UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
x
Annual
Report Pursuant To Section 13 Or 15(D) Of The Securities Exchange Act Of 1934
For the fiscal year ended
DECEMBER 31, 2003
¨
Transition Report Under Section 13 Or 15(D) Of The Securities Exchange Act Of
1934
For the transition period from _____ to _____
COMMISSION FILE NUMBER 000-32981
TUSCANY MINERALS, LTD.
(Name of small business issuer in its charter)
| NEVADA | 98-0335259 |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| 2060 Gisby Street | |
| West Vancouver, British Columbia | V7V 4N3 |
| (Address of principal executive offices) | (Zip Code) |
| 604-926-4300 | |
| Issuer's telephone number |
| Securities registered under Section 12(b) of the Exchange Act: | NONE |
| Securities registered under Section 12(g) of the Exchange Act: | COMMON STOCK, |
| PAR VALUE $0.001 PER SHARE |
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such 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 in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. x
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.) $8,509,050 as of March 19, 2004
State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date. 12,538,000 Shares of Common Stock, as of March 19, 2004.
Transitional Small Business Disclosure Format (check one): Yes ¨ No x
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TUSCANY MINERALS, LTD.
FORM 10-KSB
INDEX
Page 2 of 21
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
FORWARD-LOOKING STATEMENTS
The information in this Annual Report on Form 10-QSB contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements involve risks and uncertainties, including statements regarding Tuscany's capital needs, business plans and expectations. Such forward-looking statements involve risks and uncertainties regarding the market price of natural resources, availability of funds, government regulations, common share prices, operating costs, capital costs and other factors. Forward-looking statements are made, without limitation, in relation to operating plans, property exploration and development, availability of funds and operating costs. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expect", "plan", "intend", "anticipate", "believe", "estimate", "predict", "potential" or "continue", the negative of such terms or other comparable terminology. Actual events or results may differ materially. In evaluating these statements, you should consider various factors, including the risks outlined below, and, from time to time, in other reports Tuscany files with the SEC. These factors may cause Tuscany's actual results to differ materially from any forward-looking statement. Tuscany disclaims any obligation to publicly update these statements, or disclose any difference between its actual results and those reflected in these statements. The information constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.
OVERVIEW
We are an exploration stage company that has to date been engaged in the acquisition and exploration of mineral and oil and gas properties.
We formerly owned an option to acquire an interest in the mineral claim known as "Holy Cross mineral claim." We were unable to maintain our interest in this mineral claim due to our inability to raise financing to pursue exploration of the mineral claim. Subsequent to our losing our interest in this mineral claim, we entered into negotiations with a Texas based group of investors for the acquisition of targeted producing oil and gas properties.
On June 19, 2003, we entered into an agreement to participate in the re-entry of a natural gas well in the Tennessee Colony East (Rodessa) Field located in Anderson County, Texas, and the connection of the well to a pipeline. During fiscal 2003, we conducted a drilling program to re-enter the well with the objective of commencing production from the well. The re-entry program was not successful and we determined to abandon the well. Subsequent to abandonment, we entered into an agreement with the party who controls a 11/12 interest in the well regarding the abandonment of the well.
Our current plan of operations is to seek out the acquisition of an interest in a prospective or existing mineral property or a prospective or producing oil and gas property or other oil and gas resource related projects. We have not entered into any definitive agreements to date for an acquisition in any new property and there is no assurance that we will be able to enter into any definitive agreements. We anticipate that any further drilling program or any new acquisition will require that we raise additional financing. There is no assurance that we would be able to achieve the financing necessary to enable us to pursue our plan of operations.
CORPORATE ORGANIZATION
We were incorporated on October 5, 2000 under the laws of the state of Nevada.
We acquired an option to acquire an interest in the Holy Cross mineral claim situated in the Province of British Columbia, Canada on December 8, 2000. This option was terminated by agreement in November 2002.
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GAS EXPLORATION ACTIVITIES DURING 2003
LNR No. 1 Well
We entered into an agreement on June 19, 2003 to participate in the re-entry of a natural gas well in the Tennessee Colony East (Rodessa) Field located in Anderson County, Texas, and the connection of the well to a pipeline. The execution of the agreement followed our negotiations with a Texas based group of independent oil and gas operators for the acquisition of targeted producing and prospective gas properties.
The well is known as the LNR No. 1 Well and is located on 527.23 acres of property in Anderson County, Texas. We entered into an agreement with an arms-length party who controls 11/12ths of the undivided mineral interest in the property. Production from the property was subject to required payments of royalties and overriding royalty interests totaling no more than 25% of the production from the property.
Under the terms of the agreement, we agreed to pay for two-thirds (66.66%) of 11/12ths of the costs attributable to re-entering, completing and connecting the LNR No. 1 Well to a pipeline. The remaining one-third (33.33%) of the 11/12ths was to be paid for by an independent operating company that would also carry out the development work on the well. The agreement also provided that we would pay $30,250 for leasehold costs up front in respect of leasehold costs. In consideration for this undertaking, we were to receive a 50% working interest in the well, subject to the 25% royalty interests. This interest represents a six-sixteenths (6/16th) net revenue interest in the well.
We undertook a re-entry drilling program on the well in our third quarter with the objective of commencing gas production from the well. The objective of the re-entry program was to re-enter the well, drill out the remaining cement plugs, re-perforate the targeted Rodessa formation and flow test the well. Our proportionate share of the cost of the drilling and re-entry program was $192,350. The drilling program was not successful due to difficulties encountered in gaining access to the targeted Rodessa formation. As a result of these difficulties, we determined to abandon the drilling program at the end of September 2003.
We entered into an agreement with Jerry H. Clay, the party controlling an 11/12 interest in the well, regarding the abandonment of the well. We conveyed to Mr. Clay our interest in the well, subject to a right to participate in the drilling of a new well on the lands, and Mr. Clay agreed to assume all liabilities associated with plugging and abandoning the well.
We plan to continue to pursue negotiations for acquisitions of interests in additional prospective gas properties or other oil and gas resource related projects. There is no assurance that we will be able to finance the acquisition of an interest in any additional well or finance its participation in any operating agreement for the placing of any prospective gas well into production.
OUR CURRENT PLAN OF OPERATIONS
We currently have no business assets or revenue generating properties.
Our current plan of operations is to seek out the acquisition of an interest in a prospective or existing mineral property or a prospective or producing oil and gas property or other oil and gas resource related projects. As we have minimal capital, it is unlikely that we will be able to acquire an interest in more than one property without completing a financing. We presently do not have any arrangements in place for financing. There is no assurance that we will be able to achieve the financing necessary to enable us to pursue our plan of operations.
Our current plan of operations is to acquire an interest in a new prospective or existing mineral property or a prospective or producing gas property or other oil and gas resource related project . We have not entered into any definitive agreements to date for an acquisition in any new property and there is no assurance that we will be able to enter into any definitive agreements. We anticipate that any further drilling program or any new acquisition will require that we raise additional financing. We presently do not have any arrangements in place for financing. There is no assurance that we will be able to achieve the
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financing necessary to enable us to pursue our plan of operations. As we have minimal capital, it is unlikely that we will be able to acquire an interest in more than one property. In addition, even if we are able to acquire an interest in a mineral property or an oil and gas property and achieve the necessary funding, there is no assurance that any revenues would be generated by us or that revenues generated would be sufficient to provide a return to investors.
HOLY CROSS MINERAL CLAIMS – 2000 TO 2002
We formerly owned an option to acquire an interest in the mineral claim known as "Holy Cross mineral claim." The Holy Cross mineral claim is a twenty-unit mineral claim situated in the Omineca Mining Division in the Province of British Columbia, Canada. We were unable to maintain our interest in this mineral claim due to our inability to raise financing to pursue exploration of the mineral claim.
We obtained our interest in the Holy Cross mineral property pursuant to an option agreement dated December 8, 2000 between Mr. Geoffrey N. Goodall and ourselves. Mr. Goodall is the owner of the Holy Cross mineral property and was previously one of our directors.
We completed an initial exploration program on the Holy Cross mineral property in 2001. However, we were unable to raise additional financing either to pay the amounts due under the option agreement or to incur the exploration expenditures required by the option agreement. As a result, we were unable to satisfy the conditions required for us to retain our interest in the option for the Holy Cross mineral claims. The option agreement and our interest in the Holy Cross mineral claims was terminated by agreement with Mr. Goodall on November 18, 2002. Under the terms of the termination agreement, we have no further liability to Mr. Goodall under the option agreement or otherwise in respect of the Holy Cross mineral claims.
COMPETITION
We are a junior mineral resource exploration company engaged in the business of mineral exploration and/or oil and gas exploration. We compete with other junior mineral resource exploration companies for financing from a limited number of investors that are prepared to make investments in junior mineral resource exploration companies. The presence of competing junior mineral resource exploration companies may impact on our ability to raise additional capital in order to fund our property acquisitions and exploration programs if investors are of the view that investments in competitors are more attractive based on the merit of the mineral properties under investigation and the price of the investment offered to investors.
We also compete for mineral properties of merit with other junior exploration companies. Competition could reduce the availability of properties of merit or increase the cost of acquiring the mineral or oil and gas properties.
Many of the junior resource exploration companies with whom we compete have greater financial and technical resources than we do. Accordingly, these competitors may be able to spend greater amounts on acquisitions of properties of merit and on exploration of their properties. In addition, they may be able to afford greater geological expertise in the targeting and exploration of resource properties. This competition could result in our competitors having resource properties of greater quality and interest to prospective investors who may finance additional exploration and to senior exploration companies that may purchase resource properties or enter into joint venture agreements with junior exploration companies. This competition could adversely impact on our ability to finance property acquisitions and further exploration.
COMPLIANCE WITH GOVERNMENT REGULATION
We will not know the government regulations with which we must comply until such time as we acquire an interest in a new property. Similarly, we will not be able to assess the cost of compliance with government regulations until we acquire an interest in a new property. If we are successful in acquiring an interest in a new property, we will be required to comply with all regulations, rules and directives of governmental authorities and agencies applicable to the exploration and development of minerals and/ or oil and gas in the United States generally and in any state in which we carry out exploration. Exploitation and development of minerals and oil and gas properties may require prior approval of applicable
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governmental regulatory agencies. There can be no assurance that such approvals will be obtained. The cost and delay involved in attempting to obtain such approvals cannot be known in advance.
EMPLOYEES
We have no employees, other than Mr. J. Stephen Barley, our sole officer, as of the date of this Annual Report.
The services of Mr. Barley are provided to us pursuant to a management agreement with C.H.M. Consulting Inc., a company controlled by Mr. Barley. We pay C.H.M. Consulting Inc. a management fee of $750 per month in consideration for C.H.M. Consulting Inc. providing management and administration services for us. These services include the services of Mr. Barley. The management agreement was for an initial term commencing December 1, 2000 and expiring on December 31, 2001. The management agreement has been extended on a month-to-month basis by agreement between us and C.H.M. Consulting Inc. dated January 1, 2002.
The management services of C.H.M. Consulting include the provision of the management services of Mr. Stephen Barley, our president, secretary and treasurer, and office administration services. The management services provided by Mr. Barley include carrying out the management and direction of our business, including managing and supervising and coordinating our mineral exploration activities. Mr. Barley provides these services on a part-time basis and these services require approximately 15% of Mr. Barley’s business time. Office administration services include the provision of our office, including telephone and computer services.
We do not pay any compensation to Mr. Barley solely for serving as a director on our board of directors.
We conduct our business largely through agreements with consultants and arms-length third parties.
EXPLORATION EXPENDITURES
We have incurred mineral property exploration expenditures in the amount of $8,500 to date. We incurred oil and gas property exploration expenditures in the amount of $205,657 during 2003.
SUBSIDIARIES
We do not have any subsidiaries.
PATENTS AND TRADEMARKS
We do not own, either legally or beneficially, any patent or trademark.
RISK FACTORS
An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below, the other information in this Form 10-KSB Annual Report and other information contained in our filings with the United States Securities and Exchange Commission before investing in our common stock. If any of the following risks occur, our business, operating results and financial condition could be seriously harmed. The trading price of our common stock could decline due to any of these risks, and you may lose all or part of your investment.
RISKS RELATED TO OUR FINANCIAL CONDITION AND BUSINESS MODEL
If We Do Not Obtain Additional Financing, Our Business Will Fail
We had cash in the amount of $639 and a working capital deficit of $282,882 as of December 31, 2003. We currently do not have any operations and we have no income. Our business plan calls for significant expenses in connection with the acquisition of a new prospective mineral or prospective oil and/ or gas property. Our acquisition of an interest in a new property will be subject to our achieving the financing necessary for us to acquire the interest. We will also require additional financing in order to carry out exploration or production of any property in which we are able to acquire an interest. We will require
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additional financing to sustain our business operations in view of the fact that we will incur the cost of acquisition and additional development prior to achieving revenues. 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 market prices for minerals and oil and gas, investor acceptance of our prospective property, and 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.
Because There Is No Assurance That We Will Generate Revenues, We Face A High Risk of Business Failure
We do not have an interest in any business or revenue generating properties. We were incorporated in October 2000 and to date have been involved primarily in organizational activities and the acquisition and exploration of mineral and oil and gas properties in which we no longer have an interest. We have not earned any revenues as of the date of this Annual Report and have never been profitable. Prior to our being able to generate revenues, we will incur increased operating expenses without realizing any revenues. We therefore expect to incur significant losses into the foreseeable future. We recognize that if we are unable to generate significant revenues from our activities, 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 of the Speculative Nature of Exploration of Natural Resource Properties, There is Substantial Risk that This Business Will Fail
We can provide investors with no assurance that any new property that we acquire an interest in will contain commercially exploitable reserves of minerals or oil and gas. Exploration for natural resources is a speculative venture necessarily involving substantial risk. The expenditures to be made by us in the exploration of properties in which we may acquire an interest may not result in the discovery of commercial quantities of minerals and oil and gas. Hazards such as unusual or unexpected geological formations and other conditions are involved in mineral and oil and gas exploration and often result in unsuccessful exploration efforts. We may also become subject to liability for pollution, cave-ins or 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.
Even If We Discover Commercial Reserves, We May Not Be Able to Successfully Obtain Commercial Production
Even if we are successful in acquiring an interest in a property that has proven commercial reserves of minerals or oil and gas, we will require additional funds in order to place the property into commercial production. We can provide no assurance to investors that we will be able generate revenues from any property that we may acquire that may be shown to possess commercial reserves of minerals or oil and gas.
RISKS RELATED TO OUR MARKET AND STRATEGY
If We Are Unable To Hire And Retain Key Personnel, We May Not Be Able To Implement Our Business Plan And Our Business Will Fail
Our success will be largely dependent on our ability to hire highly qualified personnel. This is particularly true in highly technical businesses such as mineral and oil and gas exploration. These individuals may be in high demand and we may not be able to attract the staff we need. In addition, we may not be able to afford the high salaries and fees demanded by qualified personnel, or may lose such employees after they are hired. Currently, we have not hired any key personnel. Our failure to hire key personnel when needed would have a significant negative effect on our business.
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Because Our Sole Executive Officer Does Not Have Formal Training Specific To The Technicalities Of Mineral or Oil and Gas Exploration, There Is A Higher Risk Our Business Will Fail
While Mr. Stephen Barley, our sole executive officer and a director, has experience managing a mineral exploration company, he does not have formal training as a geologist or in the technical aspects of management of a mineral or oil and gas exploration company. Accordingly, we will have to rely on the technical services of others trained in appropriate areas. If we are unable to contract for the services of such individuals, it will make it difficult and maybe impossible to pursue our business plan. There is thus a higher risk of business failure.
Because Our Sole Executive Officer Has Other Business Interests, He May Not Be Able Or Willing To Devote A Sufficient Amount Of Time To Our Business Operations, Causing Our Business To Fail
Mr. Barley presently spends approximately 15% of his business time on business management services for our company. While Mr. Barley presently possesses adequate time to attend to our interests, it is possible that the demands on Mr. Barley from his other obligations could increase with the result that he would no longer be able to devote sufficient time to the management of our business. In addition, Mr. Barley may not possess sufficient time for our business if the demands of managing our business increased substantially beyond current levels. Competing demands on Mr. Barley’s business time may cause Mr. Barley to have differing interests in approving significant corporate transactions than other stockholders.
If A Market For Our Common Stock Does Not Develop, Our Investors Will Be Unable To Sell their Shares
There is currently a limited market for our common stock and we can provide no assurance to investors that a market will develop. We cannot provide investors with any assurance that a public market will materialize. If a market for our common stock does not develop, then investors may not be able to re-sell the shares of our common stock that they have purchased and may lose all of their investment.
Because Our Stock Is Penny Stock, Shareholders Will Be Limited In Their Ability To Sell The Stock
Our shares of common stock constitute penny stock under the Securities and Exchange Act. The shares will remain penny stock for the foreseeable future. The classification of penny stock makes it more difficult for a broker-dealer to sell the stock into a secondary market, which makes it more difficult for a purchaser to liquidate his or her investment. Any broker-dealer engaged by the purchaser for the purpose of selling his or her shares in Tuscany Minerals will be subject to rules 15g-1 through 15g-10 of the Securities and Exchange Act. Rather than complying with those rules, some broker-dealers will refuse to attempt to sell penny stock.
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ITEM 2. DESCRIPTION OF PROPERTY.
We do not own or lease any property. See Item 1. Description of Business.
Our principal business offices are located in the business offices of Mr. J. Stephen Barley, our sole executive officer and a director. These premises are provided to us pursuant to our management agreement with C.H.M. Consulting Inc., a private company controlled by Mr. Barley. This agreement was originally for a term expiring December 31, 2001 and has been continued on a month to month basis by agreement. We currently pay $750 per month for our use of these premises and for additional management and administrative services provided by C.H.M. Consulting.
ITEM 3. LEGAL PROCEEDINGS.
We are not a party to any material legal proceedings and to our knowledge, no such proceedings are threatened or contemplated.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to our security holders for a vote during the fourth quarter of our fiscal year ending December 31, 2003.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Market Information
Our shares of common stock are currently trading on the OTC Bulletin Board under the stock symbol TCAY. The Company’s shares were traded under the stock symbol TCAY commencing October 2001. The high and the low bid information for our shares of common stock for each quarter of actual trading were:
|
QUARTER
|
HIGH ($) | LOW ($) |
|
Fourth Quarter 2001
|
$5.10 | $2.00 |
|
First Quarter 2002
|
$7.00 | $1.50 |
|
Second Quarter 2002
|
$1.50 | $1.50 |
|
Third Quarter 2002
|
$1.50 | $1.50 |
|
Fourth Quarter 2002
|
$1.25 | $1.50 |
|
First Quarter 2003
|
$1.35 | $1.25 |
|
Second Quarter 2003
|
$1.35 | $1.35 |
|
Third Quarter 2003
|
$1.35 | $1.35 |
|
Fourth Quarter 2003
|
$1.35 | $1.35 |
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The source of the high and low bid information is the NASD OTC Bulletin Board. The market quotations provided reflect inter-dealer prices, without retail mark-up, markdown or commission and may not represent actual transactions.
Holders of Common Stock
As of the date of March 19, 2004, there were 43 registered shareholders of our common stock.
Dividends
There are no restrictions in our Articles of Incorporation or bylaws that restrict us from declaring dividends. The Nevada Revised Statutes, however, prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:
| (A) |
we would not be able to pay our debts
as they become due in the usual course of business; or
|
|
| (B) |
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 neither declared nor paid any cash dividends on our capital stock and do not anticipate paying cash dividends in the foreseeable future. Our current policy is to retain any earnings in order to finance the expansion of our operations. Our board of directors will determine future declaration and payment of dividends, if any, in light of the then-current conditions they deem relevant and in accordance with the Nevada Revised Statutes.
Recent Sales of Unregistered Securities
We did not complete any sales of our common stock during our fiscal year ended December 31, 2003.
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ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
PLAN OF OPERATIONS
Our current plan of operations is to acquire an interest in a new prospective or existing mineral property or a prospective or producing gas property or other oil and gas resource related projects. We have not entered into any definitive agreements to date for an acquisition in any new property and there is no assurance that we will be able to enter into any definitive agreements. We anticipate that any further drilling program or any new acquisition will require that we raise additional financing. We presently do not have any arrangements in place for financing. There is no assurance that we will be able to achieve the financing necessary to enable us to pursue our plan of operations. As we have minimal capital, it is unlikely that we will be able to acquire an interest in more than one property. In addition, even if we are able to acquire an interest in a mineral property or an oil and gas property and achieve the necessary funding, there is no assurance that any revenues would be generated by us or that revenues generated would be sufficient to provide a return to investors.
We currently have no employees, other than our sole officer, Mr. J. Stephen Barley, a director and our president, secretary and treasurer, and we do not expect to hire any employees in the foreseeable future. We presently conduct our business through agreements with consultants and arms-length third parties.
We anticipate that we will incur the following expenses over the next twelve months:
| 1. |
$25,000 in connection with our targeting, evaluating
and negotiating potential mineral exploration or oil and gas properties;
|
| 2. |
$10,000 for operating expenses, including professional
legal and accounting expenses associated with our becoming a reporting
issuer under the Securities Exchange Act of 1934;
|
| 3. |
$9,000 for consulting fees to be paid pursuant to our management agreement with C.H.M. Consulting Inc. for its management services and the services of Mr. Barley. |
In addition, we will incur further expenses if we are successful in entering into an agreement to acquire an interest in a prospective or existing mineral property or a prospective or producing oil or gas property. In addition to the acquisition cost, we will require further funds to carry out a development program on the property. It is not possible to estimate these funding requirements until such time as we are able to enter into a definitive agreement to acquire an interest in a property.
Accordingly, we require a minimum of approximately $44,000 to proceed with our plan of operations over the next twelve months, exclusive of any acquisition or development costs. This amount may increase if we are required to carry our due diligence investigations of any prospective property or if the costs of negotiating acquisition agreements are greater than anticipated. As we had cash in the amount of $639 and a working capital deficit in the amount of $282,882 as of December 31, 2003, we do not have sufficient working capital to enable us to carry out our stated plan of operations for the next twelve months. We plan to complete private placement sales of our common stock in order to raise the funds necessary to pursue our plan of operations and to fund our working capital deficit in order to enable us to pay our accounts payable and accrued liabilities. We currently do not have any arrangements in place for the completion of any private placement financings and there is no assurance that we will be successful in completing any private placement financings.
Results Of Operations for the Year Ended December 31, 2003
We did not earn any revenues during the years ended December 31, 2003 or December 31, 2002. We do not anticipate earning revenues until such time as we are able to acquire an interest in a mineral property or an oil and gas property and we are successful in completing the commercial development of the property.
We incurred expenses in the amount of $271,508 for the year ended December 31, 2003, compared to $24,972 for the year ended December 31, 2002. The increases in expenditures for 2003 compared with 2002 are primarily attributable to the unsuccessful completion of the re-entry drilling program on the LNR
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No.1 well. We incurred oil and gas property exploration expenditures in the amount of $205,657 during the year ended December 31, 2003.
We incurred professional fees in the amount of $12,228 during the year ended December 31, 2003, compared to $14,251 for the year ended December 31, 2002. These professional fees were primarily attributable to compliance with our reporting requirements as a reporting company under the Securities Exchange Act of 1934.
We incurred travel and business and development expenses in the amount of $32,788 during the year ended December 31, 2003, compared to $nil for the year ended December 31, 2002. The increase in travel and business and development expenses was associated with our identification and negotiation of an interest in the LNR No.1 well and our unsuccessful completion of the drilling and re-entry program on the LNR No.1 well.
We incurred a loss of $271,508 for the year ended December 31, 2003, compared to a loss of $24,972 for the year ended December 31, 2002. Our increased loss is primarily attributable to our unsuccessful drilling and re-entry program on the LNR No. 1 well completed during our third quarter.
Liquidity And Capital Resources
We had cash of $639 as of December 31, 2003 compared to cash of $347 as of December 31, 2002. We had a working capital deficit of $282,882 as of December 31, 2003 compared to working capital deficit of $11,169 as of December 31, 2002.
We financed our operations during 2003 through a loan obtained from a third party. We borrowed the principal sum of $196,050 under this loan which was outstanding in the amount of $202,585 as of December 31, 2003. The loan bears interest at the rate of 8% per annum and was originally repayable on or before January 28, 2004. We have negotiated an extension to the maturity date for this loan to July 28, 2004. As consideration for this extension, we have agreed to pay to the lender an additional payment of $25,000 on maturity of the loan in addition to accrued interest.
We will require additional financing in order to enable us to proceed with our plan of operations, as discussed above under Plan of Operations. In addition, we anticipate that we will require a minimum of approximately $44,000 over the next twelve months to pay for our ongoing expenses. These expenses include management expenses payable to C.H.M. Consulting and professional fees associated with our being a reporting company under the Securities Exchange Act of 1934. These cash requirements are in excess of our current cash and working capital resources. Accordingly, we will require additional financing in order to continue operations and to repay our accrued liabilities. We have no arrangements in place for any additional financing and there is no assurance that we will achieve the required additional funding. There is no assurance that any party will advance additional funds to us in order to enable us to sustain our plan of operations or to repay our liabilities.
We have not purchased or sold any plant or significant equipment and do not expect to do so in the foreseeable future.
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ITEM 7. FINANCIAL STATEMENTS.
Included with this Annual Report on Form 10-KSB are our audited financial statements for the year ended December 31, 2003 that are comprised of the following:
| 1. | Auditors’ Report; | |
| 2. | Audited Financial Statements for the year ended December 31, 2003, including: | |
| a. | Balance Sheets as at December 31, 2003 and 2002; | |
| b. | Statements of Loss for the years ended December 31, 2003 and 2002; | |
| c. |
Statements of Cash Flows for the years ended December 31, 2003 and 2002; |
|
| d. | Statements of Stockholders’ Deficiency for the years ended December 31, 2003 and 2002; | |
| e. | Notes to Financial Statements. | |
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TUSCANY MINERALS, LTD.
(An Exploration Stage Company)
FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002
(Stated in U.S. Dollars)
F-1
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of
Tuscany Minerals, Ltd.
(An exploration stage company)
We have audited the balance sheets of Tuscany Minerals, Ltd. (an exploration stage company) as at December 31, 2003 and 2002, and the statements of loss, cash flows, and stockholders’ deficiency for the years ended December 31, 2003 and 2002, and for the cumulative period from inception, October 5, 2000, to December 31, 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 audits.
We conducted our audits 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, these financial statements referred to above present fairly, in all material respects, the financial position of the Company as at December 31, 2003 and 2002, and the results of its operations and cash flows for the periods indicated in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1(c) to the financial statements, the Company incurred a net loss of $358,601 since inception, has not attained profitable operations and is dependent upon obtaining adequate financing to fulfil its exploration activities. These factors raise substantial doubt that the Company will be able to continue as a going concern. Management’s plans in regard to these matters are also discussed in Note 1(c). The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
| Vancouver, B.C. | “Morgan & Company” |
| February 18, 2004 | Chartered Accountants |
| Tel: (604) 687-5841 |
|
P.O. Box 10007 Pacific Centre |
| fax: (604) 687-0075 | Sute 1488 - 700 West Georgia Street | |
| www.morgan-cas.com | Vancouver, B.C. V7Y 1A1 |
F-2
TUSCANY MINERALS, LTD.
(An Exploration Stage Company)
BALANCE SHEETS
(Stated in U.S. Dollars)
| DECEMBER 31 | ||||||
| 2003 | 2002 | |||||
| ASSETS | ||||||
| Current | ||||||
| Cash | $ | 639 | $ | 347 | ||
| LIABILITIES | ||||||
| Current | ||||||
| Accounts payable and accrued liabilities | $ | 56,718 | $ | 7,999 | ||
| Notes payable (Note 4) | 24,218 | 3,517 | ||||
| Promissory note and accrued interest payable (Note 5) | 202,585 | - | ||||
| 283,521 | 11,516 | |||||
| STOCKHOLDERS’ DEFICIENCY | ||||||
| Capital Stock | ||||||
| Authorized: | ||||||
| 100,000,000 Common shares, par value $0.001 per share | ||||||
| Issued and outstanding: | ||||||
| 12,538,000 Common shares | 12,538 | 12,538 | ||||
| Additional paid-in capital | 63,462 | 63,462 | ||||
| Deficit Accumulated During The Exploration Stage | (358,601 | ) | (87,093 | ) | ||
| Cumulative Translation Adjustment | (281 | ) | (76 | ) | ||
| (282,882 | ) | (11,169 | ) | |||
| $ | 639 | $ | 347 | |||
F-3
TUSCANY MINERALS, LTD.
(An Exploration Stage Company)
STATEMENTS OF LOSS
(Stated in U.S. Dollars)
| CUMULATIVE | |||||||||
| PERIOD FROM | |||||||||
| DATE OF | |||||||||
| ORGANIZATION | |||||||||
| OCTOBER 5 | |||||||||
| YEARS ENDED | 2000 TO | ||||||||
| DECEMBER 31 | DECEMBER 31 | ||||||||
| 2003 | 2002 | 2003 | |||||||
| Expenses | |||||||||
| Office and sundry | $ | 438 | $ | 218 | $ | 2,028 | |||
| Consulting fee | 3,193 | - | 3,193 | ||||||
| Professional fees | 12,228 | 14,251 | 65,380 | ||||||
| Oil and gas property exploration | |||||||||
| expenditures | 205,657 | - | 205,657 | ||||||
| Mineral property option payment | - | 1,298 | 3,428 | ||||||
| Mineral property exploration | |||||||||
| expenditure | - | - | 8,500 | ||||||
| Filing and stock transfer fees | 468 | 205 | 2,083 | ||||||
| Management fee | 9,000 | 9,000 | 27,750 | ||||||
| Interest | 7,736 | - | 7,794 | ||||||
| Travel and business development | 32,788 | - | 32,788 | ||||||
| Loss For The Period | $ | 271,508 | $ | 24,972 | $ | 358,601 | |||
| Basic And Diluted Loss Per Share | $ | (0.02 | ) | $ | (0.01 | ) | |||
| Weighted Average Number Of Shares | |||||||||
| Outstanding | 12,538,000 | 12,538,000 | |||||||
| Comprehensive Income | |||||||||
| Net loss for the period | $ | (271,508 | ) | $ | (24,972 | ) | $ | (358,601 | ) |
| Foreign currency translation | |||||||||
| adjustment | (281 | ) | (76 | ) | (281 | ) | |||
| Total Comprehensive Loss | $ | (271,789 | ) | $ | (25,048 | ) | $ | (358,882 | ) |
F-4
TUSCANY MINERALS, LTD.
(An Exploration Stage Company)
STATEMENTS OF CASH FLOWS
(Stated in U.S. Dollars)
| CUMULATIVE | |||||||||
| PERIOD FROM | |||||||||
| DATE OF | |||||||||
| ORGANIZATION | |||||||||
| OCTOBER 5 | |||||||||
| YEARS ENDED | 2000 TO | ||||||||
| DECEMBER 31 | DECEMBER 31 | ||||||||
| 2003 | 2002 | 2003 | |||||||
| Cash Flows From Operating Activity | |||||||||
| Net loss for the period | $ | (271,508 | ) | $ | (24,972 | ) | $ | (358,601 | ) |
| Adjustments To Reconcile Net Loss To Net | |||||||||
| Cash Used By Operating Activity | |||||||||
| Accounts payable and accrued liabilities | 48,719 | 5,241 | 56,718 | ||||||
| (222,789 | ) | (19,673 | ) | (301,883 | ) | ||||
| Cash Flows From Financing Activities | |||||||||
| Notes payable | 20,701 | 3,459 | 24,218 | ||||||
| Share subscriptions | - | - | 76,000 | ||||||
| Promissory note payable | 202,585 | - | 202,585 | ||||||
| 223,286 | 3,459 | 302,803 | |||||||
| Effect Of Exchange Rate Changes On Cash | (205 | ) | 16 | (281 | ) | ||||
| (Decrease) Increase In Cash | 292 | (16,198 | ) | 639 | |||||
| Cash, Beginning Of Period | 347 | 16,545 | - | ||||||
| Cash, End Of Period | $ | 639 | $ | 347 | $ | 639 | |||
F-5
TUSCANY MINERALS, LTD.
(An Exploration Stage Company)
STATEMENTS OF STOCKHOLDERS’ DEFICIENCY
DECEMBER 31, 2003 AND 2002
(Stated in U.S. Dollars)
| DEFICIT | |||||||||||||||||
| COMMON STOCK | ACCUMULATED | ||||||||||||||||
| ADDITIONAL | DURING THE | CUMULATIVE | |||||||||||||||
| PAID-IN | EXPLORATION | TRANSLATION | |||||||||||||||
| SHARES | AMOUNT | CAPITAL | STAGE | ADJUSTMENT | TOTAL | ||||||||||||
| November - Shares issued | |||||||||||||||||
| for cash at $ 0.001 | 6,500,000 | $ | 6,500 | $ | - | $ | - | $ | - | $ | 6,500 | ||||||
| November - Shares issued | |||||||||||||||||
| for cash at $ 0.01 | 6,000,000 | 6,000 | 54,000 | - | - | 60,000 | |||||||||||
| December - Shares issued | |||||||||||||||||
| for cash at $ 0.25 | 38,000 | 38 | 9,462 | - | - | 9,500 | |||||||||||
| Translation adjustment | - | - | - | - | 660 | 660 | |||||||||||
| Net loss for the period | - | - | - | (7,310 | ) | - | (7,310 | ) | |||||||||
| Balance, December 31, 2000 | 12,538,000 | 12,538 | 63,462 | (7,310 | ) | 660 | 69,350 | ||||||||||
| Translation adjustment | - | - | - | - | (752 | ) | (752 | ) | |||||||||
| Net loss for the year | - | - | - | (54,811 | ) | - | (54,811 | ) | |||||||||
| Balance, December 31, 2001 | 12,538,000 | 12,538 | 63,462 | (62,121 | ) | (92 | ) | 13,787 | |||||||||
| Translation adjustment | - | - | - | - | 16 | 16 | |||||||||||
| Net loss for the year | - | - | - | (24,972 | ) | - | (24,972 | ) | |||||||||
| Balance, December 31, 2002 | 12,538,000 | 12,538 | 63,462 | (87,093 | ) | (76 | ) | (11,169 | ) | ||||||||
| Translation adjustment | - | - | - | - | (205 | ) | (205 | ) | |||||||||
| Net loss for the year | - | - | - | (271,508 | ) | - | (271,508 | ) | |||||||||
| Balance, December 31, 2003 | 12,538,000 | $ | 12,538 | $ | 63,462 | $ | (358,601 | ) | $ | (281 | ) | $ | (282,882 | ) | |||
F-6
TUSCANY MINERALS, LTD.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002
(Stated in U.S. Dollars)
| 1. |
NATURE OF OPERATIONS
|
|
|
a)
|
Organization The Company was incorporated in the State of Nevada, U.S.A., on October 5, 2000. |
|
|
b)
|
Development Stage Activities The Company is a development stage, independent natural gas and oil company engaged in the exploration, development and acquisition of natural gas and oil properties in the United States. The Company’s entry into the natural gas and oil business began on June 2003 with the acquisition of a working interest in a re-entry of a natural gas well (Note 4). Prior to this, the Company was engaged in the acquisition and exploration of mining properties. |
|
|
c)
|
Going Concern The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As shown in the accompanying financial statements, the Company has incurred a net loss of $358,601 for the period from October 5, 2000 (inception) to December 31, 2003, and has no sales. The future of the Company is dependent upon its ability to obtain financing and upon future profitable operations from the development of its mineral properties. Management has plans to seek additional capital through a private placement and public offering of its common stock. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence. |
|
| 2. |
SIGNIFICANT ACCOUNTING POLICIES The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States. 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. |
|
F-7
TUSCANY MINERALS, LTD.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002
(Stated in U.S. Dollars)
| 2. |
SIGNIFICANT ACCOUNTING POLICIES (Continued) The financial statements have, in management’s opinion, been properly prepared within reasonable limits of materiality and within the framework of the significant accounting policies summarized below: |
|
|
a)
|
Oil and Gas Properties The Company follows the successful efforts method of accounting for oil and gas exploration and production activities. Acquisition costs, development costs and successful exploration costs are capitalized. Exploratory dry hole costs, lease rental, and geological and geophysical costs are charged to expenses as incurred. Producing properties are depleted by the units-of-production method based on estimated proved reserves. |
|
|
b)
|
Mineral Property Option Payments and Exploration Costs The Company expenses all costs related to the maintenance and exploration of mineral claims in which it has secured exploration rights prior to establishment of proven and probable reserves. To date, the Company has not established the commercial feasibility of its exploration prospects, therefore, all costs have been expensed. |
|
|
c)
|
Joint Ventures All exploration and production activities are conducted jointly with others and, accordingly, the accounts reflect only the Company’s proportionate interest in such activities. |
|
|
d)
|
Mineral Property Option Payments and Exploration Costs The Company expenses all costs related to the maintenance and exploration of mineral claims in which it has secured exploration rights prior to establishment of proven and probable reserves. To date, the Company has not established the commercial feasibility of its exploration prospects, therefore, all costs are being expensed. |
|
|
e)
|
Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses for the reporting period. Actual results could differ from these estimates. |
|
F-8
TUSCANY MINERALS, LTD.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002
(Stated in U.S. Dollars)
| 2. |
SIGNIFICANT ACCOUNTING
POLICIES
(Continued)
|
||
|
f)
|
Foreign Currency Translation The Company’s functional currency is the U.S. dollar. Transactions in foreign currency are translated into U.S. dollars as follows: |
||
|
i)
|
monetary items at the rate prevailing
at the balance sheet date;
|
||
|
ii)
|
non-monetary items at the historical
exchange rate;
|
||
|
iii)
|
revenue and expense at the average
rate in effect during the applicable accounting period.
|
||
|
g)
|
Income Taxes The Company has adopted Statement of Financial Accounting Standards No. 109 –“Accounting for Income taxes” (SFAS 109). This standard requires the use of an asset and liability approach for financial accounting, and reporting on income taxes. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized. |
||
|
h)
|
Loss Per Share The Company computes loss per share in accordance with SFAS No. 128 – “Earnings Per Share”. Under the provisions of SFAS No. 128, basic loss per share is computed using the weighted average number of common stock outstanding during the periods. Diluted loss per share is computed using the weighted average number of common and potentially dilutive common stock outstanding during the period. As the Company generated net losses in the period presented, the basic and diluted loss per share is the same as any exercise of options or warrants would anti-dilutive. |
||
| 3. |
OIL AND GAS PROPERTY The Company has entered into an agreement, dated June 19, 2003, with an arm’s length party who controls 11/12 th of the undivided mineral interest in the property, to participate in the re-entry of a natural gas well located in Anderson County, Texas, USA, and the connection of the well to a pipeline. Under the terms of the agreement, the Company will pay for 66.66% of 11/12 th of the costs attributable to re-entering, completing and connecting the well to a pipeline. The agreement also provides that the Company will pay $30,250 for leasehold costs. In consideration for its undertaking, the Company will receive a 50% working interest in the well, subject to a 25% royalty interest of the production from the property. This interest represents a 6/16 th net revenue interest in the well. |
||
F-9
TUSCANY MINERALS, LTD.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002
(Stated in U.S. Dollars)
| 3. |
OIL AND GAS PROPERTY (Continued) During September 2003, the re-entry work on the natural gas well was abandoned and the Company entered into an agreement to terminate the well acquisition agreement. The exploration costs incurred to September 30, 2003 has been charged to operations. |
|
| 4. |
NOTES PAYABLE Notes payable are unsecured, payable on demand, and bear interest at 8% per annum. $16,059 of the notes payable are due to an associated company with a common director. |
|
| 5. |
PROMISSORY NOTE AND ACCRUED INTEREST PAYABLE The promissory note bears interest at 8% per annum and is repayable in full on January 28, 2004. Subsequent to the year end, the Company entered into a loan extension agreement whereby the expiry date was extended to July 28, 2004 with a balloon payout payment of $25,000 in addition to accrued interest. |
|
| 6. |
RELATED PARTIES
|
|
|
i)
|
The Company paid a management fee of
$9,000 (2001 - $9,000) to a company controlled by a director. The management
services are on a month to month basis at $750 per month.
|
|
|
ii)
|
The Company paid mineral property exploration
expenditures of $Nil (2002 - $Nil) and option payments of $Nil in 2003
(2002 - $1,298) to a director of the Company.
|
|
F-10
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
Not applicable.
ITEM 8A. CONTROLS AND PROCEDURES.
As required by Rule 13a-15 under the Securities Exchange Act of 1934 (the “Exchange Act”), we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2003, being the date of our most recently completed fiscal year end. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, J. Stephen Barley. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective in timely alerting management to material information relating to us required to be included in our periodic SEC filings. There have been no significant changes in our internal controls or in other factors that could significantly affect internal controls subsequent to the date we carried out our evaluation.
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
During our most recently completed fiscal year ended December 31, 2003, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to affect, our internal control over financial reporting.
The term “internal control over financial reporting” is defined as a process designed by, or under the supervision of, the registrant's principal executive and principal financial officers, or persons performing similar functions, and effected by the registrant's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
| (1) |
Pertain to the maintenance of records that in reasonable
detail accurately and fairly reflect the transactions and dispositions
of the assets of the registrant;
|
| (2) |
Provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial statements
in accordance with generally accepted accounting principles, and that
receipts and expenditures of the registrant are being made only in accordance
with authorizations of management and directors of the registrant; and
|
|
| (3) |
Provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition
of the registrant's assets that could have a material effect on the financial
statements.
|
Page 14 of 21
PART III
ITEM 9. DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
Our executive officers and directors and their respective ages as of March 19, 2004 are as follows:
DIRECTORS:
| Name of Director | Age | |
| J. Stephen Barley | 47 |
EXECUTIVE OFFICERS:
| Name of Officer | Age | Office |
| J. Stephen Barley | 47 | President, Secretary, Treasurer and Chief Executive Officer |
Set forth below is a brief description of the background and business experience of Mr. J. Stephen Barley, our sole executive officer and director, for the past five years.
Mr. J. Stephen Barley is our president, secretary, treasurer and chief executive officer and is a member of our board of directors. Mr. Barley was appointed to our board of directors on October 5, 2000. Mr. Barley was appointed as our president on October 5, 2000. Mr. Barley received his Bachelor of Commerce degree from the Mount Allison University in New Brunswick, Canada in 1979. He received his law degree from Dalhousie University in Nova Scotia, Canada in 1982. Mr. Barley practiced as a lawyer with Casey & O’Neill and successor firms from 1984 to 1991. Mr. Barley practiced as a lawyer with J. Stephen Barley Personal Law Corporation from 1992 to 1997. Mr. Barley specialized in the areas of corporate and securities law during the time of his private practice as a lawyer with Casey & O’Neill and J. Stephen Barley Personal Law Corporation. Mr. Barley’s clients included a number of publicly traded companies involved in the business of mineral exploration. Mr. Barley has been involved as a corporate finance consultant and as a director and investor in several private and public business ventures since 1997. Mr. Barley is a member in good standing of the Law Society of British Columbia and the Law Society of Alberta. Mr. Barley was the president, secretary, treasurer and a director of Copper Valley Minerals Ltd. from February 1999 to October 2001. Copper Valley Minerals Ltd.(now known as Dtomi, Inc.) is a reporting company under the Securities Exchange Act of 1934 and is a company whose shares are traded on the OTC Bulletin Board. Mr. Barley was appointed a director of New Century Equity Holdings, Corp, a Nasdaq listed company, from December 2000 to December 2002. Mr. Barley also became a director of NetDriven Solutions Inc. on March 30, 2001, a Toronto Stock Exchange listed public IT securities company.
Term of Office
Our Directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board.
Significant Employees
We have no significant employees other than the officers and directors described above.
AUDIT COMMITTEE
We presently do not have an audit committee of our board of directors.
Page 15 of 21
CODE OF ETHICS
We adopted a Code of Ethics applicable to our Chief Executive Officer, Chief Financial Officer, Corporate Controller and certain other finance executives, which is a "code of ethics" as defined by applicable rules of the SEC. Our Code of Ethics is attached to this Annual Report on Form 10-KSB. If we make any amendments to our Code of Ethics other than technical, administrative, or other non-substantive amendments, or grant any waivers, including implicit waivers, from a provision of our Code of Ethics to our chief executive officer, chief financial officer, or certain other finance executives, we will disclose the nature of the amendment or waiver, its effective date and to whom it applies in a Current Report on Form 8-K filed with the SEC.
ITEM 10. EXECUTIVE COMPENSATION.
The following table sets forth certain compensation information as to Mr. J. Stephen Barley, our chief executive officer. We do not have any other executive officers. No other compensation was paid to Mr. Barley other than the cash and stock option compensation set forth below.
SUMMARY COMPENSATION TABLE
| ANNUAL COMPENSATION | LONG TERM COMPENSATION | ||||||||
| Name | Title | Year | Salary | Bonus |
Other Annual
Compensation |
AWARDS | PAYOUTS |
All Other
Compen- sation |
|
|
Restricted
Stock Awarded |
Options/
SARs * (#) |
LTIP payouts
($) |
|||||||
|
J. Stephen
Barley(1) |
Director and
President, Secretary and Treasurer |
2003
2002 2001 |
0
0 0 |
0
0 0 |
$9,000
$9,000 $9,750 |
0
0 0 |
0
0 0 |
0
0 0 |
0
0 0 |
Notes:
| (1) | Compensation attributable to Mr. Barley is paid pursuant to a management between us and C.H.M. Consulting Inc., a private company controlled by Mr. Barley. See below under “Management Agreement”. |
STOCK OPTION GRANTS
We did not grant any stock options to any of our officers, directors or employees during our most recent fiscal year ended December 31, 2003. We have also not granted any stock options to any of our officers, directors or employees since December 31, 2003.
EXERCISES OF STOCK OPTIONS AND YEAR-END OPTION VALUES
No stock options were exercised by our officers, directors or employees during the financial year ended December 31, 2003. No stock options have been exercised since December 31, 2003.
OUTSTANDING STOCK OPTIONS
We do not have any stock options outstanding.
MANAGEMENT AGREEMENT
The services of Mr. J. Stephen Barley, our President and a director, are provided to us pursuant to a management agreement with C.H.M. Consulting Inc., a company controlled by Mr. J. Stephen Barley. We pay C.H.M. Consulting Inc. a management fee of $750 per month in consideration for C.H.M. Consulting Inc. providing management and administration services to us. This management agreement has been extended on a month-to-month basis by agreement between us and Mr. Barley dated January 1, 2002. These services include the services of Mr. Barley. The management agreement provides that the fee payable to C.H.M. Consulting Inc. will be increased in the event that Mr. Barley is required to spend more than 15% of his business time on the business of the Company.
Page 16 of 21
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who beneficially own more than ten percent of our equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors and greater than ten percent 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 received by us, we believe that during the fiscal year ended December 31, 2003 all such filing requirements applicable to our officers and directors were complied with.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information concerning the number of shares of our common stock owned beneficially as of March 19, 2004 by: (i) each person (including any group) known to us to own more than five percent (5%) of any class of our voting securities, (ii) each of our directors and officers, and (iii) our officers and directors as a group. Unless otherwise indicated, the shareholders listed possess sole voting and investment power with respect to the shares shown.
| (1) | As of March 19, 2004, there were 12,538,000 shares of our common stock issued and outstanding. |
Except as otherwise noted, it is believed by the Company that all persons have full voting and investment power with respect to the shares indicated. Under the rules of the Securities and Exchange Commission, a person (or group of persons) is deemed to be a "beneficial owner" of a security if he or she, directly or indirectly, has or shares the power to vote or to direct the voting of such security, or the power to dispose of or to direct the disposition of such security. Accordingly, more than one person may be deemed to be a beneficial owner of the same security. A person is also deemed to be a beneficial owner of any security, which that person has the right to acquire within 60 days, such as options or warrants to purchase the common stock of the Company.
CHANGE IN CONTROL
We are not aware of any arrangement that might result in a change in control in the future.
Page 17 of 21
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Except as described below, none of the following parties has, during the last two years, had any material interest, direct or indirect, in any transaction with us or in any presently proposed transaction that has or will materially affect us:
-
Any of our directors or officers;
-
Any person proposed as a nominee for election as a director;
-
Any person who beneficially owns, directly or indirectly, shares carrying
more than 10% of the voting rights attached to our outstanding shares of
common stock;
-
Any of our promoters;
- Any relative or spouse of any of the foregoing persons who has the same house as such person.
We have entered into a management agreement with C.H.M. Consulting Inc., a company controlled by Mr. J. Stephen Barley, our President and a director. We pay C.H.M. Consulting Inc. a management fee of $750 per month on a month-to-month basis in consideration for C.H.M. Consulting Inc. providing management and administration services for us. These services include the management services provided by Mr. Barley as our president.
During fiscal 2002 and 2003, an associated private company of which Mr. J. Stephen Barley, our president and a director, is a director advanced loans to us. A total of $20,701 was advanced during 2003 and $3,459 was advanced during 2002. The loans are outstanding in the amount of $24,218 as of December 31, 2003. The loans are unsecured, payable on demand, and bear interest at a rate of 8% per annum.
Page 18 of 21
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits and Index of Exhibits
|
Exhibit
Number |
Description of Exhibit |
|
3.1
|
Articles of Incorporation (1) |
|
3.2
|
Bylaws, as amended (1) |
|
4.1
|
Share Certificate (1) |
|
10.1
|
Management Agreement with C.H.M. Consulting, Inc. dated December 1, 2000 (1) |
|
10.2
|
Letter Agreement dated June 19, 2003 between the Company and Jerry H. Clay (2) |
|
10.3
|
Letter Agreement dated December 31, 2003 between the Company and Jerry H. Clay (3) |
|
14.1
|
Code of Ethics (4) |
|
31.1
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (4) |
|
32.1
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (4) |
| (1) |
Previously filed with the Securities
and Exchange Commission as an exhibit to the our Form SB-2 Registration
Statement, as amended, originally filed on June 25, 2001.
|
| (2) |
Previously filed as an exhibit to a
Current Report filed on Form 8-K on July 3, 2003.
|
| (3) |
Previously filed as an exhibit to our
Quarterly Report filed on Form 10-QSB on November 14, 2003.
|
| (4) |
Filed as an Exhibit to this Annual Report
on Form 10-KSB.
|
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the last quarter of our fiscal year ended December 31, 2003.
We have not filed any Current Reports on Form 8-K since December 31, 2003.
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ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit Fees
During fiscal years 2003 and 2002, we retained our independent auditor, Morgan & Company, Chartered Accountants, to provide services in the following categories and amounts:
|
Fee Category |
2003 | 2002 |
|
Audit Fees
|
$2,450 | $2,310 |
|
Audit Related Fees
|
330 | 310 |
|
Tax Fees
|
275 | - |
|
All Other Fees
|
- | - |
|
Total of all Fees
|
$3,055 | $2,620 |
We have considered whether the provision of non-audit services is compatible with maintaining the independence of Morgan & Company and have concluded that it is.
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| TUSCANY MINERALS, LTD. | ||
| By: | /s/ J. Stephen Barley | |
| J. Stephen Barley | ||
| President, Secretary and Treasurer | ||
| Director | ||
| Date: March 24, 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/ J. Stephen Barley | |
| J. Stephen Barley | ||
| President, Secretary and Treasurer | ||
| (Principal Executive Officer) | ||
| Director | ||
| Date: March 24, 2004 |
Page 21 of 21