ITEM 1. BUSINESS
Business Development
Beeston Enterprises Ltd. (“Beeston” or the “Company”) was incorporated on July 12, 1999, in the State of Nevada. Beeston has not been in bankruptcy or receivership proceedings, and has not undergone any material reclassification, merger or consolidation.
We originally intended to establish ourselves as a Western Canadian based medical diagnostic imaging service provider. However, based on a review of the current business climate in the private medical service sector in Canada, we have chosen to move our business in a new direction. During the second half of 2006, we began acquiring interests in mining properties located in British Columbia, Canada. Accordingly, we have changed our business plan to one of mineral exploration and development.
Current Business
At present, we are an exploration stage company. An exploration stage company is engaged in the search of mineral properties in an effort to locate mineral deposits that can be developed to the stage of a commercially viable producing mine. We currently own a 100% interest in nineteen mineral claims, comprising over 9,200 hectares, known as the “Ruth Lake Property” located approximately 25 kilometres from Lac La Hache, British Columbia, Canada. We had also obtained an option to purchase three additional mineral claims, comprising approximately 1,500 hectares, known as the “Bluff Lake Property” located approximately 8 kilometres to the North West of our “Ruth Lake Property”. Our interests in the Ruth Lake Property and the Bluff Lake Property were both acquired from Candorado Operating Company Ltd., a British Columbia corporation trading on the TSX Venture Exchange (Trading Symbol “CDO”). We recently terminated our option to purchase the Bluff Lake Property and are currently considering the acquisition of additional mineral properties.
Mineral exploration is best conducted where there are large areas of high mineral potential, where mineral rights can be obtained under terms which are reasonable and with long term certainty of title, and where political and tax regimes are known to be relatively favorable and stable. Accordingly, all of our interests in mineral properties are located within the Quesnel Trough, a well known geological belt containing an assemblage of volcanic sedimentary and intrusive rocks of Upper Jurassic age, which extends from Washington State north to central British Columbia. This belt is known for hosting skarn and porphyry copper and copper-gold deposits. Title to our interest in mineral claims, like all titles to mineral claims in British Columbia, are located and recorded by means of an on-line e-commerce system known as Mineral Title Online. This system allows mineral claims to be acquired or transferred using the Internet and results in a more accurate and secure interest in mineral claims. As for the mining industry in British Columbia, the province is currently experiencing a slow down in mineral exploration. This decrease in mineral exploration is due to the current decline in the demand for mineral resources. However, as the demand for mineral resources begins to rise, mineral exploration in the province will again increase in response to such demand. The mining industry
in Canada, and in particular the Province of British Columbia, is well established and respected, with an infrastructure capable of supporting all forms of mining activity from small scale prospecting to large scale mining operations, and a stable political environment which not only supports the mining industry but ensures it is properly regulated in regard to such matters as health and safety and environmental concerns.
The mining industry as a whole is highly fragmented in that there are numerous prospectors, exploration companies and mine producers. We are a very small exploration stage company that would be considered a minor participant in the mining industry. We do not compete directly with anyone for the exploration of our interests in mineral properties as we hold all interest and/or rights to explore these properties. Readily available commodities markets exist in Canada and around the world for the sale of gold, copper and other minerals. Therefore, should our exploration and development ever progress to the level of a producing mine, we will likely be able to sell any minerals we are able to recover. This exploration program was to have involved further soil and rock sampling.
Our plan of operation, which is described in more detail under Item 6. herein, is to carry out exploration work on our mineral properties, either by carrying out our own exploration program or by participation in some form of joint venture or option arrangement with other entities involved in mineral exploration. All such exploration shall be for the purpose of determining whether the mining claims comprising our mineral property holdings contain any commercially viable mineral deposits of copper or gold. There can be no determination that any commercially viable mineral deposits exist on any of our mining claims until the appropriate exploration work has been performed.
There is no assurance that a commercially viable mineral deposit exists on any of the mineral properties in which we have an interest. Mineral property exploration is typically performed in phases. Commencing from the initial phase of exploration work, each subsequent phase of exploration work is recommended by a geologist based on the results of the last completed phase of exploration. Even if we complete exploration programs on our mineral properties and are successful in identifying a mineral deposit, we will have to spend substantial funds on further drilling, geochemical, engineering and other studies before we will know if we have a commercially viable mineral deposit.
We have carried out exploration on both the Bluff Lake and Ruth Lake Properties. Based on the results of our initial exploration programs, management, in consultation with our geologist, Mr. Warner Gruenwald, had decided to proceed further with its exploration on both of these properties. Phase two of the work program planned for the Bluff Lake Property was to have consisted of a $165,000 CAD exploration program involving trenching and drilling. We had intended to carry out this exploration program in late spring 2008. A smaller work program of approximately $35,000 CAD was also planned for the summer of 2008 on the Ruth Lake Property. This exploration program was to have involved further soil and rock sampling. However, we were unable to raise the necessary funds to cover the costs of these planned exploration programs. As a result, we were unable to complete our exploration program on the Bluff Lake Property and subsequently turned the exploration program over to Candorado and terminated our option to purchase from Candorado. We did not carry out any exploration
program on the Ruth Lake Property in 2008 but have maintained our interest in these mineral claims by payment of the maintenance fees in cash in lieu of the conduct of exploration work. It is our intent to raise the funds necessary to continue our exploration of the Ruth Lake Property as well as to acquire additional mineral properties for the purpose of conducting exploration for gold deposits.
ITEM 1A.
ITEM 1A. RISK FACTORS
No applicable.
ITEM 1B.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2.
ITEM 2. PROPERTIES
On September 12, 2006, we entered into an agreement (the “Mineral Claim Purchase Agreement”) with Candorado Operating Company Ltd. (“Candorado”), an unrelated third party, pursuant to which we acquired a 100% interest in 19 mineral claims, totaling in excess of 9,200 hectares, upon the payment of the purchase price of $50,000 CAD on September 15, 2006. Under the terms of the agreement we are required to pay a royalty to Candorado of 2% of “net smelter returns”, as that term is defined in the Mineral Claim Purchase Agreement, on any production from the Ruth Lake Property. In the event that we do not maintain any of the mineral claims comprising the Ruth Lake Property in good standing with the Mineral Titles Branch in British Columbia, Canada by either carrying out the minimum required assessment work or paying the prescribed assessment fee in lieu of performing assessment work for each such claim, Candorado can pay the assessment fee within 30 days of the date required for such payment. We then have the option of either reimbursing Candorado for the assessment fees paid to maintain any of the mineral claims comprising the Ruth Lake Property and retaining ownership of these mineral claims, or abandoning the mineral claims and transferring ownership thereof back to Candorado.
Subsequent to the acquisition of the Ruth Lake Property, we entered into an agreement (the “Option Agreement”) with Candorado dated December 15, 2006. Under the terms of this Option Agreement, we had the right to acquire up to a 60% interest in three mineral claims, comprising approximately 1,550 hectares, currently owned by Candorado. These three mineral claims are known as the “Bluff Lake Property” and are located approximately 8 kilometers to the North West of our Ruth Lake Property. We paid $5,000 CAD to Candorado at the time of signing the Option Agreement and could have acquired a 50% interest in the Bluff Lake Property by paying $45,000 CAD to Candorado on or before January 31, 2007, and by carrying out a $200,000 CAD exploration program thereon by December 15, 2007. We could have acquired a further 10% interest in the Bluff Lake Property by carrying out an additional $250,000 CAD exploration program thereon by December 15, 2008. In the event we acquired an interest in the Bluff Lake Property, we further agreed with Candorado that at the request of either party, both parties would negotiate a joint venture agreement for the further exploration and development of the Bluff Lake Property. We could terminate the Option Agreement upon giving thirty (30) days notice to
Candorado. Candorado could also terminate the Option Agreement by giving us notice of failure on our part to pay any amount when due or perform any exploration program within the time provided under the Option Agreement and such failure continued for thirty (30) days after such notice.
Due to labor and equipment shortages in the industry in 2007, we were limited to completing phase one of the two phased exploration work program of approximately $200,000 CAD that was planned for the Bluff Lake Property. As a result, pursuant to the terms of the Mineral Claim Purchase Agreement, we obtained an extension of the time period to complete the required $200,000 CAD exploration program to June 30, 2008. This extension of the time period was formalized under an agreement (the “Amending Agreement”) entered into by the Company and Candorado on October 29, 2007.
Based on the results from phase one of the exploration program, a $165,000 CAD work program was planned as phase two of the exploration program. Phase two of the exploration program was commenced in June, 2008, and involved road construction, diamond drilling and in-fill soil sampling. However, due to labor shortages in the industry, we were unable to complete all of phase two of the exploration program within the extended time period and we were granted a further extension of the time period in which to complete the balance of phase two of the exploration program by Candorado to September 30, 2008. This latter extension was set forth in an agreement dated June 29, 2008 further amending the Option Agreement between the Company and Candorado. The majority of phase two of the exploration program had been completed; however, completion of the exploration work was suspended due to a lack of funding.
Despite its best efforts, the Company was unable to raise the necessary funds to complete phase two of its exploration program on the Bluff Lake Property within the extended time period. As a result, pursuant to an agreement dated October 3, 2008, the Company agreed to terminate its Option Agreement (as amended) with Candorado and its right thereunder to acquire various interests in the Bluff Lake Property and Candorado agreed to assume all responsibility and liability for phase two of the Company’s exploration program on the Bluff Lake Property.
On January 18, 2007, Beeston entered into an agreement (the “Option Agreement”) with Kranti Resources, Inc., (“Kranti”) a start up mining company, whereby we granted Kranti an option to acquire one of the mining claims that comprise the Ruth Lake Property. Kranti can acquire the mining claims by payment to Beeston of $20,000 U.S. at the time of entering into the Option Agreement plus carrying out an exploration program of $175,000 CAD over a period of four years. In the event that Kranti acquires the mineral claim, it shall be required, upon it selling any minerals from the mineral claim, to pay a royalty of 2% of “net smelter returns”, as that term is defined in the Option Agreement, to Candorado (as a prior owner), which can be paid out for $1,000,000 CAD, and a further royalty of 2% of net smelter returns to Beeston, which can be paid out for $2,000,000 CAD. Kranti will also be responsible for maintaining the mineral claim in good standing during the currency of the Option Agreement. Kranti can terminate the Option Agreement upon thirty days notice and Beeston, upon notice of default of any obligations by Kranti, can terminate the Option Agreement if such default continues for thirty days.
Again, due to the labor shortages experienced in the industry in 2007, Kranti was delayed in obtaining the assay results of the soil and rock sampling it carried out under its exploration program on the mining claim optioned from the Company. As a result, at the request of Kranti, we have extended the date for the completion of the exploration work required to be performed by Kranti within the first year of the Option Agreement. The extension was for a reasonable short period of time and was sufficient to allow Kranti to obtain and report on its assay results. Subsequent to December 31, 2008, Kranti requested a further extension of time for completion of the $25,000 exploration work that was required to be performed under its Option Agreement by January 18, 2009. On January 16, 2009, Beeston entered into an agreement with Kranti extending the time period for the performance of this exploration work until June 30, 2009. We anticipate that Kranti will be able to meet this exploration requirement within the extended time period.
In Canada, all lands and minerals initially rest in the Federal and Provincial Governments in the name of Her Majesty and the rights to the lands and minerals have been acquired by private individuals under Crown Grants. Early in the history of Canada the practice of reserving the minerals from the Crown Grants of land became an established practice and eventually this practice became law under legislation. The result is that the Crown is the largest mineral owner in Canada, both as the fee simple owner of Crown lands and through mineral reservations in Crown Grants. Under the Canadian Constitution, minerals located within a province vest in that province. In the case of our interests in mineral properties, that is the Province of British Columbia.
In British Columbia, most of the minerals are owned by the Province. Rights to explore and develop these minerals are obtained as a form of tenure issued by the Province of British Columbia, which is recorded in the Mineral Titles Office as a mineral claim. Mineral claims are defined as a “chattel” under the Mineral Tenure Act of British Columbia and are not an interest in land, but rather, only carry with them the right to enter upon the mineral claim land for the purpose of exploration for minerals and developing any minerals found thereon up to the point of a producing mine.
At such time as the exploration and development carried out upon a mineral claim has progressed to the stage of a mineable mineral deposit, the mineral claim holder can apply to the Miners Titles Office for the grant of a lease of the property comprising the area of the mineral deposit find. Mineral leases can be up to a 30 year term and are renewable. A mining lease increases the mineral claim holders rights in the land contained in the mineral claim and is considered an interest in the land.
The mineral claims comprising our Ruth Lake Property have been located and recorded pursuant to the Mineral Tenure Act of the Province of British Columbia. As the registered owner of the mineral claims comprising the Ruth Lake Property, we have the right to explore and develop these mineral claims and recover all of the minerals contained within the surface boundaries of these properties and continuing vertically downward.
Under the Mineral Tenure Act, mineral claims can only be located and recorded by residents of Canada. In order to comply with that requirement, we could either have the title to our mineral
properties held “in trust” for us by one of our directors or officers residing in British Columbia, or we could create a wholly owned subsidiary company in British Columbia to be the registered owner of our mineral properties. To avoid the cost of creating and maintaining a wholly owned subsidiary company, we have chosen to register the claims comprising the Ruth Lake Property in the name of our President, who holds them in trust for us. In the event we find that a commercially viable mineral deposit on any of our mineral claims, we will form a wholly owned subsidiary company in British Columbia, and our president will transfer registered title to such wholly owned subsidiary company.
The Ruth Lake Property is located approximately 25 kilometers east of the Town of Lac La Hache or approximately 60 kilometers north-east of the Town of 100 Mile House. The area can be reached via the Forest Grave/Canim Lake Road just to the north of 100 Mile House or by a network of logging roads and tracks which extend east of Lac La Hache. From the Canim Lake Road, 500 Road branches to the north 7 kilometers to the south of Ruth Lake Park and passes through the east centre of the claims and from this road a network of logging roads accesses most of the property.
The Ruth Lake Property is situate within the geological Quesnel Terrane, also known as the Quesnel Trough. This geological area hosts the Mount Polley, Mount Milligan and Lorraine alkalic copper gold deposits to the north of our properties and the Rayfield River, Afton-Ajax and Copper Mountain mineral deposits to the south. The GWR Resources Inc. Lac La Hache property is within approximately 5 kilometers to the west of our Ruth Lake Property.
All of the mineral claims comprising the Ruth Lake Property and are unencumbered. There are no native land claims that affect title to our various interests in mineral claims. There is no insurance covering any of our properties and we believe that no insurance is necessary since the mining properties are unimproved and contain no buildings or plant and equipment and our office equipment is of marginal value.
Beeston does not have any investments or interests in any real estate. Beeston also does not invest in real estate mortgages, nor does Beeston invest in securities of, or interests in, persons primarily engaged in real estate activities.
ITEM 3.
ITEM 3.
LEGAL PROCEEDINGS
The Company is not involved in any legal proceedings.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted for a vote of security holders during the 2008 fourth quarter.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED SHAREHOLDERS MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
The Company’s common stock trades on the OTC Bulletin Board under the symbol BESE. The following table shows the high and low market prices for each quarter for the past three years.
Quarter Ending
High
Low
12/31/2008
$0.10
$0.015
9/30/2008
$0.17
$0.05
6/31/2008
$0.19
$0.17
3/31/2008
$0.40
$0.10
12/31/2007
$0.80
$0.13
09/30/2007
$0.85
$0.35
06/30/2007
$0.95
$0.30
03/31/2007
$1.00
$0.46
12/31/2006
$2.34
$0.45
09/30/2006
$2.60
$1.00
06/30/2006
$1.18
$0.45
03/31/2006
$0.90
$0.40
At the present time, there are no assets available for the payment of dividends. The Company does not anticipate paying any dividends in the next twelve months.
The Articles of Incorporation currently authorize the issuance of 100,000,000 shares of common stock, with a par value of $0.001. The holders of the Shares: (a) have equal ratable rights to dividends from funds legally available therefore, when, as, and if declared by the Board of Directors of the Company; (b) are entitled to share ratably in all of the assets of the Company available for distribution upon winding up of the affairs of the Company; (c) do not have preemptive subscription or conversion rights and there are no redemption or sinking funds applicable thereto; and (d) are entitled to one non-cumulative vote per share on all matters on which shareholders may vote at all meetings of shareholders. These securities do not have any of the following rights: (a) cumulative or special voting rights; (b) preemptive rights to purchase in new issues of Shares; (c) preference as to dividends or interest; (d) preference upon liquidation; or (e) any other special rights or preferences. In addition, the Shares are not convertible into any other security. There are no restrictions on dividends under any loans, other financing arrangements or otherwise. See a copy of the Articles of Incorporation, and any amendment thereto, and Bylaws of the Company, attached as Exhibits to the Company’s previously filed SB-2. As of December 31, 2008, the Company had 58,342,000 shares of common stock outstanding.
The Company issued a Private Placement Memorandum authorizing the sale of up to 500,000 shares of its stock at a price of $0.68 per share for a total offering amount of $340,000. The memorandum originally had an expiration date of September 30, 2007. However, three
extensions were approved by the Board of Directors and it finally terminated on June 20, 2008. Upon termination, the Company had received and accepted subscriptions for 92,000 shares representing $62,560. Issuance of the share certificates was made following the closure of the offering.
Non-Cumulative Voting.
The holders of Shares of Common Stock of the Company do not have cumulative voting rights, which means that the holders of more than 50% of such outstanding Shares, voting for the election of directors, can elect all of the directors to be elected, if they so choose. In such event, the holders of the remaining Shares will not be able to elect any of the Company's directors.
Share Purchase Warrants
At December 31, 2008, no share purchase warrants were outstanding.
Share Purchase Option
At December 31, 2008, there were no share purchase options outstanding.
Dividends.
The Company does not currently intend to pay cash dividends. The Company's proposed dividend policy is to make distributions of its revenues to its stockholders when the Company's Board of Directors deems such distributions appropriate. Because the Company does not intend to make cash distributions, potential shareholders would need to sell their shares to realize a return on their investment. There can be no assurances of the projected values of the shares, nor can there be any guarantees of the success of the Company. A distribution of revenues will be made only when, in the judgment of the Company's Board of Directors, it is in the best interest of the Company's stockholders to do so. The Board of Directors will review, among other things, the investment quality and marketability of the securities considered for distribution; the impact of a distribution of securities on its customers, joint venture associates, management contracts, other investors, financial institutions, and the company's internal management, plus the tax consequences and the market effects of an initial or broader distribution of such securities.
Transfer Agent.
The Company continues to retain the services of Pacific Stock Transfer Company, 500 E. Warm Springs Road, Suite 240, Las Vegas, NV 89119, to act as transfer agent and registrar.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable
ITEM 7.
ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
This section includes a number of forward looking statements that reflect our current views with respect to future events and financial performance. Forward looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward looking statements, which apply only as of the date of this report. These forward looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.
Beeston is an exploration stage company with limited operations, limited revenue, limited financial backing and few assets, which consist mainly of mineral properties that for the most part have had limited exploration to date. Our initial plan of operation was to build a business providing medical diagnostic imaging services for individuals in Western Canada. Our customers would have been individuals who were prepared to pay for the services they receive, as well as individual clients of the provincial medical insurance providers, workers’ compensation boards, auto insurance carriers and specialty insurance providers. We believed at the time that there was an opportunity to provide these services through private clinics that would supplement those being provided by a government funded and administered health service that was constantly operating under pressure to provide such services on a timely basis. Despite our efforts in this regard, we were unable to implement this business plan. We have also undergone management changes. A number of our original directors and officers are no longer with the Company, and we are currently endeavoring to replace some of the personnel. As part of this reorganization, the Board of Directors decided to explore opportunities in areas other than those contained in the original business plan.
We believed that the growing demand for the production of natural resources presents an area of opportunity for developing companies. Accordingly, in September, 2006, we acquired a large tract of mineral claims located in the Province of British Columbia, Canada, referred to collectively as the “Ruth Lake Property”, for the purpose of carrying out exploration and development on this mineral property. There is no guarantee of locating a deposit of some mineral product that could result in a producing mine. However, we are of the opinion that the location of the mining property is such as to warrant its acquisition and for us to undertake a program of exploration on the mineral property.
In our pursuit of other mining properties of interest in the same area as our current mineral claim holdings, we were able to enter into another agreement under which we were granted an option to acquire an interest in certain mineral claims, referred to collectively as the “Bluff Lake Property”, that are proximate to our previously acquired Ruth Lake Property. Pursuant to the terms of this Option Agreement, we could obtain up to a sixty percent (60%) interest in these mineral claims through the payment of cash and the performance of exploration work upon the optioned claims over a two year period. Upon our acquiring a minimum interest of fifty percent (50%) in the optioned mineral claims, either party to the option agreement could then require participation of the other party in the further exploration and development of the optioned mineral claims pursuant to a joint venture. The Option Agreement relating to the Bluff Lake
Property and the agreement for the acquisition of the Ruth Lake Property are described in more detail in Item 2. Properties.
In addition to being near to our previously acquired mineral claims, the optioned claims had already received a significant amount of exploration work, the results of which have been made available to us. Based on the exploration work previously carried out on the optioned mineral claims, our management believed that these mineral claims were of sufficient merit to warrant a more advanced work program of exploration.
In an effort to further the exploration and development of our large tract of acquired mineral claims, we continue to review the possibility of participating in some form of joint venture or option arrangement with other entities on a portion of our mineral claim holdings. This was the case on January 18, 2007, when Beeston entered into an agreement with a start-up mining company, under which we granted the company an option to acquire a mineral claim from our larger mineral claim holdings by the payment of cash and the performance of a series of work programs over a period of four years. Upon acquisition of the mineral claim by the company, it will be required to pay a certain royalty to Beeston and the prior owner of the mineral claims based on a percentage of any net smelter returns derived from the mineral claim. The Option Agreement with Kranti is described in more detail in Item 2. Properties.
We are also continuing our effort to acquire additional mining properties or the right to acquire an interest in additional mining properties. As with our ongoing efforts to explore our existing mining properties, we will need to raise additional funds either through debt or equity financings in order to proceed with additional mining property acquisitions.
The mining industry in British Columbia is well regulated. We are required to comply with all regulations, rules and directives of governmental authorities and agencies applicable to the exploration of minerals in Canada, generally, and in British Columbia specifically. The early stages of exploration can generally be carried out without any permitting or notification to any government body or agency as it is deemed “low-disturbance/low-impact” by the British Columbia Department of Energy, Mines and Petroleum Resources (“BCDM”). In the more advanced stages of exploration involving mechanized trenching or diamond drilling - a Plan of Operation will need to be filed with the BCDM. This plan will detail the extent, location and amount of surface disturbance for the trenching and/or drilling. A bond will also have to be obtained in the amount of the cost of reclaiming the anticipated surface disturbance. Usually the reclamation process entails filling in and smoothing the surface of trenching sites, clean up and removal of any work material, and seeding native grass/plants at the sites of any disturbance. We were required to make a $2,500 CAD security deposit under the permit we applied for and obtained in regard to the exploration work planned for the phase two of our exploration program on the Bluff Lake Property. In the event any trees larger than six inches in diameter need to be cut down, a permit will also have to be obtained from the British Columbia Ministry of Forests. The cost of obtaining the BCDM or Forestry permits is nominal (less than $100 CAD). The bond required by the BCMD is returned (with interest) upon proper clean up of the exploration site. In the event that a mineral exploration program should evolve to the point where its purpose is the determination of the existence of a commercially viable mineral deposit, various other government acts, regulation and rules come into effect. Neither of the exploration programs
planned for our properties in 2008 had any such purpose. All exploration activity in British Columbia must be carried out in compliance with the Health, Safety and Reclamation Code for Mines in British Columbia.
In the quest for copper-gold mineralization, potassium and magnetic alteration is commonly used as exploration vectors. In regard to the Bluff Lake Property and the Ruth Lake Property, an airborne radiometric and magnetic geophysical survey was recently completed over the area where these properties are located under a partnership program involving a number of the exploration companies having mineral properties in the area, Geological Survey of Canada and Geoscience B.C. The results of this survey have been given to the participating exploration companies and were released to the general public in April, 2007. The survey results for the Bluff Lake Property were previously made available to us by Candorado, who was one of the participating exploration companies.
A preliminary review of the survey results showed several potassium anomalies, which could be indicative of potassium alteration. On the southern portion of the Bluff Lake Property, fracture controlled potassic alteration and copper mineralization had also been noted. Other copper showings existed elsewhere on the property. Previous mineral explorations in this area had also delineated areas of anomalous copper in soils in the property. However, no significant amount of drilling had been done. We retained the services of Warner Gruenwald, P. Geo. to provide us with an interpretation of the existing geological information on the Bluff Lake Property and recommendations for further exploration of the property. To assist him in this matter, Mr. Rob Shives, formerly the head of the Radiation Division of the Geological Survey of Canada, was retained to conduct a detailed review of the airborne geophysical survey and existing ground data. Mr. Shives’ review defined eight target areas for ground work.
Based on the information provided by Mr. Shives, Mr. Gruenwald developed a two phased $200,000 exploration program. Phase one of the exploration program entailed reconnaissance grids and sampling on the targets identified by Mr. Shives as well as some general prospecting, rock sampling and Mapping. The cost of phase one of the exploration program was $44,641 CAD. Sampling of one target area southeast of Bluff Lake yielded an east-southeast trending cooper-in-soil anomaly nearly 500 metres long and at least 150 metres wide. This anomaly appeared to be open to the east and west and coincides with a zone of weathered monzonitic intrusive rocks that differ markedly from the intrusive rocks elsewhere on the property.
Due to labor and equipment shortages in the industry, we were limited to completing phase one of our exploration program in 2007. Under the terms of our Mineral Claim Purchase Agreement with Candorado, we were granted an extension of the time period in which to complete a total of $200,000 CAD in exploration expenditures on the Bluff Property to June 30, 2008. This latter extension was set forth in an agreement dated October 29, 2007, amending the Option Agreement between the Company and Candorado.
Based on the results from phase one of the exploration program, a $165,000 CAD work program was planned as phase two of the exploration program to test the cooper anomaly. Phase two of the exploration program was commenced in June, 2008, and involved road construction, diamond drilling and in-fill soil sampling. However, we were unable to complete all of phase
two of the exploration program within the extended time period and we were granted a further extension of the time period in which to complete the balance of phase two of the exploration program by Candorado to September 30, 2008. This latter extension was set forth in an agreement dated June 29, 2008, further amending the Option Agreement between the Company and Candorado. The majority of phase two of the exploration program was completed; however, completion of the exploration work was suspended due to a lack of funding. Despite its best efforts, the Company was unable to raise the necessary funds to complete phase two of its exploration program on the Bluff Lake Property within the extended time period. As a result, pursuant to an agreement dated October 3, 2008, the Company agreed to terminate its Option Agreement (as amended) with Candorado and its right thereunder to acquire various interests in the Bluff Lake Property and Candorado agreed to assume all responsibility and liability for phase two of the Company’s exploration program on the Bluff Lake Property.
The Ruth Lake Property has not received as much exploration as the Bluff Lake Property. What prior exploration has taken place on or near this property has provided indications that the area has the potential to host a copper-gold deposit or a molybdenite deposit. Prior to retaining the services of Mr. Gruenwald, we had Mr. Marvin Mitchell, P. Eng., prepare a preliminary report on the Ruth Lake Property to provide us with a basis for further exploration of this large tract of mineral claims. As a result of the limited amount of exploration work preformed in this area, Mr. Mitchell recommended an initial exploration program of approximately $50,000 CAD involving the taking of soil geochemical samples on a regional grid with fill in samples where indicated by anomalous values. These samples would then be assayed for various elements and the results would provide a basis for a more concentrated exploration program within the property.
Following the release of the previously mentioned airborne radiometric and magnetic geophysical survey of the Ruth Lake Property, Mr. Shives was also retained to conduct a detailed review of the newly acquired airborne geophysical data for the property. The geophysical review identified five target areas worthy of investigation for alkalic cooper-gold porphyry deposits. Each target area was then explored by geochemical soil sampling and prospecting under the supervision of Mr. Gruenwald. Anomalous cooper-in-soil was detected near the edge of one target area and cooper mineralization was sighted along a newly constructed logging road near this area. In addition to the results of the exploration program, historic assessment reports relating to the southern part of the property reported sporadic molybdenite-in-soil geochemical anomalies over a north-south length of 750 metres. Molybdenite and small amounts of chalcopyrite were described as disseminations and fracture fillings in altered, silicified and locally quartz veined granite float and bedrock. While some drilling was performed, there are no records of results. Based on the results of our initial exploration program and the historic data on the property, a $35,000 CAD exploration program was planned for the Ruth Lake Property for the summer of 2008. However, due to a lack of funding, this exploration program has been postponed until this summer.
As the owner of the mineral claims comprising the Ruth Lake Property, we have the exclusive right to the minerals contained within the surface boundaries and continuing vertically down, and the right to explore, develop and mine the mineral claims for such minerals. These rights granted to owners of mineral claims are obtained as a form of tenure. To maintain our tenure in good
standing, a prescribed dollar amount of exploration and development work must be performed and an assessment report detailing such exploration and development filed with the Mineral Titles Office annually. A cash payment of the prescribed dollar amount of exploration and development work may be made in lieu of performing such exploration and development work. We are currently paying cash in lieu of exploration work to keep the Ruth Lake Property in good standing and will continue to do so until such time as we are able to commence exploration in the field.
The annual dollar value of the exploration and development work required to be undertaken on a recorded claim in British Columbia is $4.00 CAD per hectare in years 1 through 3, followed by an $8.00 CAD per hectare per year thereafter. We have filed assessment reports based on the exploration work we carried out on our mineral properties in 2007. The cost of these exploration programs covered the annual assessment fees for all of our interest in mineral properties. To date we have filed assessment work of $48,230 CAD on the Ruth Lake Property. Kranti has paid cash of $1,914 CAD in lieu of filing assessment work plus filed a further $26,075 CAD in assessment work on our optioned mineral claim. All of our properties are currently in good standing.
The terrain in the area in which our mineral properties are located is well forested with rolling hills, and elevations ranging from 915-1525 meters. The climate is generally dry with a warm summer and a cold winter. Precipitation ranges from 42-62 centimeters per year with up to 30 centimeters occurring as snow. While some exploration work such as trenching and drilling could be carried out all year long, generally, exploration in the area is limited to an eight month period running from April to October. We anticipate performing our intended exploration programs during this eight month period.
Accommodations as well as supplies and equipment are available at the Towns of Lac La Hache or 100 Mile House. Electricity lines run up to the boundaries of the mineral properties, however, most power requirements can be provided by the use of on site generators. Competition and unforeseen limited sources of supplies and manpower in the industry could result in occasional spot shortages of supplies, such as dynamite, and certain equipment such as bulldozers, excavators and drilling equipment that we may need to conduct exploration as well as skilled manpower to conduct exploration. We have not yet attempted to locate or negotiate with any suppliers of products, equipment or materials for our 2009 exploration program. We anticipate we will begin preparing for exploration under the approved program of work for the Ruth Lake Property in early spring, 2009. It is our intention to carry out this exploration program in the summer.
As our directors and officers have no professional training or technical credentials in the field of geology and specifically in the areas of exploring, developing and operating mining properties, we will have to retain the services of various professionals and technicians in the mining industry to provide such expertise. Accordingly, we have, and will continue to, retain the services of geologists and engineers to advise and assist us in the exploration of our acquired interest in mineral claims.
In order to cover the consulting costs for the preparation of the exploration programs we plan to carry out the Ruth Lake Property, the costs of conducting these exploration programs, plus general operating expenses, we will require funding of approximately $75,000 CAD for the next twelve month period. We also hope to raise an additional $125,000 CAD to facilitate the acquisition of additional mining properties or an interest in such other mining properties. We intend to raise the required funds by means of debt and/or equity funding. To date, our officers and directors have loaned us the funds necessary to acquire out interests in the mineral properties and to cover our ongoing operating expenses. Our President, Brian Smith, is prepared to provide additional loans to us; however, we will also pursue the sale of additional shares in the Company under a private placement. The are no formal agreements for the advancement of funds with Mr. Smith.
On June 20, 2007, our Board of Directors approved a private placement offering of 500,000 common shares of the Company at a price of $0.68 per share. We anticipated raising up to $340,000 by means of this private placement offering. This private placement offering, after three extensions, terminated on June 20, 2008. As of the date of termination, we had received subscriptions for 92,000 shares worth proceeds of $62,560. We anticipate that we will undertake an additional private placement as part of our plans to raise additional funds. We will also pursue the sale and/or optioning of a portion of the numerous mineral tenures that comprise the Ruth Lake Property. The sale or optioning of a portion of our mineral tenures will not only provide us with operating funds, but would also provide for the further exploration and development of these mineral tenures, as in the case of our mineral claim optioned to Kranti.
It is our belief that we will be able to obtain the necessary funding to proceed with our planned exploration program this year. However, to the extent we are unable to acquire the required funds; we will amend or delay the exploration activity accordingly.
As of December 31, 2008, all of our officers and directors have provided a total of $187,053 in funding to Beeston in the form of various non-interest demand loans. Interest on the loans is imputed at the rate of 6% per annum and is reported in our financial statements as additions to interest expense and contributed capital. We have no agreement with any of our officers and directors for the provision of additional funding.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS
Included herewith are the following financial statements:
BEESTON ENTERPRISES LTD.
(AN EXPLORATION STAGE COMPANY)
FINANCIAL STATEMENTS
DECEMBER 31, 2008 AND 2007
BEESTON ENTERPRISES LTD.
(AN EXPLORATION STAGE COMPANY)
Page(s)
Report of Independent Registered Public Accounting Firm
1-2
Balance Sheets as of December 31, 2008 and 2007
Statements of Operations for the Years Ended
December 31, 2008 and 2007 with Cumulative Totals Since Inception
Statement of Changes in Stockholders’ Equity (Deficit) for the Period
July 12, 1999 (Inception) to December 31, 2008
Statements of Cash Flows for the Years Ended
December 31, 2008 and 2007 with Cumulative Totals Since Inception
Notes to Financial Statements
7-18
BAGELL, JOSEPHS, LEVINE & COMPANY, L.L.C.
Certified Public Accountants
Lippincott Drive, Ste. J
Marlton, NJ 08053-4168
(856) 355 5900 Fax (856) 396 0022
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
Beeston Enterprises, Ltd.
#122-247 SW 8th Street
Miami, FL 33130
We have audited the accompanying balance sheets of Beeston Enterprises, Ltd. as of December 31, 2008 and 2007, and the related statements of operations, stockholders’ (deficit) and cash flows for each of the years in the two-year period ended December 31, 2008. Beeston Enterprises, Ltd’s management is responsible for these financial statements. 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 audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Beeston Enterprises, Ltd. as of December 31, 2008 and 2007, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2008 in conformity with accounting principles generally accepted in the United States of America.
(Continued)
BAGELL, JOSEPHS, LEVINE & COMPANY, L.L.C.
Certified Public Accountants
Lippincott Drive, Ste. J
Marlton, NJ 08053-4168
(856) 355 5900 Fax (856) 396 0022
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 9 to the financial statements, the Company has had recurring deficits in the past few years, is in the exploration stage, and has no recurring revenues. They have incurred losses since inception and will be looking to raise capital over the next year to assist in funding their operations. These factors raise substantial doubt about its ability to continue as a going concern. Management’s operating and financing plans in regards to these matters are also discussed in Note 9. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.
BAGELL, JOSEPHS, LEVINE & COMPANY, L.L.C.
Bagell, Josephs, Levine & Company, L.L.C.
Marlton, NJ 08053
March 30, 2009
BEESTON ENTERPRISES LTD.
(AN EXPLORATION STAGE COMPANY)
BALANCE SHEETS
DECEMBER 31, 2008 AND 2007
The accompanying notes are an integral part of these financial statements.
BEESTON ENTERPRISES LTD.
(AN EXPLORATION STAGE COMPANY)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
(WITH CUMULATIVE TOTALS SINCE INCEPTION)
The accompanying notes are an integral part of these financial statements.
BEESTON ENTERPRISES LTD.
(AN EXPLORATION STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
FROM JULY 12, 1999 (INCEPTION) TO DECEMBER 31, 2008
The accompanying notes are an integral part of these financial statements.
BEESTON ENTERPRISES LTD.
(AN EXPLORATION STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2008 AND 2007
(WITH CUMULATIVE TOTALS SINCE INCEPTION)
Cumulative Totals
July 12, 1999 to
December 31, 2008
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss
$ (69,375)
$ (157,810)
$ (416,624)
Adjustments to reconcile net loss to net cash
(used in) operating activities
Depreciation
-
3,806
Gain (loss) on foreign currency translations
20,690
(10,223)
12,539
Interest forgiven by shareholder
11,188
7,124
20,611
Release of exploration cost liability
(136,245)
-
(136,245)
Changes in assets and liabilities
(Increase) decrease in prepaid expenses and deposits
(2,859)
(2,683)
Increase in accounts payable and
accrued expenses
144,122
6,350
162,409
Total adjustments
40,533
60,437
Net cash (used in) operating activities
(28,842)
(156,811)
(356,187)
CASH FLOWS FROM INVESTING ACTIVITES
Purchase of office equipment
-
-
(3,806)
Net cash (used in) investing activities
-
-
(3,806)
CASH FLOWS FROM FINANCING ACTIVITES
Liability for stock to be issued
-
62,560
62,560
Proceeds from notes payable to stockholders
23,074
88,625
187,053
Sale of common stock
-
-
110,450
Net cash provided by financing activities
23,074
151,185
360,063
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS
(5,768)
(5,626)
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD
5,838
11,464
-
CASH AND CASH EQUIVALENTS - END OF PERIOD
$
$ 5,838
$
SUPPLEMENTAL CASH FLOW INFORMATION:
During the year, cash was paid for the following:
Income taxes
$ -
$ -
$ -
Interest
$ -
$ -
$ -
SUPPLEMENTAL DISCLOSURE OF NONCASH ACTIVITY:
Forgiveness of interest on stockholder notes payable to additional
paid-in capital
$ 11,188
$ 7,124
$ 20,611
Liability for stock to be issued
$ 62,560
$ -
$ 62,560
The accompanying notes are an integral part of these financial statements.
BEESTON ENTERPRISES LTD.
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2008 AND 2007
NOTE
ORGANIZATION AND BASIS OF PRESENTATION
The Company was incorporated on July 12, 1999 under the laws of the State of Nevada. The business purpose of the Company was originally to provide medical diagnostic imaging services to individuals in British Columbia and Alberta, Canada. In September of 2006 the Company changed its purpose to mineral exploration and development.
NOTE 2-
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Exploration Stage Company
The Company is considered to be in the exploration stage as defined in Statement of Financial Accounting Standards (SFAS) No. 7, “Accounting and Reporting by Development Stage Enterprises,” as interpreted by the Securities and Exchange Commission for mining companies in Industry Guide No. 7.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents consists principally of currency on hand, demand deposits at commercial banks, and liquid investment funds having a maturity of three months or less at the time of purchase.
Start-up Costs
In accordance with the American Institute of Certified Public Accountants Statement of Position 98-5, “Reporting on the Costs of Start-up Activities”, the Company expenses all costs incurred in connection with the start-up and organization of the Company.
Common Stock Issued For Other Than Cash
Services purchased and other transactions settled in the Company's common stock are recorded at the estimated fair value of the stock issued if that value is more readily determinable than the fair value of the consideration received.
BEESTON ENTERPRISES LTD.
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2008 AND 2007
NOTE 2-
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Property and Equipment
The cost of office computer equipment is capitalized and depreciated over its useful life using the straight-line method of depreciation. For all equipment presently owned, the useful life being used is 60 months. Repairs that substantially extend the life of the asset are capitalized and those that do not are charged to operations. Depreciation expense for the years ended December 31, 2008 and 2007 was $0 and $607, respectively.
Revenue Recognition
Revenue will be recognized when the following conditions are met: persuasive evidence of an arrangement exists; delivery has occurred in accordance with the terms of the arrangement; the price is fixed or determinable; and collectability is reasonable assured.
Net (Loss) Per Share of Common Stock
The following table sets forth the computation of basic and diluted earnings per
share:
All dilutive securities were not included in the calculation of dilutive earnings per share because the effect would be anti-dilutive when the Company has incurred a loss from operations. There are no dilutive securities, such as warrants or options, outstanding.
BEESTON ENTERPRISES LTD.
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2008 AND 2007
NOTE 2-
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Fair Value of Financial Instruments
The carrying amount reported in the balance sheet for cash and cash equivalents, accounts payable and accrued expenses approximates fair value because of the immediate or short-term maturity of these financial instruments. The carrying amount reported for notes payable approximates fair value because, in general, the interest on the underlying instruments fluctuates with market rates.
Currency Risk and Foreign Currency Translations
The Company has assets and significant debt to stockholders on notes denominated in Canadian currency. In accordance with FASB 52, “Foreign Currency Translation,” the functional currency of the Company is United States currency, requiring periodic conversion at exchange rates as of the report date.
The Company has reported its gain or loss on foreign currency translation in its statement of Other Accumulated Comprehensive Income (Loss) due to these translation adjustments.
Recent Accounting Pronouncements
In February 2006, the FASB issued SFAS No. 155, “Accounting for Certain Hybrid Financial Instruments,” an amendment of FASB Statements No. 133 and 140. SFAS No. 155 resolves issues addressed in SFAS No. 133 Implementation Issue No. D1, “Application of Statement 133 to Beneficial Interests in Securitized Financial Assets,” and permits fair value measurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation, clarifies which interest-only strips and principal-only strips are not subject to the requirements of SFAS No. 133, establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation, clarifies that concentrations of credit risk in the form of subordination are not embedded derivatives and amends SFAS No. 140 to eliminate the prohibition on a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. SFAS No. 155 is effective for all financial instruments acquired or issued after the beginning of the first fiscal year that begins after September 15, 2006. The implementation of this standard did not have a material impact on the Company’s financial position, results of operations or cash flows.
BEESTON ENTERPRISES LTD.
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2008 AND 2007
NOTE 2-
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Recent Accounting Pronouncements (Continued)
In March 2006, the FASB issued SFAS No. 156, “Accounting for Servicing of Financial Assets,” an amendment of FASB Statement No. 140. SFAS No. 156 requires an entity to recognize a servicing asset or liability each time it undertakes an obligation to service a financial asset by entering into a service contract under a transfer of the servicer’s financial assets that meets the requirements for sale accounting, a transfer of the servicer’s financial assets to a qualified special-purpose entity in a guaranteed mortgage securitization in which the transferor retains all of the resulting securities and classifies them as either available-for-sale or trading securities in accordance with SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities” and an acquisition or assumption of an obligation to service a financial asset that does not relate to financial assets of the servicer or its consolidated affiliates. Additionally, SFAS No. 156 requires all separately recognized servicing assets and servicing liabilities to be initially measured at fair value, permits an entity to choose either the use of an amortization or fair value method for subsequent measurements permits at initial adoption a one-time reclassification of available-for-sale securities to trading securities by entities with recognized servicing rights and requires separate presentation of servicing assets and liabilities subsequently measured at fair value and additional disclosures for all separately recognized servicing assets and liabilities. SFAS No. 156 is effective for transactions entered into after the beginning of the first fiscal year that begins after September 15, 2006. The implementation of this standard did not have a material impact on the Company’s financial position, results of operations or cash flows.
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” which clarifies the definition of fair value whenever another standard requires or permits assets or liabilities to be measured at fair value. Specifically, the standard clarifies 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. SFAS No. 157 does not expand the use of fair value to any new circumstances and must be applied on a prospective basis in certain cases. The standard also requires expanded financial statement disclosures about fair value measurements, including disclosure of the methods used and the effect on earnings.
In February, 2008, FASB Staff Position (“FSP”) FAS No. 157-2, “Effective Date of FASB Statement No. 157 (“FSP No. 157-2”) was issued. FSP No. 157-2 defers the effective date of SFAS No. 157 to fiscal years beginning after December 15, 2008, and interim periods within those fiscal years, for all nonfinancial assets and liabilities, except those that are recognized or disclosed at fair value fair value in the financial statements on a recurring basis (at least annually). Examples of items within the scope of FSP No. 157-2 are nonfinancial assets and nonfinancial liabilities initially measured at fair value in a business combination (but not measured at fair value in subsequent periods), and long-lived assets, such as property, plant and equipment and intangible assets measured at fair value for an impairment assessment under SFAS No. 144.
BEESTON ENTERPRISES LTD.
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2008 AND 2007
NOTE 2-
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Recent Accounting Pronouncements (Continued)
The partial adoption of SFAS No. 157 on January 1, 2008 with respect to financial assets and financial liabilities recognized or disclosed at fair value in the financial statements on a recurring basis did not have a material impact on the Company’s financial statements. See Note 10 for the fair value measurement disclosures for these assets and liabilities. The Company is in the process of analyzing the potential impact of of SFAS No. 157 relating to its planned January 1, 2009 adoption of the remainder of the standard.
In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans,” which amends SFAS No. 87, “Employers’ Accounting for Pensions,” SFAS No. 88, “Employers’ Accounting for Settlements and Curtailments of Defined Benefit Plans and for Termination Benefits,” SFAS No. 106, “Employers’ Accounting for Postretirement Benefits Other Than Pensions,” and SFAS No. 132R, “Employers’ Disclosures about Pensions and Other Postretirement Benefits (revised 2003).” This statement requires companies to recognize an asset or liability for the overfunded or underfunded status of their benefit plans in their financial statements. SFAS No. 158 also requires the measurement date for plan assets and liabilities to coincide with the sponsor’s year end. The standard provides two transition alternatives related to the change in measurement date provisions. The recognition of an asset and liability related to the funded status provision is effective for fiscal years ending after December 15, 2006 and the change in measurement date provisions is effective for fiscal years ending after December 15, 2008. This pronouncement has no effect on the Company at this time.
On January 1, 2008 (the first day of fiscal 2008), the Company adopted SFAS No. 159, “The Fair Value Option for Financial Assets and Liabilities, including an amendment to SFAS No. 115 “ (“SFAS No. 159”). SFAS No. 159 permits entities to choose to measure many many financial instruments and certain other items at fair value, which are not otherwise currently required to be measured at fair value. Under SFAS No. 159, the decision to measure items at fair value is made at specified election dates on an instrument-by-instrument basis and is irrevocable.
BEESTON ENTERPRISES LTD.
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2008 AND 2007
NOTE 2-
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Recent Accounting Pronouncements (Continued)
The new standard did not impact the Company’s Financial Statements as the Company did not elect the fair value option for any instruments existing as of the adoption date. However, the Company will evaluate the fair value measurement election with respect to financial instruments the Company enters into in the future.
In December, 2007, the FASB issued SFAS No. 141 (Revised 2007), “Business Combinations.” (“SFAS No. 141(R)”). SFAS No. 141(R) changes how an entity accounts for the acquisition of a business. While it retains the requirement to account for all business acquisitions using the acquisition method, the new rule will apply to a wider range of transactions or events and requires, in general, acquisition-date fair value measurements of identifiable assets acquired, liabilities assumed and non-controlling interests held in the acquiree, among other items. The Company is beginning to review the provisions of SFAS No. 141(R), which applies prospectively to business combinations with an acquisition date on or after the beginning of its 2009 fiscal year.
In December, 2007 the FASB issued SFAS No. 160, “Non-controlling Interests in Consolidated Financial Statements,” an amendment of ARB No. 51. SFAS No. 160 applies to “for profit” entities that prepare consolidated financial statements where there is an outstanding non-controlling interest in a subsidiary. The statement requires that the non-controlling interest be reported in the equity section of the consolidated balance sheet but identified separately from the parent. The amount of consolidated net income attributed to the non-controlling interest is required to be presented, clearly labeled for the parent and the non-controlling entity, on the face of the consolidated statement of income. When a subsidiary is deconsolidated, any retained non-controlling interest is to be measured at fair value. Gain or loss on deconsolidation is recognized rather than carried as the retained value of the retained investment. The statement is effective for fiscal years and interim periods beginning on or after December 15, 2008. It cannot be adopted earlier but, once adopted, it is to be applied retroactively. This pronouncement has no effect on the Company’s financial reporting at this time.
BEESTON ENTERPRISES LTD.
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2008 AND 2007
NOTE 2-
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Recent Accounting Pronouncements (Continued)
In March of 2008 the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 161, “Disclosures about Derivative Instruments and Hedging Activities-an amendment of FASB Statement No. 133, “Accounting for Derivatives and Hedging Activities.” SFAS No. 161 has the same scope as Statement No. 133 but requires enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement 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 financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The statement encourages, but does not require, comparative disclosures for earlier periods at initial adoption. SFAS No. 161 has no effect on the Company’s financial position, statements of operations, or cash flows at this time.
In May of 2008, the FASB issued Statement No. 162, “The Hierarchy of Generally Accepted Accounting Principles.” This statement identifies literature established by the FASB as the source for accounting principles to be applied by entities which prepare financial statements presented in conformity with generally accepted accounting principles (GAAP) in the United States. This statement is effective 60 days following approval by the SEC of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles.” This statement will require no changes in the Company’s financial reporting practices.
In May of 2008 the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 163, “Accounting for Financial Guarantee Insurance - an interpretation of FASB Statement No. 60, Accounting and Reporting by Insurance Enterprises. This statement requires that an insurance enterprise recognize a claim liability prior to an event of default (insured event) when there is evidence that credit deterioration has occurred in an insured financial obligation. This statement also clarifies how Statement 60 applies to financial guarantee insurance contracts. This statement is effective for fiscal years beginning after December 15, 2008. This statement has no effect on the Company’s financial reporting at this time.
BEESTON ENTERPRISES LTD.
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2008 AND 2007
NOTE
PROVISION FOR INCOME TAXES
The Company accounts for income taxes using the liability method. At December 31, 2008 and 2007 deferred tax assets consist of the following:
At December 31, 2008 and 2007 the Company had accumulated deficits of $416,624 and $347,249, respectively, during the development and exploration stages to offset future taxable income through 2021. The Company has established a valuation allowance equal to the amount of the deferred tax asset due to the uncertainty of the utilization of the operating losses in future periods.
NOTE 4 -
NOTES PAYABLE TO STOCKHOLDERS
The Company has borrowed funds for working capital purposes on notes payable to stockholders of the Company. The notes are payable on demand and are non-interest bearing. The total of these notes as of December 31, 2008 and 2007 was $187,053 and $163,979, respectively.
Interest on the notes is imputed currently at the rate of 6% per annum as additions to interest expense and contributed capital.
NOTE 5 -
PURCHASE OF MINERAL CLAIMS
On September 12, 2006 the Company purchased speculative mineral claims in Canada for 50,000 Canadian dollars. The expense was recognized as $44,811 USD. The Company is obligated to pay any fees and assessments to maintain the claims. A payment of $1,355 CAD on March 9, 2007 to maintain tenure was recognized as $1,163 USD. The Company is obligated to pay the vendor a royalty of 2% of net smelter returns. The royalty may be reduced to 1% by payment of $500,000 CAD (currently $408,898 in USD) or eliminated entirely by payment of $1,000,000 CAD (currently $817,795 in USD).
BEESTON ENTERPRISES LTD.
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2008 AND 2007
NOTE 5 -
PURCHASE OF MINERAL CLAIMS (CONTINUED)
On December 15, 2006 the Company made an initial payment of $5,000 CAD, recognized as $4,338 USD, to acquire an option to purchase an interest in three additional speculative claims. The Company can acquire a 50% interest in the three mineral properties by paying $45,000 CAD (currently $36,801 in USD) on or before January 31, 2007 plus carrying out a $200,000 CAD ($163,559 in USD) exploration and development program by December 15, 2007. The due date has been extended by contract to June 30, 2008 and, on June 24, 2008 extended to September 30, 2008. The Company could also acquire an additional 10% interest in the claims by carrying out an additional $250,000 CAD (currently $204,449 in USD) exploration and development program, initially by December 15, 2008 and on June 24, 2008 extended to December 31, 2009. The Company paid the cash portion of the option purchase price of $45,000 CAD, recognized as $38,561 USD, on January 29, 2007. On October 3, 2008 the Company abandoned its option to purchase the three additional claims. As part of the termination agreement, the Vendor of the claims agreed to assume liability for exploration costs incurred on the property but unpaid as of the termination date. As of October 3, 2008 the Company had incurred unpaid mining expenses of $139,016 CAD, recognized and accrued as $136,245 USD. The value of the Vendor’s assumption of liability was $136,245 USD on October 3, 2008.
NOTE 6 -
SALE OF MINERAL RIGHTS
On January 18, 2007 the Company entered into an agreement to grant an option giving the optionee the right to acquire one of the claims comprising its mineral property rights upon the payment of $20,000 USD, payable at the time of entering into the agreement, and the performance of a program of development and exploration on the mineral property totaling $175,000 CAD over a four-year period, with amounts to be completed by each anniversary. Upon exercise of the option to purchase the buyer will assume the 2% royalty of net smelter returns payable to the original seller of the claims to the Company and will receive the payout right of $1,000,000 CAD. Additionally, the buyer will assume a 2% royalty obligation to the Company, based on net smelter returns, with a payout of $2,000,000 CAD. The optionee failed to meet the second anniversary schedule so the Company amended the agreement on January 16, 2009 as explained in Note 11, Subsequent Events, below.
NOTE 7 -
STOCKHOLDERS’ (DEFICIT)
Common Stock
As of December 31, 2008 and 2007, the Company has 100,000,000 shares of common stock authorized and 58,342,000 and 58,250,000 shares, respectively, issued and outstanding.
BEESTON ENTERPRISES LTD.
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2008 AND 2007
NOTE 7 -
STOCKHOLDERS’ (DEFICIT) (CONTINUED)
Common Stock (Continued)
The following details the stock transactions for the Company:
On September 9, 1999 the Company issued 1,700,000 shares of its common stock at $.001 per share for $1,700 to provide initial working capital.
On December 30, 2002 the Company completed sale of 3,375,000 shares of its common stock at $.01 per share for $33,750 to provide further working capital and to begin funding for its operations.
On December 20, 2004 the Company completed the sale of 750,000 shares at $.10 per share for $75,000 to provide further working capital and to fund its operations.
On July 17, 2006 the Company effected a 10 for 1 forward split effective August 1, 2006 for stockholders of record July 31, 2006. The 5,825,000 pre-split shares became 58,250,000 shares issued and outstanding.
On July 9, 2008 the Company sold 92,000 shares for a liability for stock to be issued from the prior year, further explained in Note 8, below. The proceeds were used for working capital and to fund its operations.
During 2008, interest forgiven on notes payable to a stockholder was credited to additional paid-in capital for $11,188, bringing the total from inception to $20,611.
NOTE 8 -
PRIVATE PLACEMENT MEMORANDUM
The Company issued a Private Placement Memorandum authorizing the sale of up to 500,000 shares of its common stock at a price of $.68 per share. The original memorandum terminated September 30, 2007. Three extensions were authorized, bringing the termination date to June 20, 2008. At the termination of the Memorandum the Company had received subscriptions for 92,000 shares along with proceeds of $62,560, which were reported as a liability for stock to be issued pending issuance of the certificates. Issuance of certificates occurred on July 9, 2008.
BEESTON ENTERPRISES LTD.
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2008 AND 2007
NOTE 9 -
GOING CONCERN
The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, which contemplates continuation of the Company as a going concern. The Company has had recurring deficits in the past few years, has large accumulated deficits, is in the exploration stage, and has no recurring revenues. These items raise substantial doubt about the Company’s ability to continue as a going concern.
In view of these matters, realization of the assets of the Company is dependent upon the Company’s ability to meet its financial requirements and the success of future operations.
These financial statements do not include adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue its existence.
NOTE 10 -FAIR VALUE MEASUREMENTS
On January 1, 2008, the Company adopted SFAS No. 157, “Fair Value Measurements” (“SFAS No. 157”). SFAS 157 defines fair value, provides a consistent framework for measuring fair value under Generally Accepted Accounting Principles and expands fair value financial statement disclosure requirements. SFAS 157’s valuation techniques are based on observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect our market assumptions.
SFAS 157 classifies these inputs into the following hierarchy:
Level 1 Inputs- Quoted prices for identical instruments in active markets.
Level 2 Inputs- Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
Level 3 Inputs- Inputs with primarily unobservable value drivers.
BEESTON ENTERPRISES LTD.
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2008 AND 2007
NOTE 10 -FAIR VALUE MEASUREMENTS (CONTINUED)
The following table represents the fair value hierarchy for those financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2008:
Assets
Level 1
Level 2
Level 3
Total
Cash equivalents
$ -
$ -
$ -
$ -
Prepaid expenses
-
-
Total Assets
$ -
$ -
$ -
$ -
Liabilities
$ -
$ 187,053
$ -
$187,053
Total Liabilities
$ -
$ 187,053
$ -
$187,053
NOTE 11 -
SUBSEQUENT EVENTS
On January 16, 2009 the Company amended its agreement with the purchaser of an option on mineral rights explained in Note 6, above, The optionee was unable to meet its second annual due date for development work or cash in lieu of work. The amendment allows the option purchaser an extension up to June 30, 2009 to meet the annual obligation.
ITEM 9.
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no disagreements of any kind with the Company’s Independent Auditors.
ITEM 9AT. CONTROLS AND PROCEDURES
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Our evaluation of internal control over financial reporting includes using the COSO framework, an integrated framework for the evaluation of internal controls issued by the Committee of Sponsoring Organizations of the Treadway Commission, to identify the risks and control objectives related to the evaluation of our control environment. The internal controls for the Company are provided by executive management’s review and approval of all transactions.
Based on the current internal controls employed by the Company, the Company concludes that, as of December 31, 2008, a material weakness exists in the Company’s internal control procedures, in that one individual who, as an officer and director of the Company, has sole access and authority to receive cash and make cash disbursements.
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 requirements by the company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management’s report in this annual report.
Changes in internal controls over financial reporting
There was no change in our internal controls over financial reporting that occurred during the period covered by this report, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
ITEM 9B.
ITEM 9B. OTHER INFORMATION
During the fourth quarter of the fiscal year ended December 31, 2008, there was no information required to be reported on Form 8K which was not previously reported.
PART III
ITEM 10.
ITEM 10.
DIRECTORS,EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The names, ages, and respective positions of the directors, officers, and significant employees of the Company are set forth below.
Name
Age
Position
Date of Election or Appointment
Brian Smith
Director, President, Secretary, Treasurer, CEO
July,
Brian Smith
Mr. Smith graduated from the University of Saskatchewan, located in Saskatoon, Saskatchewan, with a Bachelor of Administration Degree (B. Admin) in 1971 and a Bachelor of Laws Degree (LL.B) in 1974. Mr. Smith was called to the Bar of British Columbia in 1975. Mr. Smith has been a director of Beeston since July 12, 1999, the President of Beeston since July 13, 1999, and the Treasurer of Beeston since July 12, 2005. Mr. Smith was also the Secretary of Beeston from July 13, 1999 to September 11, 1999 and was reappointed Secretary on July 11, 2006.
Mr. Smith has over 27 years experience in financial consulting and income tax planning. From 1976 to 1978, he was employed by Arthur Andersen, Chartered Accountants, before leaving to work in the corporate audit division of Revenue Canada, Taxation. In 1979, Mr. Smith again entered the private practice of law where he specialized in corporate and income tax matters. In 1984, he left the practice of law to pursue a career in financial consulting and tax planning, which, as a self-employed businessperson, he continues to this date. Mr. Smith has been allocating approximately 15-20 hours per week of his time to the initial development of Beeston and will be committing at least that amount of time, on a priority basis, to the further development and financing of Beeston's intended operations.
Beeston's director and executive officer has not been involved, during the past five years, in any bankruptcy proceedings, conviction or criminal proceedings; has not been subject to any order, judgment, or decree, not subsequently reversed or suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his or her involvement in any type of business, securities or banking activities; and has not been found by a court of competent jurisdiction, the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law.
There have been no changes in the procedures by which security holders may recommend nominees to the Company’s Board of Directors.
The Board of Directors does not currently have a standing audit committee.
Significant Employees
Beeston has no significant employees other than the officers and directors described above, whose time and efforts are being provided to Beeston without compensation.
Compliance with Section 16(a) of the Exchange Act.
The Company is not aware of an director or officer who is delinquent in their reporting under Section 16(a) of the Exchange Act.
Code of Ethics
Beeston has not adopted a Code of Ethics at this time.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION.
(a) No officer or director of Beeston is receiving any remuneration in the form of salaries and/or allowances at this time.
(b) There are no annuity, pension or retirement benefits proposed to be paid to officers, directors, or employees of the corporation in the event of retirement at normal retirement date pursuant to any presently existing plan provided or contributed to by the corporation or any of its subsidiaries.
(c) No remuneration is proposed to be paid in the future directly or indirectly by the corporation to any officer or director under any plan that presently exists.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
As of December 31, 2008, Beeston had no compensation plans in effect under which equity securities are authorized for issuance.
Following is a table showing security ownership of certain beneficial owners, as well as management of the Company. Unless otherwise noted, address of record for each shareholder is #200 - 1687 West Broadway, Vancouver, B.C., V6J 1X2. Unless otherwise noted, each shareholder is the direct owner of his or her shares.
Title of Class
Name and Address of Beneficial Owner
Amount and Nature of Beneficial Ownership
Percent of Class
Common
Brian Smith*
5,155,000
8.85%
Common
Officers and Directors as a Class (1 member)
5,155,000
8.85%
*Brian Smith’s wife owns 905,000 of the 5,155,000 shares.
There are currently no authorization plans in effect.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
Other than as set forth in Item 7, there are no relationships, transactions, or proposed transactions to which the registrant was or is to be a party, in which any of the named persons set forth in Item 404 of Regulation SK had or is to have a direct or indirect material interest.
None of the directors qualify as independent directors.
ITEM14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
1.
Audit Fees: Aggregate fees billed for each of the last two (2) fiscal years for professional services rendered by the principal accountant for the audit of the annual financial statements and review of financial statements included on Form 10-Q/QSB:
2008:
$13,500
2007:
$12,500
2.
Audit-Related Fees: Aggregate fees billed in each of the last two (2) fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit or review of the financial statements and are not reported previously.
2008:
$4,800
2007:
$3,450
3.
Tax Fees: Aggregate fees billed in each of the last two (2) fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning.
2008:
$0
2007:
$0
4.
All Other Fees: Aggregate fees billed in each of the last two (2) fiscal years for products and services provided by the principal accountant, other than the services previously reported.
2008:
$0
2007:
$0
5.
Audit Committee Pre-Approval Procedures. The Board of Directors has not, to date, appointed an Audit Committee.
PART IV
ITEM 15.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Exhibit No.
Document
Location
3.1
Articles of Incorporation
Previously Filed
3.2
Amendment to Articles
Previously Filed
3.3
Bylaws
Previously Filed
Rule 13a-14(a)/15d-14(a) Certifications
Included
Section 1350 Certifications
Included
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
BEESTON ENTERPRISES LTD.
Date: April 6, 2009
/s/ Brian Smith
Brian Smith, President, CEO
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
/s/ Brian Smith
Brian Smith
President, Treasurer, CEO, CFO, Director
Date: Apirl 6,