ITEM 1. BUSINESS
History and Organization
Our Business
The Company was incorporated under the laws of the State of Nevada on December 11, 2006 under the name of Regency Resources Inc. (“Regency”). Our fiscal year end is December 31. Our executive offices are located at 11 Glouchester Ave, Flat 5, Camden Town, London, NW1 7AU, England.
We do not have any subsidiaries, affiliated companies or joint venture partners.
We are a start-up mineral company in the pre-exploration stage and have not generated any operating revenues since inception. We have incurred losses since inception and our auditors have issued a going concern opinion since we must raise additional capital, through the sale of our securities, in order to fund our operations. There can be no assurance we will be able to raise this capital.
On February 15, 2007 Regency purchased a 100% interest in the Mara Gold Claim (the “Mara Claim”) from The Mara Group LLC., an unrelated company, for $7,000. The Mara Claim consists of one - 8 unit claim block containing 122.5 hectares (approximately 307 acres) located about 20 km North West of the city of Suva, in the Republic of Fiji. The Mara Claim is a gold exploration project.
On July 1st, 2008 we acquired a 100% interest in the La Trinidad Gold Claim (the “La Trinidad Claim”) from an unrelated mineral exploration company, Kalibo Resources Inc., for the sum of $5,000. The La Trinidad Claim, a gold exploration project, covers approximately 94.5 hectares (233.5 acres) located 45 kilometers North East of the city of Lingayen in the Republic of the Philippines. The ‘La Trinidad Claim’ and the “Mara Claim” are sometimes referred to herein collectively as the “Regency Claims”
There can be no assurance that a commercially viable mineral deposit, an ore reserve, exists on either of the Regency Claims or can be shown to exist unless and until sufficient and appropriate exploration work is carried out and a comprehensive evaluation of such work concludes economic and legal feasibility. Such work could take many years of exploration and would require expenditure of very substantial amounts of capital, capital we do not presently have and may never be able to raise. To date, we have not conducted any exploration work on either of the Regency Claims.
We have no full-time employees and management of Regency devote a very small percentage of their time to the affairs of the Company. While neither of our officers and directors is a director or officer of any other company involved in the mining industry there can be no assurance such involvement will not occur in the future. Such involvement could create a conflict of interest.
ITEM 1A.
ITEM 1A. RISK FACTORS
Risk Factors
An investment in our securities involves an exceptionally high degree of risk and is extremely speculative. In addition to the other information regarding Regency contained in this Form 10-K, you should consider many important factors in determining whether to purchase the shares in our company. The following risk factors reflect the potential and substantial material risks that could be involved if you decide to purchase shares in our company.
Risks Associated with our Company:
1.
Because our auditors have issued a going concern opinion and because our officers and directors may not loan any additional money to us, we may not be able to achieve our objectives and may have to suspend or cease exploration activity.
Our auditors' report on our December 31, 2011 financial statements expressed an opinion that substantial doubt exists as to whether we can continue as an ongoing business for the next twelve months. Because our officers and directors maybe unwilling to commit to loan or advance additional capital to us, (beyond the $60,000 already given to us by our President, we believe that if we do not raise additional capital through the issuance of treasury shares or debt securities, we will be unable to conduct exploration activity (beyond the initial work on the Mara Claim budgeted for in this 10-K) and may have to cease operations and go out of business.
2.
Because the probability of an individual prospect ever having reserves is extremely remote, in all probability our properties does not contain any reserves, and any funds spent on exploration will be lost.
Because the probability of an individual prospect ever having reserves is extremely remote, in all probability our mineral properties, the Regency Claims, do not contain any reserves, and any funds spent on exploration will be lost. If we cannot raise further funds as a result, we may have to suspend or cease operations entirely which would result in the loss of your investment.
3.
We lack an operating history and have losses which we expect to continue into the future. As a result, we may have to suspend or cease exploration activity or cease operations.
We were incorporated on December 11, 2006, have not yet conducted any exploration activities and have not generated any revenues. We have no exploration history upon which to properly evaluate the likelihood of our future success or failure. Our net loss from inception to December 31, 2011, the date of our most recent audited financial statements is $124,913. Our ability to achieve and maintain profitability and positive cash flow in the future is dependent upon
*
our ability to locate a profitable mineral property
*
our ability to locate an economic ore reserve
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our ability to generate revenues
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our ability to reduce exploration costs.
Based upon current plans, we expect to incur operating losses in future periods. This will happen because there are expenses associated with the research and exploration of our mineral properties. We cannot guarantee we will be successful in generating revenues in the future. Failure to generate revenues will cause us to go out of business.
4.
Because our officers and directors do not have technical training or experience in starting, and operating an exploration company nor in managing a public company, we will have to hire qualified personnel to fulfill these functions. If we lack funds to retain such personnel, or cannot locate qualified personnel, we may have to suspend or cease exploration activity or cease operations that will result in the loss of your investment.
Because our officers and directors are inexperienced with exploring for minerals and starting, and operating a mineral exploration company, we will have to hire qualified persons to perform surveying, exploration, and excavation of our properties. Our officers and directors have no direct training or experience in these areas and as a result may not be fully aware of many of the specific requirements related to working within the industry. Their decisions and choices may not take into account standard engineering or managerial approaches, mineral exploration companies commonly use. Consequently our exploration, earnings and ultimate financial success could suffer irreparable harm due to certain of management's lack of experience in this industry. Additionally, our officers and directors have no direct training or experience in managing and fulfilling the regulatory reporting obligations of a ‘public company’. Unless our two part time officers are willing to spend more time addressing these matters, we will have to hire professionals to undertake these filing requirements for Regency and this will increase the overall cost of operations. As a result we may have to suspend or cease exploration activity, or cease operations altogether, which will result in the loss of your investment.
5.
We have no known ore reserves. Without ore reserves we cannot generate income and if we cannot generate income we will have to cease exploration activity which will result in the loss of your investment.
We have no known ore reserves. Even if we find gold mineralization we cannot guarantee that any gold mineralization will be of sufficient quantity so as to warrant recovery. Additionally, even if we find gold mineralization in sufficient quantity to warrant recovery, we cannot guarantee that the ore will be recoverable. Finally, even if any gold mineralization is recoverable, we cannot guarantee that this can be done at a profit. Failure to locate gold deposits in economically recoverable quantities will mean we cannot generate income. If we cannot generate income we will have to cease exploration activity, which will result in the loss of your investment.
6.
If we don't raise enough money for ongoing exploration, we will have to delay exploration or go out of business, which will result in the loss of your investment.
We are in the very early pre-exploration stage. We need to raise additional capital to undertake exploration activity beyond Phase I work planned for the Regency Claims . We do not have sufficient cash on hand to continue operations for more than twelve months. Without additional loan advances from our officers and directors and/or the issuance of treasury shares, we will not be able to complete even Phase I of our planned exploration activity. You may be investing in a company that will not have the funds necessary to conduct any meaningful exploration activity due to our inability to raise additional capital. If that occurs we will have to delay exploration or cease our exploration activity and go out of business which will result in the loss of your investment.
7.
Because we are small and do not have much capital, we must limit our exploration and as a result may not find an ore body. Without an ore body, we cannot generate revenues and you will lose your investment.
Provided we undertake our planned exploration activity, any potential development of and production from the Regency Claims depends upon the results of exploration programs and/or feasibility studies and the recommendations of duly qualified engineers and geologists. Because we are small and do not have much capital, we must limit our exploration activity unless and until we raise additional capital. Any decision to expand our operations on our exploration property will involve the consideration and evaluation of several significant factors including, but not limited to:
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Costs of bringing the properties into production including exploration, preparation of production feasibility studies, and construction of production facilities;
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Availability and cost of financing;
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Ongoing costs of production;
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Market prices for the minerals to be produced;
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Environmental compliance regulations and restraints; and
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Political climate and/or governmental regulations and controls.
Such programs will require very substantial additional funds. Because we may have to limit our exploration, we may not find an ore body, even though our properties may contain mineralized material. Without an ore body, we cannot generate revenues and you will lose your investment.
8.
We may not have access to all of the supplies and materials we need to begin exploration which could cause us to delay or suspend exploration activity.
Provided we have sufficient funds to carry out exploration activity, competition and unforeseen limited sources of supplies in the industry could result in occasional spot shortages of supplies, such as dynamite, 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 as and when we are able to raise the requisite capital. If we cannot find the products and equipment we need, we will have to suspend our exploration plans until we do find the products and equipment we need.
9.
Because our officers and directors have other outside business activities and may not be in a position to devote a majority of their time to our exploration activity, our exploration activity may be sporadic which may result in periodic interruptions or suspensions of exploration.
Our President and CEO will be devoting only a small part of her time, approximately 10 hours per month, to our operations of our business. Our CFO and Secretary-Treasurer will be devoting only approximately 10 hours per month to our operations. As a consequence our business may suffer. For example, because our officers and directors have other outside business activities and may not be in a position to devote a majority of their time to our exploration activity, our exploration activity may be sporadic or may be periodically interrupted or suspended. Such suspensions or interruptions may cause us to cease operations altogether and go out of business.
10.
Because mineral exploration and development activities are inherently risky, we may be exposed to environmental liabilities. If such an event were to occur it may result in a loss of your investment.
The business of mineral exploration and extraction involves a high degree of risk. Few properties that are explored are ultimately developed into production. At present, the Regency Claims, our only properties, do not have a known body of commercial ore. Unusual or unexpected formations, formation pressures, fires, power outages, labor disruptions, flooding, explosions, cave-ins, landslides and the inability to obtain suitable or adequate machinery, equipment or labor are other risks involved in extraction operations and the conduct of exploration programs. We do not carry liability insurance with respect to our mineral exploration operations and we may become subject to liability for damage to life and property, environmental damage, cave-ins or hazards. There are also physical risks to the exploration personnel working in the rugged terrain of the Regency Claims, often in poor climatic conditions. Previous mining exploration activities may have caused environmental damage to the Regency Claims. It may be difficult or impossible to assess the extent to which such damage was caused by us or by the activities of previous operators, in which case, any indemnities and exemptions from liability may be ineffective. If the Regency Claims are found to have commercial quantities of ore, we would be subject to additional risks respecting any development and production activities. Most exploration projects do not result in the discovery of commercially mineable deposits of ore.
11.
No matter how much money is spent on the Regency Claims, the risk is that we might never identify a commercially viable ore reserve.
No matter how much money is spent over the years on the Regency Claims, we might never be able to find a commercially viable ore reserve. Over the coming years, we could spend a great deal of money on the Regency Claims without finding anything of value. There is a high probability the Regency Claims do not contain any reserves so any funds spent on exploration will probably be lost.
12.
Even with positive results during exploration, the Regency Claims might never be put into commercial production due to inadequate tonnage, low metal prices or high extraction costs.
Even if, as a result of future exploration programs, we are successful in identifying a source of minerals of good grade we might still fail to find such minerals in the quantity, the tonnage, required to make commercial production feasible. If the cost of extracting any minerals that might be found on the Regency Claims is in excess of the selling price of such minerals, we would not be able to develop the Regency Claims. Accordingly even if ore reserves were found on the Regency Claims, without sufficient tonnage we would still not be able to economically extract the minerals from the Regency Claims in which case we would have to abandon the Regency Claims and seek another mineral property to develop, or cease operations altogether.
13.
Because we have not put a mineral deposit into production before, we will have to acquire outside expertise. If we are unable to acquire such expertise we may be unable to put our properties into production and you may lose your investment.
We have no experience in placing mineral deposit properties into production, and our ability to do so will be dependent upon using the services of appropriately experienced personnel or entering into agreements with other major resource companies that can provide such expertise. There can be no assurance that we will have available to us the necessary expertise when and if we place a mineral deposit into production.
14.
Our directors and officers control a substantial number of our outstanding shares and will be able to effect corporate transactions without further shareholder approval.
Our directors and officers own 67.35% of our outstanding shares. Because of their control, they will be able to approve certain corporate transactions without seeking further shareholder approval. In addition, because of their control, it will be harder to change the board of directors and management.
15. Neither of our two directors has visited La Trinidad nor Mara claims.
Our two directors have not visited our two mineral claims, being La Trinidad and the Mara claims. Therefore, they have no personal knowledge of the mineralization on each of the claims, the terrain and the possibilities of hazards during exploration activities. They have had to rely upon the advice and opinions of the geologists working on each of the claims.
Risks Associated with our shares:
16.
Our shares may be thinly traded on the OTCBB, with wide share price fluctuations, low share prices and minimal liquidity.
We are trading on the OTCBB. Our share price may be impacted by factors that are unrelated or disproportionate to our operating performance. Our share price might be affected by general economic, political and market conditions, such as recessions, interest rates or international currency fluctuations. Stocks quoted on the OTCBB are usually thinly traded, highly volatile and not followed by analysts. These factors, which are not under our control, may have a material effect on our share price.
17.
We anticipate the need to sell additional treasury share in the future meaning that there will be a dilution to our existing shareholders resulting in their percentage ownership in the Company being reduced accordingly.
We expect that the only way we will be able to acquire additional funds is through the sale of our common stock. This will result in a dilution effect to our shareholders whereby their percentage ownership interest in the Company is reduced. The magnitude of this dilution effect will be determined by the number of shares we will have to issue in the future to obtain the funds required.
18.
Because our securities are subject to penny stock rules, you may have difficulty reselling your shares.
Our shares are "penny stocks" and are covered by Section 15(g) of the Securities Exchange Act of 1934 which imposes additional sales practice requirements on broker/dealers who sell the Company's securities including the delivery of a standardized disclosure document; disclosure and confirmation of quotation prices; disclosure of compensation the broker/dealer receives; and, furnishing monthly account statements. For sales of our securities, the broker/dealer must make a special suitability determination and receive from its customer a written agreement prior to making a sale. The imposition of the foregoing additional sales practices could adversely affect a shareholder's ability to dispose of his stock.
ITEM 1B.
ITEM 1B. UNRESOLVED STAFF COMMENTS
There are no unresolved staff comments outstanding at the present time.
ITEM 2.
ITEM 2. PROPERTIES
Our Business
Provided we have sufficient funds to do so, we intend to undertake exploration work on both of the Regency Claims. The Regency Claims were selected for acquisition due to previously recorded exploration work and because the claims are not located in an environmentally sensitive region. However, at present we do not we have funds available to undertake Phase I work on the La Trinidad Claim as described below.
We are presently in the pre-exploration stage and there is no assurance that mineralized material with any commercial value exits on either of our properties.
We do not have any ore body and have not generated any revenues from our operations. Our planned exploration work is exploratory in nature. There can be no assurance that a commercially viable mineral deposit, an ore reserve, exists on either of the Regency Claims or can be shown to exist unless and until sufficient and appropriate exploration work is carried out and a comprehensive evaluation of such work concludes economic and legal feasibility. Such work could take many years of exploration and would require expenditure of very substantial amounts of capital, capital we do not presently have and may never be able to raise. To date, we have not conducted any exploration work on either of the Regency Claims. We presently do not have funds sufficient to complete even Phase 1 of a two-phase exploration program recommended for the la Trinidad Gold Claim.
Descriptions of the Regency Claims, our two exploration property interests, are as follows:
La Trinidad Claim
Location and Access
Regency is the registered and beneficial owner of a 100% interest in the La Trinidad Claim, located in the Republic of Philippines. Regency is the only party having an interest in La Trinidad Claim and it has not entered into any agreements regarding the Claim and there are no outstanding royalties or charges of any kind. There is a tax on any income from the property in the amount of 11%. The La Trinidad Claim covers an area of approximately 94.5 hectares (approximately 233.5 acres) and is located about 45 km North East of the city of Lingayen and 35 km South West of the city of San Fernanda. The claim is accessible by all-weather government-maintained roads to the towns of Lingayen and to San Fernanda. The property is accessible by motor vehicle. Year-round deep sea port facilities exist at Lingayen. As well, Lingayen has an experienced work force and will provide all the necessary services needed for an exploration and development operation, including police, hospitals, groceries, fuel, helicopter services, hardware and other necessary items. Drilling companies and assay facilities are also present in Lingayen.
In the case of Trinidad Claim, it was acquired through a private assignment from Kalibo Resources Inc., an unrelated company incorporated in the Philipinnes. Regency did not acquire its ownership in La Trinidad Claim directly from the Department of Energy and Natural Resources of the Philippines as is done in many cases. Regency has all the mineral rights relating to La Trinidad Claim whether they are on surface or having to be mined in the future.
The La Trinidad is an unpatented claim which is subject to federal safety and environmental standards. Licensing fees, equivalent to $560, must be paid in full with the application to renew the existing license. The renewal process can take up to 14 days to process.
The topography and relief of the La Trinidad Claim is fairly rugged. The claim falls within the so-called tropical climate zone, a zone characterized by high temperatures the whole year round, relatively high rainfall and lush vegetation. Rainfall can occur in every month, but the wettest months are October, November and December. Annual rainfall is approximately 1.5 meters. Due to the steep, deforested, mountains on average 60 percent of the rainwater quickly runs off the claim area, with the remaining 40% quickly evaporating or seeping into underground aquifers. Exploration work can be undertaken year round on the La Trinidad Claim.
The following represents certain identifying information in locating and verifying ownership of the La Trinidad Gold Claim:
Claim Name:
La Trinidad Gold Mine
Certificate Number:
PLCC2139969
Title Number:
L1299153
Latitude:
16º 28 ’00” North
Longitude:
120º 37’ 00” East
Transfer No.
338-873
Parcel Identifier:
069-548-762
Assignment Transfer:
Kalibo Resources Inc.
Registered Owner:
Regency Resources Inc. [fee simple]
The La Trinidad Claim is in good standing until such time as it is abandoned by the Company. Once Regency obtains a licensing fee for its exploration work it is required to pay a fee to the Department of Energy and Natural Resources in the amount of $560. When renewing the existing license it has 30 days to make the required payment of a similar amount and it can take upwards to 14 days to process the application.
Property Geology
The La Trinidad Claim is underlain by Precambrian rocks, sediments and volcanics, exposed along a wide axial plain. The volcanics are hornfelsed and commonly contain minor pyrite, ­pyrrhotite. To the east of the claim are intrusives consisting of rocks such as tonalite, monzonite, and gabbro while on the western most point of the claim the intrusives also consist of a large mass of granodiorite.
In general the intrusive volcanics culminate with effluents of hydrothermal solutions that carry precious metals in the form of naked elements, oxides or sulphides. These hydrothermal solutions intrude into the older rocks as quartz veins. These rocks may be broken due to mechanical and chemical weathering into sand size particles and carried by streams and channels. Gold occurs also in these sands as placers.
The area consists of interlayered chert, argillite and massive andesitics to basaltic volcanics.
Recent exploration for gold occurrences in the area immediately surrounding the La Trinidad Claim has been encouraging. This area is well know for numerous productive mineral occurrences including the Cabarroguis Gold Mine located approximately 55 kilometers (34 miles) to the west of our claim.
Electricity on the property is supplied by Meralco Power from the City of Lingayen, The power is constant with no major disruptions. Water is also supplied from Lingayen from Meralco Hydro Service.
Previous Exploration
The La Trinidad Claim has seen very limited historical exploration. Several properties to the west of our claim have been drilled by junior exploration companies. We have not yet undertaken any work on the La Trinidad Claim and there is no known mineralization on the La Trinidad Claim. To date, there has been no significant work done on the property but the property is ready for the beginning stages of exploration work.
Plan of Operation: Proposed Exploration Work
Mr. Roberto Cua, P. Geo., authored the "Summary of Exploration On The La Trinidad Property, La Trinidad, Philippines” dated July 7, 2008 (the “Cua Report”), in which he recommended a phased exploration program to properly evaluate the potential of the La Trinidad Claim. We must conduct exploration to determine what minerals exist on our property and whether they can be economically extracted and profitably processed. Subject to having funds sufficient to do so, we plan to proceed with exploration of the La Trinidad Claim, in the manner recommended in the Cua Report, to determine the potential for discovering commercially exploitable deposits of gold.
We do not have any ores or reserves whatsoever at this time on the La Trinidad Claim. Our planned work is exploratory in nature.
The reserves on this particular property are unproven and the program suggested is one of exploration.
In the Philippines, Regency will not require an exploration license until such time as it undertakes exploration activities. The license will be obtained by the exploratory company or geologist doing the work and the fee will be dependent upon the outlay of funds estimated to be spent on the exploration activities.”
Mr. Cua is, and has since 1998 been, a registered Professional Geologist in good standing in the Geological Society of Philippines. He graduated from the University of far east, Manila, with a degree in geology (B. Sc.,1981) and a Master’s degree (M. Sc.) in 1986 from the same university.
The Cua Report concludes that:
- the area of the La Trinidad Claim is well known for numerous productive mineral occurrences;
- the locale of the La Trinidad Gold Claim is underlain by the units of the Precambrian rocks that are found at those mineral occurrence sites.
- these rocks consisting of cherts and argillites (sediments) and andesitic to basaltic volcanic have been intruded by granodiorite.
- structures and mineralization probably related to this intrusion are found throughout the region and occur on the claim. They are associated with all the major mineral occurrences and deposits in the area.
- mineralization found on the claim is consistent with that found associated with zones of extensive mineralization. Past work however has been limited and sporadic and has not tested the potential of the property.
- potential for significant amounts of mineralization to be found exists on the property and it merits intensive exploration.
The Cua Report recommends a two-phase exploration program to properly evaluate the potential of the claims. We anticipate, based on the budgets set forth in the Cua Report, that Phase I work will cost $12,700 (PHP 602,000).
Mr. Cua has indicated a total cost of $40,300 for both Phase I and Phase II as follows:
Phase I
Phase II
No costs have been incurred to date. The above estimated costs relate to future exploration work.
Phase I work will include establishing a grid and the creation of maps showing the location of all roads in and near the perimeter of the Regency Claims. The laying out of a grid and line cutting involves the physical cutting of the underbrush and overlay to establish an actual grid on the ground whereby items can be related one to another more easily and with greater accuracy. When we map, we essentially generate a drawing of the physical features of the land we are interested in as well as a depiction of what may have been found in relation to the boundaries of the property. So we will actually draw a scale map of the area and make notes on it as to the location where anything was found that was of interest or not. In the process we will also identify any showings which appear to warrant sampling, i.e. any rock formations that appear to warrant our taking soil and rock samples from the claims to a laboratory where a determination of the elemental make up of the sample and the exact concentrations of gold and/or uranium and other indicator minerals can be made.
The work is phased in such a manner as to allow decision points to ensure that future work has a value and will provide better or additional information as to the viability of the claim. By utilizing a multi-phase work program, at the end of each phase a decision can be made as to whether the phase has provided the necessary information to increase the viability of the project. If the information obtained as a result of any phase indicates that there is no increased probability of finding an economically viable deposit at the end of the project, a determination would be made that the work should cease at that point.
Assuming the results of the Phase I work identify suitable targets, thus indicating further exploration of the La Trinidad Claim is warranted, we intend, provided we are able to raise funds to do so, to undertake a Phase II geochemical surveying and surface sampling program at a cost of approximately $27,600 (PHP 1,205,000). Assuming the results of a Phase II trenching program identify suitable drill targets a Phase III drilling program could be undertaken. Once again, our ability to conduct such Phase III work is subject to our ability to raise funds to do so.
Plant and Equipment
With the Philippines being a hub for mining activities in Asia, ultra modern equipment is used by the various mining companies. The high safety standards enforce the level of good equipment being available with the most modern and up to date mining equipment being at our disposal.
There is no plant or equipment on the La Trinidad Claim at the present time.
Mara Claim
Location and Access
The Mara Claim gold exploration project consists of 1 unpatented mineral claim, covering 122.5 hectares (approximately 303 acres) located 20 kilometers (approximately 12.5 miles) North West of the town of Suva, Fiji. The claim was assigned to Regency by The Mara Group LLC., an unaffiliated seller, and the said assignment was filed with the Mineral Resources Department of the Ministry of Energy and Mineral Resources of the Government of the Republic of Fiji. Regency owns a 100% interest in the property.
Regency is the only party having an interest in Mara Claim and it has not entered into any agreements regarding the Claim. Since the acquisition of the Mara Claim was subject to a private transaction, rather than obtaining the Claim directly from the Government of Fiji, by law, Regency must provide a royalty to the Government of Fiji (13.75%) from the revenue from the production of minerals so long as the Claim is owned by Regency.
The claim was assigned to Regency from The Mara Group LLC, an unrelated company incorporated in Fiji, and a transfer of title was made with the Fiji Ministry of Mines. The assignment cost was $5,000 including a geological report. Therefore, Regency acquired the surface rights to the minerals and any minerals located beneath the soil. A subsequent application for a mining license is $825 and is due and payable upon filing an application for the mining license. The Company is responsible upon obtaining an interest in the claim to adhere to the safety and environmental requirements of Fiji.
The Mara Claim is an unpatented mineral claim which will lend itself to hard rock drilling rather than being a placer type mineralization deposit. The claim is a Federal mining claim and all rights to the mineralization of the Mara Claim belong to Regency.
The following represents certain identifying information in locating and verifying ownership of the Mara Claim:
Claim Name:
Mara Gold Mine
License Number:
SV5698721
Title Number:
FT286971
Latitude:
18º 08 ’00” South
Longitude:
178º 25’ 00” East
Registered Owner:
Regency Resources Inc.
The Claim is in good standing until such time as the Company decides to abandon it. When Regency undertakes an exploration program it is required to obtain a mining license from the Ministry of Mines with a payment by Regency of $825 which is renewable each year at the same fee cost
The Mara Claim is accessible from Suva, Fiji by traveling on the country’s only highway system which for the most part consists of one lane in each direction and by taking an all weather gravel road. The Claim is connected by the local power authority and has full electricity. Three back up
generators are also present in the area due to the country’s frequent power outages. The town of Suva has an experienced work force and will provide all the necessary services needed for an exploration and development operation, including police, hospitals, groceries, fuel, helicopter services, hardware and other necessary items. Drilling companies and assay facilities are present in Suva.
The Mara Claim lies at an elevation of 1,650 feet near the northeast end of the Nakanai Mountain Range. The main mountain ridge has a maximum peak of 2,642 feet with steep east facing slopes.
Tropical mountain forests grow at lower elevations in the northwest corner of the claim and good rock exposure is found along the peaks and ridges in the eastern portion of the claim. The climate is mild year round with the rainy season falling from May to October.
There are no known environmental concerns or parks designated for any area contained within the claims. The property has no encumbrances. As and when advanced exploration is contemplated there may be bonding requirements for reclamation.
Property Geology
The property is underlain by rocks of the Savura Volcanic Group and is derived from a potassium-rich magma of shoshonite association evolving from an absarokite parent magma to shoshonite, bankite and monzonite derivates. The Savura Volcanic Group consists of interlayered chert, argillite and massive andesitic to basaltic volcanics. The volcanics are hornfelsed, commonly contain minor pyrite, ­pyrrhotite.
The potential reserves are unproven as of yet and no mineralization is apparent for the property. To date Regency has not undertaken any exploration work on the Mara Claim.
Previous Exploration
Fijian and British prospectors first reported gold in the area of the Mara Claim over 60 years ago. Mineral lode claims were recorded in 1947 in the surrounding areas. Numerous showings of mineralization have been discovered in the area and six prospects have achieved significant production, with the nearby Tradewinds Gold Mine (25 kilometers away) producing 155,000 ounces of gold annually. During the 1990’s junior mineral exploration companies drilled several properties west of the Mara Claim.
Past work on Mara Claim since 2000 has indicated the presence of sulphide mineralization containing gold and silver values. No mineralization has been reported for the area of the property but structures and shear zones affiliated with mineralization on adjacent properties pass through it. Previous exploration work has not, to the knowledge of Mr. Robards, included any attempt to drill the structure on Mara Gold Claim. Records indicate that no detailed exploration has been completed on the property.
Subject to raising the necessary capital, Regency Resources Inc. is prepared to conduct preliminary exploration work on the property.
We have not completed any exploration work on the Mara Claim and the present stage of the property is in the same condition as when we purchased it.
Plan of Operation: Proposed Exploration Work
A two phased mineral exploration program, consisting of air photo interpretation, geological mapping, geochemical soil sampling and geophysical surveying to identify targets for diamond drilling, has been recommended by Peter Robards, P. Geol., in his report titled “Summary Of Exploration On The Mara Property,, Suva Fiji” (the “Robard’s Report”).
In his report Mr. Robards, who visited the Mara Claim on February 5th-8th 2008, observed that (i) the area is well known for numerous productive mineral occurrences (including the Tradewinds Gold Mines some 25 kilometers (approximately 15.5 miles) to the east) and, (ii) that the locale of the Mara Claim is underlain by the same rock units of the Savura Volcanic Group that are found at those mineral occurrence sites.
Phase I work would consist of air photo interpretation of the structures, geological mapping, both regionally and detailed on the area of the main showings, geophysical survey using both magnetic and electromagnetic instrumentation in detail over the area of the showings and in a regional reconnaissance survey and geochemical soil sample surveying regionally to identify other areas on the claim that are mineralized and in detail on the known areas of mineralization. The effort of this exploration work is to define and enable interpretation of a follow-up (i.e. Phase II) diamond drill program, so that the known mineralization and the whole property can be thoroughly evaluated with the most up to date exploration techniques.
A phased exploration program to further delineate the mineralized system currently recognized on Mara Gold Claim is recommended.
The proposed budget for Phase I work is as follows:
1. Geological Mapping $ 4,000
2. Geophysical Surveying $ 3,315
3. Geochemical surveying and surface sampling $ 13,100
(includes sample collection and assaying)
TOTAL PHASE I $ 20,415
We currently have no funds available to undertake any portion of Phase I work on the Mara Claim. Unless and until we are able to raise additional funds (through the issuance of additional shares, debt securities or loan advances from our President in addition to the $60,000 already committed to) we will be unable to undertake any exploration work on the Mara Gold Claim.
Plant and Equipment
The age and details as to modernization and physical condition of plant and equipment, etc. cannot be stated at this time. This will depend on the exploration company used by the Company. The average age, however, of equipment used by Fijian exploration companies is in excess of 10 to 15 years old. The equipment is not very modern due to numerous sanctions that have been imposed by South Pacific and other governments in response to the various coup d’états that have occurred in Fiji over the last twenty years.
There is no plant or equipment on the Mara Claim at the present time.
General
Particularly since we have a limited operating history, no reserves and no revenue, our ability to raise additional funds might be limited. If we are unable to raise the necessary funds, we would be required to suspend Regency’s operations and liquidate our company.
There are no permanent facilities, plants, buildings or equipment on the Regency Claims.
Government Regulation
Exploration activities are subject to various national, state, foreign and local laws and regulations in the Philippines and Fiji, which govern prospecting, development, mining, production, exports, taxes, labor standards, occupational health, waste disposal, protection of the environment, mine safety, hazardous substances and other matters. We believe that we are in compliance in all material respects with applicable mining, health, safety and environmental statutes and the regulations passed thereunder in the Philippines and Fiji.
Environmental Regulation
Our exploration activities are subject to various federal, state and local laws and regulations governing protection of the environment. These laws are continually changing and, as a general matter, are becoming more restrictive. Our policy is to conduct business in a way that safeguards public health and the environment. We believe that our exploration activities are conducted in material compliance with applicable laws and regulations.
Changes to current local, state or federal laws and regulations in the jurisdictions where we operate could require additional capital expenditures and increased operating and/or reclamation costs. Although we are unable to predict what additional legislation, if any, might be proposed or enacted, additional regulatory requirements could render certain exploration activities uneconomic.
One of the major prerequisites for the approval of a Prospecting License or Mining Lease application is the approval of the EIA/EMP by the Dept of Environment. For current prospecting activities/mining operations, relevant waste discharge permits apply. Additionally, the MRD’s Environment Division carries out on-site environmental inspections to ensure waste emissions are within the discharge permit/mine environmental release guidelines and comply with socio-environmental standards, which are benchmarked against international standards/best practices.
The Director of Mines at the Mineral Resources Department, grants Prospector's Rights under the Mining Act. With the consent of the Minister, the Director also grants Prospecting Licenses, Special Prospecting Licenses, Permits to Mine, Mining Leases, Special Mining Leases, Special Site Rights, and Road Access Licenses. Applications for any Right, License or Lease are considered on their own merit. The criteria for assessing merit are: the expertise and capacity/capability of the applicant to undertake the geological program, any past record that the prospecting company has in mineral exploration, and the financial standing of the company in terms of its financial ability to undertake the proposed work program. Fees are determined at the time of application.
Competition
We compete with other exploration companies searching for gold and other precious metals properties. There is competition for the limited number of gold acquisition opportunities, some of which is with other companies having substantially greater financial resources than we do. As a result, we may have difficulty acquiring attractive exploration properties.
We believe no single company has sufficient market power to affect the price or supply of gold in the world market.
Employees
We intend to continue to use the services of consultants for exploration work on our properties. At present, we have no employees as such although each of our officers and directors devotes a portion of his time to the affairs of the Company. None of our officers and directors has an employment agreement with us. We presently do not have pension, health, annuity, insurance, profit sharing or similar benefit plans; however, we may adopt such plans in the future. There are presently no personal benefits available to any employee.
As indicated above we will hire subcontractors on an as needed basis. We have not entered into negotiations or contracts with any potential subcontractors. We do not intend to initiate negotiations or hire anyone until we are nearing the time of commencement of our planned exploration activities.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
There are no legal proceedings to which Regency is a party or to which the Regency Claims are subject, nor to the best of management’s knowledge are any material legal proceedings contemplated.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
There has been no Annual General Meeting of Stockholders since Regency’s date of inception. Management plans to hold an Annual General Meeting of Stockholders during 2012
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASE OF EQUITY SECURITIES
Since inception, Regency has not paid any dividends on its common stock, and Regency does not anticipate that it will pay dividends in the foreseeable future. As at December 31, 2011, Regency had 45 shareholders; two of these shareholders are officers and directors of Regency.
Option Grants and Warrants outstanding since Inception.
No stock options have been granted since Regency’s inception.
There are no outstanding warrants or conversion privileges for Regency’s shares.
ITEM 6.
ITEM 6. SELECTED FINANCIAL INFORMATION
The following summary financial data was derived from our financial statements. This information is only a summary and does not provide all the information contained in our financial statements and related notes thereto. You should read the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related noted included elsewhere in this Form 10-K.
Operation Statement Data
Balance Sheet Data
Our historical results do not necessary indicate results expected for any future periods.
ITEM 7.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
This section of the Form 10-K 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 Form 10-K. 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.
We are a start-up, pre-exploration stage company, have a limited operating history and have not yet undertaken any exploration activity or generated or realized any revenues from the Regency Claims. Our properties are in the pre-exploration stage and there is no reasonable likelihood that revenue can be derived from the Regency Claims in the foreseeable future. There can be no assurance that a commercially viable mineral deposit, an ore reserve, exists on either of the Regency Claims or can be shown to exist unless and until sufficient and appropriate exploration work is carried out and a comprehensive evaluation of such work concludes economic and legal feasibility. Such work could take many years of exploration and would require expenditure of very substantial amounts of capital, capital we do not presently have and may never be able to raise. We have funds sufficient to complete only Phase 1 of a phased exploration program recommended for La Trinidad Claim.
Our auditors have issued a going concern opinion. This means that our auditors believe there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills. This is because we have not generated any revenues and no revenues are anticipated until we begin removing and selling minerals. Accordingly, we must raise cash from sources other than the sale of minerals found on the Regency Claims. Our only other source for cash at this time is investments by others in the Company. We must raise cash to implement our planned exploration program and stay in business.
To meet our need for cash we must raise additional capital. We will attempt to raise additional money through a private placement, public offering or through additional loans from our directors and officers. We have discussed this matter with our officers and directors. However, our officers and directors are unwilling to make any commitments as to the amount of money they are prepared to advance in the future beyond those funds committed under the President’s Loan Agreement. At the present time, we have not made any arrangements to raise any additional cash. We require additional cash to continue operations. Such operations could take many years of exploration and would require expenditure of very substantial amounts of money, money we do not presently have and may never be able to raise. If we cannot raise it we will have to abandon our planned exploration activities and go out of business.
We estimate we will require $48,348 in cash during the remainder of 2012, over the next twelve months, including the cost of planned Phase I exploration work on the La Trinidad Claim during that period. We estimate future cash advances of approximately $NIL under the President’s Loan Agreement together with our cash on hand will not enable us to meet our current obligations. For a detailed breakdown see in “Liquidity and Capital Reserves”. As noted above, thereafter we will need additional funds either from further advances made by our officers or directors, the sale of treasury shares or the issuance of debt securities.
We will have to raise additional funds in order to satisfy our expected cash requirements in 2012 and beyond. If our President were to exercise her right to demand repayment of her loan we would have no funds to satisfy our cash requirements and would have to go out of business.
We may attempt to interest other companies to undertake exploration work on the Regency Claims through joint venture arrangement or even the sale of part of the Regency Claims. Neither of these avenues has been pursued as of the date of this Form 10-K. If we are unable to finance exploration activities, we may have no alternative but to go out of business.
We do not intend to hire any employees at this time. Any work undertaken on the Regency Claims will be conducted by unaffiliated independent contractors that we will hire. The independent contractors will be responsible for surveying, geology, engineering, exploration, and excavation. The geologists will evaluate the information derived from the exploration and excavation and the engineers will advise us on the economic feasibility of removing the mineralized material.
Limited Operating History; Need for Additional Capital
There is no historical financial information about us upon which to base an evaluation of our performance as an exploration corporation. We are a pre-exploration stage company and have not generated any revenues from our exploration activities. Further, we have not generated any revenues since our formation on December 11, 2006. We cannot guarantee we will be successful in our exploration activities. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, possible delays in the exploration of our properties, and possible cost overruns due to price and cost increases in services.
To become profitable and competitive, we must invest into the exploration of our mineral properties before we start production of any minerals we may find. We must obtain equity or debt financing to provide the capital required to fully implement our phased exploration program. We have no assurance that financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we will be unable to commence, continue, develop or expand our exploration activities. Even if available, equity financing could result in additional dilution to existing shareholders.
Trends
We are in the pre-explorations stage, have not generated any revenue and have no prospects of generating any revenue in the foreseeable future. We are unaware of any known trends, events or uncertainties that have had, or are reasonably likely to have, a material impact on our business or income, either in the long term or short term, other than as described in this section or in ‘Risk Factors’.
Critical Accounting Policies
Our discussion and analysis of its financial condition and results of operations, including the discussion on liquidity and capital resources, are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, management re-evaluates its estimates and judgments.
The going concern basis of presentation assumes we will continue in operation throughout the next fiscal year and into the foreseeable future and will be able to realize our assets and discharge our liabilities and commitments in the normal course of business. Certain conditions, discussed below, currently exist which raise substantial doubt upon the validity of this assumption. The financial statements do not include any adjustments that might result from the outcome of the uncertainty.
Our intended exploration activities are dependent upon our ability to obtain third party financing in the form of debt and equity and ultimately to generate future profitable exploration activity or income from its investments. As of December 31, 2011, we have not generated revenues, and have experienced negative cash flow from minimal exploration activities. We may look to secure additional funds through future debt or equity financings. Such financings may not be available or may not be available on reasonable terms.
Overview
Our financial statements contained herein have been prepared on a going concern basis, which assumes that we will be able to realize our assets and discharge our obligations in the normal course of business. We incurred net losses from operations for the period from inception on December 11, 2006 to December 31, 2011 of $124,913. We did not earn any revenues during the aforementioned period.
Our financial statements included in this prospectus have been prepared without any adjustments that would be necessary if we become unable to continue as a going concern and are therefore required to realize upon our assets and discharge our liabilities in other than the normal course of operations.
We are presently in the pre-exploration stage and there is no assurance that a commercially viable mineral deposit, a reserve, exits in either of the Regency Claims until we undertake exploration work and a comprehensive evaluation concludes economic and legal feasibility. Such work could take many years of exploration and would require expenditure of very substantial amounts of capital, capital we do not presently have and may never be able to raise. To date, we have not conducted any exploration work on either of the Regency Claims. We do have funds sufficient to complete only Phase 1 of a two-phase exploration program recommended for the La Trinidad Claim, only one of the Regency Claims.
Our Planned Exploration Program
We must conduct exploration to determine what amounts of minerals exist on either of the Regency Claims and if such minerals can be economically extracted and profitably processed.
Our planned exploration program is designed to efficiently explore and evaluate our properties.
Our anticipated exploration costs over the next twelve months, for work to be undertaken on the La Trinidad Claim, are approximately $12,700. This figure represents the anticipated cost to us of completing the Phase I of the Cua Report. Should the results of the Phase I work be sufficiently encouraging to justify our undertaking the Phase II program, in order to undertake Phase II (at an estimated cost of $27,600), we will have to raise additional investment capital.
Liquidity and Capital Resources
Since inception we have raised the capital through private placements of common stock as follows:
Since inception, in addition to cash advances aggregating $64,570 made by our President, on April 15, 2007 the officers and directors of the Company completed a private placement pursuant to Regulation S of the Securities Act of 1933, whereby 49,500,000 shares of common stock were sold at to raise $1,650. On October 31, 2008 Regency completed a further private placement pursuant to Regulation S of the Securities Act of 1933, whereby 24,000,000 common shares were sold to raise $40,000.
On December 12, 2011, the directors of the Company approved a resolution to distribute a dividend on the outstanding shares of the Company on the basis of the issuance of 29 new shares for one existing share of common stock presently held (the “Stock Dividend”). As a result of the Stock Dividend every one outstanding shares of common stock was increased by thirty share of common stock. As at December 31, 2011, there were 73,500,000 common shares issued and outstanding. All share references have been retroactively adjusted in this Form 10-K for this Stock Dividend.
As of December 31, 2011 our total assets were $NIL and our total liabilities were $83,263 including advances from a related party of $64,570.
Expenses projected for the next year are as follows:
(i) Accounting and audit
Relates to fees in connection with the preparation of quarterly and annual financial statements and filings on Forms 10-K and 10-Q as follows:
(ii) Edgar expenses
The estimated cost of edgarizing the Forms 10-Q and 10-K.
(iii) Exploration costs
The projection of cash required over the next twelve months has assumed that Phase I of the recommended work program, set out in the Cua Report, will be completed at an estimated cost of $12,700.
(iv)
Filing fees in Nevada
To maintain the Company in good standing in the State of Nevada an annual fee of approximately $275.
(v) Office and general
We have estimated a cost of approximately $1,000 for photocopying, printing, fax and delivery.
(viii) Transfer agent
The annual fee from Action Stock Transfer Inc. to act as transfer agent for us is $1,000.
(ix). Accounts payable - unrelated parties
The amount outstanding as at December 31, 2011 was $18,693 which (i) consists of the following amounts:
In-house Accountants 17,009
Photocopies 459
Transfer agent fees 1,225
Total $18,693
Our future operations are dependent upon our ability to obtain third party financing in the form of debt and equity and ultimately to generate future profitable operations. As of the date of this Form 10-K, we have not generated revenues, and have experienced negative cash flow from operations. We may look to secure additional funds through future debt, equity financings or advances from our officers and directors. These sources of financing may not be available or may not be available on reasonable terms.
Year ended December 31, 2011.
We incurred accumulated net losses since inception of $124,913.
Balance Sheet
Total cash and cash equivalents, as at December 31, 2011 and December 31, 2010 were $NIL. Our working capital deficit as at December 31, 2011 and December 31, 2010 were respectively, $83,263 and $64,681. If amounts owed to a related party are excluded there was a negative working capital position as at December 31, 2011 of $ 18,693; and as at December 31, 2010 of $12,035.
Our working capital is attributable to the completion of an initial capital contribution on April 15, 2007, which raised $1,650, a private placement on October 31, 2008, which raised a further $40,000 together with cash advances from our President aggregating $64,570. No revenue was generated during these periods.
Total stockholders’ deficiency as at December 31, 2011 and December 31, 2010 were respectively $83,263 and $64,681.
As of December 31, 2011 shares of common stock issued and outstanding was 73,500,000.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Not applicable
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements attached to this Form 10-K for the year ended December 31, 2011 have been audited by our independent accountants, Madsen & Associates CPA’s, Inc. and attached hereto.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
During the year ended December 31, 2011, to the best of our knowledge, there have been no disagreements with Madsen & Associates CPA’s, Inc. on any matters of accounting principles or practices, financial statement disclosure, or audit scope procedures, which disagreement if not resolved to the satisfaction of Madsen & Associates CPA’s, Inc. would have caused them to make a reference in connection with its report on the financial statements for the year.
ITEM 9A
ITEM 9A - CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including the Principal Executive Officer, Ms. Jane Brooke, and Principal Accounting Officer, Mr. Dragan Bozanic, we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of December 31, 2011 (the “Evaluation Date”). Based on that evaluation, the Principal Executive Officer and Principal Accounting Officer have concluded that these disclosure controls and procedures were not effective as of the Evaluation Date as a result of the material weaknesses in internal control over financial reporting discussed below.
Disclosure controls and procedures are those controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Principal Executive Officer and Principal Accounting Officer, to allow timely decisions regarding required disclosure.
Notwithstanding the assessment that our internal control over financial reporting was not effective and that there were material weaknesses as identified below, we believe that our financial statements contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011 fairly present our financial condition, results of operations and cash flows in all material respects.
Management’s Report on Internal Control over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company's internal control over financial reporting is a process, under the supervision of the Chief Executive Officer and the Chief Financial Officer, designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company's financial statements for external purposes in accordance with United States Generally Accepted Accounting Principles (GAAP). Internal control over financial reporting includes those policies and procedures that:
-
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the Company's assets;
-
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the Board of Directors; and
-
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
The Company's management conducted an assessment of the effectiveness of the Company's internal control over financial reporting as of December 31, 2011, based on criteria established in Internal Control -Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). As a result of this assessment, management identified a material weakness in internal control over financial reporting.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis.
The material weakness identified is described below.
1.
Certain entity level controls establishing a “tone at the top” were considered material weaknesses. As of December 31, 2011, the Company did not have a separate audit committee or a policy on fraud. A whistleblower policy is not necessary given the small size of the organization.
2.
Due to the significant number and magnitude of out-of-period adjustments identified during the year- end closing process, management has concluded that the controls over the period-end financial reporting process were not operating effectively. A material weakness in the period-end financial reporting process could result in us not being able to meet our regulatory filing deadlines and, if not remedied, has the potential to cause a material misstatement or to miss a filing deadline in the future. Management override of existing controls is possible given the small size of the organization and lack of personnel.
3.
There is no system in place to review and monitor internal control over financial reporting. The Company maintains an insufficient complement of personnel to carry out ongoing monitoring responsibilities and ensure effective internal control over financial reporting.
As a result of the material weakness in internal control over financial reporting described above, the Company's management has concluded that, as of December 31, 2011, the Company's internal control over financial reporting was not effective based on the criteria in Internal Control - Integrated Framework issued by COSO.
This Annual Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. We were not required to have, nor have we, engaged our independent registered public accounting firm to perform an audit of internal control over financial reporting pursuant to the rules of the Securities and Exchange Commission that permit us to provide only management's report in this Annual Report.
Our independent accountants have stated in their report attached to this Form 10-K that “….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”.
ITEM 9 B
ITEM 9 B - OTHER INFORMATION
There are no matters required to be reported upon under this Item.
PART 111
ITEM 10.
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Officers and Directors
Each of our Directors serves until his successor is elected and qualified. Each of our officers is elected by the Board of Directors to a term of one (1) year and serves until his or her successor is duly elected and qualified, or until he or she is removed from office. The Board of Directors has no nominating or compensation committees.
The name, address, age and position of our officers and directors is set forth below:
(1)
Jane H. C. Brooke was appointed a director and was appointed President and Chief Executive Officer on December 11, 2006.
(2)
Dragan Bozanic became a director and was appointed
Secretary Treasurer and Chief Financial Officer on December 11, 2006.
The percentage of common shares beneficially owned, directly or indirectly, or over which control or direction are exercised by the directors and officers of our Company, collectively, is approximately 67% of the total issued and outstanding shares.
Neither of our directors or officers has professional or technical accreditation in the mining business.
Background of officers and directors
JANE H. C. BROOKE has been a director and our President and CEO since inception. Since her graduation, in 1973, from Pitman College, London, England, Jane has been employed in the secretarial and executive assistant field. From 2002 to 2006 she served as Administrator/Office Manager for Urban Catalyst Ltd., a London property development company. From November 2006 to the present she has served as the Personal Assistant to the Property Director of John Laing Projects & Developments, another London, England property developer.
DRAGAN BOZANIC has been a director and our Secretary Treasurer and Chief Financial Officer since inception. Following high school graduation in 1969 Mr. Bozanic attended, first, the University of Toronto, Toronto, Ontario (1971-72) and McGill University, Montreal Quebec, leaving in 1973, without graduating. Since 1986, Mr. Bozanic has been continuously employed in the construction business. He has owned and operated his own company, Bozanick Development Corp., in Mississauga, Ontario, for more than the last five (5) years.
Neither of our officers and directors work full time for our company. Jane H. C. Brooke spends approximately 10 hours a month on administrative and accounting matters. It is anticipated she will spend more time on Regency’s business, approximately 20 hours a month, during the next year as and when Regency becomes more active in our exploration activities. As Secretary Treasurer, Dragan Bozanic likewise spends approximately 5 hours per month on corporate matters.
Our Directors and Officers are not directors of another company registered under the Securities and Exchange Act of 1934.
Board of Directors
Since inception our Board has held no meetings and our Audit Committee held no meetings.
Below is a description of the Audit Committee of the Board of Directors.
The Charter of the Audit Committee of the Board of Directors sets forth the responsibilities of the Audit Committee. The primary function of the Audit Committee is to oversee and monitor the Company’s accounting and reporting processes and the audits of the Company’s financial statements.
Our audit committee is comprised of Jane H. C. Brooke, our President, and Dragan Bozanic our Secretary Treasurer. Neither Ms. Brooke nor Mr. Bozanic can be considered an “audit committee financial expert” as defined in Item 401 of Regulation S-B.
Apart from the Audit Committee, the Company has no other Board committees.
Significant Employees
Our Officers and Directors fulfill many of the functions that would otherwise require Regency to hire employees or outside consultants.
We will have to engage the services of certain consultants to assist in the exploration of the Regency Claims. In particular we will engage a professional geologist on a consulting basis, together with an assistant(s) such geologist will be responsible for hiring and supervising, to conduct the exploration work to undertaken on the Regency Claims. These individuals will be responsible for the completion of the geological work on our claims and, therefore, will be an integral part of our operations although they will not be considered employees either on a full time or part time basis. This is because our exploration programs will not last more than a few weeks and once completed these individuals will no longer be required. We have not identified any individual who would work as a consultant for us.
Family Relationships
Our President and CEO and our Secretary Treasurer and CFO are unrelated.
Involvement in Certain Legal Proceedings
To the knowledge of the Company, during the past five years, none of our directors or executive officers:
(1)
has filed a petition under the federal bankruptcy laws or any state insolvency law, nor had a receiver, fiscal agent or similar officer appointed by the court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filings;
(2)
was convicted in a criminal proceeding or named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
(3)
was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting, the following activities:
(i) acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, associated person of any of the foregoing, or as an investment advisor, underwriter, broker or dealer in securities, or as an affiliate person, director or employee of any investment company, or engaging in or continuing any conduct or practice in connection with such activity;
(ii) engaging in any type of business practice; or
(iii) engaging in any activities in connection with the purchase or sale of any security or commodity or in connection with any violation of federal or state securities laws or federal commodities laws;
(4)
was the subject of any order, judgment, or decree, not subsequently reversed, suspended, or vacated, of any federal or state authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described above under this Item, or to be associated with persons engaged in any such activities;
(5)
was found by a court of competent jurisdiction in a civil action or by the SEC to have violated any federal or state securities law, and the judgment in such civil action or finding by the SEC has not been subsequently reversed, suspended, or vacated.
(6)
was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
General Philosophy
The Company’s Board of Directors is responsible for establishing and administering the Company’s executive and director compensation.
Compensation Summary
The following table summarizes all compensation earned by or paid to our Chief Executive Officer (Principal Executive Officer) and other executive officers, during the past three fiscal years.
Compensation of Directors
We have no standard arrangement to compensate directors for their services in their capacity as directors. Directors are not paid for meetings attended. We reimburse all travel and lodging expenses associated with corporate matters, if and when incurred.
Activities since Inception
Our President, Jane H. C. Brooke, incorporated our company, subscribed for shares to provide initial working capital, identified the Regency Claims, arranged for their acquisition, commissioned a geological report on each of the Regency Claims and obtained the assistance of professionals as needed. She identified investors to participate in the private placement closed on October 31, 2008, assisted in the preparation of this registration statement and all other matters normally performed by an executive officer.
Our Secretary Treasurer Dragan Bozanic has also assisted in identifying investors to participate in the private placement closed on October 31, 2008.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The following table sets forth, as at December 31, 2011, the total number of shares owned beneficially by each of our directors, officers and key employees, individually and as a group, and the present owners of 5% or more of our total outstanding shares. The shareholder listed below has direct ownership of his/her shares and possesses sole voting and dispositive power with respect to the shares.
(1)
Unless otherwise noted, the security ownership disclosed in this table is of record and beneficial.
(2)
Under Rule 13-d of the Exchange Act, shares not outstanding but subject to options, warrants, rights, conversion privileges pursuant to which such shares may be acquired in the next 60 days are deemed to be outstanding for the purpose of computing the percentage of outstanding shares owned by the person having such rights, but are not deemed outstanding for the purpose of computing the percentage for such other persons. None of our officers or directors has options, warrants, rights or conversion privileges outstanding.
Future Sales by Existing Shareholders
As of December 31, 2011 there are a total of 73,500,000 shares of our common stock are issued and outstanding. Of these all 73,500,000, being 100%, are ‘restricted shares’ as defined in Rule 144 of the Securities Act of 1933. Under our registration statement (on Form S-1), we registered 28,950,000 shares, being 39.39% of our issued shares leaving 44,550,000 shares, being 60.62% of our shares, as restricted shares, as follows:
Jane H. C. Brooke
27,000,000 shares
Russell L. James
17,550,000 shares
Total restricted shares
44,550,000 shares
DESCRIPTION OF SECURITIES
Our authorized capital consists of 200,000,000 shares of common stock, par value $0.001 per share, of which 73,500,000 shares are issued and outstanding.
The holders of our common stock are entitled to receive dividends as may be declared by our Board of Directors; are entitled to share ratably in all of our assets available for distribution upon winding up of the affairs of our Company; and are entitled to one non-cumulative vote per share on all matters on which shareholders may vote at all meetings of the shareholders.
The shareholders are not entitled to preference as to dividends or interest; preemptive rights to purchase in new issues of shares; preference upon liquidation; or any other special rights or preferences.
In addition, the shares of common stock are not convertible into any other securities. There are no restrictions on dividends under any loan or other financing arrangements.
Dividend Policy
As of the date of this Form 10-K we have not paid any cash dividends to stockholders. The declaration of any future cash dividends, if any, will be at the discretion of the Board of Directors and will depend on our earnings, if any, capital requirements and financial position, general economic conditions and other pertinent conditions. It is our present intention not to pay any cash dividends in the near future.
Change in Control of Our Company
We do not know of any arrangements that might result in a change in control.
Transfer Agent
We have engaged the services of Action Stock Transfer Inc., 7069 Highland Drive, Suite 300, Salt Lake City, Utah, 84122, to act as transfer and registrar.
Debt Securities and Other Securities
There is no debt or other securities outstanding.
Market Information
Our shares of common stock are not traded on any public market but it is our intention to find a market maker who will make an application to the FINRA to have our shares accepted for trading on the OTCBB once this registration statement becomes effective. At the present time, there is no established market for the shares of Regency and there is no assurance that a trading market will ever be established. Further, there is no assurance an application to the FINRA will be approved. Although the OTCBB does not have any listing requirements per se, to be eligible for quotation on the OTCBB, issuers must remain current in their filings with the SEC; being as a minimum Forms 10-Q and 10-K and other filings. Market makers will not be permitted to begin quotation of a security whose issuer does not meet these filing requirements. Securities already quoted on the OTCBB that become delinquent in their required filings will be moved following a 30 or 60 day grace period if they do not make their filing during that time. If our common stock is not quoted on the OTCBB, there will be no market for trading in our common stock. This would make it far more difficult for stockholders to dispose of their common stock. This could have an adverse effect on the price of the common stock.
With a lack of liquidity in our common stock, trading prices might be volatile with wide fluctuations. This assumes that there will be a secondary market at all. Things that could cause wide fluctuations in our trading price of our stock could be due to one of the following or a combination of several of them:
●
our variations in our operations results, either quarterly or annually;
●
trading patterns and share prices in other exploration companies which our shareholders consider similar to ours;
●
the exploration results on the Regency Claims, and
●
other events which we have no control over.
In addition, the stock market in general, and the market prices for thinly traded companies in particular, have experienced extreme volatility that often has been unrelated to the operating performance of such companies. These wide fluctuations may adversely affect the trading price of our shares regardless of our future performance and that of Regency. In the past, following periods of volatility in the market price of a security, securities class action litigation has often been instituted against such company. Such litigation, if instituted, whether successful or not, could result in substantial costs and a diversion of management’s attention and resources, which would have a material adverse effect on our business, results of operations and financial conditions.
“Penny Stock” Requirements
Our common shares are quoted on the OTCBB. The SEC has adopted a rule that defines a “penny stock”, for purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:
●
that a broker or dealer approve a person’s account for transactions in penny stock; and
●
that the broker or dealer receive from the investor a written agreement to the transactions setting forth the identity and quantity of the penny stock to be purchased.
To approve a person’s account transactions in penny stock, the broker or dealer must:
●
obtain financial information and investment experience and objectives of the person; and
●
make reasonable determination that the transactions in penny stock are suitable for that person and that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, which, in highlight form:
●
sets forth the basis on which the broker or dealer made the suitability determination; and
●
that the broker or dealer received a signed, written agreement from the investor prior to the transaction.
Disclosure also has to be made about the risks of investing in penny stocks and about commission payable by both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.
Because of the imposition of the foregoing additional sales practices, it is possible that brokers will not want to make a market in our shares. This could prevent you from reselling shares and may cause the price of our shares to decline.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Transactions with Management and Others
Except as indicated below, there were no material transactions, or series of similar transactions, since inception of Regency, or any currently proposed transactions, or series of similar transactions, to which Regency was or is to be a party, in which the amount involved exceeds $120,000, and in which any director or executive officer, or any security holder who is known by Regency to own of record or beneficially more than 5% of any class of Regency’s common stock, or any member of the immediate family of any of the foregoing persons, has an interest.
Indebtedness of Management
There were no material transactions, or series of similar transactions, since inception of Regency, or any currently proposed transactions, or series of similar transactions, to which Regency was or is to be a part, in which the amount involved exceeded $120,000 and in which any director or executive officer, or any security holder who is known to Regency to own of record or beneficially more than 5% of the common shares of Regency’s capital stock, or any member of the immediate family of any of the foregoing persons, has an interest.
Conflicts of Interest
None of our officers and directors is a director or officer of any other company involved in the mining industry. However, there can be no assurance such involvement in other companies in the mining industry will not occur in the future. Such potential future involvement could create a conflict of interest.
To ensure that potential conflicts of interest are avoided or declared, the Board of Directors adopted, on October 26, 2006, a Code of Ethics for the Board of Directors (the “Code”). Regency’s Code embodies our commitment to such ethical principles and sets forth the responsibilities of Regency and its officers and directors to its shareholders, employees, customers, lenders and other organizations. Our Code addresses general business ethical principles and other relevant issues.
Transactions with Promoters
Regency does not have promoters and has no transactions with any promoters.
ITEM 14.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
(1) Audit Fees
The aggregate fees billed by the independent registered accountants for the period ended December 31, 2011 for professional services for the review of the quarterly financial statements as at March 31, 2011, June 30, 2011 and September 30, 2011, annual financial statements as of December 31, 2011 and services that are normally provided by the accountants in connection with statutory and regulatory filings or engagements for those period years were as follows: $800 for each of the quarters ended March 31, 2011, June 30, 2011 and September 30, 2011 and $3,300 for the audit of December 31, 2011.
(2) Audit-Related Fees
The aggregate fees billed in each of the two periods mentioned above for assurance and related services by the principal accountants that are reasonably related to the performance of the audit or review of Regency’s financial statements and are not reported under Item 9 (e)(1) of Schedule 14A was NIL.
(3) Tax Fees
The aggregate fees billed in December 31, 2011 for professional services rendered by the principal accountants for tax compliance, tax advice, and tax planning was NIL.
(4) All Other Fees
During the period from inceptions to December 31, 2011 there were no other fees charged by the principal accountants other than those disclosed in (1) and (3) above.
(5) Audit Committee’s Pre-approval Policies
At the present time, there are not sufficient directors, officers and employees involved with Regency to make any pre-approval policies meaningful. Once Regency has elected more directors and appointed directors and non-directors to the Audit Committee it will have meetings and function in a meaningful manner.
(6) Audit Hours Incurred
The principal accountants did not spend greater than 50 percent of the hours spent on the accounting by Regency’s internal accountant.
PART IV
ITEM 15.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Exhibits
The following exhibits are included as part of this report by reference:
Financial Statements. The following financial statements are included in this report:
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.
REGENCY RESOURCES, INC.
(Registrant)
By: JANE C. H. BROOKE
Jane C.H. Brooke
Chief Executive Officer, President
and Director
Date: February 24, 2012
Pursuant to the requirements of the Securities 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
By: JANE C. H. BROOKE
Jane C.H. Brooke
Chief Executive Officer, President
and Director
Date: February 24, 2012
By: DRAGAN BOZANIC
Dragan Bozanic
Chief Financial Officer, Chief Accounting
Officer, Secretary and Director
Date: February 24, 2012
MADSEN & ASSOCIATES, CPA’s INC.
684 East Vine Street, #3
Certified Public Accountants
Murray, Utah, 84107
Telephone: 801-268-2632
Fax: 801-262-3978
To the Board of Directors and
Stockholders of Regency Resources Inc.
(A Pre-Exploration Stage Company)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have audited the accompanying balance sheets of Regency Resources Inc. (A Pre-Exploration Stage Company) (The Company) as of December 31, 2011 and 2010, and the related statements of operations, stockholders’ deficiency, and cash flows for each of the years in the two-year period ended December 31, 2011, and for the period from December 11, 2006 (date of inception) to December 31, 2011. The Company’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 purposes 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 Regency Resources Inc. (a Pre-Exploration Stage Company) as of December 31, 2011 and 2010, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2011, and the period from December 11, 2006 (date of inception) to December 31, 2011, 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. The Company will need additional working capital to service its debt and for its planned activity, which raises substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are described in the notes to the financial statements. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Madsen & Associates, CPA’s Inc.
Murray, Utah
February 10, 2012
REGENCY RESOURCES, INC.
(Pre-exploration Stage Company)
BALANCE SHEETS
The accompanying notes are an integral part of these financial statements.
REGENCY RESOURCES, INC.
(Pre-exploration Stage Company)
STATEMENT OF OPERATIONS
For the years ended December 31, 2011 and 2010 and for the period from December 11, 2006 (date of inception) to December 31, 2011
The accompanying notes are an integral part of these financial statements.
REGENCY RESOURCES, INC.
(Pre-Exploration Stage Company)
STATEMENT OF STOCKHOLDERS' DEFICIENCY
Period December 11, 2006 (date of inception) to December 31, 2011
The accompanying notes are an integral part of these financial statements.
REGENCY RESOURCES, INC.
(Pre-exploration Stage Company)
STATEMENT OF CASH FLOWS
For the years ended December 31, 2011 and 2010 and for the period from December 11, 2006 (date of inception) to December 31, 2011
The accompanying notes are an integral part of these financial statements.
REGENCY RESOURCES, INC.
(Pre-exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2011
1. ORGANIZATION
The Company, Regency Resources Inc., was incorporated under the laws of the State of Nevada on December 11, 2006 with the authorized capital stock of 200,000,000 shares at $0.001 par value.
The Company was organized for the purpose of acquiring and developing mineral properties. At the report date mineral claims, with unknown reserves, had been acquired. The Company has not established the existence of a commercially minable ore deposit and therefore has not reached the exploration stage and is considered to be in the pre-exploration stage.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Method
The Company recognizes income and expenses based on the accrual method of accounting.
Dividend Policy
The Company has not yet adopted a policy regarding payment of dividends.
Basic and Diluted Net Income (loss) Per Share
Basic net income (loss) per share amounts are computed based on the weighted average number of shares actually outstanding. Diluted net income (loss) per share amounts are computed using the weighted average number of common and common equivalent shares outstanding as if shares had been issued on the exercise of the common share rights unless the exercise becomes antidulutive and then the basic and diluted per share amounts are the same.
Evaluation of Long-Lived Assets
The Company periodically reviews its long term assets and makes adjustments, if the carrying value exceeds fair value.
REGENCY RESOURCES, INC.
(Pre-exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2011
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
Income Taxes
The Company utilizes the liability method of accounting for income taxes. Under the liability method deferred tax assets and liabilities are determined based on differences between financial reporting and the tax bases of the assets and liabilities and are measured using the enacted tax rates and laws that will be in effect, when the differences are expected to be reversed. An allowance against deferred tax assets is recorded, when it is more likely than not, that such tax benefits will not be realized.
The Company utilizes the liability method of accounting for income taxes. Under the liability method deferred tax assets and liabilities are determined based on differences between financial reporting and the tax bases of the assets and liabilities and are measured using the enacted tax rates and laws that will be in effect, when the differences are expected to be reversed. An allowance against deferred tax assets is recorded, when it is more likely than not, that such tax benefits will not be realized.
The Company’s deferred tax assets, valuation allowance, and change in valuation allowance are as follows (“NOL” denotes Net Operating Loss):
The total valuation allowance for the year ended December 31, 2011 is $(37,474) which increased by $(5,575) for the reported period.
Foreign Currency Translations
Part of the transactions of the Company were completed in Canadian dollars and have been translated to US dollars as incurred, at the exchange rate in effect at the time, and therefore, no gain or loss from the translation is recognized. The functional currency is considered to be US dollars.
REGENCY RESOURCES, INC.
(Pre-exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2011
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued
Revenue Recognition
Revenue is recognized on the sale and delivery of a product or the completion of a service provided.
Advertising and Market Development
The company expenses advertising and market development costs as incurred.
Financial Instruments
The carrying amounts of financial instruments are considered by management to be their fair value due to their short term maturities.
Estimates and Assumptions
Management uses estimates and assumptions in preparing financial statements in accordance with general accepted accounting principles. Those estimates and assumptions affect the reported amounts of the assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were assumed in preparing these financial statements.
Statement of Cash Flows
For the purposes of the statement of cash flows, the Company considers all highly liquid investments with a maturity of three months or less to be cash equivalents.
Mineral Property Acquisition and Exploration Costs
Mineral property acquisition costs are initially capitalized when incurred. These costs are then assessed for impairment when factors are present to indicate the carrying costs may not be recoverable. Mineral exploration costs are expensed when incurred.
Environmental Requirements
At the report date environmental requirements related to the mineral claim acquired are unknown and therefore any estimate of any future cost cannot be made.
Recent Accounting Pronouncements
The Company does not expect that the adoption of other recent accounting pronouncements will have a material impact on its financial statements.
Reclassification
Certain prior years amounts have been reclassified for consistency with current year presentation. These reclassifications had no effect on reported results of operations. During the most recently completed fiscal year ended December 31, 2011 the Company determined to consolidate certain items on its statements of operations including filing fees, consulting fees, office, incorporation costs and transfer agent to one line item - “General and administrative”.
REGENCY RESOURCES, INC.
(Pre-exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2011
3. ACQUISITION OF MINERAL CLAIM
On February 15, 2007, the Company acquired the Mara Gold Claim located in the Republic of Fiji from The Mara Group LLC., an unrelated company, for the consideration of $7,000. The Mara Gold Claim is located 20 km North West of the city Suva, Fiji. Under Fijian law, the claim remains in good standing as long as the Company has an interest in it. There is no annual maintenance fee or minimum exploration work required on the Claim.
On July 1, 2008, the Company acquired the La Trinidad Gold Claim located in the Republic of the Philippines from Kalibo Resources Inc., an unrelated company, for the consideration of $5,000. Under Philippine mining laws, the claim remains in good standing as long as the Company has an interest in it.
Based on impairment analyses, the Company determined the above acquisition costs were impaired. Therefore, the Company recorded impairment losses of $7,000 and $5,000 in 2007 and 2008, respectively.
4. SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES
The two Directors have acquired 67% of the common stock issued and outstanding and the President has made advances to the Company of $64,570 ($11,924 during 2011). These advances are non-interest bearing and payable on demand.
5. CAPITAL STOCK
On April 15, 2007, Company completed a private placement consisting of 49,500,000 common shares sold to directors and officers for a total consideration of $1,650. On October 31, 2008, the Company completed a private placement of 24,000,000 common shares for a total consideration of $40,000.
On December 12, 2011, the directors of the Company approved a resolution to distribute a dividend on the outstanding shares of the Company on the basis of the issuance of 29 new shares for one existing share of common stock presently held (the “Stock Dividend”). As a result of the Stock Dividend every one outstanding shares of common stock was increased by thirty share of common stock. As at December 31, 2011, there were 73,500,000 common shares issued and outstanding. All share references in these financial statements have been retroactively adjusted for this stock dividend.
6.
GOING CONCERN
The Company will need additional working capital to service its debt and to develop the mineral claims acquired, which raises substantial doubt about its ability to continue as a going concern. Continuation of the Company as a going concern is dependent upon obtaining additional working capital and the management of the Company has developed a strategy, which it believes will accomplish this objective through additional equity funding, and long term financing, which will enable the Company to operate for the coming year.