vanguard10q20110930.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2011
[ ] Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period __________ to __________
Commission File Number 000-51640
VANGUARD MINERALS CORPORATION
(formerly Knewtrino, Inc.)
(Exact name of small Business Issuer as specified in its charter)
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NEVADA
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Nil
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(State or other jurisdiction of incorporation or organization)
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(IRS Employer Identification No.)
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2700 Glen Point Circle
RICHMOND, VA
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23233
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(Address of principal executive offices)
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(Zip Code)
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Issuer’s telephone number, including area code:
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804-767-7154
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Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
[X] Yes [ ] No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
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Large Accelerated Filer [ ]
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Accelerated Filer [ ]
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Non Accelerated Filer [ ] (Do not check if smaller reporting company)
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Smaller Reporting Company [ X]
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act. [ ] Yes [ X] No
State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of October 31, 2011, the Company had 1,619,444 shares issued and outstanding.
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Page
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PART I - FINANCIAL INFORMATION
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Item 1:
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Financial Statements
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3
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Item 2:
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Plan of Operation
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14
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Item 3:
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Quantitative and Qualitative Disclosures about Market Risk
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18
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Item 4:
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Controls and Procedures
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19
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PART II - OTHER INFORMATION
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Item 1:
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Legal Proceedings
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20
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Item 2:
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Unregistered Sales of Equity Securities and Use of Proceeds
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20
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Item 3:
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Defaults Upon Senior Securities
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21
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Item 4:
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Submission of Matters to a Vote of Security Holders
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21
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Item 5:
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Other Information
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21
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Item 6:
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Exhibits
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21
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PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-Q, and, therefore, do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows, and stockholders' equity in conformity with generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. Operating results for the three months ended September 30, 2011 are not necessarily indicative of the results that can be
expected for the year ending December 31, 2011.
The following financial statements of Vanguard Minerals Corporation (the “Company”) are included with this Quarterly Report on Form 10-Q:
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(a)
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Balance sheets as of June 30, 2011 and December 31, 2010 (unaudited);
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(b)
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Statements of operations for the three and nine month periods ended September 30, 2011 and 2010 and for the period from August 25, 2003 (inception) to September 30, 2011 (unaudited);
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(c)
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Statements of stockholders’ equity (deficit) for the period from August 25, 2003 (inception) to September 30, 2011 (unaudited);
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(d)
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Statements of cash flows for the six months ended September 30, 2011 and 2010 and for the period from August 25, 2003 (inception) to September 30, 2011 (unaudited);
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(e)
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Notes to the financial statements.
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VANGUARD MINERALS CORPORATION
(AN EXPLORATION STAGE COMPANY)
FINANCIAL STATEMENTS
SEPTEMBER 30, 2011
VANGUARD MINERALS CORPORATION
(AN EXPLORATION STAGE COMPANY)
BALANCE SHEETS (unaudited)
AS OF SEPTEMBER 30, 2011 AND DECEMBER 31, 2010
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September 30,
2011
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December 31,
2010
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ASSETS
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Current assets
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Cash and cash equivalents
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$ |
250,314 |
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$ |
358 |
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Prepaid expenses
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- |
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- |
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Total Current Assets
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250,314 |
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|
358 |
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Investment in securities, net of impairment of $ 1,020,000
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- |
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480,000 |
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Total Assets
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$ |
250,314 |
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$ |
480,358 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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Liabilities
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Current liabilities
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Accounts payable and accrued expenses
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$ |
196,439 |
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$ |
189,938 |
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Due to related parties
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48,151 |
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48,151 |
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Total Liabilities
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244,590 |
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238,089 |
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Stockholders’ Equity
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Common stock, par value $0.001, 500,000,000 shares authorized, 1,619,444 shares issued and outstanding (December 31, 2010- 1,469,444 shares issued and outstanding)
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1,619 |
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1,469 |
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Additional paid-in capital
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5,329,093 |
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6,577,743 |
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Warrants
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234,360 |
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234,360 |
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Deficit accumulated during the exploration stage
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(5,559,348 |
) |
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(6,571,303 |
) |
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Total Stockholders’ Equity
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5,724 |
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242,269 |
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Total Liabilities and Stockholders' Equity
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$ |
250,314 |
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$ |
480,358 |
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The accompanying notes are an integral part of these financial statements.
VANGUARD MINERALS CORPORATION
(AN EXPLORATION STAGE COMPANY)
STATEMENTS OF OPERATIONS (unaudited)
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010
PERIOD FROM AUGUST 25, 2003 (INCEPTION) TO SEPTEMBER 30, 2011
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Three
Months
Ended
September 30,
2011
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Three
Months
Ended
September 30,
2010
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Nine
months
ended
September 30,
2011
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Nine
months
ended
September 30,
2010
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Period from
August 25, 2003
(Inception)
To
September 30,
2011
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REVENUES – Note 3
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$ |
- |
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$ |
61,500 |
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$ |
- |
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$ |
119,500 |
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$ |
163,500 |
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OPERATING EXPENSES
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General and administrative
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2,500 |
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69,181 |
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6,545 |
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76,375 |
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518,805 |
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Exploration costs
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- |
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- |
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- |
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- |
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3,839,954 |
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Wages and benefits
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- |
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- |
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1,500 |
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- |
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187,026 |
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Product development
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- |
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- |
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- |
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- |
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270,086 |
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Rent and Utilities
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- |
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20,066 |
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- |
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20,066 |
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83,606 |
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Depreciation
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- |
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- |
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- |
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- |
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8,578 |
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TOTAL OPERATING EXPENSES
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2,500 |
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89,247 |
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8,045 |
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96,441 |
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4,908,055 |
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INCOME (LOSS) FROM OPERATIONS
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(2,500 |
) |
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(27,747 |
) |
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(8,045 |
) |
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23,059 |
|
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(4,744,555 |
) |
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(IMPAIRMENT) RECOVERY OF INVESTMENT
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- |
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- |
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1,020,000 |
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|
- |
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OTHER INCOME (EXPENSE)
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|
- |
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|
- |
|
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|
- |
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|
|
- |
|
|
|
(814,793 |
) |
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INCOME (LOSS) BEFORE INCOME TAXES
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(2,500 |
) |
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(27,747 |
) |
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|
1,011,955 |
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|
23,059 |
|
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(5,559,348 |
) |
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PROVISION FOR INCOME TAXES
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- |
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- |
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- |
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|
- |
|
|
|
- |
|
| |
|
|
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|
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NET INCOME (LOSS)
|
|
$ |
(2,500 |
) |
|
$ |
(27,747 |
) |
|
$ |
1,011,955 |
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|
$ |
23,059 |
|
|
$ |
(5,559,348 |
) |
| |
|
|
|
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|
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NET INCOME (LOSS) PER SHARE: BASIC AND DILUTED
|
|
$ |
(0.00 |
) |
|
$ |
(0.02 |
) |
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$ |
0.67 |
|
|
$ |
0.02 |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
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WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC AND DILUTED, adjusted for 300:1 share rollback
|
|
|
1,619,444 |
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1,593,832 |
|
|
|
1,536,111 |
|
|
|
1,142,167 |
|
|
|
|
|
The accompanying notes are an integral part of these financial statements.
VANGUARD MINERALS CORPORATION
(AN EXPLORATION STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) (RESTATED) (unaudited)
AS OF SEPTEMBER 30, 2011
| |
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Common Stock
|
|
|
Additional
|
|
|
|
|
|
|
|
|
Deficit
Accumulated
During the
Development
|
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Total Stockholders’
|
|
| |
|
Shares
|
|
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Amount
|
|
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Paid in Capital
|
|
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Subscriptions
|
|
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Warrants
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Stage
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|
|
Equity (Deficit)
|
|
| |
|
|
|
|
|
|
|
|
|
|
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|
|
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|
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|
|
|
|
|
Balance, December 31, 2007, as originally reported
|
|
|
76,216,333 |
|
|
$ |
76,216 |
|
|
$ |
2,388,596 |
|
|
|
|
|
$ |
234,360 |
|
|
$ |
(2,698,368 |
) |
|
$ |
804 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Correction of an accounting error
|
|
|
2,000,000 |
|
|
|
2,000 |
|
|
|
(2,000 |
) |
|
|
|
|
|
- |
|
|
|
(59,004 |
) |
|
|
(59,004 |
) |
| |
|
|
|
|
|
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|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2007, as Restated
|
|
|
78,216,333 |
|
|
|
78,216 |
|
|
|
2,386,596 |
|
|
|
|
|
|
234,360 |
|
|
|
(2,757,372 |
) |
|
|
(58,200 |
) |
| |
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
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|
|
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|
|
Issuance of common stock for cash @ $0.03 per share
|
|
|
2,333,333 |
|
|
|
2,333 |
|
|
|
67,667 |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
70,000 |
|
|
Issuance of common stock for cash @ $0.46 per share
|
|
|
492,336 |
|
|
|
49 |
|
|
|
224,351 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
224,400 |
|
|
Common stock issued to acquire mineral interests
|
|
|
4,000,000 |
|
|
|
4,000 |
|
|
|
2,316,000 |
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
2,320,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year ended December 31, 2008
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
(2,690,830 |
) |
|
|
(2,690,830 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2008
|
|
|
85,042,002 |
|
|
|
84,598 |
|
|
|
4,994,614 |
|
|
|
|
|
|
|
234,360 |
|
|
|
(5,448,202 |
) |
|
|
(134,630 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year ended December 31, 2009
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
(59,000 |
) |
|
|
(59,000 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2009
|
|
|
85,042,002 |
|
|
|
84,598 |
|
|
|
4,994,614 |
|
|
|
- |
|
|
|
234,360 |
|
|
|
(5,507,202 |
) |
|
$ |
(193,630 |
) |
|
Cancellation of shares set aside for share subscription
|
|
|
(492,336 |
) |
|
|
(49 |
) |
|
|
(224,351 |
) |
|
|
224,400 |
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
Effect of 300:1 reverse stock split
|
|
|
(84,267,834 |
) |
|
|
(84,267 |
) |
|
|
84,267 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
Issuance of common stock for common stock of PEI Worldwide Holdings, Inc.
|
|
|
1,000,000 |
|
|
|
1,000 |
|
|
|
1,499,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,500,000 |
|
|
Issuance of fractional common shares
|
|
|
612 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
|
Issuance of common stock for common stock of Genesis Ventures Fund India, I, LP
|
|
|
125,000 |
|
|
|
125 |
|
|
|
374,875 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
375,000 |
|
|
Issuance of common stock pursuant to share subscription
|
|
|
187,000 |
|
|
|
187 |
|
|
|
224,213 |
|
|
|
(224,400 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Recission of shares issued
|
|
|
(125,000 |
) |
|
|
(125 |
) |
|
|
(374,875 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(375,000 |
) |
|
Net income (loss) for the period ended December 31, 2010
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
(1,064,101 |
) |
|
|
(1,064,101 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2010
|
|
|
1,469,444 |
|
|
$ |
1,469 |
|
|
$ |
6,577,743 |
|
|
|
- |
|
|
$ |
234,360 |
|
|
$ |
(6,571,303 |
) |
|
$ |
242,269 |
|
|
Recission of shares issued for common stock of PEI Worldwide Holdings, Inc.
|
|
|
(1,000,000 |
) |
|
|
(1,000 |
) |
|
|
(1,499,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,500,000 |
) |
|
Issuance of common stock for compensation
|
|
|
150,000 |
|
|
|
150 |
|
|
|
1,350 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,500 |
|
|
Issuance of common stock pursuant to share subscription
|
|
|
1,000,000 |
|
|
|
1,000 |
|
|
|
249,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
250,000 |
|
|
Net income for the period ended September 30, 2011
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
1,011,955 |
|
|
|
1,011,955 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, September 30, 2011
|
|
|
1,619,444 |
|
|
$ |
1,619 |
|
|
$ |
5,329,093 |
|
|
|
- |
|
|
$ |
234,360 |
|
|
$ |
(5,559,348 |
) |
|
$ |
5,724 |
|
The accompanying notes are an integral part of these financial statements.
VANGUARD MINERALS CORPORATION
(AN EXPLORATION STAGE COMPANY)
STATEMENTS OF CASH FLOWS (unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011 AND 2010
PERIOD FROM AUGUST 25, 2003 (INCEPTION) TO SEPTEMBER 30, 2011
| |
|
Nine Months
Ended
September 30,
2011
|
|
|
Nine Months
Ended
September 30,
2010
|
|
|
Period from
August 25, 2003
(Inception) to
September 30,
2011
|
|
|
CASH FLOWS USED IN OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) for the period
|
|
$ |
1,011,955 |
|
|
$ |
23,059 |
|
|
$ |
(5,559,348 |
) |
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
- |
|
|
|
- |
|
|
|
8,578 |
|
|
Common stock issued for mineral property costs
|
|
|
- |
|
|
|
- |
|
|
|
2,352,500 |
|
|
Common stock issued for compensation
|
|
|
1,500 |
|
|
|
- |
|
|
|
1,500 |
|
|
Loss on disposal of property and equipment
|
|
|
- |
|
|
|
- |
|
|
|
17,524 |
|
|
Fair value discount on private placement
|
|
|
- |
|
|
|
- |
|
|
|
653,112 |
|
|
Impairment of Instant Wirefree technology
|
|
|
- |
|
|
|
- |
|
|
|
46,200 |
|
|
Impairment (recovery) of investment in shares
|
|
|
(1,020,000 |
) |
|
|
|
|
|
|
- |
|
|
(Increase) decrease in prepaid expenses
|
|
|
- |
|
|
|
2,000 |
|
|
|
- |
|
|
(Increase) decrease in accounts receivable
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
Increase (decrease) in accounts payable & accrued expenses
|
|
|
6,501 |
|
|
|
(3,642 |
) |
|
|
196,439 |
|
|
Cash flows used in operating activities
|
|
|
(44 |
) |
|
|
21,417 |
|
|
|
(2,283,495 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
- |
|
|
|
- |
|
|
|
(27,128 |
) |
|
Proceeds from disposal of property and equipment
|
|
|
|
|
|
|
|
|
|
|
1,026 |
|
| Loan receivable |
|
|
|
|
|
|
(30,000 |
) |
|
|
|
|
|
Instant Wirefree technology
|
|
|
- |
|
|
|
- |
|
|
|
(27,500 |
) |
|
Cash flows used in investing activities
|
|
|
- |
|
|
|
(30,000 |
) |
|
|
(53,602 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advances from related parties
|
|
|
- |
|
|
|
10,414 |
|
|
|
48,151 |
|
|
Proceeds from issuance of common stock
|
|
|
250,000- |
|
|
|
- |
|
|
|
2,326,00000 |
|
|
Proceeds from promissory notes
|
|
|
- |
|
|
|
- |
|
|
|
213,260 |
|
|
Cash flows provided by financing activities
|
|
|
- |
|
|
|
10,414 |
|
|
|
2,587,411 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCREASE (DECREASE) IN CASH
|
|
|
249,956 |
|
|
|
1,831 |
|
|
|
250,314 |
|
|
Cash, beginning of the period
|
|
|
358 |
|
|
|
108 |
|
|
|
- |
|
|
Cash ( bank overdraft), end of the period
|
|
$ |
250,314 |
|
|
$ |
1,939 |
|
|
$ |
250,314 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
|
|
|
Income taxes paid
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued on acquisition of Instant Wirefree Inc.
|
|
$ |
- |
|
|
$ |
|
|
|
$ |
18,700 |
|
|
Shares issued to settle debt
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
213,600 |
|
|
Shares issued for compensation
|
|
$ |
1,500 |
|
|
$ |
- |
|
|
$ |
1,500 |
|
|
Shares issued to acquire share investments
|
|
$ |
1,875,000 |
|
|
$ |
- |
|
|
$ |
1,875,000 |
|
The accompanying notes are an integral part of these financial statements
VANGUARD MINERALS CORPORATION
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2011
NOTE 1 – NATURE OF OPERATIONS
The accompanying unaudited interim financial statements have been prepared by Vanguard Minerals Corporation (the “Company”) pursuant to the rules and regulations of the United States Securities and Exchange Commission. Certain information and disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments and disclosures necessary for a fair presentation of these financial statements have been included. Such adjustments consist of normal recurring adjustments. These interim financial statements should be read in conjunction with the
audited financial statements of the Company for the fiscal year ended December 31, 2010.
The results of operations for the nine months ended September 30, 2011 are not indicative of the results that may be expected for the full year.
The Company was incorporated in the State of Nevada, United States of America on August 25, 2003. The Company’s fiscal year end is December 31.
The Company entered into a mineral license option agreement to explore and mine two properties in Mongolia. On April 19, 2006, the Company terminated the option agreements it previously held.
On May 2, 2006, the Company changed its name to Knewtrino, Inc. On May 24, 2006, the Company entered into an agreement to acquire certain technology owned by Instant Wirefree, Inc. by acquiring 100% of the common shares of Instant Wirefree, Inc. in exchange for cash in the amount of $ 27,500 and 18,700,000 common shares of the Company. During the year, the Company changed its business focus and as a result will no longer be developing the Instant Wirefree technology. As a result, the Company has recognized an impairment of $ 46,200 in the value of the technology asset.
On August 10, 2007, the Company changed its name to Vanguard Minerals Corporation.
In November 2007, the Company entered into an agreement with Coastal Uranium Holdings Ltd. to acquire its right and option to an undivided 50% right, title and interest in certain mineral claims in the Athabasca region of Canada for $58,300 (Cdn) plus 2,000,000 shares of the common stock of Vanguard. In addition, Vanguard agreed to take on the financial responsibility of Coastal Uranium Holdings Ltd. to fund development of the mineral property.
In April 2008, Vanguard entered into a second agreement with Coastal Uranium Holdings Ltd. to acquire its 50% interest in mining claim S- 110476 in the Athabasca region of Canada for $ 250,000 (Cdn) plus 4,000,000 shares of the common stock of Vanguard. In addition, Vanguard agreed to take on the financial responsibility of Coastal Uranium Holdings Ltd. to fund development of the mineral property.
The Company would also seek to grow by providing specialized consulting services to established and emerging growth companies in a wide range of industries, from mineral exploration, to green and renewable energy industries, to any other industry in which Vanguard management’s experience and expertise at providing consulting services that create value.
The Company has not generated any significant revenues to date from its mineral exploration and consulting efforts, and in accordance with SFAS #7 (ASC 915-10) is considered to be an Exploration Stage Company.
VANGUARD MINERALS CORPORATION
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2011
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Basis
These financial statements are prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles of the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. The more significant areas requiring the use of estimates include asset impairment, stock-based compensation, and future income tax amounts. Management bases its estimates on historical experience and on other assumptions considered to be reasonable under the circumstances. However, actual results may differ from the estimates.
Mineral Properties
Costs of exploration, carrying and retaining unproven mineral lease properties are expensed as occurred. Mineral property acquisition costs are capitalized including licenses and lease payments. Although the Company has taken steps to verify title to mineral properties in which it has an interest, these procedures do not guarantee the Company’s title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects.
Impairment losses are recorded on mineral properties used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amount.
All mineral properties held at September 30, 2011 and December 31, 2010 have been fully impaired.
Loss Per Share
Net income (loss) per common share is computed based on the weighted average number of common shares outstanding and common stock equivalents, if not anti-dilutive. The Company has not issued any potentially dilutive common shares.
Basic loss per share is calculated using the weighted average number of common shares outstanding and the treasury stock method is used to calculate diluted earnings per share. For the years presented, this calculation proved to be anti-dilutive.
Dividends
The Company has not adopted any policy regarding payment of dividends. No dividends have been paid during the period shown.
Revenue Recognition
The Company recognizes revenue when products are fully delivered or services have been provided and collection is reasonably assured.
VANGUARD MINERALS CORPORATION
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2011
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income Taxes
The Company provides for income taxes using an asset and liability approach. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect currently. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. No provision for income taxes is included in the statement due to its immaterial amount, net of the allowance account, based on the likelihood of the Company to utilize the loss carry-forward.
.
Stock-Based Compensation
The Company uses the modified prospective method of accounting for stock-based compensation. Under this transition method, stock compensation expense includes compensation expense for all stock-based compensation awards granted on or after January 1, 2006, based on the estimated grant-date fair value.
The Company issued its officer 150,000 common shares of its stock during the period ended September 30, 2011. Based on the estimated grant-date fair value of $ 0.01 per share, compensation expense of $ 1,500 was recorded in these financial statements.
Recent Accounting Pronouncements
In May 2009, the FASB issued SFAS 165 (ASC 855-10) entitled “Subsequent Events”. Companies are now required to disclose the date through which subsequent events have been evaluated by management. Public entities (as defined) must conduct the evaluation as of the date the financial statements are issued, and provide disclosure that such date was used for this evaluation. SFAS 165 (ASC 855-10) provides that financial statements are considered “issued” when they are widely distributed for general use and reliance in a form and format that complies with GAAP. SFAS 165 (ASC 855-10) is effective for interim and annual periods ending after June 15, 2009 and must be applied prospectively. The adoption of SFAS 165 (ASC 855-10) during the year ended November 30,
2009 did not have a significant effect on the Company’s financial statements as of that date. In connection with the preparation of the accompanying financial statements as of November 30, 2009, management evaluated subsequent events through the date that such financial statements were issued (filed with the SEC).
In June 2009, the FASB issued SFAS 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles. (“SFAS 168” or ASC 105-10) SFAS 168 (ASC 105-10) establishes the Codification as the sole source of authoritative accounting principles recognized by the FASB to be applied by all nongovernmental entities in the preparation of financial statements in conformity with GAAP. SFAS 168 (ASC 105-10) was prospectively effective for financial statements issued for fiscal years ending on or after September 15, 2009 and interim periods within those fiscal years. The adoption of SFAS 168 (ASC 105-10) on July 1, 2009 did not impact the Company’s results of operations or financial condition. The Codification did not change GAAP, however, it
did change the way GAAP is organized and presented.
As a result, these changes impact how companies reference GAAP in their financial statements and in their significant accounting policies. The Company implemented the Codification in this Report by providing references to the Codification topics alongside references to the corresponding standards.
With the exception of the pronouncements noted above, no other accounting standards or interpretations issued or recently adopted are expected to have a material impact on the Company’s financial position, operations or cash flows.
Foreign currency
transactions
The business of the Company from Canada involves incurring a substantial number of operational transactions in Canada for which it transacts payments in Canadian currency through a bank account maintained for that purpose. Included in such transactions are payments for salaries, rent, consulting and many other expenses. At the time of payment, each Canadian disbursement is translated into the U. S. dollar equivalent amount and an exchange gain or loss on currency is recorded at that time. As of December 31, 2010, the Canadian bank account balance, which was the only account balance maintained in foreign currency at that date was converted into a U. S. dollar equivalent amount.
VANGUARD MINERALS CORPORATION
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2011
NOTE 3 – RELATED PARTY TRANSACTIONS
The Company has a balance owing of $28,151 to a related party. The loan is unsecured and bears no interest. There are no specific terms of repayment with this loan.
The Company has a balance owing of $ 20,000 to a related company. The loan is unsecured. Interest of $ 10,000 was paid on the loan during the year. There are no specific terms of repayment with this loan.
During the period ending December 31, 2010, the Company provided consulting services totaling $ 58,000 to entities in which our sole director is a shareholder. As of September 30, 2011, the amounts receivable from these entities was $ nil.
NOTE 4 – STOCKHOLDERS’ DEFICIT
On November 15, 2007, the Company issued 2,000,000 shares of common stock in connection with the acquisition of a 50% interest in two mineral claims.
On April 6, 2008, the Company issued 4,000,000 shares of common stock in connection with the acquisition of a third mineral claim.
During the year ended December 31, 2008, the Company issued 2,333,333 shares of common stock for $70,000 in connection with a private placement.
During the year ended December 31, 2008, the Company allocated 492,336 shares of common stock for $224,400 in connection with a share subscription. During the period ended March 31, 2011, the company issued 187,000 shares of common stock in connection with this share subscription.
Effective April 16, 2010, the board of directors of the Company adopted a resolution to effect a 300 to 1 reverse share spit. As a result the authorized share capital of the company has been decreased to 1,666,666 shares of common stock with par value of $0.001 per share. On May 10, 2010, the board of directors adopted a resolution to increase the authorized share capital of the company to 500,000,000 shares of common stock with a par value of $ 0.001 per share.
On April 23, 2010, the Company issued 1,000,000 shares of common stock at a deemed price of $ 1.50 per share. In consideration, the Company received 1,000,000 shares of PEI Worldwide Holdings, Inc., a Nevada Corporation. On September 21, 2010, Vanguard signed an agreement with PEI that it would attempt to liquidate or sell its shares in PEI to a third party buyer and that if it was unable to do so in a 90 day period, the transaction would be rescinded and Vanguard would return the shares to PEI.
On June 7, 2011, the Company completed a recission whereby the 1,000,000 shares previously issued in exchange for the PEI shares were cancelled and the 1,000,000 shares of PEI were returned to the purchasers. The impairment in value of the PEI shares of $ 1,020,000 recorded during the year ended December 31, 2010 was reversed during the period ended September 30, 2011.
On June 16, 2010, the Company issued 125,000 shares of common stock at a deemed price of $ 3.00 per share. In consideration, the Company received a 15% interest in Genesis Venture Fund India, I, LP. a Delaware Limited
VANGUARD MINERALS CORPORATION
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2011
NOTE 4 – STOCKHOLDERS’ DEFICIT (continued)
partnership. The sole director of the Company is the managing director of Genesis and owns a 20% interest. In August 2010, this agreement was rescinded and the shares were subsequently cancelled.
On June 7, 2011, the Company issued 1,000,000 shares of common stock for $ 250,000 in connection with a private placement.
On June 13, 2011, the Company entered into an agreement with an officer of the company for services in exchange for a grant of 150,000 of our common stock vesting over a period of four years.
NOTE 5 – INCOME TAXES
The provision for Federal income tax consists of the following:
| |
|
September 30, 2011
|
|
|
September 30, 2010
|
|
|
Federal income tax benefit attributable to:
|
|
|
|
|
|
|
|
Current operations
|
|
$ |
(344,065 |
) |
|
$ |
7,840 |
|
|
Less: valuation allowance
|
|
|
|
|
|
|
- |
|
|
Less: utilization of net loss carryover
|
|
|
344,065 |
|
|
|
(7,840 |
) |
|
Net provision for Federal income taxes
|
|
$ |
- |
|
|
$ |
- |
|
The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows:
| |
|
September 30, 2011
|
|
|
December 31, 2010
|
|
|
Deferred tax asset attributable to:
|
|
|
|
|
|
|
|
Net operating loss carryover
|
|
$ |
1,890,179 |
|
|
$ |
2,234,243 |
|
|
Less: valuation allowance
|
|
|
(1,890,179 |
) |
|
|
(2,234,243 |
) |
|
Net deferred tax asset
|
|
$ |
- |
|
|
$ |
- |
|
Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur net operating loss carry forwards may be limited as to use in future years.
NOTE 6 – GOING CONCERN
The Company's financial statements are prepared using the accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has not begun to generate significant revenues, and has incurred a significant operating loss as of September 30, 2011.
The Company is dependent upon its ability to secure equity and/or debt financing and there are no assurances that the Company will be successful. Without sufficient financing, or the achievement of profitable operations, it would be unlikely for the Company to continue as a going concern.
VANGUARD MINERALS CORPORATION
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2011
NOTE 7 – SUBSEQUENT EVENTS
The Company has analyzed its operations subsequent to September 30, 2011 through the date the financial statements were submitted to the Securities and Exchange Commission and has determined that it does not have any additional material subsequent events to disclose in these financial statements.
|
Item 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Cautionary Statement Regarding Forward-Looking Statements
The information in this Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements involve risks and uncertainties, including statements regarding our markets, capital needs, business plans and expectations. Such forward-looking statements involve risks and uncertainties regarding the ability to continue mining exploration on a timely basis, that we will attract customers, that there will be no material adverse competitive or regulatory change in conditions in our business, that our President will remain employed
as such, that our forecasts accurately anticipate market demand, and that there will be no material adverse change in our operations or business or in governmental regulations affecting our business, availability of funds, common share prices, operating costs, capital costs, and other factors. Forward-looking statements are made, without limitation, in relation to marketing plans, operating plans, availability of funds, and ongoing capital and operating costs. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expect", "plan", "intend", "anticipate", "believe", "estimate", "predict", "potential" or "continue", the negative of such terms or other comparable terminology. Actual events or results may differ
materially. In evaluating these statements, you should consider various factors, including the risks outlined below, and, from time to time, in other reports we file with the SEC. These factors may cause our actual results to differ materially from any forward-looking statement. We disclaim any obligation to publicly update these statements, or disclose any difference between its actual results and those reflected in these statements. The information constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.
OVERVIEW
We are an exploration stage mining company that has briefly conducted other businesses, including wireless and mobile software and management consulting. We are actively in the process of interviewing geological firms for our mineral properties and raising funds to develop those properties. We have previously entered into two agreements with Coastal Uranium Holdings Ltd. to acquire its rights and options to acquire an undivided 50% right, title and interest in certain mineral claims in the Athabasca region. We were able to complete a financing for $250,000 for sales of our common stock in June, 2011 and are actively working on the exploration of our Uranium
Properties, although legal and regulatory hurdles and vetting of proper consultants and supporting teams, given the shortness of the exploration season, may mean that our next drilling and trenching program may not begin until April 2012, by which time we expect to have secured additional funding to explore beyond our currently intended drill program and geophysical surveys and corresponding ore body identification and 3D modelling.
CORPORATE HISTORY AND DEVELOPMENT
Overview
Vanguard Minerals Corporation, formerly Knewtrino, Inc., (the “Company”) was originally incorporated as Mongolian Explorations Ltd. on August 25, 2003, under the laws of the State of Nevada. We were originally founded to conduct mineral explorations in Mongolia. Although we did exploratory feasibility work on mineral lease development, we abandoned our mineral exploration efforts in April, 2006 due to the deteriorating political and security situation in Mongolia and specifically due to intense protests over North American mining concessions in that country which jeopardize the safety of our consultants as well as undermining our confidence that we will ever be able to see a return
on our continued investments to develop the properties.
Since that time, we had appointed an interim chief executive officer, Jenifer Osterwalder, who saw us through our transition out of the mineral exploration business and now are under the leadership of a new chief executive officer, Vladimir Fedyunin, and we were in the process of developing a business around cell phone enabled wireless applications. Toward that end, we acquired the intellectual property of wireless technology start-up Instant Wirefree, Inc., a Nevada corporation. Unfortunately, we were not able to make the transition to the ultra-competitive field of cell phone wireless applications. In June, 2007, we made the decision to abandon this line of business and
to no longer pursue commercialization of any product in the wireless space. Instead, we have returned to our original, core focus of mining, where the company has its roots, however, we wished to find a more politically stable and less dangerous environment to mine in than Mongolia.
In September, 2007, we changed our name to Vanguard Minerals Corporation to reflect our renewed commitment to our traditional core business of mineral exploration. In November 2007, the Company entered into an agreement with Coastal Uranium Holdings Ltd. to acquire its right and option to acquire an undivided 50% right, title and interest in certain mineral claims in the Athabasca region. The option was acquired through payment of $57,585 in cash as well as 2,000,000 common shares of the Company. On April 6, 2008, we entered into another agreement with Coastal Uranium Holdings Ltd., whereby we acquired a 50% undivided right, title and interest to the
mineral claim numbered S-110476 in the Athabasca region of Canada in exchange for $250,000 CAD ($248,508 USD) and 4,000,000 common shares of Vanguard Minerals corporation. In addition, we have agreed to take on the financial responsibility of Coastal to fund development of the mineral property that is the subject of claim S-110476.
In February, 2010, James Price was appointed President, Chief Executive Officer and Sole Director of the Company. Vladimir Fedyunin, the former President and CEO, remained as Principal Financial and Accounting Officer. Mr. Fedyunin left the company later in 2010.
On April 16, 2010, we effected a 300 for 1 reverse stock split in our common shares for shareholders of record as of that date.
On April 20, 2010, the Company initiated a new line of business doing business as Vanguard Management. The Company ceased this management consulting business in June, 2011. We did receive some stock in exchange for management consulting services. All this stock has been liquidated or returned. We did enter into a related party transaction with Genesis Venture Fund India I, LP, that involved a swap of stock and management consulting services. That transaction has been rescinded.
On September 21, 2010, the company entered into an agreement whereby the above referenced transaction with PEI would be rescinded and the PEI shares returned to the purchasers and the 1,000,000 common shares of Vanguard common stock returned to treasury unless a buyer for the shares could be found. This rescission was to take place within 90 days. In December, 2010, the timeframe for this rescission was extended until June 21, 2011.
On June 7, 2011, the registrant completed a rescission whereby the 1,000,000 shares previously issued in exchange for the PEI shares were cancelled and the 1,000,000 shares of PEI were returned to the purchasers.
On June 13, 2011, we entered into an agreement with Sean Rice to serve as our President, Chief Executive Officer and Principal Financial and Accounting Officer in exchange for a grant of 150,000 of our common stock vesting over a period of four years. Mr. Rice will also earn a salary of $120,000 per year, but such salary will not accrue or be payable until the Company has received aggregate financing proceeds from the sale of its common stock of $2,000,000 within a 12 month period. The agreement does not provide for any severance or accrual of unpaid salary and is an at-will employment agreement.
James Price no longer has any role in our company and is no longer a shareholder.
Our company is exclusively focused on the development of our Athabasca, Canada mineral properties.
We were able to complete a financing for $250,000 for sales of our common stock in June, 2011 and are actively working on the exploration of our Uranium Properties, although legal and regulatory hurdles and vetting of proper consultants and supporting teams, given the shortness of the exploration season, may mean that our next drilling and trenching program may not begin until April 2012, by which time we expect to have secured additional funding to explore beyond our currently intended drill program and geophysical surveys and corresponding ore body identification and 3D modelling.
Our principal executive offices are located at 2700 Glen Point Circle, Richmond, VA 23233. Our phone number is (804) 767-7154.
Results of Operations
Until April 19, 2006, we have been involved primarily in organizational activities related to our original business of mining in Mongolia, including the acquisition of the option to acquire the Altan as well as the Ovorkhangai property mineral licenses, obtaining a geological report on our mineral licenses and initiating the first phase of exploration. After April 19, 2006, when we abandoned these efforts due to the political situation in Mongolia, we acquired wireless technology from Instant Wirefree, Inc., a Nevada corporation. We attempted to commercialize technology for the wireless space but abandoned that effort in June, 2007. We are currently in the process of
returning to our core business of mining. Toward that end, we changed our name in September 2007 and we acquired interests in mineral claims in the Athabasca region of Canada in November 2007 and April 2008. We have incurred an accumulated net loss of $5,559,348 for the period from inception to September 30, 2011. We have had $163,500 in revenues from operations since our inception.
In April, 2010, the Company briefly entered and then exited the management consulting business. It is now entirely focused on the development of its mineral interests.
We were able to complete a financing for $250,000 for sales of our common stock in June, 2011 and are actively working on the exploration of our Uranium Properties, although legal and regulatoryhurdles and vetting of proper consultants and supporting teams, given the shortness of the exploration season, may mean that our next drilling and trenching program may not begin until April 2012, by which time we expect to have secured additional funding to explore beyond our currently intended drill program and geophysical surveys and corresponding ore body identification and 3D modelling.
Financial Condition and Liquidity
Our financial statements contained herein have been prepared on a going concern basis, which assumes that we will be able to realize our assets and discharge our obligations in the normal course of business. We incurred an accumulated net loss of $5,559,348 for the period from inception to September 30, 2011.
Our financial statements included in this report have been prepared without any adjustments that would be necessary if we become unable to continue as a going concern and are therefore required to realize upon our assets and discharge our liabilities in other than the normal course of business.
Cash and Working Capital
The Company's cash balance as of September 30, 2011 was $250,314, as compared to the cash balance of $358 as of December 31, 2010.
Periods Ending September 30, 2011 and September 30, 2010
Operating expenses for the three-month periods ended September 30, 2011 and September 30, 2010 totalled $2,500 and $89,247 respectively; operating expenses for the nine month periods ended September 30, 2011 and 2010 totalled $8,045 and $96,441 respectively, and from inception to the period ended September 30, 2011 operating expenses totalled $4,908,055. The company experienced net income of ($2,500), ($27,747) and a net loss of $(5,559,348) for the three-month periods ended September 30, 2011, September 30, 2010 and from inception to period ended September 30, 2011, respectively, against $163,500 in total revenues to date from
operations. The major expense during this three-month period was for general administrative costs. We did not acquire any new mineral properties in the first six months of 2011.
The net loss per share (fully diluted -- weighted average) was $0.00 for the three month period ended September 30, 2011.
Liquidity and Capital Resources
For the nine month period ended September 30, 2011, net cash used in operating activities, consisting mostly of net losses offset by an increase in accounts payable and accrued expenses, was $44. For the nine month period ended September 30, 2010, net cash used in operating activities, consisting mostly of a decrease in accounts payable and accrued expenses, was $10,522. For the period from inception to Septmber 30, 2011, net cash used in operating activities, consisting mostly of loss from operations was $2,283,495.
For the period from inception to September 30, 2011, net cash resulting from financing activities was in the amount of $2,337,411.
Our capital resources have been limited. We currently do not, and have not yet determined when we will, generate revenue for our mining and mineral exploration activities, and to date have relied on the sale of equity and related party loans for cash required for our exploration activities and the efforts of our chief executive officer for consulting agreements. The company has no external sources of liquidity in the form of credit lines from banks. No investment banking agreements are in place and there is no guarantee that the company will be able to raise capital in the future should that become necessary.
Future Financings
We anticipate that if we pursue any additional financing, the financing would be an equity financing achieved through the sale of our common stock. We do not have any arrangement in place for any debt or equity financing. If we are successful in completing an equity financing, existing shareholders will experience dilution of their interest in our company. If we do not secure additional financing in the future we may consider bringing in a joint venture partner to provide the required funding. We have not, however, undertaken any efforts to locate a joint venture partner.
Off Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.
Significant Contingencies
Our financial statements have been prepared assuming we will continue as a going concern. Our independent auditors have made reference to the substantial doubt about our ability to continue as a going concern in their report of independent registered public accounting firm on our audited financial statements for the year ended December 31, 2010. Our continuation is dependent upon the ability of the Company to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and pay its liabilities arising from normal business operations when they come due. The outcome of these matters cannot be predicted with any certainty at this time and raise
substantial doubt that the Company will be able to continue as a going concern.
Plan of Operation
We have developed a new plan of operation for 2011. In addition to continuing to seek financing to develop our mineral properties in the Athabasca region of Canada, we intend to acquire other mineral properties if we can.
We intend to conduct significant mineral exploration activities on our properties in 2011, as long as we are able to find suitable exploration providers before the winter season shuts down exploration work. We continue to seek geological advice and work on developing possible partnerships for the development of these properties. We intend to conduct over the next 12 months helicopter-supported property-scale boulder sampling and prospecting, close-spaced ground geophysics and drilling on our mining properties. With these two projects, consisting of 3 mineral claims, in close proximity to each other, we believe such operations can be conducted in a cost-efficient
manner. We are now ready to commence ground geophysics and drilling. Management has continued negotiations started in 2008 with geophysical and drill contractors in preparation for this exploration. Management is also reviewing other opportunities to acquire additional property in the region, both unexplored properties and properties with varying amounts of previous exploration. We intend to develop our management consulting business and to expand it with additional consulting clients throughout the year.
Vanguard Minerals Corporation’s short-term prospects are challenging considering our lack of financial resources to fully develop our mineral properties and considering that we have not yet derived significant revenues from our new line of business. However, should we be able to develop revenue from our new line of business or secure financing to develop our mineral properties, our prospects might improve considerably. If we do secure additional financing to continue to exploit our mineral properties, revenue from the sale of mineral products from our properties may still remain several years away.
Cash requirements
Our current cash requirements are very low. Our chief executive officer, Sean C. Rice, continues to serve without a salary. Mr. Rice currently hosts our operations in his location in Richmond, VA without charge. Nevertheless, without continued infusions of cash from management or securing additional financing or revenues from our new line of business, we will not have enough cash to complete exploration activity on our property, which could run into tens of millions of dollars.
Research and development
We would like to spend several hundred thousand dollars over the next 12 months on exploration and extraction related to our mineral properties. We would spend significantly more money that this developing those mineral properties at the moment that our full scale extraction operation were to commence. However, currently we do not have enough cash to make more than $150,000-$200,000 of such expenditures.
Plant and equipment
We currently have a location in Richmond, VA provided by our chief executive officer, Sean Rice, at no cost. We anticipate expanding our office within the next 6-12 months, especially if our exploration work yields promising results.
Employees
We have one employee currently, President and Chief Executive Officer Sean Rice. We have several consultants engaged in our mineral exploration activities, although none are currently active as we are negotiating new contracts and interviewing them due to our recent funding. We intend to hire additional exploration and geological consultants over the next 120-180 days.
The Company’s executive offices are currently located in Richmond, VA. The company’s telephone number is (804)767-7154.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
Foreign Currency and Credit Risk. The Company has no significant off-balance-sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. The Company’s reporting currency is the US Dollar. We do undertake drilling, mining exploration and other expenses related to our Canadian mining properties that must be paid in Canadian dollars and are subject to cost variations based in currency rate fluctuations.
Fair Value of Financial Instruments. The carrying value of the Company's financial instruments, including prepaid expenses, related party receivables, accounts payable and accrued liabilities at June 30, 2011 and December 31, 2010 approximates their fair values due to the short-term nature of these financial instruments.
ITEM 4. CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures.
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act). As a result of this evaluation, we identified material weaknesses in our internal control over financial reporting as of December
31, 2010. Accordingly, we concluded that our disclosure controls and procedures were not effective as of December 31, 2010.
As required by SEC Rule 15d-15(b), our Chief Executive Officer carried out an evaluation under the supervision and with the participation of our management, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 15d-14 as of the end of the period covered by this report. Based on the foregoing evaluation, our Chief Executive Officer has concluded that our disclosure controls and procedures are not
effective in timely alerting them to material information required to be included in our periodic SEC filings and to ensure that information required to be disclosed in our periodic SEC filings is accumulated and communicated to our management, including our Chief Executive Officer, to allow timely decisions regarding required disclosure as a result of the deficiency in our internal control over financial reporting discussed below.
The material weakness identified in our amended annual report on Form 10-K for the year ended December 31, 2010 was related to a lack of an accounting staff resulting in a lack of segregation of duties and accounting technical expertise necessary for an effective system of internal control.
(b) Changes in internal control over financial reporting.
There were no changes in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
We are not party to any legal proceedings.
Item 1A. RISK FACTORS.
None.
Item 2. UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS
On April 23, 2010, the Company completed a sale transaction whereby it sold 1,000,000 of its common shares at a price per share of $1.50. The per share purchase price was paid in the form of shares of PEI Worldwide Holdings, Inc., a Nevada corporation ("PEI"). The per share purchase price was derived from the closing price of shares of PEI on April 20, 2010 as listed on the Pink Sheets, which was $1.50 per share. Therefore, the total purchase price for the 1,000,000 common shares was $1,500,000. 860,000 of the shares were purchased by James Price and the other 140,000 of the shares were purchased by various purchasers. 1,000,000 shares of
PEI represents approximately 2.5% of the issued and outstanding stock of PEI.
This was a related-party transaction. Mr. Price is our sole director and he approved this transaction. There was no disinterested director who approved this transaction. There can be no assurance that the price reported for PEI shares on the Pink Sheets is an accurate reflection of the true value of PEI shares.
This transaction had the effect of causing a change of control in the registrant. Prior to this transaction, the registrant had 268,499 shares of common stock issued and outstanding out of 1,666,666 authorized. After this transaction and giving effect to the transaction described in the paragraph below regarding the issuance of 187,000 common shares, Mr. Price owns approximately 59.1% of our issued and outstanding stock and remains our sole director.
On April 23, 2010, the registrant completed an issuance of 187,000 shares of common stock. This stock had been subscribed for in April, 2008 for payment of $224,400 in cash received by the corporation. The corporation issued 187,000 of its common shares to various subscribers of the stock at a per share purchase price of $1.20 per share.
On June 16, 2010, the Vanguard Minerals Corporation, the registrant, entered into a Strategic Business Development Agreement ("Agreement") with Genesis Venture Fund India I, LP, a Delaware limited partnership ("Genesis"). The Agreement provides that Vanguard will furnish business development services and strategic management consulting services to Genesis over a period of 24 months. The Agreement provides payment of up to $250,000 in cash by Genesis to Vanguard for the consulting services based on the milestones contained in the Agreement. In addition, under the Agreement,
Vanguard will issue 125,000 shares of its common stock to Genesis in exchange for 15% of the limited partnership interests of Genesis.
Vanguard President, CEO and Sole Director, James Price , who is the controlling shareholder of Vanguard is also the Managing Director of Genesis and owns 20% of the limited partnership interests in Genesis. Mr. Price exercises control of both entities and there can be no assurance that the terms of the transaction are fair to the shareholders of Vanguard or the limited partnership interest holders of Genesis or that the terms are reflective of the terms of a similar transaction between unrelated parties. There are significant contingencies required for Vanguard to meet the milestone requirements under the Agreement and receive up to the $250,000 cash milestone payments
and there can be no assurance that such payments will ever occur. Please see the Agreement, which is attached hereto as an exhibit which were filed on the Registrant's Form 8K on June 17, 2010 for the complete terms and conditions.
The transaction with Genesis was rescinded on September 21, 2010.
The transaction with PEI was rescined in June, 2011. In June, 2011, we sold 1,000,000 of our common shares at $0.25 per share for an aggregate purchase price of $250,000 to various shareholders in a private placement.
In June, 2011, we issued 150,000 common shares to our President and CEO, Sean Rice, as part of his employment with the Company.
Item 3. DEFAULT UPON SENIOR SECURITIES
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
Item 5. OTHER INFORMATION
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Exhibits
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Document Description
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31.1
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Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed as an Exhibit to this Quarterly Report on Form 10-Q.
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31.2
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Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed as an Exhibit to this Quarterly Report on Form 10-Q.
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32.1
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Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed as an Exhibit to this Quarterly Report on Form 10-Q.
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32.2
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Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed as an Exhibit to this Quarterly Report on Form 10-Q.
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XBRL Instance |
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XBRL Schema |
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XBRL Calculation |
| 101.Def |
XBRL Definition |
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XBRL Label |
| 101.Pre |
XBRL Presentation |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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Vanguard Minerals Corporation
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DATE: November 17, 2011
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/s/ Sean Rice
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Sean Rice
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President and CEO
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By:
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/s/ Sean Rice
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Sean Rice
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Principal Financial and Accounting Officer
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