Item 1. Business
Summary
Overview
Orofino Gold Corp. (Orofino or the Company) was organized under the laws of the State of Nevada on April 12, 2005. Orofino is a development stage company and has a limited history of operations. The authorized share capital of the Company is 250,000,000 common shares.
Orofino Gold Corp. started operations on September 1, 2007 under the "Clean `N Shine" name. Prior to this, the company had no operations from inception (April 12, 2005) to November 30, 2007. On September 1, 2007, Orofino began operating as a full service automotive car wash, cleaning, detailing, and polishing business. The company has generated revenues from cleaning and car care services specifically, automotive upholstery and leather cleaning and automotive interior and exterior cleaning and washing.
On May 20, 2009, the Company completed a forward stock split of its common stock on a ratio of six shares for every one share of the Company. The record date of the forward stock split was May 15, 2009, the payment date of the forward split was May 19, 2009, and the ex-dividend date of the forward split was May 20, 2009. The forward split was payable as a dividend, thereby requiring no action by shareholders, nor any amendment to the articles of incorporation of the Company. As a result of the forward split, the post forward split number off issued and outstanding shares was 60,000,000.
There are no preferred shares authorized. The Company has issued no preferred shares. The Company has no stock option plan, warrants or other dilutive securities. We are contemplating raising additional capital to finance our business. No final decisions regarding the financing have been made at this time.
On December 5, 2009, the Company passed a resolution to change its name from SNT Cleaning Inc. to Orofino Gold Corp. On December 5, 2009, the Company accepted the resignation of its President, Secretary and director, Robert Denman, and appointed John Martin as a Director of the Company, effective as of equal date. On June 6, 2010 John Martin resigned and Shi Long Ning, a resident of China, was appointed as a director. On February 28, 2011, Ary Pernett, a resident of Colombia; Alfonso Calderon, also a resident of Colombia and Dr, Hans Bocker, a resident of Switzerland joined the board. On January 7, 2011, Salvador Rivero, a resident of Germany, was appointed to the board. Presently Alfonso Calderon is the president and Shi Long Ning is the chairman.
The Company has offices in Colombia located at:
Carrera 40, No.10A-65, Barrio El Poblado
Medellìn - Colombia
Information on Directors and Officers:
Alfonso Calderon
EDUCATION
BS in Geology and Petroleum Engineering from Escuela de Minas de Medellín, Universidad Nacional de Colombia; MSc in Coal Geology / Mining and Geotectonics from University of Illinois; Credits in Economic Geology and Mineral Exploration for Ph.D. at Indiana University and Pennsylvania State University.
PROFESSIONAL EXPERIENCE
Organization, evaluation, and technical and statistical analysis of the Colombian Mining data universe collected in the development of the Technical Appraisal and Control Process for the Improvement of Mining Activity in Colombia. Consulting contract with Minercol Ltda.
Design and preparation of CD Package for international promotion of four areas for the exploration and exploitation of emeralds in the Chivor District, Boyaca, Colombia. Joint Venture with private parties.
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Supervision of the Technical Appraisal and Control Process for the Improvement of Mining Activity in the Minercols La Jagua Seccional Área (Atlántico, Magdalena, Bolívar) and the Minercols Bogotá Seccional (Gran Minería, Córdoba, Cesar y Guajira). For Minercol Ltda.
Design and Implementation of the Colombia National Mining Balance. Design Definition and Implementation of a Computer Model and System. For the Colombian Mines Ministry UPME.
Analysis of the National Minerals Market for the Project MEDC 2000. For Minercol Ltda.
Definition of Technical, Economical and Environmental Potentialities and Restrictions for the Development of the Energy - Mining Sector in Colombia. GIS Tool for this Sector Planning. For the Colombian Mines Ministry UPME.
Appraisal and technical concept on the Geological Exploration Program Final Report submitted by Carboandes S.A. to Minercol Ltda. to develop mining operations at La Victoria and El Tesoro areas within the coal region of La Jagua de Ibirico, Cesar, Colombia.
Technical supervision of the geoelectrical study to establish the alluvial covering thickness on top of the multi seam coal deposit at Similoa and Rincón Hondo areas within the La Loma coal basin, Chiriguaná and La Jagua, Cesar, Colombia.
Drummond Coal Mining Operations appraisal, for Colombian Government, at the Pribbenow Mine in La Loma, Cesar, Colombia.
Feasibility study for Fuel Conversion of vehicles to Liquid Petroleum Gas LPG in Bogotá.
Identification and Value Estimation of all Mining Related Equipment, Machinery and Tools of the Colombian Government Property and the Recommendation of their Use and Final Destination.
Study for appraisement of Potential Demand of Fuel Gases in Colombia.
Technical and Administrative Supervision of the Exploration, Geological Evaluation and Industrial Characterization of Gypsum Deposits in the Area of Páez-Miraflores, Boyacá, Colombia.
Advisory to INGWE Coal Corporation Ltd. from South Africa.
Study for the Appraisement of Potential Substitution of Firewood for Mineral Coal in Colombia.
Definition / Preparation of Bid Terms, Contracts Preparation and Negotiations.
Installation of a Plant for Grinding / Treatment of Industrial Minerals.
Commercialization of Industrial Minerals.
Surface and Underground Geology and Mining Development Adviser.
Managing and coordinating Several Matters before Government Entities.
POSITIONS: Coveñas Terminal Construction Manager, Executive Assistant to the Coveñas Terminal Operations Manager and Executive Assistant of the Caño Limón Field General Maintenance/Construction and the Pipeline/Terminal Operations Manager.
RESPONSIBILITIES: Managing all aspects of construction and installation of the Coveñas Petroleum Terminal facilities. Active participation in the supervision and coordination of all aspects of the Caño Limón-Coveñas pipeline and Coveñas Petroleum Terminal operations and maintenance activities. Participation in evaluating and reviewing bid documents, materials requisitions, budget control, cost centers. Direct participation in the Cravo Norte Association Technical Subcommittee meetings. Coordination of relations with partners. Participation in negotiations with government entities (Minminas, Ecopetrol, Dimar) on permits, operations, others.
Intercol and Intercor (Exxon Subsidiaries)
POSITIONS: Geologist, Field Geological Supervisor, Field Exploration Resident, Projects Director, Field Operations Director, Senior Engineer, Assistant to Cerrejón Coal Project Director and Project Administration Manager.
RESPONSIBILITIES: Managed planning and development of the field exploration program for the Cerrejón Coal Project North Zone. Drilling, logging, log interpretation and correlation. Geometry of coal deposit definition, computer modeling of the Cerrejón Coal Deposit. Volumetric calculations of reserves. Supervision and administration of Intercor contractors performing engineering works. Aerial photography and topographic mapping, underwater (offshore) geotechnical explorations for selection of a main Coal Port. Groundwater Control design and a river diversion geotechnical studies. Mine facilities foundation investigations. Quarries investigations. Seismic and geotechnical studies. Selection of the railroad route.
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Active role in the definition and co-ordination of engineering, construction and procurement of all facilities for the Cerrejón Project. Assist the General Project Director for the supervision, monitoring and appraisal of the Cerrejón Project Prime Contractor (Morrison Knudsen). Active role in the office of Prime Contractor (MK), at Burlingame, California, for definition and coordination of engineering, design, procurement and construction of all facilities for the Cerrejón Project. In Barranquilla, managed several specific responsibilities in the areas of personnel administration, administrative services, government relations, systems support, and public affairs. Monitor MK (Prime Contractor) in related activities such as plans for winding down construction activities, relocation/transfer/termination of personnel and facilities. Disposal of materials and equipment, etc, others.
Carter Oil Company (Exxon Subsidiary)
Wellsite Geologist. Training with Exxon
Geological exploration for coal in Texas, Louisiana, Alabama, Arkansas, Tennessee, West Virginia. Drilling and core description, mapping, log correlation, and evaluation.
Illinois State Geological Survey
Training on general coal geology, mapping and underground mine development. Correlation of electrical logs. Structural geology application for underground mapping and mine development. Drilling and core description and correlation.
Ingeominas (Instituto Nacional de Investigaciones Geológico Mineras de Colombia).
As Field Geologist: Geological mapping along Central and Western cordilleras of Colombia. Rock and soil geological and geophysical correlation for mapping and mineral exploration and evaluation. Soil and hard rock drilling / logging supervision. Log interpretation / correlation. Geochemical mineral exploration in jungle areas. Geological and Economical Evaluation of mineral deposits.
Ary Pernett
EDUCATION
1973: Ingeniero de Minas y Metalúrgia Universidad Nacional de Colombia Medellín
(Mining and Metallurgy Engineer- National University of Colombia)
1977: Course de Reciclage en Géologie Ecole National Superieur de Géologie Nancy, France
(Actualization in Geology National School of Geology Nancy France)
1978: Docteur de L´institute National de Lorraine Nancy France
(Fluid Inclusions in Gour Negre State of Gare in France)
WORK HISTORY
1968 1970: Assistant in Petroleum Lab, National University of Colombia, Medellín-Colombia
1972 1976: Ministery of Mines of Colombia, as Engineer in Technical Assistance for Miners, (Chocó State); Director of Marmato Mines, (Maramto, Caldas State) and Mining Inspecter, (Frontino Gold Mines in Segovia, Antioquia State)
1978 1981: National Institute of Geology of Colombia, INGEOMINAS, as field geologist working in the Mining Map of Antioquia
1982- 1984: Carbones de Urabá (Coals of Urabá, a coal Enterprise exploring for Coal in Urabá area, Antioquia State, Colombia
1985 -1992: Personal activity in mining; explotation in alluvial deposits and assistance for small miners
1993 2000: CDI Gold Company in the Zancudo Mine, Titiribí, Antioquia State, Colombia, as partner, consultant, and at the ent as resident engineer in the mine site.
2000 2010: Personal Business in wood home construction, Cars, Computers, in Mexico
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PUBLICATIONS
1980: Mining Map of the State of Antioquia Ingeominas Medellín Colombia
1980: Memory of the Mining Map of the Antioquia State - Ingeominas Medellín
LANGUAGES
Spanish: 100%
French: 70%
English: 50%
Dr. Hans Bocker
Prof. Bocker lives in Switzerland. He holds two professorships in business administration and applies his dual education in technology and economics/management in many areas. As a cosmopolitan, he works as a consultant, author, finance and business journalist, columnist and IR specialist. He has for decades devoted himself to precious metals and the mining industry. His assignments and interests have taken him to over 60 countries, including many in the Middle and Far East, Africa, Europe, North and South America.
To date, the number of his publications exceeds the 2000 mark, 150 of which are academic. The majority of his articles and papers have been published by the Borsen-Zeitung (11 years of collaboration), the Frankfurter Allgemeine (2 years), Finance and Wirtschaft (over 20 years) and Die Welt (1 year). He can be found under B in all additions of: Whos Who in the World from 1991 to 2009. He teaches at two elite business schools, works in public and international relations, advises a number of commodity and mining companies and is a member of Rotary International.
Ning Shi Long
Mr. Long is a Professional Software Engineer who has led an experienced team in developing and operating specified information and data systems the last 12 years. His company has designed and successfully commissioned over 20 Software installations at local and national organizations. At Dalian Runbest Technology Development Co. Ltd. he was responsible for the entire design and development of key technology and coding for development of public packaging of a proprietary software technology. The clients of the company are concerned with the fields of finance, government, sci-tech education, medical, communication & energy, manufacturing and public utility. He was responsible for project budgeting and the successful launching of major projects within financial guidelines as per the corporate policies of the responsible ministry.
Attributes:
Attended ShanDong University - Information management and information system
Proficient in Chinese, English, French and Japanese languages.
VC++ | proficient | 12 months
OracleDB2 | proficient | 48 months
PowerbuilderSqlserverPowerdesigner | expert | 84 months
JavaAspMs Project | average | 6 months
Ning Shi Long is a hands on leader and is relied-upon for Leadership and financial control and the companys direct link to large Chinese/Japanese investment companies and high net worth individuals. Ning Long is also proficient in handling data information systems to provide information to investors and financial institutions.
Salvador Rivero
Mr. Rivero graduated as a lawyer in Mexico and has over 25 years of diverse experience in international business and corporate finance. An acquisitions specialist, he has been responsible for the development of various turn-key projects in the mining, energy, fertilizer, oil and gas, and shipping sectors. Mr. Rivero has been involved with all phases of mining exploration and development in various senior capacities.
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Mr. Rivero graduated as a lawyer in Mexico and has over 25 years of extensive experience in international business and corporate finance. An acquisitions specialist, he is responsible for the development of various turn-key projects in the energy, fertilizer, oil and gas, and shipping sectors. Mr. Rivero founded and directed Constructora y Perforadora Marina, S.A. de C.V., and Kaiser Internacional, S.A. de C.V., Ultramar Bancorp Inc., Ultramar Capital Plc. and First Mercantile Bank Ltd. In 1998-2000 Mr. Rivero was responsible for acquiring, developing and putting into production a silver mine in Sinaloa for Real de Panuco, S.A. de C.V. and was a member of the Board of Directors of the Canadian mining company Golden Temple Mining and the Mexican mining company Minas Kaiser, S.A. de C.V. Until recently, he acted as the President and served as a Director of Oroco Resource Corp, a mining corporation in Vancouver, Canada during its start up and pre IPO phase, during which time he was responsible for the successful acquisition of its mining properties in Mexico.
Labor Force
Over the year ended May 31, 2011 the company has employed casual part-time labor, as required.
Mining Concessions
On April 6, 2010, the Company counter-signed an offer for joint venture-earn-in to option several mining concessions in the Department of Bolivar, Republic of Colombia. Pursuant to various stages of due diligence it was determined that the best way of obtaining title to the various target mineral properties was to enter into new agreements. On November 15, 2010 the Company entered into four agreements. The terms of the new agreements allow for the Company to acquire an 80% interest in four mining concessions. The agreements were amended on April 18, 2011. However the Company was unable to make the October 1, 2011 payment under the amended formula. On March 1, 2012 the Company amended the acquisition agreements again on a basis of reducing the number of properties from 4 to 2 and reducing the payment schedule. A summary of the terms and ongoing payment obligations are as follows:
Cash payments:
1.
$5,000 as an initial option payment;
2.
$100,000 on or before January 31, 2011 (paid);
3.
$150,000 on or before March 31, 2011 (amended), (paid), (previously February 28, 2011);
4.
$50,000 on April 18, 2011 (amended), (paid) (previously $800,000 on or before March 31, 2011);
5.
$450,000 every six months starting on July 1, 2012 (previously $900,000 every six months starting October 1, 2011, of which the Company may pay one-half of issuing restricted common shares to the vendor at a 10-day average trading price per amendment on April 18, 2011), (previously $800,000 every six months thereafter starting on June 1, 2011).
Share issuances:
1.
24 million shares on or before March 31, 2011 (issued in March 2011)
2.
10 million shares on or before March 31, 2012, (discontinued under March 1, 2012 amendment) and
3.
10 million shares on or before December 31, 2012 (discontinued under March 1, 2012 amendment).
The Company paid a total of $350,000 to independent third parties for consulting services in relation to the signing of the option agreements. The Company incurred a cost of $100,000 paid to a person in the United States for the initial introduction of the mineral concessions and $250,000 paid to some concession holders as the initial payments to pursue an option agreement.
BANKRUPTCY OR SIMILAR PROCEEDINGS
We have not been the subject of a bankruptcy, receivership or similar proceedings.
RESEARCH AND DEVELOPMENT EXPENDITURES
We have not incurred any research or development expenditures since our incorporation.
PATENTS AND TRADEMARKS
We do not own any patents or trademarks.
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Reports to Securities Holders
We provide an annual report that includes financial information. We will make our financial information equally available to any interested parties or investors through compliance with the disclosure rules of Regulation S-K for a small business issuer under the Securities Exchange Act of 1934. We are subject to disclosure filing requirements including filing Form 10K annually and Form 10Q quarterly. In addition, we will file Form 8K and other proxy and information statements from time to time as required. We do not intend to voluntarily file the above reports in the event that our obligation to file such reports is suspended under the Exchange Act. The public may read and copy any materials that we file with the Securities and Exchange Commission, (SEC), at the SECs Public Reference Room at 100 F Street NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
Item 1A. Risk Factors
INVESTING IN OUR SECURITIES INVOLVES A HIGH DEGREE OF RISK AND ANY PROSPECTIVE SHAREHOLDER SHOULD CONSIDER CAREFULLY THE FOLLOWING FACTORS IN EVALUATING THE COMPANY AND ITS BUSINESS.
IF ANY OF THE FOLLOWING RISKS OCCUR, OUR BUSINESS, OPERATING RESULTS AND FINANCIAL CONDITION COULD BE SERIOUSLY HARMED. THE TRADING PRICE OF OUR SHARES OF COMMON STOCK COULD DECLINE DUE TO ANY OF THESE RISKS, AND YOU MAY LOSE ALL OR PART OF YOUR INVESTMENT.
THE COMPANIES SECURITIES ARE SPECULATIVE BY NATURE AND INVOLVE AN EXTREMELY HIGH DEGREE OF RISK AND SHOULD BE PURCHASED ONLY BY PERSONS WHO CAN AFFORD TO LOSE THEIR ENTIRE INVESTMENT. THE FOLLOWING KNOWN RISK FACTORS COULD CAUSE OUR ACTUAL FUTURE OPERATING RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN ANY FORWARD LOOKING STATEMENTS, ORAL OR WRITTEN, MADE BY OR ON BEHALF OF US. IN ASSESSING THESE RISKS, WE SUGGEST THAT YOU ALSO REFER TO OTHER INFORMATION CONTAINED IN THIS DOCUMENT, INCLUDING OUR FINANCIAL STATEMENTS AND RELATED NOTES.
RISK FACTORS
(a) RISKS RELATED TO OUR BUSINESS
THE COMPANY HAS A LIMITED OPERATING HISTORY UPON WHICH TO BASE AN EVALUATION OF ITS BUSINESS AND PROSPECTS. WE MAY NOT BE SUCCESSFUL IN OUR EFFORTS TO GROW OUR BUSINESS AND TO EARN INCREASED REVENUES. AN INVESTMENT IN OUR SECURITIES REPRESENTS SIGNIFICANT RISK AND YOU MAY LOSE ALL OR PART YOUR ENTIRE INVESTMENT.
We have a limited history of operations and we may not be successful in our efforts to grow our business and to increase revenues. Our business and prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development, particularly our car cleaning business. Sales and operating results are difficult to forecast because they generally depend on the volume and timing of the amount of business transacted - the frequency of which is uncertain. As a result, management may be unable to adjust its spending in a timely manner to compensate for any unexpected revenue shortfall. This inability could cause net losses in a given period to be greater than expected. An investment in our securities represents significant risk and you may lose all or part your entire investment.
WE HAVE A HISTORY OF LOSSES. FUTURE LOSSES AND NEGATIVE CASH FLOW MAY LIMIT OR DELAY OUR ABILITY TO BECOME PROFITABLE. IT IS POSSIBLE THAT WE MAY NEVER ACHIEVE PROFITABILITY. AN INVESTMENT IN OUR SECURITIES REPRESENTS SIGNIFICANT RISK AND YOU MAY LOSE ALL OR PART YOUR ENTIRE INVESTMENT.
We have yet to establish profitable operations or a history of profitable operations. We anticipate that we will continue to incur substantial operating losses for an indefinite period of time due to the significant costs associated with the development of our business.
Since incorporation, we have expended financial resources on the development of our business. As a result, losses have been incurred since incorporation. Management expects to experience operating losses and negative cash flow for the foreseeable future. Management anticipates that losses will continue to increase from current levels because the Company expects to incur additional costs and expenses related to: brand development, marketing and promotional activities; the possible addition of new personnel; and the development of relationships with strategic business partners.
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The Companys ability to become profitable depends on its ability to generate and sustain sales while maintaining reasonable expense levels. If the Company does achieve profitability, it cannot be certain that it would be able to sustain or increase profitability on a quarterly or annual basis in the future.
An investment in our securities represents significant risk and you may lose all or part your entire investment.
IF WE DO NOT OBTAIN ADDITIONAL FINANCING, OUR BUSINESS WILL FAIL.
We will need to obtain additional financing in order to complete our business plan because we currently do not have any operations and we have no income. We do not have any arrangements for financing and we may not be able to find such financing if required. Obtaining additional financing would be subject to a number of factors, including investor sentiment. These factors may adversely affect the timing, amount, terms, or conditions of any financing that we may obtain or make any additional financing unavailable to us. If we do not obtain additional financing our business will fail. Please note that the proceeds from the sale of the securities offered in this registration statement will go directly to the selling shareholder and not to the Company. As such, this offering might negatively affect the Companys ability to raise needed funds through a primary offering of the Company's securities in the future.
OUR OPERATING RESULTS WILL BE VOLATILE AND DIFFICULT TO PREDICT. IF THE COMPANY FAILS TO MEET THE EXPECTATIONS OF PUBLIC MARKET ANALYSTS AND INVESTORS, THE MARKET PRICE OF OUR COMMON STOCK MAY DECLINE SIGNIFICANTLY.
Management expects both quarterly and annual operating results to fluctuate significantly in the future. Because our operating results will be volatile and difficult to predict, in some future quarter our operating results may fall below the expectations of securities analysts and investors. If this occurs, the trading price of our common stock may decline significantly.
A number of factors will cause gross margins to fluctuate in future periods. Factors that may harm our business or cause our operating results to fluctuate include the following: the inability to obtain new customers at reasonable cost; the ability of competitors to offer new or enhanced services or products; price competition; the failure to develop marketing relationships with key business partners; increases in our marketing and advertising costs; increased fuel costs and increased labour costs that can affect demand for cleaning equipment; the amount and timing of operating costs and capital expenditures relating to expansion of operations; a change to or changes to government regulations; seasonality and a general economic slowdown. Any change in one or more of these factors could reduce our ability to earn and grow revenue in future periods.
THE COSTS OF BEING A PUBLIC COMPANY WILL PUT A STRAIN ON OUR RESOURCES
We are subject to the reporting requirements of the Securities Exchange Act of 1934, or the "Exchange Act," and the Sarbanes-Oxley Act of 2002. The Exchange Act requires that we file annual, quarterly and current reports with respect to our business and financial condition. The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures and internal control for financial reporting. These requirements will place a strain on our systems and resources as well as add additional costs to our business in complying with these regulations. The cost and effort required to stay compliant with these regulations will divert management's attention from other business concerns, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. If we are unable to conclude that our disclosure controls and procedures and internal control over financial reporting are effective, or if our independent public accounting firm is unable to provide us with an unqualified report as to the effectiveness of our internal control over financial reporting in future years, investors may lose confidence in our business and the value of our stock may decline.
(b) RISKS RELATED TO THE MINERAL EXPLORATION AND DEVELOPMENT BUSINESS
BECAUSE OF THE SPECULATIVE NATURE OF EXPLORATION AND DEVELOPMENT, THERE IS A SUBSTANTIAL RISK THAT OUR BUSINESS WILL FAIL.
The search for valuable natural resources as a business is extremely risky. We can provide investors with no assurance that the properties we have in Colombia contain commercially exploitable reserves. Exploration for natural reserves is a speculative venture involving substantial risk. Few properties that are explored are ultimately developed into producing commercially feasible reserves. Problems such as unusual or unexpected formations and other conditions are involved in mineral exploration and often result in unsuccessful exploration efforts. In such a case, we would be unable to complete our business plan.
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BECAUSE WE HAVE NOT COMMENCED BUSINESS OPERATIONS, WE FACE A HIGH RISK OF BUSINESS FAILURE DUE TO OUR INABILITY TO PREDICT THE SUCCESS OF OUR BUSINESS
We are in the initial stages of exploration of our mineral concessions and thus have no way to evaluate the likelihood that we will be able to operate our business successfully. To date have been involved primarily in organizational activities, and the acquisition and exploration of the mineral concessions. We have not earned any revenues as of the date of this report.
BECAUSE OF THE UNIQUE DIFFICULTIES AND UNCERTAINTIES INHERENT IN MINERAL EXPLORATION AND THE MINING BUSINESS, WE FACE A HIGH RISK OF BUSINESS FAILURE
Potential investors should be aware of the difficulties normally encountered by early-stage mineral exploration companies and the high rate of failure of such enterprises. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the exploration of the mineral properties that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems relating to exploration, and additional costs and expenses that may exceed current estimates.
In addition, the search for valuable minerals involves numerous hazards. As a result, we may become subject to liability for such hazards, including pollution, cave-ins and other hazards against which we cannot insure or against which we may elect not to insure. The payment of such liabilities may have a material adverse effect on our financial position.
BECAUSE WE ANTICIPATE OUR OPERATING EXPENSES WILL INCREASE PRIOR TO OUR EARNING REVENUES, WE MAY NEVER ACHIEVE PROFITABILITY
Prior to completion of our exploration stage, we anticipate that we will incur increased operating expenses without realizing any revenues. Therefore, we expect to incur significant losses into the foreseeable future. We recognize that if we are unable to generate significant revenues from the exploration of our mineral claims we will not be able to earn profits or continue operations. There is no history upon which to base any assumption as to the likelihood that we will prove successful, and we can provide investors with no assurance that we will generate any operating revenues or ever achieve profitable operations. If we are unsuccessful in addressing these risks, our business will most likely fail.
BECAUSE ACCESS TO OUR MINERAL CLAIMS MAY BE RESTRICTED BY INCLEMENT WEATHER, WE MAY BE DELAYED IN OUR EXPLORATION
Access to our mineral properties may be restricted through some of the year due to weather in the area. As a result, any attempt to test or explore the property is largely limited to the times when weather permits such activities. These limitations can result in significant delays in exploration efforts. Such delays can have a significant negative effect on our results of operations.
AS WE UNDERTAKE EXPLORATION OF OUR MINERAL CLAIMS, WE WILL BE SUBJECT TO COMPLIANCE WITH GOVERNMENT REGULATION THAT MAY INCREASE THE ANTICIPATED COST OF OUR EXPLORATION PROGRAMS
There are several governmental regulations that materially restrict mineral exploration. We may be required to obtain work permits, post bonds and perform remediation work for any physical disturbance to the land in order to comply with these laws. While our planned exploration program budgets for regulatory compliance, there is a risk that new regulations could increase our costs of doing business and prevent us from carrying out our exploration programs.
(c) RISKS RELATED TO THE AUTOMOTIVE CLEANING INDUSTRY
OUR INDUSTRY IS COMPETITIVE AND IS CHARACTERIZED BY LOW PROFIT MARGINS AND HIGH FIXED COSTS, A MINOR SHORTFALL FROM EXPECTED REVENUE COULD AFFECT THE DEMAND FOR OUR SERVICES, HAVE A SIGNIFICANT IMPACT ON OUR ABILITY TO GENERATE REVENUE, AND POSSIBLY CAUSE OUR BUSINESS TO FAIL.
Our industry is competitive. Our competitors who provide car wash packages compete for our business. Aggressive marketing tactics implemented by our competitors could impact our limited financial resources and adversely affect our ability to compete in our market.
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UNFORESEEN FUTURE ENVIRONMENTAL REGULATIONS COULD CAUSE OUR OPERATING COSTS TO INCREASE, ADVERSELY IMPACT OUR OPERATING RESULTS, AND POSSIBLY CAUSE OUR BUSINESS TO FAIL.
Our industry is concerned with environmental issues, specifically the cleanliness and conservation of our finite water resources.
Waste water along with cleaning solvents and chemicals generated from car washing, is discharged directly into storm sewers carrying contaminants directly into our local water-ways. The chemicals used by the washing process and discharged in storm sewers could be seen as environmentally unsafe by environmental bodies and affect future operations of our business. While there are currently no regulations on the disposal of contaminated water, future environmental regulations may be legislated by government that could adversely affect how we discharged wastewater. Our company is at risk to any number of future environmental regulations imposed by government bodies. Any future environmental regulations that we may have to comply with may change the way we operate our business and add unforeseen costs to our business.
UNFORESEEN INDUSTRY TRENDS COULD ADVERSELY IMPACT OUR OPERATING RESULTS.
Industry efforts are focused upon improving the quality of existing methods of auto washing and detailing, however unforeseen industry trends could adversely impact operation results and subsequently cause our business to fail.
OUR QUARTERLY RESULTS ARE SIGNIFICANTLY AFFECTED BY MANY FACTORS, AND OUR RESULTS OF OPERATIONS FOR ANY ONE QUARTER ARE NOT NECESSARILY INDICATIVE OF OUR ANNUAL RESULTS OF OPERATIONS. THE COMPANY HAS A LIMITED OPERATING HISTORY UPON WHICH TO BASE AN EVALUATION OF ITS BUSINESS AND PROSPECTS. IT IS POSSIBLE THAT WE MAY NEVER ACHIEVE PROFITABILITY. AN INVESTMENT IN OUR SECURITIES REPRESENTS SIGNIFICANT RISK AND YOU MAY LOSE ALL OR PART YOUR ENTIRE INVESTMENT.
Our proposed operations are subject to a variety of factors that frequently cause considerable volatility in our earnings, including:
*
increases in the price for fuel, security and insurance costs
*
general economic trends
*
the prosperity of the automotive, transportation, tourism and recreation industries
In addition, seasonal variations in traffic and expenditures could affect our operating results from quarter to quarter. Seasonality can affect demand for cleaning and washing automobiles and, hence our potential sales from quarter to quarter. Our results of operations in any one quarter are not necessarily indicative of our annual results of OPERATIONS. It is possible that we may never earn enough revenue to achieve profitability. An investment in our securities represents significant risk and you may lose all or part your entire investment.
(d) RISKS RELATED TO THE OWNERSHIP OF OUR SECURITIES
THE TRADING PRICE OF OUR COMMON STOCK MAY DECREASE DUE TO FACTORS BEYOND OUR CONTROL. THESE FACTORS MAY RESULT IN SUBSTANTIAL LOSSES TO INVESTORS IF INVESTORS ARE UNABLE TO SELL THEIR SHARES AT OR ABOVE THEIR PURCHASE PRICE.
The trading price of our common stock is subject to significant fluctuations due to a number of factors, including:
·
our status as a development stage company with a limited operating history;
·
limited revenues to date, which may make risk-averse investors more inclined to sell their shares on the market more quickly and at greater discounts than may be the case with the shares of a seasoned issuer in the event of negative news or lack of progress and announcements of new products by us or our competitors;
·
the timing and development of products and services that we may offer;
·
general and industry-specific economic conditions;
·
actual or anticipated fluctuations in our operating results;
·
our capital commitments;
·
the loss of any of our key management personnel.
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In addition, the financial markets have experienced extreme price and volume fluctuations. The market prices of the securities of similar companies have been highly volatile and may continue to be highly volatile in the future, some of which may be unrelated to the operating performance of particular companies.
The sale or attempted sale of a large amount of common stock into the market may also have a significant impact on the trading price of our common stock. Many of these factors are beyond our control and may decrease the market price of our common stock, regardless of our operating performance. In the past, securities class action litigation has often been brought against companies that experience volatility in the market price of their securities. Whether or not meritorious, litigation brought against us could result in substantial costs, divert management's attention and resources and harm our financial condition and results of operations
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WE MAY RAISE ADDITIONAL CAPITAL THROUGH A SECURITIES OFFERING THAT COULD DILUTE YOUR OWNERSHIP INTEREST AND VOTING RIGHTS.
We will need to raise additional capital to fund our business. If we raise additional funds through the issuance of equity, equity-related or convertible debt securities, these securities may have rights, preferences or privileges senior to those of the holders of our common stock. The issuance of additional common stock or securities convertible into common stock will also have the effect of diluting the proportionate equity interest and voting power of holders of our common stock.
OUR INCORPORATION DOCUMENTS AND NEVADA LAW INCLUDE PROVISIONS THAT MAY INHIBIT AN ATTEMPT BY OUR SHAREHOLDER TO CHANGE OUR DIRECTION OR MANAGEMENT, OR MAY INHIBIT A POSSIBLE TAKEOVER THAT SHAREHOLDERS CONSIDER FAVORABLE. THE OCCURRENCE OF SUCH EVENTS COULD LIMIT THE MARKET PRICE OF YOUR STOCK.
Our certificate of incorporation and bylaws contain provisions that could delay or prevent a change in control of our company, such as prohibiting cumulative voting in the election of directors, which would otherwise allow less than a majority of shareholders to elect director candidates. In addition, we are governed by the provisions of Section 203 of Nevada General Corporate Law. These provisions may prohibit large shareholders from merging or combining with us, which may prevent or frustrate any attempt by our shareholders to change our management or the direction in which we are heading. These and other provisions in our amended and restated certificate of incorporation and bylaws and under Nevada law could reduce the price that investors might be willing to pay for shares of our common stock in the future and result in the market price being lower than it would be without these provisions.
WE WILL NEED TO RAISE ADDITIONAL CAPITAL AND, IN SO DOING, WILL FURTHER DILUTE THE TOTAL NUMBER OF SHARES ISSUED AND OUTSTANDING.
We will need to raise additional capital, in addition to the financing as reported in this registration statement, by issuing additional shares of common stock and will, thereby, increase the number of common shares outstanding. There can be no assurance that this additional capital will be available and, if the capital is available at all, that it will be available on terms acceptable to the Company. The issuances of additional equity securities by the Company may result in a significant dilution in the equity interests of its current security holders. Alternatively, we may have to borrow large sums, and assume debt obligations that require us to make substantial interest and capital payments. If we are able to raise additional capital, we cannot assure that it will be on terms that enhance the value of our common shares. If the Company is unable to obtain financing in the amounts and on terms deemed acceptable, the business and future success of the Company will almost certainly be adversely affected.
WE ARE DEPENDENT ON KEY PERSONNEL.
The Company's success will largely rely on the efforts and abilities of certain key personnel. While the Company does not foresee any reason why such key personnel will not remain with the Company, if for any reason they do not, the Company could be adversely affected. The Company has not purchased key man life insurance for any of these individuals.
AN ACTIVE TRADING MARKET FOR OUR COMMON SHARES MAY NOT DEVELOP.
Our common shares are new issues of securities with no established trading markets or prior trading histories, and there can be no assurance regarding the future development of markets for our common shares, the ability of holders of our common shares to sell or the prices for which holders may be able to sell their holdings of our common shares. Furthermore, the liquidity of, and trading markets for, our common shares may be adversely affected by changes in the car cleaning industry and in the overall economy, as well as by any changes in our financial condition or results of operations.
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OUR STOCK IS A PENNY STOCK. TRADING OF OUR STOCK MAY BE RESTRICTED BY THE SEC'S PENNY STOCK REGULATIONS AND THE NASD'S SALES PRACTICE REQUIREMENTS, WHICH MAY LIMIT A STOCKHOLDER'S ABILITY TO BUY AND SELL OUR STOCK.
Our common stock is presently considered to be a penny stock and is subject to SEC rules and regulations which impose limitations upon the manner in which such shares may be publicly traded and regulates broker-dealer practices in connection with transactions in "penny stocks." Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system). 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 that provides information about penny stocks and the risks in the penny stock market. The broker-dealer must also 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. In addition, the penny stock rules generally require that prior to a transaction in a penny stock, the broker-dealer 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 a stock that becomes subject to the penny stock rules which may increase the difficulty investors may experience in attempting to liquidate such securities.
FORWARD-LOOKING STATEMENTS
This Form 10-KSB contains forward-looking statements that involve risks and uncertainties. We use words such as anticipate, believe, plan, expect, future, intend and similar expressions to identify such forward-looking statements. You should not place too much reliance on these forward-looking statements. Our actual results are likely to differ materially from those anticipated in these forward-looking statements for many reasons.