UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Form
10-KSB
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For
the
Year Ended December 31, 2007
Commission
file number 0-51197
STARGOLD
MINES, INC.
(Exact
name of Registrant as specified in its charter)
Nevada
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98-040020
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(State
or other jurisdiction of
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(I.R.S.
Employer Identification No.)
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incorporation
or organization)
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1840
Gateway Drive
Suite
200
San
Mateo, California 94404
(Address
of principal executive offices)
Registrant's
telephone number, including Telephone Number: 650-378-1214
Securities
registered under Section 12(b) of the Exchange Act: None
Securities
registered under Section 12(g) of the Exchange Act:
Common
Stock, par value $.0001 per share
(Title
of
each class)
Check
whether the issuer is not required to file reports pursuant to Section 13 or
15(d) of the
Exchange
Act o
Check
whether the issuer (1) filed all reports required to be filed pursuant to
Section 13 or 15(d) of the Exchange Act during the past 12 months (or shorter
period that the registrant was required to file such reports) or (2) has been
subject to such filing requirements for the past 90 days o
Check
if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained,
to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB o
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes
x No
o*
* On
March
18, 2008, the Company made an acquisition and may no longer be a shell
company.
The
issuer's revenues for its most recent fiscal year were $0.
Based
on
the closing sales price of the Common Stock on April 1, 2008, the aggregate
market value of the voting stock of registrant held by non-affiliates was
$4,575,344.
As
of
April 1, 2008, the Registrant had outstanding 56,219,311 shares of common stock
issued.
Documents
incorporated by reference: None
Transitional
Small Business Issuer Disclosure Format (Check one): Yes
o No
x
TABLE
OF CONTENTS
Cautionary
Statement for Forward Looking Information
PART
I
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Item
1.
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Description
of Business
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2
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Item
2.
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Description
of Property
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12
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Item
3.
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Legal
Proceedings
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13
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Item
4.
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Submission
of Matters to a Vote of Security Holders
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14
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PART
II
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Item
5.
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Market
for Common Equity and Related Stockholder Matters
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14
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Item
6.
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Management's
Discussion and Analysis or Plan of Operation
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15
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Item
7.
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Financial
Statements
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18
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Item
8.
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Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
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19
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Item
8A.
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Controls
and Procedures
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20
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Item
8B.
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Other
Information
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PART
III
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Item
9.
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Directors,
Executive Officers, Promoter and Control Persons; Compliance
with
Section 16(a) of the Exchange Act
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20
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Item
10.
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Executive
Compensation
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22
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Item
11.
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Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
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23
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Item
12.
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Certain
Relationships and Related Transactions; Director Independence
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24
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Item
13.
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Exhibits
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24
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Item
14.
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Principal
Accountant Fees and Services
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24
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SIGNATURES
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25
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PART
1
As
used
in this Form 10-KSB, 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.
Background
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’s
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
March
18, 2008, our Russian counsel advised that, according to the laws of the
Russian
Federation, all requirements had been met for the acquisition of UniverCompany
and as such was completed. 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 26.7%, of the Company’s
outstanding common stock.
Forward-Looking
Statements
This
Current Report on Form 10-KSB (the “Report”) contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended
(the
“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”). 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 Securities and Exchange Commission (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.
Item
1. |
Description
of Business
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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 our 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 that 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 Company 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. During the year ended December 31, 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.
UniverCompany
was formed under the laws of the Russian Federation on April 21,
2003.
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 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
throughout 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 used for
fine
gold and other precious metal recovery and the Company believes that it is
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, that has not been
paid
to date, 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 of 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 option 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. In order to obtain such interest,
payments must be made to the individual shareholders of Rudkaralon LLC in
an
aggregate amount of approximately $3,325,000.
Although
UniverCompany paid $700,000 for approximately 17.5% of the shares of Rudkaralon
LLC, 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 paid in full. If UniverCompany does not make its payments in a timely
manner, the shareholders of Rudkaralon will be entitled by the Russian Civil
Code to seek the termination of the agreement. The shareholders of Rudkaralon
LLC have informed Univer that they are seeking other purchasers and indicated
that the $700,000 would be returned.
We
are
continually engaged in the process of raising money and allocating the proceeds
between the Company’s 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 Nerchinskiye mineral property is a Dump being housed
in
a storage facility not owned by Stargold Mines, Inc. or UniverCompany) 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.
Employees
Stargold
Mines, Inc. currently has 1 full time employee. UniverCompany has 3 full
time
employees.
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 Nerchinskiye 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 use three techniques: The “Coating method”
whereby crushed materials are put into a solvent that causes mineral ore
to
dissolve, creating a mineral rich solution; “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; and “Hydro-metallurgy,”
also called the “Fracture Properties Method.” whereby ore minerals are passed
through specially designed sieves or filters to separate the ore minerals
from
the gangue (unwanted materials) 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, monies spent on the attempted
exploitation of the Nerchinskiye 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 Nerchinskiye Dump
may
require the Company to raise additional funds to continue its
operations.
Failure
to Meet Rudkaralon Contract Obligations.
We
have
not met our contractual obligations to the sellers of Rudkaralon LLC. To
date,
UniverCompany has paid $700,000 for approximately 17.5% of the shares of
Rudkaralon with an approximate $2,545,000 balance. 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 suitable
economically viable mining sites are ever discovered).
Remote
Likelihood of Finding a Mineral Reserve.
A
mineral
reserve is defined by the SEC 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
SEC'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.
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,
UniverCompany had no revenue and a comprehensive loss of $1,893,000 during
the
year ended December 31, 2007 (the “2007 Fiscal Year”). These factors raise
substantial doubt that we will be able to continue operations as a going
concern, and UniverCompany’s independent auditors included an explanatory
paragraph regarding this uncertainty in their report on our financial statements
for our 2007 Fiscal Year. Their and our Company’s 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 the Company decide to acquire the remaining available 63% interest
in
Rudkaralon. 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. 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, 2008 (the “2008 Fiscal Year”). We may be
unable to achieve profitability in the future.
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 March 31, 2009, we expect to spend approximately
$11,528,000 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 material 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 Nerchinskiye Dump contains mineral reserves that
may be
extracted for commercial profit. If we do not, 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 acquire Rudkaralon. 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 mineral resources, or if it is not
economically 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 our properties and we need additional
financing before we are able to continue our exploration efforts. We have
generated only nominal revenues 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
December 31, 2007, UniverCompany had $69,000 in cash and cash equivalents
and
incurred a comprehensive net loss of $1,893,000 for the 2007 Fiscal Year.
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 our funding requirements are complete. If we cannot find
the
funds and products and equipment we need, we will have to suspend our
exploration plans until we do find the funds and 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. There
is
no assurance that we will be able to raise additional money in the future.
If 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,
any
revenues that we may have 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.
Our
possible revenues are subject to operational risks of the mining
industry.
Our
financial results will be subject to all of the hazards and risks normally
associated with developing and operating mining properties. These risks include,
but are not limited to:
|
• |
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.
Potential
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. 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.
We
believe that 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. 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 FINRA (NASDAQ) or national stock exchanges.
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 SEC 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 SEC, the SEC 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 SEC believes that there is a high probability that
speculative low priced securities will not be suitable for at least some
customers. The SEC 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.
Item
2. |
Description
of Properties
|
We
have
one subsidiary, UniverCompany Limited Liability Company, a Russian limited
liability society, organized on April 21, 2003. UniverCompany has offices
located at 73 Volokolansko Highway, Russian Federation, 125424.
Our
principal executive offices are currently located at 1840 Gateway Drive,
Suite
200, San Mateo, CA 94404 USA. Our telephone number is 650-378-1214. 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, drudge (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 drudge. When these companies
were
shut down, 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 Company believes that the Nerchinskiye tailings
contain significant raw materials within the complex agglomerate ore. Further
commodities present include gold, silver, zinc, copper and lead.
The
Company’s plan is to process the tailings of the Nerchinskiye 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 Nerchinskiye 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.
Item
3. |
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.
Item
4. |
Submission
of Matters to a Vote of the
Securityholders
|
No
matters were submitted to the Company’s stockholders during the Company’s fiscal
quarter ended December 31, 2007.
PART
II
Item
5. |
Market
for Our Common Stock and Related Stockholder
Matters
|
Our
common stock has been quoted on the OTC Bulletin Board under the symbol
"SGDM.OB" since approximately October 23,
2006.
The following table sets forth the range of quarterly high and low prices
of the
common stock as reported by NASDAQ for the periods indicated.
Periods
|
|
High
|
|
Low
|
|
|
|
|
|
|
|
October
23, 2006 to December 31, 2006
|
|
$
|
4.50
|
|
$
|
1.15
|
|
|
|
|
|
|
|
|
|
Financial
Quarter
Ended:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March
31, 2007
|
|
$
|
7.00
|
|
$
|
3.80
|
|
June
30, 2007
|
|
$
|
7.60
|
|
$
|
3.85
|
|
September
30, 2007
|
|
$
|
0.65
|
|
$
|
0.15
|
|
December
31, 2007
|
|
$
|
0.522
|
|
$
|
0.20
|
|
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 of
April 1, 2008, we had approximately 21 shareholders of record holding a total
of
56,219,311 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, 2007.
Equity
Compensation Plans.
We do
not have any equity compensation plans.
Recent
Sales of Unregistered Securities.
During
the last three years, we have issued the following securities without
registration under the Securities Act:
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 promulgated thereunder. The exercise price
of
the warrants is $2.50 per share. The proceeds of the sale were loaned to
UniverCompany.
On
May
25, 2007, we received $500,000 from a European institutional investor in
exchange for 111,111 units consisting of one common share and a half of a
purchase warrant. Each full purchase warrant is exercisable into one common
share at $7.00 each.
On
or
about August 27, 2007, the Company obligated itself to issue 15,000,000 shares
of common stock, representing approximately 26.7% of the Company’s outstanding
shares of common stock, to the UniverCompany Shareholder, Evgeny Belchenko,
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, in reliance upon the exemptions under Regulation S, Section
4(2)
and Rule 506 thereunder. As a result of the issuance of 15,000,000 shares
in
March 2008, representing approximately 26.7% of the Company’s outstanding common
stock, Evgeny Belchenko became the principal stockholder of the
Registrant.
Item
6. |
Management's
Discussion and Analysis or Plan of
Operation
|
As
of the
date of this Report, neither the Company nor UniverCompany has had any revenues
for the current fiscal year. Over the next twelve months, we intend to engage
in
the exploitation of the Nerchinskiye Dump, raise the funds necessary to acquire
mining sites and to begin exploration and possible limited exploitation of
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 March 31, 2009 to fund our plans with respect to commencing
the
exploitation of the Nerchinskiye Dump, the purchase of necessary machinery
and
equipment to explore mining sites and to haul and process raw materials from
Nerchinskiye. Additional funds will be used for performing due diligence,
including extensive geologic testing to determine the potential viability
of
mining sites and other properties being considered for acquisition, general
operating expenses, and to start exploration and limited exploitation of
mining
sites (if acquired). In some cases, exploration will be performed to establish
reserves for exploitation by the Company or to assist in the sale of our
claims
to third parties.
The
Company intends to finance its operations by way of equity private
placement.
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 potential acquisition
targets
|
|
|
2,
458, 000
|
|
Construction
|
|
|
400,000
|
|
Payment
for mining sites
|
|
|
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
|
|
|
437,000
|
|
|
|
|
|
|
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
Both
the
Company and UniverCompany have historically incurred losses since inception
through December 31, 2007. UniverCompany, by itself, incurred comprehensive
loss
of $1,893,000 during the 2007 Fiscal Year. 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 do 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 UniverCompany’s ability to meet the operating expenses and
the capital expenses noted above, in their report on the annual financial
statements for the year ended December 31, 2007, UniverCompany’s independent
auditors included an explanatory paragraph regarding concerns about their
ability to continue as a going concern. UniverCompany’s financial statements
contained additional note disclosures describing the circumstances that lead
to
this disclosure by UniverCompany’s 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) (the “Share Based Payment”) (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 salary and benefits 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 (“US GAAP”).
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 US GAAP 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.
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
year ended December 31, 2007, the Company and UniverCompany had minimal business
operations and continued to sustain losses. Our operating expenses consist
primarily of administrative costs. The Company used consulting resources
to help
develop strategy, screen and recruit a key executive, and complete the
acquisition of UniverCompany.
Off
Balance Sheet Arrangements
We
have
no off-balance sheet arrangements or contractual or commercial
commitments.
Item
7. Financial
Statements
STARGOLD
MINES, INC.
(FORMERLY
SOCKEYE SEAFOOD GROUP INC.)
(A
DEVELOPMENT STAGE COMPANY)
FINANCIAL
STATEMENTS
YEARS
ENDED DECEMBER 31, 2007 AND 2006
CONTENTS
Report
of Independent Registered Public Accounting Firm
|
|
F-1
|
|
|
|
Balance
Sheets
|
|
F-2
|
|
|
|
Statements
of Operations and Comprehensive Loss
|
|
F-3
|
|
|
|
Statements
of Stockholders' Equity
|
|
F-4
|
|
|
|
Statements
of Cash Flows
|
|
F-5
|
|
|
|
Notes
to Financial Statements
|
|
F-6 – F-17
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the
Board of Directors and Stockholders
of
Stargold
Mines, Inc.:
We
have
audited the accompanying balance sheets of Stargold
Mines, Inc.
(a
development stage company) (the "Company") as of December 31, 2007 and 2006,
and
the related statements of operations and comprehensive loss, stockholders'
equity and cash flows for the years ended December 31, 2007 and 2006 and the
period from date of inception (May 21, 2003) through December 31, 2007. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on
our audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audits included consideration of internal control
over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe our audits provide a
reasonable basis for our opinion.
In
our
opinion, based on our audits, the financial statements referred to above present
fairly, in all material respects, the financial position of the Company as
of
December 31, 2007 and 2006, and the results of its operations and its cash
flows
for the years ended December 31, 2007 and 2006 and the period from date of
inception (May 21, 2003) through December 31, 2007, in conformity with
accounting principles generally accepted in the United States of
America.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 1 to the financial
statements, the Company has incurred losses since inception which raises
substantial doubt about the Company's ability to continue as a going concern.
Management's plan regarding this matter is also described in Note 1 to the
financial statements. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
|
/s/
SF, Partnership, LLP |
Toronto,
Canada
|
CHARTERED
ACCOUNTANTS
|
April
1,
2008
STARGOLD
MINES, INC.
(FORMERLY
SOCKEYE SEAFOOD GROUP INC.)
(A
DEVELOPMENT STAGE COMPANY)
Balance
Sheets
December
31, 2007 and 2006
|
|
2007
|
|
2006
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
Current
|
|
|
|
|
|
Cash
|
|
$
|
2,930
|
|
$
|
7,879
|
|
Prepaid
expenses
|
|
|
31,229
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Total
Current Assets
|
|
|
34,159
|
|
|
7,879
|
|
|
|
|
|
|
|
|
|
Loan
Receivable
(note 4)
|
|
|
1,009,925
|
|
|
1,000,000
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
$
|
1,044,084
|
|
$
|
1,007,879
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
80,626
|
|
$
|
25,282
|
|
Accrued
liabilities
|
|
|
47,069
|
|
|
-
|
|
Advance
from related party (note 10)
|
|
|
-
|
|
|
240
|
|
Loans
payable (note 5)
|
|
|
155,042
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Total
Current Liabilities
|
|
|
282,737
|
|
|
25,522
|
|
|
|
|
|
|
|
|
|
Total
Liabilities
|
|
|
282,737
|
|
|
25,522
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
Stock (note 6)
|
|
|
|
|
|
|
|
Authorized
|
|
|
|
|
|
|
|
1,000,000,000
common stock, par value $0.0001 per share
|
|
|
|
|
|
|
|
Issued
and outstanding 41,219,311 (2006 - 81,000,000) common
stock
|
|
|
4,122
|
|
|
8,100
|
|
|
|
|
|
|
|
|
|
Additional
Paid-in Capital
|
|
|
1,551,698
|
|
|
1,036,900
|
|
|
|
|
|
|
|
|
|
Accumulated
Other Comprehensive Loss
|
|
|
(209,075
|
)
|
|
-
|
|
|
|
|
|
|
|
|
|
Deficit
Accumulated During the Development Stage
|
|
|
(585,398
|
)
|
|
(62,643
|
)
|
|
|
|
|
|
|
|
|
Total
Stockholders' Equity
|
|
|
761,347
|
|
|
982,357
|
|
|
|
|
|
|
|
|
|
Total
Liabilities and Stockholders' Equity
|
|
$
|
1,044,084
|
|
$
|
1,007,879
|
|
(The
accompanying notes are an integral part of these financial
statements.)
STARGOLD
MINES, INC.
(FORMERLY
SOCKEYE SEAFOOD GROUP INC.)
(A
DEVELOPMENT STAGE COMPANY)
Statements
of Operations and Comprehensive Loss
Years
Ended December 31, 2007 and 2006, and the Period from
Date of Inception (May
21, 2003) through December 31, 2007
|
|
|
|
|
|
Period
|
|
|
|
|
|
|
|
from Date of
|
|
|
|
|
|
|
|
Inception
|
|
|
|
|
|
|
|
(May 21, 2003)
|
|
|
|
|
|
|
|
through
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2007
|
|
2006
|
|
2007
|
|
Revenue
|
|
$
|
-
|
|
$
|
4,127
|
|
$
|
68,739
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of Sales
|
|
|
-
|
|
|
3,259
|
|
|
60,508
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
Profit
|
|
|
-
|
|
|
868
|
|
|
8,231
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
Professional
fees
|
|
|
340,152
|
|
|
29,482
|
|
|
384,979
|
|
Office
and general
|
|
|
82,603
|
|
|
1,097
|
|
|
87,635
|
|
Salary
and benefits
|
|
|
80,000
|
|
|
-
|
|
|
80,000
|
|
Consulting
fees
|
|
|
20,000
|
|
|
-
|
|
|
20,000
|
|
Bad
debt
|
|
|
-
|
|
|
26,915
|
|
|
26,915
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Expenses
|
|
|
522,755
|
|
|
57,494
|
|
|
599,529
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Loss
|
|
|
(522,755
|
)
|
|
(56,626
|
)
|
|
(591,298
|
)
|
Other
Income
|
|
|
|
|
|
|
|
|
|
|
Debt
forgiveness
|
|
|
-
|
|
|
5,900
|
|
|
5,900
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
|
|
(522,755
|
)
|
|
(50,726
|
)
|
|
(585,398
|
)
|
Unrealized
loss on investment
|
|
|
(209,075
|
)
|
|
-
|
|
|
(209,075
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
Loss
|
|
$
|
(731,830
|
)
|
$
|
(50,726
|
)
|
$
|
(794,473
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss per Share
|
|
|
|
|
|
|
|
|
|
|
Basic
and Diluted
|
|
$
|
(0.01
|
)
|
|
(0.00
|
)
|
|
|
|
Basic
and Diluted Weighted Average Number of Common Shares Outstanding
During
the Year
|
|
|
59,891,775
|
|
|
80,084,932
|
|
|
|
|
(The
accompanying notes are an integral part of these financial
statements.)
STARGOLD
MINES, INC.
(FORMERLY
SOCKEYE SEAFOOD GROUP INC.)
(A
DEVELOPMENT STAGE COMPANY)
Statements
of Stockholders' Equity
Years
Ended December 31, 2007 and 2006, and the Period from
Date
of
Inception (May 21, 2003) through December 31, 2007
|
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
Accumulated
|
|
|
|
|
|
Number of
|
|
|
|
Additional
|
|
During the
|
|
Other
|
|
|
|
|
|
Common
|
|
Capital
|
|
Paid-in
|
|
Development
|
|
Comprehensive
|
|
Stockholders'
|
|
|
|
Shares
|
|
Stock
|
|
Capital
|
|
Stage
|
|
Loss
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
May 21, 2003 (note 6)
|
|
|
1,000,000
|
|
$
|
1,000
|
|
$
|
4,000
|
|
$
|
-
|
|
$
|
-
|
|
$
|
5,000
|
|
Net
loss for the period
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1,728
|
)
|
|
-
|
|
|
(1,728
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2003
|
|
|
1,000,000
|
|
$
|
1,000
|
|
$
|
4,000
|
|
$
|
(1,728
|
)
|
$
|
-
|
|
$
|
3,272
|
|
Common
shares issued for cash (note 6)
|
|
|
1,000,000
|
|
|
1,000
|
|
|
39,000
|
|
|
-
|
|
|
-
|
|
|
40,000
|
|
Net
loss for the year
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(4,513
|
)
|
|
-
|
|
|
(4,513
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2004
|
|
|
2,000,000
|
|
$
|
2,000
|
|
$
|
43,000
|
|
$
|
(6,241
|
)
|
$
|
-
|
|
$
|
38,759
|
|
Net
loss for the year
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(5,676
|
)
|
|
-
|
|
|
(5,676
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2005 - as previously reported
|
|
|
2,000,000
|
|
$
|
2,000
|
|
$
|
43,000
|
|
$
|
(11,917
|
)
|
$
|
-
|
|
$
|
33,083
|
|
Restated
to give retroactive effect to the November 23, 2006 1 for 40 stock
split
(note 6)
|
|
|
78,000,000
|
|
|
6,000
|
|
|
(6,000
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2005 - as restated
|
|
|
80,000,000
|
|
|
8,000
|
|
|
37,000
|
|
|
(11,917
|
)
|
|
-
|
|
|
33,083
|
|
Common
shares issued for cash
|
|
|
1,000,000
|
|
|
100
|
|
|
999,900
|
|
|
-
|
|
|
-
|
|
|
1,000,000
|
|
Net
loss for the year
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(50,726
|
)
|
|
-
|
|
|
(50,726
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2006
|
|
|
81,000,000
|
|
$
|
8,100
|
|
$
|
1,036,900
|
|
$
|
(62,643
|
)
|
$
|
-
|
|
$
|
982,357
|
|
Common
shares issued for cash (note 6)
|
|
|
194,311
|
|
|
19
|
|
|
414,413
|
|
|
-
|
|
|
-
|
|
|
414,432
|
|
Common
shares issued for services (note 6)
|
|
|
25,000
|
|
|
3
|
|
|
2,497
|
|
|
-
|
|
|
-
|
|
|
2,500
|
|
Warrants
issued for cash (note 6)
|
|
|
-
|
|
|
-
|
|
|
93,888
|
|
|
-
|
|
|
-
|
|
|
93,888
|
|
Common
shares cancelled (note 6)
|
|
|
(40,000,000
|
)
|
|
(4,000
|
)
|
|
4,000
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Net
loss for the year
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(522,755
|
)
|
|
-
|
|
|
(522,755
|
)
|
Unrealized
loss on investment, net of income taxes of $0
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(209,075
|
)
|
|
(209,075
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2007
|
|
|
41,219,311
|
|
$
|
4,122
|
|
$
|
1,551,698
|
|
$
|
(585,398
|
)
|
$
|
(209,075
|
)
|
$
|
761,347
|
|
(The
accompanying notes are an integral part of these financial
statements.)
STARGOLD
MINES, INC.
(FORMERLY
SOCKEYE SEAFOOD GROUP INC.)
(A
DEVELOPMENT STAGE COMPANY)
Statements
of Cash Flows
Years
Ended December 31, 2007 and 2006, and the Period from
Date
of
Inception (May 21, 2003) through December 31, 2007
|
|
|
|
|
|
Period
|
|
|
|
|
|
|
|
from Date of
|
|
|
|
|
|
|
|
Inception
|
|
|
|
|
|
|
|
(May 21, 2003)
|
|
|
|
|
|
|
|
through
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2007
|
|
2006
|
|
2007
|
|
|
|
|
|
|
|
|
|
Cash
Flows from Operating Activities
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(522,755
|
)
|
$
|
(50,726
|
)
|
$
|
(585,398
|
)
|
Adjustment
to reconcile non-cash item:
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock for services
|
|
|
2,500
|
|
|
-
|
|
|
2,500
|
|
Changes
in working capital:
|
|
|
|
|
|
|
|
|
|
|
Prepaid
expenses
|
|
|
(31,229
|
)
|
|
-
|
|
|
(31,229
|
)
|
Accounts
payable
|
|
|
55,344
|
|
|
25,193
|
|
|
80,626
|
|
Accrued
liabilities
|
|
|
47,069
|
|
|
-
|
|
|
47,069
|
|
Accounts
receivable
|
|
|
-
|
|
|
26,915
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Cash (Used in) Provided by Operating Activities
|
|
|
(449,071
|
)
|
|
1,382
|
|
|
(486,432
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash
Flows from Investing Activities
|
|
|
|
|
|
|
|
|
|
|
Loan
receivable
|
|
|
(219,000
|
)
|
|
(1,000,000
|
)
|
|
(1,219,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net
Cash Used in Investing Activities
|
|
|
(219,000
|
)
|
|
(1,000,000
|
)
|
|
(1,219,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash
Flows from Financing Activities
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock and warrants for cash
|
|
|
508,320
|
|
|
1,000,000
|
|
|
1,553,320
|
|
Advance
from related party
|
|
|
(240
|
)
|
|
(3,660
|
)
|
|
-
|
|
Loans
payable
|
|
|
155,042
|
|
|
-
|
|
|
155,042
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Cash Provided by Financing Activities
|
|
|
663,122
|
|
|
996,340
|
|
|
1,708,362
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(Decrease) Increase in Cash
|
|
|
(4,949
|
)
|
|
(2,278
|
)
|
|
2,930
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
- Beginning of Period
|
|
|
7,879
|
|
|
10,157
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
- End of Period
|
|
$
|
2,930
|
|
$
|
7,879
|
|
$
|
2,930
|
|
Supplemental
Disclosure of Cash Flow Information
During
the years, the Company had no cash flows arising from interest and income taxes
paid.
(The
accompanying notes are an integral part of these financial
statements.)
STARGOLD
MINES, INC.
(FORMELY
SOCKEYE SEAFOOD GROUP INC.)
(A
DEVELOPMENT STAGE COMPANY)
Notes
to
Financial Statements
December
31, 2007 and 2006
1.
|
Description
of Business and Going Concern
|
|
a)
|
Description
of Business
|
Stargold
Mines, Inc. (the "Company"), formerly Sockeye Seafood Group Inc., (Sockeye
Seafood Group Inc. merged with its wholly-owned subsidiary Stargold Mines,
Inc.
on November 23, 2006 and changed its name to Stargold Mines, Inc.) was
incorporated under the laws of the State of Nevada on May 21, 2003. The Company
was formed to engage in the business of procuring and marketing seafood products
direct from Pacific Northwest First Nations organizations to North American
and
international wholesalers, distributors, and retailers.
The
Company's operations have been limited to general administrative operations,
purchasing a limited amount of sample inventory, minimal sales and establishing
its website. The Company is considered a development stage company in accordance
with Statement of Financial Accounting Standards ("SFAS") No. 7 "Accounting
and
Reporting by Development Stage Enterprises". The Company is currently working
on
acquiring licenses to develop and extract natural resources in the Siberian
and
Far Eastern Districts of Russia.
The
accompanying financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America with
the assumption that the Company will be able to realize its assets and
liabilities in the normal course of business. The Company has experienced
recurring losses since inception and has negative cash flows from operations
that raise substantial doubt as to its ability to continue as a going concern.
For the years ended December 31, 2007 and 2006, the Company experienced a net
loss of $522,755 and $50,726, respectively, and has a deficit accumulated during
the development stage of $585,398 at December 31, 2007.
The
Company's ability to continue as a going concern is contingent upon its ability
to secure additional financing and attaining profitable operations.
Management
is pursuing various sources of equity financing. Although the Company plans
to
pursue additional financing, there can be no assurance that the Company will
be
able to secure financing when needed or obtain such on terms satisfactory to
the
Company, if at all.
The
accompanying financial statements do not include any adjustments to reflect
the
possible future effects on the recoverability and classification of assets
or
the amounts and classification of liabilities that may result from the inability
of the Company to continue as a going concern.
STARGOLD
MINES, INC.
(FORMELY
SOCKEYE SEAFOOD GROUP INC.)
(A
DEVELOPMENT STAGE COMPANY)
Notes
to
Financial Statements
December
31, 2007 and 2006
2.
|
Summary
of Significant Accounting
Policies
|
The
U.S.
dollar has been used as the unit of measurement in these financial
statements.
The
Company recognizes revenues when there is a definitive sales agreement, and
upon
shipment of products, when title is passed and the amount collectible can
reasonably be determined.
|
c)
|
Comprehensive
Income (Loss)
|
The
Company adopted SFAS No. 130, "Reporting Comprehensive Income" ("SFAS No. 130").
SFAS No. 130 establishes standards for reporting and presentation of
comprehensive income (loss) and its components in a full set of financial
statements. Comprehensive income is presented in the statements of operations,
and consists of net income and unrealized gains (losses) on available for sale
marketable securities; foreign currency translation adjustments; changes in
market value of future contracts that qualify as a hedge; and negative equity
adjustments recognized in accordance with SFAS No. 87 "Employers' Accounting
for
Pensions". SFAS No. 130 requires only additional disclosures in the financial
statements.
|
d)
|
Asset
Retirement Obligations
|
For
operating properties, costs associated with environmental remediation
obligations are accrued in accordance with SFAS No. 143, ''Accounting for Asset
Retirement Obligations'' (''SFAS No 143''). SFAS No. 143 requires the Company
to
record a liability for the present value of the estimated environmental
remediation costs, and the related asset created with it, in the period in
which
the liability is incurred. The liability will be accreted and the asset will
be
depreciated over the life of the related assets. Adjustments for changes
resulting from the passage of time and changes to either the timing or amount
of
the original present value estimate underlying the obligation will be
made.
STARGOLD
MINES, INC.
(FORMELY
SOCKEYE SEAFOOD GROUP INC.)
(A
DEVELOPMENT STAGE COMPANY)
Notes
to
Financial Statements
December
31, 2007 and 2006
2.
|
Summary
of Significant Accounting Policies (cont'd)
|
|
d)
|
Asset
Retirement Obligations (cont'd)
|
For
non-operating properties, costs associated with environmental remediation
obligations are accrued when it is probable that such costs will be incurred
and
they can be reasonably estimated. Estimates for reclamation and other closure
costs are prepared in accordance with SFAS No. 5 ''Accounting for
Contingencies,'' or Statement of Position 96-1 ''Environmental Remediation
Liabilities.'' Accruals for estimated losses from environmental remediation
obligations have historically been recognized no later than completion of the
remedial feasibility study for each facility and are charged to provision for
closed operations and environmental matters. Costs of future expenditures for
environmental remediation are not discounted to their present value unless
subject to a contractually obligated fixed payment schedule. Such costs are
based on management's current estimate of amounts to be incurred when the
remediation work is performed, within current laws and regulations.
Future
closure, reclamation and environmental-related expenditures are difficult to
estimate, in many circumstances, due to the early stage nature of
investigations, and uncertainties associated with defining the nature and extent
of environmental contamination and the application of laws and regulations
by
regulatory authorities and changes in reclamation or remediation technology.
Management periodically reviews accrued liabilities for such reclamation and
remediation costs as evidence becomes available indicating that the Company's
liabilities have potentially changed.
The
Company accounts for income taxes pursuant to SFAS No. 109, "Accounting for
Income Taxes" ("SFAS No. 109"). Deferred taxes are provided on a liability
method whereby deferred tax assets are recognized for deductible temporary
differences, and deferred tax liabilities are recognized for taxable temporary
differences. Temporary differences are the differences between the reported
amounts of assets and liabilities and their tax bases. Deferred tax assets
are
reduced by a valuation allowance when, in the opinion of management, it is
more
likely than not that some portion or all of the deferred tax assets will not
be
realized. Deferred tax assets and liabilities are adjusted for the effects
of
changes in tax laws and rates on the date of enactment.
|
f)
|
Impairment
of Long-lived Assets
|
The
Company evaluates the recoverability of long-lived assets and the related
estimated remaining lives when events or circumstances lead management to
believe that the carrying value of an asset may not be recoverable.
Recoverability is assessed based on the carrying amount of a long-lived asset
compared to the sum of the future undiscounted cash flows expected to result
from the use and the eventual disposal of the asset. An impairment loss is
recognized when the carrying amount is not recoverable (exceeds the total
undiscounted cash flows expected from its use and disposition) and exceeds
fair
value. For the years ended December 31, 2007 and 2006, no events or
circumstances occurred for which an evaluation of the recoverability of
long-lived assets was required.
STARGOLD
MINES, INC.
(FORMELY
SOCKEYE SEAFOOD GROUP INC.)
(A
DEVELOPMENT STAGE COMPANY)
Notes
to
Financial Statements
December
31, 2007 and 2006
2.
|
Summary
of Significant Accounting Policies (cont'd)
|
|
g)
|
Earnings
(Loss) per Share
|
The
Company adopted SFAS No.128, "Earnings per Share" which requires disclosure
on
the financial statements of basic and diluted earnings (loss) per share. Basic
earnings (loss) per share is computed by dividing net income (loss) by the
weighted average number of common shares outstanding for the year. In contrast,
diluted earnings (loss) per share considers the potential dilution that occurs
from other equity instruments that would increase the total number of
outstanding shares of common stock. As the warrants were anti-dilutive, there
was no adjustment to the basic loss per share.
|
h)
|
Concentration
of Credit Risk
|
|
|
SFAS
No. 105, "Disclosure of Information About Financial Instruments with
Off-Balance-Sheet Risk and Financial Instruments with Concentration
of
Credit Risk," requires disclosure of any significant off-balance-sheet
risk and credit risk concentration. The Company does not have significant
off-balance-sheet risk or credit concentration.
|
|
|
The
Company provides credit to its clients in the normal course of its
operations. It carries out, on a continuing basis, credit checks
on its
clients and maintains provisions for contingent credit losses that,
once
they materialize, are consistent with management's
forecasts.
|
For
other
receivables, the Company determines, on a continuing basis, the probable losses
and sets up a provision for losses based on the estimated realizable
value.
Concentration
of credit risk arises when a group of clients having a similar characteristic
such that their ability to meet their obligations is expected to be affected
similarly by changes in economic or other conditions. The Company does not
have
any significant risk with respect to a single client.
Preparation
of financial statements in conformity with U.S. generally accepted accounting
principles requires management to make estimates and assumptions that affect
the
amounts reported in the financial statements and related notes to financial
statements. These estimates are based on management's best knowledge of current
events and actions the Company may undertake in the future. Actual results
may
ultimately differ from those estimates, although management does not believe
such changes will materially affect the financial statements in any individual
year.
STARGOLD
MINES, INC.
(FORMELY
SOCKEYE SEAFOOD GROUP INC.)
(A
DEVELOPMENT STAGE COMPANY)
Notes
to
Financial Statements
December
31, 2007 and 2006
2.
|
Summary
of Significant Accounting Policies (cont'd)
|
The
Company has adopted the disclosure requirements of SFAS No. 123(R), "Share-Based
Payment" ("SFAS No. 123(R)") for stock options and similar equity instruments
(collectively, "options") issued to employees. The Company applies the
fair-value based method of accounting as prescribed by SFAS No. 123(R). Under
the fair-value based method, compensation cost is measured at the grant date
based on the value of the award and is recognized over the service period,
which
is usually the vesting period. For stock options, the fair value is determined
using an option-pricing model that takes into account the stock price at the
grant date, the exercise price, the expected life of the option, the volatility
of the underlying stock, the expected dividends on it, and the risk-free
interest rate over the expected life of the option. SFAS No. 123(R) also applies
to transactions in which an entity issues its equity instruments to acquire
goods or services from non-employees. Those transactions must be accounted
for
based on the fair value of the consideration received or the fair value of
the
equity instruments issued, whichever is more reliably measurable.
|
k)
|
Recent
Accounting Pronouncements
|
In
September 2006, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 157, “Fair Value
Measurements” ("SFAS No. 157"), which is effective to fiscal years beginning
after November 15, 2007, and interim periods within those fiscal years. SFAS
No.
157 defines fair value, establishes a framework for measuring fair value in
accordance with generally accepted accounting principles, and expands
disclosures about fair value measurements. SFAS No. 157 codifies the definition
of fair value as the price that would be received to sell an asset or paid
to
transfer a liability in an orderly transaction between market participants
at
the measurement date. SFAS No. 157 clarifies the principle that fair value
should be based on the assumptions market participants would use when pricing
the asset or liability and establishes a fair value hierarchy that prioritizes
the information used to develop those assumptions. The Company is currently
assessing the potential impact that the adoption of SFAS No. 157 could have
on
its financial statements.
In
September 2006, FASB issued SFAS No. 158, “Employers' Accounting for Defined
Benefit Pension and Other Postretirement Plans - an amendment of FASB Statements
No. 87, 88, 106, and 132(R)” ("SFAS No. 158") . The Company has adopted SFAS No.
158 except for the requirement to measure plan assets and benefit obligations
as
of the date of the Company's fiscal year-end statement of financial position
which is effective to fiscal years beginning after December 15, 2008. The
Company is currently assessing the potential impact that the adoption of SFAS
No. 158 could have on its financial statements.
STARGOLD
MINES, INC.
(FORMELY
SOCKEYE SEAFOOD GROUP INC.)
(A
DEVELOPMENT STAGE COMPANY)
Notes
to
Financial Statements
December
31, 2007 and 2006
2.
|
Summary
of Significant Accounting Policies (cont'd)
|
|
k)
|
Recent
Accounting Pronouncements (cont'd)
|
In
February 2007, FASB issued SFAS No. 159, "The Fair Value Option for Financial
Assets and Financial Liabilities" ("SFAS No. 159"). SFAS No. 159 permits
entities to choose to measure many financial instruments, and certain other
items, at fair value. SFAS No. 159 applies to reporting periods beginning after
November 15, 2007. The Company is currently assessing the potential impact
that
the adoption of SFAS No. 159 could have on its financial
statements.
In
April
2007, the FASB issued a FASB Statement Position ("FSP") on FASB Interpretation
("FIN") 39-1 ("FIN No. 39-1") which modifies FIN No. 39, “Offsetting of Amounts
relating to Certain Contracts” (“FIN No. 39”). FIN 39-1 addresses whether a
reporting entity that is party to a master netting arrangement can offset fair
value amounts recognized for the right to reclaim cash collateral (a receivable)
or the obligation to return cash collateral (a payable) against fair value
amounts recognized for derivative instruments that have been offset under the
same master netting arrangement in accordance with FIN No. 39. Upon adoption
of
this FASB Staff Position (“FSP”), a reporting entity shall be permitted to
change its accounting policy to offset or not offset fair value amounts
recognized for derivative instruments under master netting arrangements. The
guidance in this FSP is effective for fiscal years beginning after November
15,
2007. The Company is currently assessing the potential impact of implementing
this standard.
In
December 2007, FASB issued SFAS No. 141 (revised 2007), "Business Combinations"
("SFAS No. 141(R)"). This statement replaces SFAS No. 141, "Business
Combinations" and requires an acquirer to recognize the assets acquired, the
liabilities assumed, including those arising from contractual contingencies,
any
contingent consideration, and any noncontrolling interest in the acquiree at
the
acquisition date, measured at their fair values as of that date, with limited
exceptions specified in the statement. SFAS No. 141(R) also requires the
acquirer in a business combination achieved in stages (sometimes referred to
as
a step acquisition) to recognize the identifiable assets and liabilities, as
well as the noncontrolling interest in the acquiree, at the full amounts of
their fair values (or other amounts determined in accordance with SFAS No.
141(R)). In addition, SFAS No. 141(R)'s requirement to measure the
noncontrolling interest in the acquiree at fair value will result in recognizing
the goodwill attributable to the noncontrolling interest in addition to that
attributable to the acquirer. SFAS No. 141(R) amends SFAS No. 109, "Accounting
for Income Taxes", to require the acquirer to recognize changes in the amount
of
its deferred tax benefits that are recognizable because of a business
combination either in income from continuing operations in the period of the
combination or directly in contributed capital, depending on the circumstances.
It also amends SFAS No. 142, "Goodwill and Other Intangible Assets", to, among
other things, provide guidance on the impairment testing of acquired research
and development intangible assets and assets that the acquirer intends not
to
use. SFAS No. 141(R) applies prospectively to business combinations for which
the acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008. The Company is currently
assessing the potential impact that the adoption of SFAS No. 141(R) could have
on its financial statements.
STARGOLD
MINES, INC.
(FORMELY
SOCKEYE SEAFOOD GROUP INC.)
(A
DEVELOPMENT STAGE COMPANY)
Notes
to
Financial Statements
December
31, 2007 and 2006
2.
|
Summary
of Significant Accounting Policies (cont'd)
|
|
k)
|
Recent
Accounting Pronouncements (cont'd)
|
In
December 2007, FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements—amendment of Accounting Research Bulletin No.
51” (“SFAS No. 160”). SFAS No. 160 establishes accounting and reporting
standards for the noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary. It also clarifies that a noncontrolling
interest in a subsidiary is an ownership interest in the consolidated entity
that should be reported as equity in the consolidated financial statements.
SFAS
No. 160 also changes the way the consolidated income statement is presented
by
requiring consolidated net income to be reported at amounts that include the
amounts attributable to both the parent and the noncontrolling interest. It
also
requires disclosure, on the face of the consolidated statement of income, of
the
amounts of consolidated net income attributable to the parent and to the
noncontrolling interest. SFAS No. 160 requires that a parent recognize a gain
or
loss in net income when a subsidiary is deconsolidated and requires expanded
disclosures in the consolidated financial statements that clearly identify
and
distinguish between the interests of the parent owners and the interests of
the
noncontrolling owners of a subsidiary. SFAS No. 160 is effective for fiscal
periods, and interim periods within those fiscal years, beginning on or after
December 15, 2008. The Company is currently assessing the potential impact
that
the adoption of SFAS No. 160 could have on its financial
statements.
In
February 2008, FASB issued FASB Staff Position (“FSP”) on SFAS No. 140-3,
“Accounting for Transfers of Financial Assets and Repurchase Financing
Transactions” (“FSP SFAS No. 140-3”). The objective of this FSP is to provide
guidance on accounting for a transfer of a financial asset and a repurchase
financing. This FSP presumes that an initial transfer of a financial asset
and a
repurchase financing are considered part of the same arrangement (linked
transaction) under SFAS No. 140, “Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities” ("SFAS No. 140"). However,
if certain criteria are met, the initial transfer and repurchase financing
shall
not be evaluated as a linked transaction and shall be evaluated separately
under
SFAS No. 140. FSP SFAS No. 140-3 is effective for financial statements issued
for fiscal years beginning after November 15, 2008, and interim periods within
these fiscal years. Earlier application is not permitted. The Company is
currently reviewing the effect, if any, the proposed guidance will have on
its
financial statements.
In
February 2008, FASB issued FSP SOP No. 07-1-1, “Effective Date of AICPA
Statement of Position 07-1” (“SOP No. 07-1-1”). SOP No. 07-1-1 delays
indefinitely the effective date of AICPA Statement of Position No. 07-1,
“Clarification of the Scope of the Audit and Accounting Guide Investment
Companies and Accounting by Parent Companies and Equity Method Investors for
Investments in Investment Companies'' ("SOP No. 07-1"). SOP No. 07-1 clarifies
when an entity may apply the provisions of the Guide. Investment companies
that
are within the scope of the Guide report investments at fair value;
consolidation or use of the equity method for investments is generally not
appropriate. SOP No. 07-1 also addresses the retention of specialized investment
company accounting by a parent company in consolidation or by an equity method
investor. The Company is currently reviewing the effect, if any, the proposed
guidance will have on its financial statements.
STARGOLD
MINES, INC.
(FORMELY
SOCKEYE SEAFOOD GROUP INC.)
(A
DEVELOPMENT STAGE COMPANY)
Notes
to
Financial Statements
December
31, 2007 and 2006
2.
|
Summary
of Significant Accounting Policies (cont'd)
|
|
k)
|
Recent
Accounting Pronouncements (cont'd)
|
In
February 2008, FASB issued FSP SFAS No. 157-1, “Application of FASB Statement
No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That
Address Fair Value Measurements for Purposes of Lease Classification or
Measurement under Statement 13” (“FSP SFAS No. 157-1”). FSP SFAS No. 157-1
amends SFAS No. 157 to exclude FASB Statement No. 13, "Accounting for Leases",
and other accounting pronouncements that address fair value measurements for
purposes of lease classification or measurement under FASB Statement No. 13.
However, this scope exception does not apply to assets acquired and liabilities
assumed in a business combination that are required to be measured at fair
value
under FASB Statement No. 141, “Business Combinations”, or FASB Statement No. 141
(revised 2007), "Business Combinations", regardless of whether those assets
and
liabilities are related to leases. FSP SFAS No. 157-1 is effective upon the
initial adoption of SFAS No. 157.
In
February 2008, FASB issued FSP SFAS No. 157-2, “Effective date of FASB Statement
No. 157” (“FSP SFAS No. 157-2”). FSP SFAS No. 157-2 delays the effective date of
SFAS No. 157, “Fair Value Measurement” to fiscal years beginning after November
15, 2008, and interim periods within those fiscal years. The Company is
currently reviewing the effect, if any, the proposed guidance will have on
its
financial statements.
In
March
2008, FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and
Hedging Activities - an amendment of FASB Statement No. 133" ("SFAS No. 161").
SFAS No. 161 changes the disclosure requirements for derivative instruments
and
hedging activities. Entities are required to provide enhanced disclosures about
(a) how and why an entity uses derivative instruments, (b) how derivative
instruments and related hedged items are accounted for under SFAS No. 133 and
its related interpretations, and (c) how derivative instruments and related
hedged items affect an entity's financial position, financial performance,
and
cash flows. SFAS No. 161 is effective for fiscal years and interim periods
beginning after November 15, 2008. The Company is currently assessing the
potential impact that the adoption of SFAS No. 161 could have on its financial
statements.
Unless
otherwise noted, it is management's opinion that the Company is not exposed
to
significant interest, currency or credit risks arising from the financial
instruments. The fair value of the financial instruments approximates their
carrying values, unless otherwise noted.
STARGOLD
MINES, INC.
(FORMELY
SOCKEYE SEAFOOD GROUP INC.)
(A
DEVELOPMENT STAGE COMPANY)
Notes
to
Financial Statements
December
31, 2007 and 2006
The
loan
receivable from UniverCompany Limited Liability Company, a Russian limited
liability society ("UniverCompany"), is non-interest bearing, unsecured, has
no
specified terms for repayment, and has face value of $1,219,000. The fair value
of the loan was determined to be $1,009,925 (2006 - $1,000,000), estimated
based
on a collection period of 2 years, using an interest rate of 10.8% per annum.
Unrealized loss in the amount of $209,075 has been reported in other
comprehensive loss.
The
loan
payable to Bluewater Partners in the amount of $86,042 bears interest at the
Federal Reserve's prime plus 1% per annum, is unsecured and has no specified
terms of repayment.
The
loan
payable to Quesir Group in the amount of $69,000 bears interest at the Federal
Reserve's prime plus 1% per annum, is unsecured and has no specified terms
of
repayment.
In
May
2003, the company issued 1,000,000 shares for cash of $5,000 to the former
directors of the Company.
In
August
2004, the Company issued 1,000,000 shares for cash of $40,000.
In
November 2006, 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 2006 comparative number of shares have been retrospectively adjusted
to give effect to the stock split.
In
December 2006 the Company issued 1,000,000 units of the Company's securities,
each unit consisting of one share of common stock and one share purchase warrant
for total proceeds of $1,000,000. Each warrant is exercisable for one share
of
common stock at an exercise price of $2.50 for two years from the date of
issuance. Due to the substantial difference between market value and exercise
price no value has been attributed to the warrants.
In
March
2007, the Company issued 83,200 shares for cash of $8,320.
In
March
2007, the Company issued 25,000 shares for services valued at
$2,500.
In
May
2007, the Company issued 111,111 shares by way of the sale of 111,111 units
of
the Company's securities. Each unit consists of one share of common stock and
one half Class A Warrant. Each Class A Warrant is exercisable for one share
of
common stock at an exercise price of $7.00 for 2 years from the date of
issuance. The units were issued for cash of $406,112 for the common shares
and
$93,888 for the Class A Warrants.
In
June
2007, the Company cancelled 40,000,000 issued common shares that were held
by
former directors.
STARGOLD
MINES, INC.
(FORMELY
SOCKEYE SEAFOOD GROUP INC.)
(A
DEVELOPMENT STAGE COMPANY)
Notes
to
Financial Statements
December
31, 2007 and 2006
6.
|
Capital
Stock (cont'd)
|
Warrants
On
December 19, 2006, the Company issued warrants which allow the holders to
purchase, at any time until December, 19 2008, up to 1,000,000 common shares
at
an exercise price of $2.50.
On
May
25, 2007, the Company issued warrants which allow the holders to purchase,
at
any time until May 25, 2009, up to 55,555 common shares at an exercise price
of
$7.00.
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
Weighted
|
|
Average
|
|
|
|
|
|
Average
|
|
Remaining
|
|
|
|
Number of
|
|
Exercise
|
|
Contractual
|
|
|
|
Warrants
|
|
Price
|
|
Term
|
|
|
|
|
|
|
|
|
|
Balance,
January 1, 2006
|
|
|
-
|
|
$
|
-
|
|
|
|
|
Issued
during the year
|
|
|
1,000,000
|
|
|
2.50
|
|
|
1.97
Years
|
|
Exercised
during the year
|
|
|
-
|
|
|
-
|
|
|
|
|
Forfeitures
during the year
|
|
|
-
|
|
|
-
|
|
|
|
|
Expired
during the year
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2006
|
|
|
1,000,000
|
|
$
|
2.50
|
|
|
1.97
years
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued
during the year
|
|
|
55,555
|
|
$
|
7.00
|
|
|
1.42
years
|
|
Exercised
during the year
|
|
|
-
|
|
|
-
|
|
|
|
|
Forfeitures
during the year
|
|
|
-
|
|
|
-
|
|
|
|
|
Expired
during the year
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2007
|
|
|
1,055,555
|
|
$
|
2.74
|
|
|
0.99
years
|
|
As
at
December 31, 2007 the range of exercise prices of the outstanding warrants
were
as follows:
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
Weighted
|
|
Average
|
|
Range
of
|
|
|
|
Average
|
|
Remaining
|
|
exercise
|
|
Number of
|
|
Exercise
|
|
Contractual
|
|
prices
|
|
Warrants
|
|
Price
|
|
Term
|
|
|
|
|
|
|
|
|
|
$
|
2.50
|
|
|
1,000,000
|
|
$
|
2.50
|
|
|
0.97
year
|
|
$
|
7.00
|
|
|
55,555
|
|
$
|
7.00
|
|
|
1.42
years
|
|
Warrants
were valued using the Black-Scholes model, using the weighted average key
assumptions of volatility of 26%, a risk-free interest rate of 4.85%, a term
equivalent to the life of the warrant, and reinvestment of all dividends in
the
Company of zero percent.
STARGOLD
MINES, INC.
(FORMELY
SOCKEYE SEAFOOD GROUP INC.)
(A
DEVELOPMENT STAGE COMPANY)
Notes
to
Financial Statements
December
31, 2007 and 2006
The
Company accounts for income taxes pursuant to SFAS No. 109. This standard
prescribes the use of the liability method whereby deferred tax asset and
liability account balances are determined based on differences between financial
reporting and tax bases of assets and liabilities and are measured using the
enacted tax rates. The effects of future changes in tax laws or rates are not
anticipated.
Under
SFAS No. 109 income taxes are recognized for the following: a) amount of tax
payable for the current year, and b) deferred tax liabilities and assets for
future tax consequences of events that have been recognized differently in
the
financial statements than for tax purposes.
The
current provision for income taxes has been computed as follows:
Expected
income tax recovery at the statutory rate - 31%
|
|
$
|
(164,145
|
)
|
Valuation
allowance
|
|
|
164,145
|
|
|
|
|
|
|
Current
provision for income taxes
|
|
$
|
-
|
|
The
Company has tax losses available to be applied against future years' income.
Due
to the losses incurred in the current year and expected future operating
results, management determined that it is more likely than not that the deferred
tax asset resulting from the tax losses available for carryforward will not
be
realized through the reduction of future income tax payments, accordingly a
100%
valuation allowance has been recorded for the current income taxes and deferred
income tax assets.
The
Company has deferred income tax assets as follows:
Net
operating loss carryforward
|
|
$
|
183,815
|
|
Valuation
allowance for deferred income tax assets
|
|
|
(183,815
|
)
|
|
|
|
|
|
Deferred
income tax assets
|
|
$
|
-
|
|
As
of
December 31, 2007, the Company had $585,398 of Federal and state net operating
loss carryforwards available to offset future taxable income. The Company has
the following losses which expire in 20 years from the date the loss was
incurred:
|
|
$
|
1,728
|
|
2024
|
|
|
4,513
|
|
2025
|
|
|
5,676
|
|
2026
|
|
|
50,726
|
|
2027
|
|
|
522,755
|
|
|
|
|
|
|
|
|
$
|
585,398
|
|
STARGOLD
MINES, INC.
(FORMELY
SOCKEYE SEAFOOD GROUP INC.)
(A
DEVELOPMENT STAGE COMPANY)
Notes
to
Financial Statements
December
31, 2007 and 2006
Pursuant
to the terms of a purchase agreement by and between the Company and the
shareholder of UniverCompany, dated Nov 30, 2006, the Company acquired all
of
the shares of UniverCompany on March 18, 2008. In consideration, the Company
issued to the shareholder of UniverCompany 15,000,000 shares of the Company's
common stock.
On
May 9,
2007, the Company entered into an employment contract with the Chief Executive
Officer ("CEO") of the Company, whereby the CEO is entitled to a performance
bonus for the 2007 calendar year, at the sole discretion of the Compensation
Committee of the Board of Directors. At December 31, 2007, no performance bonus
has been accrued as the Company believes that the CEO will not likely be
entitled to any performance bonus for the 2007 calendar year.
10.
|
Advance
from Related Party
|
These
advances, from a director, are non-interest bearing, unsecured and have no
specified terms of repayment.
Certain
figures for the year ended December 31, 2006 and the period from date of
inception (May 21, 2003) through December 31, 2006 have been reclassified to
conform with the current year's consolidated financial statement
presentation.
Item
8. |
Changes
in and Disagreements with
Accountants
|
On
January 18, 2006, we engaged the services of ACI Armando C. Ibarra, Certified
Public Accountants, 317 E Street, Chula Vista CA 91910, a firm registered
with
the Public Company Accounting Oversight Board (“PCAOB”) as our principal
independent accountant and auditor to audit our financial
statements.
On
August
4, 2006, the Company dismissed ACI Armando C. Ibarra Certified Public
Accountants, 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, the Company'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.
SF
Partnership audits approximately 19 companies engaged in the natural resources
industry, including several companies with operations and properties located
outside of Canada, including the United States. SF Partnership also is
affiliated with a firm that is based in Russia and at the time of engagement
had
two, and presently has one, Russian speaking members of SF Partnership's
staff.
Item
8A. |
Control
and Procedures
|
Evaluation
of Disclosure Controls and Procedures
Our
disclosure controls and procedures are designed to ensure that information
required to be disclosed in reports that we file or submit under the Exchange
Act is recorded, processed, summarized and reported within the time periods
specified in the rules and forms of the SEC. Our Chief Executive Officer and
Chief Financial Officer have reviewed the effectiveness of our "disclosure
controls and procedures" (as defined in the Exchange Act, Rules 13a-14(c))
within the end of the period covered by this Annual Report on Form 10-KSB and
have concluded that the disclosure controls and procedures are effective to
ensure that material information relating to us is recorded, processed,
summarized, and reported in a timely manner. There were no significant changes
in our internal controls or in other factors that could significantly affect
these controls subsequent to the last day they were evaluated by our Chief
Executive Officer and Chief Financial Officer.
Management
assessed the effectiveness of the Company’s internal control over financial
reporting as of December 31, 2007, using criteria provided by the SEC in its
Interpretive Guidance (Release No. 34-55929). Based on our assessment, we
believe that, as of December 31, 2007, the Company’s internal control over
financial reporting is effective.
This
Annual Report does not include an attestation report of the Company’s registered
public accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by the Company’s registered
public accounting firm pursuant to temporary rules of the SEC that permit the
Company to provide only management’s report in this Annual Report.
Changes
in Internal Controls over Financial Reporting
There
have been no changes in our internal control over financial reporting during
the
fourth fiscal quarter for the fiscal year ended December 31, 2007 that have
materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.
Item
9. |
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
|
|
36
|
|
President,
CEO,
|
|
Since
November 2006
|
|
|
|
|
CFO
and Director
|
|
|
F.
Bryson Farrill
|
|
79
|
|
Director
|
|
Since
September 2007
|
Keith
C. Minty
|
|
52
|
|
Director
|
|
Since
October 2007
|
The
following biographies are based upon information supplied by each of the above
named persons to the Company.
Mr.
Segal
currently serves as Vice President of Operations and Acting CFO for Vindicia
Inc, a technology company specializing in credit card fraud prevention and
is a
Director of Star Energy Corporation, an oil and gas company. 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.
F.
Bryson
Farrill. He has been in the securities industry for more than 30 years. Mr.
Farrill has held various senior positions, including that of President and
Chairman of McLeod, Young, Weir International, an investment dealer in Toronto,
Canada. He was also the Chairman of Scotia McLeod (USA) Inc. for eleven years.
Since 1997 to date, he has also been a director of Homelife, Inc.
Keith
C.
Minty. From 1997 to 2002, he was the President and CEO of North American
Palladium Ltd., a platinum group metal resource company. In 2003 and 2004,
Mr.
Minty was the President and Chief Executive Officer of Crow Flight Minerals
Inc.
and Bear Tooth Platinum Corporation, then distressed public resource companies.
From 2004 until 2006, he was the South African Country Manager for Hunter
Dickinson Inc., a precious metals resource company. In 2006, Mr. Minty was
the
President and Chief Operating Officer of St. Andrews Goldfields in Toronto,
Canada, a gold mining company. Also, he has been an independent consultant
to
companies engaged in the development of precious metal resources.
The
above
named executive officers and directors are our only officers, directors and
promoters and control persons. There are no family relationships between our
directors and officers.
Audit
Committee
We
do not
currently have an Audit Committee. In addition to not having an Audit Committee,
we do not have an Audit Committee financial expert. It has been exceedingly
difficult for us to attract an independent member to our Board of Directors,
who
would qualify as an Audit Committee financial expert, to serve as a member
of
the Audit Committee of our Board of Directors. We plan to form an Audit
Committee consisting of two 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 SEC, 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 Exchange Act requires our directors and executive officers, and
persons who own more than ten percent of our common stock, to file with the
SEC
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,
2007, all Section 16(a) filing requirements applicable to our officers,
directors and greater than ten percent beneficial owners were complied with.
Mr.
F. Bryson Farrill became a director of the Company on September 21, 2007 but
did
not file his Form 3 until October 11, 2007, approximately 7 business days late.
Additionally, Evgeny Belchenko has not filed a Form 3 related to his more than
ten (10%) percent equity investment in the Company completed on March 18, 2007.
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.
Item
10. |
Executive
Compensation
|
Marcus
Segal, our Chief Executive Officer, is currently compensated at a rate of
$80,000 per year commencing in January 2007. The current directors, except
for
Mr. Segal, receive $1,000 per month for their services as such and
we
will reimburse them for reasonable out-of-pocket expenses.
SUMMARY
COMPENSATION TABLE
Compensation
|
|
|
|
Annual
Compensation
|
|
Long-Term
|
|
|
|
|
|
|
|
|
|
Other
|
|
Awards
|
|
Name
and
|
|
|
|
|
|
|
|
Annual
|
|
Payouts
|
|
Position(s)
|
|
Year
|
|
Salary
|
|
Bonus
|
|
Comp.
|
|
|
|
Marcus
Segal
|
|
|
2007
|
|
$
|
80,000
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
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
and
plan to issue stock grants in the near future.
Item
11. 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) the executive officer and director and (iii)
all
executive officers and directors as a group. As of March 31, 2008, there were
56,219,311 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 (1)
|
|
|
15,000,000
|
|
|
26.7
|
%
|
|
|
|
|
|
|
|
|
Marcus
Segal (2) (3)
|
|
|
0
|
|
|
*
|
|
2643
20th Street
|
|
|
|
|
|
|
|
San
Francisco, CA 94110
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F.
Bryson Farrill (2) (3)
|
|
|
0
|
|
|
*
|
|
|
|
|
|
|
|
|
|
Keith
C. Minty (2) (3)
|
|
|
0
|
|
|
*
|
|
|
|
|
|
|
|
|
|
as
a Group (3 persons)
|
|
|
|
|
|
|
|
*
Denotes
less than one (1%).
|
(1)
|
The
address for Mr. Belchenko is Lenick Prospect 6, Str. 7, Suite 15-20,
Moscow 119991, Russian Federation.
|
|
(2)
|
The
address for each of the above identified executive officers and directors
is c/o Stargold Mines, Inc., 1840 Gateway Drive, Suite 200, San Mateo,
California 94404.
|
|
(3)
|
Mr.
Segal is the President, Chief Executive Officer, Chief Financial
Officer
and a Director of the Company. Messrs. Farrill and Minty are
Directors.
|
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, 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 . We do plan to issue
stock grants to our officer and directors in the near term.
Changes
in Control
Other
than the issuance of 15,000,000 shares, representing approximately 26.7% 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.
Item
12. |
Certain
Relationships and Related Transactions; Director
Independence
|
On
March
18, 2008, we completed the purchase of UniverCompany from Mr. Belchenko in
consideration for 15,000,000 shares of our Common Stock.
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.
Exhibit No.
|
|
Description
|
|
|
|
31.1.
|
|
Certification
by Principal Executive Officer and Financial Officer pursuant to
Rule
13a-14 and Rule 15d-14 of the Securities Exchange Act of
1934.*
|
|
|
|
32.1.
|
|
Certification
by Principal Executive Officer and Financial Officer pursuant to
Section
906 of the Sarbanes-Oxley Act of 2002 (18 USC
1350).*
|
______________
Item
14. |
Principal
Accounting Fees and
Services
|
Audit
Fees
The
aggregate fees billed for professional services rendered by our professional
accountants for the audit of our annual financial statements for the fiscal
year
ended December 31, 2007 was $24,000 and for the fiscal year ended December
31,
2006 were $30,000. The reviews for the financial statements included in
quarterly reports on Form 10-QSB during the fiscal years ended December 31,
2007
and December 31, 2006 were $73,800 and $2,800, respectively.
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
|
Date:
April 14, 2008 |
|
|
|
|
STARGOLD
MINES, INC. |
|
(Registrant) |
|
|
|
|
By: |
/s/
Marcus Segal
|
|
|
Name:
Marcus Segal
|
|
|
Title:
Chief Executive Officer, Chief Financial
Officer,
Secretary, Principal Accounting Officer,
and
Director
|