UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
(x) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
ACT OF 1934
For the fiscal year ended November 30, 2003
-------------------
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transaction period from to
Commission File number 000-32181
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BROOKMOUNT EXPLORATIONS, INC.
------------------------------
(Exact name of Company as specified in charter)
Nevada 98-0201259
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State or other jurisdiction of (I.R.S. Employee
Incorporation or Organization I.D. No.)
400 Burrard Street, Suite 1400
Vancouver BC, Canada V6C 3G2
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number,
including area code 604-643-1745
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Securities registered pursuant to section 12(b) of the Act:
Title of each share Name of each exchange on which registered
None None
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Securities registered pursuant to Section 12(g) of the Act:
Common Stock
------------
(Title of Class)
Check whether the Issuer (1) filed all reports required to be filed by section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for a shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes [X] No [ ]
Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B is not contained herein, and will not be contained, to the best
of the registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
State issuer's revenues for its most recent fiscal year: Nil
------------------
State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, as of a
specified date within the past 60 days. (See definition of affiliate in Rule
12b-2 of the Exchange Act.)
$939,254 as at March 31, 2004
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.
9,837,014 shares of common stock as at March 31, 2004
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2
TABLE OF CONTENTS
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Page
----
PART I
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ITEM 1. DESCRIPTION OF BUSINESS............................................. 4
ITEM 2. DESCRIPTION OF PROPERTY............................................. 8
ITEM 3. LEGAL PROCEEDINGS................................................... 10
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITIES HOLDERS................. 10
PART II
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ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS............ 10
ITME 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION........... 11
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA...................... F-F11
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE.............................. 12
ITEM 8A. CONTROLS AND PROCEDURES............................................. 12
PART III
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ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTOERS AND CONTROL PERSONS....... 13
ITEM 10. EXECUTIVE COMPENSATION.............................................. 15
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICAL
OWNERS AND MANAGEMENT............................................... 16
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...................... 17
ITEM 13. EXHIBITS AND REPORTS................................................ 18
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.............................. 18
SIGNATURES.......................................................... 19
3
PART 1
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ITEM 1. DESCRIPTION OF BUSINESS
HISTORY AND ORGANIZATION
Brookmount Explorations, Inc. (the "Company"), a Nevada Corporation, was
incorporated on December 9, 1999. Since inception, the Company has not been in
bankruptcy, receivership or similar proceedings. It has not had any material
reclassification, merger, consolidation, purchase or sale of a significant
amount of assets not in the ordinary course of business. The Company has no
subsidiaries and no affiliated companies. The Company's executive offices are
located at 400 Burrard Street, Suite 1400, Vancouver, B.C., Canada, V6C 3G2
(Telephone: 604-643-1745).
The Company's Articles of Incorporation currently provide that the Company is
authorized to issue 200,000,000 shares of common stock, par value $0.001 per
share. As at November 30, 2003 there were 9,708,900 shares outstanding.
The Company intends to commence business operations as a mineral exploration
stage company and intends to apply to have its common stock quoted on the OTC
Bulletin Board. To date, it has not made an application to file the required
forms with the NASD. Management cannot guarantee that the Company will ever be
quoted on the OTC Bulletin Board.
The Company plans to become engaged in the exploration, and if warranted, the
development of mineral properties. Currently, the Company owns an interest in
five mineral claims located in Quebec which are known as the Brookmount claims.
In addition, the Company has entered into an agreement whereby it may acquire an
interest in six mineral concessions located in Peru which are collectively known
as the Mercedes property.
Brookmount Claims
The Company presently has the mineral rights to five mineral claims called the
Brookmount claims located in Chazel Township, Abitibi West County, Quebec.
The Company retained J.G. Burns & Associates of Timmins, Ontario were retained
to write a geological report on these claims. The claims are in good standing
until November 14, 2004.
No ore body has been discovered on the Brookmount claims. Even with a major
exploration program, there is no assurance an ore body will be discovered.
Presently, the Company does not have sufficient funds to undertake any further
exploration activities unless it obtains funds from its directors and officers
or raises additional capital through the sale of its equity. The directors do
not have any arrangements in this regard.
The Company has no sources of revenue either from the Brookmount claim or any
other asset.
4
Mercedes Property
The Company has also entered into an agreement with its president, Peter Flueck,
whereby the Company has agreed to purchase a 100% interest in six mineral
concessions comprising a total of 2,550 hectares located in Ahuigrande Parish,
Comas District, Concepcion Province of the Department of Junin, Peru. Pursuant
to the agreement, the Company must issue 5,000,000 shares of common stock and
pay $20,000 to Peter Flueck and his assignees. As of the date of this annual
report, this agreement has not closed.
Employees
The Company does not have any full time employees and the directors and officers
devote such time as is required to the affairs of the Company. Once a major
exploration program commences the Company will need the officers to devote more
time to the activities of the Company or it will be required to hire consultants
to undertake the work.
Available Information
The Company has not yet delivered any annual reports to its shareholders. Once
it has obtained a quotation on either the OTCBB, which might never happen, it
will hold annual general meetings and distribute certain documents, including
financial statements, to shareholders of record.
Presently, the Company files with the United States Securities and Exchange
Commission (the "SEC") on Forms 10-KSB and 10-QSB.
The public may read and copy any material the Company files with the SEC at the
SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C., 20549.
The public may obtain information on the operation of the Public Reference Room
by calling the SEC at 1-800-SEC-0330. The Company is on electronic files and
therefore the public can review the Company's filing on the SEC Internet site
that contains reports, proxy, and information statements, and other information
regarding the Company. This information can be obtained by accessing the SEC
website address at http://www.sec.gov.
The Company's internet address is www.brookmount.com
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RISK FACTORS
The Company's business is subject to numerous risk factors, including the
following:
THE MINERAL PROPERTIES IN WHICH WE HAVE AN INTEREST, THE BROOKMOUNT CLAIMS AND
THE MERCEDES PROPERTY, HAS NO RESERVES.
Our sole mineral property assets are the Brookmount claims in Quebec and the
Mercedes property in Peru. We have not yet completed our acquisition of the
Mercedes property.
As both the Brookmount and the Mercedes properties are in the exploration stage,
they do not generate any cash flow. Accordingly, we have no means of producing
any income. We anticipate incurring losses for the foreseeable future.
5
IF WE DO NOT OBTAIN ADDITIONAL FINANCING, OUR BUSINESS WILL FAIL.
Our current operating funds are less than necessary to complete planned
exploration on our mineral properties, and therefore we will need to obtain
additional financing in order to complete our business plan. As of November 30,
2003, we had cash in the amount of $37,429. We currently do not have any
operations and we have no income.
Our business plan calls for significant expenses in connection with the
exploration of the Brookmount claims and the Mercedes property. We do not have
sufficient funds to complete recommended exploration on the properties and
ongoing administrative expenses.
We will also require additional financing if the costs of the exploration of our
properties are greater than anticipated. We will require additional financing to
sustain our business operations if we are not successful in earning revenues
once exploration is complete. We do not currently have any arrangements for
financing and we can provide no assurance to investors that we will be able to
find such financing if required. Obtaining additional financing would be subject
to a number of factors, including the market prices for metals such as gold,
investor acceptance of our properties and general investor sentiment. These
factors may make the timing, amount, terms or conditions of additional financing
unavailable to us.
The most likely source of future funds presently available to us is through the
sale of equity capital. Any sale of share capital will result in dilution to
existing shareholders. The only other anticipated alternative for the financing
of further exploration would be the offering by us of an interest in our
properties to be earned by another party or parties carrying out further
exploration thereof, which is not presently contemplated.
BECAUSE OF THE SPECULATIVE NATURE OF EXPLORATION OF MINERAL PROPERTIES, THERE IS
A SUBSTANTIAL RISK THAT OUR BUSINESS WILL FAIL.
The search for valuable minerals as a business is extremely risky. We can
provide investors with no assurance that the mineral claims that we have an
interest in contain commercially exploitable reserves of valuable metals.
Exploration for minerals is a speculative venture necessarily involving
substantial risk. The expenditures to be made by us in the exploration of the
optioned mineral properties may not result in the discovery of commercial
quantities of minerals. 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.
BECAUSE OF THE INHERENT DANGERS INVOLVED IN MINERAL EXPLORATION, THERE IS A RISK
THAT WE MAY INCUR LIABILITY OR DAMAGES AS WE CONDUCT OUR BUSINESS.
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.
6
WE MAY NOT BE ABLE TO OPERATE AS A GOING CONCERN AND OUR BUSINESS MAY FAIL.
The Independent Auditor's Report to our audited financial statements for the
period ended November 30, 2003, indicates that there are a number of factors
that raise substantial doubt about our ability to continue as a going concern.
Such factors identified in the report are that we are in the pre-exploration
stage, we have no established source of revenue and that we are dependent on our
ability to raise capital from shareholders or other sources to sustain
operations.
IF WE DO NOT OBTAIN CLEAR TITLE TO OUR PROPERTIES, OUR BUSINESS MAY FAIL.
While we have obtained geological reports with respect to Brookmount claims and
the Mercedes property, this should not be construed as a guarantee of title. The
property may be subject to prior unregistered agreements, transfers or native
land claims, and title may be affected by undetected defects. The properties
have not been surveyed and therefore, the precise location and areas of the
properties may be in doubt.
IF A MARKET FOR OUR COMMON STOCK DOES NOT DEVELOP, SHAREHOLDERS MAY BE UNABLE TO
SELL THEIR SHARES.
There is currently no market for our common stock and we can provide no
assurance that a market will develop. We have applied for listing of our common
stock on the NASD over the counter bulletin board. However, we can provide
investors with no assurance that our shares will be traded on the bulletin board
or, if traded, that a public market will materialize. If no market is ever
developed for our shares, it will be ifficult for shareholders to sell their
stock. In such a case, shareholders may find that they are unable to achieve
benefits from their investment.
IF A MARKET FOR OUR COMMON STOCK DEVELOPS, OUR STOCK PRICE MAY BE VOLATILE.
If a market for our common stock develops, we anticipate that the market price
of our common stock will be subject to wide fluctuations in response to several
factors, including:
(1) actual or anticipated variations in our results of operations; (2) our
ability or inability to generate new revenues; (3) increased competition; and
(4) conditions and trends in the mineral exploration industry.
Further, if our common stock is traded on the NASD over the counter bulletin
board, our stock price may be impacted by factors that are unrelated or
disproportionate to our operating performance. These market fluctuations, as
well as general economic, political and market conditions, such as recessions,
interest rates or international currency fluctuations may adversely affect the
market price of our common stock.
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
7
forward-looking statements for many reasons, including the risks faced by us
described in the above "Risk Factors" section and elsewhere in this document.
ITEM 2. DESCRIPTION OF PROPERTY
BROOKMOUNT PROPERTY
The Brookmount property consists of five claims totalling approximately 500
acres, which are located in Chazel Township, Abitibi West County, Quebec. A 100%
interest in these claims were recorded in the name of George Fournier, which he
holds in trust for the Company, on December 20, 1999, and subsequently
registered on February 1, 2000. Assessment work with a minimum value of $6000.00
must be submitted to Quebec's Ministry of Mines by November 14, 2004 in order to
keep the claims in good standing.
Location of Brookmount claim
The claims lie in northwestern Quebec some 100 miles North, North East from the
city of Rouyn-Noranda, Quebec. The claims are easily accessible by gravel and
logging roads.
History of the Brookmount mining area
Chazel Township and the general surrounding area have been prospected and
explored since the early 1900s. Gold was originally the main commodity sought,
but interest in base metals increased following the discovery in 1922 of the
Oditan copper-zinc occurrence in the township and in 1925 of the Normetal
copper-zinc-silver-gold deposit. Exploration for copper-nickel and asbestos
deposits was undertaken in the 1970s but since the 1980s the major emphasis once
again shifted to gold.
Past Exploration of the Brookmount claim
Summaries for work conducted on properties now overlain by the Brookmount claim
are as follows.
1973-1975: Dome Explorations (Canada) Limited ("Dome")
Dome's 41 full lot claims in Chazel and Dission Townships included the present
Brookmount property, and were staked to cover several anomalies defined by an
airborne electromagnetic survey contracted by the Quebec government in 1972.
Ground magnetic and horizontal loop electromagnetic (HLEM) surveys conducted in
1973 defined a strong 3/10 mile long HLEM anomaly with a low but precise
magnetic correlation. Hole 60C-1, drilled on the property in 1974 to a depth of
100 yards, tested the anomaly. A 5.3 yard section and mineralized with 10%
pyrite, a rock type often found in the presence of copper and gold
mineralization, assayed 0.08% copper.
An HLEM survey conducted over the remainder of the property in 1975 defined a
strong, long, formational conductor, as well as four shorter anomalies
approximately 220 yards south of the former. Two of the shorter anomalies lie
within the Brookmount claims and are situated about 220 to 275 yards south of
the north boundary. Drill testing was recommended for both conductors but there
are no records to indicate that either was ever drilled.
8
1986-1987: Resources Macamic Inc. ("Macamic")
Macamic held a contiguous, irregularly shaped block of 97 claims in Chazel
Township and Dission Township. The present Brookmount claims were included
within their property limits.
The property was acquired as a gold project. Work conducted in 1986 included
induced polarization (IP), HLEM, magnetic and geological surveys. Nine short
lines of IP scattered about the property were surveyed. On one line, which
extended from the north onto the Brookmount property, a well defined anomaly
coincident with an HLEM conductor (Dome survey) was detected. The anomaly was
recommended as a first priority drill target.
Macamic's magnetic and HLEM surveys covered the Brookmount property, and two
HLEM anomalies were defined within it. One anomaly extended for over 880 yards
and showed a weak magnetic correlation and corresponded in form to the Dome
anomaly. It was rated a first priority target. The second anomaly was considered
to be an extension of the first anomaly and was rated a second priority target.
Topography and Infrastructure
Within the general area of the Brookmount claims, the topography is basically
flat with only the occasional low hill. Elevation ranges from 352 yards on the
property to 3/10 mile. Vegetation in the area is mixed boreal forest. Tree
species present on the property are spruce, jackpine balsam, tamarack, cedar,
birch and poplar. Glacial till and glacial-lacustrine clay soils dominate the
area. The area is extensively covered by low, swampy ground.
No infrastructure exists on the property. Infrastructure in the general area
includes
a) an intricate road network;
b) electrical power - the grid extends to Authier Nord, 4.4
miles from the property;
c) railway - the main east/west line of the Canadian National
Railway passes 10.6 miles to the south;
d) numerous base metal and gold mines and mills; and
e) a copper smelter in Rouyn-Noranda.
Most goods and services as well as experienced persons required for both
exploration and mining are readily available in the towns of Macamic, La Sarre
and Rouyn-Noranda and the surrounding area.
Exploration work performed on the Brookmount claim
The Company has not commenced exploration work on the Brookmount claims. Because
of this fact, the Brookmount claims expired in January 2003 and subsequently had
to be re-staked by the Company. The cost of re-staking was cheaper than
undertaking the required exploration program.
9
Mercedes Property
By an agreement dated July 3, 2003, the Company has also entered into an
agreement with its president, Peter Flueck, whereby the Company has agreed to
purchase a 100% interest in six mineral concessions comprising a total of 2,611
hectares located in Ahuigrande Parish, Comas District, Concepcion Province of
the Department of Junin, Peru. Pursuant to the agreement, the Company must issue
5,000,000 shares of common stock and pay $20,000 to Peter Flueck and his
assignees. As of the date of this annual report, this agreement has not closed.
ITEM 3. LEGAL PROCEEDINGS
There are no legal proceedings pending or threatened against us.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
No matters were submitted to a vote of shareholders of the Company during the
final quarter of the fiscal year ended November 30, 2003.
PART II
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ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
Our shares of common stock do not trade on any stock exchange or through the
facilities of any quotation system. While we have applied for our shares of
common stock to be quoted on the National Association of Securities Dealers' OTC
Bulletin Board, there is no guarantee that we will be successful.
We have 37 shareholders of record as at the date of this annual report.
Dividends
There are no restrictions in our articles of incorporation or bylaws that
prevent us from declaring dividends. The Nevada Revised Statutes, however, do
prohibit us from declaring dividends where, after giving effect to the
distribution of the dividend:
1. we would not be able to pay our debts as they become due in the usual
course of business; or
2. our total assets would be less than the sum of our total
liabilities plus the amount that would be needed to satisfy the rights
of shareholders who have preferential rights superior to those
receiving the distribution.
We have not declared any dividends, and we do not plan to declare any dividends
in the foreseeable future.
10
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
OVERVIEW
Our plan of operations for the twelve months following the date of this annual
report is to complete initial exploration programs on the Brookmount and
Mercedes properties. We anticipate that these programs will cost $10,000 and
$220,000 respectively.
In addition, we anticipate spending $17,200 on professional fees, $99,000 on
salaries and wages, $10,000 on travel costs, $15,000 on promotional expenses and
$50,000 on other administrative expenses.
Total expenditures over the next 12 months are therefore expected to be
$421,200. We will not be able to proceed with either exploration program, or
meet our administrative expense requirements, without additional financing.
We will not be able to complete the initial exploration programs on our mineral
properties without additional financing. We currently do not have a specific
plan of how we will obtain such funding; however, we anticipate that additional
funding will be in the form of equity financing from the sale of our common
stock. We may also seek to obtain short-term loans from our directors, although
no such arrangement has been made. At this time, we cannot provide investors
with any assurance that we will be able to raise sufficient funding from the
sale of our common stock or through a loan from our directors to meet our
obligations over the next twelve months. We do not have any arrangements in
place for any future equity financing.
Results Of Operations For Period Ending November 30, 2003
We did not earn any revenues during the period ending November 30, 2003. We do
not anticipate earning revenues until such time as we have entered into
commercial production of the Brookmount claims or the Mercedes property. We are
presently in the pre-exploration stage of our business and we can provide no
assurance that we will discover economic mineralization levels of minerals on
either property, or if such minerals are discovered, that we will enter into
commercial production.
We incurred operating expenses in the amount of $164,407 for the fiscal year
ended November 30, 2003. These operating expenses included consulting fees of
$3,000 and management fees of $112,000.
Our net loss increased from $17,811 in fiscal 2002 to $164,407 in fiscal 2003
primarily due to a general increase in company activity surrounding our change
of management and the identification, negotiation and execution of an agreement
to acquire an interest in the Mercedes property.
We have not attained profitable operations and are dependent upon obtaining
financing to pursue exploration activities. For these reasons our auditors
stated in their report that they have substantial doubt that we will be able to
continue as a going concern.
At November 30, 2003, we had assets of $53,248 consisting of cash on hand of
$37,429, resource property cost advances of $15,130 and prepaid expenses of
$689. At the same date, we had $63,641 in liabilities consisting of accounts
payable of $12,575 and $51,066 due to related parties.
11
ITEM 7. FINANCIAL STATEMENTS
BROOKMOUNT EXPLORATIONS INC.
(A Pre-exploration Stage Company)
FINANCIAL STATEMENTS
November 30, 2003 and 2002
(Stated in US Dollars)
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INDEPENDENT AUDITORS' REPORT
To the Stockholders,
Brookmount Explorations Inc.
We have audited the accompanying balance sheet of Brookmount Explorations Inc.
(A Pre-exploration Stage Company) as of November 30, 2003 and the related
statements of operations, cash flows and stockholders' equity (deficiency) for
the year ended November 30, 2003 and the period from December 9, 1999 (Date of
Incorporation) to November 30, 2003. 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 audit. The financial
statements as of November 30, 2002 and for the period December 9, 1999 (Date of
Incorporation) to November 30, 2002 were audited by other auditors whose report
dated May 12, 2003 expressed an unqualified opinion on those statements. Our
opinion on the statement of operations and cash flows for the period from
December 9, 1999 (Date of Incorporation) to November 30, 2003, insofar as it
relates to amounts for prior periods through November 30, 2002, is based on the
report of other auditors.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform an audit to obtain reasonable assurance whether the financial statements
are free of material misstatement. 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 audit provides 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 Brookmount Explorations Inc. as
of November 30, 2003 and the results of its operations and its cash flows for
the year ended November 30, 2003 and the period from December 9, 1999 (Date of
Incorporation) to November 30, 2003, in conformity with accounting principles
generally accepted in the United States of America.
The accompanying financial statements referred to above have been prepared
assuming that the Company will continue as a going concern. As discussed in Note
1 to the financial statements, the Company is in the pre-exploration stage, has
no established source of revenue and is dependent on its ability to raise
capital from shareholders or other sources to sustain operations. These factors,
along with other matters as set forth in Note 1, raise substantial doubt that
the Company will be able to continue as a going concern. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Vancouver, Canada /s/ Amisano Hanson
February 25, 2004 Chartered Accountants
F1
BROOKMOUNT EXPLORATIONS INC.
(A Pre-exploration Stage Company)
BALANCE SHEETS
November 30, 2003 and 2002
(Stated in US Dollars)
----------------------
ASSETS 2003 2002
------ ---- ----
Current
Cash $ 37,429 $ 3
Prepaid expenses 689 -
Resource property cost advances 15,130 -
--------- ---------
$ 53,248 $ 3
========= =========
LIABILITIES
-----------
Current
Accounts payable $ 12,575 $ 14,296
Due to related parties - Note 5 51,066 3,580
--------- ---------
63,641 17,876
--------- ---------
STOCKHOLDERS' DEFICIENCY
------------------------
Common stock, $0.001 par value - Notes 3 and 4
200,000,000 shares authorized
9,708,900 (November 30, 2002: 9,282,400) shares
outstanding 9,709 9,282
Additional paid in capital 210,658 39,198
Deficit accumulated during the pre-exploration stage (230,760) ( 66,353)
--------- ---------
( 10,393) ( 17,873)
--------- ---------
$ 53,248 $ 3
========= =========
Nature and Continuance of Operations - Note 1
Commitments - Notes 3 and 4
Subsequent Event - Note 4
SEE ACCOMPANYING NOTES
F2
BROOKMOUNT EXPLORATIONS INC.
(A Pre-exploration Stage Company)
STATEMENT OF OPERATIONS
for the years ended November 30, 2003 and 2002
and for the period December 9,1999 (Date of Incorporation) to November 30, 2003
(Stated in US Dollars)
----------------------
December 9, 1999
(Date of
Years ended Incorporation) to
November 30, November 30,
2003 2002 2003
---- ---- ----
Expenses
General and administrative - Note 5 $ 164,407 $ 17,811 $ 230,760
--------- --------- ---------
Net loss for the period $( 164,407) $ ( 17,811) $( 230,760)
========= ========= =========
Basic and diluted loss per share $( 0.02) $ ( 0.00)
========= =========
Weighted average number of shares
outstanding 9,381,509 9,282,400
========= =========
SEE ACCOMPANYING NOTES
F3
BROOKMOUNT EXPLORATIONS INC.
(A Pre-exploration Stage Company)
STATEMENTS OF CASH FLOWS
for the years ended November 30, 2003 and 2002
and for the period December 9,1999 (Date of Incorporation) to November 30, 2003
(Stated in US Dollars)
----------------------
December 9,
1999
(Date of Incor-
poration) to
November 30,
2003 2002 2003
---- ---- ----
Cash Flows from Operating Activities
Net loss for the period $ ( 164,407) $ ( 17,811) $ ( 230,760)
Add item not affecting cash:
Capital contributions - expenses 2,250 9,000 29,250
Changes in non-cash working capital balances
related to operations
Prepaid expenses ( 689) - ( 689)
Resource property costs advances ( 15,130) - ( 15,130)
Accounts payable ( 1,721) 8,718 12,575
Due to related parties 47,486 - 51,066
----------- ---------- ----------
( 132,211) ( 93) ( 153,688)
----------- ---------- ----------
Cash Flows from Financing Activity
Capital stock issued 169,637 - 191,117
----------- ---------- ----------
Increase (decrease) in cash during the period 37,426 ( 93) 37,429
Cash, beginning of the period 3 96 -
---------- ---------- ----------
Cash, end of the period $ 37,429 $ 3 $ 37,429
========== ========== ==========
Supplemental disclosure of cash flow
information
Cash paid for:
Interest $ - $ - $ -
========== ========== ==========
Income taxes $ - $ - $ -
========== ========== ==========
Non-cash transactions - Note 8
SEE ACCOMPANYING NOTES
F4
BROOKMOUNT EXPLORATIONS INC.
(A Pre-exploration Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
for the period December 9, 1999 (Date of Incorporation) to November 30, 2003
(Stated in US Dollars)
----------------------
Deficit
Accumulated
Common Shares Additional During the
-------------------------------- Paid-in Pre-exploration
Number Par Value Capital Stage Total
------ --------- ------- ----- -----
Capital stock issued for cash
- at $0.001 3,500,000 $ 3,500 $ - $ - $ 3,500
--------- ------------ ----------- ----------- -----------
Balance, as at November 30, 1999 3,500,000 3,500 - - 3,500
Capital stock issued for cash
- at $0.002 5,750,000 5,750 5,750 - 11,500
- at $0.20 32,400 32 6,448 - 6,480
Contributions to capital by officers - - 9,000 - 9,000
Net loss for the year - - - ( 31,327) 31,327
--------- ------------ ----------- ----------- -----------
Balance, as at November 30, 2000 9,282,400 9,282 21,198 ( 31,327) ( 847)
Contributions to capital by officers - - 9,000 - 9,000
Net loss for the year - - - ( 17,215) ( 17,215)
--------- ------------ ----------- ----------- -----------
Balance, as at November 30, 2001 9,282,400 9,282 30,198 ( 48,542) ( 9,062)
Contributions to capital by officers - - 9,000 - 9,000
Net loss for the year - - - ( 17,811) ( 17,811)
--------- ------------ ----------- ----------- -----------
Balance, as at November 30, 2002 9,282,400 9,282 39,198 ( 66,353) ( 17,873)
Capital stock issued for cash
- at $0.25 176,500 177 43,948 - 44,125
- at $0.50 250,000 250 125,262 - 125,512
Contributions to capital by officers - - 2,250 - 2,250
Net loss for the year - - - ( 164,407) ( 164,407)
--------- ------------ ----------- ----------- -----------
Balance, as at November 30, 2003 9,708,900 $ 9,709 $ 210,658 $ ( 230,760) $ ( 10,393)
========= ============ =========== =========== ===========
SEE ACCOMPANYING NOTES
F5
BROOKMOUNT EXPLORATIONS INC.
(A Pre-exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
November 30, 2003
(Stated in US Dollars)
----------------------
Note 1 Nature and Continuance of Operations
------------------------------------
The Company is a pre-exploration stage company. The Company was
organized for the purpose of acquiring and developing mineral
properties. The Company has not yet determined whether these
properties contain reserves that are economically recoverable. The
recoverability of amounts from properties acquired will be
dependent upon the discovery of economically recoverable reserves,
confirmation of the Company's interest in the underlying property,
the ability of the Company to obtain necessary financing to
satisfy the expenditure requirements under the property agreement
and to complete the development of the property and upon future
profitable production on proceeds for the sale thereof.
These financial statements have been prepared on a going concern
basis. The Company has a working capital deficiency of $10,393 as
of November 30, 2003 and has accumulated a deficit of $230,760
since inception. Its ability to continue as a going concern is
dependent upon the ability of the Company to generate profitable
operations in the future and/or to obtain the necessary financing
to meet its obligations and repay its liabilities arising from
normal business operations when they come due. The outcome of
these matters cannot be predicted with any certainty at this time.
These factors raise substantial doubt that the company will be
able to continue as a going concern. The Company has historically
satisfied its capital needs primarily by issuing equity
securities. Management plans to continue to provide for its
capital needs during the year ended November 30, 2004 by the
issuance of common stock. These financial statements do not
include any adjustments to the amounts and classification of
assets and liabilities that may be necessary should the Company be
unable to continue as a going concern.
The Company was incorporated in under the laws of the State of
Nevada, USA on December 9, 1999 and commenced operations at that
time.
Note 2 Summary of Significant Accounting Policies
------------------------------------------
The financial statements of the Company have been prepared in
conformity with accounting principles generally accepted in the
United States of America. 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
judgement. Actual results may vary from these estimates.
F6
BROOKMOUNT EXPLORATIONS INC.
(A Pre-exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
November 30, 2003
(Stated in US Dollars)
----------------------
Note 2 Summary of Significant Accounting Policies - (cont'd)
------------------------------------------
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:
Pre-exploration Stage Company
-----------------------------
The Company is a pre-exploration stage company as defined in
Statement of Financial Accounting Standards ("SFAS") No. 7
"Accounting and Reporting by Development Stage Enterprises". The
Company has devoted substantially all of its efforts to the
business of exploration and development of resource property
interests in Canada and Peru. All losses accumulated since
incorporation have been considered as part of the Company's
pre-exploration stage activities.
Impairment of Long-lived Assets
-------------------------------
Capital assets are reviewed for impairment in accordance with SFAS
No. 144, "Accounting for the Impairment or Disposal of Long-lived
Assets", which was adopted effective January 1, 2002. Under SFAS
No. 144, these assets are tested for recoverability whenever
events or changes in circumstances indicate that their carrying
amounts may not be recoverable. An impairment charge is recognized
for the amount, if any, which the carrying value of the asset
exceeds the fair value.
Mineral Lease
-------------
Cost of lease acquisition, exploration, carrying and retaining
unproven mineral lease properties are expensed as incurred.
Environmental Costs
-------------------
Environmental expenditures that relate to current operations are
expensed or capitalized as appropriate. Expenditures that relate
to an existing condition caused by past operations, which do not
contribute to current or future revenue generation, are expensed.
Liabilities are recorded when environmental assessment and/or
remedial efforts are probable, and the cost can be reasonable
estimated. Generally, the timing of these accruals coincides with
the earlier of completion of a feasibility study or the Company's
commitments to plan of action based on the then known facts.
F7
BROOKMOUNT EXPLORATIONS INC.
(A Pre-exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
November 30, 2003
(Stated in US Dollars)
----------------------
Note 2 Summary of Significant Accounting Policies - (cont'd)
------------------------------------------
Foreign Currency Translation
----------------------------
Foreign currency transactions are translated into US dollars, the
functional and reporting currency, by the use of the exchange rate
in effect at the date of the transaction in accordance with SFAS
No. 52 "Foreign Currency Translation". At each balance sheet date,
recorded balances that are denominated in a currency other than US
dollars are adjusted to reflect the current exchange rate.
Basic Loss Per Share
--------------------
The Company reports basic loss per share in accordance with SFAS
No. 128 "Earnings per Share". Basic loss per share is computed
using the weighted average number of shares outstanding during the
period.
Income Taxes
------------
The Company uses the asset and liability method of accounting for
income taxes in accordance with SFAS No. 109 "Accounting for
Income Taxes". Under this method, deferred tax assets and
liabilities are recognized for the future tax consequences
attributable to temporary differences between the financial
statements carrying amounts of existing assets and liabilities and
loss carryforwards and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled.
Fair Value of Financial Instruments
-----------------------------------
The carrying value of the Company's financial instruments,
consisting of cash, accounts payable and due to related parties
approximate their fair value due to the short-term maturity of
such instruments. Unless otherwise noted, it is management's
opinion that the Company is not exposed to significant interest,
currency or credit risks arising from these financial instruments.
New Accounting Standards
------------------------
Management does not believe that any recently issued, but not yet
effective accounting standards if currently adopted could have a
material effect on the accompanying financial statements.
F8
BROOKMOUNT EXPLORATIONS INC.
(A Pre-exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
November 30, 2003
(Stated in US Dollars)
----------------------
Note 3 Commitments
-----------
Abitibi West County, Quebec, Canada
The Company acquired five mineral claims located in the Chazel
Township, in the Province of Quebec.
The Company must file assessment work with a minimum value of
CDN$6,000 not later than November 14, 2004.
Mercedes Property, Junin, Peru
Pursuant to a property acquisition agreement dated for reference
July 3, 2003, the Company acquired a 100% interest in 2,611
hectares located in Central Peru for consideration of $20,000 cash
and 5,000,000 common shares. As at November 30, 2003, the Company
has not paid the cash or issued the shares.
Note 4 Capital Stock - Note 3
-------------
Pursuant to an offering memorandum dated July 23, 2003, the
Company undertook to sell a minimum of 1,000,000 common shares at
$0.50 per share. At November 30, 2003, the Company had sold
250,000 common shares for proceeds of $125,512. This amount has
been included in share capital at November 30, 2003.
Subsequent to November 30, 2003, the Company received $63,600 for
128,114 common shares at $0.50 per share pursuant to this offering
memorandum.
Note 5 Related Party Transactions
--------------------------
The Company was charged the following amounts by directors of the
Company or companies with directors or officers in common:
December 9, 1999
(Date of Incorpor-
ation) to
November 30,
2003 2002 2003
---- ---- ----
Consulting fees $ 3,000 $ - $ 3,000
Management fees 112,000 6,000 124,000
------------ ------------ ------------
$ 115,000 $ 6,000 $ 127,000
============ ============ ============
F9
BROOKMOUNT EXPLORATIONS INC.
(A Pre-exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
November 30, 2003
(Stated in US Dollars)
----------------------
Note 5 Related Party Transactions - (cont'd)
--------------------------
The charges were measured by the exchange amount which is the
amount agreed upon by the transacting parties.
Amounts due to related parties of $51,066 (2002: $3,580) are due
to directors of the Company or former directors of the Company.
These amounts are unsecured, non-interest bearing and have no
specific terms for repayment.
Note 6 Deferred Tax Assets
-------------------
The significant components of the Company's deferred tax assets
are as follows:
Total
-----
Deferred Tax Assets
Non-capital loss carryforwards $ 78,458
Valuation allowance for deferred tax assets ( 78,458)
------------
$ -
============
The amount taken into income as deferred tax assets must reflect
that portion of the income tax loss carryforwards which is likely
to be realized from future operations. The Company has provided an
allowance of 100% against all available income tax loss
carryforwards, regardless of their time of expiry, as it is more
likely than not that all of the deferred tax assets will not be
realized.
Note 7 Income Taxes
------------
No provision for income taxes has been provided in these financial
statements due to the net loss. At November 30, 2003, the Company
has net operating loss carryforwards, which expire commencing in
2019 totalling approximately $231,000, the benefit of which has
not been recorded in the financial statements.
F10
BROOKMOUNT EXPLORATIONS INC.
(A Pre-exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
November 30, 2003
(Stated in US Dollars)
----------------------
Note 8 Non-cash Transactions
---------------------
Investing and financing activities that do not have a direct
impact on current cash flows are excluded form the statement of
cash flows. Directors and officers of the Company have provided
certain administrative services at no charge. The fair value
of these services has been recorded as contributed surplus as
follows:
December 9, 1999
(Date of Incor-
-oration) to
November 30,
2003 2002 2003
---- ---- ----
Management fees $ 1,500 $ 6,000 $ 19,500
Rent 600 1,000 3,600
Telephone 150 2,000 6,150
------- ------- ---------
$ 2,250 $ 9,000 $ 29,250
======= ======= =========
These transactions were excluded from the statement of cash flows.
F11
ITEM 8. CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS
ON ACCOUNTING FINANCIAL DISCLOSURE
Previous Independent Auditor
On July 16, 2003, Sellers and Andersen L.L.C. resigned as our independent
auditor. Sellers and Anderson L.L.C.'s reports on our financial statements for
the fiscal years ended November 30, 2001 and November 30, 2002, did not contain
an adverse opinion or a disclaimer of opinion, and was not qualified or modified
as to uncertainty, audit scope or accounting principles. The decision to change
accountants has been approved by our board of directors.
For the fiscal years ended November 30, 2001 and November 30, 2002, and up to
the date of Sellers and Andersen L.L.C.'s resignation on July 16, 2003, there
has been no disagreement between us and Sellers on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure.
New Independent Auditor
We engaged Amisano Hanson, Chartered Accountants of Vancouver, British Columbia
as our new independent accountants. We have not consulted with Amisano Hanson
regarding the application of accounting principles, the type of audit opinion
that might be rendered by Amisano Hanson.
ITEM 8A: CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls
We evaluated the effectiveness of our disclosure controls and procedures as of
the end of the 2003 fiscal year. This evaluation was conducted with the
participation of our chief executive officer and our principal accounting
officer.
Disclosure controls are controls and other procedures that are designed to
ensure that information that we are required to disclosed in the reports we file
pursuant to the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported.
12
Limitations on the Effective of Controls
Our management does not expect that our disclosure controls or our internal
controls over financial reporting will prevent all error and fraud. A control
system, no matter how well conceived and operated, can provide only reasonable,
but no absolute, assurance that the objectives of a control system are met.
Further, any control system reflects limitations on resources, and the benefits
of a control system must be considered relative to its costs. These limitations
also include the realities that judgments in decision-making can be faulty and
that breakdowns can occur because of simple error or mistake. Additionally,
controls can be circumvented by the individual acts of some persons, by
collusion of two or more people or by management override of a control. A design
of a control system is also based upon certain assumptions about potential
future conditions; over time, controls may become inadequate because of changes
in conditions, or the degree of compliance with the policies or procedures may
deteriorate. Because of the inherent limitations in a cost-effective control
system, misstatements due to error or fraud may occur and may not be detected.
Conclusions
Based upon their evaluation of our controls, the chief executive officer and
principal accounting officer have concluded that, subject to the limitations
noted above, the disclosure controls are effective providing reasonable
assurance that material information relating to us is made known to management
on a timely basis during the period when our reports are being prepared. There
were no changes in our internal controls that occurred during the quarter
covered by this report that have materially affected, or are reasonably likely
to materially affect our internal controls.
PART III
ITEM 9: DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Name Age Position with Registrant Served as a Director
or Officer Since
Peter Flueck 55 President and Director March 21, 2003
Zaf Sungur 51 Chief Operating Officer April 15, 2003
Secretary, Treasurer and
Director
Victor Stilwell 53 Vice-President and Director March 21, 2003
13
The following describes the business experience of the Company's directors and
executive officers, including other directorships held in reporting companies:
Each director of the Company serves for a term of one year and until his
successor is elected at the Company's annual shareholders' meeting and is
qualified, subject to removal by the Company's shareholders. Each officer
serves, at the pleasure of the board of directors, for a term of one year and
until his successor is elected at the annual general meeting of the board of
directors and is qualified.
Set forth below is certain biographical information regarding each of the
Company's executive officers and directors.
Peter Flueck
Mr.Flueck brings to the Company a wealth of experience, not only in the resource
sector, but with extensive experience in Peru as well. He is presently the
President and sole shareholder of Grand Combe Developments Ltd., a Canadian
development company based in Edmonton, Alberta. He has recently been the
President of several mining companies based in Peru,including Blower Investments
A.V.V., Condor Resources A.V.V. Aruba, the Recursos Mineros El Dorado and the
Minera El Serrano, Peru.
He was also involved in the acquisition of several key mining properties in Peru
and headed up a series of negotiations with mining concerns there in order to
raise investor capital and to initiate the development of the Mercedes property
in Peru. Prior to his involvement within the mining industry, Mr. Flueck was
Vice President of Western Timber Export Ltd., an Alberta-based company
specializing in harvesting, sawmill production, pipeline contracting, production
sales and contract bidding. He has been a successful, self-employed cattle
rancher.
Zaf Sungur
Mr. Sungur has over twenty years experience in real estate development,
planning, project management and marketing. Prior to joining the Company, he has
been working as a business consultant to clients, streamlining their businesses
to achieve increased efficiencies. For a ten-year period prior to that, he was
the President of Pan Pacific Investments, which specialized in all aspects of
real estate development, project management and business consulting. Mr. Sungur
was also President of Sunmark International marketing, a company based in
Vancouver, British Columbia that marketed a range of Asian consumer products. He
created a network of over 50 sales representatives to cover the United States,
the United Kingdom, Holland, Germany, Italy and France, and initiated a system
of offshore manufacturing to dramatically reduce costs. Mr. Sungur holds a
Business Degree (Bachelor of Commerce), has extensive experience in North
American, Asian and European business negotiations and is fluent in English and
Turkish. He will be responsible for the operations of the Company as it proceeds
with its mining projects in Peru and Quebec.
14
Vic Stilwell
Mr. Stillwell is the principal of a major sales agency based in Calgary,
Alberta, which for the past twenty-five years has focused on representing such
companies as Hitachi, Panasonic, Magic Chef appliances and Flexsteel Furniture.
His company has grown successfully through the years due to its focus on high
quality products and after-sales service.
He has also been a key figure in the development of commercial and residential
real estate projects in La Paz, Mexico, planning several major projects and
providing serviced lots to potential residents and commercial concerns.
Section 16(A) Beneficial Ownership Reporting Compliance
-------------------------------------------------------
Section 16(a) of the Exchange Act requires our executive officers and directors,
and persons who beneficially own more than 10% of our equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission. Officers, directors and greater than 10% shareholders are required
by SEC regulation to furnish us with copies of all Section 16(a) forms they
file. Based on our review of the copies of such forms we received, we believe
that during the fiscal year ended December 31, 2003 all such filing requirements
applicable to our officers and directors were complied with exception that
reports were filed late by the following persons:
Number Transactions Known Failures
Name and Of late Not Timely to file a
Principal position Reports Reported Required Form
------------------ ------- ------------ --------------
Peter Flueck 0 0 1
Zaf Sungur 0 0 1
Victor Stilwell 0 0 1
ITEM 10. EXECUTIVE COMPENSATION
The table below summarizes all compensation awarded to, earned by, or paid to
our executive officers by any person for all services rendered in all capacities
to us for the fiscal year ended November 30, 2003.
Annual Compensation Long Term Compensation
Other Annual Restricted Stock Options/ LTIP All Other
Name Title Year Salary Bonus Compensation Awarded SARs (#) payouts ($) Compensation
---- ----- ---- ------ ----- ------------ ------- -------- ----------- ------------
Peter President 2003 $28,000 0 0 0 0 0 0
Flueck
Zaf COO, 2003 $28,000 0 0 0 0 0 0
Sungur Secretary/
Treasurer
Victor Vice-Presid2003 $28,000 0 0 0 0 0 0
Stilwell
15
ITEM 11: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth information regarding the beneficial ownership of
our shares of common stock at November 30, 2003 by (i) each person known by us
to be the beneficial owner of more than 5% of our outstanding shares of common
stock, (ii) each of our directors, (iii) our executive officers, and (iv) by all
of our directors and executive officers as a group. Each person named in the
table, has sole voting and investment power with respect to all shares shown as
beneficially owned by such person and can be contacted at our executive office
address.
NAME OF SHARES OF
TITLE OF CLASS BENEFICIAL OWNER COMMON STOCK PERCENT OF CLASS
-------------- ---------------- ------------ ----------------
Common Peter Flueck 1,925,000 19.57%
18912-121 Ave. N.W.
Edmonton, Alberta
T5V 1R3
Common Norman Goodson 630,000 6.40%
118 - 3420 Bell Avenue
Burnaby, B.C.
V3J 1M7
Common Victor Stillwell 630,000 6.40%
16 Douglas Woods Park S.E.
Calgary, Alberta
T2Z 2K6
Common Raymond Tang 600,000 6.10%
871 - 1078 East 31st St.
Vancouver, B.C.
V7A 2E5
Common Lisa Tang 515,000 5.24%
205 - 8077 Alexandra Rd
Richmond, B.C.
Common Kit Fan Leung 500,000 5.08%
830 - 1268 West Broadway
Vancouver, B.C.
V6H 1G6
Common Huang Guang Quan 490,000 4.98%
215 - 5471 Arcadia Road
Richmond, B.C.
V7A 2E5
Common Tang Zi Mond 475,000 4.83%
208 - 2150 Brunswick
Vancouver, B.C.
V7A 2E5
Common Zaf Sungur 315,000 3.20%
2005 - 837 W. Hastings
Vancouver, B.C.
V6C 1B6
DIRECTORS AND 2,870,000 36.99%
OFFICERS AS A
GROUP
As of the date of this annual report, we have 9,837,014 shares of common stock
issued and outstanding.
ITEM 12.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the fiscal year ended November 30, 2003, we paid or accrued $3,000 in
consulting fees to a private company owned by Peter Flueck,our president.
We also paid or accrued $28,000 in management fees to each of the following
individuals:
o Peter Flueck, our president;
o Zaf Sungur, our COO,secretary and treasurer;
o Victor Stilwell, our vice-president; and
o Norman Goodson, a former director of the Company.
During the fiscal year, the Company has also entered into an agreement with its
president, Peter Flueck, whereby the Company has agreed to purchase a 100%
interest in six mineral concessions comprising a total of 2,550 hectares located
in Ahuigrande Parish, Comas District, Concepcion Province of the Department of
Junin, Peru. Pursuant to the agreement, the Company must issue 5,000,000 shares
of common stock and pay $20,000 to Peter Flueck and his assignees.
Otherwise, none of our directors or officers, nor any proposed nominee for
election as a director, nor any person who beneficially owns, directly or
indirectly, shares carrying more than 10% of the voting rights attached to all
of our outstanding shares, nor any promoter, nor any relative or spouse of any
of the foregoing persons has any material interest, direct or indirect, in any
transaction since our incorporation or in any presently proposed transaction
which, in either case, has or will materially affect us.
Our management is involved in other business activities and may, in the future
become involved in other business opportunities. If a specific business
opportunity becomes available, such persons may face a conflict in selecting
between our business and their other business interests. In the event that a
conflict of interest arises at a meeting of our directors, a director who has
such a conflict will disclose his interest in a proposed transaction and will
abstain from voting for or against the approval of such transaction.
17
PART IV
Exhibits
--------
3.1 Charter and By-Laws*
10.1 Mineral Property Purchase Agreement
31.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
* Filed as an exhibit to our registration statement on Form
10-KSB dated December 27, 2000
Reports on Form 8-K
-------------------
We did not file any reports on Form 8-K during the last quarter of 2003.
ITEM 14: PRINCIPAL ACCOUNTANT FEES AND SERVICES
Our current principal accountants, Amisano Hanson, Chartered Accoutants, and our
former principal accountants, Sellers & Andersen, L.L.C. billed the following
fees for the services indicated.
Fiscal year ended Fiscal year ended
November 30, 2002 November 30, 2003
Audit fees $5,800 $5,500*
Audit-related fees Nil Nil
Tax fees Nil Nil
All other fees Nil Nil
* includes an accrual for audit fees
Audit fees consist of fees related to professional services rendered in
connection with the audit of our annual financial statements, the review of the
financial statements included in each of our quarterly reports on Form 10-QSB.
Our audit committee's policy is to pre-approve all audit and permissible
non-audit services performed by the independent accountants. These services may
include audit services, audit-related services, tax services and other services.
Under our audit committee's policy, pre-approval is generally provided for
particular services or categories of services, including planned services,
project based services and routine consultations. In addition, the audit
committee may also pre-approve particular services on a case-by-case basis. Our
audit committee approved all services that our independent accountants provided
to us in the past two fiscal years.
18
SIGNATURES
Pursuant to the requirements of Section 13 and 15 (d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Brookmount Explorations Inc.
By /s/ Peter Flueck
----------------
Peter Flueck
President, CEO & Director
Date: April 12, 2004
In accordance with the Securities 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.
By /s/ Peter Flueck
----------------
Peter Flueck
President, CEO & Director
Date: April 12, 2004
By /s/ Zaf Sungur
---------------
COO, Secretary, Treasurer, Principal
Accounting Officer and Director
Date: April 12, 2004
By /s/ Victor Stilwell
-------------------
Vice-President and Director
Date: April 12, 2004
19
Exhibit 10.1
MINERAL PROPERTY PURCHASE AGREEMENT
THIS AGREEMENT dated for reference July 3, 2003.
BETWEEN:
PETER FLUECK, 18912 121ST Avenue N.W., Edmonton,
Alberta, T5V 1R3;
(the "Vendor")
OF THE FIRST PART
AND:
BROOKMOUNT EXPLORATION INC.,a body corporate,duly incorporated
under the laws of the State of Nevada and having its head
office at 1400 - 400 Burrard Street, Vancouver, British
Columbia, V6C 3G2;
("Brookmount")
OF THE SECOND PART
W H E R E A S :
A. The Vendor is the registered and beneficial owner of the
Ahui Grande mineral property located in Ahuigrande Parish, Comas District,
Concepcion Province of the Department of Junin, Peru which property is more
particularly described in Schedule "A" attached hereto which forms a material
part hereof (collectively, the "Concessions");
B. The Vendor has agreed to sell and Brookmount has agreed to
purchase a 100% right, interest and title in and to the Concessions upon the
terms and conditions hereinafter set forth;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration
of the mutual covenants and provisos herein contained, THE PARTIES HERETO AGREE
AS FOLLOWS:
1. VENDOR'S REPRESENTATIONS
1.1 The Vendor represents and warrants to Brookmount that:
(a) The Vendor is the registered and beneficial owner of the
Concessions and holds the right to transfer title to the
Concessions and to explore and develop the Concessions;
(b) The Vendor holds the Concessions free and clear of all
liens, charges and claims of others, and the Vendor has a free
and unimpeded right of access to the Concessions and has use
of the Concessions surface for the herein purposes;
20
(c) The Concessions have been duly and validly located and
recorded in a good and miner-like manner pursuant to the laws
of Peru and are in good standing in Peru as of the date of
this Agreement;
(d) There are no adverse claims or challenges against or to
the Vendor's ownership of or title to any of the Concessions
nor to the knowledge of the Vendor is there any basis
therefor, and there are no outstanding agreements or options
to acquire or purchase the Concessions or any portion thereof;
(e) The Vendor has the full right, authority and capacity
to enter into this Agreement without first obtaining the
consent of any other person or body corporate and the
consummation of the transaction herein contemplated will not
conflict with or result in any breach of any covenants or
agreements contained in, or constitute a default under, or
result in the creation of any encumbrance under the provisions
of any indenture, agreement or other instrument whatsoever to
which the Vendor is a party or by which he is bound or to
which he is subject; and
(f) No proceedings are pending for, and the Vendor is
unaware of any basis for, the institution of any proceedings
which could lead to the placing of either Vendor in
bankruptcy, or in any position similar to bankruptcy.
1.2 The representations and warranties of the Vendor set out in
paragraph 1.1 above form a part of this Agreement and are conditions upon which
Brookmount has relied in entering into this Agreement and shall survive the
acquisition of any interest in the Concessions by Brookmount.
1.3 The Vendor will indemnify Brookmount from all loss, damage,
costs, actions and suits arising out of or in connection with any breach of any
representation, warranty, covenant, agreement or condition made by the Vendor
and contained in this Agreement.
1.4 The Vendor acknowledges and agrees that Brookmount has
entered into this Agreement relying on the warranties and representations and
other terms and conditions of this Agreement and that no information which is
now known or which may hereafter become known to Brookmount shall limit or
extinguish the right to indemnity hereunder, and, in addition to any other
remedies it may pursue, Brookmount may deduct the amount of any such loss or
damage from any amounts payable by it to the Vendor hereunder.
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2. BROOKMOUNT'S REPRESENTATIONS
Brookmount warrants and represents to the Vendor that it is a
body corporate, duly incorporated under the laws of the State of Nevada with
full power and absolute capacity to enter into this Agreement and that the terms
of this Agreement have been authorized by all necessary corporate acts and deeds
in order to give effect to the terms hereof.
3. SALE OF CONCESSIONS
The Vendor hereby sells, grants and devises to Brookmount a
100% undivided right, title and interest in and to the Concessions in
consideration of Brookmount issuing 5,000,000 shares of restricted common stock
in its capital to the individuals listed in Schedule "B" to this Agreement upon
closing of this Agreement.
4. CLOSING
4.1 The sale and purchase of the interest in the Concessions
shall be closed at 10:00 A.M. on July 7, 2003 at the offices of Gregory S. Yanke
Law Corporation, 200 - 675 West Hastings Street, Vancouver, British Columbia, or
such other place and time acceptable to both parties (the "Closing").
4.2 At Closing, Brookmount shall be obligated to deliver to the
Vendor certificates representing 5,000,000 shares of restricted common stock in
its capital registered in accordance with Schedule "B" hereto and a cheque for
$20,000.
4.3 At Closing, the Vendor shall be obligated to provide
Brookmount with evidence that the Concessions have been registered in
Brookmount's name, or are held in trust for the sole benefit of Brookmount.
5. FORCE MAJEURE
If Brookmount is prevented from or delayed in complying with
any provisions of this Agreement by reason of strikes, labour disputes,
lockouts, labour shortages, power shortages, fires, wars, acts of God,
governmental regulations restricting normal operations or any other reason or
reasons beyond the control of Brookmount, the time limited for the performance
of the various provisions of this Agreement as set out above shall be extended
by a period of time equal in length to the period of such prevention and delay,
and Brookmount, insofar as is possible, shall promptly give written notice to
the Vendor of the particulars of the reasons for any prevention or delay under
this section, and shall take all reasonable steps to remove the cause of such
prevention or delay and shall give written notice to the Vendor as soon as such
cause ceases to exist.
6. ENTIRE AGREEMENT
This Agreement constitutes the entire agreement to date
between the parties hereto and supersedes every previous agreement,
communication, expectation, negotiation, representation or understanding,
whether oral or written, express or implied, statutory or otherwise, between the
parties with respect to the subject matter of this Agreement.
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7. NOTICE
7.1 Any notice required to be given under this Agreement shall
be deemed to be well and sufficiently given if delivered, in the case of the
Vendor, as follows:
Peter Flueck
18912 121st Avenue N.W.
Edmonton, Alberta, T5V 1R3
and, in the case of Brookmount, as follows:
Brookmount Ventures Inc.
1400 - 400 Burrard Street
Vancouver, British Columbia
V6C 3G2
and any notice given as aforesaid shall be deemed to have been given, if
delivered, when delivered, or if mailed, on the fourth business day after the
date of mailing thereof.
7.2 Either party may from time to time by notice in writing change
its address for the purpose of this paragraph.
8. RELATIONSHIP OF PARTIES
Nothing contained in this Agreement shall, except to the
extent specifically authorized hereunder, be deemed to constitute either party a
partner, agent or legal representative of the other party.
9. FURTHER ASSURANCES
The parties hereto agree to do or cause to be done all acts or
things necessary to implement and carry into effect the provisions and intent of
this Agreement.
10. TIME OF ESSENCE
Time shall be of the essence of this Agreement.
11. TITLES
The titles to the respective sections hereof shall not be
deemed a part of this Agreement but shall be regarded as having been used for
convenience only.
12. CURRENCY
All funds referred to under the terms of this Agreement shall
be funds designated in the lawful currency of Canada.
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13. NONSEVERABILITY
This Agreement shall be considered and construed as a single
instrument and the failure to perform any of the terms and conditions in this
Agreement shall constitute a violation or breach of the entire instrument or
Agreement and shall constitute the basis for cancellation or termination.
14. APPLICABLE LAW
The situs of the Agreement is Vancouver, British Columbia, and
for all purposes this Agreement will be governed exclusively by and construed
and enforced in accordance with the laws prevailing in the Province of British
Columbia.
15. ENUREMENT
This Agreement shall enure to the benefit of and be binding
upon the Parties hereto and their respective successors and assigns.
IN WITNESS WHEREOF this Agreement has been executed as of the
day and year first above written.
BROOKMOUNT
EXPLORATIONS INC.
/s/ Peter Flueck PER: /s/ Norman Goodson
--------------------------- -------------------------
PETER FLUECK Authorized Signatory
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SCHEDULE "A"
The Concessions consist in the aggregate of the following six mineral
concessions comprising a total of 2,611 hectares.
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SCHEDULE "B"
Brookmount Explorations Inc. shall issue the 5,000,000 shares of restricted
common stock in its capital in connection with its purchase of the Concessions
as follows:
Name of Shareholder Number of Shares
------------------- ----------------
Peter Flueck 5,000,000
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Exhibit 31.1
CERTIFICATION
I, Peter Flueck,President and Chief Executive Officer of Brookmount Explorations
Inc., certify that:
1. I have reviewed this annual report on Form 10-KSB of Brookmount
Explorations Inc.;
2. Based on my knowledge, this annual report does not contain any untrue
statement of material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee
of the registrant's board of directors (or persons performing the equivalent
function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
27
6. The registrant's other certifying officer and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: April 12, 2004 /s/ Peter Flueck
----------------
Peter Flueck
President, CEO and
director
28
Exhibit 31.2
CERTIFICATION
I, Zaf Sungur, COO, Secretary, Treasurer and principal accounting officer of
Brookmount Explorations Inc., certify that:
1. I have reviewed this annual report on Form 10-KSB of Brookmount
Explorations Inc.;
2. Based on my knowledge, this annual report does not contain any untrue
statement of material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee
of the registrant's board of directors (or persons performing the equivalent
function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
29
6. The registrant's other certifying officer and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Date: April 12, 2004 /s/ Zaf Sungur
---------------
Zaf Sungur
COO, Secretary, treasurer
and principal accounting
officer
30
Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
I, Peter Flueck, Chief Executive Officer of Brookmount Explorations Inc.,
certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that the Annual Report on Form 10-KSB of
Brookmount Explorations Inc., for the fiscal year ended November 30, 2003 fully
complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 and that the information contained in the Annual Report on
Form 10-KSB fairly presents in all material respects the financial condition and
results of operations of Brookmount Explorations Inc.
/s/ Peter Flueck
---------------------------
Peter Flueck
Chief Executive Officer
April 12, 2004
31
Exhibit 32.2
CERTIFICATION OF PRINCIPAL ACCOUNTING OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
I, Zaf Sungur, principal accounting officer of Brookmount Explorations Inc.,
certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that the Annual Report on Form 10-KSB of
Brookmount Explorations Inc., for the fiscal year ended November 30, 2003 fully
complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 and that the information contained in the Annual Report on
Form 10-KSB fairly presents in all material respects the financial condition and
results of operations of Brookmount Explorations Inc.
/s/ Zaf Sungur
---------------------------
Zaf Sungur
Principal Accounting Officer
April 12, 2004
32