-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VcJ00FVDRwF0NGthoN1sdvyvcI+rJdkLZbVo27bbqsjx0ICur/2CDwzW/smWN3dE BST4yEyv/fMl31RRoU2G6A== 0001080602-04-000013.txt : 20040614 0001080602-04-000013.hdr.sgml : 20040611 20040614120953 ACCESSION NUMBER: 0001080602-04-000013 CONFORMED SUBMISSION TYPE: SB-2/A PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 20040614 FILER: COMPANY DATA: COMPANY CONFORMED NAME: STANFORD MANAGEMENT LTD CENTRAL INDEX KEY: 0001080602 STANDARD INDUSTRIAL CLASSIFICATION: METAL MINING [1000] IRS NUMBER: 980413066 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SB-2/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-108218 FILM NUMBER: 04860469 BUSINESS ADDRESS: STREET 1: 420 - 625 HOWE STREET CITY: VANCOUVER STATE: A1 ZIP: V6C 2T6 BUSINESS PHONE: 604-608-0223 MAIL ADDRESS: STREET 1: 420 - 625 HOWE STRET CITY: VANCOUVER STATE: A1 ZIP: V6C 2T6 SB-2/A 1 doc1.txt AS FILED WITH THE COMMISSION ON JUNE 14, 2004 FILE NO. 333-108218 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM SB-2A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 (AMENDMENT NO. 4) STANFORD MANAGEMENT LTD. -------------------------- (Name of small business issuer in its charter) Delaware 1099 98-0413066 -------- ---- ---------- (State or jurisdiction of (Primary Standard Industrial (I.R.S. Employee incorporation or organization) Classification Code Number) Identification No.) 420 - 625 Howe Street Vancouver, B. C. Canada, V6C 2T6 420 - 625 Howe Street (Tel: 604-608-0223) Vancouver, B. C., Canada, V6C 2T6 - -------------------- --------------------------------- (Address and telephone number of (Address of principal place of business principal executive offices) or intended principal place of business) The Company Corporation, 1013 Centre Road, Wilmington, DE 19805, (Tel: ---------------------------------------------------------------------- 302-636-5440) ------------- (Name, address and telephone number of agent of service) APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box [x] If this Form is filed to register additional common stock for an offering under Rule 462(b) of the Securities Act, please check the following box and list the Securities Act of 1933 registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed under Rule 462(c) of the Securities Act, of 1933 check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed under Rule 462(d) of the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made under Rule 434, please check the following box. [ ] CALCULATION OF REGISTRATION FEE
PROPOSED TITLE OF EACH PROPOSED MAXIMUM/ CLASS OF SECURITIES NUMBER OF MAXIMUM MINIMUM AMOUNT OF TO BE SHARES TO OFFERING AGGREGATE REGISTRATION REGISTERED BE REGISTERED PRICE PER SHARE OFFERING PRICE FEE (1) - ------------------- ------------- --------------- -------------- -------------- Common Stock - par value of $0.001 - ------------------- Maximum. . . . .. . . . 1,000,000 $ 0.20 $ 200,000 $ 100 - -------- --------- ------ -------- ----- Minimum. . . . . . . . . 250,000 $ 0.20 $ 50,000 $ 100 - -------- --------- ------ -------- ------
(1) Estimated solely for the purpose of computing the amount of registration fee in accordance with Rule 457 (o). Stanford hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. -1- Prospectus Subject to Completion Dated June 14, 2004 THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. STANFORD MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE (THE "EFFECTIVE DATE"). THIS PROSPECTUS IS NOT AN OFFER TO SELL SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFERING OR SALE IS NOT PERMITTED. A Minimum of 250,000, Maximum 1,000,000 shares STANFORD MANAGEMENT LTD. Common Stock Stanford is offering a minimum of 250,000 shares of its common stock and a maximum of 1,000,000 shares of its common stock, par value of $0.001, for $0.20 per share. This will result in minimum proceeds of $50,000 and maximum proceeds of $200,000. All dollar amounts referenced herein refer to United States dollars.
Underwriters' Proceeds to Price to the discount and Stanford public commission before expenses -------------- ------------- ---------------- Per share to the general public $ 0.20 $ Nil $ 0.20 - Minimum offering $ 50,000 $ Nil $ 50,000 - Maximum offering $ 100,000 $ Nil $ 200,000
Stanford is making this offering of up to 1,000,000 shares of common stock on a self-underwritten, minimum-maximum basis conducted only by the officers and directors of Stanford. Stanford will begin to sell the shares on the date listed on the cover of this prospectus. No use of these funds will occur until the minimum subscriptions have been subscribed for. During the initial offering period, Stanford may continue to offer shares for a period of up to 12 months from the date of this prospectus. At such time that a minimum of $50,000 in proceeds is received from the sale of shares, the proceeds will be used by Stanford for immediate use. If Stanford does not sell the minimum $50,000 gross proceeds during the initial period, Stanford may update this prospectus and continue the offering for up to an additional 12 months, being a total of 24 months from the date of this prospectus, but after that time period the offering will be closed. During the continuous offering period, being 24 months, investors will receive no interest in the event that the offering is terminated for failure to meet the minimum proceeds requirement. The minimum purchase for any investor is $200. Stanford may terminate this offering at any time. If Stanford does not received subscriptions for the minimum $50,000 in gross proceeds, all funds received from potential investors will be returned without interest or deduction. Stanford will file, during any period in which it offers or sells securities, a post-effective amendment to this registration statement to reflect any fundamental change in the registration statement, disclose additional or changed material information about the plan of distribution relating to an increase or decrease in the volume of securities being offered (if the total dollar value of securities being offered would not exceed that which was registered), any deviation from the low or high end of the estimated maximum offering range if, in the aggregate, the changes in volume and price represents no more than a 20% change in the maximum aggregate offering price set forth in the above noted schedule. The updating of financial information will adhere to the requirements of Section 10 (a)(3) of the Securities Act of 1933 where it states that a prospectus is used more than nine months after the date of the prospectus, the information contained therein shall be as of the date not more than sixteen months prior to such use, so far as such information is known to the users of such prospectus or can be furnished by such user without unreasonable effort or expense. Before this offering, there has been no public market for Stanford's common stock and its stock is not currently traded on any exchange or quotation system. If is Stanford's intention to seek a market maker to apply for a quotation on the OTC Bulletin Board in the United States, also known as the OTCBB, following the effective date of this prospectus. THE SECURITIES OFFERED IN THIS PROSPECTUS INVOLVE A HIGH DEGREE OF RISK. THE READER SHOULD CAREFULLY CONSIDER THE FACTORS DESCRIBED UNDER THE HEADING "RISK FACTORS" BEGINNING ON PAGE 7. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. Stanford has not authorized any person to give any information or to make any representation not in this prospectus in connection with any offering of these shares of common stock. This prospectus is not an offer to sell any securities other than these shares of common stock and Stanford is not soliciting an offer to buy any securities other than these shares of common stock. This prospectus is not an offer to sell these shares of common stock to any person and Stanford is not soliciting an offer from any person to buy these shares of common stock in any jurisdiction where the offer or sale to that person is not permitted. STANFORD HAS NO AFFILIATIONS WITH STANFORD UNIVERSITY. The date of this prospectus is July , 2004 -2- TABLE OF CONTENTS
Page Item 3. Summary Information and Risk Factors 4 Item 4. Use of Proceeds 15 Item 5. Determination of Offering Price 17 Item 6. Dilution 17 Item 7. Selling Security Holders 19 Item 8. Plan of Distribution 19 Item 9. Legal Proceedings 20 Item 10 Directors, Executive Officers, Promoters and Control Persons 20 Item 11 Security Ownership of Certain Beneficial Owners and Management 25 Item 12 Description of Securities 27 Item 13 Interest of Named Experts and Counsel 28 Item 14 Disclosure of Commission Positions of Indemnification for Securities Act Liabilities 28 Item 15 Organization Within Last Five Years 30 Item 16 Description of Business 31 Item 17 Management's Discussion and Analysis or Plan of Operation 43 Item 18 Description of Property 55 Item 19 Certain Relationship and Related Party Transactions 55 Item 20 Market for Common Equity and Related Stockholder Matters 56 Item 21 Executive Compensation 57 Item 22 Financial Statements 58 Item 23 Changes In and Disagreement with Accountants on Accounting and Financial Disclosure 72
-3- PROSPECTUS SUMMARY AND RISK FACTORS ----------------------------------- STANFORD MANAGEMENT LTD. ("Stanford") Stanford is a company without revenue, with little or no assets and having incurred losses since its inception. The only source of funds to Stanford has been from the sale of shares in its capital stock and loans made from affiliates. Stanford will register the common stock under the 1934 Act when the offering period beings; being the date of this prospectus. Stanford is a "small business issuer" as defined under Regulation S-B adopted under the Securities Act of 1933, as amended, and will file reports with the SEC pursuant to the 1934 Act on forms applicable to small business issuers: being Forms 10-KSB, 10-QSB, Form 3 and 5 and any other forms required, on a timely basis to be filed with the SEC. Stanford intends to furnish annual reports to stockholders containing audited financial statements, quarterly reports and such other periodic reports as it may determine to be appropriate. Stanford has ownership interest in the mineral rights on the claim called the "SF" claim. During the next several years, Stanford will explore the SF claim. Stanford's objectives are more fully described elsewhere in the Form SB-2. Stanford is considered an "exploration stage company" since there is no assurance that a commercially viable mineral deposit, a reserve (refer to next three paragraphs), exists on the SF claim until appropriate exploration work is done and a comprehensive study based upon such work concluded legal and economic feasibility. A reserve is part of a mineral deposit which can be economically and legally extracted or produced at the time of the reserve determination. Reserves are customarily stated in terms of "ore" when dealing with metalliferous minerals. Reserves are classified as follows: Proven (Measured) Reserves: Reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or quality are computed from the results of detailed sampling and (b) the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well-established. Probable (Indicated) Reserves: Reserves for which quantity and grade and/or quality are computed from information similar to that used for proven (measure) reserves, but the sites for inspection, sampling, and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven (measured) reserves, is high enough to assume continuity between points of observation. Stanford was incorporated under the laws of the State of Delaware on September 28, 1998. Currently, Stanford has three directors, Glen Macdonald, William Nielson and Vera McCullough. Stanford did not have sufficient capital in 2000 and 2001 to pay the annual costs to the State of Delaware and therefore on May 16, 2002 Stanford filed a -4- Certificate of Renewal and the Revival of the Certificate of Incorporation to ensure it was in good standing in the State of Delaware (Exhibit 3.i.1). Stanford originally considered the development of a software protocol program for the restaurant industry, whereby a wireless menu system could be implemented. The system would be designed to be compliant with Palm Pilots which are currently readily available and widely used in the market for personal hand-held devices. Such a software protocol program would eliminate the need to develop a proprietary software program, which in turn would require design and manufacture of specific special purpose hardware components. The concept of this software program was dispensed with after several years due to a general lack of interest on the part of restaurants. Stanford decided to obtain a mineral property in British Columbia for exploration as more fully described elsewhere in this Form SB-2. Stanford acquired on January 21, 2001 a 100% interest in the mineral rights to the "SF" claim, which will be explored for gold, platinum or other commercial minerals such as zeolite and bentonite. Stanford acquired these rights to the SF claim by "staking" (refer to "Exploration of the SF Claim" for a definition of staking). The land is owned by the Crown; being the Province of British Columbia, who granted the mineral rights for a twelve month period to Stanford once the staking has occurred and been filed with the Gold Commissioner's Office, except for placer and coal rights (refer to Exhibits 99.2 and 99.3). Every twelve months either work has to be done on the SF claim or cash paid in lieu to extend the rights to the minerals. The mineral rights to the SF claim will expire on January 12, 2005 unless a minimum of $2,340 is spent on exploration work or cash is paid in lieu of exploration work to the Ministry of Mines and Energy for the Province of British Columbia. Stanford does not have ownership to the land itself; only to the mineral rights thereon. Placer minerals comprise such minerals as gold, silver and platinum which remain near their original location after the effect of long continued weathering or the action of water has broken down the constituents. The more resistant minerals, such as gold, silver and platinum, will collect nearer to the outcrop while the softer and less resistant minerals are carried away by the forces of erosion. Some of the normal ways of recovering placer minerals is by way of panning (by extracting material from the bottom of a stream and washing the lighter minerals out of the pan by hand with the circulation of water the heavier minerals remain behind), sluicing (the placer gravel is shoveled into the head of an elongated sluice box which is inclined and has various configurations of bars and traps across the bottom called riffles which hold the heavier minerals as the water washes out the lighter minerals), hydraulicking (a stream of water under great pressure is directed against the base of the placer gravel bank thereby collapsing the bank, disintegrating the gravel and washing the broken material to and through sluice boxes situated in convenient positions downslope) and dredging (method of removing material which is submerged in streams and water bodies by use of a floating machine). The latter two methods are not suitable for the SF claim. Stanford does not have a claim or lease for placer minerals. Stanford has the rights to the minerals on the SF claim other than placer minerals and coal. In other words, Stanford has the rights to explore for minerals below the surface but cannot extract minerals found on the surface of the SF claim. Under the Mineral Tenure Act of British Columbia, Stanford would -5- have to stake the SF claim for placer minerals. Once this staking is completed Stanford could use either panning or sluicing to extract minerals from Collins Gulch Creek which flows through the claim. If Stanford only had the placer claim rights then production would be limited to 2,000 cubic metres of paydirt each year. Under a placer lease, which is a higher form of tenure than a claim, there is no production limit and the issue lease cannot be challenged under the Mineral Tenure Act. Title to a lease is therefore only issued when the ground and title to be held by the leasehold has been verified to a higher standard than that required of a claim. This is achieved by means of a survey. Components of the survey are: - - conduct the historical research to determine those titles which may affect the ground to be acquired by the lease; - - verification of the legal posts of those titles on the ground; and - - produce a survey plan from the collected data. The majority of the SF claim has not been staked for placer minerals and does not contain a placer lease over the claim. Until Stanford has completed its initial exploration work on the SF claim, no decision will be made to stake the claim for placer minerals and no survey will be undertaken to obtain a placer lease. Stanford will begin an exploration program on its claim contingent on the success of this Offering. The exploration program will cost Stanford $21,550 (refer to page 41) and if the exploration program is successful, Stanford will undertake a further exploration program on the SF claim. The date of expiration of the SF claim is January 5, 2005. SUMMARY FINANICAL INFORMATION
Date of Date of Inception Inception September 24, September 24, 1998 to 1998 to February 29, August 31, 2004 2003 (Unaudited) (Audited) -------------- -------------- Statement of Expenses Information: Revenue . . . . . . . . . . . . . . Nil Nil Net Losses (116,923) (98,072) Total Operating Expenses 116,923 98,072 Staking and Exploration Costs 6,238 4,693 General and Administrative 110,685 93,379 As of .. . . . As of February 29,. August 31, 2004 2003 (Unaudited) . (Audited) -------------- ------------- Balance Sheet Information: Cash. . . . . . . . . . . . . . . . Nil Nil Total Assets. . . . . . . . . . . Nil Nil Total Liabilities 42,173 29,622 Stockholders Equity (deficit) (42,173) (29,622)
-6- The number of common shares currently outstanding are 2,385,500. RISK FACTORS Any potential investor should carefully consider the risks described below and other information in this Form SB-2. If any of the following risks occur, Stanford's business, results of operation and financial condition could seriously be harmed. Stanford's common stock does not have any value until it obtains a quotation on a recognized stock exchange. Stanford's share value could decline below the offering price in this Prospectus even if it obtains a quotation on a stock exchange due to the following risk factors. RISKS ASSOCIATED WITH THIS OFFERING 1. STANFORD'S SHARE PRICE WILL BE SUBJECT TO THE PENNY STOCK RULE WHICH WILL RESULT IN ANY BROKER-DEALER INVOLVED IN STANFORD'S SHARES HAVING INCREASED ADMINISTRATIVE RESPONSIBILITIES WHICH WILL HAVE AN AFFECT ON STANFORD BEING ABLE TO RAISE FUNDS AND AN INVESTOR PURCHASING OR SELLING HIS SHARES. Stanford's common stock is considered to be a "penny stock" because it meets one or more of the definitions in SEC Rule 3a51-1: (i) it has a price of less than five dollars per share; (ii) it is not traded on a recognized national exchange; (iii) it is not quoted on the National Association of Security Dealers, Inc. ("NASD") automated quotation system (NASDAQ), or even if so, has a price less than five dollars per share; or (iv) is issued by a company with net tangible assets of less than $2,000,000, if in business more than three years continuously, or $5,000,000, if in business less than a continuous three years, or with average revenues of less than $6,000,000 for the past three years. A broker-dealer will have to undertake certain administrative functions required when dealing in a penny stock transaction. Disclosure forms detailing the level of risk in acquiring Stanford's shares will have to be sent to an interested investor, current bid and offer quotations will have to be provided with an indication as to what compensation the broker-dealer and the salesperson will be receiving from this transaction and a monthly statement showing the closing month price of the shares being held by the investor. In addition, the broker-dealer will have to receive from the investor a written agreement consenting to the transaction. This additional administrative work might make the broker-dealer reluctant to participate in the purchase and sale of Stanford's shares. From Stanford's point of view, being subject to the Penny Stock Rule could make it extremely difficult for it to attract new investors for future capital requirements since many financial institutions are restricted under their -7- by-laws from investing in shares under a certain dollar amount. Ordinary investors might not be willing to subscribe to shares in the capital stock of Stanford due to the uncertainty as to whether the share price will ever be able to be high enough that the Penny Stock Rule is no longer a concern. Any new investor purchasing shares under this Offering might consider whether they will be able to sell their shares at the price of this Offering or higher since if no broker-dealer becomes involved with Stanford and Stanford is unable to raise future investment capital the price per share may deteriorate to a point that an investor's entire investment could be lost. 2. THIS OFFERING IS BEING SELF-UNDERWRITTEN BY STANFORD WITH NO INDEPENDENT DUE DILIGENCE UNDERTAKEN BY EITHER A QUALIFIED INDEPENDENT THIRD PARTY OR A BROKER-DEALER TO DETERMINE IF THE ASSETS, FUTURE INCOME POTENTIAL AND CAPABILITIES OF MANAGEMENT ARE PRESENT TO SUPPORT THE OFFERING PRICE UNDER THIS PROSPECTUS. Stanford has decided to self-underwrite this Offering and thereby has eliminated any opportunity for a qualified independent third party such as a broker-dealer's legal counsel or the broker-dealer itself to examine the records of Stanford, discuss with management its future strategy and assess the assets and future income potential before making a decision whether the price under this Offering is reasonable. Without an independent review, Stanford might find it difficult to attract investors for this Offering since investors might be unsure whether the price per share is reasonable or not and if Stanford is unable to raise capital it might hinder the exploration activities of the SF claim. New investors are relying on Stanford's management to set a reasonable share price under this Offering and without independent verification by a broker-dealer or an independent third party there is no assurance that the price set herein is reasonable. 3. THE PRESENT SHAREHOLDERS HAVE PAID $0.001 PER SHARE WHEREAS THE NEW INVESTORS WILL BE PAYING $0.20 PER SHARE. Originally all shares were sold for $0.001 per share; a price considerably below the Offering price under this Form SB-2. With this type of discrepancy, it might be difficult for Stanford to attract new investors who might not wish to contribute the majority of the money to Stanford for a considerably lesser number of shares (refer to Item 6 - Dilution). With this fact in mind, new investors should consider that if, and when, Stanford's shares are quoted on an exchange the existing shareholders could commence selling their shares at prices substantial below the Offering price herein and still make a profit. 4. THERE IS NO PUBLIC MARKET FOR THE SHARES OF STANFORD AND THE SHARES MAY NEVER BE QUOTED ON ANY EXCHANGE. Prior to this Offering, there has been no public market for Stanford's shares and there may never be an active trading market for Stanford's shares. A new investor may not, once he or she has subscribed for the shares under this Offering, be able to dispose of his shares when he wishes to and if he is able to sell them privately he might not realize his original cost. -8- 5. A MARKET MAKER MIGHT NOT BE ABLE TO BE MAINTAINED TO OVERSEE TRANSACTIONS IN THE TRADING OF STANFORD'S COMMON SHARES AND IF NO MARKET MAKER IS MAINTAINED THE TRADING SHARES MIGHT BE IMPAIRED. If Stanford is unable to maintain at least one NASD broker/dealer as a market maker, the liquidity of the common shock could be impaired, not only in the number of shares of common stock which could be bought or sold, but also through possible delays in the timing of transactions, and lower prices than might otherwise prevail. Furthermore, the lack of market makers could result in Stanford's shareholders being unable to buy or sell shares of its common stock on any secondary market. Stanford may not be able to maintain such market makers and hence new investors might not be able to sell their shares. 6. PREEMPTIVE RIGHT AND CUMULATIVE VOTING RESTRICTIONS MIGHT AFFECT NEW INVESTORS IN HAVING CONTROL IN THE DEVELOPMENT OF STANFORD. In accordance with Stanford's Articles of Incorporation and By-laws, there are no preemptive rights in connection with Stanford's common stock. This being the case, Stanford's existing and new shareholders might have a dilution in their percentage ownership of Stanford's stock in the event additional shares are issued under this Form SB-2 or in subsequent financings. Moreover, cumulative voting in electing directors is not provided for. Accordingly, the holder(s) of a majority of Stanford's outstanding shares, present in person or by proxy, will be able to elect all of its directors and thereby control Stanford. New investors might never have the opportunity to have any voice in the activities of Stanford and might eventually be deleted in ownership interest to a point that they will never be able to effectively offer any opposition to the activities of the control group. RISKS ASSOCIATED WITH STANFORD 1. STANFORD HAS A LIMITED OPERATING HISTORY IN WHICH NEW INVESTORS CAN VALUE THE PERFORMANCE OF STANFORD, ITS MANAGEMENT AND ITS FUTURE EXPECTATIONS. Stanford commenced its operations in 1998 but only became involved in the mineral exploration industry in January 2001. With no past operating history, any meaningful evaluation of Stanford is difficult. Having been mainly inactive since its inception, Stanford is basically a start-up company and therefore there is no history available which will allow a new investor to assess its business plan, its management and its future operations. Without these three factors, a new investor cannot make a meaningful decision as to whether or not the purchase of shares in Stanford is a wise investment. 2. STANFORD HAS A LACK OF WORKING CAPITAL WHICH, UNLESS OBTAINED ON ACCEPTABLE TERMS IN THE FUTURE, WILL INHIBIT ITS FUTURE GROWTH STRATEGY. The only present source of working capital available to Stanford is through the sale of common shares, incurring debt or other borrowing. At present, Stanford does not have adequate funds to conduct operations and financing may not be available when needed. Even if the financing is available, it may be on terms Stanford deems unacceptable or are materially adverse to shareholders' interests with respect to dilution of book value, dividend preferences, liquidation -9- preferences, or other terms. Stanford's inability to obtain financing would have a materially adverse effect on its ability to implement its growth strategy, and as a result, could require it to diminish or suspend its exploration program on the SF claim and possibly cease its operations. An investor may be investing in a company that does not have adequate funds to conduct its operations and, if so, an investor might lose all of his investment. 3. STANFORD HAS INCURRED LOSSES SINCE ITS INCEPTION AND THEREFORE HAS AN ACCUMULATED DEFICIT WHICH MIGHT AFFECT OBTAINING FUTURE CAPITAL. Since inception, Stanford has incurred losses and has an accumulative deficit of $116,923 as at February 29, 2004. Stanford's ultimate success in fully implementing its mineral exploration program on the SF claim is dependent on its ability to raise additional capital. Having never made a profit or having had a cash flow will effect Stanford in being able to raise funds from the public since there is no certainty Stanford will ever be able to make a profit. New investors should carefully consider whether they wish to invest in a company who has incurred continual losses since its inception and may never be able to reverse this trend. 4. THE AUDITORS HAVE EXAMINED THE FINANCIAL STATEMENTS BASED ON STANFORD BEING A GOING CONCERN BUT HAVE SUBSTANTIAL DOUBT THAT IT WILL BE ABLE TO CONTINUE AS A GOING CONCERN. Stanford's auditors, Amisano Hanson, in the audited financial statements attached to this Form SB-2 for the year ended August 31, 2003, have stated in their audit report the following: "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, and 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." The auditors are concerned that Stanford, without any established source of revenue and being dependent on its ability to raise capital from its shareholders or other sources might not be able to sustain operations. If this is the case, Stanford, without adequate future funding, might not be able to continue as a going concern. A new investor should give careful consideration to this fact since the capital they contribute to Stanford under this Offering may be the only capital which Stanford is able to raise. This might result in the total loss of the investor's investment. 5. ABSENCE OF CASH DIVIDENDS MAY AFFECT A SHAREHOLDER'S RETURN ON INVESTMENT. The Board of Directors does not anticipate paying cash dividends on the outstanding shares, both now and in the future, and intends to retain any future earnings to finance its exploration activities on the SF claim or to seek additional claims. Payment of dividends, if any, will depend, among other factors, on earnings, capital requirements and the general operating and -10- financial condition of Stanford, and will be subject to legal limitations on the payment of dividends out of paid-in capital. An investor should be aware that a dividend, either in cash or shares, may never be paid by Stanford and, therefore, the shares of Stanford should not be purchased by an investor as an income producing security. 6. THERE IS AN ABSENCE OF RECENT EXPLORATION ACTIVITIES ON THE SF CLAIM OTHER THAN SUFFICIENT EXPLORATION WORK TO MAINTAIN THE SF CLAIM IN GOOD STANDING WHICH HAS NOT RESULTED IN AN ORE RESERVE BEING DISCOVERED OR ANY REVENUE BEING DERIVED FROM THE SF CLAIM. There has been no significant exploration activity on the SF claim in recent years, except for limited exploration during 2002 by Stanford to maintain the claim in good standing until 2005. Without a detailed work program being undertaken on the SF claim, no ore reserve has been identified, and may never be identified, and no other exploration company or entity has made an offer to purchase, lease or engage in any other transaction, such as a joint venture, with respect to the SF claim. Although Stanford incurred only nominal expenses to preserve its ownership and maintain the SF claim in good standing with the Ministry of Energy and Mines for the Province of British Columbia, it has received no revenue or other income from the SF claim. Investors should be aware the SF claim might never prove to have a commercially viable ore reserve and therefore will eventually lapse leaving Stanford with no mineral claim. 7. NO MATTER HOW MUCH MONEY IS SPENT ON EXPLORING THE SF CLAIM THERE MAY NEVER BE AN ORE RESERVE FOUND. No matter how much Stanford spends on exploration activities it may never discover a commercially viable quantity of ore on the SF claim. Most exploration activities do not result in the discovery of commercially mineable deposits of ore. In fact, it is extremely remote that a mineral property will become a producing mine. An investor should not consider, by purchasing shares in Stanford under this Offering, that they are acquiring an interest in a future exploration company since it is extremely unlikely Stanford will ever become a viable company. 8. THE UNCERTAINTY OF THE TOPOGRAPHY OF THE SF CLAIM WILL HAVE AN EFFECT ON THE FUTURE COST OF ANY EXPLORATION ACTIVITIES. The SF claim is located on a fairly rugged hill with ridge topography ranging from 2,400 to 4,000 feet in elevation with a steep canyon at the north part of the claim. The SF claim is covered by a thin layer of glacial till. This ruggedness in the overlying area could affect during exploration the location of drilling sites and trenches, as well as the construction of any facilities. Platforms might have to be constructed to allow a drilling rig to function properly due to the unevenness of the ground. This will mean additional costs depending upon the drilling site selected by the geologist in-charge with the exploration activities. This factor, at the present time, is uncertain, and Stanford does not know if this factor will have a material adverse effect on the ability of Stanford to conduct its exploration activities. If the cost of exploration is prohibitive, Stanford might have to cease its operations on the SF claim. New investors should consider whether a more suitable investment for them would be a recognized exploration company with mineral claims already in operation and no longer in the exploration stage. -11- 9. TITLE TO THE SF CLAIM IS NOT HELD IN THE NAME OF STANFORD. The title of the SF claim is held in trust by the staker of SF claim. Even though the staker has signed a Bill of Sale Absolute, Stanford has not recorded it with the Ministry of Mines and Energy for the Province of British Columbia. Basically, Stanford, to record the Bill of Sale Absolute, must have a Free Miner License. Due to its present lack of funds it has not purchased this license. Therefore, the staker's creditors could lien the rights to the minerals on the SF claim and offer these rights for sale to another party. If this happens, Stanford will be without a mineral claim. Until the rights to the minerals on the SF claim have been formerly transferred to Stanford, a new investor might be wise to refrain from investing in any shares being offered under this Form SB-2. 10. THE SF CLAIM HAS NEVER BEEN SURVEYED AND THE EXACT BOUNDARIES OF THE CLAIM ARE UNCERTAIN. The exact boundaries of the SF claim are uncertain since the claim has never been professionally surveyed. At this time, Stanford does not intend to undertake the cost of having the SF claim surveyed and therefore it may never know the exact boundaries of the claim. The problem in the future, if and when Stanford identifies an ore reserve, is that disputes could develop with other companies or parties as to the exact boundaries of the SF claim. If the ore reserve is partly or totally on another party's claim, Stanford would lose either the majority or part ownership in the ore reserve. Unless a mutually acceptable agreement can be reached, Stanford would have to enter into legal action which might take years and a great deal of money to settle. If Stanford was unsuccessful in its legal battle, it would lose the ore reserve and might be left with nothing to put into production. A new investor might consider this risk factor prior to making a decision in investing in Stanford's shares since the loss of part or all of any future ore reserve, if any, due to not undertaking an initial survey on the SF claim could be very costly to Stanford and have a detrimental effect on its share price. 11. WEATHER WILL AFFECT THE EXPLORATION ACTIVITIES ON THE SF CLAIM. The weather in the Princeton area of British Columbia is varied in that during the months of November to early May the SF claim will be covered in snow whereas during the summer months the weather is hot and dry. Stanford might not be able to work during the winter months due to the snow conditions not allowing any meaningful exploration activities on the SF claim. Whereas, during the hot dry summer months, the Ministry of Forestry might close the Princeton area for fear of forest fires and therefore curtail any exploration activities on the SF claim. The weather might have a limiting effect on the exploration activities on the SF claim resulting in a longer period before Stanford will know if there is a viable commercial ore reserve on the SF claim. New investors might want to consider investing in a company where its mineral claims can be explored year-round since Stanford's share price might experience wide fluctuations; dropping during periods of inactivity on the SF claim and increasing in value during exploration. -12- 12. STANFORD DOES NOT HAVE THE RIGHTS TO PLACER MINERALS ON THE SF CLAIM. Stanford has not staked the SF claim for placer minerals located on the surface, being the total of the overburden (any material covering or obscuring rocks from view) to the actual bed rock (being the core rock that forms the majority of the Earth's surface), of the claim and therefore does not have any rights to placer minerals therein. Stanford only has the rights to the minerals below the overburden and contained within the bed rock itself. In the event a third party stakes the SF claim for placer minerals, Stanford would lose any future opportunity to develop a placer deposit. By not having the rights to placer minerals Stanford might forego future revenues, if and only if, it were determined that such placer deposits, if any, were economical. 13. STANFORD HAS NOT ENTERED INTO ANY CONTRACTUAL AGREEMENT WITH ITS OFFICERS AND DIRECTORS AND THEREFORE ANY TERMINATION ON THEIR PART WILL HAVE A DAMAGING EFFECT OF THE OPERATION OF STANFORD. Stanford's directors and officers have varied business interests and are working for other companies. No member of management has signed a written employment agreement with Stanford and Stanford cannot afford to pay management. In the event, Glen Macdonald, William Nielsen or Vera McCullough decides to resign as directors and officers of Stanford, Stanford may be unable to attract other qualified officers and directors. An investor might have an ownership interest in a company which is, in the future, controlled by a Board of Directors who do not have the qualification to manage an exploration company. 14. THE PRESIDENT OF STANFORD HAS CLIENTS AND IS A DIRECTOR OF OTHER COMPANIES IN THE EXPLORATION INDUSTRY WHICH MIGHT RESULT IN A CONFLICT OF INTEREST. Glen Macdonald is a professional geologist who has numerous clients in the exploration and mining industry. These clients use a considerable amount of his time thereby reducing the time he can spend on the activities of Stanford. For example, Mr. Macdonald is a director of Starfield Resources Inc., a mineral exploration company quoted on the TSX Exchange in Toronto, Canada. A conflict of interest could develop in the event Mr. Macdonald knows of a mineral property for either sale or staking since he would have to offer it to both Starfield and Stanford. Stanford assumes Mr. Macdonald will act fairly to both companies in such matters but has no way of knowing if this will be the case. An investor might want to consider whether he is interested in purchasing shares in a exploration company where the President is involved with other companies in the same business, unable to devote full time to the activities of Stanford and may or may not give Stanford the opportunity to acquire properties of merit of which he has knowledge. 15. WITH ONLY THE PRESIDENT OF STANFORD HAVING ANY EXPLORATION EXPERIENCE, STANFORD MIGHT HAVE TO RELY UPON OUTSIDE CONSULTANTS TO ASSIST IN THE EXPLORATION OF THE SF CLAIM. Glen Macdonald is a professional geologist but Ms. McCullough has no experience at all in the exploration industry. Mr. Nielsen has limited experience in the mining industry. Stanford will be dependent on Mr. Macdonald's expertise in any exploration program on the SF claim. Stanford will, if Glen Macdonald is -13- unavailable, have to rely on outside consultants who are familiar with the exploration industry in British Columbia. Using consultants will be an expensive way to explore the SF claims since consultant fees generally are higher than the use of full or part time employees. Capital raised will quickly be spent if Stanford has to rely on consultants and not the services of Mr. Macdonald. New investors might wish to consider if this is the way that they want their money, from the purchase of shares, to be spent. 16. THE DIRECTORS AND OFFICERS DO NOT WORK FULL TIME ON THE AFFAIRS OF STANFORD AND THIS LIMITED TIME MIGHT HAVE AN ADVERSE EFFECT ON THE OPERATION OF STANFORD. Both Glen Macdonald, William Nielsen and Vera McCullough work approximately 5 hours each during a given month due to having other job commitments. Therefore, Stanford does not have full time staff working for it which might have the effect of lengthening the time it will take for the exploration on the SF claim to either realize there is an ore reserve associated with it or that Stanford should consider other properties. An investor might wish to consider, before purchasing shares in Stanford, as to whether they wish to be involved in a company where the directors and officers work only a few hours a month on its activities. 17. STANFORD DOES NOT HAVE THE FUNDS AVAILABLE TO PURCHASE AN INSURANCE POLICY TO PROTECT ITSELF IN THE EVENT ITS DIRECTORS AND OFFICERS DEPARTS. Stanford does not have an insurance policy for loss of its directors and officers since it is not prepared to currently pay the premiums for such a policy. In the event Mr. Macdonald departs Stanford, there will be no insurance proceeds to entice another geologist to become an officer and director of Stanford and no other members of the present management team have a geological background. This lack of insurance proceeds might result in Stanford not being able to obtain an individual with the qualifications it desires. With Stanford unwilling to pay the premiums of an insurance policy due to its lack of capital, a new investor might wish to consider a company where there is a larger management team, some of the members having a professional geological designation, in the event that one departure will not affect the future operations of the company. 18. STANFORD HAS ENTERED INTO INDEMNITY AGREEMENTS WITH ITS OFFICERS AND DIRECTORS WHICH COULD RESULT IN SUBSTANTIAL EXPENDITURES AND MAYBE MONETARY DAMAGES AS A RESULT OF THEIR ACTIONS. Stanford's Articles of Incorporation provide that it may indemnify any director, officer, agent or employee against certain liabilities. In addition, on September 30, 2002, Stanford entered into an Indemnity Agreement with both Glen Macdonald and Vera McCullough - refer to Exhibit 99.2. The foregoing indemnification could result in substantial expenditures by Stanford and prevent any monetary recovery from them for losses incurred by Stanford as a result of their actions. It is Stanford's understanding that, in the opinion of the SEC, indemnification is against public policy as expressed in the Security Act of 1933, as amended, and is, therefore, unenforceable. Nevertheless, a new shareholder might not wish to invest in a company who has indemnified its officers and directors for their actions which could result in substantial legal costs and court ordered penalties which might render Stanford insolvent. -14- FORWARD LOOKING STATEMENTS This Form SB-2 contains certain forward-looking statements. Such forward-looking statements include, but are not limited to, statements regarding Stanford's future plans regarding the exploration of the SF claim and the planned use of proceeds. Actual results could differ from those projected in any forward-looking statement. The forward-looking statements are made as of the date of this Form SB-2 and Stanford assumes no obligation to update such forward-looking statements, or to update the reasons why actual results may differ from those projected in the forward-looking statements. Numerous factors, including without limitation those factors mentioned in the above Risk Section of this Form SB-2, could cause future results to differ substantially from those contemplated in such forward-looking statements. A number of the factors that may influence future results of operations are outside Stanford's control. ITEM 4. USE OF PROCEEDS The primary purpose of this Offering is to provide additional capital required to support Stanford's continued exploration of the SF mineral claim. The use of proceeds under this Offering, at various subscription levels, will be as follows:
$50,000 % $100,000 % $150,000 % $200,000 % --------- ---- -------- ----- --------- ----- -------- ----- Offering expenses (Item 25). . . . . . . $16,500 33.00 $ 16,715 16.72 $ 16,930 11.29 $ 17,200 8.60 Estimated exploration Program (page 41). . . . . . . 21,550 43.10 21,550 21.55 21,550 14.36 21,550 10.78 Estimated Phase 11 (i) - - 50,000 50.00 50,000 33.33 50,000 25.00 Payment to Creditors Other than related parties (iii). . . . . 25,561 51.12 25,561 25.56 25,561 17.04 25,561 12.78 Working capital. . . . . . . . (13,611) (27.22.) (13,826) (13.83) 35,959 23.98 85,689 42.84 --------- ------- -------- ------- ------ ------ ------- ------ $ 50,000 100.00 $100,000 100.00 $150,000 100.00 $200,000 100.00 ======= ====== ======== ====== ======== ====== ======== ======
(i) Depending upon the results of prospecting the SF claim and the soil sample results obtained, as recommend by John Jenks on page 40, a secondary exploration program might be warranted. Further prospecting and soil sampling might be considered to identify an area of interest whereby a drilling program will be contemplated. Stanford has estimated $50,000 for Phase II which includes a drilling program as indicated on page 44. -15- (ii) The net proceeds of the Offering remaining in working capital will be invested in short-term, interest bearing-investments or accounts. (iii) The settlement of accounts owed to creditors from the proceeds of this Offering will be as follows:
Offering Balance to Creditiors to be paid Amount (a) Expenses (b) be paid - ---------------------- ---------- ------------ ---------- Accounting (c) $ 9,987 $ 3,000 $ 6,987 Annual General Meeting. . . . . . . . 1,158 - 1,158 Auditing (c) . . . . . 3,269 2,000 1,269 Consulting . . . . . . 5,000 - 5,000 Miscellaneous (c). . . 208 - 208 Office (c) . . . . . . 4,664 - 4,664 Transfer agent (d) . . 6,275 - 6,275 ------ ------- ------ Total payment. . . . . $ 30,561 $ 5,000 $ 25,561 ======== ======== ========
(a) Represents the amount outstanding as indicated under Item 17 - Management Discussion and Analysis or Plan of Operation - (a) Plan of Operation as indicated on page 47. These figures are as at February 29, 2004. (b) To avoid double accounting, the amount accrued under Item 25 - Other Expenses of Issuance and Distribution on page 73, the accounting and audit costs have been deducted as noted above. (c) There is no interest or maturity dates associated with these outstanding accounts payable. (d) The interest charge by the transfer agent is 1 percent per month on the outstanding balance. There is no maturity dated associated with the amount outstanding. The foregoing represents Stanford's best estimate of its use of the proceeds derived from this Offering based on its present plans, the state of its business operations and current conditions in the exploration industry which Stanford operates. Stanford reserves the right to change the use of proceeds if unanticipated governmental regulations and exploration cost changes which would prohibit the exploration of the SF claim with the funds available under the Use of Proceeds noted above. The only other situation where the use of proceeds would be changed is where Glen Macdonald recommends to the Board of Directors an increase in exploration expenses on the SF claim. This would have the effect of reducing the working capital position and increasing the exploration program costs. Other than indicated above, the proceeds from this Offering will not be used to discharge debts to related parties. In addition, it is anticipated that the proceeds will not be used to acquire assets or finance the acquisition of other businesses. As noted under Item 17 - Management's Discussion and Analysis or Plan of Operations, if the minimum Offering is subscribed for there will not be adequate -16- funds available to meet the cash requirements over the next twelve months. If this is the situation the directors will have to advance funds to Stanford to maintain it in good standing for the twelve-month period. Glen Macdonald has indicated he will provide sufficient capital to ensure Stanford does not lose the rights to the SF claim and become a blank check company. No agreement or written commitment has been entered into between Glen Macdonald and Stanford. Upon the date of this prospectus filed under the Securities Act by Stanford, Stanford shall report the use of proceeds on its first periodic report filed pursuant to sections 13(a) and 15(b) of the Exchange Act (15 U.S.C. 78m(a) and 78o(d)) after effectiveness of its Form SB-2, and thereafter on each of its subsequent periodic reports filed pursuant to sections 13(a) and 15(d) of the Exchange Act through the latter of disclosure of the application of all the Offering proceeds, or disclosure of the termination of the Offering. ITEM 5. DETERMINATION OF OFFERING PRICE Since Stanford's shares of common stock are not listed or quoted on any exchange or quotation system, the offering price of the shares of its common stock was arbitrarily determined. The facts considered in determining the Offering price were Stanford's financial condition and prospects, its limited operating history and the general condition of the securities market. The Offering price is not an indication of and is not based upon the actual value of Stanford. The Offering price bears no relationship to Stanford's book value, assets or earnings or any other recognized criteria of value. The Offering price should not be regarded as an indicator of the future market price of Stanford's securities. ITEM 6. DILUTION As at February 29, 2004, Stanford had a negative net tangible book value of $42,173 or a negative $0.018 per share based on the existing outstanding shares of 2,358,500. The following analysis sets forth the net tangible book value per share before and after distribution, the amount of the increase in such net tangible book value per share attributable to the cash payments made by the new shareholders of the shares being offered and the amount of the immediate dilution from the public offering price which will be absorbed by the new shareholders. -17- At various subscriptions levels - ----------------------------------------------------------------
$50,000 $100,000 $150,000 $200,000 ----------- ----------- ----------- ----------- Price per share. . . . . . . . $ 0.20 $ 0.20 $ 0.20 $ 0.20 Net negative tangible book Value per share before Offering . . . . . . . . . . . $ (42,173) $ (42,173) $ (42,173) $ (42,173) Net tangible book value per share after this Offering. . . $ 7,827 $ 57,827 $ 107,827 $ 157,827 Immediate dilution per share To new shareholders. . . . . . $ (0.197) $ (0.180) $ (0.165) $ (0.153) Increase in net tangible book value per shares attributed to cash payments by new shareholders (i) . . . . . . . $ 0.003 $ 0.020 $ 0.035 $ 0.047 Number of shares held by New shareholders . . . . . . . 250,000 500,000 750,000 1,000,000 Total shares outstanding after this Offering. . . . . . 2,608,500 2,858,500 3,108,500 3,358,500 Percentage ownership by New sharesholders. . . . . . . 9.6% 17.5% 24.1% 29.8% Percentage ownership by existing shareholders after this Offering. . . . . . . . . 90.4% 82.5% 75.9% 70.2%
(i) The amount contributed by the existing shareholders are as follows: Shareholders who paid $0.001 per share $ 2,015 Shareholders who paid $0.01 per share 3,435 ----- Total contributions to shares $ 5,450 ====== Number of shares purchased by original shareholders 2,358,500 --------- Average price per share $ 0.002 ---------- As can be determined from the above analysis, new investors will immediately suffer a loss in the amount they contribute to Stanford on a per share basis whereas the original shareholders will realize an immediate increase in their per share value with no further investment on their part other than their original investment. -18- There are no outstanding stock options, warrants or rights which, if outstanding, would have caused further dilution to the new investors. All shares to be issued under this Form SB-2 will be for cash consideration only. No shares will be issued in consideration of amounts owed by Stanford to either third or related parties. Vera McCullough will purchase 25,000 shares under this Offering for cash consideration only. ITEM 7. SELLING SECURITY HOLDERS There are no selling securities holders under this Form SB-2. ITEM 8. PLAN OF DISTRIBUTION Up to 1,000,000 shares of common stock of Stanford will be sold under this Form SB-2 if all shares offered are subscribed for. Stanford is not using the services of an underwriter and therefore is under no underwriting obligations since it will self-underwrite this Offering. No compensation, in either cash or shares, will be paid to any director or officerfor assisting in selling any securities under this Offering. The directors, being Glen Macdonald, Vera McCullough and William Nielsen, will be solely responsible for selling shares under this offering. The directors and officers will not be registered as a broker-dealer pursuant to Section 15 of the Securities Act of 1934 in reliance upon Rule 3(a) 4-1. Rule 3(a) 4-1 sets forth those conditions under which a person associated with Stanford may participate in the Offering of Stanford's securities and not be deemed to be a broker-dealer. The conditions are that: 1. None of such persons are subject to a statutory disqualification, as that term is defined in Section 3(a)(39) of the Act, at the time of his participation; 2. None of such persons are compensated in connection with his or her participation by the payment of commissions or other remuneration based either directly or indirectly on transactions in securities; 3. None of such persons are, at the time of his participation, an associated person of a broker-dealer; and 4. All of such persons meet the conditions of Paragraph (a)(4)(ii) of Rule 3a4-1 of the Exchange Act, in that they (a) primarily perform, or are intended primarily to perform at the end of the offering, substantial duties for or on behalf of Stanford otherwise than in connection with transactions in securities; and (b) are not a broker or dealer, or an associated person of a broker or dealer, within the preceding twelve months; and (c) do not participate in selling and offering of securities for Stanford more than once every twelve months other than in reliance on Paragraphs (a)(4)(i) or (a)(4)(iii). This Offering will commence on the date of this prospectus and continue for a 12-month period thereafter. If Stanford is unable to sell the minimum number of shares under this Offering, it will update this Form SB-2 and continue the -19- Offering for an additional 12 months from the date of the updating of this Form SB-2. The procedure for purchasing shares is as follows: 1. The investor will execute and deliver a Share Subscription Agreement (the "Agreement") in the format as indicated in Exhibit 99.1. The Agreement is the investor's acceptance of Stanford's offer to sell him or her shares of common stock. Stanford will review the executed Agreement and decide if it will accept the offer to buy its common shares. If Stanford accepts, the Agreement will be signed by an authorized signatory of Stanford and a copy will be returned to the subscriber. 2. The investor will deliver a check or certified funds to Stanford for the acceptance or rejection. All checks for the purchase of shares must be made payable to "Stanford Management Ltd." Stanford has the right to accept or reject subscriptions in whole or in part, for any reason or for no reason. All funds received from rejected Agreements will be returned immediately to the subscriber, without interest or deductions. Subscriptions for securities will be accepted or rejected within 48 hours after Stanford receives the Agreements. The estimated fees and expenses, which will be paid by Stanford, associated with the issuance and distribution of the securities being registered are more fully described under Item 25 - Other Expenses of Issuance and Distribution. ITEM 9. LEGAL PROCEEDINGS Stanford is not aware of any pending legal proceeding contemplated by a governmental authority, or concerning its business or the SF claim, that involves primarily a claim for damages in excess of ten percent of current assets excluding interest and costs. As of the date of this filing, Stanford is not a party to any legal proceeding, either as plaintiff or defendant. Thus, the financial statements have not been adjusted to reflect any material uncertainty regarding exposure to liability in legal proceedings. ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS DIRECTORS, EXECUTIVE OFFICERS AND PROMOTERS The name, municipality of residence, position held within Stanford, principal occupation of each of the directors and officers and the date the individual was first elected or appointed are set forth in the following table. Each director is to serve until the Annual Meeting of Shareholders or until his or her successor is elected or appointed. Unless otherwise indicated, each director and officer has been engaged for the past five years in the specified principal occupations or in other executive capacities with the companies or firms referred to, or with affiliates or predecessors thereof. -20-
NAME AND POSITION OR OFFICE YEAR MUNICIPALITY OF WITHIN BECAME RESIDENCE STANFORD A DIRECTOR Glen Macdonald. . Chief Executive Officer, 2002 (2) Vancouver . . . . President and British Columbia. Director (1) Canada Vera McCullough Chief Financial 2001 (3) Vancouver . . . . Officer British Columbia. Secretary - Canada. . . . . . Treasurer and Director (1) William Nielsen Chief Accounting Offcier 2003 (4) Burnaby and British Columbia. Director Canada
(1) Directors who are members of the Audit Committee. (2) Glen Macdonald was appointed a Director on October 23, 2002, President on October 24, 2003 and Chief Executive Officer on August 8, 2003. (3) Vera McCullough was appointed a Director and Secretary Treasurer on May 21, 2001 and Chief Financial Officer on August 8, 2003. (4) William Nielsen appointed Chief Accounting Officer on August 8, 2003. Audit Committee The Audit Committee of Stanford currently consists of Glen Macdonald and Vera McCullough. The Audit Committee has received and discussed the audited financial statements. Glen Macdonald, on behalf of the Audit Committee, has discussed with the independent auditors the matters required to be discussed by SAS 61 and has received the written disclosures and the letters from the independent accountants required by Independence Standards Board Standard No. 1. Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Stanford's Form SB-2. The overall general function of the audit committee is to review the overall audit plan and Stanford's system of internal control, to review the results of the external audit, and to resolve any potential dispute with Stanford's auditors. The percentage of common shares beneficially owned, directly or indirectly, or even which control or direction is exercised by all directors and officers of Stanford, collectively, is approximately 17 percent of the total -21- issued and outstanding shares. The directors will be appointing 2 independent members of the Audit Committee; each one being a non-director and non-officer of Stanford. These individuals have not yet been identified. The following are biographies of the directors and officers of Stanford. GLEN MACDONALD, 55, attended the University of British Columbia and obtained degrees in economics and geology in 1972 and 1973 respectively. He attended the Masters Program for Artic engineering at the University of Alaska for a year but did not graduate with his Masters Degree due to family matters. He is a member of the Alberta Professional Engineers, Geologists and Geophysicists Association and a member of the British Columbia Association of Professional Engineers and Geoscientists. He has experience in grade control and ore reserve definition at 2000 plus tons per day underground mine and has been a project manager for exploration programs with budgets that exceed $2,000,000. Between 1973 and 1974, Mr. Macdonald worked as a geologist for Whitehorse Copper Mines Ltd. in the Yukon where his duties involved exploration activities around the mine as well as grade control underground. In 1975 to 1983, Mr. Macdonald was employed as Exploration Project Manager with Noranda Mines Ltd in the Yukon and parts of the North West Territories in Canada where he was in-charge of projects that ranged from regional exploration to ore definition drilling programs for feasibility scoping studies. Noranda Mines is involved in base metal exploration, being metals other than precious metals such as gold and silver, such as copper and zinc and to a much lesser extent in gold and silver. As Exploration Project Manager, Mr. Macdonald was responsible for identifying mineral properties of merit for either joint venture with other companies or the outright purchase of the mineral claim in question. Mr. Macdonald was also responsible for a project which included design and management of a placer mine which was a 2 to 3 year project employing up to 10 professional staff plus ancillary personnel. In addition, he was responsible for the identification, design and management of a joint venture project between Noranda Mines and Westinghouse to look for tungsten in the North West Territories and Alaska. In 1983, Mr. Macdonald left his position with Noranda and became an independent consultant. Between 1983 and 2002, he has worked as a consultant for a number of junior and major exploration companies; some of which include AGIP, Tenajon Resources, Ashton Mines and American Express Leasing. As a consultant his duties included the design, implications and management of core drilling projects either in British Columbia, North West Territories or the Yukon. In the designing, implicating and managing of the various exploration programs for his clients he was responsible for the prospecting, mapping, undertaking various geochemcial surveys which would lead to the eventual acquisition of the mineral claim under examination. In addition, his responsibilities included mine resources definition for extraction, project results analysis, project design and management, government liason, report writing for professional corporate purposes and general corporate direction. During 2002 and 2003, as part of his consulting business, he acted as exploration manager and a director from January 1995 to January 2002 for New Shoshoni Ventures Ltd., a company in the exploration industry since its inception, where he negotiated the acquisition of Drybones Bay Kimberlite , located in the Northwest Territories near Yellowknife, had been an inactive property for the past five years. This property contains diamond bearing kimberlite (a mineral which occurs in vertical pipes, dikes and sills and is the principal original environment of diamonds) and Mr. Macdonald designed the program required to further the geophysical and other exploration techniques to allow a decision to be made to commence a winter drill program on the property. This has lead to the discovery of a new diamond bearing kimberlite. In addition to acting as a geological consultant during 2004, Mr. Macdonald has been kept on retainer to act for New Shoshoni Ventures Ltd in order to review other projects that might be introduced to it. -22- VERA McCULLOUGH, 55, graduated from New Westminister Senior Secondary in 1965 and was subsequently employed with BC Telephone where she became Supervisor of Operations responsible for scheduling and hiring. In 1972 she left her position at BC Telephone and started work for Brothers Electric Ltd. of Vancouver, British Columbia; an electrical contracting company doing work in both the commercial and residential housing area. Her position in Brothers Electric Ltd was as Comptroller in which her responsibilities included overseeing the estimating of various commercial and residential jobs, setting up budgets for over all review by management, accounting for accounts receivable and answering any complaints from customers, ensuring adequate controls were established over accounts payable and ensuring timely payment of all outstanding invoices, control over payroll including remittances to the various governmental agencies, reviewing complaints from staff members and assisting, where possible, in the annual evaluation of personnel, and overseeing the daily operations of the office and warehouse facilities. She was employed by Brothers Electric Ltd until 2001 when she retired, having worked for the company for 29 years. Other than being Chief Financial Officer, Secretary Treasurer and Director of Stanford, Mrs McCullough is not seeking any employment with any other firm or organization. WILLIAM SCHELL NIELSEN, (60), obtained a degree as an Registered Industrial Accountant while attending the University of Alberta in Calgary, Alberta. In (year) he received a degree in Business Administration and Accounting while living in Hamilton, Bermuda. In 1964 Mr. Nielsen worked as General Manager for Major Supplies Ltd. in Sechelt, British Columbia, Canada which was a company retailing and wholesaling lumber, tools, hardware, electrical and automotive supplies. He was responsible for sales, installation and servicing of major domestic and commercial appliances for Inglis/Whirlpool and Sears Canada Ltd. In 1984, he became Branch Manager for Inglis Limited in Surrey, British Columbia where he was responsible for starting up the new Inglis service branch by establishing inventory requirements, determining staff levels and overall responsibility for service technicians and the customer service center. During this period, Mr. Nielsen was responsible for accounting for all branch profits and computerizing the entire operations. In 1992, he was transferred by Inglis/Whirlpool Corporation to Mississauga, Ontario as District Manager and Accountant where he was responsible for the management of parts inventory and sales distribution for 32 Inglis Service Depots throughout British Columbia. In addition, he was responsible for the development of new sales areas and the accounting for all assets under his control. In 1997, he became Chief Accountant and Administrator for Zarcan Minerals Inc. of Vancouver, British Columbia where he was responsible for managing all company financial transactions, including budgeting, preparation of all financial information for distribution to Directors and shareholders, income tax preparation and payroll. In 2002 he left this position to work full time with a business consulting company, Nielsen-Popek & Associates, Certified Public Accountants, which he had originally established in 1980. This firm is an established consulting business offering ongoing evaluations, assessments, management development programs, accounting and income tax preparation to small and medium sized companies. Glen Macdonald holds a directorship on the following reporting companies: Starfield Resources Inc. (OTC.BB - SRFDF and TSX - SRU) Thelon Ventures Ltd. (TSX - THV) Otish Mountain Ventures Inc. (TSX - OTS) Golden Caribou Resources Ltd. (TSV - GCC) Solitaire Minerals Corporation (TSV - SLT) -23- Vera McCullough and William Nielsen do not hold a directorship position on any other reporting companies. Family Relationships There are no family relationships among directors, executive officers, or persons nominated or chosen by Stanford to become directors or executive officers. Significant Employees, Full and Part time and Hours Worked Other than the three directors of Stanford, Glen Macdonald, William Nielsen and Vera McCullough, Stanford has no other employees. If Glen Macdonald is not available during the exploration of the SF claim, Stanford will have to consider hiring consultants to oversee the exploration activities. The consultants would only be hired for the duration of the exploration program and once it has been completed they will no longer be engaged in any activities of Stanford. Stanford does not wish, at the present time due to lack of capital, to retain employees during periods when the SF claim is not being explored. Glen Macdonald, William Nielsen and Vera McCullough do not work full time for Stanford. They may each spend up to 5 hours a month on administrative work for Stanford - refer to Risk Factor #16 on page 14. During the exploration program, it is anticipated Glen Macdonald will spend approximately 20 hours a week on supervising the program. Mr. John Jenks, whose exploration budget is shown on page 40, has no agreement with Stanford to serve as a consultant or to work for Stanford in any other capacity. Involvement in Certain Legal Proceedings To the knowledge of management, during the past five years, no present or former director, executive officer or person nominated to become a director or an executive officer of Stanford: (1) filed a petition under the federal bankruptcy laws or any state insolvency law, nor had a receiver, fiscal agent or similar officer appointed by the court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filings; (2) was convicted in a criminal proceeding or named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting, the following activities: (i) acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, associated person of any of the foregoing, or as an investment advisor, underwriter, broker or dealer in securities, or as an affiliate person, director or employee of any investment company, or engaging in or continuing any conduct or practice in connection with such activity; -24- (ii) engaging in any type of business practice; or (iii) engaging in any activities in connection with the purchase or sale of any security or commodity or in connection with any violation of federal or state securities laws or federal commodities laws; (4) was the subject of any order, judgment, or decree, not subsequently reversed, suspended, or vacated, of any federal or state authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described above under this Item, or to be associated with persons engaged in any such activities; (5) was found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission to have violated any federal or state securities law, and the judgment in such civil action or finding by the Securities and Exchange Commission has not been subsequently reversed, suspended, or vacated. (6) was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated. ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICAL OWNERS AND MANAGEMENT SECURITY OWNERSHIP OF MANAGEMENT AND BENEFICIAL OWNERS The following table sets forth information regarding the beneficial ownership of shares of Stanford's common stock as of May 31, 2004 (2,358,500 shares issued and outstanding) by all directors, executive officers and beneficial owners.
AMOUNT OF TITLE OR NAME AND ADDRESS OF BENEFICIAL PERCENT OF CLASS BENEFICIAL OWNER (1) OWNERSHIP (2) CLASS - ---------- --------------------- -------------- ---------- Common Glen Macdonald 400,000 (3) 17 Stock 420 - 625 Howe Street Vancouver, British Columbia . . . . . Canada, V6C 2T6 Common Vera McCullough Nil (4) Nil Stock 40 Sweetwater Place . . Lions Bay, British Columbia . Canada, V0N 2E0 Common William Nielsen Nil Nil Stock 93 - 7501 Cumberland Street . . Burnaby, British Columbia . . . . . . Canada, V3N 4Y6 Common. . .. . Ownership of all Directors and 400,000 17 Stock . . . Officers as a group
-25- (1) Mr. Macdonald has sole voting power and sole dispositive power as to all of the shares shown as beneficially owned by him. (2) Under Rule 13-d of the Exchange Act, shares not outstanding but subject to options, warrants, rights and conversion privileges pursuant to which such shares may be required in the next 60 days are deemed to be outstanding for the purpose of computing the percentage of outstanding shares owned by the person having such rights, but are not deemed outstanding for the purpose of computing the percentage for such other persons. None of the directors or officers of Stanford have any options, warrants, rights or conversion privileges outstanding. (3) The shares held by Glen Macdonald are restricted since they were issued to a former director in compliance with an exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended. After these shares have been held for one year, Mr. Macdonald could sell a percentage of his shares based on one percent of the issued and outstanding shares of the Stanford. In other words, Mr. Macdonald's shares can be sold after the expiration of one year in compliance with the provisions of Rule 144. The share certificate bears a 'stop transfer' legend on it. As at May 31, 2004, the number of shares which could presently be sold pursuant to Rule 144 is 23,585 shares. (4) Vera McCullough presently does not own any shares in Stanford but is planning to acquire for cash 25,000 shares under this Offering. When issued these shares will be restricted from trading in compliance with an exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended. After these shares have been held for one year, Mrs. McCullough could sell a percentage of her shares based on one percent of the issued and outstanding shares of Stanford. In other words, Mrs. McCullough's shares can be sold after the expiration of one year in compliance with the provisions of Rule 144. The share certificate will have a 'stop transfer' legend stamped on it. Presently the control position is the 400,000 shares held by Glen Macdonald which represents 17% of the issued shares. With the purchase of 25,000 shares by Vera McCullough, the new control percentage in relationship to the issued shares at the various subscription levels will be as follows: Directors' and Officers' Shares Number of shares Control Subscribed for after Offering Percentage - --------------- --------------- ------------------------ 250,000 2,608,500 16.29% 500,000 2,858,500 14.87% 750,000 3,108,500 13.67% 1,000,000 3,358,500 12.65% At various levels of subscription for shares under this Form SB-2, the total number of shares outstanding increases and the percentage ownership by the directors and officers decreases. -26- ITEM 12. DESCRIPTION OF SECURITIES The securities being offered are shares of common stock. The authorized capital of Stanford consists of 25,000,000 common shares with a par value of one tenth of a cent ($0.001) per share, amounting to twenty five thousand dollars ($25,000). The holders of common stock shall: - - have equal ratable rights to dividends from funds legally available therefore, when, as, and if declared by the Board of Directors of Stanford; - - are entitled to share ratably in all of the assets of Stanford available for distribution upon winding up of the affairs of Stanford; and - - are entitled to one non-cumulative vote per share on all matters on which shareholders may vote at all meetings of shareholders. The shares of common stock do not have any of the following rights: - - preference as to dividends or interest; - - preemptive rights to purchase in new issues of shares; - - preference upon liquidation; or - - any other special rights or preferences. In addition, the shares are not convertible into any other securities. There are no restrictions on dividends under any loan agreements. Non-Cumulative Voting. The holders of shares of common stock of Stanford do not have cumulative voting rights, which means that the holders of more than 50% of such outstanding shares, voting for the election of directors, can elect all of the directors to be elected, if they so choose. In such event, the holders of the remaining shares will not be able to elect any of Stanford's directors. Dividends Stanford has not declared or paid any dividends on its common stock. It does not currently anticipate paying any cash dividends in the foreseeable future on its common stock, when issued pursuant to this Offering. Although Stanford intends to retain its earnings, if any, to finance the exploration and growth of the SF claim, its Board of Directors will have the discretion to declare and pay dividends in the future. Payment of dividends in the future will depend upon Stanford's earnings, capital requirements, and other factors, which its Board of Directors may deem relevant. Because Stanford does not intend to make cash distribution by way of dividends, potential shareholders would need to sell their shares to realize a return on their investment. There can be no assurance that the Offering price of $0.20 per share as indicated in this Form SB-2 will be able to be realized by any -27- shareholder liquidating their share position in the future. A distribution of revenues will be made only when, in the judgment of Stanford's Board of Directors, it is in the best interest of Stanford's stockholders to do so. Change in Control of Stanford Stanford does not know of any arrangements which might result in a change in control. Registered Office Stanford has engaged the service of Chennell Mowbray, The Company Corporation, 1013 Centre Road, Wilmington, DE 19805, to act as registrar. Transfer Agent Stanford has engaged the services of Nevada Agency & Trust Company, Suite 880, 50 West Liberty Street, Reno, Nevada, 89501 to act as transfer agent. Debt Securities and Other Securities There are no debt securities outstanding or any other form of securities. ITEM 13. INTEREST OF NAMED EXPERTS AND COUNSEL Other than as set forth below, no named expert or counsel was hired on a contingent basis, will receive a direct or indirect interest in Stanford, or was a promoter, underwriter, voting trustee, director, officer, or employee of Stanford. Stanford's auditors are Amisano Hanson, Chartered Accountants, 604-750 West Pender Street, Vancouver, British Columbia, Canada, who examined the financial statements of Stanford for the five years ended August 31, 2003 in conformity with accounting principles generally accepted in the United States. The fee paid to Amisano Hanson was $7,420; an accrual of $750 has been made in the accounts for the six months ended February 29, 2004. ITEM 14. DISCLOSURE OF COMMISSION POSITIONS ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers, and controlling persons of Stanford pursuant to the following provisions or otherwise, Stanford has been advised that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in such act, and is therefore unenforceable. Section 102(b)(7) of the Delaware General Corporation Law ("DGCL") enables a corporation in its original certificate of incorporation or an amendment thereto to eliminate or limit the personal liability of a director to a corporation or its stockholders for violations of the director's fiduciary duty, except: - - for any breach of a director's duty of loyalty to the corporation or its stockholders; -28- - - for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; - - pursuant to Section 174 of the DGCL (providing for liability of directors for unlawful payment of dividends or unlawful stock purchases or redemptions); or - - for any transaction from which a director derived an improper personal help Section 145 of the DGCL provides, in summary, that directors and officers of a Delaware corporation are entitled, under certain circumstances, to be indemnified against all expenses and liabilities (including attorney's fees) incurred by them as a result of suits brought against them in their capacity as a director or officer, if they acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, if they had no reasonable cause to believe their conduct was unlawful; provided, that no indemnification may be made against expenses in respect of any claim, issue or matter as to which they shall have been adjudged to be liable to the corporation, unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, they are fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper. Any such indemnification may be made by the corporation only as authorized in each specific case upon a determination by the stockholders or disinterested directors that indemnification is proper because the indemnity has met the applicable standard of conduct. The Articles of Incorporation contain provisions which, in substance, eliminate the personal liability of the Board of Directors and officers of Stanford and its shareholders from monetary damages for breach of fiduciary duties as directors to the extent permitted by Delaware law. By virtue of these provisions, and under current Delaware law, a director of Stanford will not be personally liable for monetary damages for breach of fiduciary duty, except liability for: a. breach of his duties of loyalty to Stanford or to its shareholders; b. acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law; c. dividends or stock repurchase or redemptions that are unlawful under Delaware law; and d. any transactions from which he or she receives an improper personal benefit. These provisions pertain only to breaches of duty by individuals solely in the capacity as directors, and not in any other corporate capacity, such as an officer, and limit liability only for breaches of fiduciary duties under Delaware law and not for violations of other laws (such as Federal securities laws). As a result of these indemnification provisions, shareholders may be unable to recover monetary damages against directors for actions taken by them that constitute negligence or gross negligence or that are in violation of their duties, although it may be possible to obtain injunctive or other equitable relief with respect to such actions. The inclusion of these indemnification provisions in Stanford's By-laws may have the effect of reducing the likelihood of derivation litigation against -29- directors, and may discourage or deter shareholders or management from bringing lawsuit action, which if successful, might otherwise benefit Stanford or its shareholders. Stanford has entered into separate Indemnification Agreements with Glen Macdonald and Vera McCullough containing provisions that provide for the maximum indemnification allowed to directors and officers under Delaware law - refer to Exhibit 99.2. Stanford, among other obligations, will indemnify such directors and officers against certain liabilities that may arise by reason of their status as directors and officers, other than liabilities arising from willful misconduct of a culpable nature, provided that such persons acted in good faith and in a manner that they reasonably believed to be in or not opposed to the best interest of Stanford and, in the case of criminal proceeding, had no reasonable cause to believe that his or her conduct was unlawful. In addition, the indemnification agreement provides generally that Stanford will, subject to certain exceptions, advance the expenses incurred by directors and officers as a result of any proceedings against them as to which they may be entitled to indemnifications. Stanford believes these arrangements are necessary to attract and retain qualified persons as directors and officers. ITEM 15. ORGANIZATION WITHIN LAST FIVE YEARS Stanford yet been in existence for a period of five years but has during the time since its inception accomplished the following: 1. The incorporating director was Philip Yee of Vancouver, British Columbia who organized Stanford and raised the initial seed capital from the existing shareholders. 2. During his time as the sole officer and director of Stanford, Mr. Yee identified a software protocol program for the restaurant industry whereby a wireless menu system could be implicated. Unfortunately the demand for such a program was not present and the project was abandoned in 2001. Subsequently in January 2001 the SF Claim was staked for Stanford. 3. Stanford engaged the services of John Jenks, Professional Geologist to prepare a report on the SF mineral claim and to recommend a program of exploration (as more fully detailed on page 40). 4. During the last two years, the directors have provided funds for a preliminary exploration program on the SF claim. 5. Stanford appointed two additional directors, Doug Symonds and Vera McCullough, on May 21, 2001. Soon afterwards, Philip Yee resigned as President and Director on May 21, 2001 and Doug Symonds was appointed as the new President of Stanford. 6. Mr. Symonds resigned on October 15, 2002 and was replaced by Glen Macdonald on October 23, 2002. On October 24, 2002, Glen Macdonald was appointed President of Stanford. Holders of Common Equity As of the date of this Form SB-2, Stanford has 59 shareholders, which include the President, Glen Macdonald. Exploration Activities Stanford undertook exploration work on the SF claim in 2002 and 2003. The directors will undertake further exploration work on the SF claim from the proceeds of the sale of common stock registered under this Form SB-2. -30- Additional Mineral Properties Stanford may seek out additional mineral properties in the Princeton region either by way of purchase, staking or joint venturing. No properties have been identified to date. Acquisition of Assets from Promoters, Founders or Organizers of Stanford Stanford has not received or acquired any assets or other consideration from any promoter, founder or organizer of Stanford since its inception. ITEM 16. DESCRIPTION OF BUSINESS Business Development Stanford is a company without revenues, with little or no assets and having incurred losses since its inception. The only source of funds to Stanford has been from the sale of its shares in its capital stock and loans made by affiliates. Stanford does not have any subsidiary, affiliated companies or joint venture partners. Stanford has not declared bankruptcy, been under receivership or similar proceedings. In addition, Stanford does not have any material reclassification, merger, consolidation or purchase or sale of a significant amount of assets not in the ordinary course of business. Stanford's area of interest is in the exploration industry, whereby it will explore its SF claim ("Exploration of the SF Claim"). Stanford is an exploration stage company in that there is no assurance that a commercially viable mineral deposit on the SF claim will ever be found and further exploration will be required before a final evaluation as to the economic and legal feasibility is determined. Stanford does not have an ore reserve at the present time and the likelihood of finding an ore body is remote (see "Risk Factor - 7" page 11). Nevertheless, management feels that its SF claim is worth the time and money to explore in order to determine if an ore reserve does exist. Since it is in the exploration stage, Stanford is not distributing any products, nor has it announced any new products or services. Stanford has the rights to the mineral on the SF claim other than placer minerals and coal. In other words, Stanford has the rights to explore for minerals below the surface but cannot extract minerals found on the surface of the SF claim. Under the Mineral Tenure Act of British Columbia, Stanford would have to stake the SF claim for placer minerals. Once this staking is completed Stanford could use either panning or sluicing to extract minerals from Collins Gulch Creek which flows through the claim. If Stanford only had the placer claim rights then production would be limited to 2,000 cubic metres of paydirt each year. Under a placer lease, which is a higher form of tenure than a claim, there is no production limit and the issue lease cannot be challenged under the Mineral Tenure Act. Title to a lease is therefore only issued when the ground -31- and title to be held by the leasehold has been verified to a higher standard than that required of a claim. This is achieved by means of a survey. Components of the survey are: - - conduct the historical research to determine those titles which may affect the ground to be acquired by the lease; - - verification of the legal posts of those titles on the ground; and - - produce a survey plan from the collected data. The majority of the SF claim has not been staked for placer minerals and does not contain a placer lease over the claim. Until Stanford has completed its initial exploration work on the SF claim, no decision will be made to stake the claim for placer minerals and no survey will be undertaken to obtain a placer lease. One of the main reasons Stanford is filing this Form SB-2 is to qualify its shares for a quotation on the OTC Bulletin Board. There is the chance Stanford's shares may never be qualified for trading on OTC Bulletin Board and therefore the shareholders might never be able to sell their shares to recoup a percentage of their original investment. Presently Stanford has ownership interest in the mineral rights to one mineral claim: the SF claim. As is custom in the Province of British Columbia, Stanford does not actually own the land itself; only the mineral rights thereto. The ownership interest in the land is held by the Province of British Columbia. Having "staked" the mineral claim in January 2001, Stanford has the rights to the minerals thereon for a period of one year from the date of staking (refer to Exploration of the "SF Claim" for a description of staking). The actual cost of staking the SF was $1,513 which maintained the mineral claim in good standing until January 12, 2002. In January 2002, the Stanford spent $2,927, $1,188 in June 2002 and $1,544 on November 15, 2003 to maintain the claim in good standing until January 12, 2005. To date Stanford has realized no revenue from the SF claim and it will take an unknown number of years of exploration to be able to identify a commercially viable ore reserve, if any. An exploration program of any size will require additional capital which presently Stanford does not have. Its ability to raise funds might be limited as more fully described under "Risk Factor - 2" on page 9. If Stanford is unable to find minerals during its exploration of the SF claim group, it will seek out other mineral properties of merit. In the meantime, the SF claim comprises 1,109 acres and allows for a number of exploration programs within the claim group. No specific mineralization has yet been identified by Stanford on the SF claim. Stanford has not identified any other mineral properties to date for future exploration work. Nevertheless, the corporate objective is to acquire other mineral properties in the event that the SF claim does not prove to have commercially viable ore reserve on it. Stanford's main product Stanford, being in the exploration stage, has no main product unless it discovers a commercially viable mineral deposit. There is no guarantee any commercially viable mineral deposit will ever be found and therefore no revenue will be derived from the SF claim. Stanford does not have the rights to the placer on its claim and therefore only has the rights to any minerals below the -32- earth's surface. If a third party stakes the placer rights before Stanford has made a decision to do so, which will depend upon its findings during its initial exploration activities, it will lose the rights on the SF claim to placer gold, silver, platinum, bentonite and zeolite. Competitive business conditions There are vast areas of British Columbia and the Pacific Northwest Coast, which includes Washington, Oregon and California states, which have been explored and in some cases staked through mineral exploration programs. Competition to identify, locate and explore mineral claims is intense. Exploration companies such as Stanford must compete for various resources, including consultants and other human resources, equipment and capital - refer to Risk Factor - 13, page 13. Sources and availability of raw materials Stanford does not have available to it any sources of raw materials since it is in the exploration stage and does not require any raw materials from outside suppliers. In the future, it might require raw materials such as cement, wood and sand to commence production of its SF claims. Such raw materials are easily obtainable by Stanford from local suppliers in Princeton, British Columbia. If no ore reserve is found on the SF claim, there will be no requirements for raw materials. Dependence on a few major customers To date Stanford has no customers and may not have any customers if there is no ore reserve on the SF claim. Patents, trademarks, licenses, franchises, concessions, royalty agreements or labor contracts Stanford has no patents, trademarks, licenses, franchises, concessions, royalty agreements or labor contracts to date. Stanford has not entered into any joint venture agreements with any parties relating to the SF claim. Governmental Approvals and Mining Regulations During the initial exploration stage, which comprised establishing a grid and soil/rock sampling, Stanford was not required to seek any governmental approvals. Upon completion of the initial exploration work as mentioned on page 40 herein, Stanford filed a "Statement of Work, Cash Payment, Rental" form with the Gold Commissioner's Office as required under the Mineral Tenure Act. This form stated that work credits from the exploration activities on the SF were incurred and can be used to maintain it in good standing for a further year. The recording fee to the Gold Commissioner's Office was $140. Once a decision has been made to carry out a drilling program, as will be done under Phase II, Stanford will have to obtain a "Reclamation Permit" and complete a "Safekeeping Agreement" with the Ministry of Energy and Mines (the "Ministry") by making a deposit to the Ministry directly or establishing a separate bank account in one of the five chartered banks in Canada, being either Bank of Montreal, Bank of Nova Scotia, Toronto-Dominion, Royal Bank or Imperial Bank of Commerce, with the Ministry being beneficiary. The estimated amount to be deposited with the Ministry is between $2,700 and $3,850; as determined by the Inspector of Mines upon review of the drilling and work program to be done on the SF claim. Approval and confirmation of the deposit should take -33- approximately two weeks. This deposit will ensure Stanford will spend the time to put the SF claim in basically the same environmental condition as it was prior to the drilling program. Approval and confirmation of the required deposit should take approximately two weeks. When either a trenching or drilling program is considered, Stanford will have to complete and submit to the Ministry a "Notice of Work" detailing the specifics of its work program. Approval for this form normally takes approximately six weeks and can be filed at the same time as the Reclamation Permit and Safekeeping Agreement mentioned in the above paragraph. Again the fee for filing the Notice Of Work form will be $140. The approximately date Stanford will need the approval is unknown at this time but will be prior to the above mentioned trenching or drilling activities taking place on the SF claim. If Stanford decides to undertake trenching in addition to a drilling program, it will have to file the above mentioned "Notice of Work" with the Ministry and in the event that it does not clean-up the site after the trenching program, the Ministry will undertake the clean-up at a cost of between $0.55 to $0.77 per cubic metre of material moved. All work must be carried out in accordance with the "Mineral Exploration Code - Part II Health, Safety and Reclamation Code for Mines" in British Columbia as set forth in the Mining Act. This Code is to protect employees and all other persons from undue risks to their health and safety arising out of or in connection with activities of mining and drilling, safeguarding the public from risks arising out of or in connection with mining activities and exploration, protecting and reclaiming the land and waterways affected by the activities of Stanford. There is no fee charged by the Ministry in adhering to this Code. In addition, Stanford will have to adhere to the "Fire Prevention and Suppression Regulations of the Forest Practices Code of British Columbia Act" which set specific guidelines on open fires either in a stove or campsite, use of explosives in exploration and how Stanford should conduct itself during times of forest closures. The Ministry does not charge a fee for adhering to this Regulation. During the drilling activities on the SF claim, the drilling company will be responsible to have an employee on location who has a First Aid Certificate and has a First Aid Kit on or near his person at all times. Having such a person on staff is a standard requirement of all drilling companies in British Columbia. There are no fee charges by the Ministry for Stanford to comply with this requirement. In the area where Stanford will undertake the initial exploration program, it is covered by poplar and other species of trees not significant in size and of no commercial value. Therefore, the removal of these trees will not require a "License to Cut" under the Forestry Act unless Stanford is in an area on the SF claim that has secondary growth. If this is the case, Stanford will apply for a License to Cut which would take approximately two weeks to receive approval. The filing fee is approximately $150. Water to reduce the heat during drilling will be supplied by the drilling company and can be obtained from nearby streams and lakes without causing any hardships to the marine life therein. The drilling company can either obtain water from Collins Gulch Creek which flows through the SF claim or transport it from Tulameen River slightly north of the claim. The drilling company will be required to meet all governmental requirements prior to commencing drilling thereby eliminating Stanford from this responsibility. -34- Environmental requirements in the Province of British Columbia are under the direction of the Provincial Government since both the local and Federal governments do not take an active part in administering the requirements of Bill 57 - Environmental Management Act (the "Act") which was passed after the third reading on October 21, 2003 and received Royal Assent on October 23, 2003. Under the Act the basic principle is that a person or company who has contaminated or contributed to the disturbance of a piece of property should bear the cost of remedying such disturbance. Under the Act, the new legislation also incorporates the corollary principle of "beneficiary pays", designed to ensure that those who benefit from activities resulting in contamination or disturbance will share in the liability for clean-up. The philosophical underpinning of this concept is that those who benefit from the activity should not be unfairly enriched. This Act mainly focuses on contamination of the soil and underground water supplies. Stanford will not be using chemicals during its exploration activities which would contaminate the surrounding soil. The drilling process would require water to reduce the heat of the drill and this can be obtained by the drilling company from either Collins Gulch Creek on the SF claim itself or from Tulameen River, slightly north of the claim. As mentioned previously in this Form SB-2, the establishment of a grid and subsequent soil sampling does not require approval from the Inspector of Mines. Before the commencement of Phase II, Stanford will submit a Notice of Work and a Reclamation Permit to the Ministry of Energy and Mines for the Province of British Columbia. The SF claim has logging roads running through the claim itself which will allow for easy access to a proposed drilling site. In the event an additional road or trail is required to the drilling site, the drilling company will meet with the Inspector of Mines and determine if a bond is required and the particulars of the road or trail construction. The drilling site itself will use limited ground space and therefore there may not be a need to apply for License to Cut trees in the surrounding area. The License to Cut trees and approval of construction access to the drill site will be applied for by the drilling company. Upon completion of the drilling program, the drilling company will have the responsibility of cleaning up the site. This might entail planting small trees to replace the ones cut down and throwing grass seed around the areas where the ground was disturbed. This cost will be borne by the drilling company and will be included in the total fee charged to Stanford. During the exploration and future drilling program, Stanford will not build facilities to house the exploration and drilling crew since the drilling company will provide accommodation for its employees in the town of Coalmont approximately 15 miles away from the SF claim. Any employees of Stanford will stay in Coalmont during the exploration program. The President of Stanford, Glen Macdonald, has extensive exploration experience and is familiar with the regulations respecting the initial acquisition and early exploration of mining claims in British Columbia, Canada. Stanford does expect there to be costs associated with adhering to government mining regulations during the initial exploration stage but will have to deposit the reclamation fees as noted above. Research and Development Stanford has not spent any money on research and development since its inception. -35- Cost of Compliance with Environmental Regulations Stanford is subject to the Health, Safety and Reclamation Code for Mines in British Columbia, Canada. This code deals with environmental matters relating to the exploration mineral properties. The Code is meant to protect the environment through a series of regulations affecting: 1. Health and Safety 2. Archeological Sites 3. Exploration Access Stanford is responsible to provide a safe work environment, no disruption of archeological sites and conduct its activities in a manner as to not cause any unnecessary damage to the SF claim. Stanford will secure all necessary permits for exploration, if required, and will file final plans of operation prior to the commencement of any explorationoperations. It is anticipated no endangered species will be disturbed. Re-contouring and re-vegetation of disturbed surface areas will be completed pursuant to the law. There will be no discharge of water into active streams, creeks, rivers or lakes and any other body of water regulated by the environmental law, or regulation. Any portals, adits or shafts will be sealed. The estimeated amount of dollars incurred for environmental "clean-up" which Stanford will have to pay will be approximately $7,700 - the deposit posted with the Ministry of Energy and Mines for the Province of British Columbia. The amount of dollars required for environmental clean-up will depend upon the work being done on the SF claim. If Stanford undertakes a trenching program the cost per cubic metre of material moved will range between $0.55 to $0.77 if the government is required to undertaken the clean-up. No charge will be incurred if Stanford does the clean-up itself. If road access is required or the site being explored will be unduly disturbed, the Inspector of Mines will have to determine the amount of the bond in advance of work being done. The Reclamation bond will have to be paid to the Government with the preparation of the site for drilling and will be refunded, assuming Stanford does its own clean-up, when Stanford completes that phase of its exploration program. This could mean the refund for the Reclamation bond could be paid back to Stanford within several months of completing the drilling program since time would have to be allowed for the Inspector of Mines to examine the drilling site on the SF claim and prepare the paper work required to refund the deposit. If Stanford chooses, it might not make the application for a refund of the Reclamation bond and apply it towards future drilling and exploration activities on the SF claim. The Federal Government does not take an active part in environmental issues in the mining industry unless a salmon spawning river is in danger. This is not the case with the SF claim. Local governmental agencies do not become involved with environmental issues since they rely upon the Provincial Government to ensure regulations are adhered to. Exploration of the "SF Claim" Stanford retained John Jenks, Professional Geologist and Geoscientist, of Salmon Arm, British Columbia, Canada, to summarize the geology and mineral potential on its SF claim near Coalmont, British Columbia. The SF was "staked" by a professional staker on behalf of Stanford. "Staking" of a claim is the method used by the Ministry of Energy and Mines for the Province of British Columbia in -36- verifying title to the minerals on government-owned land. The individual staking a claim, known as a "staker", prepares a post on the unstaked property and defines this post as the corner post or "identification" post. A serieal pre-numbered tag, purchased from the Gold Commissioner's office (a department of the Ministry of Energy and Mines) is affixed to the post and the date and time of preparing the post is recorded on it as well as the name of the claim. The staker is required to define the perimeter of the claim by a clearly marked line. Upon completion of marking the perimeter the staker records the number of units being staked upon the metal tag on the corner post. This information is recorded on a "4 Post Mineral Claim" form and filed with the Gold Commissioner's Office. Stanford has not identified any other mineral properties for staking and, therefore, has title to the mineral rights only on the SF claim. LOCATION AND ACCESS The SF claim is situated 2.5 miles west-north-west of the hamlet of Coalmont, BC, itself located 11 miles by paved road north-west of Princeton, British Columbia. From Coalmont the SF claim may be accessed by a series of dirt/gravel logging and recreational trails - a road distance of approximately 3 miles to the eastern claim boundary. While portions of the road system are driveable by four-wheel drive pick-up they are best accessed by the four-wheeler/quad/all terrain vehicle type of vehicle as was used during the initial property examination by John Jenks. During the initial exploration stage, Stanford will only be able to explore the SF claim during the late spring, summer and early fall months due to the possibility of snow in the winter. Winter weather conditions make it difficult to obtain soil and rock samples, prospecting, trenching and removal of overburden. During the winter months, the SF claim has to be accessed by snowmobile since the number of inches of snow during a normal winter is approximately 39 inches in the Princeton area. During the summer there is the possibility, on a random basis, of road closures from July to September due to the possibility of fires. Access to the property during the summer is best done by all terrain vehicles or by four by four vehicles. LAND TENURE Consisting of an 18 unit four-post claim extending 1.8 miles in the north-south direction by 0.9 miles east-west and totaling 1,109 acres. The SF mineral claim was staked on January 12, 2001. The claim tenure number is 383391, tag number 240871 and the anniversary date is January 12, 2005. It should be noted the SF claim confers the right to explore for precious and base metals in lode form and certain industrial minerals. Coal, as well as placer minerals, are issued under separate licenses and therefore are not owned by Stanford. Stanford has not obtained the lease for placer minerals on the SF claim. Placer minerals, often being gold, silver, platinum, gemstones or other heavy minerals of value, are located in gravel or ground and are extracted by the use of water, by sluicing, hydraulicking, etc. Under the Titles Division of the Ministry, a separate application for a lease of placer minerals must be obtained. Under the regulations of the Ministry, a lease is a higher form of tenure than a claim. There is no production limit on a lease (placer claims have a production limit of 2,000 cubic metres of paydirt per year), and the issued lease cannot be challenged under the Mineral Tenure Act. Title to a lease is therefore only issued when the ground and title to be held by the leasehold has been verified to a higher standard than required for a claim. This is achieved by means of a survey. Components of the survey process are: -37- conduct the historical research to determine those titles which may affect the ground to be acquired by the lease; verification of the legal posts of those titles on the ground, and produce a survey plan from the collected data. The Mineral Tenure Act Regulation provides for two alternative types of surveys for a placer lease, a legal survey (to be completed by a British Columbia Land Surveyor for submission to the Surveyor General's office for approval) and a technical survey (option to a full legal survey but required all documents to be completed and filed with the Ministry). Stanford has not obtained the lease for placer minerals on the SF claim. PHYSIOGRAPHY AND CLIMATE The claim area is characterized by fairly rugged hill and ridge topography ranging from 2,400 to 4,000 feet in elevation. The most predominant feature is the steep canyon of the north-north-east trending Collins Gulch Creek which bisects the claim area and empties into the Tulameen River at the northern extremity. Outcrop, being that part of a rock formation that appears at the surface of the ground, is exposed primarily along ridges and escarpment areas; being a long, more or less continuous cliff or steep slope which separates two levels of ground and usually was caused by erosion of the ground or in some case faulting. Most of the claim area is covered by a thin layer of glacial till; being comprising clay, silt, sand gravel and boulders ranging in various sizes originally deposited under a glacier prior to it receding. Tree cover is moderate to very thick consisting primarily of lodgepole pine and Douglas fir with subordinate poplar and deciduous species. Most of the timber is mature second-growth as much of the claim area has been previously logged. Timber rights are held by Tolko Industries Ltd., a company unrelated to Stanford. Summers are hot with moderate precipitation. Up to 4.5 feet of snow may accumulate anytime after late October and remain until early May. The effect of winter conditions is more fully described on page 53, "(vii) Seasonal aspects affecting the financial condition" REGIONAL GEOLOGY The Tulameen and Princeton areas, in which the SF claim is located, were geologically mapped in 1960. Located within the southern portion of the Intermontane Belt the map area is dominated by the magmatic area sequence Upper Triassic Nicola Group. This consists of a north-trending belt of volcanic (generally finely crystalline or glassy rock which has been put near the Earth's surface by volcanic action) and sedimentary (a rock resulting from the consolidation of loose sediment that has accumulated in layers) rocks intruded by Late Triassic and Early Jurassic (a specific geologic time period from 208.0 to 146.6 million years before the present time) comagmatic plutons; being molten rock material with the Earth from which an igneous rock results by cooling and crystallization. The sequence is unconformably overlain by Cretaceous and Tertiary volcanics and clastic sediments of the Spences Bridge, Kingsvale and Princeton Groups. -38- PROPERTY GEOLOGY/AIR PHOTO INTERPRETATION Approximately 60% of the SF claim is underlain by the northeast limb of the Eocene-aged Tulameen Basin, a synclinal structure trending northwesterly. The northern third is covered by older upper Triassic rock of the Nicola Group consisting of basic lavas, being fluid rock issued during volcano reaction, and sediments. Intrusive rock, being a body of igneous rock which has formed itself into pre-existing rocks either along some definite structural feature or by deformation and cross-cutting of the invading rocks, of the coast Intrusions occupies the northeastern 10% of the claim. The northeastern synclinal limb, a dipping curvature area of a fold between adjacent fold hinges, dips at -45 degrees to the southwest. A prominent shale,a fine grained sedimentary rock formed by consolidation of clay, silt and mud, mudstone, a style of mud having the texture and composition of shale, member forms a northwesterly-trending series of ridges. The prevalent schistosity trend, being rock structure generally split into slabs which contain mineralization of interest, of 55 degrees dipping minus 60 degrees to the southeast may parallel a possible late fault structure coinciding with Collins Gulch. Higher in the section a siliceous lapilli tuff, being small stones which in the unconsolidated stage is similar to ash and upon consolidation is referred to as tuff, contains interstitial zeolite; being part of the family of water salts occurring as secondary minerals in cavities of lava. Within the above interval, coal seams and bentonite, a clay formed by the alteration of volcanic ash, horizons occur, however, more surface examination is required to define their exact position. DISCUSSION The Tulameen Basin portion of the claim does contain the industrial minerals zeolite and bentonite, both of which are included in the mineral title. Despite their presence and possible resource potential, like most industrial minerals, the marketing aspect is of prime consideration. Any decision to explore for these materials must therefore coincide with corporate objectives. The Nicola Group comprising the northern third of the claim is prospective for both base and precious metals in veins and disseminated form within the area. Accordingly, this portion could be subject for further investigation with these metals in mind. It is conceivable that satellite bodies of the ultrabasic, being an igneous rock having a salt content lower than most basic rocks, could be distributed exterior to the main body - in fact the northern third of the SF claim underlain by the Nicola Group could host ultrabasic satellite intrusives with platinum/gold potential. Much of the claim is covered by a thin layer of glacial till implying that any potential deposit is easily masked. Accordingly, careful prospecting, stream geochemistry (including panning) and soil geochemistry would be employed in a subsequent search for precious and platinum-group metal mineralization, particularly within the northern third of the claim. Based upon a single day's examination of the property and subsequent literature research by John Jenks, the following conclusions are indicated by him: - - The southern 60% of the SF claim area underlain by Eocene Tulameen basin metasediments has industrial minerals zeolite and bentonite, both of which -39- pose a marketing challenge. A corporate decision to explore for these minerals would be required prior to directing further efforts in this area. - - The northern 30% of the claim underlain by Nicola Group metavolcanics and metasediments has potential for high grade base and precious metal vein (a mineral which has filled a fault or fracture in a rock and is often of interest in exploration), shear zone, being an area that is often mineralized by ore-forming solutions, hosted, breccia (a coarse-grained rock usually composed of angular broken rock fragments held together by a mineral cement or in a fine-grained matrix) and disseminated deposits. Particular attention should be directed to this claim portion. - - Within the same group the possible presence of smaller satellite intrusives of the zoned Alaska-type Tulameen Ultrabasic Complex could imply potential for platinum group mineralization. - - The northeastern claim portion comprising 10% of the claim area underlain by Coast Intrusive rock has a limited potential for disseminated base metal deposits. - - As 80% of the claim area is covered by a thin layer of glacial till, surface prospecting would be best directed to ridge, escarpment and exposed stream banks. Soil geochemistry could be applied in an effort to gain insight into the possible presence of sub-surface mineralization. It is recommended that efforts be directed in the following areas: - - The northern 30% of the claim underlain by the Nicola Group. This area could be surface prospected and soil sampled on a reconnaissance scale. Particular attention should be made to the possible presence of ultrabasic rock. - - If corporate objectives include the industrial minerals zeolite and bentonite then the potential for these minerals should be examined, inventoried and later followed up by surface trenching. Old trenches should be located and re-examined. - - A cursory surface examination should be made of the small area underlain by Coast Intrusive rock to ascertain its potential for mineralization and subsequent follow-up detailed prospecting and soil geochemistry. ESTIMATED PROGRAMME COSTS - --------------------------- Geologist/prospector 15 days @ $200/per day $ 3,000 Data compilation/report writing 3,000 Supervision 1,300 Establishment of recon.Grid 10 days @ $130/per day 1,300 Sampling 10 days @ $130/per day 1,300 Geochemical analyses 600 samples @ $8/sample 4,800 Vehicle expense 50 days @ $35/day 1,750 Gasoline 500 Food & accommodation 50 days @ $45/per day 2,250 Materials and supplies 350 ------- -40- Subtotal 19,550 Contingency @ 10% 2,000 ------ Total $21,550 ======= Success in the initial phase would entail a follow-up program and subsequent budgeting. The cost of Phase II has been estimated at $50,000 as indicated on page 43. Stanford's Exploration Facilities While in the exploration phase, the crew of Stanford will be living in the town of Coalmont due to its close proximity to SF claim. RECENT WORK ON THE SF CLAIM IN 2002 January 2002 Grid sample stations were set up and marked every 33 feet on the baseline and grid sample lines in January 2002. The grid was set up as follows: Baseline: Stn. 0 + 000 N to Stn. 1 + 200 N 3,600 feet Stn. 2 + 800 N to Stn. 3 + 000 N 600 feet ------ 4,200 feet ------ Grid Sample lines: Stn. 0 + 000 N to Stn. 0 + 300 W 900 feet Stn. 0 + 090 N to Stn. 0 + 300 W 900 feet Stn. 0 + 810 N to Stn. 0 + 250 W 750 feet Stn. 0 + 990 N to Stn. 0 + 350 W 1,050 feet Stn. 1 + 200 N to Stn. 0 + 250 W 750 feet Stn. 2 + 800 N to Stn. 1 + 500 W 4,500 feet Stn. 3 + 000 N to Stn. 1 + 500 W 4,500 feet ----- 13,350 feet ------ Total base and grid sample lines 17,550 feet ====== In June 2002, Stanford undertook a soil sampling program as mentioned below based on the above grid system. June 2002 Stanford continued its exploratory work on the SF claim by extending Grid line station 0 + 000 N to 675 W. Soil samples were collected every 80 feet for geochemical analysis. Grid line station 0 + 090 N was entended to 0 + 0625 W every 75 plus feet and soil samples were collected for geochemical analysis. These soil samples were obtained following the accepted geological soil sampling techniques. All 49 samples tested the "B" horizon, in soils, just below the -41- humus contact. These samples were all analyzed by Acme Laboratories Ltd., Vancouver, British Columbia, Canada, using the ME - ICP +1 method. The soil sample geochemical assay results did not define any copper, lead or zinc anomalies. Further exploration will extend the soil sampling to the southern claim segment. November 2003 Stanford undertook the establishment of a new grid system north of the previously established grid system since due to light snow conditions and were the ground was relatively level. As in the past, the grid layout was continued with grid sampling stations horizontally chained and flagged every 30 feet. Stations were recorded, with location, every 90 feet. The new grid sampling lines established were as follows:
Stn. 0 + 000 N - 0 + 190 W. Coalmont Trail - 0 + 685 W. . . Collins Gulch, East - 0 + 900 W. . . Collins Gulch, West - 0 + 960 W. . . Logging Boundary - 0 + 070 W. . . Logging Road - 0 + 190 W. . . Swamp - 0 + 320 W. . Logging Road - 0 + 500 W. . . End 3,600 feet Stn. 0 + 300 N . - 0 + 260 W. Coalmont Trail - 0 + 750 W. . . Collins Gulch - 0 + 050 W. . . Logging Boundary - 0 + 310 W. . . Logging Road - 0 + 475 W. . . Logging Road - 0 + 500 W. . . End 4,500 feet Stn. 0 + 600 N - 0 + 180 W. Coalmont Trail - 0 + 710 W. . . Collins Gulch Extreme Topography End 2,130 feet Stn 0 + 720 N. - 0 + 030 W. Coalmont Trail - 0 + 720 W. . . Collins Gulch Extreme Topography End 2,160 feet --------- Total Grid Layout . . . . 12,390 feet ===========
In conjunction with the original grid layout, a soil and rock sampling program will be undertaken in the late spring or early summer of 2004. Even though John Jenks is the professional geologist who prepared a geological report for Stanford, he will not be the geologist assigned to the exploration of the SF claim. Mr. Macdonald, being a geologist himself, will direct and supervise the exploration program, based on the recommendations of John Jenks as noted above, and will determine at that time the staff he will require to facilitate it. -42- Reports to Security Holders Stanford does not currently file reports with the Securities and Exchange Commission ("SEC"). It is the intention of Stanford that it will file the required financial reports: 10-KSB and 10-QSB. The directors and beneficial owners of Stanford will file their Form 3s once it is a reporting company. In the future, the public may read and copy any material 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 operations of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The Company will file electronically on Edgar and the public may view these filings on the SEC's Internet site that contains all reports, proxy and information statements, and other information regarding the Company by using (http://www.sec.gov). At the present time, ------------------ Stanford does not have an Internet address. ITEM 17. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (A) PLAN OF OPERATION While management believes the SF claim has value and opportunity for further exploration, management advises that Stanford is in the exploration stage and has not yet generated or realized any revenues from its SF claim. Stanford is attempting to raise the funds necessary for the exploration of the SF claim - refer to "Use of Proceeds" on page 14. Stanford has not made any additional arrangements to raise additional cash, other than through the current Offering under this Form SB-2. It is estimated that Phase I recommended by John Jenks, as shown on page 39, will take approximately 15 days to complete. The objective under Phase I will be to enlarge the present grid system established on the SF claim and take 600 soil and rock samples for subsequent assaying. The review of the results will be done by Glen Macdonald, President of Stanford and Professional Geologist, who in conjunction with the Board of Directors, will determine the area of interest for Phase II. During the next twelve months following Effective Date of this Form SB-2, Stanford will complete Phases I and II and determine the exploration program for Phase III. Assessing and evaluating the results of Phase I will be performed by Glen Macdonald. A decision to continue exploration activities will be done jointly by the Board of Directors upon recommendation from Glen Macdonald. The criteria in making a decision to continue will be based on the results of Phase I and the knowledge that the SF claim, under Phase I, has only had limited exploration work thereon. If the results of Phase 1 are not significantly positive to enable Stanford to continue in the area under exploration, the Board of Directors will consider other areas within the claim for further exploration. Until the majority of the SF claim has been explored, the Board of Directors is reluctant to abandon the SF claim. The following is a summary of the estimated expenditures to complete Phase II of the exploration program on the SF claim. -43- Diamond drilling: Diamond drilling (four holes of 300 feet per hole @ $25 per foot)(i) $ 30,000 Independent consultant's fees, core logging, splitting, program management (14 days @ $275)(ii) 3,850 Expenses: 4-wheel drive rental (14 days @ $50 per day) 700 Assays of core (80 assays @ $15)(iii) 2,400 Gasoline 100 Accommodation (14 days @ $60) 840 Meals (14 days @ $40) 560 Core boxes - estimated 4 boxes 200 Exploration supplies - estimated 100 Maps and air photos - if required 100 Photocopying report 20 Telephone 25 5,045 ---- Deposit on Reclamation with Ministry (iv) 5,000 Data interpretation and report writing (v) 2,500 ------ 46,395 Contingency reserve (vi) 3,605 ------- Total estimated cost for Phase II $ 50,000 ====== (i) Drilling costs are between $20 to $30 per foot. This price includes mobilization of the drill (transporting the drill to the SF claim and setting it up for drilling) and de-mobilization (the removal of the drill and cleaning the site drilled so that it is roughly in the same condition as prior to the drilling), payment of the drillers and their accommodation during drilling. (ii) During the drilling program, Stanford might have to retain the services of an independent geologist, if Glen Macdonald is not available, to oversee, on behalf of itself, the drilling activities and ensure that the drilling adheres to the program set forth. As the core is drawn from the hole it will be examined by the geologist and split for assaying. (iii) It has been assumed that 40 samples from each drill hole with be sent in for fire assaying for gold or other precious metals. (iv) Estimated amount for Stanford to pay as a reclamation deposit to ensure the SF claim is basically left in its original condition after the drilling program. (v) Estimated amount for the independent geologist to interpret data and write a report. (vi) Contingency reserve to cover any expenditures not known at this time and therefore not accounted for. Stanford estimates Phase II will take approximately two weeks of drilling and another week for the geologist to prepare and complete his report. -44- Stanford's President, from results of Phase I and prior work done in Phase II, will determine where the drill holes will be set and the angle of drilling. Stanford will issue tenders to the following drill companies to undertake the drilling program defined in Phase II and will accept the bid with the lower price per foot: Aggressive Diamond Drilling Ltd. Kelowna, B.C. Adams Diamond Drilling Ltd. Princeton, B.C. Boisveneau Diamond Drilling Ltd. Surrey, B.C. Hytech Diamond Drilling Ltd. Smithers, B.C. Britton Bros Ltd. Smithers, B.C. At this point in time, Stanford does not know what drilling rig will be used since the decision will be left to the drilling company. There is a possibility that a NQ wireless drill rig will be used on the SF claim but the final decision will be made by the drilling company. All equipment and personnel for the drilling program will be supplied by the drill company and is included in the price per foot. It is estimated the drill program will take 10 to 14 days depending upon the overburden and the bedrock the drill encounters. If Glen Macdonald is unable to supervise the drilling program, Stanford will have one individual on the SF claim the entire time of drilling so that the core can be examined, split for assaying. In addition this individual, who will also have to be a geologist, will ensure the drill company is adhering to the requirements of the drill program; core size, angle of drilling and depth of the hole. Once the drill program is completed and the drill has been removed from the SF claim, the geologist will send samples of the core into Acme Analytical Laboratories Ltd., Vancouver, British Columbia, for fire assaying to determine the gold and precious metal content of each sample. If Glen Macdonald has supervised the drill program and sent the core samples in for assay, Stanford will have to engage the services of an independent geologist to prepare a report on the results of the drilling program and to recommend a Phase III program. Without the information derived from Phases I and II, Stanford is unable to determine the expected cost and time frame for an exploration program under Phase III. If the results are favorable from Phases I and II, the independent geologist, preparing a report based on Phases I and II, will recommend a further exploration program and the associated cost of undertaking said program. If the results are minimal from Phases I and II, Stanford will explore other areas of the SF claim to determine if any such areas are suitable for further exploration. Being 1,109 acres in size, there is the possibility of other areas within the SF claim will be of interest and worthy of exploration. (1) The next twelve months cash requirements Stanford will require, as a minimum, the following cash requirements within the next twelve months. Stanford does not have the cash necessary to pay its creditors; if capital is not raised by Stanford, it will be unable to satisfy its current liabilities. If Stanford is unable to raise any funds from this Offering, its directors will advance money to it to maintain the SF claim in good standing and pay the minimum amounts owed to creditors. Stanford has no written commitments or agreements with any of its directors or officers to provide funds to it if Stanford is unable to raise sufficient funded from this offering. -45- Unfortunately, this will result in Phase I and II not being undertaken as planned. The consequences to Stanford and its investors is that the SF claim will not be explored as planned and Stanford will have to rely upon its directors for funds to maintain its existence. Without work being performed on the SF claim, there will be little or no interest in new investors acquiring the shares. The alternative plan, if no funds are received from this Offering, is to maintain the SF claim in good standing for several years, pay its minimum obligations to its creditors, and wait for a time when new investors find that a investment in Stanford is a suitable investment. The following represents the minimum funds required to maintain Stanford over the next year to meet various financial requirements assuming no funds are raised under this Offering.
Audit and accounting fees $ 4,750 (i) Bank charges. . . . . . . . . . . . . . . . . . . . . . . 100 (ii) Filing fees State of Delaware $50 Registration fees 175 Edgar filings 1,350 . . . . 1,575 (iiii) ------- Miscellaneous expenses. . . . . . . . . . . . . . . . . . 1,000 (iv) Offering expenses - Item 25 . . . . . . . . . . . . .. . 17,200 (v) Transfer agent's fees . . . . . . . . . . . . . . . .. . 1,200 (vi) Account payable - third parties - as at February 29, 2004 30,561 (vii) ------- $56,386 =======
(i) Accounting and audit fees are for the preparation, examination and review of the various Forms 10-KSB and 10-QSB required during the forthcoming year. (ii) Normally monthly charges incurred with operating a checking account over the year. (iii) Filing fees to the State of Delaware are the annual franchise fees based on the number of shares issued. This amount payable to the State of Delaware does not assume any penalties or interest for late filing. Registration fees represent the cost of having a registered office in Delaware and the Edgar filing fees are the cost of filing this Form SB-2 and subsequently, when Stanford is deemed to be a reporting company, the fees for filing the various Forms 10-KSB and 10-QSB over the next fiscal year. (iv) Miscellaneous expenses represent various expenses which might be incurred by Stanford which at the present time are unknown to it. For example, miscellaneous expenses will include photocopying, fax, printing, delivery charges and other expenses normally associated the administration of a company as well a preparing and holding the Annual General Meeting for 2004. (v) The Offering expenses are detailed under Item 25 - Other Expenses of Issuance and Distribution. Regardless whether or not Stanford is able to raise any funds under this Offering these costs will be incurred. The only cost which might not be incurred if no funds are raised is the $1,000 for the cost of printing share certificates which has been estimated under Item 25 - Other Expenses of Issuance and Distribution. In the above analysis, Stanford has assumed the entire Offering will be subscribed for and therefore has used the higher amount for Offering expenses. -46- (vi) The annual fee to the transfer agent is $1,200. (vii) As at February 29, 2004, the following accounts payable were due to third parties: Creditor Amount -------- ------ Accountant $ 9,987 Annual General Meeting 1,158 Auditors 3,269 Consulting (*) 5,000 Miscellaneous (**) 208 Office (***) 4,664 Transfer agent fees and interest 6,275 ------ Total accounts payable - February 29, 2004 30,561 Deduct: audit and accounting under Offering Costs (****) (5,000) ------- Adjusted Accounts payable as per above $25,561 ====== (*) Cost to prepare this Form SB-2 (**) Represents monies owed to the individual taking the soil samples on the SF claim. (***) Various office expenses such as photocopying, fax and delivery not paid for over the last year, payment to State of Delaware and other charges. (****) The cost of preparing the financial statements included in this Form SB-2 has been taken into consideration in Item 25 - Other Expenses of Issuance and Distribution and therefore has been eliminated from the accounts payable figure to avoid duplication. The above estimated cash requirements for the next twelve months does not reflect an outlay of funds for management fees, rent and telephone. As in the past, management has taken no fees for their services and will continue with this policy until such time as Stanford has sufficient funds on hand to warrant such an expenditure or a decision is made to cease exploration activities on the SF claim and proceed to develop a proven ore reserve, if ever. When comparing the above cash requirements over the next twelve months with the Use of Proceeds shown under Item 4, there will not be sufficient funds available under the minimum Offering to maintain Stanford for the next twelve month period unless exploration activities are reduced. Management does not wish to consider this approach and will find other ways to raise funds, if required, to maintain the SF claim in good standing and meet its financial obligations. No definite decision by management has yet been made as to what approach to raise additional funds will be used. Stanford does not plan to convert $11,612 owed to related parties as at February 29, 2004 to shares being offered under this Form SB-2. If any of the directors or officers acquire shares under this Form SB-2, it will be for cash consideration only and not a conversion of debts owed to them. Therefore, only cash will be paid for any shares subscribed to under this Offering and the cash received will not be used to reduce debts to related parties. Stanford has received no interim financing during the last several months except from advances from its officers and directors - refer to page 49. Presently, management does not contemplate arranging any interim financing unless Stanford is unable to sell any shares under this Form SB-2. -47- At the present time, and in the foreseeable future, management does not wish to acquire office space since it finds the present accommodations are adequate. Management realizes that as its activities increase it will require its own telephone number but for the intermediate period it will continue to use the business telephone number of Glen Macdonald, its President. (2) Purchase of plant and significant equipment. Stanford will not buy any plant or significant equipment in the immediate future. (B) ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION. (1) Full Fiscal Year of August 31, 1999, 2000, 2001, 2002 and 2003 and the six months ended February 29, 2004 The changes in the balance sheet positions over the prior five years ending August 31and for the six months ended February 29, 2004 are shown as follows:
Feb 29 Aug 31 Aug 31 Aug 31 Aug 31 Aug 31 2004 2003 2002 2001 2000 1999 ---------- ----------- ----------- -------- --------- --------- Assets Current assets: Bank . . . . . . . $ - $ - $ - $ 1,045 $ 1,111 $ 2,561 -------------- ------------- --------------- --------- --------- --------- Total . . . . . . . . $ - $ - $ - $ 1,045 $ 1,111 $ 2,561 ========= ======== ========= ======== ======== ========= Liabilities Current liabilities: Accounts payable. . . $ 30,561 $ 19,554 $ 9,707 $ 6,175 $ 3,338 $ 1,805 Due to related Parties . . . . . . . 11,612 10,068 3,895 2,912 - - ---------- ---------- -------- -------- -------- ------- Total accounts Payable . . . .. . 42,173 29,622 13,602 9,087 3,338 1,805 ========== ---------- ---------- ------- -------- ------- Stockholders' deficit: Common stock. . 2,358 2,358 2,358 2,358 2,358 2,358 Paid in Capital . . 3,092 3,092 3,092 3,092 3,092 3,092 Contributed Surplus 69,300 63,000 50,400 37,800 25,200 12,266 Deficit . . . . . . (116,923) (98,072) (69,452) (51,292) (32,877) (17,294) ---------- --------- -------- -------- -------- ------- Total stockholders' deficit . . . . . . . (42,173) (29,622) (13,602) (8,042) (2,227) 756 --------- --------- --------- -------- -------- ------ Total . . . . . . . . $ - $ - $ - $ 1,045 $ 1,111 $ 2,561 ========= ======== ========= ====== ====== =========
-48- August 31, 1999: During Stanford's first year of operation, it raised the initial seed capital from investors and engaged the services of Nevada Agency & Trust Company to act as transfer agent. The number and price per share subscribed for was as follows: 400,000 shares issued to its director at a price of $0.001 per share; 1,615,000 shares issued to 18 shareholders at a price of $0.001 per share; and 343,500 shares issued to 40 shareholders at a price of $0.01 per share. Since the initial raising of the seed capital, Stanford has not issued any more shares in its capital stock. August 31, 2000 During this fiscal period, Stanford considered the development of a software program for the restaurant industry as mentioned on page 5. August 31, 2001 During January 2001, Stanford identified, staked and recorded the SF claim. Management had John Jenks prepare a geological report setting forth the geological aspects of the claim and recommending a work program on the SF claim. No work was undertaken during this fiscal year on the claim. John Jenks' report, in part, is described under Item 16 - Description of Business on page 31. August 31, 2002 Stanford undertook two separate geological programs on the SF claim during the beginning and middle of this calendar year. These programs are described on page 41. Aug 31, 2003 Management prepared this Form SB-2 to raise capital to further explore the SF claim and to proceed with its objective of becoming a reporting company and eventually listed on the OTC Bulletin Board. No documents have been filed to date with the OTC Bulletin Board and none will be filed until the date of this prospectus. For an analysis of the accounts payable as at February 29, 2004 refer to Item 17, "Management's Discussion and Analysis or Plan of Operation" (a) - Plan of Operations, part (viii) on page 47. The amount of capital contributed since inception by related parties is as follows: Glen Macdonald $ 7,717 Vera McCullough 3,895 ------- $11,612 ====== -49- The amounts due to related parties are unsecured, do not bear interest and have no fixed repayment terms. February 29, 2004 Stanford undertook work on the SF claim in November 2003 to maintain the claim in good standing until January 5, 2005. (2) Results of Operations An overall analysis of the operations for Stanford for the five years ended August 31, 2003 and the six months ended February 29, 2004 are shown below: Statements of Operations:
Six Year Year Year Year Year From Months ended ended ended ended ended Sept. 24, Feb. Aug. Aug Aug Aug Aug 1998 to 29 31 31 31 31 31 May 31, 2004 2003 2002 2001 2000 1999 2003 ------- ------- ------- ------- ------- -------- ---------- Accounting, audit (i) $ 2,250 $ 8,620 $ 1,750 $ 1,500 $ 1,550 $ 1,500 $ 17,170 Bank charges And interest (ii) . . 435 701 426 84 70 38 1,754 Consulting fees . . . 6,000 - - - - - 6,000 Exploration expenses (iii) . . . 1,544 500 1,282 2,912 - - 6,238 Filing fees (iv). . . 60 378 502 120 100 430 1,590 Legal . . . . . . . . 93 4,408 - - - - 4,501 Management fees (v). . . . . . . 3,000 6,000 6,000 6,000 6,000 6,000 33,000 Office (vi) . . . . . 969 213 385 - 63 115 1,745 Rent (vii). . . . . . 2,100 4,200 4,200 4,200 4,200 4,200 23,100 Telephone (ix). . . . 1,200 2,400 2,400 2,400 2,400 2,400 13,200 Transfer agent's fees (x). . . . . . . 1,200 1,200 1,215 1,200 1,200 2,610 8,625 ------- ------- ------- ------- ------- -------- ---------- Net loss for The period . . . . . $18,851 $28,620 $18,160 $18,416 $15,583 $ 17,293 $ 116,923 ======= ======= ======= ======= ======= ======== ==========
(i) Accounting and audit Stanford has engaged the services of Amisano Hanson, Chartered Accountants, to examine the financial statements for the five years ended August 31, 2003 and for the six months ended February 29, 2004; which are reproduced under Item 22 - Financial Statements. The audit fees incurred to date have been approximately $7,420 and the review of the unaudited interim financial statements for the six months ended February 29, 2004 has been accrued at $750. Stanford has engaged the services of an -50- accountant to prepare the accounting records in advance of the examination by the auditors. The cost associated with this service for the five years ended August 31, 2003 and for the six months ended February 29, 2004 was $9,000. (ii) Bank charges and interest This expense represents the monthly charges imposed by Stanford's bank for maintaining and servicing transactions within the account. Included in the amount for August 31, 2003 and February 29, 2004, is interest charged by Nevada Agency & Trust Company for late payment of it charges. Due to the lack of funds, the bank account was closed but can be re-opened upon receipt of any proceeds of funds obtained under this Form SB-2. (iii) Exploration expenses The cost of staking the SF mineral claim was $1,381 and the cost for the preparation of the geological report commissioned by Stanford was $1,531. The cost of the physical work program on the SF mineral claim in January and June 2002 was $1,282. The cost of assaying the soil samples taken during the work program was $500. The cost of exploration performed in November 2003 was $1,544. Exploration expenses were not capitalized and amortized over the life of the mineral claim but were treated as a period cost and written off in the year incurred. Stanford will expense all costs in the future relating to the SF claim or any other future claim obtained by it until such time as a production decision is made. (iv) Filing fees Filing fees are paid to The Company Corporation Inc. in the State of Delaware and to the State of Delaware for franchise taxes. The Company Corporation Inc. assisted in the incorporation of Stanford and acts as the registered office in Delaware. The following represents an analysis of filing fees incurred since inception.
February August August August August August 2004 2003 2002 2001 2000 1999 --------- ------- ------- ------- ------- ------- Incorporation costs. $ - $ - $ - $ - $ - $ 255 Fees paid to SEC . . - 100 - - - - Basic franchise tax. 30 30 30 30 30 Filing fee for franchise tax (a). . 60 20 20 20 20 20 Interest and penalty (b). . . . - 53 75 70 50 - Registration fee (c). . . . . . . - 175 150 - - 125 Reinstatement fee (d) . . . . . . - - 227 - - - --------- ------- ------- ------- ------- ------- $ 60 $ 378 $ 502 $ 120 $ 100 $ 430 ========= ======= ======= ======= ======= =======
(a) In 2004 the State of Delaware increased the franchise tax. -51- (b) Interest and penalties is charged by the State of Delaware on late filing of the franchise fees. (c) For the years 2000 and 2001, Stanford was late in paying its registered agent fee. Stanford has re-instated itself with The Company Corporation and will maintain itself in good standing with its registered agent in the future. (d) In re-instating itself in the State of Delaware, Stanford paid the following additional fees besides the registered agent fee of $150 and the annual payment to the State of Delaware: State fee $ 95 Recording fee 24 Service fee 90 Federal Express charges 18 ---- $ 227 === (v) Management fee The directors and officers of Stanford have never received anything of value for their services nor have they received any compensation for the time they have spent on the business of Stanford. Nevertheless, recognition should be given for this service. Therefore, a charge of $500 per month has been determined as reasonable in the light of the inactively of Stanford in prior years. This amount has been expensed in each period with an offsetting entry to Contributed Surplus. Basically, the accrual for management fees is a bookkeeping entry which will never have to be settled by Stanford in either cash or shares either now or in the future. (vi) Office Office expenses over the periods have related to photocopying, fax and delivery charges. Office expenses were higher in August 2002 due to photocopying charges for various documents and working papers being submitted to the auditors. For the six months ended February 29, 2004, Stanford incurred printing costs relating to the filing of this Form SB-2 as well as the purchase of various office supplies. (vii) Rent Stanford uses the premises of its President without having the liability to pay rent. A normal rent for a one room office located in a second class building in Vancouver would be approximately $350. The accounting treatment for rent is the same as for management fees above and telephone below. (viii) Telephone Stanford, at this time, does not have its own telephone number but rather uses as its business telephone number that of its President. Therefore, no charge has been incurred by Stanford but Stanford recognizes that there is a cost associated with a telephone and has accrued $200 per month as a reasonable charge. Similar to management fees and rent, the expense has been recognized in the periods noted above. It is the intention of Stanford to eventually seek its own office and install its own telephone system once it has the funds available to do so. -52- (ix) Transfer agent's fees The transfer agent for Stanford is Nevada Agency & Trust Company in Reno, Nevada. During 1999 Stanford paid a total of $2,610 in fees to the transfer agent consisting of $1,200 for Nevada Agency to be the registered transfer agent, $175 for obtaining a CUCIP number and $1,235 for the issuance of the share certificates to the shareholders. In 2000 to 2003, Stanford paid the annual fee to Nevada Agency to act as the transfer agent. No shares were required to be issued in years 2000 to 2004 other than a transfer from a previous director to a current director. First Annual General Meeting to Shareholders Stanford held its First Annual General Meeting of Shareholders (the "Meeting") on September 19, 2003 in Vancouver, British Columbia Canada to approve various resolutions recommended by the Board of Directors to Stanford's shareholders. The following resolutions were approved at the Meeting: 1. the approval of the audited financial statements for the fiscal year ended August 31, 2002; 2. the election of the Board of Directors comprising Glen Macdonald, Vera McCullough and William Nielsen; 3. the appointment of Amisano Hanson as auditors for the ensuing year; and 4. the approval of the issuance of a maximum 1,000,000 common shares at a price of $0.20 per share as indicated under this Form SB-2; and The votes cast at the Meeting were a total of 1,887,000 representing 80% of the shares eligible to vote. The breakdown of shares was 620,000 shares were in person and 1,267,000 shares were by proxy. Other factors and trends to be considered: (i) Short and long-term trend liabilities Stanford is unaware of any known trends, events or uncertainties that have or are reasonably likely to have a material impact on its business either in the long-term or long-term liquidity which have not been disclosed under Risk Factors - Page 7. (ii) Internal and external sources of liquidity There are no material internal and external sources of liquidity. (iii) Commitments for capital expenditures Stanford has no commitments for any capital expenditures of a significant amount and has not budgeted any funds from this Offering to purchase any assets of any nature. -53- (iv) Known trends, events or uncertainties having an impact on income. Since Stanford is in the start-up stage and the SF claims have not produced any income, and there is a chance that they never will, management does not know of any trends, events or uncertainties that are reasonably expected to have a material impact on income in the future - refer to Risk Factor - 1 - page 9. (v) Income from other sources. Stanford knows of no significant elements of income or losses that do not arise from Stanford's continuing operations. Until such time as Stanford has defined a mineable ore reserve it will not realize any income. (vi) Changes in the financial statements. Stanford does not know of any cause for any material changes from period to period in one or more line items of its financial statements as shown in this Form SB-2. These audited financial statements adhere with accounting principles generally accepted in the United States of America. (vii) Seasonal aspects affecting the financial condition. The only seasonal aspect known to Stanford which will affect its financial condition or results of operations is the weather. During the initial exploration stage, Stanford will only be able to explore the SF claim during the late spring, summer and early fall months due to the possibility of snow in winter. Winter weather conditions makes it difficult to obtain soil and rock samples, prospecting, trenching and removal of overburden. Refer to Location and Access on page 36. (2) Interim Periods Stanford has no historical financial information upon which to base an evaluation of its performance other than the audited financial statements filed with this Form SB-2. It is in the exploration stage and has not generated any revenues from operations to date. There is no guarantee that Stanford will have successful business operations. It is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, possible delays in the exploration of the SF claim, and possible cost overruns due to price and cost increases in services required during its exploration work. To date Stanford has concentrated on the SF claim. In the future, Stanford will investigate other exploration properties to determine which ones are of merit and are of interest to Stanford. Subject to the availability of financing, Stanford will seek to increase its inventory of mineral properties and, if acceptable to management, enter into joint venture agreements to explore various other mineral properties of merit. No mineral properties or joint venture situations have been identified to date. -54- ITEM 18. DESCRIPTION OF PROPERTY SF Claim The description of the SF claim is more fully described under "Location and Access" and "Land Tenure" on page 37. Advantage of incorporation in Delaware Stanford was incorporated in the State of Delaware. Had it been incorporated in the Province of British Columbia it would be subject to both Provincial and Federal Taxes on its net income earned during the fiscal year. In addition, the Province of British Columbia has a capital tax over and above its corporate tax. Taking into consideration the Federal/Provincial corporate tax and the capital tax could result in Stanford paying half of its net income in taxes. Being a Delaware incorporated entity will result in Stanford paying only 15% tax in Canada which becomes a credit when filing a corporate tax return in the United States. To take advantage of this situation, Stanford will have to become an ex-provincially incorporated company in British Columbia. It has not yet taken the steps to do this and will not ex-provincially incorporate until such time as it has proven to have a viable ore reserve. Investment Policy Stanford is not limited on the percentage of assets which it may invest in and therefore can purchase other mineral claims in the future. A disposal of a major asset would result in the Board of Directors seeking shareholders' approval since this would ensure no subsequent shareholder action could be brought against Stanford and its directors and officers. Stanford's policy is to acquire assets, being mineral properties, primarily for income in the future rather than capital gains. It is the intention of Stanford to explore the SF claim in hopes of eventually developing it into becoming a producing mineral based property. In the interim period, management will invest idle funds into income bearing securities such as term deposits, interest bearing notes, etc. ITEM 19. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS Stanford has never before filed a prospectus specified under Section 10(a) of the Securities Act of 1933. Stanford raised funds from its director's relatives, friends and business associates as more fully described below. A former director, Philip Yee, acquired 400,000 shares at $0.001 per share for cash consideration on February 24, 1999. Philip Yee is deemed to be a founder, organizer and initial shareholder of Stanford. Other than the shares he purchased, he received nothing of value from Stanford. Douglas Symonds, a former President and director of Stanford, was transferred Mr. Yee's shares for becoming a director and President of Stanford. After the resignation of Mr. Symonds, Glen Macdonald acquired the 400,000 shares noted above from Mr. Symonds and he became the President of Stanford. Vera McCullough, Secretary Treasurer and Director, has no shares in Stanford but is planning to acquire 25,000 shares under this Offering. Vera McCullough has -55- not entered into any agreement to purchase these shares and when they are available for sale she will pay cash as will all investors under this Offering. The shares registered to Glen Macdonald and the proposed shares to be purchased under this Offering by Vera McCullough are and will be restricted since they were and will be issued in compliance with the exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended. After this stock has been held for one year, the holders of these shares could sell a percentage of their shares every three months based on 1% of the outstanding stock in Stanford. Therefore, this stock can be sold after the expiration of one year in compliance with the provisions of Rule 144. There are "stop transfer" instructions placed against the stock of Glen Macdonald and a legend is imprinted on the stock certificate. This will be the same case for the future shares being purchased by Vera McCullough. As of May 31, 2004, Glen Macdonald has the only shares restricted under Rule 144 totaling 400,000 shares. Stanford did not use the services of an underwriter for the issuance of the above-mentioned shares and therefore no discounts or commissions were paid to anyone. All shares purchased were for cash consideration only. Other than as set forth above, since inception there have not been any transactions that have occurred between Stanford and its officers, directors, promoters and five percent or greater shareholders. ITEM 20. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS Market Information Stanford's stock is not presently traded or listed on any public market and therefore there is no established market price for the shares. Subsequent to the Effective Dated of Stanford's registration statement under the Securities Act of 1933, it is anticipated one or more broker dealers may make a market in its securities over-the-counter, with quotations carried on the National Association of Securities Dealers, Inc.'s "OTC Bulletin Board". There is no assurance Stanford will ever be quoted on the OTC Bulletin Board or any other exchange. Stanford has no proposed symbol for the OTC Bulletin Board and there is no market maker for Stanford's shares. There are no common shares subject to outstanding options, warrants or securities convertible into common equity of Stanford. The number of shares presently subject to Rule 144 is 400,000 shares. The share certificate has the appropriate legend affixed thereto. Presently, under Rule 144, the number of shares which could be sold, if an application is made, is 23,585 shares. The 400,000 shares, mentioned above, are the only shares issued by Stanford which are restricted. There are no shares being offered pursuant to an employee benefit plan or dividend reinvestment plan. In addition, there are no outstanding options or warrants to purchase common shares or shares convertible into common shares of Stanford. -56- Equity Compensation Plans There are no securities authorized for issuance under equity compensation plans or individual compensation arrangements. ITEM 21. EXECUTIVE COMPENSATION There has been no compensation given to any of the directors or officers since inception. There are no stock options outstanding as at March 31, 2004 and no options have been granted in 2002, 2003 or 2004, but it is contemplated that Stanford may issue stock options in the future to officers, directors, advisers and future employees. Stanford has accrued $500 per month since its inception as management fees to give recognition to services provided by the directors and officers for which they are not paid. The directors and officers have agreed not to accept shares or cash in the future for the management fees accrued to date. Therefore, management fees have been expensed during the period they were recognized and credited to Contributed Surplus. The total amount of management fees so credited since inception is $33,000. Stanford does not consider the above noted management fees as compensation to the directors and officers because they received nothing personally, and the expenses were accrued to accurately reflect the value of services provided to Stanford, even though Stanford did not actually pay anything for such services. There are no employment contracts or termination of employment agreements in effect. Initially Stanford will use independent workers and consultants on a part time basis. This will enable Stanford to not incur long-term contracts with any employee and will assist Stanford to utilize funds raised by way of this Form SB-2 in the exploration of the SF claim and not the retention of employees during idle times. Directors are not paid for meetings attended and there are no fees for telephone meetings. Nevertheless, Stanford has accrued telephone charges for each period since inception and credited a similar amount to Contributed Surplus. All travel and lodging expenses associated with directors' meeting(s) are reimbursed by Stanford when incurred. -57- ITEM 22. FINANCIAL STATEMENTS The following represents the audited financial statements for the year ended August 31, 2003. (on Amisano Hanson letterhead) INDEPENDENT AUDITORS' REPORT To the Stockholders, Stanford Management Ltd. We have audited the accompanying balance sheets of Stanford Management Ltd. (A Pre-exploration Stage Company) as of August 31, 2003 and 2002 and the related statements of operations, stockholders' deficiency and cash flows for the three year period ended August 31, 2003 and for the period September 24, 1998 (Date of Incorporation) to August 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 about 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 audits provide 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 Stanford Management Ltd. as of August 31, 2003 and 2002 and the results of its operations and its cash flows for three year period ended August 31, 2003 and for the period from September 24, 1998 (Date of Incorporation) to August 31, 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, and 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. "Amisano Hanson" Vancouver, Canada Chartered Accountants November 21, 2003 -58- STANFORD MANAGEMENT LTD. (A Pre-exploration Stage Company) BALANCE SHEETS August 31, 2003 and 2002 (Stated in US Dollars) --------------------
LIABILITIES 2003 2002 ---------- -------- Current Liabilities Accounts payable and accrued liabilities. . . . . $ 19,554 $ 9,707 Due to related parties - Note 4 . . . . . . . . . 10,068 3,895 ---------- --------- 29,622 13,602 ---------- --------- STOCKHOLDERS' DEFICIENCY Common stock $0.001 par value 25,000,000 authorized 2,358,500 outstanding (2002: 2,385,500) . . . . . . . 2,358 2,358 Paid-in Capital . . . . . . . . . . . . . . . . . . . 3,092 3,092 Contributed surplus - Note 8. . . . . . . . . . . . . 63,000 50,400 Deficit accumulated during the pre-exploration stage. (98,072) (69,452) ---------- --------- (29,622) (13,602) ---------- --------- $ - $ - ========== ========= Nature and Continuance of Operations - Note 1 Commitments - Note 9
SEE ACCOMPANYING NOTES -59- STANFORD MANAGEMENT LTD. (A Pre-exploration Stage Company) STATEMENTS OF OPERATIONS For the years ended August 31, 2003, 2002 and 2001 and the period September 24, 1998 (Date of Incorporation) to August 31, 2003 (Stated in US Dollars) --------------------
SEPTEMBER 24 1998(Date of YEAR ENDED YEAR ENDED YEAR ENDED Incorporation AUGUST 31 AUGUST 31 AUGUST 31 TO AUGUST 31, 2003 2002 2001 2003 ------------- ----------- ------------ -------------- Expenses Accounting . . . . . . . . . . $ 8,620 $ 1,750 $ 1,500 $ 14,920 Bank charges and interest. . . 701 426 84 1,319 Exploration expenses . . . . . 500 1,282 2,912 4,694 Filing fees. . . . . . . . . . 378 502 120 1,530 Legal fees . . . . . . . . . . 4,408 - - 4,408 Management fees (Note 8) . . . 6,000 6,000 6,000 30,000 Office . . . . . . . . . . . . 213 385 - 776 Rent - Note 8. . . . . . . . . 4,200 4,200 4,200 21,000 Telephone - Note 8 . . . . . . 2,400 2,400 2,400 12,000 Transfer agent's fees. . . . . 1,200 1,215 1,200 7,425 --------- --------- --------- -------- $ 28,620 $ 18,160 $ 18,416 $ 98,072 -------- --------- -------- --------- Net loss for the period . . . . . $ (28,620) $ (18,160) $ (18,416) $ (98,072) ======== ========= ======== ========= Basic and diluted loss per share. $ ( 0.001) $ ( 0.001) $ 0.001) ======== ========= ========== Weighted average shares outstanding . . . . . . . . . . . 2,358,500 2,358,500 2,358,500 ========= ========== ==========
SEE ACCOMPANYING NOTES -60- STANFORD MANAGEMENT LTD. (A Pre-exploration Stage Company) STATEMENTS OF CASH FLOWS For the years ended August 31, 2003, 2002 and 2001 and for the period September 24, 1998 (Date of Incorporation) to August 31, 2003 (Stated in US Dollars) --------------------
SEPTEMBER 24, 1998 (DATE OF YEAR ENDED YEAR ENDED YEAR ENDED INCORPORATION) AUGUST 31 AUGUST 31 AUGUST 31 TO AUGUST 31 2003 2002 2001 2003 ------------ ------------ ------------ -------------- Cash flows from Operating Activities Net loss for the period. . . . . $ (28,620) $ (18,160) $ (18,416) $ (98,072) Non-cash administrative expenses 12,600 12,600 12,600 63,000 Changes in non-cash working capital item Accounts payable and accrued liabilities . . . . . . . . . . 9,847 3,532 2,838 19,554 --------- ---------- --------- --------- Cash used in operating activities (6,173) (2,028) (2,978) (15,518) --------- ----------- --------- ---------- Cash flows from Financing Activities Capital stock issued. . . . . . . - - - 5,450 Due to related party. . . . . . . 6,173 983 2,912 10,068 -------- ------- --------- ------- Cash provided by financing activities 6,173 983 2,912 15,518 -------- -------- -------- ------- Decrease in cash during the period. . - (1,045) ( 66) - Cash, beginning of the period . . . . - 1,045 1,111 - --------- ----------- ---------- --------- Cash, end of the period . . . . . . . $ - $ - $ 1,045 $ - ========= ========= ========== ========= Supplemental disclosure of cash flow information: Cash paid for: Interest. . . . . . . . . . . $ - $ - $ - $ - =============== ============ =============== ============== Income taxes. . . . . . . . . $ - $ - $ - $ - =============== ============ =============== ============== Non-cash transaction - Note 8
SEE ACCOMPANYING NOTES -61- STANFORD MANAGEMENT LTD. (A Pre-exploration Stage Company) STATEMENTS OF STOCKHOLDERS' DEFICIENCY for the period September 24, 1998 (Date of Incorporation) to August 31, 2003 (Stated in US Dollars) --------------------
DEFICIT ACCUMULATED DURING THE PRE- PAID-IN CONTRIBUTED EXPLORATION NUMBER PAR VALUE CAPITAL SURPLUS STAGE TOTAL --------- ----------- -------- --------- -------------- --------- Capital stock issued For cash at $0.001. . . 2,015,000 $ 2,015 $ - $ - $ - $ 2,015 at $0.01 343,500 343 3,092 - - 3,435 Capital contribution. . . - - - 12,600 - 12,600 Net loss for the period . - - - - (17,294) (17,294) ---------- ------- ------- ------- --------- --------- Balance, August 31, 1999. 2,358,500 2,358 3,092 12,600 (17,294) 756 Capital contribution. . . - - - 12,600 - 12,600 Net loss for the period . - - - - (15,583) (15,583) ---------- -------- -------- ------- --------- -------- Balance, August 31, 2000. 2,358,500 2,358 3,092 25,200 (32,877) (2,227) Capital contribution. . . - - - 12,600 - 12,600 Net loss for the period . . - - - - (18,415) (18,415) --------- ------- ------- -------- -------- -------- Balance, August 31, 2001. 2,358,500 2,358 3,092 37,800 (51,292) ( 8,042) Capital contribution. . . - - - 12,600 - 12,600 Net loss for the period . - - - - (18,160) (18,160) ----------- ------- ------- -------- --------- -------- Balance, August 31, 2002. 2,358,500 2,358 3,092 50,400 (69,452) (13,602) Capital Contribution. . . - - - 12,600 - 12,600 Net loss for the year . . - - - - (28,620) (28,620) ---------- ------ ------ ------- --------- -------- BALANCE, AUGUST 31, 2003. 2,358,500 $ 2,358 $ 3,092 $ 63,000 $(98,072) $(29,622) ========= ======= ======= ======= ========= ========
SEE ACCOMPANYING NOTES -62- STANFORD MANAGEMENT LTD. (A Pre-exploration Stage Company) NOTES TO FINANCIAL STATEMENTS August 31, 2003 and 2002 (Stated in US Dollars) -------------------- NOTE 1 NATURE AND CONTINUANCE OF OPERATIONS ---------------------------------------- The Company was incorporated under the laws of the State of Delaware on September 24, 1998. The Company is in the pre-exploration stage. The Company has staked a mineral claim and has not yet determined whether this property contains reserves that are economically recoverable. The recoverability of amount from the property 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 explore and complete and development of the property and upon future profitable production or proceeds for the sale thereof. These financial statements have been prepared on a going concern basis. The Company has accumulated a deficit of $98,072 since inception and at August 31, 2003 has a working capital deficiency totaling $29,622. Its ability to continue as a going concern is dependent upon the ability of the Company to generate profitability 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. NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ---------------------------------------------- The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States 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. 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 complies with Financial Accounting Standard Board Statement No. 7, and Securities and Exchange Commission Act Guide 7 for its characterization of the Company as pre-exploration stage. Exploration Expenses - --------------------- Cost of lease, acquisition, exploration, carrying and retaining unproven mineral properties are expenses as incurred. -63- STANFORD MANAGEMENT LTD. (A Pre-exploration Stage Company) NOTES TO FINANCIAL STATEMENTS August 31, 2003 and 2002 (Stated in US Dollars) - Page 2 -------------------- NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONT'D) ----------------------------------------------------------- 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, and which do not contribute to current or future revenue generation, are expensed. Liabilities are recorded when environmental assessments and/or remedial efforts are probable, and the cost can be reasonably 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. Income Taxes - ------------- The Company uses the liability method of accounting for income taxes pursuant to Statement of Financial Accounting Standards, No. 109 "Accounting for Income Taxes." The Financial Accounting Standards Board issued Statement Number 109 in Accounting for Income Taxes ("FAS 109") which is effective for fiscal years beginning after December 15, 1992. FAS 109 requires the use of asset and liability method of accounting for income taxes. Under the assets and liability method of FAS 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statements carry amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expect to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Basic Loss Per Share - ----------------------- The Company reports basic loss per share in accordance with the Statement of Financial Accounting Standards No. 128, "Earnings Per Share". Basic loss per share is computed using the weighted average number of shares outstanding during the period. Diluted loss per share has not been provided as it would be antidilutive. Financial Instruments - ---------------------- The carrying value of each accounts payable and accrued liabilities and due to related parties approximates fair value because of the short maturity of these 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. -64- STANFORD MANAGEMENT LTD. (A Pre-exploration Stage Company) NOTES TO FINANCIAL STATEMENTS August 31, 2003 and 2002 (Stated in US Dollars) - Page 3 -------------------- NOTE 3 UNPROVEN MINERAL CLAIMS ------------------------- The Company has a 100% interest in a 18 unit metric mineral claim known as the SF claims located in the Tulameen Mining Division located 11 miles northwest of Princeton, British Columbia, Canada. The claims have not been proven to have a commercially minable reserve and therefore all costs for exploration and retaining the properties have been expensed. NOTE 4 DUE TO RELATED PARTIES ------------------------- Amounts due to related parties are comprised of advances from to a director of the Company and are unsecured, do not bear interest and have no fixed repayment terms. NOTE 5 DEFERRED TAX ASSETS --------------------- The following table summarizes the significant components of the Company's deferred tax assets:
Total -------- Deferred tax assets Non-capital loss carryforward $ 21,600 Less: valuation allowance . . (21,600) --------- $ - ==========
The amount taken into income as deferred tax assets must reflect that portion of the income tax loss carry forwards that is likely to be realized from future operations. The Company has chosen to provide an allowance of 100% against all available income tax loss carryforwards, regardless of their time of expiry. NOTE 6 INCOME TAXES ------------- No provision for income taxes has been provided in these financial statements due to the net loss. At August 31, 2003 the Company has net operating loss carryforwards, which expire commencing in 2019, totaling approximately $98,072, the benefit of which has not been recorded in the financial statements. NOTE 7 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. -65- STANFORD MANAGEMENT LTD. (A Pre-exploration Stage Company) NOTES TO FINANCIAL STATEMENTS August 31, 2003 and 2002 (Stated in US Dollars) - Page 4 -------------------- NOTE 8 NON-CASH TRANSACTION --------------------- Investing and financing activities that do not have a direct impact on current cash flows are excluded from the statement of cash flows. Directors and officers of the Company have provided certain administrative services at no charge. The deemed fair value of these services has been recorded as contributed surplus as follows:
SEPTEMBER 24 1998 (DATE OF INCORPORATION) TO AUGUST 31, 2003 2002 2001 2003 ------- ------- ------- -------------- Management fees. $ 6,000 $ 6,000 $ 6,000 $ 30,000 Rent . . . . . . 4,200 4,200 4,200 21,000 Telephone. . . . 2,400 2,400 2,400 12,000 -------- -------- --------- --------- $ 12,600 $ 12,600 $ 12,600 $ 63,000 ======== ========= ======== =========
These transactions were excluded from the statement of cash flows. NOTE 9 COMMITMENT ----------- The Company filed a SB-2 registration statement which includes an offering of up to 1,000,000 common shares at $0.20 per share to the public. -66- INTERIM FINANCIAL STATEMENTS STANFORD MANAGEMENT LTD. (A Pre-exploration Stage Company) INTERIM BALANCE SHEETS February 29, 2004 and August 31, 2003 (Stated in US Dollars) -------------------- (Unaudited)
LIABILITIES February 29, August 31, 2004 2003 -------------- -------------- --------------- Current Liabilities Accounts payable and accrued liabilities. . . . . . . . . . . . $ 30,561 $ 9,554 Due to related parties. . . . . . . . . . . . . . . .. . 11,612 10,068 ----------- --------- 42,173 29,622 ------------ --------- STOCKHOLDERS' DEFICIENCY -------------------------- Common stock $0.001 par value 25,000,000 authorized 2,358,500 outstanding (2003: 2,358,500) . . . . . . . 2,358 2,358 Paid-in capital . . . . . . . . . . . . . . . . . . . 3,092 3,092 Contributed surplus - Note 3. . . . . . . . . . . . . . 69,300 63,000 Deficit accumulated during the pre-exploration stage. . . . (116,923) ( 98,072) --------- ---------- (42,173) ( 29,622) ---------- --------- $ - $ - ========== =========
Nature and Continuance of Operations - Note 2 Commitment - Note 4 SEE ACCOMPANYING NOTES -67- STANFORD MANAGEMENT LTD. (A Pre-exploration Stage Company) INTERIM STATEMENTS OF OPERATIONS for the three and six months ended February 29, 2004 and February 28, 2003 and for the period September 24, 1998 (Date of Incorporation) to February 29, 2004 (Stated in US Dollars) -------------------- (Unaudited)
Sept. 24, Three Three Six Six 1998 Months Months Months Months (Date of Incorp.) Ended Ended Ended Ended to February February February February February 29 28 29 28 29 2004 2003 2004 2003 2004 ----------- ----------- ---------- ----------- ------------ Expenses Accounting and auditing fees . . . . . . . . . . . . $ - $ 950 $ 2,250 $ 900 $ 17,170 Bank charges and interest. . . . . . . . . . . . 223 119 435 246 1,754 Consulting fees . . . . . . . . . . . . . . . . 6,000 - 6,000 - 6,000 Exploration expenses. . . . . . . . . 1,544 - 1,544 500 6,238 Filing fees . . . . . . . . . . . . . 60 - 60 - 1,590 Legal fees. . . . . . . . . . . . . . - - 93 - 4,501 Management fees-Note 3 . . . . . . . . . . . . . 1,500 1,500 3,000 3,000 33,000 Office. . . . . . . . . . . . . . . . 700 168 969 168 1,745 Rent-Note 3 . . . . . . . . . . . . . 1,050 1,050 2,100 2,100 23,100 Telephone Note 3. . . . . . . . . . . . . . . . 600 600 1,200 1,200 13,200 Transfer agent's fees. . . . . . . . . . . . . 1,200 - 1,200 51 8,625 -------- ------- ------- ------- ------ 12,877 4,387 18,851 8,165 116,923 ------- -------- ------- -------- -------- Net loss for the period. . . . . . . . . . . . . . $ ( 12,877) $ ( 4,387) $ (18,851) $ ( 8,165) $ ( 116,923) ========= ========= ========= ========= ========== Basic and diluted loss per share. . . . . . . . . . . . . . $ ( 0.00) $ ( 0.00) $ ( 0.01) $ ( 0.00) ========= ========= ========= ========== Weighted average number of shares outstanding . . . . . . . . . . . 2,358,500 2,358,500 2,358,500 2,358,500 ========= ========== ========= =========
SEE ACCOMPANYING NOTES -68- STANFORD MANAGEMENT LTD. (A Pre-exploration Stage Company) INTERIM STATEMENTS OF CASH FLOWS for the six months ended February 29, 2004 and February 28, 2003 and for the period September 24, 1998 (Date of Incorporation) to February 29, 2004 (Stated in US Dollars) -------------------- (Unaudited)
September 24, 1998 (Date of February February Incorporation) to 29 28 February 29, 2004 2003 2004 ------------ ------------ -------------- Cash flow from Operating Activities Net loss for the period . . . . . . . . . . . . . $ ( 18,851) $ ( 8,165) $ (116,923) Non-cash administration expenses. . . . . . . . . 6,300 6,300 69,300 Change in non-cash working capital item: Accounts payable and accrued Liabilities. . . . . . . . . . . . . . . . . . . 11,007 1,865 30,561 ---------- ---------- --------- Cash used in operating activities . . . . . . . . (1,544) - (17,062) ----------- ---------- --------- Cash flows from Financing Activities Capital stock issued. . . . . . . . . . . . . . . - - 5,450 Due to related parties. . . . . . . . . . . . . . 1,544 - 11,612 ---------- ---------- -------- Cash provided by financing activities . . . . . . 1,544 - 17,062 --------- ------------ -------- Decrease in cash during the period. . . . . . . . - - - Cash, beginning of the period . . . . . . . . . . - - - =========== ========= ========== Cash, end of the period . . . . . . . . . . . . . $ - $ - $ - Supplemental disclosure of cash flow information: Cash paid for: Interest. . . . . . . . . . . . . . . . . . . . . $ - $ - $ - ============ ========== =========== Income taxes. . . . . . . . . . . . . . . . . . . $ - $ - $ - ============ ========== ===========
Non-cash transactions - Note 3 SEE ACCOMPANYING NOTES -69- STANFORD MANAGEMENT LTD. (A Pre-exploration Stage Company) INTERIM STATEMENT OF STOCKHOLDERS' DEFICIENCY for the period September 24, 1998 (Date of Incorporation) to February 29, 2004 (Stated in US Dollars) -------------------- (unaudited)
DEFICIT ACCUMULATED DURING THE PAID-IN CONTRIBUTED PRE-EXPLORATION NUMBER PAR VALUE CAPITAL SURPLUS STAGE TOTAL -------- ---------- -------- ---------- --------------- ------ Capital stock issued For cash - at $0.001. . . 2,015,000 $ 2,015 $ - $ - $ - $ 2,015 - at $0.001 343,500 343 3,092 - - 3,435 Capital contribution. . . . - - - 12,600 - 12,600 Net loss for the period . . - - - - (17,293) (17,293) ---------- --------- ------ ------ -------- -------- Balance, August 31, 1999. . 2,358,500 2,358 3,092 12,600 (17,293) 757 Capital contribution. . . . - - - 12,600 - 12,600 Net loss for the period . . - - - - (15,583) (15,583) ----------- --------- -------- -------- -------- -------- Balance, August 31, 2000. . 2,358,500 2,358 3,092 25,200 (32,876) (2,226) Capital contribution. . . . - - - 12,600 - 12,600 Net loss for the period . . - - - - (18,416) (18,416) ----------- -------- -------- -------- -------- ---------- Balance, August 31, 2001. . 2,358,500 2,358 3,092 37,800 (51,292) ( 8,042) Capital contribution. . . . - - - 12,600 - 12,600 Net loss for the period . . - - - - (18,160) (18,160) ----------- ---------- -------- -------- -------- --------- Balance, August 31, 2002. . 2,358,500 2,358 3,092 50,400 (69,452) (13,602) Capital contribution. . . . - - - 12,600 - 12,600 Net loss for the period . . - - - - (28,620) (28,620) ----------- ---------- -------- -------- -------- --------- Balance, August 31, 2003. . 2,358,500 2,358 3,092 63,000 (98,072) (29,622) Capital contribution. . . . - - - 6,300 - 6,300 Net loss for the period . . - - - - (18,851) (18,851) ----------- --------- --------- -------- -------- -------- Balance, February 29, 2004. 2,358,500 $ 2,358 $ 3,092 $ 69,300 $ (116,923) $ (42,173) =========== ======== ======== ======== ========= =========
SEE ACCOMPANYING NOTES -70- STANFORD MANAGEMENT LTD. (A Pre-exploration Stage Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS February 29, 2004 (Stated in US Dollars) -------------------- (Unaudited) Note 1 Interim Reporting ------------------ While the information presented in the accompanying interim six months financial statements is unaudited, it includes all adjustments which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows for the interim period presented. All adjustments are of a normal recurring nature. It is suggested that these financial statements be read in conjunction with the company's August 31, 2003 annual financial statements. Note 2 Continuance of Operations --------------------------- The financial statements have been prepared using generally accepted accounting principles in the United States of America applicable for a going concern which assumes that the Company will realize its assets and discharge its liabilities in the ordinary course of business. As at February 29, 2004, the Company has a working capital deficiency of $42,173, which is not sufficient to meet its planned business objectives or to fund mineral property expenditures and ongoing operations for the next year. The Company has accumulated losses of $116,923 since its commencement. Its ability to continue as a going concern is dependent upon the ability of the Company to obtain necessary financing to meet its obligations and pay its liabilities arising from normal business operations when they come due. Note 3 Non-cash Transactions ---------------------- Investing and financing activities that do not have a direct impact on current cash flows are excluded from the statement of cash flows. Directors and officers of the Company have provided certain administrative services at no charge. The deemed fair value of these services has been recorded as contributed surplus as follows: September 24 1998 (Date of Incorporation) Three months ended Six months ended to February 29, 2004 2003 2004 2003 2004 ---- ---- ---- ---- ----
Management fees $1,500 $1,500 $3,000 $3,000 $33,000 Rent. . . . . . 1,050 1,050 2,100 2,100 23,100 Telephone . . . 600 600 1,200 1,200 13,200 ------ ------ ----- ------ ------- $3,150 $3,150 $6,300 $6,300 $69,300 ====== ====== ===== ===== =======
These transactions were excluded from the statement of cash flows. -71- STANFORD MANAGEMENT LTD. (A Pre-exploration Stage Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS February 29, 2004 (Stated in US Dollars) -------------------- (Unaudited) Note 4 Commitment ---------- The Company has filed a SB-2 registration statement, which includes an initial public offering of 1,000,000 common shares at $0.20 per share. The registration statement is subject to approval by the United States Securities and Exchange Commission. ITEM 23. CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNT AND FINANCIAL DISCLOSURE The principal accountant's report, rendered by Amisano Hanson, Chartered Accountants, on the financial statements did not contain adverse opinion or disclaimer of opinion, or was modified as to uncertainty, audit scope, or accounting principles. No decision has been made by the shareholders of the Stanford to change accountants. There has been no disagreement with the auditors on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures. Dealer Prospectus Delivery Obligation Until --------, 2004, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions. -72- PART II - INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS Information on this item is set forth in the prospectus under the heading Item 14 - "Disclosure of Commission Position on Indemnification for Securities Act Liabilities" on page 28. ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION The following table sets forth the estimated fees and expenses in connection with the issuance and distribution of the securities being registered hereunder, all of which are being paid by Stanford: Various Subscription Levels
$50,000 $100,000 $150,000 $200,000 ------- -------- -------- -------- Accounting and auditing. . . . . $ 5,000 $ 5,000 $ 5,000 $ 5,000 Legal. . . . . . . . . . . . . . 10,000 10,000 10,000 10,000 Office and miscellaneous . . . . . 500 550 600 700 Transfer agent's fees - new issuance of shares 1,000 1,165 1,330 1,500 ------- ------- -------- -------- Estimated expenses of Issuance . . . . . . . . . . . . $16,500 $ 16,715 $ 16,930 $ 17,200 ======= ======== ======== ========
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES From inception through to May 31, 2004, Stanford has issued and sold the following unregistered shares of its common stock (the aggregated value of all such offerings did not exceed $1,000,000): (i) Subscription for shares by a Director and Officer of Stanford (a) Subscription for shares by a former director and officer On February 24, 1999 Stanford issued to its former President, Philip Yee, 400,000 common shares at .001 per share. Douglas Symonds, a former President, acquired the 400,000 common shares previously held by Mr. Yee for becoming Stanford's President. -73- (b) Subscription for shares by current directors and officers Stanford's new President Glen Macdonald, was transferred the 400,000 common shares previously held by Mr. Symonds for becoming the President of Stanford on October 24, 2002. These shares are restricted since they were issued in compliance with the exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended. After this stock has been held for one year, Glen Macdonald could sell within a three month period a percentage of his shares based on 1% of the outstanding stock in the Stanford. Therefore, this stock can be sold after the expiration of one year in compliance with the provisions of Rule 144. There are "stop transfer" instructions placed against this certificate and a legend has been imprinted on the stock certificate itself. (ii) Subscription for 1,615,000 shares On February 24, 1999, Stanford accepted subscriptions from 18 investors in the amount of 1,615,000 shares at a price of $0.001 per share. In all cases, the consideration was cash. These shares were issued in accordance with the exemption from registration provided by Rule 504 of Regulation D of the Securities Act of 1933, as amended, and an appropriate Form D was filed in connection with the issuance of these shares. These owners of record of this stock do not own 5% of the outstanding shares of Stanford and therefore were not controlling shareholders and none of them were officers and directors of Stanford. (iii) Subscription for 343,500 shares On March 3, 1999, Stanford accepted subscriptions from 40 investors in the amount of 343,500 shares at a price of $0.01 per share. In all cases the consideration was cash. These shares were issued in accordance with the exemption from registration provided by Rule 504 of Regulation D of the Securities Act of 1933, as amended, and an appropriate Form D was filed in connection with the issuance of these shares. These owners of record of this stock do not own 5% of the outstanding shares of Stanford and therefore were not controlling shareholders and none of them were officers and directors of Stanford. -74- ITEM 27. EXHIBITS
EXHIBIT NO. DESCRIPTION PAGE - ------- ---------------- ---- 11.1 Statement re: Computation of Per Share Earnings 78 Consent of Experts and Counsel Amisano Hanson . . . . . . . . . . . 79 23.1 John Jenks, P. Geo.. . . . . . . . 80 99.1 Share Subscription Agreement. . . . . . . . . . 81 99.2 Record of 4 Post Claim. . . . . . . . . . . . . 84 99.3 Bill of Sale Absolute . . . . . . . . . . . . . 86
The following exhibits are included as part of this report by reference:
Exhibit No. Description 3.i Certificate of Incorporation (incorporated by reference from Stanford's Registration Statement on Form SB-2A filed on August 29, 2003) 3.i.1 Certificate of Renewal and the Revival of the Certificate of Incorporation (incorporated by reference from Stanford's Registration Statement on Form SB-2A on August 29, 2003) 3.ii . . By-laws (incorporated by reference from Stanford's Registration Statement on Form SB-2A on August 29, 2003) 4.1 Stock Specimen (incorporated by reference from Stanford's Registration Statement on Form SB-2A on August 29, 2003) 5 Opinion re. Legality (incorporated by reference from Stanford's Registration Statement on Form SB-2A on February 3, 2004) 10.1 Material Contracts Transfer Agent and Registrar Agreement (incorporated by reference from Stanford's Registration Statement on Form SB-2A on August 29, 2003) 99 99-2 Indemnification Agreement (incorporated by reference from Stanford's Registration Statement on Form SB-2A on August 29, 2003)
ITEM 28. UNDERTAKINGS Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as -75- expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlled person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submitted to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The undersigned registrant hereby undertakes: 1. To file, during any period in which offers or sales are made, a post-effective amendment to this registration statement: a. To include any prospectus required by Section 10(a)(3) of the Securities Act; b. To reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registrant statement. Notwithstanding the foregoing, any increase or decrease in the volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424 (b)(S 230.424(b)) of the Securities Act, if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registrant Fee" table in the effective registration statements; and c. To include any additional or changed material information with respect to the plan of distribution. 2. For determining liability under the Securities Act to treat each such post-effective amendment as a registration statement of the securities offered, and the offering of the securities at that time to be the initial bona fide offering. 3. to file a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering. -76- SIGNATURES In accordance with the requirements of the Securities Act of 1933, Stanford certifies that it has reasonable grounds to believe that it meets all the requirements of filing on Form SB-2 and authorized this registration to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Vancouver, British Columbia, Canada on June 11, 2004 STANFORD MANAGEMENT LTD. (Registrant) /s/ "Glen Macdonald" ---------------------- Glen Macdonald Principal Executive Officer, President, and Director SPECIAL POWER OF ATTORNEY The undersigned constitute and appoint Glen Macdonald their true and lawful attorney-in-fact and agent with full power of substitution, for him and in his name, place, and stead, in any and all capacities, to sign any and all amendments, including post-effective amendments, to this Form SB-2 registration the U.S. Securities and Exchange Commission, granting such attorney-in-fact the full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully and to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that such attorney-in-fact may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the date indicated. Dated: June 11, 2004 /s/ "Glen Macdonald" - ---------------------- Glen Macdonald Principal Executive Officer, President and Director /s/ "Vera McCullough" - ----------------------- Vera McCullough Principal Financial Officer, Secretary Treasurer and Director -77- EX-11 2 doc2.txt COMPUTATION OF SHARE EARNINGS EXHIBIT 11 STANFORD MANAGEMENT LTD. Statement re: Computation of Share Earnings Stanford has 2,358,500 common shares outstanding as at February 29, 2004 (*) Accumulated loss as at February 29, 2004 $ 116,923 -------- Loss per share - based on outstanding shares $ 0.0496 ------- (*) There have been no shares issued since February 29, 2004. EX-23.1 3 doc3.txt CONSENT OF INDEPENDENT ACCOUNTANTS EXHIBIT 23.1 (on Amisano Hanson letterhead) CONSENT OF INDEPENDENT ACCOUNTANT We hereby consent to the use in this Registration Statement on Form SB-2 Amendment NO. 4 of our report dated November 21, 2003, relating to the financial statements of Stanford Management Ltd., as of August 31, 2003 and the reference to our firm as experts in the Registration Statement. Vancouver, Canada /s/ "Amisano Hanson" June 11, 2004 Chartered Accountants EX-23.2 4 doc4.txt CONSENT OF JOHN JENKS EXHIBIT 23.2 JOHN JENKS - P.GEO. (BC) 2780 - 25th Ave. NE Salmon Arm, British Columbia Canada, V1E 3C7 (TEL and FAX: 250-832-6346) June 9, 2003 Stanford Management Ltd. 420 - 625 Howe Street Vancouver, British Columbia Canada, V6C 2T6 ATTENTION: MR. GLEN MACDONALD President and Director Dear Mr. Macdonald: Re: Preliminary Geological Evaluation The SF claims - Tulameen Mining Division Coalmont area, British Columbia I hereby give my consent to the use of the above noted preliminary geological evaluation report prepared by me on May 27, 2001 to be included in your company's filing of a Form SB-2 with the United States Securities and Exchange Commission. Sincerely yours; /s/ "John Jenks" John Jenks, P. Geo. EX-99.1 5 doc5.txt SHARE SUBSCRIPTION AGREEMENT EXHIBIT 99.1 SHARE SUBSCRIPTION AGREEMENT (the "Agreement") STANFORD MANAGEMENT LTD. (the "Company") TO: STANFORD MANAGEMENT LTD. Suite 420 625 Howe Street Vancouver, BC Canada, V6C 2T6 AND TO: THE DIRECTORS THEREOF 1. I, the undersigned, hereby offer to subscribe for and agree to purchase Common Shares with a par value of $0.001 per share (the "Securities") of the Company at a price US $0.20 per share and deliver herewith a check or bank draft, made payable to Stanford Management Ltd. in the amount of US $ in full payment of the aggregate subscription price for the Securities. 2. I hereby represent and warrant that: (a) I am not an officer, director or "affiliate" (as the term is defined in Rule 403 of the Securities Act of 1933): (b) my subscription for the Securities is unconditional, irrevocable and non-transferable, and has not been induced by any warranties or representations with regards to the present or future value of the Securities; and (c) I have full power and authority to execute and deliver this Agreement and to perform its obligation hereunder; and this Agreement is a legally binding obligation of myself and enforceable against me in accordance with its terms. 3. I hereby agree that this Agreement constitutes an irrevocable offer by me for the Securities at the price, on the terms and subject to the conditions herein set out, and is subject to acceptance by the Board of Directors of the Company in their sole discretion. 4. The Company hereby represents and warrants to me that: (a) The Company was incorporated in 1998 under the laws of the State of Delaware and is in full compliance, to the extent applicable, with all reporting obligations under Delaware law; (b) The execution, delivery and performance of this Agreement by the Company and the performance of its obligations hereunder do not and will not constitute a breach or violation of any of the terms and provisions of, or constitute a default under or conflict with or violate any provisions of (i) the Company's Articles of Incorporation or By-laws, (ii) any indenture, mortgage, deed of trust, agreement or any instrument to which the Company is a party or by which it or any of its property is bound, (iii) any applicable stature or regulation, or (iv) any judgment, decree or order of any court or government body having jurisdiction over the Company or any of its property; (c) The execution, delivery and performance of this Agreement and the consummation of the issuance of the Securities and the transaction contemplated by this Agreement are within the Company's corporate powers and have been duly authorized by all necessary corporate and stockholder action on behalf of the Company; (d) There is no action, suit or proceedings before or by any court or governmental agency or body, domestic or foreign, now pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its properties, which might result in any material adverse change in the condition (financial or otherwise) or in the earnings, business affairs or business prospects of the Company, or which might materially and adversely affect the properties or assets thereof; and (e) To the Company's best knowledge, the conduct of the business of the Company complies in all material respects with all statutes, laws, regulations, ordinances, rules, judgments, orders and decrees applicable thereto. The Company has not received notice of any alleged violations of any statute, law, regulation ordinance, rule, judgment, order or decree from any governmental authority which would materially adversely affect the business of the Company. 5. This Agreement constitutes the entire agreement between myself and the Company, and there are no other agreements, warranties, representations, conditions or covenants, written or oral, expressed or implied, in respect of, or which affect, the transactions herein contemplated, and this Agreement supercedes and supplants any previous dealings whatsoever between myself and the Company in respect of the said transactions. 6. This Agreement will be construed and enforced in accordance with and governed by the laws of the State of Delaware. I will update my address as may be required from time to time by notice in writing to the Company. DATED: , 2004 Signature of Witness Signature of Subscriber Name of Witness Name of Subscriber Resident Address Resident Address Occupation Telephone Number ACCEPTED: , 2004 STANFORD MANAGEMENT LTD. Per:---------------------- Authorized Signatory SEND BOTH SIGNED COPIES OF THIS AGREEMENT TO THE COMPANY AND ONE FULLY SIGNED AGREEMENT, IF ACCEPTED, WILL BE RETURNED TO YOU. EX-99.2 6 doc6.txt RECORD OF 4 POST CLAIM EXHIBIT 99.2 RECORD OF 4 POST CLAIM - MINERALS TENURE ACT SIMILKAMEEN Tenure No. 383391 ----------- ------ Mining division DO NOT WRITE IN THIS SHADED AREA Date of Record January 12, 2001 ------------------ PLEASE PRINT CLEARLY I, Edwqrd Skoda AGENT FOR - Self - 320 - 1100 Melville Street Vancouver, B.C. V6E 4A6 Client No. 124862 Client No. ------ Hereby apply for a record of a 4 post claim location; including reference to roads, trails, topographic features, permanent landmarks and a description of the legal post location. ACCESS Access from Coalmont, south across the Tulameen River and westward, along an old logging road to Collins Gulch. The LCP was located on the northside of the road approximately 400 meters, by road, west of Collins Gulch. TAG INFORMATION I have securely fastened the metal identification INDENTIFICATION POST NOT Tag embossed "LEGAL CORNER POST" to the PLACED were 2S, 3S, 4S, Legal post (or witness post) and impressed this 5S, 6S, 6S1W, 6S3W, 5S3W, Information on the tag 4S3W, 3S3W, 2S3W, 1S3W 1S3W because snow and topographical Conditions. LEGAL CORNER POST TAG NO. 240871 ------ CLAIM NAME SF If a witness post was placed for the LOCATOR E. Skoda legal corner post: FMC No. 124862 AGENT FOR Self Bearing from witness post to true DATE COMMENCED: Jan. 12 / 01 position of legal corner post is TIME 1100 Hrs - degrees at a distance of - metres. DATE COMPLETED Jan. 12/01 Bearing from identification post to TIME 1600 Hrs witness post - degrees, at a Distance of - metres. NUMBER OF CLAIM UNITS NOTE: Legal corner post can be N - S 6 E - W 3 witnessed only if it was not feasible to place ANY posts. ACKNOWLEDGEMENT I have complied with all the terms and conditions of the Mineral Tenure Act and Regulations pertaining to the SUB-RECORDER location of 4 post claims and have attached a plan of RECEIVED location on which the positions of the legal corner post and all corner posts (and witness and identification posts JAN. 15, 2001 if applicable) are indicated. M.R.# 2 $ 180.00 VANCOUVER, B.C. Do you intend to extract Industrial Minerals from this tenure Yes [ ] No [X] (RECORDING STAMP) /s/ "E. F. Skoda" -------------------- Signature of Locator EX-99.3 7 doc7.txt BILL OF SALE ABSOLUTE EXHIBIT 99.3 BRITISH COLUMBIA Ministry of Employment and Investment Energy and Minerals Division Mineral Title Branch MINERAL TENURE ACT SECTION 52 BILL OF SALE ABSOLUTE INDICATE TYPE OF TITLE: MINERAL ------- mineral or placer MINING DIVISION: SIMILKAMEEN M.D. ----------------- SELLER PURCHASER:: I, Edward Skoda Stanford Management Ltd. 320-1100 Melville Street 2652 Dundas Street Vancouver, B.C. Vancouver, B.C. Client Number: 124862 Client Number: For and in consideration of the sum of one dollar ($1.00) paid to me, do hereby sell the interest as specified below to the following mineral titles: PERCENTAGE OF CLAIM NAME OR LEASE TYPE TENURE NUMBER TITLE BEING SOLD ------------------------- -------------- ------------------ SF 383391 100% Date: January 15, 2001 I declare that I have good title to these tenures and every right to sell the same, in witness whereof I have today signed my legal name. /s/ "Philip Yee" /s/ "E.F. Skoda" - ---------------------- ------------------ (signature of witness) (signature of seller) -----END PRIVACY-ENHANCED MESSAGE-----