UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended April 30, 2011
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT
Commission file number: 000-08299
CAMELOT CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 84-0691531
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
17 Sutton Way
Washington Twp, NJ 07676 (201) 970-4987
(Address, including zip code of (Registrant's telephone number,
principal executive offices) including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE EXCHANGE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE EXCHANGE ACT:
Common Stock, $0.01 par value
Indicate by check mark if the Registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the Registrant is not required to file reports
pursuant to Section 13 of Section 15(d) of the Act. Yes [ ] No [X}
Indicate by check mark whether the Registrant (1) has 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 Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.229.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). ).* *The registrant
has not yet been phased into the interactive data requirements. Yes [ ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss.232.405 of this chapter) is not contained herein, and will
not be contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [X]
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.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [X] No [ ]
Aggregate market value of the voting and non-voting stock of the registrant held
by non-affiliates of the registrant as of October 31, 2010 was approximately
$194,469.
As of July 26, 2011, the registrant's outstanding common stock consisted of
2,006,528 shares.
TABLE OF CONTENTS
Part I
Page
----
Item 1 Business 3
Item 1A Risk Factors 7
Item 1B Unresolved Staff Comments 13
Item 2 Properties 13
Item 3 Legal Proceedings 13
Item 4 Removed and Reserved 13
Part II
Item 5 Market for Registrant's Common Equity, Related Stockholder Matters
and Issuer Purchases of Equity Securities 14
Item 6 Selected Financial Data 14
Item 7 Management's Discussion and Analysis of Financial Condition and
Results of Operations 14
Item 7A Quantitative and Qualitative Disclosures About Market Risk 16
Item 8 Financial Statements and Supplementary Data 17
Item 9 Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 28
Item 9A Controls and Procedures 28
Item 9B Other Information 29
Part III
Item 10 Directors, Executive Officers and Corporate Governance 31
Item 11 Executive Compensation 31
Item 12 Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters 32
Item 13 Certain Relationships and Related Transactions and Director
Independence 33
Item 14 Principal Accounting Fees and Services 33
Part IV
Item 15 Exhibits, Financial Statement Schedules 33
Signatures 34
2
PART I
ITEM 1 BUSINESS
THE COMPANY
The Company was incorporated in Colorado on September 5, 1975, and completed a
$500,000 public offering of its common stock in March 1976. The Company made
several acquisitions and divestments of businesses. The Company was delisted
from NASDAQ's Small Cap Market on February 26, 1998. In July 1998 all employees
of Camelot were terminated. Its directors and officers have since provided
unpaid services on a part-time basis to the Company. Recently the Company has
formulated a business plan to investigate the possibilities of a viable mineral
deposit on 10 leased mining claims located in Esmeralda County, Nevada, USA.
On November 6, 2009, the Company's common stock was accepted for quotation,
effective November 9, 2009, on the OTC Bulletin Board ("OTCBB").
On November 24, 2009, the Company filed with the SEC a current report on Form
8-K reporting a sale of a majority of the Company's common stock from Danny
Wettreich to Jeffrey Rochlin, the resignation of Danny Wettreich as officer of
the Company and the election of Jeffrey Rochlin as President, Chief Executive
Officer, Secretary and Treasurer of the Company effective November 20, 2009.
On May 12, 2010, the sole director of the Company, Danny Wettreich, appointed
Jeffrey Rochlin as a director of the Company. Concurrent with said appointment,
Mr. Wettreich resigned as a director, with Mr. Rochlin to serve as director
until the next annual meeting of shareholders and until the election and
qualification of his successor or his earlier removal or resignation. The
Company reported Mr. Rochlin's appointment and Mr. Wettreich's resignation on a
Current Report on Form 8-K filed with the SEC on May 12, 2010.
A special meeting of shareholders of Camelot Corporation was held on Thursday,
April 28, 2011. At the special meeting, a majority of the shareholders of
Camelot Corporation approved the adoption of a proposed Agreement and Plan of
Merger, to reincorporate Camelot Corporation, a Colorado corporation ("Camelot
Nevada") in the State of Nevada by merger with and into a Nevada corporation
with the name Camelot Corporation ("Camelot Nevada") (the "Migratory Merger").
Camelot Colorado formed Camelot Nevada expressly for the purpose of the
Migratory Merger.
On May 23, 2011, FINRA affected the Migratory Merger, and the Agreement and Plan
of Merger became effective resulting in the following:
1. The adoption of the Articles of Incorporation of Camelot Nevada under the
laws of the state of Nevada as the Articles of Incorporation of the Company,
pursuant to which there are 150,000,000 shares of authorized capital stock,
consisting of 50,000,000 shares of common stock, par value $0.01 per share (the
"Camelot Nevada Common Stock"), and 100,000,000 shares of "blank check"
preferred stock, par value $0.01 per share (the "Preferred Stock"). The
Preferred Stock may be issued from time to time in one or more participating,
optional, or other special rights and qualifications,limitations or restrictions
thereof, as shall be stated in the resolutions adopted by Camelot Nevada's Board
of Directors providing for the issuance of such Preferred Stock or series
thereof.
2. The issued and outstanding shares of Camelot Colorado Common Stock
(49,236,106 shares) automatically converted into the right to receive shares of
Camelot Nevada Common Stock at a ratio of one (1) share of Camelot Nevada Common
Stock for each twenty-five (25) shares of Camelot Colorado Common Stock held
immediately prior to the effectiveness of the Migratory Merger, provided,
however, that holders of Camelot Colorado Common Stock who would receive at
least one share but fewer than 100 shares of Camelot Nevada Common Stock upon
conversion were rounded up so that they received 100 shares of Camelot Nevada
Common Stock (the "Conversion Ratio"). No fractional shares were issued, and
holders who would receive less than one share upon conversion did not receive
Camelot Nevada Common Stock but will receive a cash distribution of One Dollar
($1.00) upon submission of the Shareholder Transmittal Form Requesting Cash
Payment for Fractional Shares.
3. The adoption of the Bylaws of Camelot Nevada under the laws of the state of
Nevada as the Bylaws of the Company. The approval of the Migratory Merger
resulted in a total of 2,006,528 shares of common stock issued and outstanding
at May 23, 2011. The Company's plan of operations is to conduct mineral
3
exploration activities on the mineral claim Property, as described below, in
order to assess whether the Claims possess commercially exploitable mineral
deposits. (Commercially exploitable mineral deposits are deposits which are
suitably adequate or prepared for productive use of a natural accumulation of
minerals or ores). This exploration program is designed to explore for
commercially viable deposits of gold, silver or other valuable minerals.
(Commercially viable deposits are deposits which are suitably adequate or
prepared for productive use of an economically workable natural accumulation of
minerals or ores). The Company has not, nor has any predecessor, identified any
commercially exploitable reserves of these minerals on our Claims. (A reserve is
an estimate within specified accuracy limits of the valuable metal or mineral
content of known deposits that may be produced under current economic conditions
and with present technology). The Company is an exploration stage company and
there is no assurance that a commercially viable mineral deposit exists on its
Claims.
Upon acquiring a Lease on the Property, David A. Wolfe, Professional Geologist,
prepared a geologic report for the Company on the mineral exploration potential
of the Claims. Mr. Wolfe was, at the time of the signing of the Lease, President
of Timberwolf Minerals LTD, the company from whom the Property is leased.
Included in Mr. Wolfe's report is a recommended exploration program which
consists of mapping, sampling, staking additional claims and drilling. The
conditions of the Lease are detailed in the section "Requirements or Conditions
for Retention of Claim Rights".
At this time the Company is uncertain of the extent of mineral exploration it
will conduct before concluding that there are, or are not, commercially viable
minerals on the Claims. Further phases beyond the current exploration program
will be dependent upon numerous factors such as Mr. Wolfe's recommendations
based upon ongoing exploration program results and the Company's available
funds.
ACQUISITION OF THE MINERAL CLAIM
On June 11, 2010, the Company entered into a Mineral Lease Agreement (the
"Lease") with Timberwolf Minerals, Ltd. ("Timberwolf") to lease certain
unpatented lode mining claims (the "Property") owned by Timberwolf located in
Section 2, Township 2 North, Range 38 East and Section 35, Township 3 North,
Range 38 East, Mt. Diablo Meridian in Esmeralda County, Nevada subject to the
terms of the Lease. The Property consists of Claims BJ 101, 103, 105, 107, 109,
110, 112, 114, 116 and 118 with BLM Serial No. NMC# Lead File 1017556 (the
"Claims"). The Company reported entry into the Mineral Lease on a Current Report
on Form 8-K filed with the SEC on July 26, 2010.
The Lease grants the Company the exclusive right to explore, develop and mine
the Property for minerals. Under the Lease, the Company is obligated to pay all
Federal, State and County annual mining claim maintenance or rental fees and
execute, record or file proof of payment of same and of Timberwolf's intention
to hold the Claims.
REQUIREMENTS OR CONDITIONS FOR RETENTION OF CLAIM RIGHTS
Upon execution of the Lease, the Company paid $11,456.50 inclusive of $1,456.50
for 2010 maintenance fees. On June 8, 2011, the Company and Timberwolf entered
into an Amended Mineral Lease Agreement (the "Amended Lease"). Under the terms
of the Lease and the Amended Lease, the Company paid an annual rental payment of
$4,000 on the first anniversary of the Lease and is obligated to pay to
Timberwolf minimum subsequent annual rental payments as follows: $20,000 on or
before the second anniversary of the Lease, $25,000 on or before the third
anniversary of the Lease, $50,000 on or before the fourth anniversary of the
Lease and $50,000 on or before the fifth anniversary of the Lease. The Company
has the right to purchase all of Timberwolf's unpatented Claims covered by the
Lease and within the boundaries of the area of interest for $5,000,000 on or
before the sixth anniversary of the Lease, failure of which will terminate the
Lease.
PROPERTY DESCRIPTION AND LOCATION
The Property, known as the Blair Junction prospect, straddles St. Hwy. 95 on the
pediment south of the Monte Cristo Range, approx. 25 west of Tonopah, Nevada.
The area lies on structural trend with the closed open-pit at the Boss Mine,
located 4 miles to the NE. Low-sulfidation, adularia-rich gold systems occur at
the Boss Mine, at Gilbert 10 miles due N, and at the Midway deposit, located 35
miles to the ENE.
The Blair Junction epithermal system lies under portions of Sec.
1,2,3,10,11,12,13,14, & 15, T 2 N, R 38 E, and the western edges of Sec. 6,7, &
18, T 2 N, R 38.2 E. In March, 2008, Timberwolf Minerals staked 12 claims
covering the SE Cor. Sec. 11 and the S portion of Sec. 12, T 2 N, R 38 E. All
surrounding ground is open BLM ground.
4
Approximately two miles to the NE, in Sec. 4, 2N, 38.5E, is the western edge of
a 4-5 mile square claim block extending northeastward.
Water for drilling must be obtained from the Tonopah Water System which is
located at a group of springs, located approx. 7-8 miles east of town. Water for
production would need to be from drilled production wells. Ideal geology is
present with 1-2 miles up-slope from the currently defined target. Electric
should be available from power lines along State Hwy 95, approx. 4-5 miles to
the south. Labor is plentiful in the Tonopah and Silver Peak areas both located
within 25 miles of the property. Other smaller towns are located north of
Tonopah at Manhattan and Belmont as well as numerous ranches in the region.
MINERAL PROPERTY EXPLORATION
Upon acquiring a Lease on the Property, David A. Wolfe, Professional Geologist,
prepared a geologic report for the Company on the mineral exploration potential
of the Claims. Mr. Wolfe was, at the time of the signing of the Lease, President
of Timberwolf Minerals LTD, the company from whom the Property is leased.
Included in Mr. Wolfe's report is a recommended exploration program which
consists of mapping, sampling, staking additional claims and drilling. The
following information is from Mr. Wolfe's report:
PHASE I
In August, 2008, privately-held Union Summit Minerals of Canada leased the Blair
Junction property. In September, an additional 40 claims were added and filed
with Esmeralda County. The exploration target and concepts defining a drill
target which are outlined in the following report on the Blair project.
The exploration target was permitted with 10 drill hole locations in October,
2008, and drilling began in early November 2008. The objective was to drill the
project and evaluate results before spending the funds to file the claims with
the BLM. Four holes were completed to depths of 330 ft to 540 ft. All four holes
intersected fine-grained sands and thick sections of lakebed muds to total
depth. The lakebed muds were weakly pyritic below 300 ft. No bedrock was
encountered, nor were any quartz boulder-rich lenses.
The drilling was based primarily on the concept that the anomalous
quartz-adularia-gold boulder fragments, nearly identical in nature to those
found over the Midway deposit located NE of Tonopah, had moved upward from
bedrock by the physical process of "selective sorting". Drill results strongly
suggest that the mineralized boulder "train" was not derived from bedrock
immediately below the surface concentration, but was derived from some distance
up-pediment.
Additional reconnaissance mapping completed during the drill program, however,
did confirm that no evidence can be found to suggest that the mineralized
boulders were derived from outcrops in bedrock in the Monte Cristo Mountains to
the north. More specifically, they were not derived from the Gilbert Mineral
Trend where it outcrops in bedrock.
Union Summit elected not to continue the program beyond the 2008 drilling. The
project did not fit their future agenda. In March 2009, Timberwolf Minerals,
Ltd., staked a new block of 20 claims up-pediment from the boulder anomaly in
the center of what is now projected as the source of the quartz-adularia-gold
boulders. The new target is discussed below. In October, 2009, the claim block
was reduced to 10 centralized claims.
PHASE I - CONCLUSIONS
The 2008 drilling results lead to the conclusion the mineralized
quartz-adularia-gold boulders are derived from hidden basin-margin structures
along the southern flank of the Monte Cristo mountain block. Hence, the work to
date has essentially limited the potential source area to a 2.0 mile by 3.0 mile
block of pediment between the float "train" boulder concentration and the
outcrop edge of the mountain range to the north -- effectively reducing a large
pediment area down to a reasonably-sized exploration target.
EXPLORATION TARGET -- PHASE II
The intersection of the Blair boulder train anomaly with the inferred WNW-ESE
structure, and the intersection of the Gilbert Mineral Trend, roughly defines a
2.0 mile by 3.0 mile block of pediment which could host a Midway-type high-grade
5
quartz-adularia-gold vein system, or even a Round Mountain-type bulk tonnage
system. The area comprises Sections 34, 35 & 36, T. 3 N., R. 38 E. and Sections
1, 2, & 3, T. 2 N., R. 38 E. MDPM and may extend eastward into R. 38.5 E.
RECOMMENDATIONS FOR PHASE II FOLLOW-UP
Consultation with James Wright, geophysicist, who has done most of the
geophysical interpretation for Newmont and Midway Gold at Midway, indicates that
detailed gravity should be effective in defining the range-front structure
within the target area. This could be followed by several lines of CSAMT to
identify silicified structures.
The geophysics could then be followed up with 4-6 drill holes designed to test
bedrock for alteration and mineralization. The purpose of the first round of
drill holes is simply to establish the existence of an altered and mineralized
system. Favorable results could then dictate a more thorough on-going effort in
the area. With well-orchestrated planning, it is possible to complete this work
before making a decision to spend the funds necessary to file the claims with
the BLM.
The area can be tested with the following estimated budget, exclusive of land
costs:
GRAVITY SURVEY -- 400m line spacing along pediment, 100m station
spacing, 2.0mi X 3.0 mi $ 16-18,000
CSAMT -- 2 lines @ 1.5 km/line (minimum) $ 8-10,000
TOTAL GEOPHYSICS* $ 24-28,000
PERMITTING -- permit for 10 holes including permit preparation
& bond $ 8,000
DRILLING -- 5 holes @ 500 ft/hole @ $25/ft $ 63,000
ASSAYING -- 200 ft/hole, 5 ft/sample, 5 holes,
200 samples @ $35/sample $ 7,000
GEOLOGIST -- drilling supervision, reports, etc 20 Days @ $500/D
+ $125/D expenses $ 12,500
SUPPLIES, WATER, BACKHOE, RECLAMATION $ 7,600
------------
TOTAL ESTIMATED COST OF PROGRAM $122-126,100
============
TOTAL ESTIMATED COST OF PROGRAM W/ SELECTIVE GRAVITY* $ 118,100
============
----------
* Geophysics includes interpretation reports by J. Wright. Figures could
probably be reduced to $10,000 with more selective gravity line placement.
COMPLIANCE WITH GOVERNMENT REGULATION
Our exploration programs in Nevada are subject to state and federal regulations
regarding environmental considerations. All operations involving the exploration
for the production of minerals are subject to existing laws and regulations
relating to exploration procedures, safety precautions, employee health and
safety, air quality standards, pollution of streams and fresh water sources,
odor, noise, dust and other environmental protection controls adopted by
federal, state and local governmental authorities as well as the rights of
adjoining property owners. We may be required to prepare and present to federal,
state or local authorities data pertaining to the effect or impact that any
proposed exploration for or production of minerals may have upon the
environment. All requirements imposed by any such authorities may be costly,
time consuming and may delay commencement or continuation of exploration or
production operations. Future legislation may significantly emphasize the
protection of the environment, and, as a consequence, our activities may be more
closely regulated to further the cause of environmental protection. Such
legislation, as well as further interpretation of existing laws in the United
States, may require substantial increases in equipment and operating costs and
delays, interruptions, or a termination of operations, the extent of which
cannot be predicted. Environmental problems known to exist at this time in the
United States may not be in compliance with regulations that may come into
existence in the future. This may have a substantial impact upon the capital
expenditures required of us in order to deal with such problem and could
substantially reduce earnings.
The regulatory bodies that directly regulate our activities are the Bureau of
Land Management (Federal) and the Nevada Department of Environmental Protection
(State).
PATENTS, TRADEMARKS, FRANCHISES, CONCESSIONS, ROYALTY AGREEMENTS OR LABOR
CONTRACTS
We have no current plans for any registrations such as patents, trademarks,
copyrights, franchises, concessions, royalty agreements or labor contracts. We
will assess the need for any of these applications on an ongoing basis.
6
COMPETITION
We do not compete directly with anyone for the exploration or removal of
minerals from our leased property. Readily available commodities markets exist
in the U.S. and around the world for the sale of gold, silver and other
minerals. Therefore, we will likely be able to sell any minerals that we are
able to recover.
We will be subject to competition and unforeseen limited sources of supplies in
the industry in the event spot shortages arise for supplies such as dynamite,
and certain equipment such as bulldozers and excavators that we will need to
conduct exploration. We have not yet attempted to locate or negotiate with any
suppliers of products, equipment or services. If we are unsuccessful in securing
the products, equipment and services we need we may have to suspend our
exploration plans until we are able to do so.
EMPLOYEES AND EMPLOYMENT AGREEMENTS
At present, we have no employees and no employment agreements. Our President
provides services on a consultant basis. We anticipate that we will be
conducting most of our business through agreement with consultants and third
parties.
REPORTS TO SECURITY HOLDERS
We make our financial information available to any interested parties or
investors through compliance with the disclosure rules of Regulation S-K for a
smaller reporting company under the Securities Exchange Act of 1934. The public
may read and copy any materials that we file with the Securities and Exchange
Commission, ("SEC"), at the SEC's Public Reference Room at 100 F Street NE,
Washington, DC 20549. The public may obtain information on the operation of the
Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an
Internet site (http://www.sec.gov) that contains reports, proxy and information
statements, and other information regarding issuers that file electronically
with the SEC.
ITEM 1A RISK FACTORS
RISKS RELATING TO OUR COMPANY
OUR ONLY MINING PROPERTY IS ONE MINING CLAIM, THE FEASIBILITY OF WHICH HAS NOT
BEEN ESTABLISHED AS WE HAVE NOT COMPLETED EXPLORATION OR OTHER WORK NECESSARY TO
DETERMINE IF IT IS COMMERCIALLY FEASIBLE TO DEVELOP THE PROPERTY.
We are currently an exploration stage mining company. Our only mining asset is
one mining claim on the Property. The Property does not have any proven or
probable reserves. A "reserve," as defined by the SEC, is that part of a mineral
deposit which could be economically and legally extracted or produced at the
time of the reserve determination. A reserve requires a feasibility study
demonstrating with reasonable certainty that the deposit can be economically
extracted and produced. We have not carried out any feasibility study with
regard to the Property. As a result, we currently have no reserves and there are
no assurances that we will be able to prove that there are reserves on the
Property.
WE MAY NEVER FIND COMMERCIALLY VIABLE GOLD OR OTHER RESERVES.
Mineral exploration and development involve a high degree of risk and few
properties that are explored are ultimately developed into producing mines. We
cannot assure you that any future mineral exploration and development activities
will result in any discoveries of proven or probable reserves as defined by the
SEC since such discoveries are remote. Further, we cannot provide any assurance
that, even if we discover commercial quantities of mineralization, a mineral
property will be brought into commercial production. Development of our mineral
properties will follow only upon obtaining sufficient funding and satisfactory
exploration results.
WE WILL REQUIRE SIGNIFICANT ADDITIONAL CAPITAL TO CONTINUE OUR EXPLORATION
ACTIVITIES, AND, IF WARRANTED, TO DEVELOP MINING OPERATIONS.
Exploration activities and, if warranted, development of the Property will
involve significant expenditures. We will be required to raise significantly
more capital in order to fully develop the Property for mining production
assuming that economically viable reserves exist. There is no assurance that the
7
exploration will disclose potential for mineral development and no assurance
that any such development would be financially productive. Our ability to obtain
necessary funding depends upon a number of factors, including the price of gold
and other base metals and minerals which we are able to mine, the status of the
national and worldwide economy and the availability of funds in the capital
markets. If we are unable to obtain the required financing for these or other
purposes, our exploration activities would be delayed or indefinitely postponed,
and this would likely, eventually, lead to failure of our Company. Even if
financing is available, it may be on terms that are not favorable to us, in
which case, our ability to become profitable or to continue operating would be
adversely affected. If we are unable to raise funds to continue our exploration
and feasibility work on the Property, or if commercially viable reserves are not
present, the market value of our securities will likely decline, and our
investors may lose some or all of their investment.
WE HAVE INCURRED LOSSES SINCE OUR INCORPORATION AND SINCE THE COMPANY BEGAN ITS
EXPLORATION STAGE. WE MAY NEVER BE PROFITABLE WHICH RAISES SUBSTANTIAL DOUBT
ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN.
Since the Company was incorporated on September 5, 1975, we have had limited
operations and incurred operating losses. As of April 30, 2011, our accumulated
deficit since June 11, 2010 when we began our exploration stage is $64,743. As
we are just beginning exploration activities on the Property, we expect to incur
additional losses in the foreseeable future, and such losses may be significant.
To become profitable, we must be successful in raising capital to continue with
our exploration activities, discover economically feasible mineralization
deposits and establish reserves, successfully develop the Property and finally
realize adequate prices on our minerals in the marketplace. It could be years
before we receive any revenues from gold and mineral production, if ever. Thus,
we may never be profitable. Even if we do achieve profitability, we may not be
able to sustain or increase profitability on a long-term basis. These
circumstances raise substantial doubt about our ability to continue as a going
concern as described in Note 2 of the Notes to Financial Statements included in
this Report. If we are unable to continue as a going concern, investors will
likely lose all of their investment in the Company.
BECAUSE WE HAVE NOT YET COMMENCED EXPLORATION OPERATIONS, EVALUATING OUR
BUSINESS IS DIFFICULT.
Though the Company was incorporated on September 5, 1975 we only began the
exploration stage of our business on June 11, 2010. We have not earned revenues
as of the date of this Report and have incurred total losses of $64,743 from
June 11, 2010 to April 30, 2011. Accordingly, our business and our future
prospects cannot be evaluated due to our lack of operating history. Potential
investors should be aware of the difficulties normally encountered by
exploration stage companies and the high rate of failure of such enterprises. In
addition, there is no guarantee that we will commence business operations. Even
if we do commence operations, at present, we do not know when.
Furthermore, prior to completion of our exploration stage, we anticipate that we
will incur increased operating expenses without realizing any revenues. We
therefore expect to incur significant losses into the foreseeable future. We
recognize that if we are unable to generate significant revenues from
development of the Claim and any production of minerals from the Claim, we will
not be able to earn profits or continue operations.
VERY FEW MINERAL PROPERTIES ARE ULTIMATELY DEVELOPED INTO PRODUCING MINES.
The business of exploration for minerals and mining involves a high degree of
risk. Few properties that are explored are ultimately developed into producing
mines. At present, the Claim has no known body of commercial mineralization.
Most exploration projects do not result in the discovery of commercially
mineable deposits of mineralization.
Substantial expenditures are required for the Company to establish
mineralization reserves through drilling, to develop metallurgical processes, to
extract the metal from the ore and, in the case of new properties, to develop
the mining and processing facilities and infrastructure at any site chosen for
mining.
Although substantial benefits may be derived from the discovery of a major
mineral deposit, we cannot assure you that the Company will discover minerals in
sufficient quantities to justify commercial operations or that it can obtain the
funds required for development on a timely basis. The economics of developing
precious and base metal mineral properties is affected by many factors including
the cost of operations, variations in the grade of ore mined, fluctuations in
metal markets, costs of processing equipment and other factors such as
government regulations, including regulations relating to royalties, allowable
production, importing and exporting of minerals and environmental protection.
8
HISTORICAL PRODUCTION OF MINERALS AT PROPERTIES IN THE AREA OF THE CLAIM MAY NOT
BE INDICATIVE OF THE POTENTIAL FOR FUTURE DEVELOPMENT OR REVENUE.
Historical production of metals and minerals from mines in the area of the Claim
cannot be relied upon as an indication that the Claim will have commercially
feasible reserves. Investors in our securities should not rely on historical
operations of mines in the area of the Claim as an indication that we will be
able to place the Property into commercial production. We expect to incur losses
unless and until such time as the Property enters into commercial production and
produces sufficient revenue to fund our continuing operations.
FLUCTUATING GOLD, METAL AND MINERAL PRICES COULD NEGATIVELY IMPACT OUR BUSINESS
PLAN.
The potential for profitability of our gold and other metal and mineral mining
operations and the value of the Property will be directly related to the market
price of gold and the metals and minerals that we mine. Historically, gold and
other mineral prices have widely fluctuated, and are influenced by a wide
variety of factors, including inflation, currency fluctuations, regional and
global demand and political and economic conditions. Fluctuations in the price
of gold and other minerals that we mine may have a significant influence on the
market price of our common stock and a prolonged decline in these prices will
have a negative effect on our results of operations and financial condition.
RECLAMATION OBLIGATIONS ON THE PROPERTY AND OUR MINING OPERATIONS, IF ANY, COULD
REQUIRE SIGNIFICANT ADDITIONAL EXPENDITURES.
We are responsible for the reclamation obligations related to any exploratory
and mining activities located on the Property. Since we have only begun
exploration activities, we cannot estimate these costs at this time. We may be
required to file for a reclamation bond for any mining operations which we
conduct, and the cost of such a bond will be significant. We do not currently
have an estimate of the total reclamation costs for mining operations on the
Property. The satisfaction of current and future bonding requirements and
reclamation obligations will require a significant amount of capital. There is a
risk that we will be unable to fund these additional bonding requirements, and
further, that increases to our bonding requirements or excessive actual
reclamation costs will negatively affect our financial position and results of
operation.
TITLE TO MINERAL PROPERTIES CAN BE UNCERTAIN, AND WE ARE AT RISK OF LOSS OF
OWNERSHIP OF OUR PROPERTY.
Our ability to explore and mine the Property depends on the validity of title to
the Property. The Property consists of a mining claim. Unpatented mining claims
are effectively only a lease from the government to extract minerals; thus an
unpatented mining claim is subject to contest by third parties or the
government. These uncertainties relate to such things as the sufficiency of
mineral discovery, proper posting and marking of boundaries, failure to meet
statutory guidelines, assessment work and possible conflicts with other claims
not determinable from descriptions of record. Since a substantial portion of all
mineral exploration, development and mining now occurs on unpatented mining
claims, this uncertainty is inherent in the mining industry. We have not
obtained a title opinion on the Property. Thus, there may be challenges to the
title to the Property which, if successful, could impair development and/or
operations.
OUR ONGOING OPERATIONS ARE SUBJECT TO ENVIRONMENTAL RISKS, WHICH COULD EXPOSE US
TO SIGNIFICANT LIABILITIES, DELAY, SUSPENSION OR TERMINATION OF OUR OPERATIONS.
Mining exploration and exploitation activities are subject to national,
provincial and local laws, regulations and policies, including laws regulating
the removal of natural resources from the ground and the discharge of materials
into the environment. These regulations mandate, among other things, the
maintenance of air and water quality standards and land reclamation. They also
set forth limitations on the generation, transportation, storage and disposal of
solid and hazardous waste. Exploration and exploitation activities are also
subject to national, state and local laws and regulations which seek to maintain
health and safety standards by regulating the design and use of exploration
methods and equipment.
National and state agencies may initiate enforcement activities against our
Company. The agencies involved, generally, can levy significant fines per day of
each violation, issue and enforce orders for clean-up and removal, and enjoin
ongoing and future activities. Our inability to reach acceptable agreements with
agencies in question would have a material adverse effect on us and our ability
to continue as a going concern.
Environmental and other legal standards imposed by national, state or local
authorities are constantly evolving, and typically in a manner which will
require stricter standards and enforcement, and increased fines and penalties
for non-compliance. Such changes may prevent us from conducting planned
9
activities or increase our costs of doing so, which would have material adverse
effects on our business. Moreover, compliance with such laws may cause
substantial delays or require capital outlays in excess of those anticipated,
thus causing an adverse effect on us. Additionally, we may be subject to
liability for pollution or other environmental damages that we may not be able
to or elect not to insure against due to prohibitive premium costs and other
reasons. Unknown environmental hazards may exist on the Property or upon
properties that we may acquire in the future caused by previous owners or
operators, or that may have occurred naturally.
OUR INDUSTRY IS HIGHLY COMPETITIVE, ATTRACTIVE MINERAL LANDS ARE SCARCE AND WE
MAY NOT BE ABLE TO OBTAIN QUALITY PROPERTIES OR RECRUIT AND RETAIN QUALIFIED
EMPLOYEES.
We compete with many companies in the mining industry, including large,
established mining companies with capabilities, personnel and financial
resources that far exceed our limited resources. In addition, there is a limited
supply of desirable mineral lands available for claim-staking, lease or
acquisition in Nevada, and other areas where we may conduct exploration
activities. We are at a competitive disadvantage in acquiring mineral
properties, since we compete with these larger individuals and companies, many
of which have greater financial resources and larger technical staffs. Likewise,
our competition extends to locating and employing competent personnel and
contractors to prospect, develop and operate mining properties. Many of our
competitors can offer attractive compensation packages that we may not be able
to meet. Such competition may result in our Company being unable not only to
acquire desired properties, but to recruit or retain qualified employees or to
acquire the capital necessary to fund our operation and advance our properties.
Our inability to compete with other companies for these resources would have a
material adverse effect on our results of operation and business.
BECAUSE MARKET FACTORS IN THE MINING BUSINESS ARE OUT OF OUR CONTROL, WE MAY NOT
BE ABLE TO MARKET ANY MINERALS THAT MAY BE FOUND. The mining industry, in
general, is intensely competitive and we can provide no assurance to investors
that even if minerals are discovered, a ready market will exist from the sale of
any ore found. Numerous factors beyond our control may affect the marketability
of metals. These factors include market fluctuations, the proximity and capacity
of natural resource markets and processing equipment, government regulations,
including regulations relating to prices, taxes, royalties, land tenure, land
use, importing and exporting of minerals and environmental protection. The exact
effect of these factors cannot be accurately predicted, but the combination of
these factors may result in our not receiving an adequate return on invested
capital.
WE DEPEND ON OUR PRINCIPAL EXECUTIVE OFFICER AND THE LOSS OF THIS INDIVIDUAL
COULD ADVERSELY AFFECT OUR BUSINESS.
Our Company is completely dependent on Jeffrey Rochlin, our President, Principal
Executive Officer, Principal Financial Officer and Director. As of the date of
this Report, Jeffrey Rochlin was our sole executive officer and one of our
directors. The loss of his services would significantly and adversely affect our
business. We have no life insurance on the life of Jeffrey Rochlin.
MANAGEMENT HAS ONLY LIMITED EXPERIENCE IN RESOURCE EXPLORATION.
The Company's management, while experienced in business operations, has only
limited experience in resource exploration. The sole executive officer of the
Company has no significant technical training or experience in resource
exploration or mining. The Company relies on the opinions of consulting
geologists that it retains from time to time for specific exploration projects
or property reviews. As a result of management's inexperience, there is a higher
risk of the Company being unable to complete its business plan.
THE NATURE OF MINERAL EXPLORATION AND PRODUCTION ACTIVITIES INVOLVES A HIGH
DEGREE OF RISK AND THE POSSIBILITY OF UNINSURED LOSSES THAT COULD MATERIALLY AND
ADVERSELY AFFECT OUR OPERATIONS.
Exploration for minerals is highly speculative and involves greater risk than
many other businesses. Many exploration programs do not result in the discovery
of economically feasible mineralization. Few properties that are explored are
ultimately advanced to the stage of producing mines. We are subject to all of
the operating hazards and risks normally incident to exploring for and
developing mineral properties such as, but not limited to:
10
* economically insufficient mineralized material;
* fluctuations in production costs that may make mining uneconomical;
* labor disputes;
* unanticipated variations in grade and other geologic problems;
* environmental hazards;
* water conditions;
* difficult surface or underground conditions;
* industrial accidents; personal injury, fire, flooding, cave-ins and
landslides;
* metallurgical and other processing problems;
* mechanical and equipment performance problems; and
* decreases in revenues and reserves due to lower gold and mineral
prices.
Any of these risks can materially and adversely affect, among other things, the
development of properties, production quantities and rates, costs and
expenditures and production commencement dates. We currently have no insurance
to guard against any of these risks. If we determine that capitalized costs
associated with any of our mineral interests are not likely to be recovered, we
would incur a write-down of our investment in these interests. All of these
factors may result in losses in relation to amounts spent which are not
recoverable.
OUR OPERATIONS ARE SUBJECT TO PERMITTING REQUIREMENTS WHICH COULD REQUIRE US TO
DELAY, SUSPEND OR TERMINATE FUTURE OPERATIONS ON OUR MINING PROPERTY.
Our operations, including our planned exploration activities on the Property,
require permits from state and national governmental agencies. We may be unable
to obtain these permits in a timely manner, on reasonable terms or at all. If we
cannot obtain or maintain the necessary permits, or if there is a delay in
receiving these permits, our timetable and business plan for exploration of the
Property will be adversely affected.
MINERAL EXPLORATION INVOLVES A HIGH DEGREE OF RISK AGAINST WHICH THE COMPANY IS
NOT CURRENTLY INSURED.
Unusual or unexpected rock formations, formation pressures, fires, power
outages, labor disruptions, flooding, cave-ins, landslides and the inability to
obtain suitable or adequate machinery, equipment or labor are risks involved in
the operation of mines and the conduct of exploration programs. The Company has
relied on and will continue to rely upon consultants and others for exploration
expertise.
It is not always possible to fully insure against such risks, and the Company
may decide not to take out insurance against such risks as a result of high
premiums or other reasons. Should such liabilities arise, they could reduce or
eliminate any future profitability and result in increasing costs and a decline
in the value of the Company's shares. The Company does not currently maintain
insurance against environmental risks relating to the Claim.
11
THE COSTS TO MEET OUR REPORTING AND OTHER REQUIREMENTS AS A PUBLIC COMPANY
SUBJECT TO THE SECURITIES EXCHANGE ACT OF 1934 WILL BE SUBSTANTIAL AND MAY
RESULT IN US HAVING INSUFFICIENT FUNDS TO EXPAND OUR BUSINESS OR EVEN TO MEET
ROUTINE BUSINESS OBLIGATIONS.
Since having become subject to the reporting requirements of the Securities
Exchange Act of 1934, we will incur ongoing expenses associated with
professional fees for accounting, legal and a host of other expenses for annual
reports and proxy statements. We estimate that these costs will range up to
$25,000 per year for the next few years and will be higher if our business
volume and activity increases. These obligations will reduce our ability and
resources to fund other aspects of our business and may prevent us from meeting
our normal business obligations.
RISKS ASSOCIATED WITH OUR COMMON STOCK
TRADING ON THE OTC BULLETIN BOARD MAY BE VOLATILE AND SPORADIC, WHICH COULD
DEPRESS THE MARKET PRICE OF OUR COMMON SHARES AND MAKE IT DIFFICULT FOR OUR
SHAREHOLDERS TO RESELL THEIR SHARES.
Our common shares are quoted on the OTC Bulletin Board service of the Financial
Industry Regulatory Authority (FINRA). Trading in stock quoted on the OTC
Bulletin Board is often thin and characterized by wide fluctuations in trading
prices due to many factors that may have little to do with our operations or
business prospects. This volatility could depress the market price of our common
shares for reasons unrelated to operating performance. Moreover, the OTC
Bulletin Board is not a stock exchange, and trading of securities on the OTC
Bulletin Board is often more sporadic than the trading of securities listed on a
quotation system like NASDAQ or a stock exchange like the American Stock
Exchange. Accordingly, our shareholders may have difficulty reselling any of
their shares.
OUR STOCK IS A PENNY STOCK. TRADING OF OUR STOCK MAY BE RESTRICTED BY THE SEC'S
PENNY STOCK REGULATIONS AND FINRA'S SALES PRACTICE REQUIREMENTS, WHICH MAY LIMIT
A STOCKHOLDER'S ABILITY TO BUY AND SELL OUR STOCK.
Our stock is a penny stock. The Securities and Exchange Commission has adopted
Rule 15g-9 which generally defines "penny stock" to be any equity security that
has a market price (as defined) less than $5.00 per share or an exercise price
of less than $5.00 per share, subject to certain exceptions. Our securities are
covered by the penny stock rules; which impose additional sales practice
requirements on broker-dealers who sell to persons other than established
customers and "accredited investors". The term "accredited investor" refers
generally to institutions with assets in excess of $5,000,000 or individuals
with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or
$300,000 jointly with their spouse. The penny stock rules require a
broker-dealer, prior to a transaction in a penny stock not otherwise exempt from
the rules, to deliver a standardized risk disclosure document in a form prepared
by the SEC which provides information about penny stocks and the nature and
level of risks in the penny stock market. The broker-dealer also must provide
the customer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction and
monthly account statements showing the market value of each penny stock held in
the customer's account. The bid and offer quotations, and the broker-dealer and
salesperson compensation information, must be given to the customer orally or in
writing prior to effecting the transaction and must be given to the customer in
writing before or with the customer's confirmation. In addition, the penny stock
rules require that prior to a transaction in a penny stock not otherwise exempt
from these rules; the broker-dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor interest
in, and limit the marketability of, our common shares.
FINRA'S SALES PRACTICE REQUIREMENTS MAY ALSO LIMIT A STOCKHOLDER'S ABILITY TO
BUY AND SELL OUR STOCK.
In addition to the "penny stock" rules promulgated by the Securities and
Exchange Commission (see above for a discussion of penny stock rules), FINRA
rules require that in recommending an investment to a customer, a broker-dealer
must have reasonable grounds for believing that the investment is suitable for
that customer. Prior to recommending speculative low priced securities to their
non-institutional customers, broker-dealers must make reasonable efforts to
obtain information about the customer's financial status, tax status, investment
objectives and other information. Under interpretations of these rules, FINRA
believes that there is a high probability that speculative low priced securities
will not be suitable for at least some customers. FINRA requirements make it
more difficult for broker-dealers to recommend that their customers buy our
common shares, which may limit your ability to buy and sell our stock and have
an adverse effect on the market for our shares.
12
ONE SHAREHOLDER OWNS 86.46% OF OUR OUTSTANDING COMMON STOCK, WHICH LIMITS OTHER
SHAREHOLDERS' ABILITY TO INFLUENCE THE OUTCOME OF ANY SHAREHOLDER VOTE.
Our sole executive officer and a director beneficially owns 86.46% of our
outstanding common stock as of the date of this Report. Under our Certificate of
Incorporation and the laws of the State of Nevada, the vote of a majority of the
shares voting at a meeting at which a quorum is present is generally required to
approve most shareholder action. As a result, he is able to control the outcome
of shareholder votes, including votes concerning the election of directors,
amendments to our Certificate of Incorporation or proposed mergers or other
significant corporate transactions.
CERTAIN COMPANY ACTIONS AND THE INTERESTS OF STOCKHOLDERS MAY DIFFER.
The voting control of the Company could discourage others from initiating a
potential merger, takeover or another change-of-control transaction that could
be beneficial to stockholders. As a result, the value of stock could be harmed.
WE HAVE NEVER PAID A DIVIDEND ON OUR COMMON STOCK AND WE DO NOT ANTICIPATE
PAYING ANY IN THE FORESEEABLE FUTURE.
We have not paid a cash dividend on our common stock to date, and we do not
intend to pay cash dividends in the foreseeable future. Our ability to pay
dividends will depend on our ability to successfully develop one or more
properties and generate revenue from operations. Notwithstanding, we will likely
elect to retain earnings, if any, to finance our growth. Future dividends may
also be limited by bank loan agreements or other financing instruments that we
may enter into in the future. The declaration and payment of dividends will be
at the discretion of our Board of Directors.
WE HAVE NOT VOLUNTARILY IMPLEMENTED VARIOUS CORPORATE GOVERNANCE MEASURES, IN
THE ABSENCE OF WHICH, SHAREHOLDERS MAY HAVE MORE LIMITED PROTECTIONS AGAINST
INTERESTED DIRECTOR TRANSACTIONS, CONFLICTS OF INTEREST AND SIMILAR MATTERS.
Recent U. S. legislation, including the Sarbanes-Oxley Act of 2002, has resulted
in the adoption of various corporate governance measures designed to promote the
integrity of the corporate management and the securities markets. Some of these
measures have been adopted in response to legal requirements. Others have been
adopted by companies in response to the requirements of national securities
exchanges, such as the NYSE or NASDAQ Stock Market, on which their securities
are listed. Among the corporate governance measures required under the rules of
national securities exchanges and NASDAQ are those that address board of
directors' independence, audit committee oversight and the adoption of a code of
ethics. We have not yet adopted any of these corporate governance measures and,
since our securities are not listed on a national securities exchange or NASDAQ,
we are not required to do so. It is possible that if we were to adopt some or
all of these corporate governance measures, shareholders would benefit from
somewhat greater assurances that internal corporate decisions were being made by
disinterested directors and that policies had been implemented to define
responsible conduct. For example, in the absence of nominating and compensation
committees comprised of at least a majority of independent directors, decisions
concerning matters such as compensation packages to our senior officers and
recommendations for director nominees may be made by a majority of directors who
have an interest in the outcome of the matters being decided. Prospective
investors should bear in mind our current lack of corporate governance measures
in formulating their investment decisions.
ITEM 1B UNRESOLVED STAFF COMMENTS
None.
ITEM 2 PROPERTIES
None.
ITEM 3 LEGAL PROCEEDINGS
There are no pending, nor to our knowledge threatened, legal proceedings against
the Company
ITEM 4 REMOVED AND RESERVED
13
PART II
ITEM 5 MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
On November 10, 2009, the Company's common stock was approved for quotation on
the OTC Bulletin Board under the symbol "CAML". The Company's common stock was
traded in the pink sheets prior thereto. The following table sets forth the
quarterly high and low prices of the common stock for the last two years. They
reflect inter-dealer prices, without retail mark-up, mark-down or commission,
and may not necessarily represent actual transactions
2011 High Low
---- ---- ---
First July 31, 2010 0.035 0.015
Second October 31, 2010 0.05 0.01
Third January 31, 2011 0.04 0.01
Fourth April 30, 2011 0.06 0.015
2010 High Low
---- ---- ---
First July 31, 2009 0.05 0.05
Second October 31, 2009 0.05 0.011
Third January 31, 2010 0.01 0.01
Fourth April 30, 2010 0.129 0.005
As of April 30, 2011, the Company had approximately 410 shareholders of record
of the Company's common stock. No dividends have been declared on the stock in
the last two fiscal years and the Board of Directors does not presently intend
to pay dividends in the near future.
ITEM 6 SELECTED FINANCIAL DATA
Not Applicable.
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD LOOKING STATEMENTS
This Report contains projections and statements relating to Company that
constitute "forward-looking statements." These forward-looking statements may be
identified by the use of predictive, future-tense or forward-looking
terminology, such as "intends," "believes," "anticipates," "expects,"
"estimates," "may," "will," or similar terms. Such statements speak only as of
the date of such statement, and the Company undertakes no ongoing obligation to
update such statements. These statements appear in a number of places in this
Report and include statements regarding the intent, belief or current
expectations of the Company, and its respective directors, officers or advisors
with respect to, among other things: (1) trends affecting the Company's
financial condition, results of operations or future prospects, (2) the
Company's business and growth strategies and (3) the Company's financing plans
and forecasts. Potential investors are cautioned that any such forward-looking
statements are not guarantees of future performance and involve significant
risks and uncertainties, and that, should conditions change or should any one or
more of the risks or uncertainties materialize or should any of the underlying
assumptions of the Company prove incorrect, actual results may differ materially
from those projected in the forward-looking statements as a result of various
factors, some of which are unknown. The factors that could adversely affect the
actual results and performance of the Company include, without limitation, the
Company's inability to raise additional funds to support operations and capital
expenditures, the Company's inability to effectively manage its growth, the
Company's inability to achieve greater and broader market acceptance in existing
and new market segments, the Company's inability to successfully compete against
existing and future competitors, the Company's reliance on independent
manufacturers and suppliers, disruptions in the supply chain, the Company's
inability to protect its intellectual property, other factors described
elsewhere in this Report, or other reasons. All forward-looking statements
attributable to the Company or persons acting on its behalf are expressly
qualified in their entirety by the foregoing cautionary statements and the "Risk
Factors" described herein.
14
The following discussion of our financial condition and plan of operation should
be read in conjunction with the Company's financial statements, the notes to
those statements and the information included elsewhere in this Report. This
discussion includes forward-looking statements that involve risks and
uncertainties. As a result of many factors, such as those set forth under "RISK
FACTORS" and elsewhere in this Report, our actual results may differ materially
from those anticipated in these forward-looking statements.
OVERVIEW
The Company's revenue for the period ended April 30, 2011 was $0 compared with
$0 for the previous period. Net loss for the year ended April 30, 2011 was
$72,679 compared with a loss for the previous year of $43,619. The loss in the
current period and the previous period was principally due to ongoing expenses
for a public company.
The balance sheets for the period show total assets of $18,774 compared with
$14,290 for the previous period.
PLAN OF OPERATION
The Company's plan of operations is to conduct mineral exploration activities on
the mineral claim Property as described below in order to assess whether the
Claims possess commercially exploitable mineral deposits. (Commercially
exploitable mineral deposits are deposits which are suitably adequate or
prepared for productive use of a natural accumulation of minerals or ores). This
exploration program is designed to explore for commercially viable deposits of
gold, silver or other valuable minerals. (Commercially viable deposits are
deposits which are suitably adequate or prepared for productive use of an
economically workable natural accumulation of minerals or ores). The Company has
not, nor has any predecessor, identified any commercially exploitable reserves
of these minerals on our Claims. (A reserve is an estimate within specified
accuracy limits of the valuable metal or mineral content of known deposits that
may be produced under current economic conditions and with present technology).
The Company is an exploration stage company and there is no assurance that a
commercially viable mineral deposit exists on its Claims.
Upon acquiring a lease on the Property, David A. Wolfe, Professional Geologist,
prepared a geologic report for the Company on the mineral exploration potential
of the Claims. Mr. Wolfe is the President of Timberwolf Minerals LTD, the
company from whom the Property is leased. Included in Mr. Wolfe's report is a
recommended exploration program which consists of mapping, sampling, staking
additional claims and drilling.
At this time the Company is uncertain of the extent of mineral exploration it
will conduct before concluding that there are, or are not, commercially viable
minerals on the Claims. Further phases beyond the current exploration program
will be dependent upon numerous factors such as Mr. Wolfe's recommendations
based upon ongoing exploration program results and the Company's available
funds.
EXPLORATION PROGRAM
The following exploration program has been recommended by Mr. Wolfe. At this
time we do not have the available funds to commence however we expect to proceed
within the next 12 months.
Consultation with James Wright, geophysicist, who has done most of the
geophysical interpretation for Newmont and Midway Gold at Midway, indicates that
detailed gravity should be effective in defining the range-front structure
within the target area. This could be followed by several lines of CSAMT to
identify silicified structures.
The geophysics could then be followed up with 4-6 drill holes designed to test
bedrock for alteration and mineralization. The purpose of the first round of
drill holes is simply to establish the existence of an altered and mineralized
system. Favorable results would then dictate a more thorough on-going effort in
the area. With well-orchestrated planning, it is possible to complete this work
before making a decision to spend the funds necessary to file the claims with
the BLM.
The area can be tested with the following estimated budget, exclusive of land
costs:
15
GRAVITY SURVEY -- 400m line spacing along pediment, 100m station
spacing, 2.0mi X 3.0 mi $ 16-18,000
CSAMT -- 2 lines @ 1.5 km/line (minimum) $ 8-10,000
TOTAL GEOPHYSICS* $ 24-28,000
PERMITTING -- permit for 10 holes including permit preparation
& bond $ 8,000
DRILLING -- 5 holes @ 500 ft/hole @ $25/ft $ 63,000
ASSAYING -- 200 ft/hole, 5 ft/sample, 5 holes,
200 samples @ $35/sample $ 7,000
GEOLOGIST -- drilling supervision, reports, etc 20 Days @ $500/D
+ $125/D expenses $ 12,500
SUPPLIES, WATER, BACKHOE, RECLAMATION $ 7,600
------------
TOTAL ESTIMATED COST OF PROGRAM $122-126,100
============
TOTAL ESTIMATED COST OF PROGRAM W/ SELECTIVE GRAVITY* $ 118,100
============
----------
* Geophysics includes interpretation reports by J. Wright. Figures could
probably be reduced to $10,000 with more selective gravity line placement.
LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operating activities for the year ended April 30, 2011 was
$(30,083) compared with $(15,286) in 2010. The increase was due primarily to an
increase in professional fees. Net cash used by investing activities for the
year ended April 30, 2011 was $(11,457) compared with $0 in 2010. The increase
was due to the leased mineral property. Net cash provided by financing
activities for the year ended April 30, 2011 was $35,000 compared with $29,053
in 2010, the increase was due to additional funds advanced from a related party.
There is a cash balance of $7,317 as of April 30, 2011 compared with $13,857 for
the previous period.
Off-Balance Sheet Arrangements
We do not have any 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 investors.
ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable
16
ITEM 8 FINANCIAL STATEMENTS
Reports of Independent Registered Public Accounting Firms 18
Balance Sheets 19
Statements of Operations 20
Statement of Changes in Stockholder's (Deficit) 21
Statements of Cash Flows 22
Notes to Financial Statements 23
17
Report of Independent Registered Public Accounting Firm
Board of Directors
Camelot Corporation
We have audited the accompanying balance sheets of Camelot Corporation, as of
April 30, 2011, and 2010 and the related statements of operations, stockholders'
(Deficit), and cash flows for the year ended April 30, 2011 and 2010. 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 the standards of the Public Company
Accounting Oversight Board (United States of America). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. The company is not
required to have, nor were we engaged to perform an audit of its internal
control over financial reporting. Our audits included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company's internal control over financial
reporting. Accordingly, we express no such opinion. 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 our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Camelot Corporation as of April
30, 2011, and 2010 and the results of its operations and cash flows for the year
ended April 30, 2011, and 2010 in conformity with accounting principles
generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As described in Note 2, the Company
has recurring losses, has negative working capital and has a total stockholders'
deficit, which raise substantial doubt about its ability to continue as a going
concern. Management's plans in regard to this matter are also discussed in Note
2. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
/s/ Schumacher & Associates, Inc.
-------------------------------------------
SCHUMACHER & ASSOCIATES, INC.
Littleton, Colorado
July 25, 2011
18
CAMELOT CORPORATION
(An Exploration Stage Company)
Balance Sheets
Year Ended Year Ended
April 30, April 30,
2011 2010
------------ ------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 7,317 $ 13,857
Prepaid Expenses -- 433
------------ ------------
TOTAL CURRENT ASSETS 7,317 14,290
Other assets
Mineral rights-leased (Note 7) 11,457 --
------------ ------------
TOTAL ASSETS $ 18,774 $ 14,290
============ ============
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 66,948 $ 34,234
Accrued interest payable 12,544 3,095
Advances payable, related party 50,025 15,025
------------ ------------
TOTAL CURRENT LIABILITIES 129,517 52,354
Note payable 117,000 117,000
------------ ------------
TOTAL LIABILITIES 246,517 169,354
------------ ------------
COMMITMENTS AND CONTINGENCIES (NOTES 1,2, 4, 5, 6, 7, AND 8)
STOCKHOLDERS' (DEFICIT)
Preferred stock $0.01 par value 100,000,000 shares authorized;
none issued -- --
Common stock $0.01 par value; 50,000,000 shares authorized;
2,006,528 shares issued and outstanding at April 30,2011 and 2010 20,065 20,065
Additional paid-in-capital 32,849,816 32,849,816
Accumulated deficit (33,032,881) (33,024,945)
Accmulated deficit during the exploration stage (64,743) --
------------ ------------
TOTAL STOCKHOLDERS' (DEFICIT) (227,743) (155,064)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) $ 18,774 $ 14,290
============ ============
The accompanying notes are an integral part of these financial statements.
19
CAMELOT CORPORATION
(An Exploration Stage Company)
Statements of Operations
For the
period from
June 11,2010,
(date of
exploration stage)
Year Ended Year Ended through
April 30, April 30, April 30,
2011 2010 2011
---------- ---------- ----------
Revenues $ -- $ -- $ --
Operating Expenses
Professional fees 57,014 36,426 51,079
Other 6,216 583 5,004
---------- ---------- ----------
TOTAL OPERATING EXPENSES 63,230 37,009 56,083
---------- ---------- ----------
(LOSS) FROM OPERATIONS (63,230) (37,009) (56,083)
OTHER INCOME (EXPENSE)
Interest (expense) (9,449) (6,610) (8,660)
Settlement Expense -- -- --
---------- ---------- ----------
NET (LOSS) (72,679) (43,619) (64,743)
========== ========== ==========
Loss per share basic and diluted $ (0.04) $ (0.02) $ (0.03)
========== ========== ==========
Weighted average number of common shares outstanding
basic and diluted 2,006,528 2,006,528 2,006,528
========== ========== ==========
The accompanying notes are an integral part of these financial statements.
20
CAMELOT CORPORATION
(An Exploration Stage Company)
Statement of Stockholders' (Deficit)
For the Period from May 1, 2008 to April 30,2011
Deficit
Accumulated
Preferred Stock Common Stock Additional During Total
--------------- ------------------ Paid-in Accumulated Exploration Stockholders'
Shares Amount Shares Amount Capital (Deficit) Stage Deficit
------ ------ ------ ------ ------- --------- ----- -------
BALANCE MAY 1, 2008 -- $ -- 2,006,528 $ 20,065 $32,846,301 $(32,978,602) $ -- $ (112,236)
Net income April 30, 2009 -- -- -- -- -- 5,729 -- 5,729
----- ---- --------- -------- ----------- ------------ -------- ----------
BALANCE APRIL 30, 2009 -- -- 2,006,528 20,065 32,846,301 (32,972,873) -- (106,507)
===== ==== ========= ======== =========== ============ ======== ==========
Correction of error (Note 7) -- -- -- -- -- (8,453) -- (8,453)
----- ---- --------- -------- ----------- ------------ -------- ----------
Corrected balance, -- -- 2,006,528 20,065 32,846,301 (32,981,326) -- (114,960)
===== ==== ========= ======== =========== ============ ======== ==========
Contributed capital -- -- -- -- 3,515 -- -- 3,515
Net loss April 30, 2010 -- -- -- -- -- (43,619) -- (43,619)
----- ---- --------- -------- ----------- ------------ -------- ----------
BALANCE APRIL 30, 2010 -- -- 2,006,528 20,065 32,849,816 (33,024,945) -- (155,064)
===== ==== ========= ======== =========== ============ ======== ==========
Net loss April 30,2011 -- -- -- (7,936) (64,743) (72,679)
----- ---- --------- -------- ----------- ------------ -------- ----------
BALANCE APRIL 30, 2011 -- $ -- 2,006,528 $ 20,065 $32,849,816 $(33,032,881) $(64,743) $ (227,743)
===== ==== ========= ======== =========== ============ ======== ==========
The accompanying notes are an integral part of these financial statements.
21
CAMELOT CORPORATION
(An Exploration Stage Company)
Statements of Cash Flows
For the
period from
June 11,2010,
(date of
exploration stage)
Year Ended Year Ended through
April 30, April 30, April 30,
2011 2010 2011
---------- ---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (72,679) $ (43,619) $ (64,743)
Adjustments to reconcile net income (loss) to net cash
used in operating activities
Changes in operating assets and liabilities:
Decrease prepaid expense 433 (433) 379
Increase in accrued interest payable 9,449 3,095 8,660
Increase in accounts payable 32,714 25,671 39,478
---------- ---------- ----------
Net cash (used in) operating activities (30,083) (15,286) (16,226)
---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Mineral rights - leased (11,457 -- (11,457)
---------- ---------- ----------
Net cash (used in) investing activities (11,457) -- (11,457)
---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Paid in capital 3,515
Advances from related party 35,000 25,538 35,000
---------- ---------- ----------
Net cash provided by financing activities 35,000 29,053 35,000
---------- ---------- ----------
Net increase in cash and cash equivalents (6,540) 13,767 7,317
Cash and cash equivalents at beginning of period 13,857 90 --
---------- ---------- ----------
Cash and cash equivalents at end of period $ 7,317 $ 13,857 $ 7,317
========== ========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
2,006,528 shares issued and outstanding at April 30, 2011 and 2010
Interest $ -- $ -- $ --
========== ========== ==========
Income Taxes $ -- $ -- $ --
========== ========== ==========
SUPPLEMENTAL DISCLOSURES OF NON-CASH TRANSACTIONS
Exchange of accounts payable for note payable $ 117,000
==========
The accompanying notes are an integral part of these financial statements.
22
Camelot Corporation
(An Exploration Stage Company)
Notes to Financial Statements
April 30, 2011
1. OVERVIEW AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
Camelot Corporation, ("the Company") was incorporated under the laws of the
State of Colorado on September 5, 1975. The Company was formerly a holding
company but since it ceased operations in the fiscal year ended April 30, 1999,
the Company has had minimal operations. All previous business activities have
been discontinued. In May 2011 the Company was redomiciled to the State of
Nevada as part of a Migratory Merger as discussed in Note 9 of these Notes to
the Financial Statements.
Recently the Company has formulated a business plan to investigate the
possibilities of a viable mineral deposit on 10 leased mining claims located in
Esmeralda County, Nevada, USA.
The Company's fiscal year end is April 30.
REVENUE RECOGNITION
The Company has not generated any revenues since it ceased operations in 1999.
It is the Company's policy that revenues are recognized when persuasive evidence
of an arrangement exists, delivery has occurred (or service has been performed),
the sales price is fixed and determinable, and collectability is reasonably
assured.
CASH AND CASH EQUIVALENTS
The Company considers cash in banks, deposits in transit, and highly liquid debt
instruments purchased with original maturities of three months or less to be
cash and cash equivalents.
USE OF ESTIMATES
The preparation of financial statements in conformity with US GAAP requires
management to make estimates and assumptions that affect the reported amount 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 reporting period. Management routinely makes judgments and
estimates about the effects of matters that are inherently uncertain. Estimates
that are critical to the accompanying financial statements include the
identification and valuation of assets and liabilities, valuation of deferred
tax assets, and the likelihood of loss contingencies. Management bases its
estimates and judgments on historical experience and on various other factors
that are believed to be reasonable under the circumstances, the results of which
form the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results
could differ from these estimates. Estimates and assumptions are revised
periodically and the effects of revisions are reflected in the financial
statements in the period it is determined to be necessary.
FAIR VALUE OF FINANCIAL INSTRUMENTS
ASC 825, "Disclosures about Fair Value of Financial Instruments", requires
disclosure of fair value information about financial instruments. ASC 820, "Fair
Value Measurements" defines fair value, establishes a framework for measuring
fair value in generally accepted accounting principles, and expands disclosures
about fair value measurements. Fair value estimates discussed herein are based
upon certain market assumptions and pertinent information available to
management as of April 30, 2011.
The respective carrying values of certain on-balance-sheet financial instruments
approximate their fair values. These financial instruments include accounts
payable, advances payable, accrued liabilities and notes payable. Fair values
were assumed to approximate carrying values for these financial instruments
since they are short term in nature and their carrying amounts approximate fair
value, or they are receivable or payable on demand.
23
MINERAL PROPERTY ACQUISITION AND EXPLORATION COSTS
The Company has been in the exploration stage since June 11, 2010, and has not
yet realized any revenue from its operations. Mineral property acquisition costs
are initially capitalized in accordance with accounting standards. The Company
assesses the carrying costs for impairment at each fiscal quarter end. If proven
and probable reserves are established for a property and it has been determined
that a mineral property can be economically developed, capitalized costs will be
amortized using the units-of-production method over the estimated life of the
probable reserves. To date the Company has not established any proven or
probable reserves on its mineral properties. Mineral exploration costs are
expensed as incurred.
INCOME TAXES
Deferred income taxes are determined using the liability method under which
deferred tax assets and liabilities are based upon temporary differences between
the carrying amounts of assets and liabilities for financial and tax reporting
purposes and the effect of net operating loss carry-forwards. Deferred tax
assets are evaluated to determine if it is more likely than not that they will
be realized. Valuation allowances have been established to reduce the carrying
value of deferred tax assets in recognition of significant uncertainties
regarding their ultimate realization.
BASIC AND DILUTED EARNINGS (LOSS) PER SHARE
The Company computes earnings (loss) per share in accordance with ASC 260-10-45
"Earnings per Share",which requires presentation of both basic and diluted
earnings per share on the face of the statement of operations. Basic earnings
(loss) per share is computed by dividing net earnings (loss) available to common
shareholders by the weighted average number of outstanding common shares during
the period. Diluted earnings (loss) per share gives effect to all dilutive
potential common shares outstanding during the period. Dilutive earnings (loss)
per share excludes all potential common shares if their effect is anti-dilutive.
The Company has no potential dilutive instruments, and therefore, basic and
diluted earnings (loss) per share are equal.
STOCK BASED COMPENSATION
The Company accounts for common stock issued to employees for services based on
the fair value of the instruments issued, and accounts for common stock issued
to other than employees based on the fair value of the consideration received or
the fair value of the equity instruments, whichever is more reliably measurable.
The Company did not issue any option grants during 2011 to employees or
non-employees, and accordingly, has not recognized any stock based compensation
expense related to options.
RECENT ACCOUNTING PRONOUNCEMENTS
There were various accounting standards and updates recently issued, none of
which are expected to have a material impact on the Company's financial
position, operations, or cash flows.
2. GOING CONCERN
The Company's financial statements are prepared on a going concern basis, which
contemplates the realization of assets and the satisfaction of obligations in
the normal course of business. However, the Company has recurring losses, has
negative working capital, and has a total stockholders' deficit. The Company
does not currently have any revenue generating operations. These conditions
raise substantial doubt about the ability of the Company to continue as a going
concern.
In view of these matters, continuation as a going concern is dependent upon
continued operations of the Company, which in turn is dependent upon the
Company's ability to meets its financial requirements, raise additional capital,
and the success of its future operations. The financial statements do not
include any adjustments to the amount and classification of assets and
liabilities that may be necessary should the Company not continue as a going
concern.
Management plans to fund operations of the Company through advances from
existing shareholders, private placement of restricted securities or the
issuance of stock in lieu of cash for payment of services until such a time as a
business combination or other profitable investment may be achieved. There are
no written agreements in place for such funding or issuance of securities and
there can be no assurance that such will be available in the future. Management
believes that this plan provides an opportunity for the Company to continue as a
going concern.
24
3. CAPITAL STOCK
COMMON STOCK
On November 20, 2009, Daniel Wettreich sold 1,734,830 (post-merger basis) shares
of common stock to Jeffrey Rochlin. Following this transaction Mr. Rochlin now
controls 86.46% of the presently issued and outstanding common shares of the
Company. The total number of common shares authorized by the Company is
50,000,000 shares, par value $.01, of which 2,006,528 are issued and outstanding
at April 30, 2011.
PREFERRED STOCK
The Company has 100,000,000 authorized shares of $.01 par value preferred stock
with rights and preferences as designated by the board of directors at the time
of issuance. As of April 30, 2011 and April 30, 2010, the following series of
preferred stock were authorized, issued and outstanding:
Series of Number of Number of Shares Issued
Preferred Stock Shares Authorized and Outstanding
--------------- ----------------- ---------------
A 2,000 0
B 75,000 0
C 50,000 0
D 66,134 0
E 108,056 0
F 15,000 0
G 1,000,000 0
H 5,333,333 0
I 17,000,000 0
J 10,000,000 0
K 412,000 0
L 500,000 0
TOTALS 34,561,523 0
4. INCOME TAXES
Deferred income taxes arise from temporary timing differences in the recognition
of income and expenses for financial reporting and tax purposes. The Company's
deferred tax assets consist entirely of the benefit from net operating loss
(NOL) carryforwards. The net operating loss carryforwards, if not used, will
expire in various years through 2030, and are severely restricted as per the
Internal Revenue code due to the change in ownership. The Company's deferred tax
assets are offset by a valuation allowance due to the uncertainty of the
realization of the net operating loss carry forwards. Net operating loss
carryforwards may be further limited by other provisions of the tax laws.
The Company's deferred tax assets, valuation allowance, and change in valuation
allowance are as follows:
Estimated Change in
Estimated NOL NOL Tax Benefit Valuation Valuation Net Tax
Period Ending Carry-forward Expires from NOL Allowance Allowance Benefit
------------- ------------- ------- -------- --------- --------- -------
April 30, 2011 $266,298 Various $49,265 $(49,265) $(13.445) $ --
April 30, 2010 $193,619 Various $35,820 $(35,820) $(8,070) $ --
April 30, 2009 $150,000 Various $27,750 $(27,750) $ -- $ --
25
Income taxes at the statutory rate are reconciled to the Company's actual income
taxes as follows:
Income tax benefit at statutory rate resulting from net
operating loss carryforward (15.00%)
State tax (benefit) net of federal benefit (3.50%)
Deferred income tax valuation allowance 18.50%
------
Actual tax rate 0%
======
5. RELATED PARTY TRANSACTIONS
The Company's Chief Executive Officer & majority shareholder until November 20,
2009, advanced funds to pay creditors of the Company. During the year ended
April 30, 2009, a total of $99,188 was advanced and $105,287 was owed at year
end. Following the end of fiscal year 2009 and prior to the sale of his common
stock on November 20, 2009, Danny Wettreich advanced additional funds to pay
creditors of the Company. These advances were evidenced by a Demand Promissory
Note of the Company to Mr. Wettreich, which Note was sold to an outside investor
on November 20, 2009. (See note 6)
The Company uses the offices of its President for its minimal office facility
needs for no consideration. No provision for these costs has been provided since
it has been determined that they are immaterial.
During the year ended April 30, 2011, the company's current president advanced
$35,000 to the Company, and $50,025 was owed at April 30, 2011. The advances
bear an annual interest rate of six percent. As of April 30, 2011, accrued
interest payable of $2,429 is owed and has no specific repayment terms.
6. NOTE PAYABLE
The July 20, 2010 Promissory Note in the principal amount of $117,000, bears an
annual interest rate of six percent, is due and payable on November 30, 2015 and
is collateralized by all the assets of the Company. As of April 30, 2011 accrued
interest payable of $10,115 is owed on this note.
7. MINERAL LEASE AGREEMENT
The company entered into a mineral lease agreement with Timberwolf Minerals,
Ltd. on June 11, 2010. The cost of the initial lease payment was capitalized in
accordance with accounting standards. The agreement calls for a series of lease
payments to be made over a 6 year period, with a right to purchase all 10
unpatented mining claims before the start of the 7th year. The Company can
terminate the lease by giving Lessor a 30 day written notice. The following
table outlines the amounts due and payable for the next 5 years.
Lease Payment Due Amount of Payment
----------------- -----------------
June 8, 2012 $ 4,000
June 8, 2013 $ 20,000
June 8, 2014 $ 25,000
June 8, 2015 $ 50,000
June 8, 2016 $ 50,000
--------
TOTALS $149,000
========
8. CHANGE OF CONTROL
On November 20, 2009, Jeffrey Rochlin entered into a Stock Purchase Agreement
with Danny Wettreich pursuant to which Mr. Wettreich sold 1,734,830 (post-merger
basis) shares of common stock of the Company, representing approximately 86.46%
of the total issued and outstanding shares of common stock of the Company, for a
total purchase price of $8,000.
26
9. SUBSEQUENT EVENTS
A Special Meeting of Shareholders of Camelot Corporation was held on Thursday,
April 28, 2011. At the Special Meeting a majority of the shareholders approved
the adoption of a proposed Agreement and Plan of Merger, to reincorporate
Camelot Corporation, a Colorado corporation ("Camelot Colorado" or the
"Company") in the State of Nevada by merger with and into a Nevada corporation
with the name Camelot Corporation ("Camelot Nevada") which Camelot Colorado
formed for such purpose (the "Migratory Merger") in which Camelot Colorado
shareholders will receive shares of Camelot Nevada Common Stock for shares of
common stock held in Camelot Colorado (the "Camelot Colorado Common Stock").
On May 23, 2011 the adoption of the Agreement and Plan of Merger became
effective resulting in the following which have been reflected in these
financial statements:
1. The capital structure of Camelot Nevada includes total authorized capital
stock of 150,000,000 shares, of which 50,000,000 are common stock, with a par
value of $0.01 per share (the "Camelot Nevada Common Stock") and 100,000,000
shares are blank check preferred stock, with a par value of $0.01 per share (the
"Preferred Stock"). The Preferred Stock may be issued from time to time in one
or more participating, optional, or other special rights and qualifications,
limitations or restrictions thereof, as shall be stated in the resolutions
adopted by Camelot Nevada's Board of Directors providing for the issuance of
such Preferred Stock or series thereof; and
2. The issued and outstanding shares of Camelot Colorado Common Stock
(49,236,106 shares) automatically converted into the right to receive shares of
Camelot Nevada Common Stock at a ratio of one (1) share of Camelot Nevada Common
Stock for each twenty-five (25) shares of Camelot Colorado Common Stock held
immediately prior to the effectiveness of the Migratory Merger, provided,
however, that holders of Camelot Colorado Common Stock who would receive at
least one share but fewer than 100 shares of Camelot Nevada Common Stock upon
conversion were rounded up so that they received 100 shares of Camelot Nevada
Common Stock (the "Conversion Ratio"). No fractional shares were issued, and
holders who would receive less than one share upon conversion did not receive
Camelot Nevada Common Stock but will receive a cash distribution of One Dollar
($1.00) upon submission of the Shareholder Transmittal Form Requesting Cash
Payment for Fractional Shares.
The approval of the Migratory Merger resulted in a total of 2,006,528 shares of
common stock issued and outstanding at May 23, 2011.
27
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
On June 9, 2010, the Board of Directors of the Company approved the resignation
of Comiskey & Co., P.C. ("Comiskey"), the independent accountant previously
engaged as the principal accountant to audit the Company's financial statements.
On June 9, 2010, the Board of Directors of the Company also ratified and
approved the Company's engagement of Schumacher & Associates, Inc.
("Schumacher") as independent auditor for the Company. The resignation of
Comiskey and the engagement of Schumacher were reported on Amendment No. 1 to
the Current Report on Form 8-K/A filed with the SEC on June 21, 2010.
There have been no disagreements with the Company's principal independent
registered public accounting firms for the two-year period ended April 30, 2011.
ITEM 9A CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
As of the end of the period covered by this Annual Report, our sole officer
performed an evaluation of the effectiveness of our disclosure controls and
procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act.
Based on the evaluation and the identification of the material weaknesses in
internal control over financial reporting described below, our sole officer
concluded that, as of April 30, 2011, the Company's disclosure controls and
procedures were not effective.
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management is responsible for establishing and maintaining adequate internal
control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of
the Exchange Act. Internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements in accordance with GAAP.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projection of any evaluation of
effectiveness to future periods is subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
Jeffrey Rochlin, our President, has conducted an assessment of our internal
control over financial reporting as of April 30, 2011. Management's assessment
of internal control over financial reporting was conducted using the criteria in
Internal Control over Financial Reporting - Guidance for Smaller Public
Companies issued by the Committee of Sponsoring Organizations of the Treadway
Commission ("COSO").
A material weakness is a deficiency, or a combination of deficiencies, in
internal control over financial reporting, such that there is a reasonable
possibility that a material misstatement of the Company's annual or interim
financial statements will not be prevented or detected on a timely basis. In
connection with management's assessment of our internal control over financial
reporting as required under Section 404 of the Sarbanes-Oxley Act of 2002, we
identified the following material weaknesses in our internal control over
financial reporting as of April 30, 2011:
1. The Company has not established adequate financial reporting monitoring
procedures to mitigate the risk of management override, specifically because
there are no employees and only one officer and director with management
functions and therefore there is lack of segregation of duties. In addition, the
Company does not have accounting software to prevent erroneous or unauthorized
changes to previous reporting periods. The lack of effective controls resulted
in deficient financial reporting which was corrected in the audit process.
2. In addition, there is insufficient oversight of accounting principles
implementation and insufficient oversight of external audit functions.
3. There is a strong reliance on the external attorneys to review and edit the
annual and quarterly filings and to ensure compliance with SEC disclosure
requirements.
28
Because of the material weaknesses noted above, management has concluded that we
did not maintain effective internal control over financial reporting as of April
30, 2011, based on Internal Control over Financial Reporting - Guidance for
Smaller Public Companies issued by COSO.
REMEDIATION OF MATERIAL WEAKNESSES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
As a small business, without a viable business and revenues, the Company does
not have the resources to install a dedicated staff with deep expertise in all
facets of SEC disclosure and GAAP compliance. As is the case with many small
businesses, the Company will continue to work with its external consultants as
it relates to new accounting principles and changes to SEC disclosure
requirements. The Company has found this approach worked well in the past and
believes it to be the most cost effective solution available for the foreseeable
future.
The Company will conduct a review of existing sign-off and review procedures as
well as document control protocols for critical accounting spreadsheets. The
Company will also increase management's review of key financial documents and
records.
As a small business, the Company does not have the resources to fund sufficient
staff to ensure a complete segregation of responsibilities within the accounting
function. However, Company management does review, and will increase the review
of, financial statements on a monthly basis. These actions, in addition to the
improvements identified above, will minimize any risk of a potential material
misstatement occurring.
This Annual Report does not include an attestation report of the Company's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the Company's
registered public accounting firm pursuant to temporary rules of the SEC that
permit the Company to provide only management's report in this annual report.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no changes in our internal control over financial reporting during
the period ended April 30, 2011 that materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.
ITEM 9B OTHER INFORMATION
On March 28, 2011, Camelot Corporation filed its definitive proxy statement with
the Securities and Exchange Commission and sent such statement to its holders of
common stock, notifying such holders of the special meeting of shareholders
scheduled for April 28, 2011, to approve the Migratory Merger (as defined
below). A special meeting of shareholders of Camelot Corporation was held on
Thursday, April 28, 2011. At the special meeting, a majority of the shareholders
of Camelot Corporation approved the adoption of a proposed Agreement and Plan of
Merger, to reincorporate Camelot Corporation, a Colorado corporation ("Camelot
Colorado" or the "Company") in the State of Nevada by merger with and into a
Nevada corporation with the name Camelot Corporation ("Camelot Nevada") (the
"Migratory Merger"). Camelot Colorado formed Camelot Nevada for such purpose
(the "Migratory Merger"). Pursuant to the Migratory Merger, Camelot Colorado
shareholders received shares of Camelot Nevada Common Stock for shares of common
stock held in Camelot Colorado (the "Camelot Colorado Common Stock") at the
Conversion Ratio (as defined below).
On May 23, 2011, FINRA effected the Migratory Merger, and the Agreement and Plan
of Merger became effective resulting in the following:
1. The adoption of the Articles of Incorporation of Camelot Nevada under the
laws of the state of Nevada as the Articles of Incorporation of the Company,
pursuant to which there are 150,000,000 shares of authorized capital stock,
consisting of 50,000,000 shares of common stock, par value $0.01 per share (the
"Camelot Nevada Common Stock"), and 100,000,000 shares of "blank check"
preferred stock, par value $0.01 per share (the "Preferred Stock"). The
Preferred Stock may be issued from time to time in one or more participating,
optional, or other special rights and qualifications,limitations or restrictions
thereof, as shall be stated in the resolutions adopted by Camelot Nevada's Board
of Directors providing for the issuance of such Preferred Stock or series
thereof.
29
2. The issued and outstanding shares of Camelot Colorado Common Stock
(49,236,106 shares) automatically converted into the right to receive shares of
Camelot Nevada Common Stock at a ratio of one (1) share of Camelot Nevada Common
Stock for each twenty-five (25) shares of Camelot Colorado Common Stock held
immediately prior to the effectiveness of the Migratory Merger, provided,
however, that holders of Camelot Colorado Common Stock who would receive at
least one share but fewer than 100 shares of Camelot Nevada Common Stock upon
conversion were rounded up so that they received 100 shares of Camelot Nevada
Common Stock (the "Conversion Ratio"). No fractional shares were issued, and
holders who would receive less than one share upon conversion did not receive
Camelot Nevada Common Stock but will receive a cash distribution of One Dollar
($1.00) upon submission of the Shareholder Transmittal Form Requesting Cash
Payment for Fractional Shares.
3. The adoption of the Bylaws of Camelot Nevada under the laws of the state of
Nevada as the Bylaws of the Company. The approval of the Migratory Merger
resulted in a total of 2,006,528 shares of common stock issued and outstanding
at May 23, 2011.
30
PART III
ITEM 10 DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The directors of the Company hold office for annual terms and will remain in
their positions until successors have been elected and qualified. The officers
are appointed by the board of directors of the Company and hold office until
their death, resignation or removal from office. The ages, positions held, and
duration of terms of the directors and executive officers as of the date of this
Report are as follows:
Name Age Position
---- --- --------
Jeffrey Rochlin 41 President, Chief Executive Officer and Director
JEFFREY ROCHLIN, PRESIDENT, CHIEF EXECUTIVE OFFICER
Mr. Rochlin is a resident of Washington Township, NJ, and a graduate of
University of Hartford, where he earned a degree in accounting. His professional
experience has been primarily in the finance sector, where he has worked as a
finance manager in operations, and senior accountant for a major pharmaceutical
company. In addition to his position with the Company, Mr. Rochlin is engaged
with a biotechnology company in its budgeting and financial reporting sector.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
Our sole executive officer and director has not been the subject of:
1. A conviction in a criminal proceeding or named as a defendant in a pending
criminal proceeding (excluding traffic violations and other minor offenses);
2. The entry of an order, judgment or decree, not subsequently reversed,
suspended or vacated, by a court of competent jurisdiction that permanently or
temporarily enjoined, barred, suspended or otherwise limited such person's
involvement in any type of business, securities, commodities, or banking
activities;
3. A finding or judgment by a court of competent jurisdiction (in a civil
action), the Securities and Exchange Commission, the Commodity Futures Trading
Commission, or a state securities regulator of a violation of federal or state
securities or commodities law, which finding or judgment has not been reversed,
suspended, or vacated; or 4. The entry of an order by a self-regulatory
organization that permanently or temporarily barred, suspended or otherwise
limited such party's involvement in any type of business or securities
activities.
ITEM 11 EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and long-term
compensation earned by the Company's principal executive officer, each of our
two most highly compensated executive officers who were serving as executive
officers as of the date of this Report.
Change in
Pension
Value and
Non-Equity Nonqualified
Incentive Deferred
Stock Option Plan Compensation All Other
Salary Bonus Awards Awards Compensation Earnings Compensation Total
Name and Principal Position Year ($) ($) ($) ($) ($) ($) ($) ($)
--------------------------- ---- ------ ----- ------ ------ ------------ -------- ------------ -----
Jeffrey Rochlin 2011 Nil Nil Nil Nil Nil Nil Nil Nil
President, Chief 2010 Nil Nil Nil Nil Nil Nil Nil Nil
Executive Officer,
Chairman and Treasurer
31
There are no employment agreements or consulting agreements with our current
director or executive officer. There are no arrangements or plans in which we
provide pension, retirement or similar benefits for directors or executive
officers. We do not have any material bonus or profit sharing plans pursuant to
which cash or non-cash compensation is or may be paid to our directors or
executive officers, except that stock options may be granted at the discretion
of our board of directors from time to time. We have no plans or arrangements in
respect of remuneration received or that may be received by our executive
officers to compensate such officers in the event of termination of employment
(as a result of resignation, retirement, change of control) or a change of
responsibilities following a change of control.
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The following table sets forth certain information as of the date of this Report
with respect to the beneficial ownership of the outstanding common stock of the
Company by (i) any holder of more than five (5%) percent; (ii) each of the
Company's executive officers and directors; and (iii) the Company's directors
and executive officers as a group. Unless otherwise indicated below, the persons
and entities named in the table have sole voting and sole investment power with
respect to all shares beneficially owned. The percentage of class is based on
2,006,528 shares of common stock issued and outstanding as of the date of this
Report. Unless otherwise indicated, the address of each individual named below
is the Company address.
Name and Address of Amount of Percentage
Beneficial Owner Beneficial Ownership of Class
---------------- -------------------- --------
Jeffrey Rochlin 1,734,830 86.46%
President, Chief Executive Officer
Directors and Executive Officers 1,734,830 86.46%
CAPITAL STOCK
The authorized capital stock of the Company is 50,000,000 shares of common
stock, with a par value of $0.01 per share, and 100,000,000 shares of preferred
stock, with a par value of $0.01 per share.
As of the date of this Report, there are 2,006,528 shares of common stock issued
outstanding. There is no preferred stock outstanding.
As of the date of this Report, there are 410 holders of record of the Company's
common stock.
OPTIONS AND WARRANTS
There are no outstanding options or warrants or other securities that are
convertible into our common stock.
VOTING RIGHTS
Each shareholder is entitled to one (1) vote for each share of voting stock.
DIVIDEND POLICY
We intend to retain and use any future earnings for the development and
expansion of our business and do not anticipate paying any cash dividends in the
foreseeable future.
TRANSFER AGENT
The registrar and transfer agent for our common stock is Empire Stock Transfer
Inc. Its address and telephone number are 1859 Whitney Mesa Drive, Henderson, NV
89014, (702) 818-5898.
32
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
Effective October 20, 2009, the Company gave a demand promissory note, in
exchange for payables, to Daniel Wettreich, its former CEO and majority
shareholder, then a related party, for $116,511 without interest. On November
20, 2009, Mr. Wettreich sold the demand promissory note to an unrelated third
party. On July 20, 2010, the demand promissory note was cancelled and a new
interest-bearing promissory note was issued in substitute therefor. The July 20,
2010 Promissory Note is in the principal amount of $117,000, bears an annual
interest rate of six percent, is due and payable on November 30, 2015 and is
collateralized by all the assets of the Company.
The Company uses the offices of its President for its minimal office facility
needs for no consideration. No provision for these costs has been provided since
it has been determined that they are immaterial.
During the year ended April 30, 2011, the company's current president advanced
$35,000 to the company, and $50,025 was owed at April 30, 2011. The advances
bear an annual interest rate of six percent. As of April 30, 2011, accrued
interest payable of $2,429 is owed and has no specific repayment terms.
ITEM 14 PRINCIPAL ACCOUNTING FEES AND SERVICES
During the year ended April 30, 2011, the total fees billed for audit-related
services was $5,900, for tax services was $0 and for all other services was $0.
During the year ended April 30, 2010, the total fees billed for audit-related
services was $0, for tax services was $0 and for all other services was $0.
PART IV
ITEM 15 EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Exhibit No. Description
----------- -----------
3.1 Certificate of Incorporation(1)
3.2 Amended Certificate of Incorporation(1)
3.3 Articles of Incorporation - Nevada(2)
3.4 By-Laws(2)
4.1 Specimen common stock certificate(1)
10.1 Mineral Lease Agreement dated June 11, 2010 between Camelot
Corporation and Timberwolf Minerals, Ltd.(3)
10.2 Amendment to Mineral Lease Agreement dated June 8, 2011 between
Camelot Corporation and Timberwolf Minerals, Ltd.(2)
16.1 Letter from Comiskey & Co., P.C. dated June 9, 2010(4)
31 Certification of Principal Executive Officer and Principal
Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
32 Certification of Principal Executive Officer and Principal
Financial Officer to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
99.1 Blair Junction Summary Report of Timberwolf Minerals Ltd.(3)
99.2 Blair Junction Summary and Recommendations of Timberwolf Minerals
Ltd.(3)
----------
1 Incorporated herein by reference from the Company's Registration Statement
on Form 10 filed with the Securities and Exchange Commission on June 23,
1976.
2 Incorporated herein by reference from the Company's Current Report on Form
8-K filed with the Securities and Exchange Commission on June 13, 2011.
3 Incorporated herein by reference from the Company's Current Report on Form
8-K filed with the Securities and Exchange Commission on July 26, 2010.
4 Incorporated herein by reference from the Company's Current Report on Form
8-K filed with the Securities and Exchange Commission on June 14, 2010.
33
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
CAMELOT CORPORATION
Date: July 26, 2011 By /s/ Jeffrey Rochlin
------------------------------------
Jeffrey Rochlin
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated:
/s/ Jeffrey Rochlin President, Chief Executive Officer July 26, 2011
--------------------------------- (Principal Executive Officer)
Jeffrey Rochlin (Principal Financial and Accounting Officer)
34