulatory agencies. We can
provide no assurance to investors that such approvals will be obtained. The cost
and delay involved in attempting to obtain such approvals cannot be known at
this time.
We have budgeted for regulatory compliance costs in the proposed work program
recommended by the geological report. Such costs will be less than $500 and will
consist of having any significant soil or rock that is moved during the
exploration process returned to its original location. Soil and rock movement
during proposed exploration is anticipated to be negligible.
We will have to sustain the cost of reclamation and environmental mediation for
all exploration (and development) work undertaken. The amount of these costs is
not known at this time as we do not know the extent of the exploration program
that will be undertaken beyond completion of the recommended work program.
However, it is anticipated that such costs will not exceed $20,000 for future
exploration phases. Because there is presently no information on the size,
tenor, or quality of any resource or reserve at this time, it is impossible to
assess the impact of any capital expenditures on earnings, our competitive
position or us in the event a potentially economic deposit is discovered.
23
If we enter into production, the cost of complying with permit and regulatory
environment laws will be greater than in phase one because the impact on the
project area is greater. Permits and regulations will control all aspects of any
production program if the project continues to that stage because of the
potential impact on the environment. Examples of regulatory requirements
include:
- Water discharge will have to meet water standards;
- Dust generation will have to be minimal or otherwise re-mediated;
- Dumping of material on the surface will have to be re-contoured and
re-vegetated;
- An assessment of all material to be left on the surface will need to be
environmentally benign;
- Ground water will have to be monitored for any potential contaminants;
- The socio-economic impact of the project will have to be evaluated and
if deemed negative, will have to be re-mediated; and
- There will have to be an impact report of the work on the local fauna
and flora.
During the exploration phase, a bond will need to be provided covering possible
land disturbance. In the case of normal fieldwork, this should be minimal. The
costs of compliance with environmental regulations in the production phase are
variable and cannot be determined at this time.
Employees
We have no employees as of the date of this prospectus. Our two directors
provide their services to us on a voluntary basis.
Research and Development Expenditures
We have not incurred any other research or development expenditures since our
incorporation.
Subsidiaries
We do not have any subsidiaries.
Patents and Trademarks
We do not own, either legally or beneficially, any patents or trademarks.
24
Reports to Security Holders
Although we are not required to deliver a copy of our annual report to our
security holders, we will voluntarily send a copy of our annual report,
including audited financial statements, to any registered shareholder who
requests it. We will not be a reporting issuer with the Securities & Exchange
Commission until our registration statement on Form SB-2 is declared effective.
We have filed a registration statement on form SB-2 under the Securities Act of
1933 with the Securities and Exchange Commission with respect to the shares of
our common stock offered through this prospectus. This prospectus is filed as a
part of that registration statement, but does not contain all of the information
contained in the registration statement and exhibits. Statements made in the
registration statement are summaries of the material terms of the referenced
contracts, agreements or documents of the company. We refer you to our
registration statement and each exhibit attached to it for a more detailed
description of matters involving the company, and the statements we have made in
this prospectus are qualified in their entirety by reference to these additional
materials. You may inspect the registration statement, exhibits and schedules
filed with the Securities and Exchange Commission at the Commission's principal
office in Washington, D.C. Copies of all or any part of the registration
statement may be obtained from the Public Reference Section of the Securities
and Exchange Commission, 100 F Street, N.W., Washington, D.C. 20549. Please call
the Commission at 1-800-SEC-0330 for further information on the operation of the
public reference rooms. The Securities and Exchange Commission also maintains a
web site at http://www.sec.gov that contains reports, proxy statements and
information regarding registrants that file electronically with the Commission.
Our registration statement and the referenced exhibits can also be found on this
site.
Plan Of Operations
Our plan of operation for the twelve months following the date of this
prospectus is to complete the recommended phase one exploration program on the
CATHI 1 claim consisting of mapping, prospecting and geochemical sampling.
We anticipate that the program will cost approximately $7,400 based on an
estimate provided by our consulting geologist, Kenneth M. Dawson. To date, we
have not commenced exploration on the CATHI 1 claim. We intend to commence
exploration on the CATHI 1 claim in the spring of 2007, as soon as weather
conditions on the property permit. The program is estimated to take two months
to complete, including the interpretation of results.
Geochemical sampling refers to the gathering of chip samples and grab samples
from property areas with the most potential to host economically significant
mineralization based on past exploration results. Grab samples are soil samples
or pieces of rock that appear to contain precious metals such as gold and
silver, or industrial metals such as copper and nickel. All samples gathered
will be sent to a laboratory where they are crushed and analysed for metal
content.
Dr. Dawson will provide and recommend further exploration and a budget for a
phase two upon completion of phase one and a review of the results. We then
intend to commence the phase two program in the summer or fall of 2007. We will
not know the extent of this program until we have received the recommendations
from Dr. Dawson following the completion of phase one.
In the next 12 months, we also anticipate spending an additional $25,000 on
professional fees and administrative expenses, including fees payable in
connection with the filing of this registration statement and complying with
reporting obligations.
Total expenditures over the next 12 months are therefore expected to be
approximately $32,400.
Our cash reserves are not sufficient to meet our obligations for the next
twelve-month period. As a result, we will need to seek additional funding in the
25
near future. We currently do not have a specific plan of how we will obtain such
funding; however, we anticipate that additional funding will be in the form of
equity financing from the sale of our common stock. We may also seek to obtain
short-term loans from our directors, although no such arrangement has been made.
At this time, we cannot provide investors with any assurance that we will be
able to raise sufficient funding from the sale of our common stock or through a
loan from our directors to meet our obligations over the next twelve months. We
do not have any arrangements in place for any future equity financing.
We do not expect to earn any revenue from operations until we have either
commenced mining operations on the CATHI 1 claim or have sold an interest in the
property to a third party. Before this occurs, we expect that we will have to
complete current recommended exploration on the property, as well as additional
exploration recommended by a geologist.
We do not have any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on the small business issuer's
financial condition, changes in financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital resources that
are material to investors.
Results Of Operations For Period Ending October 31, 2006
Results Of Operations For Period Ending January 31, 2007
We have not earned any revenues from our incorporation on August 13, 2004 to
January 31, 2007. We do not anticipate earning revenues unless we enter into
commercial production on the CATHI 1 claim, which is doubtful. We have not
commenced the exploration stage of our business and can provide no assurance
that we will discover economic mineralization on the property, or if such
minerals are discovered, that we will enter into commercial production.
We incurred operating expenses in the amount of $18,655 for the period from our
inception on August 13, 2004 to January 31, 2007. These operating expenses were
comprised of $6,440 for mineral property expenditures and $12,215 in general and
administrative fees.
We have not attained profitable operations and are dependent upon obtaining
financing to pursue exploration activities. For these reasons our auditors
believe that there is substantial doubt that we will be able to continue as a
going concern.
Description Of Property
We own a 100% interest in the mineral claim comprising the CATHI 1 claim. We do
not own or lease any property other than the CATHI 1 claim.
Certain Relationships And Related Transactions
None of the following parties has, since our date of incorporation, had any
material interest, direct or indirect, in any transaction with us or in any
presently proposed transaction that has or will materially affect us:
* Any of our directors or officers;
* Any person proposed as a nominee for election as a director;
* Any person who beneficially owns, directly or indirectly, shares
carrying more than 10% of the voting rights attached to our
outstanding shares of common stock;
* Our sole promoter, Tim Sun;
* Any member of the immediate family of any of the foregoing persons.
26
Market For Common Equity And Related Stockholder Matters
No Public Market for Common Stock
There is presently no public market for our common stock. We have applied for
trading of our common stock on the over the counter bulletin board upon the
effectiveness of the registration statement of which this prospectus forms a
part. However, we can provide no assurance that our shares will be traded on the
bulletin board or, if traded, that a public market will materialize. As well,
there is no assurance that our stock may be resold at the offered price if and
when an active secondary market might develop. Even if developed, a public
market for our securities may not be sustained.
Stockholders of Our Common Shares
As of the date of this registration statement, we have 44 registered
shareholders.
Rule 144 Shares
A total of 700,000 shares of our common stock are available for resale to the
public after November 15, 2006 in accordance with the volume and trading
limitations of Rule 144 of the Act. In general, under Rule 144 as currently in
effect, a person who has beneficially owned shares of a company's common stock
for at least one year is entitled to sell within any three month period a number
of shares that does not exceed the greater of:
1. 1% of the number of shares of our common stock then outstanding which, in
our case, will equal 23,800 shares as of the date of this prospectus; or
2. the average weekly trading volume of the company's common stock during the
four calendar weeks preceding the filing of a notice on Form 144 with
respect to the sale.
Sales under Rule 144 are also subject to manner of sale provisions and notice
requirements and to the availability of current public information about the
company.
Under Rule 144(k), a person who is not one of the company's affiliates at any
time during the three months preceding a sale, and who has beneficially owned
the shares proposed to be sold for at least two years, is entitled to sell
shares without complying with the manner of sale, public information, volume
limitation or notice provisions of Rule 144.
27
As of the date of this prospectus, persons who are our affiliates hold all of
the 700,000 shares that may be sold pursuant to Rule 144.
Registration Rights
We have not granted registration rights to the selling shareholders or to any
other persons.
Dividends
There are no restrictions in our articles of incorporation or bylaws that
prevent us from declaring dividends. The Nevada Revised Statutes, however, do
prohibit us from declaring dividends where, after giving effect to the
distribution of the dividend:
1. we would not be able to pay our debts as they become due in the usual course
of business; or
2. our total assets would be less than the sum of our total liabilities plus the
amount that would be needed to satisfy the rights of shareholders who have
preferential rights superior to those receiving the distribution.
We have not declared any dividends, and we do not plan to declare any dividends
in the foreseeable future.
Executive Compensation
Summary Compensation Table
The table below summarizes all compensation awarded to, earned by, or paid to
our executive officers by any person for all services rendered in all capacities
to us for the fiscal periods ended January 31, 2007 and 2006 and subsequent to
that period to the date of this prospectus.
Annual Compensation
Nonqualified
Non-Equity Deferred
Name and Year Salary Bonus Stock Option Incentive Plan Compensation All Other Total
Principal Position Awards Awards Compensation on Earnings Compensation
Tim Sun 2007 $0 $0 None None None None None $0
2006 $0 $0 None None None None None $0
2005 $0 $0 None None None None None $0
Mar Bergstrom 2007 $0 $0 None None None None None $0
2006 $0 $0 None None None None None $0
2005 $0 $0 None None None None None $0
28
Director Independence
Our securities are not listed on any stock exchange or quoted on any quotation
system. We have applied to have our common shares quoted for trading on the OTC
Bulletin Board, however, there is no guarantee that this application will be
successful. We will not need to meet any director independence requirements in
order to qualify for quotation on the OTC Bulletin Board.
The NASDAQ Stock Market has instituted director independence guidelines that
have been adopted by the Securities & Exchange Commission. These guidelines
provide that a director is deemed "independent" only if the board of directors
affirmatively determines that the director has no relationship with the company
which, in the board's opinion, would interfere with the director's exercise of
independent judgment in carrying out his or her responsibilities. Significant
stock ownership will not, by itself, preclude a board finding of independence.
For NASDAQ Stock Market listed companies, the director independence rules list
six types of disqualifying relationships that preclude an independence filing.
The company's board of directors may not find independent a director who:
1. is an employee of the company or any parent or subsidiary of the
company;
2. accepts, or who has a family member who accepts, more than $60,000 per
year in payments from the company or any parent or subsidiary of the
coampny other than (a) payments from board or committee services; (b)
payments arising solely from investments in the company's securities;
(c) compensation paid to a family member who is a non-executive
employee of the company' (d) benefits under a tax qualified retirement
plan or non-discretionary compensation; or (e) loans to directors and
executive officers permitted under Section 13(k) of the Exchange Act;
3. is a family member of an individual who is employed as an executive
offier by the company or any parent or subsidiary of the company;
4. is, or has a family member who is, a partner in, or a controlling
shareholder or an executive officer of, any organization to which the
company made, or from which the company received, payments for property
or services that exceed 5% of the recipient's consolidated gross
revenues for that year, or $200,000, whichever is more, other than (a)
payments arising solely from investments in the company's securities or
(b) payments under non-discretionary charitable contribution matching
programs;
5. is employed, or who has a family member who is employed, as an
executive officer of another company whose compensation
committee includes any executive officer of the listed company; or
6. is, or has a family member who is, a current partner of the company's
outside auditor, or was a partner or employee of the company's outside
auditor who worked on the company's audit.
None of these six factors apply to our directors. Accordingly, our board of
directors has determined that our two directors, namely Dr. Tim Sun and Mar
Bergstrom, are independent under these rules.
Stock Option Grants
We have not granted any stock options to the executive officers since our
inception.
29
Consulting Agreements
We do not have any employment or consulting agreement with Dr. Sun or Ms.
Bergstrom. We do not pay them any amount for acting as directors. Both of our
directors have agreed to volunteer their time to our business for the time being
in order to allow us to focus our fiscal resources on operations with a view to
increasing the value of their personal stock positions in the company. Our Board
of Directors has not identified any triggering events that would determine when
compensation will be paid to Dr. Sun or Ms. Bergstrom or what the terms of such
compensation would be.
Financial Statements
Index to Financial Statements:
1. Report of Independent Registered Public Accounting Firm;
2. Audited financial statements for the periods ending January 31, 2007 and
2006, including:
a. Balance Sheets;
b. Statements of Operations;
c. Statements of Cash Flows;
d. Statements of Stockholders' Equity; and
e. Notes to the Financial Statements
30
GEOPULSE EXPLORATIONS INC.
(An Exploration Stage Company)
FINANCIAL STATEMENTS
JANUARY 31, 2007
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
BALANCE SHEETS
STATEMENTS OF OPERATIONS
STATEMENT OF STOCKHOLDERS' EQUITY
STATEMENTS OF CASH FLOWS
NOTES TO THE FINANCIAL STATEMENTS
31
[DALE MATHESON Partnership of: Robert J Burkart, Inc. James F Carr-Hilton, Ltd.
[CARR-HILTON LABONTE Alvin F Dale, Ltd. Peter J Donaldson, Inc. R.J. LaBonte, Ltd.
------------------- Robert J Matheson, Inc. Fraser G Ross, Ltd.
[CHARTERED ACCOUNTANTS LOGO]
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
--------------------------------------------------------------------------------
To the Stockholders and Board of Directors of Geopulse Explorations Inc.:
We have audited the balance sheets of Geopulse Explorations Inc (an exploration
stage company) as at January 31, 2007 and 2006 and the statements of operations,
stockholders' equity and cash flows for the years ended January 31, 2007 and
2006, and for the period from August 13, 2004 (inception) to January 31, 2007.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform an audit to obtain reasonable assurance whether the financial
statements are free of material misstatement. 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 and 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, these financial statements present fairly, in all material
respects, the financial position of the Company as at January 31, 2007 and 2006
and the results of its operations and cash flows and changes in stockholders'
equity for the year ended January 31, 2007 and 2006, and for the period from
August 13, 2004 (inception) to January 31, 2007 in conformity with accounting
principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, to date the Company has not generated revenues since
inception, has incurred losses in developing its business, and further losses
are anticipated. The Company requires additional funds to meet its obligations
and finance its operations. These factors raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in this
regard are described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
"DMCL"
DALE MATHESON CARR-HILTON LABONTE LLP
CHARTERED ACCOUNTANTS
Vancouver, Canada
March 23, 2007
Vancouver Suite 1700 - 1140 West Pender Street, Vancouver, B.C., Canada V6E 4G1,
Tel: 604 687 4747 Fax: 604 687-4216
Suite 1300 - 1140 West Pender Street - Regulatory and Tax Practices
Office
Tel: 604 687 4747 Fax: 604 689 2778
Port Coquitlam P.O. Box 217, 2232D Elgin Avenue, Port Coquitlam, B.C., Canada
V3C 3V7, Tel: 604 941 8266 Fax: 604 941 0971
Surrey Suite 303-7337 137th Street, Surrey, B.C., Canada V3W 1A4,
Tel: 604 572 4586 Fax: 604 572 4587
32
GEOPULSE EXPLORATIONS INC.
(An Exploration Stage Company)
BALANCE SHEETS
---------------------------------------------------------------------------------------------------------------------------
January 31, January 31,
2007 2006
- $ - - $ -
------------- --------------
ASSETS
CURRENT ASSETS
Cash 25,290 41,821
===========================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Related party advance (Note 4) 945 6,500
---------------------------------------------------------------------------------------------------------------------------
Nature of Operations and Going Concern (Note 1)
STOCKHOLDERS' EQUITY
Common stock (Note 5)
Authorized:
75,000,000 common shares with a par value of $0.001
Issued and outstanding:
2,380,000 common shares (2006 : 2,380,000)
2,380 2,380
Additional paid-in capital 40,620
40,620
Deficit accumulated during the exploration stage (18,655) (7,679)
---------------------------------------------------------------------------------------------------------------------------
24,345 35,321
---------------------------------------------------------------------------------------------------------------------------
25,290 41,821
===========================================================================================================================
The accompanying notes are an integral part of these financial statements.
33
GEOPULSE EXPLORATIONS INC.
(An Exploration Stage Company)
Statements of Operations
-----------------------------------------------------------------------------------------------------------------------
Year ended August 13, 2004
Year ended January 31, (Inception) to
January 31, 2007 2006 January 31, 2007
- $ - - $ - - $ -
----------------- ---------------- -----------------
Expenses
Mineral interest costs (Note 3) - 2,440 6,440
General and administrative 10,976 824 12,215
-----------------------------------------------------------------------------------------------------------------------
Net loss (10,976) (3,264) ( 18,655)
=======================================================================================================================
Basic and Diluted Net Loss Per Share ( 0.00) (0.00)
=====================================================================================================
Weighted average number of shares outstanding 2,380,000 420,547
=====================================================================================================
The accompanying notes are an integral part of these financial statements.
34
GEOPULSE EXPLORATIONS INC.
(An Exploration Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
For the period August 13, 2004 (Inception) to January 31, 2007
---------------------------------------------------------------------------------------------------------------------------
Deficit
Accumulated
Additional During the
Common Shares Paid-in Exploration
Number Par Value Capital Stage Total
-------------------------------------------------------------------------------
Balance August 13, 2004 - $ - $ - $ - $ -
Net loss - - - (4,415) (4,415)
-------------------------------------------------------------------------------
Balance, January 31, 2005 - - - (4,415) (4,415)
Capital stock issued for cash:
November 2005 at $0.001 per share 1,900,000 1,900 17,100 - 19,000
January 2006 at $0.05 per share 480,000 480 23,520 - 24,000
Net loss - - - (3,264) (3,264)
------------------------------------------------------------------------------------------------------------------------------
Balance, January 31, 2006 2,380,000 2,380 40,620 (7,679) 35,321
Net loss - - - (10,976) (10,976)
------------------------------------------------------------------------------------------------------------------------------
Balance, January 31, 2007 2,380,000 $ 2,380 $ 40,620 $ (18,655) $ 24,345
==============================================================================================================================
The accompanying notes are an integral part of these financial statements.
35
GEOPULSE EXPLORATIONS INC.
(An Exploration Stage Company)
Statements of Cash Flows
-------------------------------------------------------------------------------------------------------------------------------
August 13, 2004
Year ended Year ended (Inception) to
January 31, 2007 January 31, 2006 January 31, 2007
- $ - - $ - - $ -
------------------ ----------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss (10,976) (3,264) (18,655)
-------------------------------------------------------------------------------------------------------------------------------
Net cash used in operations (10,976) (3,264) (18,655)
-------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Related party advance (5,555) - 945
Shares issued for cash - 43,000 43,000
-------------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities (5,555) 43,000 43,945
-------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH (16,531) 39,736 25,290
CASH, BEGINNING 41,821 2,085 -
-------------------------------------------------------------------------------------------------------------------------------
CASH, ENDING 25,290 41,821 25,290
===============================================================================================================================
Supplemental cash flow information:
Cash paid for:
-Interest - - -
===============================================================================================================================
-Income taxes - - -
===============================================================================================================================
The accompanying notes are an integral part of these financial statements.
36
GEOPULSE EXPLORATIONS INC.
(An Exploration Stage Company)
Notes To The Financial Statements
January 31, 2007
--------------------------------------------------------------------------------
1. NATURE OF OPERATIONS AND GOING CONCERN
Geopulse Explorations Inc. (the "Company") was incorporated in the State of
Nevada on August 13, 2004 and is in the exploration stage. The Company has
acquired a mineral interest located in the Province of British Columbia, Canada,
and has not yet determined whether this interest contains reserves that are
economically recoverable. The recoverability of costs incurred for acquisition
and exploration of the property will be dependent upon the discovery of
economically recoverable reserves, confirmation of the Company's interest in the
underlying property, the ability of the Company to obtain necessary financing to
satisfy the expenditure requirements under the property agreement and to
complete the development of the property and upon future profitable production
or proceeds from the sale thereof.
Going Concern
These financial statements have been prepared on a going concern basis which
assumes the Company will be able to realize its assets and discharge its
liabilities in the normal course of business. The Company has incurred losses
since inception resulting in an accumulated deficit of $18,655 as at January 31,
2007 and further losses are anticipated in the development of its business
raising doubt about the Company's ability to continue as a going concern. The
ability to continue as a going concern is dependent upon the Company generating
profitable operations in the future and/or obtaining the necessary financing to
meet its obligations and repay its liabilities arising from normal business
operations when they come due. Management intends to finance operating costs
over the next twelve months with existing cash on hand and loans from directors
and/or private placement of common stock.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The financial statements of the Company have been prepared in accordance with
generally accepted accounting principles in the United States of America and are
presented in US dollars.
Exploration Stage Company
The Company complies with Financial Accounting Standards Board Statement No. 7
"Accounting and Reporting by Development Stage Enterprises" in its
characterization of the Company as an exploration stage enterprise.
Foreign Currency Translation
Transaction amounts denominated in foreign currencies are translated at exchange
rates prevailing at transaction dates. Carrying values of monetary assets and
liabilities are adjusted at each balance sheet date to reflect the exchange rate
at that date. Non-monetary assets and liabilities are translated at the exchange
rate on the original transaction date. Gains and losses from restatement of
foreign currency assets and liabilities are included in comprehensive income.
Revenues and expenses are translated at the rates of exchange prevailing on the
dates such items are recognized in the statements of operations.
Mineral Interests
The Company is primarily engaged in the acquisition, exploration and development
of mineral properties. Mineral property acquisition costs are capitalized in
accordance with EITF 04-2 when management has determined that probable future
benefits consisting of a contribution to future cash inflows, have been
identified and adequate financial resources are available or are expected to be
available as required to meet the terms of property acquisition and budgeted
exploration and development expenditures. Mineral property acquisition costs are
expensed as incurred if the criteria for capitalization is not met. Mineral
property exploration costs are expensed as incurred. When it has been determined
that a mineral property can be economically developed as a result of
establishing proven and probable reserves, the costs incurred
37
GEOPULSE EXPLORATIONS INC.
(An Exploration Stage Company)
Notes To The Financial Statements
January 31, 2007
--------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Mineral Interests (continued)
to develop such property are capitalized. As of the date of these financial
statements, the Company has incurred only acquisition and exploration costs
which have been expensed. To date the Company has not established any proven or
probable reserves on its mineral properties.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the period. Actual results
could differ from those estimates.
Financial instruments
The Company's financial instruments consist of cash and advances from related
party. The fair values of these financial instruments approximate their carrying
values due to the short-term maturity of those instruments. In management's
opinion, the Company is not exposed to significant interest rate, currency
exchange rate or credit risk arising from these financial instruments. The
Company is not party to any derivative instruments.
Environmental Costs
Environmental expenditures that relate to current operations are expensed or
capitalized as appropriate. Expenditures that relate to an existing condition
caused by past operations, and which do not contribute to current or future
revenue generation, are expensed. Liabilities are recorded when environmental
assessments and/or remedial efforts are probable, and the cost can be reasonably
estimated. Generally, the timing of these accruals coincides with the earlier of
completion of a feasibility study or the Company's commitments to plan of action
based on the then known facts.
Income Taxes
The Company follows the liability method of accounting for income taxes. Under
this method, deferred income tax assets and liabilities are recognized for the
estimated tax consequences attributable to differences between the financial
statement carrying values and their respective income tax basis (temporary
differences). The effect on deferred income tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date. At January 31, 2007 a full deferred tax asset valuation
allowance has been provided and no deferred tax asset benefit has been recorded.
Loss Per Share
The Company computes loss per share in accordance with SFAS No. 128, "Earnings
per Share" which requires presentation of both basic and diluted earnings per
share on the face of the statement of operations. Basic loss per share is
computed by dividing net loss available to common shareholders by the weighted
average number of outstanding common shares during the period. Diluted loss per
share gives effect to all dilutive potential common shares outstanding during
the period including stock options and warrants using the treasury method.
Dilutive loss per share excludes all potential common shares if their effect is
anti-dilutive.
38
GEOPULSE EXPLORATIONS INC.
(An Exploration Stage Company)
Notes To The Financial Statements
January 31, 2007
--------------------------------------------------------------------------------
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Stock-based Compensation
The Company has not adopted a stock option plan and has not granted any stock
options. Accordingly, no stock-based compensation has been recorded to date.
Recent Accounting Pronouncements
In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities". This Statement permits entities to
choose to measure many financial assets and financial liabilities at fair value.
Unrealized gains and losses on items for which the fair value option has been
elected are reported in earnings. SFAS No. 159 is effective for fiscal years
beginning after November 15, 2007. The Company is currently assessing the impact
of SFAS No. 159 on its financial position and results of operations.
In September 2006, the FASB issued SFAS No. 158, "Employers' Accounting for
Defined Benefit Pension and Other Postretirement Plans." This Statement requires
an employer to recognize the over funded or under funded status of a defined
benefit post retirement plan (other than a multiemployer plan) as an asset or
liability in its statement of financial position, and to recognize changes in
that funded status in the year in which the changes occur through comprehensive
income. SFAS No. 158 is effective for fiscal years ending after December 15,
2006. The adoption of SFAS No. 158 had no impact on the financial position or
results of operations of the Company.
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measures". This
Statement defines fair value, establishes a framework for measuring fair value
in generally accepted accounting principles (GAAP), expands disclosures about
fair value measurements, and applies under other accounting pronouncements that
require or permit fair value measurements. SFAS No. 157 does not require any new
fair value measurements. However, the FASB anticipates that for some entities,
the application of SFAS No. 157 will change current practice. SFAS No. 157 is
effective for financial statements issued for fiscal years beginning after
November 15, 2007, which for the Company would be the fiscal year beginning
February 1, 2008. The Company is currently evaluating the impact of SFAS No. 157
but does not expect that it will have a material impact on its financial
statements.
In September 2006, the SEC issued Staff Accounting Bulletin ("SAB") No. 108,
"Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements." SAB No. 108 addresses how
the effects of prior year uncorrected misstatements should be considered when
quantifying misstatements in current year financial statements. SAB No. 108
requires companies to quantify misstatements using a balance sheet and income
statement approach and to evaluate whether either approach results in
quantifying an error that is material in light of relevant quantitative and
qualitative factors. SAB No. 108 is effective for periods ending after November
15, 2006. The adoption of SFAS No. 158 had no impact on the financial position
or results of operations of the Company.
3. MINERAL INTERESTS
Cathi 1 Claim, British Columbia, Canada
On August 13, 2004, the Company acquired a 100% undivided right, title and
interest in the "Cathi 1" claim located in the province of British Columbia,
Canada for $4,000. Cumulative property costs expensed to January 31, 2007 were
$6,440 (January 31, 2006: $6,440).
39
GEOPULSE EXPLORATIONS INC.
(An Exploration Stage Company)
Notes To The Financial Statements
January 31, 2007
--------------------------------------------------------------------------------
4. RELATED PARTY TRANSACTIONS
As at January 31, 2007, a balance of $945 (2006 - $6,500) is owing to the
corporate manager of the Company. The amount is unsecured, non-interest bearing
and has no specified terms of repayment.
5. COMMON STOCK
The total number of common shares authorized that may be issued by the Company
is 75,000,000 shares with a par value of $0.001 per share and no other class of
shares is authorized.
During the year ended January 31, 2006, the Company issued 1,900,000 shares of
common stock at $0.001 per share for total cash proceeds of $19,000 and 480,000
shares of common stock at $0.05 for total cash proceeds of $24,000.
At January 31, 2007, there were no outstanding stock options or warrants and
accordingly the Company has not recorded any stock based compensation.
6. INCOME TAXES
As of January 31, 2007, the Company had net operating loss carry forwards of
approximately $19,000 that may be available to reduce future years' taxable
income through 2027. Future tax benefits which may arise as a result of these
losses have not been recognized in these financial statements, as their
realization is determined not likely to occur. The Company has recorded a full
valuation allowance against the deferred tax asset relating to these tax loss
carry-forwards.
40
Changes In And Disagreements With Accountants
We have had no changes in or disagreements with our accountants.
Until _________________, all dealers that effect transactions in these
securities whether or not participating in this offering, may be required to
deliver a prospectus. This is in addition to the dealer's obligation to deliver
a prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
Part II
Information Not Required In The Prospectus
Indemnification Of Directors And Officers
Our officers and directors are indemnified as provided by the Nevada Revised
Statutes and our bylaws.
Under the NRS, director immunity from liability to a company or its shareholders
for monetary liabilities applies automatically unless it is specifically limited
by a company's articles of incorporation that is not the case with our articles
of incorporation. Excepted from that immunity are:
(1) a willful failure to deal fairly with the company or its
shareholders in connection with a matter in which the director
has a material conflict of interest;
(2) a violation of criminal law (unless the director had
reasonable cause to believe that his or her conduct was lawful
or no reasonable cause to believe that his or her conduct was
unlawful);
(3) a transaction from which the director derived an improper
personal profit; and
(4) willful misconduct.
Our bylaws provide that we will indemnify our directors and officers to the
fullest extent not prohibited by Nevada law; provided, however, that we may
modify the extent of such indemnification by individual contracts with our
directors and officers; and, provided, further, that we shall not be required to
indemnify any director or officer in connection with any proceeding (or part
thereof) initiated by such person unless:
(1) such indemnification is expressly required to be made by law;
(2) the proceeding was authorized by our Board of Directors;
(3) such indemnification is provided by us, in our sole
discretion, pursuant to the powers vested us under Nevada law;
or
(4) such indemnification is required to be made pursuant to the
bylaws.
41
Our bylaws provide that we will advance all expenses incurred to any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that he is or was our director or
officer, or is or was serving at our request as a director or executive officer
of another company, partnership, joint venture, trust or other enterprise, prior
to the final disposition of the proceeding, promptly following request. This
advanced of expenses is to be made upon receipt of an undertaking by or on
behalf of such person to repay said amounts should it be ultimately determined
that the person was not entitled to be indemnified under our bylaws or
otherwise.
Our bylaws also provide that no advance shall be made by us to any officer in
any action, suit or proceeding, whether civil, criminal, administrative or
investigative, if a determination is reasonably and promptly made: (a) by the
board of directors by a majority vote of a quorum consisting of directors who
were not parties to the proceeding; or (b) if such quorum is not obtainable, or,
even if obtainable, a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, that the facts known to the
decision- making party at the time such determination is made demonstrate
clearly and convincingly that such person acted in bad faith or in a manner that
such person did not believe to be in or not opposed to our best interests.
Other Expenses Of Issuance And Distribution
The estimated costs of this offering are as follows:
Securities and Exchange Commission registration fee $ 8.99
Transfer Agent Fees $ 1000.00
Accounting and auditing fees and expenses $ 7,500.00
Legal fees and expenses $ 15,000.00
Edgar filing fees $ 1,500.00
---------------
Total $ 25,008.99
===============
All amounts are estimates other than the Commission's registration fee.
We are paying all expenses of the offering listed above. No portion of these
expenses will be borne by the selling shareholders. The selling shareholders,
however, will pay any other expenses incurred in selling their common stock,
including any brokerage
commissions or costs of sale.
Recent Sales of Unregistered Securities
We completed an offering of 700,000 shares of our common stock at a price of
$0.001 per share on November 15, 2005 to Tim Sun, our President (as to 350,000
shares) and Mar Bergstrom (as to 350,000 shares), our Secretary and Treasurer.
The total amount received from this offering was $7,000.
These shares were issued pursuant to Regulation S of the Securities Act.
Appropriate legends were affixed to the stock certificates representing these
shares.
42
We completed an offering of 1,200,000 shares of our common stock at a price of
$0.001 per share to a total of twelve purchasers on November 28, 2005. The total
amount received from this offering was $1,200. We completed this offering
pursuant to Regulation S of the Securities Act. The purchasers were as follows:
Name of Shareholder Number of Shares
Hang Pan 100,000
Wei Gao 100,000
Xiao Dong Liu 100,000
Jane Liu 100,000
Huoqi Chen 100,000
Xueying Zeng 100,000
Tianying Zeng 100,000
Helen Gao 100,000
Shi You Liu 100,000
Mattew Liang 100,000
Zhiquan Cai 100,000
Yanxia Liu 100,000
We completed an offering of 480,000 shares of our common stock at a price of
$0.05 per share to a total of thirty purchasers on January 20, 2006. The total
amount received from this offering was $24,000. We completed this offering
pursuant to Regulation S of the Securities Act. The purchasers were as follows:
Name of Shareholder Number of Shares
David Lee Bergstrom 16,000
Steven Bergstrom 16,000
Weidong Yu 16,000
Tianyu Zhang 16,000
Jun Yao 16,000
Eric Hsu 16,000
Chong Chuen Chung 16,000
Saibao Li 16,000
Demi Zeng 16,000
Xianfeng Liu 16,000
Hui Zhao 16,000
Yuping Liu 16,000
Cheng Han Li 16,000
Yue Yao 16,000
Nancy Ho 16,000
Greta S. F. Ho 16,000
Patrick Wong 16,000
Jesse Chan 16,000
Bei Zhou 16,000
Da Xin Ma 16,000
43
Name of Shareholder Number of Shares
Haipei Sun 16,000
Xuedong Zhang 16,000
Limei Zhou 16,000
Dwayne Yaretz 16,000
Alex Von Kleist 16,000
Ben Zhang 16,000
Kwok Sing Wu 16,000
Zhen Hao Yin 16,000
Polo (Canada) Investment & Management Corp. 16,000
Yanhui Guo 16,000
Regulation S Compliance
Each offer or sale was made in an offshore transaction;
Neither we, a distributor, any respective affiliates nor any person on behalf of
any of the foregoing made any directed selling efforts in the United States;
Offering restrictions were, and are, implemented;
No offer or sale was made to a U.S. person or for the account or benefit of a
U.S. person;
Each purchaser of the securities certifies that it was not a U.S. person and was
not acquiring the securities for the account or benefit of any U.S. person;
Each purchaser of the securities agreed to resell such securities only in
accordance with the provisions of Regulation S, pursuant to registration under
the Act, or pursuant to an available exemption from registration; and agreed not
to engage in hedging transactions with regard to such securities unless in
compliance with the Act;
The securities contain a legend to the effect that transfer is prohibited except
in accordance with the provisions of Regulation S, pursuant to registration
under the Act, or pursuant to an available exemption from registration; and that
hedging transactions involving those securities may not be conducted unless in
compliance with the Act; and
We are required, either by contract or a provision in its bylaws, articles,
charter or comparable document, to refuse to register any transfer of the
securities not made in accordance with the provisions of Regulation S pursuant
to registration under the Act, or pursuant to an available exemption from
registration; provided, however, that if any law of any Canadian province
prevents us from refusing to register securities transfers, other reasonable
procedures, such as a legend described in paragraph (b)(3)(iii)(B)(3) of
Regulation S have been implemented to prevent any transfer of the securities not
made in accordance with the provisions of Regulation S.
44
Exhibits
Exhibit
Number Description
3.1 Articles of Incorporation*
3.2 Bylaws*
5.1 Legal opinion
10.1 Bill of Sale Absolute dated August 13, 2004*
23.1 Consent of Dale Matheson Carr-Hilton LaBonte, Chartered
Accountants
23.2 Consent of Dr. Kenneth M. Dawson, professional geologist
* filed as an exhibit to our registration statement on Form SB-2 dated
September 22, 2006
** filed as an exhibit to our registration statement on Form SB-2 dated
February 14, 2007
The undersigned registrant hereby undertakes:
1. To file, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(a) include any prospectus required by Section 10(a)(3) of th Securities
Act of 1933;
(b) reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information set
forth in this registration statement; and notwithstanding the
forgoing, 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 the volume and price represen 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
(c) include any additional or changed material information on the plan of
distribution.
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 herein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
3. To remove from registration by means of a post-effective amendment any of the
securities being registered hereby which remain unsold at the termination of the
offering.
4. That, for determining our liability under the Securities Act to any purchaser
in the initial distribution of the securities, we undertake that in a primary
offering of our securities 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, we 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 that we file relating to the
offering required to be filed pursuant to Rule 424 (Section 230.424
of this chapter);
(ii) any free writing prospectus relating to the offering prepared by or
on our behalf or used or referred to by us;
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(iii) the portion of any other free writing prospectus relating to the
offering containing material information about us or our securities
provided by or on behalf of us; and
(iv) any other communication that is an offer in the offering made by us to
the purchaser.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to our directors, officers and controlling persons pursuant to the
provisions above, or otherwise, we have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act, and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities, other
than the payment by us of expenses incurred or paid by one of our directors,
officers, or controlling persons in the successful defense of any action, suit
or proceeding, is asserted by one of our directors, officers, or controlling
person in connection with the securities being registered, we will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification is against public policy as expressed in the Securities Act, and
we will be governed by the final adjudication of such issue.
Signatures
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of
Vancouver, Province of British Columbia on May 29, 2007.
Geopulse Exploration Inc.
By:/s/ Tim Sun
------------------------------
Tim Sun, President, Chief
Executive Officer and Director
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated.
SIGNATURE CAPACITY IN WHICH SIGNED DATE
/s/ Tim Sun President, Chief Executive May 29, 2007
----------------------- Officer, Chief Financial Officer,
Tim Sun principal financial officer, principal
accounting officer and director
/s/ Mar Bergstrom Secretary, Treasurer and Director May 29, 2007
-----------------------
Mar Bergstrom
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