ITEM 1.
BUSINESS.
Company History
We were incorporated in the State of Nevada on December 9, 2004. We planned to engage in the acquisition and exploration of mining properties. We currently have no properties, are not conducting any exploration work and are therefore not in the “exploration stage”. We maintain our statutory registered agent's office at 502 North Division Street, Carson City, Nevada 89703-4103 and our business office is located at 666 Burrard Street, Suite 600, Vancouver, British Columbia, Canada V6E 4M8.
From 2004 to 2011, we held the right to conduct mineral exploration activities on a property in British Columbia, Canada. The claim was located on the south end of Polley Lake, approximately 90 kilometers northeast of the city of Williams Lake in the Cariboo Mining Division of British Columbia. No work was performed on the property. In 2011, due to adverse economic conditions and the increasing difficulty of raising funding for small scale mining exploration, we decided not to pursue exploration activities on the claim. The mineral claim interest was expensed and charged to Mineral property costs in 2011.
On July 15, 2011, we entered into a definitive securities purchase agreement with respect to the proposed acquisition of rights to certain mining concessions located in the State of Chihuahua, Mexico covering approximately 15,980 hectares. Pursuant to the terms of the Agreement we agreed to issue 25,000,000 shares of common stock and make an aggregate cash payment of $150,000. Of that amount, $75,000 was advanced on June 20, 2011 and the remaining $75,000 was payable on or before closing. In the event the transaction did not close, the advance amount paid was to be treated as a secured demand loan bearing interest at 5% per annum.
Closing of the transaction was subject to a number of conditions including: satisfactory completion of both parties’ due diligence; obtaining all necessary governmental, regulatory and third party consents, waivers and approvals; the appointment of two nominees to our board of directors; and completion of an interim financing with proceeds intended to be used to fund our working capital.
The 25,000,000 shares were not issued and none of the closing conditions described above were completed. The parties agreed on September 27, 2011 to a mutual release and cancellation of the Agreement. The other party acknowledged the $75,000 advanced as a loan from us, bearing interest at 5% per annum and indicated it would use best efforts to repay the loan in a timely manner. The loan is secured by the assets of the other party and the Company expects to be repaid. However collectability is uncertain. In 2011 management made a provision for loan loss in the amount of $76,418, for the full amount of the loan plus accrued interest.
As disclosed in previous filings, on July 15, 2012, we entered into a Letter of Intent (the “LOI”) with SignalChem Lifesciences Corporation, a private company incorporated in the Province of British Columbia, Canada (“SLC”), with respect to a proposed exchange of all of the issued and outstanding shares of SLC. We were unable to conclude negotiations with SLC and agreed with that company on October 1, 2013 to terminate the LOI.
We have no revenues, have losses since inception, have no operations, and have been issued a going concern opinion by our auditor. We are relying upon the sale of securities and loans to fund our operations.
Current Status
We are currently considered a “shell” company inasmuch as we are not generating revenues, do not own an operating business, and have no specific plan other than to engage in a merger or acquisition transaction with a yet-to-be finalized operating company or business. We have no employees and minimal cash.
We currently have no definitive agreements or understandings with any prospective business combination or project candidates and there are no assurances that we will find a suitable business with which to combine or project to acquire. The implementation of our business objectives is wholly contingent upon a business combination or project acquisition and/or the successful sale of our securities. We intend to utilize the proceeds of any offering, any sales of equity securities or debt securities, bank and other borrowings or a combination of those sources to effect a business combination or project acquisition which we believe has significant growth potential.
A common reason for a target company to enter into a merger with a shell company is the desire to establish a public trading market for its shares. Such a company would hope to avoid the perceived adverse consequences of undertaking a public offering itself, such as the time delays and significant expenses incurred to comply with the various federal and state securities law that regulate initial public offerings.
ITEM 1.
BUSINESS. - continued
We have no employees. The services of our president and CEO, Robert M. Baker, are provided through a consulting agreement effective January 1, 2012 with a company owned by Mr. Baker. We expect to use outside consultants, advisors, attorneys and accountants as necessary, none of whom will be hired on a retainer basis. We do not anticipate hiring any full-time employees so long as we are seeking and evaluating business opportunities.
In evaluating a prospective target business or project, we will consider a variety of factors, including the following:
-
experience and skill of management and availability of additional personnel of the target business or project;
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costs associated with effecting the business combination or project acquisition;
-
equity interest retained by our stockholders in any merged entity;
-
growth potential of the target business or project;
-
capital requirements of the target business or project;
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capital available to the target business or project;
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stage of development of the target business or project
-
proprietary features and degree of intellectual property or other protection of the target business or project;
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the financial statements of the target business or project; and
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the regulatory environment in which the target business or project operates.
The foregoing criteria are not intended to be exhaustive and any evaluation relating to the merits of a particular target business or project will be based, to the extent relevant, on the above factors, as well as other considerations we deem relevant. In connection with our evaluation of a prospective target business or project, we anticipate that we will conduct a due diligence review which will encompass, among other things, meeting with incumbent management as well as a review of financial, legal and other information.
The time and costs required to select and evaluate a target business or project (including conducting a due diligence review) and to structure and consummate the business combination or project acquisition (including negotiating and documenting relevant agreements and preparing requisite documents for filing pursuant to applicable corporate and securities laws) cannot be determined at this time. Our will devote such time as he deems reasonably necessary to carry out our business and affairs. The amount of time devoted to our business and affairs may vary significantly depending upon, among other things, whether we have identified a target business or project or are engaged in active negotiation of a business combination or project acquisition.
We anticipate that prospective target businesses or projects will be brought to our attention from various sources, including securities broker-dealers, investment bankers, venture capitalists, bankers and other members of the financial community.
Proposed Business Acquisition
On January 30, 2014, we entered into a Letter of Intent (LOI) with ECI Canada, INC (ECI) Corporation, whereby we will do a share exchange to acquire all of the outstanding shares of ECI for a minimum of 60% of our outstanding shares. The LOI is subject to a number of conditions including, negotiation and execution of a Definitive Agreement, receipt of all required regulatory approvals, and completion of due diligence investigations by both companies. Both companies will use their best efforts to come to a Definitive Agreement for this transaction by April 15, 2014.
ECI is a provincially chartered company based in Toronto, Ontario and is in the business of providing bilge wastewater treatment services. ECI has a memorandum of understanding with Royal Emirates Group (REG) to collaborate in order to provide its services to ports in Dubai and the United Arab Emirates. With the help of REG, ECI have entered into an LOI to acquire 70% of Advanced Environmental Technologies LLC, UAE (AET) a company in the oily water treatment business for over 14 years with all the necessary licenses, including the Environmental Impact Assessment license necessary to operate.
There is no assurance that the transaction will be completed.
ITEM 1A.
ITEM 1A.
RISK FACTORS.
You should carefully consider the risks described below before purchasing our common stock. The following risk factors could have a material adverse effect on our business, financial condition and results of operations.
WE HAVE LIMITED OPERATING HISTORY OR BASIS FOR EVALUATING OUR PROSPECTS.
In considering whether to invest in our common stock, you should consider that we have earned no revenues to date and there is only limited historical financial and operating information available on which to base your evaluation of our performance. We have no operating business or immediate plans to develop one. We are currently seeking to enter into a merger or business combination with another company, or acquire a project. Our efforts are limited to meeting our regulatory filing requirements and searching for a merger target or project to acquire.
WE HAVE LIMITED RESOURCES AND NO REVENUES FROM OPERATIONS, AND WILL NEED ADDITIONAL FINANCING IN ORDER TO EXECUTE ANY BUSINESS PLAN.
We have losses which we expect to continue into the future. As a result, we may have to suspend or cease operations. We have limited resources, no revenues from operations to date and our cash on hand will not be sufficient to satisfy our cash requirements during the next twelve months. In addition, we will not achieve any revenues until, at the earliest, the consummation of a merger or acquisition of a project and we cannot ascertain our capital requirements until such time.
WE WILL BE ABLE TO EFFECT AT MOST ONE MERGER, AND THUS ARE NOT LIKELY TO HAVE A DIVERSIFIED BUSINESS.
Our resources are limited and we will most likely have the ability to effect only a single merger, or acquisition of a business or project. This probable lack of diversification will subject us to numerous economic, competitive and regulatory developments, any or all of which may have a material adverse impact upon the particular industry in which we may operate subsequent to the consummation of a merger or acquisition of a business or project. We will become dependent upon the development or market acceptance of a single or limited number of products, processes or services.
WE DEPEND SUBSTANTIALLY UPON OUR PRESIDENT TO MAKE ALL MANAGEMENT DECISIONS.
Our ability to effect a merger or acquire a new project will be dependent upon the efforts of our president, Robert M. Baker. We have not obtained any "key man" life insurance for Mr. Baker. The loss of the services of Mr. Baker would have a material adverse effect on our business objectives and success. We rely upon the expertise of Mr. Baker and do not anticipate that we will hire additional personnel unless required after a merger or project acquisition is completed.
THERE IS COMPETITION FOR THOSE PRIVATE COMPANIES SUITABLE FOR A MERGER TRANSACTION OR BUSINESS PROJECTS OF THE TYPE CONTEMPLATED BY MANAGEMENT.
We are in a highly competitive market for a limited number of business opportunities which could reduce the likelihood of consummating a successful business combination or project acquisition. We are and will continue to be a very small participant in the business of seeking mergers with, joint ventures with or acquisitions of small private and public entities or projects. A large number of established and well-financed entities, including small public companies and venture capital firms, are active in mergers and acquisitions of companies or projects that may be desirable targets for us. Nearly all these entities have significantly greater financial resources, technical expertise and managerial capabilities than we do; consequently, we will be at a competitive disadvantage in identifying possible business opportunities and successfully completing a business combination or project acquisition. These competitive factors may reduce the likelihood of our identifying and consummating a successful business combination or project acquisition.
ITEM 1A.
RISK FACTORS - continued
FUTURE SUCCESS IS HIGHLY DEPENDENT ON THE ABILITY OF MANAGEMENT TO LOCATE AND ATTRACT A SUITABLE ACQUISITION OR PROJECT.
The nature of our operations is highly speculative. The success of our plan of operation will depend to a great extent on the operations, financial condition and management of an identified business opportunity. While management intends to seek a business combination or project with entities having established operating histories, we cannot assure you that we will be successful in locating candidates meeting that criterion. In the event we complete a business combination or acquire a new project, the success of our operations may be dependent upon management of the successor firm or venture partner firm and numerous other factors beyond our control.
WE HAVE NO AGREEMENT FOR A BUSINESS COMBINATION OR OTHER TRANSACTION.
We have no binding agreement with respect to engaging in a merger with, joint venture with or acquisition of, a private or public entity or business project. No assurances can be given that we will successfully identify and evaluate suitable business opportunities or that we will conclude a business combination or acquire a new project. We cannot guarantee that we will be able to negotiate a business combination or acquire a new project on favorable terms, and there is consequently a risk that funds allocated to the purchase of our shares will not be invested in a company with active business operations.
CURRENT SHAREHOLDERS COULD BE SUBSTANTIALLY DILUTED UPON A MERGER OR BUSINESS COMBINATION OR PROJECT ACQUISITION.
Our Certificate of Incorporation authorized the issuance of 100,000,000 shares of our Common Stock. There are currently 88,491,000 authorized but unissued shares of Common Stock available for issuance. To the extent that additional shares of Common Stock are authorized and issued in connection with a merger or business combination or project acquisition, our shareholders could experience significant dilution of their respective ownership interests. Furthermore, the issuance of a substantial number of shares of Common Stock may adversely affect prevailing market prices, if any, for our Common Stock and could impair our ability to raise additional capital through the sale of equity securities.
CONTROL BY EXISTING SHAREHOLDER.
Robert M. Baker is our sole director and officer and beneficially owns 24.3% of the outstanding shares of our Common Stock. As a result, this shareholder is able to exercise significant control over matters requiring shareholder approval, including the election of directors, and the approval of mergers, consolidations and sales of all or substantially all of our assets.
OUR COMMON STOCK IS A "PENNY STOCK" WHICH MAY RESTRICT THE ABILITY OF STOCKHOLDERS TO SELL OUR COMMON STOCK IN THE SECONDARY MARKET.
The Securities and Exchange Commission (the “SEC”) has adopted regulations which generally define “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors”. The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. As long as the common stock is subject to the penny stock rules, holders of our common stock may find it more difficult to sell their securities.
ITEM 1A.
RISK FACTORS - continued
OUR COMMON STOCK HAS BEEN THINLY TRADED, LIQUIDITY IS LIMITED, AND WE MAY BE UNABLE TO OBTAIN LISTING OF OUR COMMON STOCK ON A MORE LIQUID MARKET.
Our Common Stock is quoted on the OTCQB operated by the OTC Markets Group which provides significantly less liquidity than a securities exchange (such as the NYSE Amex or New York Stock Exchange) or an automated quotation system (such as the Nasdaq Global Market or Capital Market). There is uncertainty that we will ever be accepted for a listing on an automated quotation system or national securities exchange.
There is currently a very limited volume of trading in our common stock, and often there has been no trading activity at all. The purchasers of shares of our common stock may find it difficult to resell their shares at prices quoted in the market or at all.
ITEM 1 B.
ITEM 1 B.
UNRESOLVED STAFF COMMENTS.
None.
ITEM 2.
ITEM 2.
PROPERTIES.
We currently do not own any property.
Our principal offices are located at 666 Burrard Street, Suite 600, Vancouver, British Columbia, Canada V6E 4M3. The office space is currently provided as part of an agreement with the consulting firm that we use for administrative, regulatory compliance, and bookkeeping services.
ITEM 3.
ITEM 3.
LEGAL PROCEEDINGS.
There are no material, pending legal proceedings to which our company is a party, and no such proceedings are known by us to be contemplated.
There is no material proceeding to which any director, officer, or affiliate of our company, or any owner of record or beneficial owner of more than 5% of any class of voting securities of our company, or any associate of any such director, officer, affiliate of our company, or security holder is a party adverse to our company or has a material interest adverse to our company.
ITEM 4.
ITEM 4.
MINE SAFETY DISCLOSURES.
Not applicable.
PART II
ITEM 5.
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Our stock is quoted under the symbol “ITGC” on the OTCQB tier of the OTC market operated by the Financial Industry Regulatory Authority (FINRA). OTCQB companies must be registered with and reporting to the SEC or a U.S. banking regulator. A summary of trading by quarter for the 2013 and 2012 fiscal years is as follows:
These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commissions and may not represent actual transactions.
The market for the common stock has been sporadic and there have been long periods during which there were few, if any, transactions in the common stock and no reported quotations. Accordingly, reliance should not be placed on the quotes listed above, as the trades and depth of the market may be limited, and therefore, such quotes may not be a true indication of the current market value of the Company’s common stock.
On March 31, 2014, we had 91 shareholders of record of our common stock.
Dividends
We have not declared any cash dividends, nor do we have any plans to do so. Management anticipates that, for the foreseeable future, all available cash will be needed to fund our operations.
Recent Sales of Unregistered Securities
During the year ended December 31, 2013 and to date, other than as previously described in our report on Form 10-Q for the quarter ended September 30, 2013, we received no further amounts as subscriptions for shares of our common stock.
During the year ended December 31, 2013, the Company reached agreement with a lender to issue 217,500 shares of its common stock to settle $21,750 in loans payable. Those shares were issued on October 3, 2013. The lender was not a US person.
Section 15(g) of the Securities Exchange Act of 1934
Our shares are covered by Section 15(g) of the Securities Exchange Act of 1934, as amended that imposes additional sales practice requirements on broker/dealers who sell such securities to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouses). For transactions covered by the Rule, the broker/dealer must make a special suitability determination for the purchase and have received the purchaser’s written agreement to the transaction prior to the sale. Consequently, the Rule may affect the ability of broker/dealers to sell our securities and also may affect your ability to sell your shares in the secondary market.
Section 15(g) also imposes additional sales practice requirements on broker/dealers who sell penny securities. These rules require a one page summary of certain essential items. The items include the risk of investing in penny stocks in both public offerings and secondary marketing; terms important to in understanding of the function of the penny stock market, such as “bid” and “offer” quotes, a dealers “spread” and broker/dealer compensation; the broker/dealer compensation, the broker/dealers duties to its customers, including the disclosures required by any other penny stock disclosure rules; the customers rights and remedies in causes of fraud in penny stock transactions; and, the NASD’s toll free telephone number and the central number of the North American Administrators Association, for information on the disciplinary history of broker/dealers and their associated persons.
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. - continued
Securities authorized for issuance under equity compensation plans
We have no equity compensation plans and accordingly we have no shares authorized for issuance under an equity compensation plan.
ITEM 6.
ITEM 6.
SELECTED FINANCIAL DATA.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
ITEM 7.
ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
This section of this report includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this report. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.
General
Our plan is to seek, investigate, and consummate a merger or other business combination, purchase of assets or other strategic transaction with a corporation, partnership, or other operating business entity desiring the perceived advantages of becoming a publicly reporting and publicly held corporation. We have no operating business, and conduct minimal operations necessary to meet regulatory requirements. Our ability to commence any operations is contingent upon obtaining adequate financial resources.
We may consider a business which has recently commenced operations and is seeking to develop a new product or service, or a business combination may involve the acquisition of, or merger with, a company which does not need substantial additional capital, but which desires to establish a public trading market for its shares, while avoiding, among other things, the time delays, significant expense, and loss of voting control which may occur in a public offering. Alternatively, we may consider acquiring a project that is no longer aligned with the strategic direction of the business in which it was developed.
We are not currently engaged in any business activities that provide cash flow. The costs of meeting our regulatory and reporting requirements, as well as the costs of investigating and analyzing potential business combinations or projects for the next twelve months will need to be funded through sales of our common stock and/or loans.
During the next twelve months we anticipate incurring costs related to:
(i)
preparation, review, and audit of financial statements;
(ii)
preparation of regulatory reports;
(iii)
filing of Exchange Act reports;
(iv)
transfer agent, compliance services and other overhead;
(v)
consulting fees in connection with the services of our president and CEO, and
(vi)
identifying, investigating and possibly completing a transaction to acquire a business or project as described above.
Equipment and Employees
As of December 31, 2013, we had no operating business, no equipment, and no employees.
Going Concern
Our auditors have issued a going concern opinion. This means that 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 expenses. This is because we have not generated any revenues to date and we can not currently estimate the timing of any possible future revenues. Our only source for cash at this time is investments by others in our common stock, or loans.
ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. - continued
Results of Operations
The following summary of our results of operations should be read in conjunction with our audited financial statements for the year ended December 31, 2013 which are included with this Report.
Revenues
We recorded a net loss of $177,259 for the year ended December 31, 2013, have an accumulated deficit of $882,286 and have had no operating revenues since our inception on December 9, 2004. We have no way to generate any revenue until after we are able to effect a business combination or project acquisition. The possibility and timing of revenue being generated after that cannot be predicted, given that we have no definitive agreement in place for a business combination or project acquisition.
Expenses
Our expenses for the years ended December 31, 2013 and 2012 are outlined below:
Consulting services relate to fees for services of our president under the terms of a contract which commenced January 1, 2012. The total includes monthly fees and reimbursed expenses. There was no significant change from 2012.
Corporate support services: In recognition of the Company’s continuing constrained financial condition, the service provider agreed to decrease the rate in 2014 to $1,000 monthly, plus applicable taxes.
Interest, bank and finance charges decreased in 2013 primarily due to a service provider’s agreement to reverse interest charges on overdue accounts payable.
Office, foreign exchange and sundry increased in 2013 mainly due to higher foreign exchange cost (approximately $8,000) and license fees (approximately $1,000).
Professional fees decreased primarily due to timing of billings for 2013 audit and review services, offset slightly by lower legal costs being incurred in 2012.
Transfer and filing fees remained consistent year over year.
ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. - continued
Assets and Liabilities
Balance Sheet items with notable year over year differences are as follows:
·
Cash decreased due to the amount of cash provided by financing activities being lower than the amount of cash used by operating activities.
·
Amounts receivable decreased due to the receipt in the first quarter of 2013 of the final Goods and Services tax refund for which we were eligible. As a non-operating company, we can no longer claim a refund of GST payments. Those amounts are now expensed.
·
Prepaid consulting fees to related parties decreased due to an agreement to offset December 31, 2012 prepaid consulting fees against payables.
·
Accounts payable and accrued liabilities decreased mainly due to an agreed assignment to our payables of various amounts due to our president and/or a company controlled by him.
·
Loans payable increased due to two new loans totalling approximately $11,000 and an increase in accrued interest of approximately $8,000.
·
Promissory notes due to related party decreased as a result of an agreed assignment of the December 31, 2012 balance to our payable account for a related party.
Liquidity and Capital Resources
Our financial condition for the years ended December 31, 2013 and 2012 and the changes between those periods for the respective items are summarized as follows:
Working Capital
The increase in our working capital deficiency from December 31, 2012 to December 31, 2013 was due to a decrease in cash of approximately $11,000, amounts receivable of approximately $9,000 and prepaid consulting fees to related parties of approximately $43,000, together with a decrease in accounts payable and accrued liabilities of approximately $10,000, an increase in loans payable of approximately $19,000, and a decrease in promissory notes due to related parties of approximately $7,000.
ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. - continued
Liquidity and Capital Resources - continued
Cash Flows
Cash Used In Operating Activities:
The decrease in cash used for operating activities year over year is comprised mainly of the decrease in net loss of approximately $84,000; a decrease in receivables of approximately $9,000; the recovery of prepaid consulting fees of approximately $43,000; and a decrease in payables and accrued liabilities in 2013 smaller than in 2012 by approximately $13,000.
Cash Provided By (Used In) Financing Activities:
The year over year decrease in cash provided by financing activities was primarily due to a decrease in the receipt of subscriptions for our common stock of approximately $287,000, offset by a decrease in advances to related parties of approximately $42,000; a decrease in prepayment of consulting fees of approximately $43,000; and an increase in receipt of loans payable of approximately $32,000.
As of the date of this report, we have yet to generate any revenues from our business operations. Our ability to generate adequate amounts of cash to meet our needs is entirely dependent on the issuance of shares or receipt of loans.
As of December 31, 2013, our total assets were $21 and our total liabilities were $189,807.
Our principal source of working capital has been in the form of loans and capital contributions from our shareholders or management, loans from third parties, and funds received as subscriptions for our common stock. For the foreseeable future, we will have to continue to rely on those sources for funding. We have no assurance that we can successfully engage in any further private sales of our securities or that we can obtain any additional loans. At December 31, 2013, we had cash of $21 and negative working capital of $189,786.
ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. - continued
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
Commitments
We do not have any commitments as of December 31, 2013 which are required to be disclosed in tabular form.
A consulting agreement was executed by us for the provision of corporate compliance services, administrative services, provision of a head office address, and bookkeeping, dated for reference January 1, 2011. The agreement calls for a monthly fee of $3,000 (Canadian) plus applicable taxes. In recognition of our constrained financial condition, the consultant agreed to reduce the regular monthly fee in Q4, 2012 to $2,000 plus applicable taxes and to $1,000 plus applicable taxes in 2013. The agreement remains in effect until terminated by either party on one month’s notice. In the event that we terminate the agreement other than for cause, we are required to pay two months’ fees as a termination fee. The agreement was terminated by the consultant effective December 31, 2013. A replacement agreement is under discussion but has not been finalized to date.
On February 21, 2012 a consulting agreement was executed between us and another company controlled by our sole director and officer, effective January 1, 2012 for a term of 48 months, whereby the other company has agreed to provide the services of its shareholder as the our CEO, COO, CFO and Corporate Secretary. As compensation, we are to pay $90,000 per annum, in equal monthly installments of $7,500, in arrears, plus applicable taxes. We also agreed to reimburse reasonable business and/or entertainment and automobile expenses during the duration of the consulting agreement. The agreement may be terminated by either party on thirty days’ notice. In the event that the agreement is terminated on a change of control or, other than for cause, the consultant is entitled to a severance payment equivalent to twelve months of fees. Effective July 1, 2012, the compensation rate was amended to $108,000 per annum, in equal monthly installments of $9,000 in arrears, plus applicable taxes.
Critical Accounting Policies
In preparing our financial statements in accordance with U.S. generally accepted accounting principles our management is required to use their judgment in making estimates and assumptions that affect the amounts reported in its financial statements and related notes. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Our critical accounting policies are mainly those subject to significant judgments and uncertainties which could potentially result in materially different results under different conditions and assumptions. We believe the following critical accounting policies reflect our most significant estimates, judgments and assumptions used in the preparation of our financial statements:
Use of Estimates and Assumptions
The preparation of financial statements, in conformity with United States generally accepted accounting principles, requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying disclosures. By their nature, these estimates are subject to measurement uncertainty and the effect on the financial statements of changes in such estimates in future periods could be significant. Significant areas requiring management’s estimates and assumptions are determining the fair value of transactions involving common stock, valuation and impairment losses on mineral property acquisitions and values recorded for related party transactions. Actual results may differ from the estimates.
ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. - continued
Stock-Based Compensation
We account for equity instruments issued in exchange for the receipt of goods or services from parties other than employees in accordance with ASC 718 and ASC 505, Equity. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services.
Income Taxes
We use the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, Income Taxes. This standard requires the use of an asset and liability approach for financial accounting and reporting on income taxes. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized.
Recent Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, (“FASB”) or other standard setting bodies that are adopted by us as of the specified effective date. Unless otherwise discussed, we believe that the impact of recently issued standards that are not yet effective will not have a material impact on our financial statements upon adoption.
ITEM 7A.
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
ITEM 8.
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
INTERNATIONAL GOLD CORP.
FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
(Stated in U.S. Dollars)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Directors and Stockholders of
International Gold Corp.
We have audited the accompanying balance sheets of International Gold Corp. (the “Company”) as of December 31, 2013 and 2012, and the related statements of operations, cash flows and stockholders’ deficiency for each of the two years in the period ended December 31, 2013. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe 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 the Company as of December 31, 2013 and 2012, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2013, in conformity with accounting principles generally accepted in the United States.
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations, has negative operating cash flows, has a stockholders’ deficiency and is dependent upon obtaining adequate financing to fulfill its business activities. These factors raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also discussed in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Vancouver, Canada
April ___, 2014
Chartered Accountants
INTERNATIONAL GOLD CORP.
BALANCE SHEETS
(Stated in U.S. Dollars)
The accompanying notes are an integral part of these financial statements.
INTERNATIONAL GOLD CORP.
STATEMENTS OF OPERATIONS
(Stated in U.S. Dollars)
The accompanying notes are an integral part of these financial statements.
INTERNATIONAL GOLD CORP.
STATEMENTS OF CASH FLOWS
(Stated in U.S. Dollars)
The accompanying notes are an integral part of these financial statements.
INTERNATIONAL GOLD CORP.
STATEMENTS OF STOCKHOLDERS’ DEFICIENCY
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
(Stated in U.S. Dollars)
The accompanying notes are an integral part of these financial statements.
INTERNATIONAL GOLD CORP.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
(Stated in U.S. Dollars)
1.
BASIS OF PRESENTATION AND NATURE OF OPERATIONS
Organization
International Gold Corp. (“the Company”) was incorporated in the State of Nevada, U.S.A., on December 9, 2004. The Company’s principal executive offices are located in Vancouver, British Columbia, Canada. The Company was originally formed for the purpose of acquiring exploration stage natural resource properties. The Company currently has no properties, is not conducting any exploration work and is not in the “exploration stage”. The Company has not realized any revenues from its operations to date.
Going Concern
The accompanying financial statements have been prepared assuming the Company will continue as a going concern.
The future of the Company is dependent upon its ability to establish a business and to obtain new financing to execute a business plan. As shown in the accompanying financial statements, the Company has incurred accumulated losses of $882,286 for the period from December 9, 2004 (inception) to December 31, 2013, and has had no revenue. There is no assurance that management’s plans to seek additional capital through private placements of its common stock will be realized, and these factors cast substantial doubt upon the use of the going concern assumption. These financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.
INTERNATIONAL GOLD CORP.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
(Stated in U.S. Dollars)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates which have been made using careful judgment. All dollar amounts are in U.S. dollars unless otherwise noted.
The financial statements have, in management’s opinion, been properly prepared within reasonable limits of materiality and within the framework of the significant accounting policies summarized below:
a)
Basis of Accounting
The Company’s financial statements have been prepared using the accrual method of accounting.
b)
Asset Retirement Obligations
The Company has no asset retirement obligations, including environmental expenditures, which relate to an existing condition caused by past operations.
c)
Cash and Cash Equivalents
Cash consists of cash on deposit with high quality major financial institutions. For purposes of the balance sheet and statements of cash flows, the Company considers all highly liquid debt instruments purchased with maturity of 90 days or less to be cash equivalents.
d)
Foreign Currency Accounting
The Company’s functional currency is the U.S. dollar. Head office financing and investing activities are generally in Canadian dollars. Transactions in Canadian currency are translated into U.S. dollars as follows:
i)
monetary items at the exchange rate prevailing at the balance sheet date;
ii)
non-monetary items at the historical exchange rate; and
iii)
revenue and expense items at the rate in effect of the date of transactions.
Gains and losses arising on the settlement of foreign currency denominated transactions or balances are recorded in the statements of operations.
e)
Fair Value of Financial Instruments
ASC Topic 820-10 establishes a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market.
These tiers include:
§
Level 1 - defined as observable inputs such as quoted prices in active markets;
§
Level 2 - defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and
§
Level 3 - defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
INTERNATIONAL GOLD CORP.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
(Stated in U.S. Dollars)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
e)
Fair Value of Financial Instruments (Continued)
Liabilities measured at fair value on a recurring basis were presented on the Company’s balance sheet as at December 31, 2013 and 2012 as follows:
The carrying amount of loans payable was a reasonable approximation of their fair value.
f)
Use of Estimates and Assumptions
The preparation of financial statements, in conformity with GAAP, requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying disclosures. By their nature, these estimates are subject to measurement uncertainty and the effect on the financial statements of changes in such estimates in future periods could be significant. Significant areas requiring management’s estimates and assumptions are determining the fair value of transactions involving related parties and common stock. Actual results may differ from the estimates.
g)
Basic and Diluted Loss Per Share
The Company reports basic loss per share in accordance with ASC Topic 260, “Earnings Per Share”. Basic loss per share is computed by dividing net loss available to common stockholders by the weighted average number of common stock outstanding during the period. Diluted loss per share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. As the Company generated net losses in the period presented, the basic and diluted loss per share are the same.
h)
Income Taxes
The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, Income Taxes. This standard requires the use of an asset and liability approach for financial accounting and reporting on income taxes. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized.
i)
Recent Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
INTERNATIONAL GOLD CORP.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
(Stated in U.S. Dollars)
3.
CAPITAL STOCK
During the year ended December 31, 2013, in connection with the $0.20 private placement, the Company received $90,000 as subscriptions for 450,000 shares of its common stock. 250,000 shares were issued on October 3, 2013 and 200,000 on October 25, 2013 in connection with those subscriptions.
During the year ended December 31, 2013, the Company reached an agreement with a lender to issue 217,500 shares of its common stock to settle $21,750 in loans payable. Those shares were issued on October 3, 2013.
During the year ended December 31, 2012:
In connection with a private placement of $0.05 shares:
·
The Company received payments totaling $129,200 as subscriptions for 2,584,000 shares of its common stock.
·
Loans totaling $22,500 Canadian were converted to a subscription for 450,000 shares of common stock.
·
Part of a loan together with interest totaling $6,000 was converted to a subscription for 120,000 shares of common stock.
On July 24, 2012, the Company issued 3,354,000 shares of its common stock in return for the share subscriptions above totaling $157,700, together with a July 2011 subscription totaling $10,000.
In connection with a private placement of $0.20 shares:
·
On October 15, 2012, the Company issued 297,500 shares of its common stock in return for subscriptions received totaling $59,500.
·
The Company received a further $188,000 as subscriptions for 940,000 shares of its common stock. Those shares were not issued in 2012 and were included on the December 31, 2012 Balance Sheet as Shares To Be Issued. The shares were issued on October 3, 2013.
The Company has no stock option plan, warrants or other dilutive securities.
4.
LOANS PAYABLE
As at December 31, 2013, the Company had the following loans payable:
i)
$5,000: unsecured; interest at 15% per annum; due on April 20, 2012.
ii)
$75,000: unsecured; interest at 10% per annum; due on August 2, 2011.
iii)
$1,642: unsecured; non-interest bearing; with no specific terms of repayment.
iv)
$8,979: unsecured; non-interest bearing; with no specific terms of repayment.
As at December 31, 2012, the Company had the following loans payable:
i)
$5,000: unsecured; interest at 15% per annum; due on April 20, 2012.
ii)
$75,000: unsecured; interest at 10% per annum; due on August 2, 2011.
The loan balances remain outstanding to date and the Company intends to renegotiate the repayment terms with the lenders.
As of December 31, 2013, interest totaling $21,110 (2012 - $12,860) was accrued on the loan amounts.
INTERNATIONAL GOLD CORP.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
(Stated in U.S. Dollars)
5.
RELATED PARTY TRANSACTIONS AND AMOUNTS DUE
Transactions with related parties were in the normal course of operations and have been valued in these financial statements at the exchange amount, which is the amount of consideration agreed to and established by the related parties.
a)
Related Party Amounts Due
At December 31, 2013, the Company had prepaid $Nil (2012 - $43,022) in consulting fees to a related party. The 2012 amount was prepaid to the sole director and officer of the Company and a company controlled by that director.
Other amounts due to the above noted related party and included in accounts payable totaled $32,108 at December 31, 2013 (2012 - $30,970).
b)
Promissory Notes Due to Related Parties
The Company was indebted at December 31, 2013 for unsecured promissory notes due on demand, bearing interest at 8% per annum, totaling $Nil (2012 - $7,116) including accrued interest of $Nil (2012 - $1,216).
The promissory notes were due to a company controlled by the sole director and officer of the Company.
c)
Consulting Services
During the year ended December 31, 2013, the Company paid $110,581 (2012 - $110,880) in consulting fees and expenses to the sole director and officer of the Company.
6.
CONTRACTUAL OBLIGATIONS, COMMITMENTS AND SUBSEQUENT EVENTS
On February 21, 2012 a consulting agreement was fully executed between the Company and another company controlled by the sole director and officer of the Company, effective January 1, 2012 for a term of 48 months, whereby the related company agreed to provide the services of its shareholder as the Company’s CEO, COO, CFO and Corporate Secretary. As compensation, the Company was to pay $90,000 per annum, in equal monthly installments of $7,500, in arrears and plus applicable taxes. The Company also agreed to reimburse reasonable business and/or entertainment and automobile expenses during the duration of the consulting agreement.
Effective July 1, 2012, the above consulting agreement was revised to amend the compensation to be monthly installments of $9,000 plus applicable taxes, with the 48 month term to commence from the new effective date.
Management has evaluated subsequent events and the impact on the reported results and disclosures and has concluded that no other significant events require disclosure as of the date these financial statements were issued.
INTERNATIONAL GOLD CORP.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012
(Stated in U.S. Dollars)
7.
INCOME TAXES
A reconciliation of income tax benefit to the amount computed at the statutory rate of 34% (2012 - 34%) is as follows:
Significant components of deferred income tax assets are as follows:
The Company has approximately $882,300 (2012 - $705,000) in net operating losses carry forward which will expire by 2033 if not utilized. Future tax benefits, which may arise as a result of these losses, have not been recognized in these financial statements, and have been offset by a valuation allowance.
The Company’s net operating losses carried forward for United States income tax purposes will expire, if not utilized, as follows:
Realization of the above losses carried forward is dependent on the Company filing the applicable tax returns with the tax authorities and the Company generating sufficient taxable income prior to expiration of the losses carried forward.
ITEM 9.
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no disagreements on accounting and financial disclosures from the inception of our company through the date of this report on Form 10-K. Our financial statements for the years ended December 31, 2013 and 2012, included in this report, have been audited by Morgan LLP, 700 West Georgia Street, Suite 1488, Vancouver, British Columbia, Canada V7Y 1A1.
ITEM 9A.
ITEM 9A.
CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
As required by paragraph (b) of Rules 13a-15 or 15d-15 under the Securities Exchange Act of 1934, we evaluated our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this Annual Report on Form 10-K. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of the end of the period covered by this Annual Report on Form 10-K, these disclosure controls and procedures were adequate to ensure that the information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and include controls and procedures designed to ensure that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake.
Management’s Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over our financial reporting. In order to evaluate the effectiveness of internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act, management conducted an assessment, based upon criteria established in “Internal Control-Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on the evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our internal controls over financial reporting were effective as of December 31, 2013.
Our system of internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions and that the degree of compliance with the policies or procedures may deteriorate. This Annual Report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting.
Changes in Internal Control Over Financial Reporting:
There were no changes in our internal control over financial reporting during the quarter ended December 31, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B.
ITEM 9B.
OTHER INFORMATION.
None.
PART III
ITEM 10.
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
Officers and Directors
Our directors serve until their successor is elected and qualified. Our officers are elected by the board of directors to a term of one (1) year and serve until their successor is duly elected and qualified. The board of directors has no nominating or compensation committees.
The name, address, age and position of our present officers and directors are set forth below:
Name and Address*
Age
Position(s)
Robert M. Baker
President, Principal Executive Officer, Principal Accounting Officer, Principal Financial Officer, Secretary, Treasurer and sole member of the Board of Directors.
*Unless otherwise noted, the address is that of the Company.
Background of Our Officer and Director
Since December 9, 2004, Robert Baker has been our secretary and a member of our board of directors, and since May 31, 2007, Mr. Baker has been our president, principal executive officer, treasurer, principal financial officer, and principal accounting officer. From March 1, 2006 to September 14, 2011, Mr. Baker was an officer and director of Snowdon Resources Corporation, a Nevada corporation, engaged in the business of uranium mining exploration. From June 2003 to January 2006, Mr. Baker was the president, principal executive officer, principal financial officer, principal accounting officer, secretary, treasurer and a director of Global Green Solutions Inc., a Nevada corporation. On January 5, 2006, Mr. Baker resigned as president, principal executive officer, principal financial officer and treasurer. He continues to hold the positions of secretary and a member of the board of directors. From May 2005 to May 2007, Mr. Baker was the secretary and a member of the board of directors of Marathon Gold Corp., a Nevada corporation engaged in the business of mining exploration. From November 2004 to December 2005, Mr. Baker was a director of Cierra Pacific Ventures Ltd. located in Vancouver, British Columbia. Cierra Pacific is engaged in the business of mining exploration. Cierra Pacific does not file reports with the United States Securities and Exchange Commission, but is listed for trading on the TSX Venture Exchange under the symbol CIZ.H. From October 2004 to June 2007, Mr. Baker was the secretary and a director of Tapango Resources Ltd. located in Vancouver, British Columbia. Tapango Resources is engaged in the business of mining exploration. Tapango Resources does not file reports with the United States Securities and Exchange Commission, but is listed for trading on the TSX Venture Exchange under the symbol TPA.H. From September 2004 to June 2006, Mr. Baker was a director and secretary of Tapestry Ventures Ltd. located in Vancouver, British Columbia. Tapestry Ventures is engaged in the business of mining exploration. Tapestry Ventures does not file reports with the United States Securities and Exchange Commission, but is listed for trading on the TSX Venture Exchange under the symbol TPV.H. From January 2004 to March 2006, Mr. Baker was the president, principal executive officer, treasurer and principal financial officer of Sterling Gold Corporation , a Nevada corporation, engaged in the business of mining exploration. From June 2002 to October 2003, Mr. Baker was the president, principal executive officer, treasurer, principal financial officer and a member of the board of directors of TexEn Oil & Gas, Inc. From November 1998 to June 2002, Mr. Baker was a registered representative with Canaccord Capital Corporation, a Canadian broker/dealer registered with the United States Securities and Exchange Commission.
We believe that Mr. Baker is qualified to serve on our board of directors because of his knowledge of our company’s history and current operations, which he gained from working for our company as described above, together with his business experience, also described above.
Involvement in Certain Legal Proceedings
During the past ten years, our sole director and officer has not been involved in any of the following events:
1. any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
2. any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offences);
3. being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities;
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE - continued
4. being found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
5. being the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: (i) any federal or state securities or commodities law or regulation; or (ii) any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease- and-desist order, or removal or prohibition order; or (iii) any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
6. being the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Securities Exchange Act of 1934), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
Director Independence
Mr. Baker, our sole officer and director, is not independent. We have no nominating or compensation committees.
Audit Committee and Charter
Our audit committee is comprised of our board of directors. Our sole director is not deemed to be independent. This creates a potential conflict of interest. Our audit committee’s role is to oversee all material aspects of our reporting, control, and audit functions, except those specifically related to the responsibilities of any other standing committee of the board. This includes a particular focus on the qualitative aspects of financial reporting to shareholders and on our processes for the management of business/financial risk and for compliance with significant legal, ethical and regulatory requirements. In addition, the committee is responsible for (1) selection and oversight of our independent accountant; (2) establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls and auditing matters; (3) establishing procedures for the confidential, anonymous submission by our employees of concerns regarding accounting and auditing matters; (4) establishing internal financial controls; (5) engaging outside advisors; and, (6) funding for the external auditors and any outside advisors engagement by the audit committee.
Audit Committee Financial Expert
We are a reporting issuer in the Province of British Columbia, Canada. National Instrument 52-110 of the Canadian Securities Administrators requires our company, as a venture issuer, to disclose annually in our annual report certain information concerning the constitution of our audit committee and our relationship with our independent auditor. Our board of directors has determined that it does not have an audit committee member that qualifies as an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K. Our audit committee is composed of our sole director. We believe that the audit committee member is capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. In addition, we believe that retaining an independent director who would qualify as an “audit committee financial expert” would be overly costly and burdensome and is not warranted in our circumstances given the early stage of our development and the fact that we have not generated revenues to date.
Code of Ethics
We have adopted a corporate code of ethics. We believe our code of ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of code violations; and provide accountability for adherence to the code. A copy of the code of ethics was filed as Exhibit 14.1 our 2008 Annual Report on Form 10-K as filed with the Securities and Exchange Commission on April 7, 2009.
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE - continued
Disclosure Committee and Charter
We have a disclosure committee and disclosure committee charter. Our disclosure committee is comprised of all of our officers and directors. The purpose of the committee is to provide assistance to the Chief Executive Officer and the Chief Financial Officer in fulfilling their responsibilities regarding the identification and disclosure of material information about us and the accuracy, completeness and timeliness of our financial reports. A copy of the disclosure committee charter was filed as Exhibit 99.3 our 2008 Annual Report on Form 10-K as filed with the Securities and Exchange Commission on April 7, 2009.
Section 16(a) Beneficial Ownership Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers and directors, and persons who beneficially own more than 10% of a registered class of our equity securities to file with the Securities and Exchange Commission initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common shares and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10% stockholders are required by the Securities and Exchange Commission regulations to furnish us with copies of all Section 16(a) reports they file. Based solely on our review of the copies of such forms received by us, or written representations from the reporting persons, we believe that during our 2013 fiscal year, our officers, directors, and owners of 10% or more of our common stock filed all reports required by section 16(a) of the Securities Exchange Act of 1934.
ITEM 11.
ITEM 11.
EXECUTIVE COMPENSATION.
The following table sets forth the compensation paid by us during the last three fiscal years for our officers. This information includes the dollar value of base salaries, bonus awards and number of stock options granted, and certain other compensation, if any. The compensation discussed addresses all compensation awarded to, earned by, or paid to our named executive officers.
Summary Compensation Table
On February 21, 2012 a consulting agreement was executed between us and another company controlled by our sole director and officer, effective January 1, 2012 for a term of 48 months, whereby the other company has agreed to provide the services of its shareholder as the our CEO, COO, CFO and Corporate Secretary. As compensation, we were to pay $90,000 per annum, in equal monthly installments of $7,500, in arrears, plus applicable taxes. We also agreed to reimburse reasonable business and/or entertainment and automobile expenses during the duration of the consulting agreement. The agreement may be terminated by either party on thirty days’ notice. In the event that the agreement is terminated on a change of control or, other than for cause, the consultant is entitled to a severance payment equivalent to twelve months of fees. Effective July 1, 2012, the compensation rate was amended to $108,000 per annum, in equal monthly installments of $9,000 in arrears, plus applicable taxes.
The following table sets forth all compensation paid to our directors during the calendar year December 31, 2013. We do not anticipate paying any compensation to our directors in 2014, other than as described immediately above.
Director Compensation
There are no stock option, retirement, pension, or profit sharing plans for the benefit of our officers and directors.
Long-Term Incentive Plan Awards
We do not have any long-term incentive plans.
Compensation of Directors
We do not have any plans to pay our directors, other than as described immediately below.
ITEM 11.
EXECUTIVE COMPENSATION - continued
Employment Agreements
We have no employment agreements, however, as described above, on February 21, 2012 a consulting agreement was fully executed between us and another company controlled by our director and officer, effective January 1, 2012 for a term of 48 months, whereby the other company has agreed to provide the services of its shareholder as our CEO, COO, CFO and Corporate Secretary.
Indemnification
Under our Bylaws, we may indemnify an officer or director who is made a party to any proceeding, including a lawsuit, because of his position, if he acted in good faith and in a manner he reasonably believed to be in our best interest. We may advance expenses incurred in defending a proceeding. To the extent that the officer or director is successful on the merits in a proceeding as to which he is to be indemnified, we must indemnify him against all expenses incurred, including attorney's fees. With respect to a derivative action, indemnity may be made only for expenses actually and reasonably incurred in defending the proceeding, and if the officer or director is judged liable, only by a court order. The indemnification is intended to be to the fullest extent permitted by the laws of the State of Nevada.
Regarding indemnification for liabilities arising under the Securities Act of 1933, which may be permitted to directors or officers under Nevada law, we are informed that, in the opinion of the Securities and Exchange Commission, indemnification is against public policy, as expressed in the Act and is, therefore, unenforceable.
ITEM 12.
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth, as of the date of this report, the total number of shares of common stock 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.
* Unless otherwise noted, the address is that of the Company.
[1]
The person named above may be deemed to be a “parent” and “promoter” of our company, within the meaning of such terms under the Securities Act of 1933, as amended, by virtue of his/its direct and indirect stock holdings. Mr. Baker, our sole officer and director, is the only “promoter” of our company.
[2]
Mr. Baker holds title to his common stock in the name of Woodburn Holdings Ltd., a British Columbia corporation, which he owns and controls.
Changes in Control
We are not aware of any arrangements which may result in a change in control of our Company.
ITEM 13.
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
In December 2004, we issued a total of 2,500,000 shares of restricted common stock to Dimac Capital Corporation, a corporation owned and controlled by Kathrine MacDonald, our former president, in consideration of $25. Dimac Capital sold its shares to West Peak Ventures of Canada Limited (“West Peak”), in consideration of $25, on May 31, 2007. In December 2004, we also issued 2,500,000 shares of restricted common stock to Woodburn Holdings Ltd., a corporation owned and controlled by Robert M. Baker, our president, in consideration of $25. This was accounted for as a purchase of common stock. In September, 2011, West Peak sold its 2,500,000 shares of our common stock to Woodburn Holdings Ltd. for the original acquisition cost of $25. West Peak no longer holds any of our common stock.
As of December 31, 2013, the following amounts were due (to) or from Robert M. Baker, our president and director, and Woodburn Holdings Ltd., a company which he owns and controls:Accounts payable: $32,108
Mr. Baker, our sole officer and director, is the only person considered to be a promoter of our company within the meaning of such term under the Securities Act of 1933, as amended.
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. - continued
National Instrument 58-101
We are a reporting issuer in the Province of British Columbia, Canada. National Instrument 58-101 of the Canadian Securities Administrators requires our company, as a venture issuer, to disclose annually in our annual report certain information concerning corporate governance disclosure. See Item 10, Audit Committee and Charter, and Audit Committee Financial Expert.
ITEM 14.
ITEM 14.
PRINCIPAL ACCOUNTING FEES AND SERVICES.
(1) Audit Fees
The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for our audit of annual financial statements and review of financial statements included in our Form 10-Qs or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years was:
(2) Audit-Related Fees
The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountants that are reasonably related to the performance of the audit or review of our financial statements and are not reported in the preceding paragraph:
(3) Tax Fees
The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning was:
(4) All Other Fees
The aggregate fees billed in each of the last two fiscal years for the products and services provided by the principal accountant, other than the services reported in paragraphs (1), (2), and (3) was:
(5) Our audit committee’s pre-approval policies and procedures described in paragraph (c)(7)(i) of Rule 2-01 of Regulation S-X were that the audit committee pre-approve all accounting related activities prior to the performance of any services by any accountant or auditor.
(6) The percentage of hours expended on the principal accountant’s engagement to audit our financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full time, permanent employees was nil.
PART IV. OTHER INFORMATION
ITEM 15.
ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
The following is a complete list of exhibits filed as part of this annual report:
   
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities and Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on this 14th day of April, 2014
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
Signature
Title
Date
/s/ Robert M. Baker
Director, President, and Chief Financial Officer
April 14, 2014
Robert M. Baker