UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K/A
CURRENT
REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES
EXCHANGE ACT OF 1934
August
27,
2007
STARGOLD
MINES, INC.
(Exact
name of Registrant as specified in its charter)
Nevada
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000-51197
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98-0400208
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(State
or other jurisdiction of incorporation)
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(Commission
File Number)
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(IRS
Employer Identification No)
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1840
Gateway Drive
Suite
200
San
Mateo, California 94404
(Address
of principal executive offices)
(650)
378-1214
(Registrant's
Telephone Number, Including Area Code)
___________________________________________________________
(Former
Name or Former Address, if Changed Since Last Report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
o
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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The
principal purpose of this Amendment to Stargold Mines, Inc.’s (the “Company’s)
Current Report on Form 8-K is to provide the audited financial statements of
UniverCompany Limited Liability Company (“UniverCompany”) as well as pro forma
financial statements of the Company reflecting the acquisition of UniverCompany.
In addition, we are providing herein certain information reflecting the business
and operations of the Company following its acquisition of
UniverCompany.
Section
2 - Financial Information
Item
2.01 Completion of Acquisition or Disposition of Assets.
Acquisition
of UniverCompany Limited Liability Company
As
disclosed in the Company’s Current Report on Form 8-K filed with the Securities
and Exchange Commission (the “SEC”) on December 5, 2006, on November 30, 2006,
the Company entered into a Stock Purchase Agreement with UniverCompany Limited
Liability Company, a Russian limited liability society (“UniverCompany”), and
the shareholder of UniverCompany, Evgeny Belchenko (the “UniverCompany
Shareholder”)(collectively, the “Univer Agreement”). Pursuant to the Univer
Agreement, the Company agreed to purchase from the UniverCompany Shareholder
100% of the issued and outstanding shares of common stock of UniverCompany
in
exchange for 41,000,000 shares of the Company’s common stock. In May 2007, the
Univer Agreement was amended to provide that the consideration for the shares
of
UniverCompany would be 15,000,000 shares of the Company’s common stock, rather
than 41,000,000 shares.
On
August
27,
2007,
the Company completed its acquisition of UniverCompany by acquiring 100% of
the
issued and outstanding shares of common stock of UniverCompany in accordance
with the UniverAgreement, as amended on May 15, 2007. As a result of the
acquisition, UniverCompany has become a wholly-owned subsidiary of the Company.
Evgeny Belchenko currently owns 15,000,000 shares, representing approximately
36.39%, of the Company’s outstanding common stock.
Description
of Business:
As
used
in this Form 8-K, references to the “Registrant”, the "Company," "we," "our" or
"us" refer to Stargold Mines, Inc. and our subsidiary, UniverCompany, Limited
Liability Company, a Russian limited liability society, unless the context
otherwise indicates.
Forward-Looking
Statements
This
Current Report on Form 8-K (the “Report”) contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended,
and
Section 21E of the Securities Exchange Act of 1934, as amended. These statements
relate to future actions or events, future performance, costs and expenses,
interest rates, outcome of contingencies, financial condition, results of
operations, liquidity, business strategies, cost savings and objectives of
management. The Private Securities Litigation Reform Act of 1995 provides a
"safe harbor" for forward-looking information to encourage companies to provide
prospective information about themselves without fear of litigation so long
as
that information is identified as forward-looking and is accompanied by
meaningful cautionary statements identifying important factors that could cause
actual results to differ materially from those projected in the information.
Forward-looking information may be included in this Report or may be
incorporated by reference from other documents filed with the SEC by us. In
some
cases, you can identify forward-looking statements by terminology such as “may”,
“should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”,
“predicts”, “potential” or “continue” or the negative of these terms or other
comparable terminology. These statements are only predictions and involve known
and unknown risks, uncertainties and other factors, including the risks in
the
section entitled “Risk Factors” and the risks set out below, any of which may
cause our or our industry’s actual results, levels of activity, performance or
achievements to be materially different from any future results, levels of
activity, performance or achievements expressed or implied by these
forward-looking statements. These risks include, by way of example and not
in
limitation:
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risks
and uncertainties relating to the interpretation of drill results,
the
geology, grade and continuity of mineral
deposits;
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results
of initial feasibility, pre-feasibility and feasibility studies,
and the
possibility that future exploration, development or mining results
will
not be consistent with our
expectations;
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mining
and development risks, including risks related to accidents, equipment
breakdowns, labor disputes or other unanticipated difficulties with
or
interruptions in production;
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the
potential for delays in exploration or development activities or
the
completion of feasibility studies;
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risks
related to the inherent uncertainty of production and cost estimates
and
the potential for unexpected costs and
expenses;
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risks
related to commodity price
fluctuations;
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the
uncertainty of profitability based upon our history of
losses;
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risks
related to failure to obtain adequate financing on a timely basis
and on
acceptable terms for our planned exploration and development
projects;
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risks
related to environmental regulation and
liability;
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risks
that the amounts reserved or allocated for environmental compliance,
reclamation, post-closure control measures, monitoring and on-going
maintenance may not be sufficient to cover such
costs;
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risks
related to tax assessments;
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political
and regulatory risks associated with mining development and exploration,
particularly as it relates to operations in Russia;
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other
risks and uncertainties related to our prospects, properties and
business
strategy;
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our
ability to implement our business plan;
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our
ability to hire and maintain the personnel necessary to operate our
business.
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The
above
list is not an exhaustive list of the risk factors that may affect any of our
forward-looking statements. These and other factors should be considered
carefully and readers should not place undue reliance on our forward-looking
statements.
Forward
looking statements are made based on our management’s current expectations,
beliefs, estimates and opinions on the date the statements are made and we
undertake no obligation to update forward-looking statements if these beliefs,
estimates and opinions or other circumstances should change. Although we believe
that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. In particular, we have based many of these forward-looking
statements on assumptions about future events that may prove to be inaccurate.
Except as required by applicable law, including the securities laws of the
United States, we do not intend to update any of the forward-looking statements
to conform these statements to actual results.
Our
History
The
Company was incorporated under the laws of the State of Nevada on May 21, 2003
under the name Sockeye Seafood Group, Inc. On November 13, 2006, we entered
into
a Plan and Agreement of Merger with its wholly-owned subsidiary, Stargold Mines,
Inc., a Nevada corporation, formed by us on November 8, 2006 for the sole
purpose of entering into such merger (the “Subsidiary”). Prior to the merger,
the Subsidiary had no assets or liabilities and no previous operating
history.
The
merger was consummated on November 23, 2006. On such date, the Company filed
with the Secretary of State of Nevada Articles of Merger, pursuant to which
the
Subsidiary merged with and into the Company in accordance with the Plan of
Merger. Pursuant to the Articles of Merger, the Registrant also changed its
name
from “Sockeye Seafood Group, Inc.” to “Stargold Mines, Inc.”
Simultaneously
with the merger, the Company filed with the Secretary of State of Nevada a
Certificate of Change, effective as of November 23, 2006, pursuant to which
the
Company implemented a one for forty (1:40) forward stock split and increased
its
authorized shares of common stock on a corresponding basis. The number of shares
of common stock issued and outstanding prior to the forward split was 2,000,000
shares. After the forward split, the number of shares of common stock issued
and
outstanding was 80,000,000 shares. The Certificate of Change also increased
the
number of authorized shares of common stock of the Company on a one for forty
(1:40) basis, from 25,000,000 shares, par value $0.001, to 1,000,000,000 shares,
par value $0.0001.
In
June
2007, we cancelled 40,000,000 shares owned by previous management of the
Company.
Since
inception, the Company has had an insignificant amount of revenues. Our
operations have been limited to general administrative operations. We are
considered a development stage company in accordance with Statement of Financial
Accounting Standards No. 7.
Our
Business
Through
our acquisition of UniverCompany, we intend to engage in the exploration,
development and extraction of natural resources from certain properties to
which
UniverCompany has ownership rights pursuant to Russian law. UniverCompany’s
General Director and sole employee is Evgeny Belchenko.
Mr.
Belchenko is an accomplished Russian mining engineer. In 1977, he obtained
a
Bachelor's Degree in mountain engineering from Moscow State Mountain Institute
and in 2005 earned a Ph.D in engineering science from St. Petersburg State
Polytechnic Institute. Mr. Belchenko is a full member of the International
Mining Academy (MAI). Over the last 20 years, Mr. Belchenko has participated
in
expert valuations and estimates of mining enterprises in the Russian Federation,
South Africa, Zimbabwe, Namibia, Mozambique, Zambia, Australia, Angola and
Mongolia. He has served as a director for Bilibinskiy Mining Processing and
Industrial Works and was a founder of the Republic of Buryatiya Precious/Rare
Earth Metals development project that performs mineral exploration projects
throughour Buryatiya and Chita.
In
conjunction with Canadian-based mining firm Knelson Gravity Solutions, Mr.
Belchenko developed and introduced a series of gravity-based concentrators
now
known universally as "Knelson Concentrators." They are primarily known for
fine
gold and other precious metal recovery and rank among the most efficient metals
recovery platforms in the world.
Mr.
Belchenko is on the faculty at Moscow State Mountain Institute and has authored
two books: Gold of the Russian Interior (Moscow, 2000) and Physical Processes
For Mining Minerals In Permafrost (Moscow State Mountain University, Moscow,
2000). He has also has received numerous awards in his career, including the
State Medal "For merits Before The Fatherland" and was the winner of the gold
medal for "The Miner Of Russia."
Accordingly,
through UniverCompany and with Mr. Belchenko’s experience, we plan to engage in
the extraction of precious metals, such as gold and silver; and scarce
resources, including copper, lead, tin and scandium, from raw and partially
processed material from a mine (“tailings”). Pursuant to a Purchase and Sale
Agreement No. Yuv/ZGP, dated November 5, 2006, as amended on December 1, 2006
(collectively “the Nerchinskiye Agreement”), UniverCompany obtained the rights
to extract metals from two consignments of tailings, aggregating 254,906 tons,
from the Nerchinskiye Rudniki mining dump (the “Nerchinkiye Dump”) from Mining
Corporation Zabaikalgeoprom Limited Liability Company, a Russian entity (the
“Seller”).
The
Nerchinkiye Agreement provides that 133,271 tons of tailings from the
Nerchinkiye Dump were to be delivered on or before December 31, 2006 (the “First
Consignment”). In exchange, UniverCompany would pay the Seller 10,000,000 rubles
(approximately $392,000) on or before December 31, 2007 and December 31, 2008,
respectively. The balance of 672,729,331 rubles (approximately $26,189,486)
for
the First Consignment would be paid in equal monthly installments between 2009
and 2012. The above referenced payments commence, if, and when, minerals are
successfully extracted. If UniverCompany is unable to implement, develop, or
acquire an extraction method and begin extracting metals from the Nerchinkiye
Dump, it is entitled to cancel the Nerchinkiye Agreement. Although UniverCompany
is deemed to be the owner of the Nerchinkiye Dump, if UniverCompany begins
extraction of the Dump and does not make the payments described above, the
Seller may terminate the Nerchinkiye Agreement and claim the property back
from
UniverCompany.
The
Nerchinkiye Agreement provides for the transfer the balance of an additional
121,635 tons of tailings (the “Second Consignment”). The Second Consignment is
to be delivered to UniverCompany, provided the UniverCompany requests this
consignment by December 30, 2008, provided, however, that UniverCompany is
under
no obligation to do so. If UniverCompany requests the Second Consignment,
632,270,669 rubles (approximately $24,614,422) must be paid in equal monthly
installments between 2009 and 2012.
If
we
obtain sufficient financing, additional projects will be focused on the
exploration and appraisal of placer (sand or gravel that contains minerals
of
value) and ore deposits suitable for the processing and extraction of precious
metals such as gold and silver; and scarce resources, including copper, lead,
tin and scandium.
UniverCompany
also has a contractual right to purchase up to an 80% ownership of Rudkaralon
LLC, a Russian limited liability company that owns the rights to exploit
minerals in a region called Rudkaralon; however, in order to obtain such
interest the following payments must be made to the individual shareholders
of
Rudkaralon LLC:
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For
the 13% interest: $380,000 on or before December 15, 2006, $205,000
on or
before February 15, 2007, $935,000 on or before March 15, 2007 and
$300,000 on or before April 15,
2007,
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For
the 40% interest: $285,000 on or before December 15, 2006 and $480,000
on
or before February 15, 2007,
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For
the 14% interest: $380,000 on or before February 15,
2007,
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For
the13% interest: $360,000 on or before February 15,
2007.
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The
selling shareholders are entitled to interest in the case of late payments
at a
36.5% annual rate.
As
of
August 23, 2007, UniverCompany has paid $700,000_for approximately 17.5% of
the
shares of Rudkaralon LLC from two of the five shareholders of Rudkaralon LLC.
These shareholders own 13% and 40% of Rudkaralon LLC respectively. The payment
made by UniverCompany constitutes only a partial payment to these shareholders
for the shares they own and under the terms of the agreement, said shareholders
will not fully transfer any ownership shares of Rudkaralon LLC until they are
paid in full. If UniverCompany does not make its payments in a timely manner,
than the shareholders of Rudkaralon will be entitled by the Russian Civil Code
to seek the termination of the agreement.
As
a
development stage company, we are continually engaged in the process of raising
money and allocating the proceeds between its current contractual obligations,
administrative needs, desired exploration projects, and acquisition of new
assets. As a result of the foregoing, the primary measures of the Company’s
performance for any given period lies in the amount of money it was able to
raise, the amount of exploration it was able to undertake and the results of
those exploration efforts.
The
mineral resource business generally consists of three stages: exploration,
development and production. Mineral resource companies that are in the
exploration stage have not yet found mineral resources in commercially
exploitable quantities, and are engaged in exploring land in an effort to
discover them. Mineral resource companies that have located a mineral resource
in commercially exploitable quantities and are preparing to extract that
resource are in the development stage, while those engaged in the extraction
of
a known mineral resource are in the production stage. Our company is currently
in the exploration stage.
The
mineral exploration, development, and production industry is highly competitive.
We compete with other exploration companies looking for mineral resources in
Russia. We are one of the smaller exploration companies presently
active.
To
date,
we have not completed the acquisition of a land-based mineral property as
evidenced by a deed (the Nerchinskie mineral property is a Dump being housed
in
a storage facility not owned by StarGold or Univer) and there is no guarantee
that we will do so at any point. We intend to raise the funds necessary to
acquire the rights to exploit the Rudkaralon property and explore this property
with a goal of developing and extracting any mineral deposits we discover or
selling or otherwise assigning the rights to do so.
The
address of our principal executive office is 1840 Gateway Drive,Suite 200,
San
Mateo, California 24404. Our telephone number is (650) 378-1214.
We
have
one subsidiary, UniverCompany Limited Liability Company, a Russian limited
liability society, organized on April 21, 2003.
Description
of Property
Our
principal executive offices are currently located at 1840 Gateway Drive, Suite
200, San Mateo, CA 94404 USA. We lease these premises at a cost of $190 per
month from HQ Office Headquarters. The lease is a month to month lease.
Location
and Access
Nerchinskiye
Dump
The
“Nerchinskiye Dump” is being held at the Artel Strarateley ‘Soyuz Open
Joint-Stock Company, a storage/depository facility in Balei, located in Russia
in a region of Far Eastern Siberia called Chita.
The
Nerchinskiye Dump includes post-enrichment dumps (also called industrial heaps)
from the Nerchinks Polymetal Combine, a now-defunct company that specialized
in
zinc and lead mining. The Nerchinskiye Dump contains industrial heaps comprised
of mineral raw materials that include ores, dradge (the inferior portions of
previously processed ore), and waste from the Nerchinsk Polymetal Combine
formerly operated under the former USSR’s National Ore Mining and Concentrating
program (“GOK System). The planned economy before the dissolution of the USSR
allowed inefficient money-losing mining companies to function. When the country
moved to a market economy, the GOK system proved unviable because mineral
deposits were mined inefficiently: only 1-2 components were mined, (tin, lead
and others), while other elements, in the form of ore, would accumulate in
the
wastes, and some ores would even be considered dradge. When these companies
were
shutdown, large heaps of wastes were left behind. With the use of modern mining
technologies, these heaps may constitute valuable mineral
raw material
for
extraction of precious and rare-earth metals.
The
tailings that comprise the dump resulting from the mining operations at the
former Nerchinsk Polymetal Plant have been placed into storage above ground
while awaiting processing. The Nerchinskie tailings contain significant raw
materials within the complex agglomerate ore. Gold grades between 0.05 and
0.3
grams per ton and silver 7-20 grams per ton. Further commodities present include
zinc, copper and lead. The existence of these minerals is based on exploration
and examination by the Zabaikal Scientific Research Institute and can be found
in a report dated August 8th,
2006,
reference #576. An excerpt of which is provided below:
Facility
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Reserves
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Metals
prices as of
01.01.2006,
usd/ton
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Value
of valuable
components
in
mln.
usd
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OJSC
Nerchinskiye Rudniki
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dradge
(tons)
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valuable
components (tons)
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254,906
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Pb
- 70,912
Zn
- 113,133
Ag
- 158
Au
- 21.49
Bi
- 62.6
Cd
- 478.6
Sb
- 4,569
Ga
- 37.9
In
- 45.282
Sn
- 6,250
Cu
- 8,256
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1,598
4,554
13.44
/ troy oz.
637.5
/ troy oz.
15
/ kg.
1.55
/ lb.
5,400
400
/ kg.
900
/ kg.
10,200
7,038
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113.317
515.207
68.28
440.509
0.939
1.635
24.67
15.16
40.753
63.75
58.18
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TOTAL:
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1342.4
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Company’s
plan is to process the tailings of the Nerchinskie dump using modern mining
techniques like “flotation” whereby crushed material is put into a liquid with a
density that lies between the density of the ore mineral and the density of
the
gangue minerals, “coating” whereby crushed material is put into a solvent, and
“hydro-metallurgy” where minerals are granulated and sorted through sieves using
water.
Work
on
the extraction of the minerals located in the Nerchinskie Dump will begin
approximately one year after necessary funding is acquired to purchase the
necessary equipment to begin the process and secure agreements with the firms
that operate that machinery.
The
Rudkaralon Project
The
Rudkaralon project is located in a remote region of the Republic of Buryatiya.
The ore deposits of Rudkaralon is situated in the Middle-Vitim mountain range
on
the left bank of the Rudkaralon River (the left tributary of the Vitim River).
The nearest town and railway station is called Taksimo and is 120km away by
direct helicopter route, 160km along the summer road route and 240 km along
the
mountain road. A network of gravel and dirt roads provide access throughout
the
Rudkaralon project area.
There
are
no proven commercially viable reserves on the Rudkaralon property and any
proposed program by us is exploratory in nature. Prior exploration work has
occurred on the property but neither Univer Company or StarGold Mines have
conducted any significant exploration activities on the Rudkaralon property.
There is no assurance that StarGold will raise the funds necessary to purchase
Rudkaralon in its entirety nor is there any guarantee that a commercially viable
mineral deposit or reserve exists at the Rudkaralon property. until further
exploration is completed
For
information on our plans for this property over the next twelve months,
please
see the section of this report entitled "Plan of Operations" below.
Employees
Stargold
Mines, Inc. currently has 1 full time employee. UniverCompany has 1 full time
employee.
Risk
Factors
An
investment in our common stock involves a number of very significant risks.
You
should carefully consider the following risks and uncertainties in evaluating
our company and its business before investing in our common stock. Our business,
operating results and financial condition could be seriously harmed due to
any
of the following risks. You could lose all or part of your investment due to
any
of these risks.
Risks
Associated With Mining
In
order
for the tailings of the Nerchinskie Dump to be profitably exploited, the
desirable minerals and ores must be separated from all of the other minerals
in
the ore. This leaves a concentrate that is richer in the desired mineral or
metal. There are many techniques available for separation and concentration
of
minerals. We plan to primarily to use three techniques: The “Coating method”,
whereby crushed materials are put into a solvent that causes mineral ore to
dissolve dissolves creating a mineral rich solution and “Flotation” whereby
crushed material is put into a liquird with a density that lies between the
density of the ore mineral and the density of the gangue minerals, and
“Hydro-metallurgy” also called the “Fracture Properties Method” whereby ore
minerals are passed through a specially designed sieves or filters to separate
the ore minerals from the gangue (unwanted materias) by particle
size.
If
we are
unable to successfully implement, acquire, or develop a profitable extraction
program using the methods listed above to profitably extract rare earth minerals
and precious metals from the Nerchinkiye Dump, than the Company may choose
to
return the tailings to the Seller. All monies spent on the attempted
exploitation of the Nerchinskie Dump will be lost and the pro-forma, as it
is
presented in this report, will need to be restated. Further, failure to
extract rare earth minerals and precious metals from the Nerchinskie Dump may
require the Company to raise additional funds to continue its
operations.
If
we do
not meet our contractual obligations to the sellers of Rudkaralon, we will
not
own an interest in the rights to the property. Univer Company has the right
to
purchase 80% of the shares of Rudkaralon LLC. To date, UniverCompany has paid
$700,000 for approximately 17.5% of the shares of Rudkaralon from two of the
five shareholders. This payment constitutes only a partial payment to these
shareholders of Rudkaralon who respectively own 13% and 40% of the shares of
Rudkaralon LLC. Transfer of the shares that Univer Company owns will not occur
until payments to these two shareholders are made in full for their entire
holdings in Rudkaralon LLC. To purchase the remaining 27% of available shares,
Univer Company will need to make additional payments according to the schedule
outlined above to the other shareholders of Rudkaralon LLC. Without a
controlling interest in the property, there may be difficulty gaining support
from other shareholders for the extraction of minerals from mining sites (if
a
suitable economically viable mining sites were ever discovered).
The
Rudkaralon project is in the exploration stage. There is no assurance that
we
can establish the existence of any mineral resource on this property in
commercially exploitable quantities. Until we can do so, we cannot earn any
revenues from operations and if we do not do so we will lose all of the funds
that we expend on exploration. If we do not discover any mineral resource in
a
commercially exploitable quantity, our business will fail.
A
mineral
reserve is defined by the Securities and Exchange Commission in its Industry
Guide 7 (which can be viewed over the Internet at http://www.sec.gov/divisions/corpfin/forms/industry.htm#secguide7)
as that
part of a mineral deposit which could be economically and legally extracted
or
produced at the time of the reserve determination. The probability of an
individual prospect ever having a "reserve" that meets the requirements of
the
Securities and Exchange Commission's Industry Guide 7 is extremely remote.
Mining is a highly speculative industry whereby funds spent on exploring must
uncover commercially significant quantities of precious metals and minerals
extractable with the funds Company has on hand or can raise.
If
we do
discover a mineral reserve on the Rudkaralon property, there can be no assurance
that we will be able to develop our property into producing mines and extract
those resources. Both mineral exploration and development involve a high degree
of risk and few properties which are explored are ultimately developed into
producing mines.
The
commercial viability of an established mineral deposit will depend on a number
of factors including, by way of example, the size, grade and other attributes
of
the mineral deposit, the proximity of the resource to infrastructure such as
a
smelter, roads and a point for shipping, government regulation and market
prices. Many of these factors will be beyond our control, and any of them could
increase costs and make extraction of any identified mineral resource
unprofitable.
Both
mineral exploration and extraction require permits from various foreign,
federal, state, provincial and local governmental authorities and are governed
by laws and regulations, including those with respect to prospecting, mine
development, mineral production, transport, export, taxation, labor standards,
occupational health, waste disposal, toxic substances, land use, environmental
protection, mine safety and other matters. The Russian Federation’s current
regulations lack flexibility for subsoil license holders and could get worse
in
time causing potential difficulties for foreign investors when they seek
licenses and permits to expand operations. Therefore there can be no assurance
that we will be able to obtain the permits required for the continued
exploration of mineral properties or for the construction and operation of
a
mine on properties at economically viable costs. If we cannot accomplish these
objectives, our business could fail.
We
believe that we are in compliance with all material laws and regulations that
currently apply to our activities but there can be no assurance that we can
continue to do so. Current laws and regulations could be amended and we might
not be able to comply with them, as amended. Further, there can be no assurance
that we will be able to obtain or maintain all permits necessary for our future
operations, or that we will be able to obtain them on reasonable terms. To
the
extent such approvals are required and are not obtained, we may be delayed
or
prohibited from proceeding with planned exploration or development of our
mineral properties.
If
we establish the existence of a mineral resource on any of our properties in
a
commercially exploitable quantity, we will require additional capital in order
to develop the property into a producing mine. If we cannot raise this
additional capital, we will not be able to exploit the resource, and our
business could fail.
If
we do
discover mineral resources in commercially exploitable quantities on any of
our
properties, we will be required to expend substantial sums of money to establish
the extent of the resource, develop processes to extract it and develop
extraction and processing facilities and infrastructure. Although we may derive
substantial benefits from the discovery of a major deposit, there can be no
assurance that such a resource will be large enough to justify commercial
operations, nor can there be any assurance that we will be able to raise the
funds required for development on a timely basis. If we cannot raise the
necessary capital or complete the necessary facilities and infrastructure,
our
business may fail.
Mineral
exploration and development is subject to extraordinary operating risks. We
do
not currently insure against these risks. In the event of a cave-in or similar
occurrence, our liability may exceed our resources, which would have an adverse
impact on our company.
Mineral
exploration, development and production involves many risks which even a
combination of experience, knowledge and careful evaluation may not be able
to
overcome. Our operations will be subject to all the hazards and risks inherent
in the exploration, development and production of resources, including liability
for pollution, cave-ins or similar hazards against which we cannot insure or
against which we may elect not to insure. Any such event could result in work
stoppages and damage to property, including damage to the environment. We do
not
currently maintain any insurance coverage against these operating hazards.
The
payment of any liabilities that arise from any such occurrence would have a
material, adverse impact on our company.
Mineral
prices are subject to dramatic and unpredictable
fluctuations.
We
expect
to derive revenues, if any, from the extraction and sale of precious and base
metals such as gold, silver and copper. The price of those commodities has
fluctuated widely in recent years, and is affected by numerous factors beyond
our control including international, economic and political trends, expectations
of inflation, currency exchange fluctuations, interest rates, global or regional
consumptive patterns, speculative activities and increased production due to
new
extraction developments and improved extraction and production methods. The
effect of these factors on the price of base and precious metals, and,
therefore, the economic viability of any of our exploration projects, cannot
accurately be predicted.
The
mining industry is highly competitive and there is no assurance that we will
continue to be successful in acquiring mineral claims. If we cannot continue
to
acquire properties to explore for mineral resources, we may be required to
reduce or cease operations.
The
mineral exploration, development, and production industry is largely
unintegrated. We compete with other exploration companies looking for mineral
resource properties. While we compete with other exploration companies in the
effort to locate and license mineral resource properties, we will not compete
with them for the removal or sales of mineral products from our properties
if we
should eventually discover the presence of them in quantities sufficient to
make
production economically feasible. Readily available markets exist worldwide
for
the sale of gold and other mineral products. Therefore, we will likely be able
to sell any gold or mineral products that we identify and produce.
We
compete with many companies possessing greater financial resources and technical
facilities. This competition could adversely affect our ability to acquire
suitable prospects for exploration in the future. Accordingly, there can be
no
assurance that we will acquire any interest in additional mineral resource
properties that might yield reserves or result in commercial mining
operations.
Risks
associated with our business
If
our business strategy is not successful, we may not be able to continue
operations as a going concern and our stockholders may lose their entire
investment in us.
As
discussed in the Notes to Financial Statements included in this Report, we
had
no revenue and reported an accumulated deficit of approximately $62,643 at
December 31, 2006. The Company also incurred a net loss of $23,262 for the
period of January 1 to March 31, 2007. These factors raise substantial doubt
that we will be able to continue operations as a going concern, and our
independent auditors included an explanatory paragraph regarding this
uncertainty in their report on our financial statements for the period January
1
to March 31, 2007. Our ability to continue as a going concern is dependent
upon
our generating cash flow sufficient to fund operations and reducing operating
expenses. In addition, we are subject to interest payments to the stockholders
of Rudkaralon in the amount of 36.5% per annum should Company decide to acquire
the 80% interest in Rudkaralon available. Our business strategy may not be
successful in addressing these issues. If we cannot continue as a going concern,
our stockholders may lose their entire investment in us.
Our
limited operating history makes it difficult to evaluate our future
prospects.
We
have
just consummated the acquisition of UniverCompany. Accordingly we have no
previous experience in the business of exploring mineral resource properties.
As
a result, we have never had any revenues from mining operations. In addition,
our operating history has been restricted to the acquisition and exploitation
of
the mining dump currently owned by UniverCompany and this does not provide
a
meaningful basis for an evaluation of our prospects if we determine that we
have
a mineral reserve and commence the construction and operation of a mine on
any
of the Rudkaralon sites. Prior to performing the necessary exploration work,
we
have no way to evaluate the likelihood of whether our mineral property contains
any mineral reserve or to determine if we will be able to build or operate
a
mine successfully. Our prospects are subject to risks and uncertainties
frequently encountered by start-up companies in new and rapidly evolving markets
such as the mineral resources market.
We
have a history of losses and anticipate continued losses, and we may be unable
to achieve profitability.
We
have
never been profitable as a public company and expect to continue to incur
operating losses on both a quarterly and annual basis for at least the end
of
the fiscal year ended December 31, 2007. We may be unable to achieve
profitability in the future. As of December 31, 2006, we had an accumulated
deficit of $62,643.
We
anticipate that we will continue to incur operating costs without realizing
any
revenues during the period when we are exploring our properties. During the
twelve months ending August 31, 2007, we expect to spend approximately
$10,000,000 on the maintenance and exploration of our mineral properties and
the
operation of our company. We therefore expect to continue to incur significant
losses into the foreseeable future. We recognize that if we are unable to raise
funds or generate significant revenues from mining operations and any
dispositions of our properties, we will not be able to earn profits or continue
operations. At this early stage of our operation, we also expect to face the
risks, uncertainties, expenses and difficulties frequently encountered by
companies at the start up stage of their business development. We cannot be
sure
that we will be successful in addressing these risks and uncertainties and
our
failure to do so could have a materially adverse effect on our financial
condition. There is no history upon which to base any assumption as to the
likelihood that we will prove successful and we can provide investors with
no
assurance that we will generate any operating revenues or ever achieve
profitable operations. As a result, we will need to generate significant
revenues to achieve profitability. We cannot assure you that revenues will
grow
in the future or that we will achieve sufficient revenues for profitability.
If
revenues grow more slowly than we anticipate, or if operating expenses exceed
our expectations, our business would be severely harmed.
We
have no known commercially viable ore reserves and we may not find any mineral
resources or, if we find mineral resources, the deposits may be uneconomic
or
production from those deposits may not be profitable.
We
have
not established that the Nerchinskie Dump contains mineral reserves that may
be
extracted for commercial profit. If we do not, than our business will fail.
We
have no known ore reserves and we may not find any mineral resources on the
Rudkaralon sites if we are able to raise the funds to acquire said sites. Even
if we find mineral substances, it may not be economically feasible to recover
them, or to make a profit in doing so. If we cannot find economic mineral
resources or if it is not economic viable to recover the mineral resources,
we
will have to cease operations.
If
we do not raise enough money for exploration, we will have to delay exploration
or go out of business.
We
are in
the very early exploration stage on each of our properties and we need
additional financing before we are able to continue our exploration efforts.
We
have not generated any revenue from operations since our incorporation and
we
anticipate that we will continue to incur operating expenses without revenues
unless and until we are able to identify a mineral resource in a commercially
exploitable quantity on one or more of our mineral properties and we build
and
operate a mine. We have not made any arrangements for financing and we may
be
unable to raise financing. If we are not able to raise any financing we will
have to delay our exploration or go out of business. As we cannot assure a
lender that we will be able to successfully explore and develop our mineral
properties, we will probably find it difficult to raise debt financing from
traditional lending sources. We have traditionally raised our operating capital
from sales of equity and debt securities, but there can be no assurance that
we
will continue to be able to do so. If we cannot raise the money that we need
to
continue exploration of our mineral properties, we may be forced to delay,
scale
back, or eliminate our exploration activities. If any of these were to occur,
there is a substantial risk that our business would fail.
As
of
July 29, 2007, we had $201,000 in cash. We incurred a net loss of $23,262 for
the period January 1, 2007 to March 31, 2007. We estimate our average
monthly operating expenses to be approximately $10,000 per month, not including
exploration, general and administrative expenses. Once we commence exploration
activities, we will require approximately $833,000 per month. As a result,
we
believe that if we are to commence exploration and extraction activities that
we
will have to raise additional funds to meet our currently budgeted operating
requirements for the next 12 months.
We
may not have access to all of the supplies and materials we need to begin
exploration that could cause us to delay or suspend operations.
Competition
and unforeseen limited sources of supplies in the industry could result in
occasional spot shortages of supplies, such as explosives, and certain equipment
such as bulldozers and excavators that we might need to conduct exploration.
We
have not attempted to locate or negotiate with any suppliers of products,
equipment or materials. We will attempt to locate products, equipment and
materials after this offering is complete. If we cannot find the products and
equipment we need, we will have to suspend our exploration plans until we do
find the products and equipment we need.
We
do not have enough money to complete our exploration and consequently may have
to cease or suspend our operations unless we are able to raise additional
financing.
We
are in
the very early exploration stage on each of our properties and we need
additional financing before we are able to continue our exploration efforts.
Because we are conducting exploration on undeveloped projects, we do not know
how much we will have to spend to find out if there is mineralized material
on
our property. If we are unable to find exploration partners to venture with
to
complete our exploration programs on our properties, we will need to raise
additional funds from a public offering, a private placement or loans. At the
present time, we have not made any plans to raise additional money and there
is
no assurance that we would be able to raise additional money in the future.
In
we need additional money and cannot raise it, we will have to suspend or cease
operations.
We
face intense competition in the mineral resources market and we cannot assure
you that we will be able to compete successfully.
The
mineral resources market is a well rapidly evolving and intensely competitive
marketplace, and we expect competition to intensify in the future. Barriers
to
entry are minimal, and the Russian economy is flourishing which could allow
more
competitors to enter the mining business. Our business could be severely harmed
if we are not able to compete successfully against current or future
competitors. Although we believe that there may be opportunities for several
providers of products, a single provider could end up dominating the
market.
Decreases
in prices of precious metals would reduce our revenues.
The
profitability of precious metals mining operations (and thus the value of our
properties) is directly related to the market price of precious metals. The
market price of various precious metals fluctuates widely and is affected by
numerous factors beyond the control of any mining company. These factors include
industrial and jewelry fabrication demand, expectations with respect to the
rate
of inflation, the relative strength of the U.S. dollar and other currencies,
interest rates, gold sales and loans by central banks, forward sales by gold
producers, global or regional political, economic or banking crises, and a
number of other factors. If the market price of precious metals should drop,
our
revenues would also drop. In addition, if the gold price drops dramatically,
we
might not be able to recover our investment in properties. The selections of
a
property for exploration or development, the determination to construct a mine
and place it into production, and the dedication of funds necessary to achieve
such purposes are decisions that must be made long before the first revenues
from production will be received. Price fluctuations between the time that
such
decisions are made and the commencement of production can have a material
adverse effect on the economics of a mine, and can eliminate or have a material
adverse impact on the value of our properties or interests.
The
volatility in the gold price is illustrated by the following table compiled
from
data provided by the World Gold Council’s website at www.gold.org, which sets
forth, for the periods indicated, the high and low prices in U.S. dollars per
ounce of gold, based on the London PM fix.
Gold
Price Per Ounce ($):
Year
|
High
|
Low
|
1997
|
$
353.87
|
$
288.59
|
1998
|
$
291.68
|
$
284.11
|
1999
|
$
310.72
|
$
256.08
|
2000
|
$
299.86
|
$
266.01
|
2001
|
$
283.42
|
$
260.48
|
2002
|
$
331.92
|
$
281.51
|
2003
|
$
406.11
|
$
328.18
|
2004
|
$
442.08
|
$
383.78
|
2005
|
$
510.10
|
$
421.87
|
2006
|
$
629.42
|
$
549.86
|
2007
|
$
679.37
|
$
631.17
|
Volatility
in the price of gold or other minerals of value present in the Nerchinskie
Dump
or Rudkaralon property could adversely impact any potential return on Company’s
investments in exploitation or exploration of said properties.
Our
revenues are subject to operational risks of the mining
industry.
Our
financial results are subject to all of the hazards and risks normally
associated with developing and operating mining properties. These risks include:
|
•
|
insufficient
ore reserves;
|
|
•
|
fluctuations
in production costs that may make mining of ore uneconomic;
|
|
•
|
declines
in the price of gold;
|
|
•
|
significant
environmental and other regulatory restrictions;
|
|
•
|
pit
walls or tailings dam failures;
|
|
•
|
natural
catastrophes such as floods or earthquakes;
|
|
•
|
political
risks associated with operations in developing countries; and
|
|
•
|
the
risk of injury to persons, property or the environment.
|
The
mining industry is subject to significant environmental
risks
Mining
is
subject to potential risks and liabilities associated with pollution of the
environment and the disposal of waste products occurring as a result of mineral
exploration and production. Laws and regulations in the United States and abroad
intended to ensure the protection of the environment are constantly changing
and
generally are becoming more restrictive and costly. The Russian Federation
is
working internally and with the Organization for Economic Cooperation and
Development [OECD] to develop systems to integrate environmental concerns into
its economic reform process. In the last five years, government agencies have
been set up at the national and sub-national level for environmental policy
design, regulation and compliance. Laws establishing liability for environmental
accidents are now in place. Insurance against environmental risks (including
potential liability for pollution or other hazards as a result of the disposal
of waste products occurring from exploration and production) is not generally
available to the companies within the mining industry, such as the operators
of
the mines in which we hold a royalty interest, at a reasonable price. If an
operator is forced to incur significant costs to comply with environmental
regulations or becomes subject to environmental restrictions that limit its
ability to continue or expand operations, it could reduce our royalty revenues.
To the extent that we become subject to environmental liabilities for the time
period during which we were operating properties, the satisfaction of any
liabilities would reduce funds otherwise available to us and could have a
material adverse effect on our financial condition and results of
operations.
Risks
related to doing business in Russia
Our
sales and operations are subject to greater risks associated with doing business
in foreign countries.
Our
foreign operations may pose greater risks than business in the United States.
In
some countries there is increased chance for economic, legal or political
changes. Our foreign operations may be sensitive to changes in a foreign
government’s national priorities and budgets. International transactions can
involve increased financial and legal risks arising from foreign exchange-rate
variability and differing legal systems An unfavorable event or trend in any
one
or more of these factors could adversely affect our revenues and
earnings.
The
Russian Federation’s current legislation does not adequately regulate the
transfer of subsoil use rights. The current system is highly bureaucratic and
mistakes could lead to invalidation of licenses regardless of how much money
has
been invested by an operator. Under current legislative and administrative
procedures in the Russian Federation, discovering a commercially viable deposit
does not ensure that an Operator will obtain the right to the development of
a
mine.
Risks
associated with our common stock
Trading
on the OTC Bulletin Board may be volatile and sporadic, which could depress
the
market price of our common stock and make it difficult for our stockholders
to
resell their shares.
Our
common stock is quoted on the OTC Bulletin Board service of the National
Association of Securities Dealers. Trading in stock quoted on the OTC Bulletin
Board is often thin and characterized by wide fluctuations in trading prices,
due to many factors that may have little to do with our operations or business
prospects. This volatility could depress the market price of our common stock
for reasons unrelated to operating performance. Moreover, the OTC Bulletin
Board
is not a stock exchange, and trading of securities on the OTC Bulletin Board
is
often more sporadic than the trading of securities listed on a quotation system
like NASDAQ or a stock exchange like the American Stock Exchange. Accordingly,
shareholders may have difficulty reselling any of the shares.
Because
the SEC imposes additional sales practice requirements on brokers who deal
in
our shares that are penny stocks, some brokers may be unwilling to trade them.
This means that you may have difficulty in reselling your shares and may cause
the price of the shares to decline.
Our
stock
is a penny stock. The Securities and Exchange Commission has adopted Rule 15g-9
which generally defines “penny stock” to be any equity security that has a
market price (as defined) less than $5.00 per share or an exercise price of
less
than $5.00 per share, subject to certain exceptions. Our securities are covered
by the penny stock rules, which impose additional sales practice requirements
on
broker-dealers who sell to persons other than established customers and
“accredited investors”. The term “accredited investor” refers generally to
institutions with assets in excess of $5,000,000 or individuals with a net
worth
in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly
with their spouse. The penny stock rules require a broker-dealer, prior to
a
transaction in a penny stock not otherwise exempt from the rules, to deliver
a
standardized risk disclosure document in a form prepared by the SEC which
provides information about penny stocks and the nature and level of risks in
the
penny stock market. The broker-dealer also must provide the customer with
current bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction and monthly account
statements showing the market value of each penny stock held in the customer’s
account. The bid and offer quotations, and the broker-dealer and salesperson
compensation information, must be given to the customer orally or in writing
prior to effecting the transaction and must be given to the customer in writing
before or with the customer’s confirmation. In addition, the penny stock rules
require that prior to a transaction in a penny stock not otherwise exempt from
these rules, the broker-dealer must make a special written determination that
the penny stock is a suitable investment for the purchaser and receive the
purchaser’s written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor interest
in, and limit the marketability of, our common stock.
In
addition to the “penny stock” rules promulgated by the Securities and Exchange
Commission, the NASD has adopted rules that require that in recommending an
investment to a customer, a broker-dealer must have reasonable grounds for
believing that the investment is suitable for that customer. Prior to
recommending speculative low priced securities to their non-institutional
customers, broker-dealers must make reasonable efforts to obtain information
about the customer’s financial status, tax status, investment objectives and
other information. Under interpretations of these rules, the NASD believes
that
there is a high probability that speculative low priced securities will not
be
suitable for at least some customers. The NASD requirements make it more
difficult for broker-dealers to recommend that their customers buy our common
stock, which may limit your ability to buy and sell our stock.
Trading
in our common shares on the OTC Bulletin Board is limited and sporadic, and
fluctuations in the trading price of our common stock could make it difficult
for our shareholders to sell their shares or liquidate their
investments
Our
common shares are currently listed for public trading on the OTC Bulletin Board.
The trading price of our common shares has been subject to wide fluctuations.
Trading prices of our common shares may fluctuate in response to variations
in
quarterly results of operations, the gain or loss of significant customers,
changes in earning estimates by analysts, announcements of new mining sites
or
reserves by us or our competitors, general economic conditions and other events
or factors, many of which are beyond our control. The stock market has generally
experienced extreme price and volume fluctuations that have often been unrelated
or disproportionate to the operating performance of companies with no current
business operation. There can be no assurance that trading prices and price
earnings ratios previously experienced by our common shares will be matched
or
maintained. These broad market and industry factors may adversely affect the
market price of our common shares, regardless of our operating
performance.
In
the
past, following periods of volatility in the market price of a company’s
securities, securities class-action litigation has often been instituted. Such
litigation, if instituted, could result in substantial costs for us and a
diversion of management’s attention and resources.
Investors’
interests in our company will be diluted and investors may suffer dilution
in
their net book value per share if we issue additional shares or raise funds
through the sale of equity securities
Our
Articles of Incorporation authorize the issuance of 1,000,000,000 shares of
common stock. In the event that we are required to issue any additional shares
or enter into private placements to raise financing through the sale of equity
securities, investors’ interests in our company will be diluted and investors
may suffer dilution in their net book value per share depending on the price
at
which such securities are sold. If we issue any such additional shares, such
issuances also will cause a reduction in the proportionate ownership and voting
power of all other shareholders. Further, any such issuance may result in a
change in our control.
Management's
Discussion and Analysis or Plan of Operation
Plan
of Operation.
As
of the
date of this Report, the Company had no revenues. Over the next twelve months,
we intend to engage in the exploitation of the Nerchinskie mining dump, raise
the funds necessary to acquire the remaining available shares of Rudkaralon
and
to begin exploration and possible limited exploitation of Rudkaralon ore sites
and to seek out and possibly acquire other ore sites containing precious metals,
placer, or other high value minerals.
We
anticipate that we will require approximately $11,428,000 for the 12 months
ending August 31, 2008 to fund our plans with respect to commencing the
exploitation of the Nerchinskie Dump, completing the acquisition of the
remaining available shares of Rudkaralon, the purchase of necessary machinery
and equipment to explore Rudkaralon and other mining sites and to haul and
process raw materials from Nerchinskie and possibly Rudkaralon. Additional
funds
will be used for performing due diligence, including extensive geologic testing
to determine the potential viability of Rudkaralon sites and other properties
being considered for acquisition, general operating expenses, and to start
exploration and limited exploitation of Rudkaralon (a greater expansion of
exploitation activities is planned for 2009) and other sites (if acquired).
In
some cases, exploration will be performed to establish reserves for exploitation
by Company or to assist in the sale of our claims to third parties.. Depending
on the time it takes to raise necessary funds, we may need approximately
$5,000,000 (including interest fees for late payment) to purchase the full
80%
interest in Rudkaralon that is available; note, an annual interest rate of
36.5%
will be due for each block of available shares of Rudkaralon that Company
decides to purchase. This means that any delays in raising the necessary funds
to complete the acquisition of Rudkaralon would raise the price considerably.
The
Company intends to finance its operations by way of equity private placement.
As
such, the Company has taken bankers from a US based investment bank to view
the
Nerchinskiye Dump and Rudkaralon property.
The
following discussion focuses on our property, our goals regarding that property
for the next 12 months and how we intend to accomplish our goals.
We
have
projected a budget of US $11,428,000:
Budget
|
|
Total
$US
|
|
Prospecting
- Mapping, geochemical sampling, due diligence of Rudkaralon and
other
potential acquisition targets
|
|
|
2
458 000
|
|
Construction
|
|
|
400
000
|
|
Approximate
Payment for shares of owners of “Rudkaralon” LLC with interest
included
|
|
|
5
000 000
|
|
Purchase
of deposits
|
|
|
450
000
|
|
Material
- technical expenses
|
|
|
80
000
|
|
Machines
and equipment
|
|
|
2
003 000
|
|
Other
expenses
|
|
|
600
000
|
|
Administrative-and-managerial
expenses
|
|
|
437000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
cost
|
|
|
11
428 000
|
|
We
intend
to finance our activities via brokered or non-brokered private placements during
the next twelve months. The amount and conditions precedent to such fund-raising
are presently under consideration.
Financial
Condition, Liquidity and Capital Resources
Going
Concern Consideration
We
have
historically incurred losses, and have incurred losses of $32,625 since
inception through December 31, 2006. We will require additional working capital
to develop our business operations. We intend to raise additional working
capital through private placements, public offerings and/or bank financing,
although we not currently have any arrangements in place to effect any such
financing and there can be no assurance that we will be able to raise the funds
required.
Due
to
the uncertainty of our ability to meet our current operating expenses and the
capital expenses noted above, in their report on the annual financial statements
for the year ended December 31, 2006, our independent auditors included an
explanatory paragraph regarding concerns about our ability to continue as a
going concern. Our financial statements contained additional note disclosures
describing the circumstances that lead to this disclosure by our independent
auditors.
The
continuation of our business is dependent upon obtaining further financing
and
achieving a profitable level of operations. The issuance of additional equity
securities by us could result in a significant dilution in the equity interests
of our current or future stockholders. Obtaining commercial loans, assuming
those loans would be available, will increase our liabilities and future cash
commitments.
There
are
no assurances that we will be able to either (1) achieve a level of revenues
adequate to generate sufficient cash flow from operations; or (2) obtain
additional financing through either private placements, public offerings and/or
bank financing necessary to support our working capital requirements. To the
extent that funds generated from operations and any private placements, public
offerings and/or bank financing are insufficient, we will have to raise
additional working capital. No assurance can be given that additional financing
will be available, or if available, will be on terms acceptable to us. If
adequate working capital is not available we may not increase our
operations.
These
conditions raise substantial doubt about our ability to continue as a going
concern. The financial statements do not include any adjustments relating to
the
recoverability and classification of asset carrying amounts or the amount and
classification of liabilities that might be necessary should we be unable to
continue as a going concern.
In
December 2004, the Financial Accounting Standards Board (FASB) issued Statement
No. 123(R) (revised 2004). In addition, in March 2005 the SEC issued Staff
Accounting Bulletin Topic 14, “Share-Based
Payment”
(SAB
107) which provides interpretations regarding the interaction between FAS 123(R)
and certain SEC rules and regulations and provided the staff’s views regarding
the valuation of share-based payment arrangements for public companies. FAS
123(R) focuses primarily on accounting for transactions in which an entity
obtains employee services in share-based payment transactions, including stock
option awards. FAS 123(R) revises FASB Statement No. 123, “Accounting
for Stock-Based Compensation”
and
supersedes APB Opinion No. 25. FAS 123(R) will require us to measure the cost
of
employee services received in exchange for stock option awards based on the
grant date fair value of such awards. That cost will be recognized over the
period during which an employee is required to provide service in exchange
for
the award, which is usually the vesting period. We will report such costs as
part of our general and administrative expenses. On April 14, 2005, the SEC
announced amended compliance dates for SFAS 123(R). The SEC previously
required companies to adopt this standard no later than July 1, 2005, but
the new rules now require us to adopt FAS 123(R) as of the beginning of
the first annual reporting period that begins after December 15, 2005, which
is
our fiscal year ended December 31, 2006. Currently, the cumulative effect of
initially applying FAS 123(R) has not been determined and is subject to change
depending on future events.
Critical
Accounting Policies
Our
financial statements and accompanying notes are prepared in accordance with
generally accepted accounting principles in the United States. Preparing
financial statements requires management to make estimates and assumptions
that
affect the reported amounts of assets, liabilities, revenue, and expenses.
These
estimates and assumptions are affected by management's application of accounting
policies. We believe that understanding the basis and nature of the estimates
and assumptions involved with the following aspects of our financial statements
is critical to an understanding of our financials.
Use
of
Estimates
The
preparation of financial statements in conformity with U.S. 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 reporting period.
Actual results could differ from those estimates.
Basic
and Diluted Net Income (Loss) Per Share
We
computed net income (loss) per share in accordance with Statement of Financial
Accounting Standards (SFAS) No. 128, "Earnings
per Share".
SFAS
No. 128 requires presentation of both basic and diluted earnings per share
(EPS)
on the face of the income statement. Basic EPS is computed by dividing net
income (loss) available to common shareholders (numerator) by the weighted
average number of shares outstanding (denominator) during the period. Diluted
EPS gives effect to all dilutive potential common shares outstanding during
the
period using the treasury stock method and convertible preferred stock using
the
if-converted method. In computing Diluted EPS, the average stock price for
the
period is used in determining the number of shares assumed to be purchased
from
the exercise of stock options or warrants. Diluted EPS excludes all dilutive
potential shares if their effect is anti dilutive.
Cash
and Cash Equivalents
We
consider all highly liquid instruments with maturity of three months or less
at
the time of issuance to be cash equivalents.
Financial
Instruments
The
fair
values of accounts payable, accrued liabilities and amounts due to a related
party were estimated to approximate their carrying values due to the immediate
or short-term maturity of these financial instruments.
Financial
Condition and Results of Operation
For
the
three months ended December 31, 2006, the Registrant had minimal business
operations. Since January 1, 2007, the Registrant has operated at a loss. The
Registrant's operating expenses consist primarily of administrative costs.
The
Registrant used consulting resources to help develop strategy, screen and
recruit key executives, fill interim management positions and complete the
acquisition of UniverCompany. The Registrant's operating expenses from January
1
thru March 31, 2007 were $23,262 as compared with $2,000 for January 1 thru
March 31st
2006.
Off
Balance Sheet Arrangements
We
have
no off-balance sheet arrangements or contractual or commercial
commitments.
Security
Ownership of Certain Beneficial Owners and Management
The
following table sets forth certain information regarding Common Stock
beneficially owned on the date of this filing for (i) each shareholder known
by
us to be the beneficial owner of five (5%) percent or more of our issued and
outstanding Common Stock, (ii) each executive officers and directors, and (iii)
all executive officers and directors as a group. As of August 20, 2007, there
were 41,219,311 shares of our common stock issued and outstanding.
Name
and Address
|
Amount
and Nature of
|
|
of
Beneficial Owner
|
Beneficial
Ownership
|
Percent
of Class
|
|
|
|
Evgeny
Belchenko
|
15,000,000
|
36.39%
|
|
|
|
Director:
|
|
|
|
|
|
Marcus
Segal
|
0
|
|
2643
20th Street
|
|
|
San
Francisco, CA 94110
|
|
|
|
|
|
Officers
and Directors
|
|
|
as
a Group (1 person)
|
|
|
The
persons named above, who are the only officers, directors and principal
shareholders, may be deemed to be parents and promoters, within the meaning
of
such terms under the Securities Act of 1933, by virtue of their direct
securities holdings. In general, a person is considered a beneficial owner
of a
security if that person has or shares the power to vote or direct the voting
of
such security, or the power to dispose of such security. A person is also
considered to be a beneficial owner of any securities of which the person has
the right to acquire beneficial ownership within (60) days.
There
are
currently no options, warrants, rights or other securities conversion privileges
granted to our officers, directors or beneficial owners and no plans to issue
any such rights in the future.
Changes
in Control
Other
than the issuance of 15,000,000 shares, representing approximately 36.39% of
the
Company’s outstanding common stock, to Mr. Evgeny Belchenko as described above,
there are no arrangements known to us, the operation of which may at a
subsequent date result in a change of control of our Company.
Directors,
Executive Officers, Promoters and Control Persons;
Compliance
with Section 16(a) of the Exchange Act
The
following table sets forth the names, positions and ages of our executive
officers and directors. All directors hold office until the next annual meeting
of the security holders or until their successors have been elected and
qualified. Officers are elected by the Board of Directors and their terms of
office are, except to the extent governed by employment contract, at the
discretion of the Board of Directors.
Name
|
Age
|
Position(s)
|
Period
Serving
|
|
|
|
|
Marcus
Segal
|
|
President,
CEO,
|
Since
November 2006
|
|
|
CFO
and Director
|
|
Mr.
Segal
currently serves as Chief Executive Officer of Star Energy Corporation, an
oil
and gas company. He also serves as Vice President of Operations and Acting
CFO
for Vindicia Inc, a technology company specializing in credit card fraud
prevention. Prior to joining Vindicia, Mr. Segal served as Vice President of
Operations at EMusic.com, a leading Internet-based music subscription service,
where he was responsible for the HR, Production, Customer Service, Royalty
Administration, and Business Affairs departments of eMusic through the Company's
acquisition by Vivendi/Universal's Universal Music Group in 2002. Prior to
EMusic, Mr. Segal served as the Executive in Charge of Production/COO for The
Documedia Group, an award-winning documentary production company based in Los
Angeles. His projects included the 52-hour Sworn to Secrecy series for The
History Channel and The Last Days of WWII for the A&E Network, for which he
was nominated for an Emmy. Mr. Segal holds an MBA from Pepperdine University's
Graziadio School of Business, was named a National Journalism Center Fellow
in
1996, and received a BA in English Literature from the University of California
at Santa Barbara.
The
officers and directors are our only officers, directors, promoters and control
persons. There are no family relationships between our directors and
officers.
Involvement
in Legal Proceedings
To
the
best of our knowledge, during the past five years, neither of our directors
or
executive officers were involved in one of the following:
(1)
any
bankruptcy petition filed by or against any business of which such person was
a
general partner or executive officer either at the time of the bankruptcy or
within two years prior to that time; (2) any conviction in a criminal proceeding
or being subject to a pending criminal proceeding (excluding traffic violations
and other minor offenses); (3) being subject to any order, judgment or decree,
not subsequently reversed, suspended or vacated, of any court of any competent
jurisdiction, permanently or temporarily enjoining, barring, suspending or
otherwise limiting his involvement in any type of business, securities or
banking activities; and (4) being found by a court of competent jurisdiction
(in
a civil action), the SEC or the Commodities Futures Trading Commission to have
violated a federal or state securities or commodities law, and the judgment
has
not been reversed, suspended or vacated.
Audit
Committee
We
do not
currently have an Audit Committee. In addition, having no Audit Committee,
we do
not have an Audit Committee financial expert. As a small, development-stage
company, it has been exceedingly difficult for us to attract an independent
member of our board of directors, who would qualify as an Audit Committee
financial expert, to serve as the sole member of the Audit Committee of our
board of directors. We plan to form an Audit Committee consisting solely of
one
or more independent members of our board of directors, at least one of whom
will
qualify as an Audit Committee financial expert under the rules and regulations
of the Securities and Exchange Commission, once we are able to identify and
attract a satisfactory candidate. In the meantime, our current board of
directors intends to satisfy the duties of the committee.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Securities Exchange Act of 1934 requires our directors and
executive officers, and persons who own more than ten percent of our Common
Stock, to file with the Securities and Exchange Commission initial reports
of
ownership and reports of changes of ownership of our Common Stock. Officers,
directors and greater than ten percent stockholders are required by SEC
regulation to furnish us with copies of all Section 16(a) forms they file.
To
the best of our knowledge, during the year ended December 31, 2006, all Section
16(a) filing requirements applicable to our officers, directors and greater
than
ten percent beneficial owners were complied with. In making these disclosures,
we have relied solely on a review of the copies of such reports furnished to
us
and written representations by our directors, executive officers and greater
than ten percent stockholders.
Code
of Ethics
Our
board
of directors has not adopted a Code of Business Conduct and Ethics that applies
to all of our directors, officers and employees.
Executive
Compensation
Marcus
Segal, CEO is currently compensated at a rate of $80,000 per year starting
January 2007. The current plan does not provide directors with any cash or
non-cash compensation for their services but will reimburse them for reasonable
out-of-pocket expenses. There are plans to implement a compensation plan for
directors at a later date.
SUMMARY
COMPENSATION TABLE
|
|
|
|
Compensation
|
|
|
|
Annual
Compensation
|
|
Long-Term
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
Name
and
|
|
|
|
|
|
|
|
Annual
|
|
Payouts
|
|
Position(s)
|
|
Year
|
|
Salary
|
|
Bonus
|
|
Comp.
|
|
|
|
Marcus
Segal
|
|
|
|
|
|
|
|
|
|
|
|
President
and CEO
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sheldon
Goldberg*
|
|
|
2006
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
President
and CEO
|
|
|
2005
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
F. Knapfel*
|
|
|
2006
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
VP,
Treasurer,
|
|
|
2005
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Principal
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounting
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and
Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*On
November 7, 2006, Sheldon Goldberg resigned from his positions as director,
President, and Chief Executive Officer, effective as of such date. On the same
date, David F. Knapfel resigned from his positions as director, Vice President,
Treasurer, Chief Financial Officer, Secretary, and Principal Accounting
Officer.
On
November 7, 2006, the Board of Directors of the Registrant appointed Marcus
Segal as a director and as the Chief Executive Officer, Chief Financial Officer,
Secretary, and Principal Accounting Officer of the Registrant, effective
immediately.
Employment
Agreements
The
Company’s sole officer is paid a salary of $80,000 per year. We do not have any
pension, health, annuity, insurance, stock options, profit sharing or similar
benefit plans; however, we may adopt such plans in the future. There are
presently no personal benefits available to directors, officers or
employees.
Certain
Relationships and Related Transactions
At
December 31, 2005, a loan payable in the amount of $3,900 was due to David
Knapfel, an officer and director and related party. As of December 31, 2006,
we
had not established any specific repayment terms and the loan is non-interest
bearing.
We
do not
have any other related party transactions and have not yet formulated a policy
for the resolution of any related transaction conflicts, should they
arise.
Market
for Our Common Stock and Related Matter
Our
common stock has been quoted on the OTC Bulletin Board under the symbol
"SGDM.OB" since approximately December 5, 2006.
The
following table sets forth the range of quarterly high and sales prices of
the
common stock as reported on Yahoo Finance for the periods indicated. Our common
stock was forward split 1:40 on November 23, 2006. The prices for our common
stock reflect the forward split.
Price
Information*
|
|
Financial
Quarter Ended
|
|
High
|
|
Low
|
|
March
31, 2005
|
|
|
NA
|
|
|
NA
|
|
June
30, 2005
|
|
|
NA
|
|
|
NA
|
|
September
30, 2005
|
|
|
NA
|
|
|
NA
|
|
December
31, 2005
|
|
|
NA
|
|
|
NA
|
|
|
|
|
|
|
|
|
|
March
31, 2006
|
|
|
NA
|
|
|
NA
|
|
June
30, 2006
|
|
|
NA
|
|
|
NA
|
|
September
30, 2006
|
|
|
NA
|
|
|
NA
|
|
December
31, 2006
|
|
$
|
3.90
|
|
$
|
3.80
|
|
*
The
quotations do not reflect inter-dealer prices, without retail mark-up, mark-down
or commission and may not represent actual transactions.
Record
Holders.
As
August 20, 2007, we have 21 shareholders of record holding a total of
41,219,311 shares
of
common stock -- 40,000,000 shares free trading. The holders of the common stock
are entitled to one vote for each share held of record on all matters submitted
to a vote of stockholders. Holders of the common stock have no preemptive rights
and no right to convert their common stock into any other securities. There
are
no redemption or sinking fund provisions applicable to the common stock.
Dividends.
We have
not declared any dividends since inception and do not anticipate paying any
dividends in the foreseeable future. The payment of dividends is within the
discretion of the board of directors and will depend on our earnings, capital
requirements, financial condition, and other relevant factors. There are no
restrictions that currently limit our Company’s ability to pay dividends on its
common stock other than those generally imposed by applicable state law.
Transfer
Agent.
The
transfer agent of our common stock is Holladay Stock Transfer, 2929 N.
67th
Place,
Scottsdale, Arizona, 480-481-3940.
Purchases
of Our Equity Securities.
Neither
we nor any of our affiliates purchased any equity securities from our
stockholders during our fiscal quarter ended December 31, 2006.
Equity
Compensation Plans.
We do
not have any equity compensation plans.
Changes
in and Disagreements with Accountants
On
October 4, 2005, our certifying accounting firm, Franklin Griffith &
Associates, merged with another accounting firm and advised us of its intention
to withdraw from the PCAOB and no longer perform public company
audits.
Reports
on our consolidated financial statements for the fiscal year ended December
31,
2004 by Franklin Griffith & Associates did not contain an adverse opinion or
disclaimer of opinion, nor were they qualified or modified as to uncertainty,
audit scope or accounting principle. During the fiscal year ended December
31,
2004 and for the subsequent interim periods, there were no disagreements with
Franklin Griffith & Associates on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure which,
if not resolved to Franklin Griffith & Associates' satisfaction, would have
caused Franklin Griffith & Associates to make reference to the subject
matter in connection with its report on our consolidated financial statements
for such period. During our fiscal years through December 31, 2005, none of
the
reportable events described in Item 304(a)(1)(iv) of Regulation S-B occurred.
However, the reports included a going concern emphasis.
On
January
18, 2006, we engaged the services of Armando C. Ibarra, Certified Public
Accountant, 317 E Street, Chula Vista CA 91910, a firm registered with the
PCAOB, as our principal independent accountant and auditor to audit our
financial statements.
On
August
4, 2006, we dismissed ACI Armando C. Ibarra Certified Public Accountants, A
Professional Corporation, as its independent auditors after being advised that
the firm would no longer be performing public company audits, as they were
in
the process of withdrawing from registration with the PCAOB. The decision to
change principal accounting firms was unanimously approved by written consent
of
our Board of Directors on August 4, 2006.
Since
the
appointment of ACI Armando C. Ibarra Certified Public Accountants on January
20,
2006 and all subsequent interim periods through the date of dismissal on August
4, 2006, ACI Armando C. Ibarra Certified Public Accountants’ reports on our
financial statements did not contain any adverse opinion or disclaimer of
opinion, nor were they modified as to audit scope or accounting principles.
The
audit report from ACI Armando C. Ibarra Certified Public Accountants for the
fiscal year ended December 31, 2005 was modified as to the uncertainty regarding
our ability to continue as a going concern because of our status as a
development stage company with limited operations. The financial statements
for
the year ended December 31, 2005, did not include any adjustments that might
have resulted from the outcome of this uncertainty.
From
the
date of appointment on January 20, 2006 through the date of this report, there
were no disagreements with ACI Armando C. Ibarra Certified Public Accountants
on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure which, if not resolved to ACI Armando
C. Ibarra Certified Public Accountants ' satisfaction, would have caused ACI
Armando C. Ibarra Certified Public Accountants to make reference to the subject
matter in connection with its reports and/or reviews of our consolidated
financial statements during our then most recent fiscal year or any interim
period.
On
August
4, 2006, Registrant's Board of Directors unanimously approved by written consent
the appointment of Chang G. Park, CPA, Ph.D, 6474 University Avenue, San Diego,
California, a PCAOB registered firm, as its new certifying principal accounting
firm to audit Registrant’s financial statements.
On
January 24, 2007, we dismissed Chang G. Park, CPA as our principal independent
accountants, and retained SF Partnership, LLP as our principal independent
accountants. The decision to change accountants was recommended and approved
by
our Board of Directors.
Chang
G.
Park, CPA was our independent registered public accounting firm from August
4,
2006 until January 24, 2007. None of Chang G. Park, CPA’s reports on our
financial statements during that period and until January 24, 2007, and none
of
the reports by the our principal independent accountants during either of the
previous two fiscal years and for the period since then and until January 24,
2007, (a) contained an adverse opinion or disclaimer of opinion, or (b) was
modified as to uncertainty, audit scope, or accounting principles, which would
include the uncertainty regarding the ability to continue as a going concern,
or
(c) contained any disagreements on any matters of accounting principles or
practices, financial statement disclosure, or auditing scope or procedures,
which disagreements, if not resolved to the satisfaction of the principal
independent accountants, would have caused it to make reference to the subject
matter of the disagreements in connection with its reports. None of the
reportable events set forth in Item 304(a)(1)(iv)(B) of Regulation S-B occurred
during the period in which Chang G. Park, CPA served as our principal
independent accountants. The financial statements audited by Chang C. Park,
CPA
for the year ended December 31, 2005 were modified to contain an explanatory
sentence pertaining to our ability to continue as a going concern, but such
financial statements did not contain any adjustment that might result from
the
uncertainty stated therein.
In
considering the appointment of SF Partnership, LLP (the “New Accountant”), we
considered the New Accountant’s experience and expertise with Russian companies
and operations since our UniverCompany subsidiary is a Russian company. Not
only
does the New Accountant conduct audits on two companies located in Russia,
but
there are three Russian speaking Chartered Accountants in their Toronto office.
As a result of our acquisition of UniverCompany, all of our assets, revenues
and
operations, as well as all of our accounting records, will be located in Russia.
Accordingly, we selected a firm registered with the Public Company Accounting
Oversight Board which could audit financial statements of a company with
operations in Russia with the expertise to audit such records.
Recent
Sales of Unregistered Securities
During
the last three years, we have issued the following securities without
registration under the Securities Act:
In
August
2004, we completed an offering of 1,000,000 shares of our common stock to
approximately 29 investors for a total purchase price of $40,000 ($0.04 per
share) in accordance with Rule 504 of Regulation D under the Securities Act.
The
shares were registered by qualification under the securities laws of
Nevada.
In
December 2006, we issued and sold to Hampton Park Capital LLC 1,000,000 units
of
our securities, each unit consisting of one share of common stock and one share
purchase warrant, for a total purchase price of $1,000,000 ($1.00 per unit),
pursuant to the exemption from registration under Section 4(2) of the Securities
Act and Rule 506 of Regulation D there under. The exercise price of the warrants
is $2.50 per share. The proceeds of the sale were loaned to
UniverCompany.
In
July
2007, Star Gold received $500,000 USD from a European institutional investor
in
exchange Star Gold issued 142,857 units consisting of one common share and
a
half of a purchase warrant. Each full purchase warrant is exercisable into
one
common share at $7.50 each.
On
August
9, 2007 we issued and sold to Mr. Evgeny Belchenko 15,000,000 shares of common
stock in consideration for the one share of Univer Company owned by Mr.
Belchenko The issuance of the shares was exempt from the registration
requirements of the Securities Act of 1933, as amended, in reliance upon the
exemptions under Regulation S, Section 4(2) and Rule 506 there
under.
Section
3 - Securities and Trading Markets
Item
3.02. Unregistered Sales of Equity Securities.
As
discussed above, on August 28, 2007, the Company issued 15,000,000 shares of
common stock, representing approximately 36.39% of the Company’s outstanding
shares of common stock, to the UniverCompany Shareholder, Belchenko Evgeny,
in
exchange for 100% of the issued and outstanding shares of common stock of
UniverCompany pursuant to the Purchase Agreement as amended on May 15, 2007.
The
issuance of the shares was exempt from the registration requirements of the
Securities Act of 1933, as amended, in reliance upon the exemptions under
Regulation S, Section 4(2) and Rule 506 thereunder.
Section
5 - Corporate Governance and Management
Item
5.01. Changes
in Control of Registrant.
The
disclosure set forth above under Item 3.02 (Unregistered Sales of Equity
Securities) is hereby incorporated by reference into this Item 5.01. As a result
of the issuance of 15,000,000 shares, representing approximately 36.39% of
the
Company’s outstanding common stock, Evgeny Belchenko became the principal
stockholder of the Registrant.
Section
9-Financial Statements and Exhibits
Item
9.01 Financial Statements and Exhibits
(a)
|
Financial
Statements of business acquired.
|
|
|
|
(1)
Report of Independent Registered Accounting Firm
|
|
|
|
(2)
Balance Sheets dated as of December 31, 2006 and December 31,
2005
|
|
|
|
(3)
Statements of Income for the fiscal years ended December 31, 2006
and
December 31, 2005
|
|
|
|
(4)
Statements of Members' Equity (Deficit) for the periods from January
1, 2005 through December 31, 2006
|
|
|
|
(5)
Statements of Cash Flows for the fiscal years ended December 31,
2006
and
December 31, 2005
|
|
|
|
(6)
Notes to the Financial Statements
|
|
|
(b) |
Pro
forma financial information.
|
|
|
Page
Nos.
|
|
|
|
|
Table
of Contents
|
32
|
|
|
|
|
(1)
Pro-forma Consolidated Balance Sheet
|
33
|
|
|
|
|
(2)
Pro-forma Statement of Deficit
|
34
|
|
|
|
|
(3)
Pro-forma Statement of Operations
|
35
|
|
|
|
|
(4)
Notes to Pro-forma Consolidated Financial Statement’s
|
36
|
10.2
|
Stock
Purchase Agreement, dated November 30, 2006, among Stargold Mines,
Inc.,
UniverCompany Limited Liability Company, Lipatov Valeriy and Belchenko
Evgeny*
|
|
|
10.3
|
Amendment
to Stock Purchase Agreement dated June 1,
2007
|
______________
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this amendment to the report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date:
August 28, 2007
STARGOLD
MINES, INC.
(Registrant)
By:
/s/ Marcus
Segal
Name:
Marcus Segal
Title:
Chief Executive Officer, Chief Financial Officer,
Secretary,
Principal Accounting Officer, and Director
STARGOLD
MINES, INC.
PRO-FORMA
CONSOLIDATED FINANCIAL STATEMENTS
THREE
MONTHS ENDED MARCH 31, 2007
UNAUDITED
CONTENTS
Pro-forma
Consolidated Balance Sheet
|
33
|
|
|
Pro-forma
Consolidated Statement of Deficit
|
34
|
|
|
Pro-forma
Consolidated Statement of Operations
|
35
|
|
|
Notes
to Pro-forma Consolidated Financial Statements
|
36
|
STARGOLD
MINES, INC.
Pro-forma
Consolidated Balance Sheet
March
31,
2007
Unaudited
|
|
Stargold
|
|
UniverCompany
|
|
|
|
|
|
|
|
|
|
Mines,
Inc.
|
|
LLC
|
|
|
|
Mines,
Inc.
|
|
|
|
|
|
(US)
|
|
(Russia)
|
|
|
|
(US)
|
|
|
|
|
|
Mar.
31,
|
|
Mar.
31,
|
|
Pro-forma
|
|
Pro-forma
|
|
Dec.
31,
|
|
|
|
2007
|
|
2007
|
|
Adjustments
|
|
Mar.
31, 2007
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
10,327
|
|
$
|
191
|
|
$
|
-
|
|
$
|
10,518
|
|
$
|
7,879
|
|
Accounts
and other receivable
|
|
|
-
|
|
|
1,538
|
|
|
-
|
|
|
1,538
|
|
|
-
|
|
Inventory
|
|
|
-
|
|
|
22,570,502
|
|
|
19,443,500
|
|
|
42,014,002
|
|
|
-
|
|
Prepaid
expense
|
|
|
-
|
|
|
309,931
|
|
|
-
|
|
|
309,931
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Current Assets
|
|
|
10,327
|
|
|
22,882,162
|
|
|
19,443,500
|
|
|
42,335,989
|
|
|
7,879
|
|
Properties,
Plant and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equipment
|
|
|
-
|
|
|
1,476
|
|
|
-
|
|
|
1,476
|
|
|
-
|
|
Loan
Receivable
|
|
|
1,000,000
|
|
|
-
|
|
|
(1,000,000
|
)
|
|
-
|
|
|
1,000,000
|
|
Investment
|
|
|
-
|
|
|
692,096
|
|
|
-
|
|
|
692,096
|
|
|
-
|
|
VAT
Receivable |
|
|
-
|
|
|
2,729,362
|
|
|
-
|
|
|
2,729,362
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
$
|
1,010,327
|
|
$
|
26,305,096
|
|
$
|
18,443,500
|
|
$
|
45,758,923
|
|
$
|
1,007,879
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued liabilities
|
|
$
|
10,532
|
|
$
|
51,255
|
|
$
|
-
|
|
$
|
61,787
|
|
$
|
25,282
|
|
Loan
payable
|
|
|
35,000
|
|
|
58,824
|
|
|
-
|
|
|
93,824
|
|
|
-
|
|
Advances
from related party
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
240
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Current Liabilities
|
|
|
45,532
|
|
|
110,079
|
|
|
-
|
|
|
155,611
|
|
|
25,522
|
|
Deferred
Taxes
|
|
|
-
|
|
|
1,782,160
|
|
|
-
|
|
|
1,782,160
|
|
|
-
|
|
Trade
Payable
|
|
|
-
|
|
|
17,856,357
|
|
|
-
|
|
|
17,856,357
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Liabilities
|
|
|
45,532
|
|
|
19,748,596
|
|
|
-
|
|
|
19,794,128
|
|
|
25,522
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
Stock
|
|
|
8,111
|
|
|
347
|
|
|
1,153
|
|
|
9,611
|
|
|
9,000
|
|
Additional
Paid in Capital
|
|
|
1,047,709
|
|
|
1,000,000
|
|
|
23,998,500
|
|
|
26,046,209
|
|
|
1,036,000
|
|
Subscriptions
Receivable
|
|
|
(5,120
|
)
|
|
-
|
|
|
(5,120
|
)
|
|
|
|
|
|
|
Accumulated
Deficit
|
|
|
(85,905
|
)
|
|
5,556,153
|
|
|
(5,556,153
|
)
|
|
(85,905
|
)
|
|
(62,643
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Stockholders' Equity
|
|
|
964,795
|
|
|
6,556,500
|
|
|
18,443,500
|
|
|
25,964,795
|
|
|
982,357
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Liabilities and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity
|
|
$
|
1,010,327
|
|
$
|
26,305,096
|
|
$
|
18,443,500
|
|
$
|
45,758,923
|
|
$
|
1,007,879
|
|
(The
accompanying notes are an integral part of these pro-forma consolidated
financial statements.)
STARGOLD
MINES, INC.
Pro-forma
Consolidated Statement of Deficit
Three
Months Ended March 31, 2007
Unaudited
|
|
Stargold
|
|
UniverCompany
|
|
|
|
Stargold
|
|
Stargold
|
|
|
|
Mines,
Inc.
|
|
LLC
|
|
|
|
Mines,
Inc.
|
|
Mines,
Inc.
|
|
|
|
(US)
|
|
(Russia)
|
|
|
|
(US)
|
|
(US)
|
|
|
|
Mar.
31,
|
|
Mar.
31,
|
|
Pro-forma
|
|
Pro-forma
|
|
Dec.
31,
|
|
|
|
2007
|
|
2007
|
|
Adjustments
|
|
Mar
31, 2007
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Accumulated
Deficit) Retained Earnings
|
|
|
|
|
|
|
|
|
|
|
|
-
Beginning of Period
|
|
$
|
(62,643
|
)
|
$
|
5,423,464
|
|
$
|
(5,423,464
|
)
|
$
|
(62,643
|
)
|
$
|
(11,917
|
)
|
Net
(loss) earnings
|
|
|
(23,262
|
)
|
|
132,689
|
|
|
(132,689
|
)
|
|
(23,262
|
)
|
|
(50,726
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Accumulated
Deficit) Retained Earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
End of Period
|
|
$
|
(85,905
|
)
|
$
|
5,556,153
|
|
$
|
(5,556,153
|
)
|
$
|
(85,905
|
)
|
$
|
(62,643
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(The
accompanying notes are an integral part of these pro-forma consolidated
financial statements.)
STARGOLD
MINES, INC.
Pro-forma
Consolidated Statement of Operations
Three
Months Ended March 31, 2007
Unaudited
|
|
Stargold
|
|
UniverCompany
|
|
|
|
Stargold
|
|
Stargold
|
|
|
|
Mines,
Inc.
|
|
LLC
|
|
|
|
Mines,
Inc.
|
|
Mines,
Inc.
|
|
|
|
(US)
|
|
(Russia)
|
|
|
|
(US)
|
|
(US)
|
|
|
|
Mar.
31,
|
|
Mar.
31,
|
|
Pro-forma
|
|
Pro-forma
|
|
Dec.
31,
|
|
|
|
2007
|
|
2007
|
|
Adjustments
|
|
Mar.
31, 2007
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
$
|
4,127
|
|
Cost
of Sales
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
3,259
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Profit
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
868
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bad
debts
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
26,915
|
|
Office
and general
|
|
|
5,101
|
|
|
53,675
|
|
|
(53,675
|
)
|
|
5,101
|
|
|
1,097
|
|
Professional
fees
|
|
|
18,161
|
|
|
-
|
|
|
-
|
|
|
18,161
|
|
|
29,482
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Expenses
|
|
|
23,262
|
|
|
53,675
|
|
|
(53,675
|
)
|
|
23,262
|
|
|
57,494
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Loss
|
|
|
(23,262
|
)
|
|
(53,675
|
)
|
|
53,675
|
|
|
(23,262
|
)
|
|
(56,626
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
Income (Expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect
from discounting
|
|
|
-
|
|
|
(6,807
|
)
|
|
6,807
|
|
|
-
|
|
|
-
|
|
Foreign
exchange gain
|
|
|
-
|
|
|
296,512
|
|
|
(296,512
|
)
|
|
-
|
|
|
-
|
|
Previous
year losses
|
|
|
-
|
|
|
(38,537
|
)
|
|
38,537
|
|
|
-
|
|
|
|
|
Debt
forgiven
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
5,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Other Income (Expense)
|
|
|
-
|
|
|
251,168
|
|
|
(251,168
|
)
|
|
-
|
|
|
5,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
Before Income Taxes
|
|
|
(23,262
|
)
|
|
197,493
|
|
|
(197,493
|
)
|
|
(23,262
|
)
|
|
(50,726
|
)
|
Income
taxes - deferred
|
|
|
-
|
|
|
(64,804
|
)
|
|
64,804
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(Loss) Income
|
|
$
|
(23,262
|
)
|
$
|
132,689
|
|
$
|
(132,689
|
)
|
$
|
(23,262
|
)
|
$
|
(50,726
|
)
|
(The
accompanying notes are an integral part of these pro-forma consolidated
financial statements.)
These
unaudited pro-forma consolidated financial statements have been prepared to
give
effect to the following:
On
November 30, 2006, the Company entered into a stock purchase agreement with
UniverCompany, and the two shareholders of UniverCompany. Pursuant to the stock
purchase agreement, the Company agreed to purchase from the shareholders of
UniverCompany 100% of the issued and outstanding shares of common stock of
UniverCompany. In consideration thereon, the Company will issue to the
shareholders of UniverCompany 15,000,000 shares of the Company's common stock
for a total value of $25,000,000.
The
consummation of above transactions will take place at a closing to be held
at a
later date. Such closing will not take place until certain conditions have
occurred.
The
pro-forma consolidated financial statements are based on the balance sheets
of
the following:
|
a)
|
Stargold
as at March 31, 2007 (unaudited) and December 31, 2006
(audited).
|
|
b)
|
UniverCompany
as at March 31, 2007 (unaudited).
|
The
pro-forma consolidated financial statements include the statement of earnings
for the following:
|
a)
|
Stargold
for the three months ended March 31, 2007 (unaudited) and for the
year
ended December 31, 2006 (audited).
|
|
b)
|
UniverCompany
for the three months ended March 31, 2007
(unaudited).
|
The
pro-forma consolidated financial statements are not necessarily indicative
of
the actual results that would have occurred had the proposed transactions
occurred on the dates indicated and not necessarily indicative of future
earnings or financial position.
To
record
the consolidation of Stargold with UniverCompany including:
|
a)
|
The
merger of Stargold and UniverCompany was accounted for by purchase
method,
with the net assets of UniverCompany brought forward at their fair
market
value basis.
|
|
b)
|
To
eliminate the pre-acquisition shareholders' equity of UniverCompany
at
March 31, 2007.
|