SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO
SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2005
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TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _________________ to __________________
Commission file number: 001-32289
ZENO INC.
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(Exact name of Registrant as specified in its charter)
Nevada Applied For
------ ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
220 Decourcy Drive
Gabriola Island, British Columbia, Canada V0R 1X1
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(Address of principal executive offices)
(604) 837-2739
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Registrant's telephone number, including area code
Securities to be registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which
to be so registered each class is to be registered
None None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock
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(Title of Class)
Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes No X
----------- --------
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB.
Yes X No
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State issuer's revenues for its most recent fiscal year: Nil
----------------------
State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, as of a
specified date within the past 60 days. (See definition of affiliate in Rule
12b-2 of the Exchange Act.)
$197,100 as at August 8, 2005
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State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.
5,971,000 as of August 8, 2005
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TABLE OF CONTENTS
Page
ITEM 1: DESCRIPTION OF BUSINESS..............................................4
ITEM 2: DESCRIPTION OF PROPERTY.............................................10
ITEM 3: LEGAL PROCEEDINGS...................................................10
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.................10
ITEM 5: MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS............10
ITEM 6: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION...........11
ITEM 7: FINANCIAL STATEMENTS................................................11
ITEM 8: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES........................................12
ITEM 9: DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS........12
ITEM 10: EXECUTIVE COMPENSATION.............................................13
ITEM 11: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.....13
ITEM 12: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.....................14
ITEM 13: EXHIBITS AND REPORTS...............................................14
PART I
Description Of Business
In General
We intend to commence operations as an exploration stage mineral exploration
company. As such, there is no assurance that a commercially viable mineral
deposit exists on our sole mineral property interest, the Rawluk Lake property.
Further exploration will be required before a final evaluation as to the
economic and legal feasibility of the Rawluk Lake property is determined.
We will be engaged in the acquisition, and exploration of mineral properties
with a view to exploiting any mineral deposits we discover that demonstrate
economic feasibility. We acquired a 100% undivided right, title and interest in
and to seven mineral claims, known collectively as the Rawluk Lake property,
located in the Thunder Mining District, Ontario, Canada. We acquired a 100%
interest in the Rawluk Lake property for staking costs of $4,197.
Our plan of operation is to determine whether this Rawluk Lake property contains
reserves that are economically recoverable. The recoverability of amounts from
the property will be dependent upon the discovery of economically recoverable
reserves, confirmation of necessary financing to satisfy the expenditure
requirements under the property agreement and to complete the development of the
property and upon future profitable production or proceeds for the sale thereof.
Rawluk Lake Property Purchase Agreement
On December 2003, we retained Mr. Robert Reukl of Manitouwadge, Ontario whereby
he agreed to stake for us a total of seven mineral claims located 280 kilometers
east northeast of the city of Thunder Bay in north central Ontario. We paid Mr.
Reukl $4,197 to stake these claims.
At the time of the staking agreement, Mr. Reukl was at arm's length to us.
Subsequent to the staking of the property, Mr. Reukl subscribed for 1,000 shares
of our common stock.
Title to the Rawluk Lake Property
The Rawluk Lake Property consists of seven mineral claims. A "mineral claim"
refers to a specific section of land over which a title holder owns rights to
explore for and extract minerals from the ground. Such rights may be transferred
or held in trust. The claims are registered 100% in the name of a private
company owned by Robert Reukl. Mr. Reukl holds these claims in trust for us.
If the trustee becomes bankrupt or transfers the claims to a third party, we may
incur significant legal expenses in enforcing our interest in the claims in
Ontario courts.
The registration of the claims in the name of a trustee does not impact a third
party's ability to commence an action against us respecting the Rawluk Lake
property or to seize the claims after obtaining judgment.
Description, Location and Access
The Rawluk Lake property is located 20 kilometers east of the town of
Manitouwadge and 280 kilometers east northeast of the city of Thunder Bay in
north central Ontario. Manitouwadge is the closest town and is located at the
northern end of Secondary Highway 614, 54 kilometers north of Highway 17 which
forms part of the Trans Canada Highway network. The property is accessible by
gravel road from the town of Manitouwadge. From Manitouwadge a bush road, known
as the Camp 70 Road, proceeds east. Approximately 4.5 kilometers along this
road, the Twist Lake Road turns off to the south. In order to access the
property, one must proceed along the Twist Lake road approximately 14 kilometers
to Ice Cream Lake Road. The property is approximately two kilometers east of Ice
Cream Road. No infrastructure is located on the property, however it is crossed
by a network of logging roads that were used to harvest marketable timber over
the past 15 years. These roads provide access across the entire property. The
property is also crossed by a power transmission line near the northern boundary
which carries power from Manitouwadge to the nearby town of Clayborne.
4
The seven mineral claims are located in Cecil, Roberta, Nickle and Hebert
Townships in the Thunder Bay Mining Division.
Mineralization & Exploration History
The area covered by the Rawluk Lake property has never been systematically
explored for base or precious metal potential to date, although adjacent areas
have undergone considerable exploration in recent years for precious and
platinum group metal potential. In the past, copper and zinc were produced from
four mines in Manitouwadge, 20 kilometers west of the property. Gold is
currently being produced from three mines at Hemlo, 55 kilometers to the south
southwest.
We staked the property on the basis of encouraging exploration results for
platinum group metals on a property adjacent to the east and in the immediate
area of the Rawluk Lake property. Government geological and geophysical data
indicate rock types, similar to those rocks in the immediate area known to
exhibit platinum group metal mineralization exist on the property. The lack of
previous exploration within the property boundary and the existence of rocks,
similar to those known to host mineralization elsewhere in the area, makes the
property a target for additional exploration work.
Geological Report: Rawluk Lake Property
We have obtained a geological report on the Rawluk lake property that was
prepared by Mr. Rob Reukl, a geologist from Manitouwadge, Ontario. The
geological report summarizes the results of exploration in the area of the
Rawluk lake property and makes a recommendation for further exploration work.
In his report, Mr. Reukl concludes that the Rawluk lake property has the
potential to host base and precious metal occurrences in the immediate area. He
notes that previous exploration on properties adjacent to the east and in the
immediate area are known to exhibit platinum group metal mineralization. If such
mineralization continued over a significant area, the Rawluk lake property could
potentially host a mineral deposit.
Mr Reukl recommends a three-phase program to determine the potential of the
property to host economic mineralization. Phase I will consist of prospecting
and linecutting as a basis for the next phase. Phase II will consist of
geochemical and geophysical surveys. Phase III will consist of diamond drilling
to assess the targets generated in Phase II.
Line cutting involves removing bush from the property in order to produce
straight clearings. This provides grid boundaries for geophysical and other
surveys.
Geochemical surveys involve a consulting geologist gathering samples of soil and
rock from property areas with the most potential to host economically
significant mineralization. All samples gathered will be sent to a laboratory
where they are crushed and analysed for metal content.
5
Geophysical surveying is the search for mineral deposits by measuring the
physical property of near-surface rocks, and looking for unusual responses
caused by the presence of mineralization. Electrical, magnetic, gravitational,
seismic and radioactive properties are the ones most commonly measured.
Drilling involves extracting a long cylinder of rock from the ground to
determine amounts of metals at different depths. Pieces of the rock obtained,
known as drill core, are analysed for mineral content.
Mr. Reukl has provided us with the following proposed exploration budget for the
Rawluk Lake property:
Phase I
Prospecting: 5 days at $150 per day: $750
Linecutting: 10 kilometers at $230 per day: $2,300
Travel, accommodation, etc.: $1,200
Contingency (7.7%): $500
Total estimated Phase I costs: $4,750
Phase II
Soil analysis: 300 samples at $8 each: $2,400
Geological mapping and geophysical surveys: $2,700
Rock assaying: 30 samples at $12 per sample: $ 360
Travel accommodation, etc.: $1,150
Contingency (5.8%): $400
Total estimated Phase II costs: $7,010
Phase III:
Diamond drilling: 1,500 meters at $50 each: $58,000
Camp costs: $150 per day for 15 days: $2,250
Core assaying: 320 samples at $12 each: $3,840
Supervision, core logging, reporting writing: $6,800
Geological technician: $2,300
Mobilization/demobilization: $2,000
Contingency (6.8%): $5,400
Total estimated Phase III costs: $80,590
We do not have an agreement with Mr. Reukl to provide his geological services
for planned exploration work on the Rawluk lake property. However, Mr. Reukl has
indicated that he would be prepared to undertake such work if he was available.
Compliance with Government Regulation
We will be required to conduct all mineral exploration activities in accordance
with the Mining Act of Ontario. While we do not require any authorization to
proceed with the initial two phases of the recommended exploration program, we
will be required to obtain work permits from the Ontario Ministry of Northern
Development and Mines for the Phase III drilling program and any subsequent
exploration work that results in a physical disturbance to the land if the
program calls for the disturbance of more than 10,000 square meters of the
property surface, or such areas that would total that amount when combined. A
work permit is also required for the erection of structures on the property.
There is no charge to obtain a work permit under the Mining Act.
6
When our exploration program proceeds to the drilling stage, we may be required
to post small bonds if the rights of a private land owner may be affected. We
may also be required to file statements of work with the Ministry of Northern
Development and Mines. We will also be required to undertake remediation work on
any exploration that results in physical disturbance to the land. The cost of
remediation work will vary according to the degree of physical disturbance. We
have budgeted for regulatory compliance costs in our proposed exploration
program.
The amount of these costs is not known at this time as we do not know the extent
of the exploration program that will be undertaken beyond completion of the
recommended exploration program. Because there is presently no information on
the size, tenor, or quality of any minerals or reserve at this time, it is
impossible to assess the impact of any capital expenditures on earnings or our
competitive position.
An environmental review is not required under the Environmental Assessment Act
to proceed with the recommended exploration program on our mineral claims.
Employees
We have no employees as of the date of this annual report other than our two
directors.
Research and Development Expenditures
We have not incurred any other research or development expenditures since our
incorporation.
Subsidiaries
We do not have any subsidiaries.
Patents and Trademarks
We do not own, either legally or beneficially, any patents or trademarks.
Risk Factors
An investment in our common stock involves a high degree of risk. You should
carefully consider the risks described below and the other information in this
annual report before investing in our common stock. If any of the following
risks occur, our business, operating results and financial condition could be
seriously harmed. The trading price of our common stock could decline due to any
of these risks, and you may lose all or part of your investment.
IF WE DO NOT OBTAIN ADDITIONAL FINANCING, OUR BUSINESS WILL FAIL.
Our current operating funds are less than necessary to complete all intended
exploration of the Rawluk Lake property, and therefore we will need to obtain
additional financing in order to complete our business plan. We currently do not
have any operations and we have no income.
Our business plan calls for significant expenses in connection with the
exploration of the Rawluk Lake property. We do not currently have sufficient
funds to conduct initial exploration on the property and require additional
financing in order to determine whether the property contains economic
mineralization. We will also require additional financing if the costs of the
exploration of the Rawluk Lake property are greater than anticipated.
7
We will require additional financing to sustain our business operations if we
are not successful in earning revenues once exploration is complete. We do not
currently have any arrangements for financing and we can provide no assurance to
investors that we will be able to find such financing if required. Obtaining
additional financing would be subject to a number of factors, including the
market prices for copper and gold, investor acceptance of our property and
general market conditions. These factors may make the timing, amount, terms or
conditions of additional financing unavailable to us.
The most likely source of future funds presently available to us is through the
sale of equity capital. Any sale of share capital will result in dilution to
existing shareholders. The only other anticipated alternative for the financing
of further exploration would be our sale of a partial interest in the Rawluk
Lake property to a third party in exchange for cash or exploration expenditures,
which is not presently contemplated.
BECAUSE WE HAVE NOT COMMENCED BUSINESS OPERATIONS, WE FACE A HIGH RISK OF
BUSINESS FAILURE.
Although we are preparing to commence exploration on the Rawluk Lake property in
the fall of 2004, we have not yet commenced exploration on the property.
Accordingly, we have no way to evaluate the likelihood that our business will be
successful. To date, we have been involved primarily in organizational
activities and the acquisition of our mineral property. We have not earned any
revenues as of the date of this annual report. Potential investors should be
aware of the difficulties normally encountered by new mineral exploration
companies and the high rate of failure of such enterprises. The likelihood of
success must be considered in light of the problems, expenses, difficulties,
complications and delays encountered in connection with the exploration of the
mineral properties that we plan to undertake. These potential problems include,
but are not limited to, unanticipated problems relating to exploration, and
additional costs and expenses that may exceed current estimates.
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 Rawluk Lake
property and the production of minerals from the claims, we will not be able to
earn profits or continue operations.
There is no history upon which to base any assumption as to the likelihood that
we will prove successful, and we can provide investors with no assurance that we
will generate any operating revenues or ever achieve profitable operations. If
we are unsuccessful in addressing these risks, our business will most likely
fail.
BECAUSE OF THE SPECULATIVE NATURE OF EXPLORATION OF MINING PROPERTIES, THERE IS
A SUBSTANTIAL RISK THAT OUR BUSINESS WILL FAIL.
The search for valuable minerals as a business is extremely risky. We can
provide investors with no assurance that our mineral claims contain economic
mineralization or reserves of copper, zinc or gold.
Exploration for minerals is a speculative venture necessarily involving
substantial risk. Our exploration of the Rawluk Lake property may not result in
the discovery of commercial quantities of copper, zinc or gold. Problems such as
unusual or unexpected formations and other conditions are involved in mineral
exploration and often result in unsuccessful exploration efforts. In such a
case, we would be unable to complete our business plan.
8
BECAUSE OF THE INHERENT DANGERS INVOLVED IN MINERAL EXPLORATION, THERE IS A RISK
THAT WE MAY INCUR LIABILITY OR DAMAGES AS WE CONDUCT OUR BUSINESS.
The search for valuable minerals involves numerous hazards. As a result, we may
become subject to liability for such hazards, including pollution, cave-ins and
other hazards against which we cannot insure or against which we may elect not
to insure. The payment of such liabilities may have a material adverse effect on
our financial position.
EVEN IF WE DISCOVER RESERVES OF PRECIOUS METALS ON THE RAWLUK LAKE PROPERTY, WE
MAY NOT BE ABLE TO SUCCESSFULLY DEVELOP THE PROPERTY.
The Rawluk Lake property does not contain any known bodies of mineralization. If
our exploration programs are successful in establishing minerals of commercial
tonnage and grade, we will require additional funds in order to further develop
the property. At this time, we cannot assure investors that we will be able to
obtain such financing.
WE NEED TO CONTINUE AS A GOING CONCERN IF OUR BUSINESS IS TO SUCCEED.
The Independent Auditor's Report to our audited financial statements for the
period ended March 31, 2005, indicates that there are a number of factors that
raise substantial doubt about our ability to continue as a going concern. Such
factors identified in the report are our net loss position, our failure to
attain profitable operations and our dependence upon obtaining adequate
financing. If we are not able to continue as a going concern, it is likely
investors will lose their investments.
BECAUSE MANAGEMENT HAS NO TECHNICAL EXPERIENCE IN MINERAL EXPLORATION, OUR
BUSINESS HAS A HIGHER RISK OF FAILURE.
None of our directors has any technical training in the field of geology. As a
result, we may not be able to recognize and take advantage of potential
acquisition and exploration opportunities in the sector without the aid of
qualified geological consultants. As well, with no direct training or
experience, our management may not be fully aware of the specific requirements
related to working in this industry. Their decisions and choices may not be well
thought out and our operations and ultimate financial success may suffer
irreparable harm as a result.
BECAUSE OUR DIRECTORS HAVE OTHER BUSINESS INTERESTS, THEY MAY NOT BE ABLE OR
WILLING TO DEVOTE A SUFFICIENT AMOUNT OF TIME TO OUR BUSINESS OPERATIONS,
CAUSING OUR BUSINESS TO FAIL.
Our president, Mr. McGill and our C.F.O., Ms. Smith intend to devote 20 and five
to ten hours per week respectively to our business affairs.
It is possible that the demands on Mr. McGill and Ms. Smith from their other
obligations could increase with the result that they would no longer be able to
devote sufficient time to the management of our business. In addition, Mr.
McGill and Ms. Smith may not possess sufficient time for our business if the
demands of managing our business increased substantially beyond current levels.
A PURCHASER IS PURCHASING PENNY STOCK WHICH LIMITS HIS OR HER ABILITY TO SELL
THE STOCK.
Our shares constitute penny stock under the Securities and Exchange Act. The
shares will remain penny stock for the foreseeable future. The classification of
penny stock makes it more difficult for a broker-dealer to sell the stock into a
secondary market, which makes it more difficult for a purchaser to liquidate his
or her investment. Any broker-dealer engaged by a shareholder for the purpose of
selling his or her shares in our company will be subject to rules 15g-1 through
15g-10 of the Securities and Exchange Act. Rather than creating a need to comply
with those rules, some broker-dealers will refuse to attempt to sell penny
stock.
9
Forward-Looking Statements
This annual report contains forward-looking statements that involve risks and
uncertainties. We use words such as anticipate, believe, plan, expect, future,
intend and similar expressions to identify such forward-looking statements. You
should not place too much reliance on these forward-looking statements. Our
actual results are most likely to differ materially from those anticipated in
these forward-looking statements for many reasons, including the risks faced by
us described in the "Risk Factors" section and elsewhere in this annual report.
ITEM 2: DESCRIPTION OF PROPERTY
We acquired a 100% undivided right, title and interest in and to the seven
mineral claims, known as Rawluk Lake property, located in the Thunder Bay Mining
District in Ontario, Canada. We do not own any interest in real property.
ITEM 3: LEGAL PROCEEDINGS
There are no legal proceedings pending or threatened against us.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted during the fourth quarter of our fiscal year to a vote
of security holders, through the solicitation of proxies or otherwise.
PART II
ITEM 5: MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
While our shares of common stock are quoted for trading on the OTC Bulletin
Board under symbol "ZNNO", no actual trades have occurred through the quotation
system's facilities.
We had 34 shareholders of record as at the date of this annual report.
Dividends
There are no restrictions in our articles of incorporation or bylaws that
prevent us from declaring dividends. The Nevada Revised Statutes, however, do
prohibit us from declaring dividends where, after giving effect to the
distribution of the dividend:
1. we would not be able to pay our debts as they become due in the usual
course of business; or
2. our total assets would be less than the sum of our total liabilities plus
the amount that would be needed to satisfy the rights of shareholders who
have preferential rights superior to those receiving the distribution.
We have not declared any dividends, and we do not plan to declare any dividends
in the foreseeable future.
10
ITEM 6: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Plan of Operation
Our plan of operation for the twelve months following the date of this annual
report is to complete the recommended phase one and phase two exploration
programs on the Rawluk Lake property at an estimated cost of $11,760.
The Phase I exploration program will consist of prospecting and linecutting.
Phase II will consist of geochemical and geophysical surveys.
We also anticipate spending approximately $30,000 in connection with
administrative expenses relating to our affairs, including all costs relating to
our filing obligations as a reporting company. Accordingly, we anticipate
spending $41,760 in order to accomplish our business objectives over the next 12
months.
We will require additional funding in order to complete proposed exploration on
the Rawluk Lake property and to cover administrative costs. We anticipate that
additional funding will be required in the form of equity financing from the
sale of our common stock. However, we may not be able to raise sufficient
funding from the sale of our common stock to fund the third phase of the
exploration program. We do not have any arrangements in place for any future
equity financing. Our management is prepared to provide us with short-term
loans, although no such arrangement has been made.
If we do not secure additional funding for exploration expenditures, we may
consider seeking an arrangement with a joint venture partner that would provide
the required funding in exchange for receiving a part interest in the Rawluk
Lake property. We have not undertaken any efforts to locate a joint venture
partner. There is no guarantee that we will be able to locate a joint venture
partner who will assist us in funding exploration expenditures upon acceptable
terms. We may also pursue acquiring interests in alternate mineral properties in
the future.
Results Of Operations For Period Ending March 31, 2005
We did not earn any revenues during the period ending March 31, 2005. We have
not commenced the exploration stage of our business and can provide no assurance
that we will discover economic mineralization on the property.
We incurred operating expenses in the amount of $42,701, for the period from our
inception on January 28, 2003 to March 31, 2005. These operating expenses were
comprised of accounting and audit fees of $14,075, legal fees of $12,500,
management fees of $7,125, resource property costs of $4,197, listing and filing
fees of $1,705, office and rent costs of $1,268 and bank charges of $282.
We have not attained profitable operations and are dependent upon obtaining
financing to pursue exploration activities. For these reasons our auditors
believe that there is substantial doubt that we will be able to continue as a
going concern.
ITEM 7: FINANCIAL STATEMENTS
11
ZENO, INC.
(A Pre-exploration Stage Company)
REPORT AND FINANCIAL STATEMENTS
March 31, 2005 and 2004
(Stated in US Dollars)
AMISANO HANSON
A PARTNERSHIP OF INCORPORATED PROFESSIONALS
CHARTERED ACCOUNTANTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders,
Zeno, Inc.
(A Pre-exploration Stage Company)
We have audited the accompanying balance sheets of Zeno, Inc. (A Pre-exploration
Stage Company) as of March 31, 2005 and 2004 and the related statements of
operations, cash flows and stockholders' equity (deficiency) for the years ended
March 31, 2005 and 2004 and the period from January 28, 2003 (Date of
Incorporation) to March 31, 2005. 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 an audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, these financial statements referred to above present fairly, in
all material respects, the financial position of Zeno, Inc. as of March 31, 2005
and 2004 and the results of its operations and its cash flows for the years
ended March 31, 2005 and 2004 and the period from January 28, 2003 (Date of
Incorporation) to March 31, 2005, in conformity with accounting principles
generally accepted in the United States of America.
The accompanying financial statements referred to above have been prepared
assuming that the company will continue as a going concern. As discussed in Note
1 to the financial statements, the company is in the pre-exploration stage, and
has no established source of revenue and is dependent on its ability to raise
capital from shareholders or other sources to sustain operations. These factors,
along with other matters as set forth in Note 1, raise substantial doubt that
the company will be able to continue as a going concern. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Vancouver, Canada "AMISANO HANSON"
July 11, 2005 Chartered Accountants
750 West Pender Street, Suite 604 Telephone: 604-689-0188
Vancouver Canada Facsimile: 604-689-9773
ZENO, INC.
(A Pre-exploration Stage Company)
BALANCE SHEETS
March 31, 2005 and 2004
(Stated in US Dollars)
ASSETS 2005 2004
------ ---- ----
Current
Cash $ - $ 23,812
================= =================
LIABILITIES
Current
Accounts payable and accrued liabilities $ 14,851 $ 5,816
----------------- -----------------
STOCKHOLDERS' EQUITY (DEFICIENCY)
Capital stock - Note 4 Authorized:
75,000,000 common shares, par value $0.001 per share
Issued and outstanding:
5,971,000 common shares (2004: 5,971,000) 5,971 5,971
Additional paid in capital 21,879 21,879
Deficit accumulated during the pre-exploration stage (42,701) (9,854)
----------------- -----------------
(14,851) 17,996
----------------- -----------------
$ - $ 23,812
================= =================
Nature and Continuance of Operations - Note 1
SEE ACCOMPANYING NOTES
ZENO, INC.
(A Pre-exploration Stage Company)
STATEMENTS OF OPERATIONS
for the years ended March 31, 2005 and 2004
and the period January 28, 2003 (Date of Incorporation) to March 31, 2005
(Stated in US Dollars)
--------------------
January 28,
2003 (Date of
Incorporation)
Years ended to
March 31, March 31
2005 2004 2005
---- ---- ----
Expenses
Accounting and audit fees $ 9,975 $ 3,000 $ 14,075
Bank charges 201 81 282
Legal fees 11,500 1,000 12,500
Listing and filing fees 1,705 - 1,705
Management fees - Note 5 7,125 - 7,125
Office and rent - Note 5 2,341 56 2,817
Resource property costs - 4,197 4,197
----------------- ----------------- -----------------
Net loss for the period $ (32,847) $ (8,334) $ (42,701)
================= ================= =================
Basic and diluted loss per share $ (0.01) $ (0.00)
================= =================
Weighted average number of shares outstanding 5,971,000 3,964,581
================= =================
SEE ACCOMPANYING NOTES
ZENO, INC.
(A Pre-exploration Stage Company)
STATEMENTS OF CASH FLOWS
for the years ended March 31, 2005 and 2004
and the period January 28, 2003 (Date of Incorporation) to March 31, 2004
(Stated in US Dollars)
--------------------
January 28,
2003 (Date of
Incorporation)
Years ended to
March 31, March 31,
2005 2004 2005
---- ---- ----
Cash Flows used in Operating Activities
Net loss for the period $ (32,847) $ (8,334) $ (42,701)
Adjustment to reconcile net loss to net cash
used by operating activities
Accounts payable and accrued liabilities 9,035 4,296 14,851
----------------- ------------------ -----------------
Net cash used in operating activities (23,812) (4,038) (27,850)
----------------- ------------------ -----------------
Cash Flows from Financing Activity
Issuance of common shares - 27,850 27,850
----------------- ------------------ -----------------
Net cash from financing activity - 27,850 27,850
----------------- ------------------ -----------------
Increase (decrease) in cash during the period (23,812) 23,812 -
Cash, beginning of the period 23,812 - -
----------------- ------------------ -----------------
Cash, end of the period $ - $ 23,812 $
================= ================== =================
Supplemental disclosure of cash flow information Cash paid for:
Interest $ - $ - $ -
================= ================== =================
Income taxes $ - $ - $ -
================= ================== =================
SEE ACCOMPANYING NOTES
ZENO, INC.
(A Pre-exploration Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
(DEFICIENCY) for the period January 28, 2003
(Date of Incorporation) to March 31, 2005
(Stated in US Dollars)
Deficit
Accumulated
Additional During the
Common Shares Paid-in Exploration
-----------------------------------
Number Par Value Capital Stage Total
--------------- --------------- --------------- --------------- ---------------
Net loss for the period ended
March 31, 2003 - $ - $ - $ (1,520) $ (1,520)
--------------- --------------- --------------- --------------- ---------------
Balance, March 31, 2003 - - - (1,520) (1,520)
Capital stock issued for cash
- at $0.001 5,750,000 5,750 - - 5,750
- at $0.10 221,000 221 21,879 - 22,100
Net loss for the year ended
March 31, 2004 - - - (8,334) (8,334)
--------------- --------------- --------------- --------------- ---------------
Balance, March 31, 2004 5,971,000 5,971 21,879 (9,854) 17,996
Net loss for the year ended
March 31, 2005 - - - (32,847) (32,847)
--------------- --------------- --------------- --------------- ---------------
Balance, March 31, 2005 5,971,000 $ 5,971 $ 21,879 $ (42,701) $ (14,851)
=============== =============== =============== =============== ===============
SEE ACCOMPANYING NOTES
ZENO, INC.
(A Pre-exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 2005
(Stated in US Dollars)
Note 1 Nature and Continuance of Operations
------------------------------------
The Company was incorporated in the State of Nevada on January 28,
2003 and is in the pre-exploration stage. The Company has obtained
a mineral property located in the Province of Ontario, Canada and
has not yet determined whether this property contains reserves
that are economically recoverable. The recoverability of amounts
from the property will be dependent upon the discovery of
economically recoverable reserves, confirmation of the Company's
interest in the underlying property, the ability of the Company to
obtain necessary financing to satisfy the expenditure requirements
under the property agreement and to complete the development of
the property and upon future profitable production or proceeds for
the sale thereof.
These financial statements have been prepared on a going concern
basis. The Company has a working capital deficiency of $14,851,
has accumulated a deficit of $32,847 since inception, has yet to
achieve profitable operations and further losses are anticipated
in the development of its business, raising substantial doubt
about the Company's ability to continue as a going concern. Its
ability to continue as a going concern is dependent upon the
ability of the Company to generate profitable operations in the
future and/or to obtain the necessary financing to meet its
obligations and repay its liabilities arising from normal business
operations when they come due. Management plans to continue to
provide for its capital needs by issuing equity securities. These
financial statements do not include any adjustments to the
recoverability and classification of assets, or the amount and
classification of liabilities that may be necessary should the
Company be unable to continue as a going concern.
Note 2 Summary of Significant Accounting Policies
------------------------------------------
Basis of Presentation
---------------------
The financial statements of the Company have been prepared in
accordance with accounting principles generally accepted in the
United States of America. Because a precise determination of many
assets and liabilities is dependent upon future events, the
preparation of financial statements for a period necessarily
involves the use of estimates which have been made using careful
judgement. Actual results may vary from these estimates.
The financial statements have, in management's opinion, been
properly prepared within the framework of the significant
accounting policies summarized below:
Note 2 Summary of Significant Accounting Policies - (cont'd)
------------------------------------------
Pre-exploration Stage Company
-----------------------------
The Company complies with Financial Accounting Standard Board
Statement No. 7 and The Securities and Exchange Commission
Exchange Act Guide 7 for its characterization of the Company as
pre-exploration stage.
Resource Property
-----------------
Costs of lease, acquisition, exploration, carrying and retaining
unproven mineral lease properties are expensed as incurred.
Foreign Currency Translation
----------------------------
The Company's functional currency is the United States of America
dollar. The Company uses the United States of America dollar as
its reporting currency for consistency with registrants of the
Securities and Exchange Commission ("SEC") and in accordance with
the Statement of Financial Accounting ("FAS") No. 52.
Transactions undertaken in currencies other than the functional
currency of the Company are translated using the exchange rate in
effect as of the transaction date. Foreign exchange gains or
losses are included in other income or expenses.
Financial Instruments
---------------------
The carrying value of cash and accounts payable and accrued
liabilities approximates their fair value because of the short
maturity of these instruments. Unless otherwise noted, it is
management's opinion that the Company is not exposed to
significant interest, currency or credit risks arising from these
financial instruments.
Environmental Costs
-------------------
Environmental expenditures that relate to current operations are
expensed or capitalized as appropriate. Expenditures that relate
to an existing condition caused by past operations, and which do
not contribute to current or future revenue generation, are
expensed. Liabilities are recorded when environmental assessments
and/or remedial efforts are probable, and the cost can be
reasonably estimated. Generally, the timing of these accruals
coincides with the earlier of completion of a feasibility study or
the Company's commitments to plan of action based on the then
known facts.
Note 2 Summary of Significant Accounting Policies - (cont'd)
------------------------------------------
Income Taxes
------------
The Company uses the assets and liability method of accounting for
income taxes pursuant to Statement of Financial Accounting
Standards, No. 109 "Accounting for Income Taxes" ("SFAS 109").
Under the assets and liability method of SFAS 109, deferred tax
assts and liabilities are recognized for the future tax
consequences attributable to temporary differences between the
financial statements carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled.
Basic and Diluted Loss Per Share
--------------------------------
The Company reports basic loss per share in accordance with the
SFAS No. 128, "Earnings Per Share". Basic loss per share is
computed using the weighted average number of shares outstanding
during the period. Diluted loss per share has not been provided as
there are no dilutive securities.
Note 3 Resource Properties
-------------------
Rawluk Lake Property
--------------------
The Company owns a 100% undivided right, title and interest in and
to 99 claim units, known as Rawluk Lake Property, located in the
Thunder Mining District in the Province of Ontario, Canada. These
claims were obtained during the year ended March 31, 2004 by the
Company staking these claims at a cost of $4,197.
Note 4 Capital Stock
-------------
During the year ended March 31, 2004 the Company issued 5,971,000
common shares for total proceeds of $27,850.
Note 5 Related Party Transaction
-------------------------
During the year ended March 31, 2005, the Company paid management
fees of $7,125 (2004: $Nil) and reimbursed office and rent
expenses of $2,068 (2004: $Nil) to a director of the Company.
Note 6 Income Taxes
------------
At March 31, 2005, the Company has accumulated non-capital losses
totalling $42,701, which are available to reduce taxable income in
future taxation years. These losses expire beginning in 2023. The
potential benefit of these losses, if any, has not been recognized
in the financial statements because the Company cannot be assured
it is more likely-than-not it will utilize the net operating
losses carried forward in future years.
The significant components of the Company's deferred tax assets are as
follows:
2005 2004
---- ----
Deferred Tax Assets
Non-capital loss carryforward $ 14,945 $ 3,450
Less: valuation allowance for deferred tax asset (14,945) (3,450)
------------ ------------
$ - $ -
============ ============
The amount taken into income as deferred tax assets must reflect
that portion of the income tax loss carryforwards that is likely
to be realized from future operations. The company has chosen to
provide an allowance of 100% against all available income tax loss
carryforwards, regardless of their time of expiry.
ITEM 8: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 9: DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Our executive officers and directors and their respective ages as of the date of
this annual report are as follows:
Directors:
Name of Director Age
----------------------- -----
Mr. Frank McGill 65
Ms. Linda Smith 56
Executive Officers:
Name of Officer Age Office
--------------------- ----- -------
Frank McGill 65 President, Chief
Executive Officer,
secretary & director
Linda Smith 56 Chief Financial
Officer, Treasurer,
Principal accounting
officer & director
Biographical Information
Set forth below is a brief description of the background and business experience
of each of our executive officers and directors for the past five years.
Mr. Frank McGill has acted as our President, chief executive officer, secretary
and as a director since our incorporation on January 28, 2003. Mr. McGill was
employed as a longshoreman with the local of the International Longshoremen's
and Warehousemen's Union from 1982 until June 2002. From January 2000 to March
2002, Mr. McGill acted as secretary for Blue Lightning Ventures Inc. From
October 2000 to July 2003, he acted as a director of Gemstar Resources Ltd. Both
of these companies are British Columbia and Alberta reporting corporations
involved in mineral property exploration.
Mr. McGill intends to devote 20 hours of his business time per week to our
affairs.
Mr. McGill does not possess any professional or technical credentials relating
to mineral exploration, mine development or mining.
Ms. Linda Smith has acted as our chief financial officer, treasurer, principal
accounting officer and as a director since our incorporation on January 28,
2003. Ms. Smith has also acted as Blue Lightning Ventures Inc.'s president and
as a director from October 1999 to July 2004. She also acted in the same
capacities for Big Bar Gold Corporation from August 1999 to June 2003 and for
Candorado Operating Company Ltd. from June 2000 to November 2001. All of these
companies are British Columbia and Alberta reporting corporations involved in
mineral property exploration. Ms. Smith was also employed part-time as a dental
assistant from 1995 to 2002.
12
Ms. Smith intends to devote five to ten hours of her business time per week to
our affairs.
Ms. Smith does not possess any professional or technical credentials relating
to mineral exploration, mine development or mining.
ITEM 10: EXECUTIVE COMPENSATION
The table below summarizes all compensation awarded to, earned by, or
paid to our executive officers by any person for all services rendered in all
capacities to us for the fiscal period from our incorporation on January 28,
2003 to March 31, 2003 and for the fiscal years ended March 31, 2004 and 2005.
Annual Compensation
Restricted Options/ LTIP Other
Other Stock SARs payouts Comp
Name Title Year Salary Bonus Comp. Awarded (#) ($)
-----------------------------------------------------------------------
Frank Pres., 2005 $0 0 0 0 0 0 0
McGill CEO & 2004 $0 0 0 0 0 0 0
Dir. 2003 $0 0 0 0 0 0 0
Linda CFO 2005 $0 0 7,125 0 0 0 0
Smith & Dir. 2004 $0 0 0 0 0 0 0
2003 $0 0 0 0 0 0 0
Section 16(A) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our executive officers and directors,
and persons who beneficially own more than 10% of our equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission. Officers, directors and greater than 10% shareholders are required
by SEC regulation to furnish us with copies of all Section 16(a) forms they
file. Based on our review of the copies of such forms we received, we believe
that during the fiscal year ended November 30, 2004 all such filing requirements
applicable to our officers and directors were complied with exception that
reports were filed late by the following persons:
Number Transactions Known Failures
Of late Not Timely To File a
Name and principal position Reports Reported Required Form
--------------------------------- ----------- ------------- --------------
Frank McGill 0 0 1
(President, Secretary, C.E.O.
and Director)
Linda Smith 0 0 1
(Treasurer and Director)
ITEM 11: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table provides the names and addresses of each person known to us
to own more than 5% of our outstanding common stock as of the date of this
annual report, and by the officers and directors, individually and as a group.
Except as otherwise indicated, all shares are owned directly.
13
Amount of
Title of Name and address beneficial Percent
Class of beneficial owner ownership of class
--------------------------------------------------------------------------------
Common Dimitrios Gountis 4,000,000 66.99%
Stock 7400 E. Orchard Rd #290
Greenwood Village, CO 80111
Common Frank McGill 0 0.00%
Stock President, Chief
Executive Officer, Secretary
and Director
1161 Prairie Ave.
Port Coquitlam, B.C.
Canada
Common Linda Smith 0 0.00%
Stock CFO, Treasurer,
principal accounting officer
and director
220 Decourcy Dr.
Gabriola Island, B.C.
Canada
Common All Officers and Directors 4,000,000 67.00%
Stock as a Group that consists of shares
two people
The percent of class is based on 5,971,000 shares of common stock issued and
outstanding as of the date of this annual report.
ITEM 12: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the fiscal year ended March 31, 2005, we paid management fees of $7,125
and reimbursed $2,058 in office and rent expenses to a director, Linda Smith.
Otherwise, none of the following parties has, during the fiscal year ended March
31, 2005, had any material interest, direct or indirect, in any transaction with
us or in any presently proposed transaction that has or will materially affect
us:
* Any of our directors or officers;
* Any person proposed as a nominee for election as a director;
* Any person who beneficially owns, directly or indirectly, shares carrying
more than 10% of the voting rights attached to our outstanding shares of
common stock;
* Any of our promoters;
* Any relative or spouse of any of the foregoing persons who has the same
house as such person.
ITEM 13: EXHIBITS AND REPORTS
Exhibits
3.1 Articles of Incorporation*
3.2 Bylaws*
31.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
* Originally filed as exhibits to our registration statement on Form SB-2
filed on August 2, 2004
14
Reports on Form 8-K
During the period ended March 31, 2005, we filed a current report on Form 8-K
providing details regarding our directors' sale of shares of our common stock.
SIGNATURES
Pursuant to the requirements of Section 13 and 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
ZENO INC.
By /s/ Frank McGill
-------------------------
Frank McGill
President, CEO & Director
Date: August 8, 2005
In accordance with the Securities Exchange Act, this report has been signed
below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.
By /s/ Frank McGill
-------------------------
Frank McGill
President, CEO & Director
Date: August 8, 2005
By /s/ Linda Smith
---------------------------------
Linda Smith
Secretary, Treasurer and Director
Date: August 8, 2005