UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
Amendment No. 1
[ X ] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2003
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 000-28481
ANGLOTAJIK MINERALS INC.
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(Name of small business issuer in its charter)
NEVADA 86-0891931
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(State or jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
11400 West Olympic Blvd. Suite 200, Los Angeles, CA 94080 (310) 445-8819
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Address and telephone number of principal executive offices
N/A
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Former issuer name, if changed from last report
Securities registered under Section 12(b) of the Exchange Act:
None.
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $.001 per share
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[X] Check whether the issuer (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 the filing requirements for at least
the past 90 days.
[ ] Check if disclosure of delinquent filers pursuant 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.
Issuer's revenues for its most recent fiscal year: $0.
Aggregate market value of the voting stock held by non-affiliates of the
registrant as of March 1, 2004:
$5,736,137
Number of outstanding shares of the registrant's $.001 par value common stock,
as of March 1, 2004:
19,120,458 shares
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NOTE: This first amended Annual Report on Form 10-KSB of Anglotajik Minerals,
Inc. is filed to supplement certain information regarding issuances of our
securities and executive compensation during our fiscal year 2002 that was
inadvertently omitted from the original filing.
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
BACKGROUND OF THE COMPANY
Anglotajik Minerals, Inc. was originally incorporated August 1, 1997 in
Nevada as MexiMed Industries to develop and produce a non-reusable medical
syringe. We later abandoned that business, as we lacked sufficient capital
resources. In 1999 we changed our name to Digital Video Display Technology Corp.
and obtained a license to market a patented audio video jukebox technology in
Canada and in five U.S. states. However, disagreements arising out of
contractual relationships impeded the development of the business. In July of
2001 we changed our name to Iconet, Inc. in connection with a proposal to build
the jukeboxes and sell them back to the licensor of the technology, but owing to
changing technology and to disagreements among our board as to the future
direction the company should take, we eventually abandoned that business as
well.
In June of 2002 we resolved to investigate some possible opportunities in
mineral exploration. We optioned a property in Ontario, Canada, but after our
due diligence investigation we elected not to proceed and mutually rescinded the
agreement.
In June of 2003 our board appointed Mr. Matthew Markin as president and as
a director to replace Randy Miller. Mr. Miller also resigned as director, so
that Mr. Markin became the sole executive officer and director of the Company.
Mr. Miller's resignation was voluntary to pursue other interests, and not as a
result of any dispute with the Company.
In July of 2003, we adopted a plan of reorganization whereby our common
stock was reverse split by a ratio of 1-for-143. Shortly thereafter, we effected
a 2-for-1 forward split. (See "Changes in Securities" below.) For the reader's
convenience, references to stock transactions throughout this Annual Report are
expressed in terms of their post-split equivalents, unless we indicate otherwise
in the context.
BUSINESS OF THE COMPANY
We are currently pursuing what we perceive to be promising opportunities in
mineral exploration. Since mid-2003 we have been in negotiation with officials
of the Republic of Tajikistan to acquire interests in certain properties that
have known occurrences of valuable minerals, including gold, silver, tungsten,
aluminum, and perhaps others. We do not currently have a producing mine or
reserves of ore.
Tajikistan, in central Asia, was formerly part of the U.S.S.R., gaining
its independence in 1991. Tajikistan adopted a new constitution in 1994, which
restored the office of President, transformed the Soviet-era "Supreme Soviet"
into the Supreme Assembly, recognized civil liberties and property rights, and
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provided for a judiciary. However, factionalism led to a five-year civil war,
which ended in a peace agreement in 1997 and a new republican government, with
executive and legislative branches and a judiciary, implemented in 2000.
Attention in the wake of the war in Afghanistan has brought increased economic
development assistance, which analysts believe could create jobs and increase
stability in the long term. The country is seeking World Trade Organization
membership and has joined NATO's Partnership for Peace.
Tajikistan is known to have significant natural resources, including
hydropower, uranium, some petroleum, mercury, brown coal, lead, zinc, antimony,
tungsten, silver, and gold. The civil war (1992-1997) severely damaged the
already weak economic infrastructure and caused a sharp decline in industrial
and agricultural production. Since the war, however, economic growth has been
steady, with a rate of 5% for the year 2002 (estimated). A debt restructuring
agreement was reached with Russia in December 2002, which included an interest
rate of 4%, a 3-year grace period, and a US$49.8 million credit to the Central
Bank of Tajikistan. A number of foreign corporations are currently active in
Tajikistan in the exploration, development, and production stages.
We have been engaged in discussions with officials of the government of
Tajikistan regarding the acquisition of exploration rights to certain properties
where mineral deposits are known to exist. In March of 2004 we completed a
formal agreement with the Tajikistan Ministry of Industry granting us exclusive
mineral exploration and development rights in a 400 square kilometer area of
southeastern Tajikistan known as the Rushan Complex. See Item 2 - Description of
Property.
We have entered into key-employee contracts with three Tajik nationals who
will assist us in business development there, to include establishing and
managing our Tajikistan offices and corporate infrastructure, liaison with the
appropriate ministers and other federal and local governmental authorities,
translation, and various other functions which may be important or essential to
the establishment and continuation of our proposed exploration activities (see
"Employees" below). At an appropriate future date, we intend to either employ or
contract appropriate experts in the field of mineral exploration.
Subsequent to the period covered by this report, we employed Dr. Vladislav
Minaev as our Chief Geologist. We understand Dr. Minaev to be Tajikistan's
recognized leading authority on the Rushan Complex, as he was originally
involved in the Pamir Expedition's exploration of the property during 1971-77.
He continued to work on the property throughout the further exploration and
independent study performed by Kilborn Engineering in 1997-98. Dr. Minaev was
introduced to us and recommended by the Minister of Industry during Management's
most recent trip to Dushanbe.
We currently have no cash or sources of financing. Our President has
advanced funds to us for our business planning activities, but is under no
obligation to continue to do so. We are attempting to obtain equity financing in
the form of a private placement of our stock so that we can commence exploration
operations if and when we reach a satisfactory agreement with the government of
Tajikistan.
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FACILITIES
We currently occupy office space provided to us at no cost by our
President, Matthew Markin. Mr. Markin is under no obligation to continue to
provide us free office space for any period of time in the future. Our offices
are located at 11400 West Olympic Boulevard Suite 200, Los Angeles, California
90064. Our telephone number is (310) 445-8819.
We have opened an interim office in Dushanbe, Tajikistan, that will serve
as our local base for our operations in Tajikistan and provide working space for
our three employees there. Our president, Mr. Markin, has advanced the occupancy
costs through December 1, 2004.
EMPLOYEES
We currently have four employees, our sole executive officer, and our three
contract employees in Tajikistan. Once the office in Dushanbe is opened, we
expect to recruit two or three additional office staff. If and when we acquire
funding to proceed with exploration in the IKAR region, we expect to either hire
or contract additional staff for positions in the office and in the field.
However, we have not yet deteremined how many or what those positions will be.
RISK FACTORS
An investment in our securities involves certain risks, including those
enumerated below. You should consider the following specific risks before making
an investment in our securities.
EXPLORATION FOR ECONOMIC DEPOSITS OF MINERALS IS SPECULATIVE. The business
of mineral exploration is very speculative, since there is generally no way to
recover any of the funds expended on exploration unless the existence of
mineable reserves can be established and the Company can exploit those reserves
by either commencing mining operations, selling or leasing its interest in the
property, or entering into a joint venture with a larger resource company that
can further develop the property to the production stage. We expect to expend
considerable funds before we are able to determine whether we have a
commercially mineable ore body. Should we fail to find adequate valuable
minerals before our funds are exhausted, and if we cannot raise additional
capital, we will have to discontinue operations, which could make our stock
valueless.
OUR CURRENT MANAGEMENT LACKS EXPERIENCE IN THE BUSINESS OF MINERAL
EXPLORATION. Our Directors and Executive Officers lack significant experience or
technical training in exploring for precious mineral deposits and developing
mines. We intend to recruit management and advisory personnel who have such
experience, but until we do our management may not be fully aware of many of the
specific requirements related to working within this industry. Their decisions
-3-
and choices may not take into account standard engineering or managerial
approaches such as mineral exploration companies commonly use. Thus, our
operations, earnings, and ultimate financial success could suffer irreparable
harm due to management's lack of experience in the industry.
OUR SOLE EXECUTIVE OFFICER AND DIRECTOR MAY NOT BE ABLE TO DEVOTE
ADEQUATE TIME TO OUR BUSINESS. Our sole executive officer, Matthew Markin, is
engaged and may continue to engage in other business activities that may make
demands on his working hours that are in conflict with our needs. We cannot be
certain that any such conflicts will be resolved in our favor. It is possible
that such conflicts could prove detrimental to our business.
WE EXPECT TO ISSUE ADDITIONAL COMMON SHARES IN THE FUTURE WHICH WOULD
DILUTE THE OUTSTANDING SHARES. As of October 31, 2002, approximately 281,881,035
shares of our common stock were authorized but unissued including 699,301
reserved for the possible exercise of options. These shares may be issued in the
future without stockholder approval. The prices at which we sell these
securities and other terms and provisions will depend on prevailing market
conditions and other factors in effect at that time, all of which are beyond our
control. Shares may be issued at prices which are less than the then-current
market price of our common stock.
WE HAVE NO MINING OPERATIONS, AND DO NOT KNOW IF WE WILL EVER REACH THE
DEVELOPMENT STAGE. We currently have no revenues from operations, no mining
operations, and no reserves. We may never reach the development stage, and if we
do investors in our shares will face additional risks, hazards and
uncertainties, including gold bullion losses, environmental hazards, industrial
accidents, labor disputes, unusual or unexpected geological formations or other
geological or grade problems, unanticipated ground or water conditions,
cave-ins, pit wall failures, flooding, rock falls, periodic interruptions due to
inclement or hazardous weather conditions, other unfavorable operating
conditions and other acts of God. Such risks could result in damage to or
destruction of mineral properties or costs that make further activities
prohibitively expensive.
WE MAY BE SUBJECT TO EXTRAORDINARY BUSINESS RISKS RELATED TO CONDUCTING
BUSINESS OPERATIONS IN A DEVELOPING COUNTRY. We propose to explore for valuable
minerals in Tajikistan, a newly-independent country that was part of the Former
Soviet Union. We may face additional risks and uncertainties there such as
political instability, currency exchange losses, inadequate infrastructure,
security issues, cultural conflicts, civil strife, government policy changes,
and others. We intend to insure against such risks to the extent practical;
however, we may experience interruptions in our activities, financial losses, or
even cessation of our activities there as a result of such risks.
FORWARD LOOKING STATEMENTS
This Current Report contains "forward-looking statements." Forward-looking
statements involve known and unknown risks and uncertainties that may cause the
company's actual results in future periods to differ materially from forecasted
results. These may include statements contained under "Risk Factors,"
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"Management's Discussion and Analysis" and "Business." The following statements
are or may constitute forward-looking statements:
o statements before, after or including the words "may," "will,"
"could," "should," "believe," "expect," "future," "potential,"
"anticipate," intend," "plan," estimate" or "continue" or the negative
or other variations of these words; and
o other statements about matters that are not historical facts.
We may be unable to achieve future results covered by the forward-looking
statements. The statements are subject to risks, uncertainties and other factors
that could cause actual results to differ materially from the future results
that the statements express or imply. Please do not put undue reliance on these
forward-looking statements, which speak only as of the date of this Current
Report. In particular, as an exploration stage company our future is highly
uncertain.
ITEM 2. DESCRIPTION OF PROPERTY.
Our agreement with the government of the Republic of Tajikistank grants us
exclusive rights to explore, and if warranted to develop, sites of our choosing
within a 400 square kilometer area of southeastern Tajikistan known as the
Rushan Complex. A great deal has been reported about the geology and
mineralization of the region during a period of extensive exploration under the
former Soviet regime from 1970 through 1977. After studying the available
literature, including the comprehensive 1978 technical report of the "Pamir
Expedition", and an independent study in 1997-98 by Kilborn Engineering of
Alberta, we have elected to conduct further exploration in the mineralized zone
known as the IKAR Deposit.
The Pamir Expedition identified 10 "mineralized zones" in the IKAR Deposit,
of which six have been designated "ore bodies." To facilitate identification,
and because we have not evaluated the sites to determine the existence of
recoverable ores according to Western industry standards, we will use the term
"mineralized units" when referring to the structures the Soviet report
identifies as "ore bodies."
Subsequent to the period covered by this report, we elected to commence our
exploration activities in Tajikistan in the Ikar Deposit. The Soviet exploration
documents indicate this tungsten/gold deposit as having, on the surface, 8
mineralized segments which have been identified along a trend extending for
approximately 1km. Trenches 1m wide by 1m deep totaling 2183 meters, have been
excavated and sampled across mineralization which varies in width from 0.6 to
3.9 meters. An Adit (i.e., and underground passage), excavated at an elevation
level of 2770 meters is documented to be 2354 meters (2.35 Kilometers / 1.46
miles) deep consisting of 2m wide by 3m high drifts and crosscuts (horizontal
tunnels cut to gain access to the vein), some 160-340 meters beneath the surface
exposures. During this Soviet exploration period, diamond drilling was completed
from surface (5 holes totaling 1515 meters) and underground (17 horizontal holes
totaling 2737 meters and 12 holes angled down totaling 2978 meters) in all
totaling 7230 meters (7.23 kilometers / 4.493 miles).
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The Soviet compilation of these exploration results indicate average grades
of various mineralized units that range from 2 - 9 gms/tonne gold, 2-9 gms/tonne
silver, 0.1 - 0.8% tungsten oxide, 0.1 - 0.4% copper and 0.05 - 0.4% cobalt.
These results were broadly confirmed by Kilborn Engineering, an independent,
internationally recognized North American mining and engineering corporation
based in Alberta, Canada, subject to certain qualifications on sample sizes and
exact locations. Soviet Exploration grades reported within the silver deposit
indicate mineralization ranging between several grams silver per tonne and
22,790 grams silver, per tonne. These were identified in fault and fracture
controlled quartz veins across widths varying between 0.5 to 1.5 meters. Many
veins and structures are listed within the 1978 Soviet exploration documents,
but maps and section identifications have not yet been made available. Current
evaluations regarding procedures to clarify and confirm these measurements to
western metal measurement standards are being addressed.
We have engaged Arctex Engineering Services to consult with us on the
development of an exploration plan for the IKAR Deposit and possibly other
properties.
Under the terms of our agreement with the Tajikistan Ministry of Industry
(the "Ministry") we are to submit an exploration plan and budget for each site
we propose to explore. At that time the Ministry and we will discuss and arrive
at an agreement as to royalty or other compensation arrangements in the event
the results of exploration warrant development of the property.
Although specifics of our proposed exploration plan remain to be
determined, in general we intend to follow the recommendations for exploration
of the IKAR Deposit contained in the Kilborn Engineering 1998-99 Report. Work
will be done to clean up all the overburden, reinforce and clean the original
Adit and commence a drilling program, which would be similar to the original
drilling program completed by the Pamir Expedition during it's exploration
program of 1971-77. The property will be drilled out according to the original
drill program and the new core will be split and samples will be assayed under
extreme security and stringent western assay principals. These assays would be
performed in countries outside of Tajikistan including Germany and Canada.
ITEM 3. LEGAL PROCEEDINGS.
Merrill Lynch Canada Inc. ("Merrill Lynch") filed suit against ua on June
26, 2001, seeking damages in connection with an alleged dispute related to the
sale of restricted shares of the Company's common stock to Merrill Lynch by a
non-affiliate stockholder. The case is captioned "Merrill Lynch vs. Digitial
Video Display Technology, and others" and is identified as Action No. S-004012
in the Vancouver Law Court, Supreme Court of British Columbia. The case is in
its very early stages, and our legal counsel has not yet formed an opinion as to
the merits of the suit or the likely outcome.
We are not aware of any other current or threatened legal proceedings
disclosable under this item.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no matters submitted to a vote of security holders during the
period.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
We have one class of equity security designated as common stock, $.001 par
value, of which on April 16, 2004 19,120,458 shares were outstanding among 68
shareholders of record plus an unknown number of street name holders. Our common
stock is quoted on the Over-the-Counter Bulletin Board ("OTC-BB") using the
symbol "AJKM".
Following is a chart of the approximate high and low bid prices for our
shares during the indicated periods. The quotations reflect inter-dealer prices,
without retail mark-up, mark-down or commission and may not represent actual
transactions.
Quarter Ended High Bid Low Bid
-------------------- -------- -------
March 31, 2002 $1.15 $ .77
June 30, 2002 $ .20 $ .05
September 30, 2002 $ .14 $ .10
December 31, 2002 $ .09 $ .08
March 31, 2003 $8.22 @1.28
June 30, 2003 $1.43 $ .21
September 30, 2003 $1.43 $ .01
December 31, 2003 $ .86 $ .35
We have outstanding an option to purchase 699,301 common shares at $.21 per
share until July 2011.
On August 1, 2003 we issued to 19 individuals a total of 16,999,984
restricted shares in settlement of principal and interest due on cash loans made
to the company in 2001. In accordance with an opinion of counsel, the shares
were deemed issued as of the dates of the original loans. Accordingly, the
shares may currently be eligible for resale pursuant to Rule 144(k) under the
Securities Act of 1933, as amended. To our knowledge, each of the 19 individuals
exercises sole voting and dispositive control over his or her shares, and there
is no voting agreement or other arrangement respecting the stock between or
among any of the individuals.
We have paid no dividends to date. The Board of Directors has the authority
to declare and pay dividends from available Company funds.
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The transfer agent and registrar for our common stock is Pacwest Transfer
LLC, of Warrenton, Virginia.
Recent Sales of Unregistered Securities
The following securities were issued without registration in reliance on
the exemption authority provided by Section 4(2) of the Securities Act of 1933,
as amended, relating to sales not involving any public offering. We believe that
each sale was made by our President in private, negotiated transactions without
any advertising, public announcements or general solicitation. The purchasers of
the shares represented themselves in writing to be, and the company believes
them to be, members of one or more of the following classes:
a. Officers, directors, promoters or control persons of the issuer;
b. Individuals or entities who are accredited investors, as defined in
Rule 501 of Regulation D under the Securities Act; or c. Individuals
who:
i. Are knowledgeable and sophisticated in investment matters;
ii. Are able to assess the risks of an investment such as in our
securities;
iii. Are financially able to bear the risk of a loss of their entire
investment; and
iv. Have access to pertinent information regarding the issuer and its
operations.
The shares are subject to the resale provisions of Rule 144 and may not be sold
or transferred without registration except in accordance with Rule 144.
Certificates representing the securities bear a legend to that effect.
-8-
========================================================================================
NUMBER OF
DATE CLASS AMOUNT PRICE PURCHASERS
----------------------------------------------------------------------------------------
July 2002 Common, $.001 par value 13,986 $7.15 2
May 2003 Common, $.001 par value 13,986 (1) 1
June 2003 Common, $.001 par value 20,797 (2) 1
July 20, 2003 Common, $.001 par value 566,434 (3) 1
Aug. 1, 2003 Common, $.001 par value 16,999,904 (4) 19
Oct 13, 2003 Common, $.001 par value 1,000,000 (5) 1
----------------------------------------------------------------------------------------
(1) Valued at $100,000, or an average price of $.1399 per share. Issued to the
former President of the Company as settlement for consulting fees and
expenses.
(2) Valued at $75,000, or an average price of $.277 per share. Issued to the
former President of the Company as settlement for consulting fees.
(3) Issued to the current President of the Company as settlement for amounts
owed to him.
(4) Valued at $150,519, or approximately $.009 per share. Issued to 19
individuals in settlement of principle and interest on cash loans to the
Company. These share may be eligible for resale (see "MARKET FOR OUR
SECURITIES" above).
(5) Valued at $370,000, or $.37 per share. Issued in payment for legal services
in connection with the Company's exploration activities.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
Plan of Operation
We are in the exploration stage and have no revenues from operations, nor
do we expect revenues for the foreseeable future. To date, we have funded our
various business activities through advances from officers and stockholders and
through the issuance of equity stock. Our officers are under no obligation to
continue to provide advances to the us.
We have no cash or cash equivalent resources, no lines of credit, nor any
other source of funds. We are negotiating with various commercial funding
sources in Europe to raise approximately %5,000,000 to fund our exploration
operations, although we have not yet received any commitments from any source
for any amount of funding. We will not be able to begin a meaningful exploration
program unless and until we acquire funding.
-9-
If we are able to obtain financing, we expect to spend approximately
$2,000,000 on exploration of the IKAR Deposit property before making a
determination whether or not to proceed with development. Whether we conduct any
other exploration activities will depend upon the amount of financing, if any,
we are able to obtain.
If we sell equity stock to raise capital, our current stockholders will
experience substantial dilution of their shareholdings.
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ITEM 7. FINANCIAL STATEMENTS.
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders of
Anglotajik Minerals, Inc.
We have audited the accompanying balance sheet of Anglotajik Minerals, Inc. as
of December 31, 2003 and the related statements of operations, stockholders'
equity and cash flows for the year then ended. The financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit. The
financial statements of Anglotajik Minerals, Inc. for the year ended December
31, 2002, were audited by other auditors whose report dated May 14, 2003
expressed an unqualified opinion.
We conducted our audit in accordance with auditing standards generally accepted
in the 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. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Anglotajik Minerals, Inc. as of
December 31, 2003 and the results of its operations and cash flows for the year
then ended 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 discussed in Note 1, the Company's
operating loss and lack of working capital raise substantial doubt about its
ability to continue as a going concern. Management's plans in regard to those
matters are also described in Note 1. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
Chisholm, Bierwolf & Nilson, LLC
Bountiful, Utah
April 13, 2004
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MARK BAILEY & CO. LTD.
Certified Public Accountants
Management Consultants
OFFICE ADDRESS: MAILING ADDRESS:
1495 Ridgeview Drive, Ste. 200 Phone: 775/332.4200 P.O. Box 6060
Reno, Nevada 89509-6634 Fax: 775/332.4210 Reno, Nevada 89513
INDEPENDENT AUDITORS' REPORT
May 14, 2003
Board of Directors
Iconet, Inc.
We have audited the accompanying balance sheet of Iconet, Inc. (an exploration
stage Company) as of December 31, 2002, and the related statements of
operations, stockholders' deficit, and cash flows for the years ended December
31, 2002, and 2001. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the
audits 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, the financial statements referred to above present fairly, in
all material respects, the financial position of Iconet, Inc (a Company in the
exploration stage), as of December 31, 2002, and the results of its operations
and its cash flows for the years ended December 31, 2002, and 2001, in
conformity with accounting principles generally accepted in the United States.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As described in Note 1 to the
financial statements, the Company is in the Exploration stage, and existing cash
and available credit are insufficient to fund the Company's cash flow needs for
the next year. These conditions raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 1. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
Mark Bailey & Company, Ltd.
Reno, Nevada
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Anglotajik Minerals, Inc.
(A Company in the Exploration Stage)
Balance Sheets
ASSETS
December 31, December 31,
2003 2002
------------------ -----------------
Current Assets
Cash $ 594 5,105
Prepaid consulting expenses - 352,000
------------------ -----------------
Total current assets
Other Assets
Mining rights - 515,000
------------------ -----------------
Total other assets - 515,000
------------------ -----------------
Total assets $ 594 $ 872,105
================== =================
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Bank overdraft $ 28,343 $ 28,796
Accounts payable 360,106 355,644
Accrued expenses 183,155 98,611
Shareholder advance - 18,600
Interest payable 4,692 150,458
Note payable - related party 457,535 481,065
------------------ -----------------
Total current and total liabilities 1,033,831 1,133,174
------------------ -----------------
Stockholders' Deficit
Common stock, $.001 par value, 300,000,000 shares
authorized, 19,120,458 and 667,932 shares issued and
outstanding at December 31, 2003 and 2002, respectively 19,120 668
Common stock subscribed - 88,000
Additional paid-in capital 4,121,063 3,717,496
Deferred compensation costs - (280,000)
Deficit accumulated during the development stage (5,173,420) (3,787,232)
------------------ -----------------
Total Stockholders' Equity (1,033,237) (261,068)
------------------ -----------------
Total liabilities and stockholders' equity $ 594 $ 872,105
================== =================
The accompanying notes are an integral part of these financial statements.
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Anglotajik Minerals, Inc.
(A Company in the Exploration Stage)
Statement of Operations
Cumulative
During the For the Year For the Year
Exploration Stage Ended Ended
December 31, December 31, December 31,
2003 2003 2002
------------------ ------------------ ------------------
Revenue $ - $ - $ -
Operating Costs and Expenses
Operating and administrative expenses $ 5,020,909 $ 1,381,435 $ 764,619
Depreciation expense 5,562 - -
Amortization expense 16,500 - -
------------------ ------------------ ------------------
Total operating costs and expenses 5,042,971 1,381,435 764,619
Non-operating Income
Dividend income 1,212 - -
Gain on cancellation of contracts 90,604 - -
Loss on disposal of assets (59,641) - -
------------------ ------------------ ------------------
Total non-operating income 32,175 - -
------------------ ------------------ ------------------
Interest expense (162,624) (4,753) (7,391)
Net loss before income taxes (5,173,420) (1,386,188) (772,010)
------------------ ------------------ ------------------
Provision for income taxes - - -
------------------ ------------------ ------------------
Net loss $ (5,173,420) $ (1,386,188) $ (772,010)
================== ================== ==================
Loss per common share - basic $ (3.86) $ (0.17) $ (1.40)
================== ================== ==================
Weighted average common shares - basic 1,340,170 8,173,442 552,946
================== ================== ==================
The accompanying notes are an integral part of these financial statements.
-14-
Anglotajik Minerals, Inc.
Statements of Stockholders' Equity
From December 31, 1998 through December 31, 2003
Accumulated
Common Stock Additional Deficit During
------------------------------------------------ Deferred Paid In Exploration
Shares Amount Subscribed Compensation Capital Stage
---------------- ------------- --------------- --------------- -------------- ---------------
Issuance of shares to Company's
officers and directors for cash
in August 1997 1,469 $ 1 $ - $ - $ 9,999 $ -
Net loss for the year ended
December 31, 1997 - - - - - (989)
---------------- ------------- --------------- --------------- -------------- ---------------
Balance December 31, 1997 1,469 1 - - 9,999 (989)
Shares issued for cash at
$135.81 per share less $5,365
issuance cost 1,469 1 - - 194,634 -
Shares issued for distribution
rights at $136.05 per share 147 - - - 20,000 -
Net loss for the year ended
December 31, 1998 - - - - - (34,513)
---------------- ------------- --------------- --------------- -------------- ---------------
Balance December 31, 1998 3,084 3 - - 224,633 (35,511)
Cancellation of shares (1,615) (2) - - (19,998) -
Shares issued for patent rights
at $142.86 per share 140 - - - 20,000 -
Shares issued for services
at $147.06 per share 17 - - - 2,500 -
Net loss for the year ended
December 31, 1999 - - - - - (806,793)
---------------- ------------- --------------- --------------- -------------- ---------------
Balance, December 31, 1999 1,626 1 - - 227,135 (842,304)
Shares issued for services
at $14,920.60 per share 5 - - - 74,603 -
Cancellation of shares for
patent rights (140) - - - (20,000) -
Shares issued for services
at $10,500.00 per share 7 - - - 73,500 -
Net loss for the year ended
December 31, 2000 - - - - - (1,305,397)
---------------- ------------- --------------- --------------- -------------- ---------------
Balance, December 31, 2000 1,498 1 - - 355,238 (2,147,701)
Continued
-15-
Anglotajik Minerals, Inc.
Statements of Stockholders' Equity
From December 31, 1998 through December 31, 2003
Accumulated
Common Stock Additional Deficit During
------------------------------------------------ Deferred Paid In Exploration
Shares Amount Subscribed Compensation Capital Stage
---------------- ------------- --------------- --------------- -------------- ---------------
Shares issued to retire accounts
payable at $100.10 per share 2,098 $ 2 $ - $ - $ 209,998 $ -
Shares issued to retire accounts
payable for $1.52 per 419,580 420 - - 637,505 -
Shares issued for services
at $46.48 per share 13,986 14 - - 649,986 -
Deferred compensation for
the issuance of 13,986 options - - - (400,000) 400,000 -
Deferred compensation expense - - - 20,000 - -
Net loss for the year ended
December 31, 2001 - - - - - (867,521)
---------------- ------------- --------------- --------------- -------------- ---------------
Balance, December 31, 2001 437,162 437 - (380,000) 2,252,727 (3,015,222)
Shares issued for services
at $3.58 per share 20,979 21 - - 74,979 -
Shares issued for mining
rights at $3.58 per share 27,972 28 - - 99,972 -
Shares issued for cash
at $17.88 per share 13,986 14 - - 249,986 -
Shares issued for services
at $11.44 per share 27,972 28 - - 319,972 -
Share subscribed to relieve
liabilities and services
at $1.00 per share - - 88,000 - - -
Deferred compensation cost - - - 100,000 - -
Net loss for the year ended
December 31, 2002 - - - - - (772,010)
---------------- ------------- --------------- --------------- -------------- ---------------
Balance, December 31, 2002 667,932 668 88,000 (280,000) 3,717,496 (3,787,232)
Shares issued to relieve
common stock subscribed 7,692 8 (88,000) - 87,992 -
Cancellation of shares for
mining rights (139,860) (140) - - (499,860) -
Continued
-16-
Anglotajik Minerals, Inc.
Statements of Stockholders' Equity
From December 31, 1998 through December 31, 2003
Accumulated
Common Stock Additional Deficit During
------------------------------------------------ Deferred Paid In Exploration
Shares Amount Subscribed Compensation Capital Stage
---------------- ------------- --------------- --------------- -------------- ---------------
Shares issued for relief of
accrued expenses at
$4.83 per share 2,797 $ 3 $ - $ - $ 13,497 $ -
Shares issued to relieve
payables at $7.15 per share 13,986 14 - - 99,986 -
Shares issued to an officer to
relieve officer advances
at $0.35 per share 286,713 286 - - 99,714 -
Shares issued to an officer
for services at $0.36 per share 279,721 280 - - 99,720 -
Shares issued to relieve interest
payables at $0.009 16,999,984 17,000 - - 133,519 -
Shares issued for services
at $0.37 per share 1,000,000 1,000 - - 369,000 -
Rounding due to 1:43 reverse
split and a 2:1 forward split 1,493 1 - - - -
Deferred compensation cost - - - 280,000 - -
Net loss for the year ended
December 31, 2003 - - - - - (1,386,188)
---------------- ------------- --------------- --------------- -------------- ---------------
Balance, December 31, 2003 19,120,458 $ 19,120 $ - $ - $ 4,121,063 $ (5,173,420)
================ ============= =============== =============== ============== ===============
The accompanying notes are an integral part of these financial statements.
-17-
Anglotajik Minerals, Inc.
(A Company in the Exploration Stage)
Statement of Cash Flows
(Unaudited)
Cumulative
During the For the Year For the Year
Exploration Stage Ended Ended
December 31, December 31, December 31,
2003 2003 2002
------------------ ----------------- ------------------
Cash Flows from Operating Activities
Net loss $ (5,173,420) $ (1,386,188) $ (772,010)
Adjustments to reconcile net loss to net
cash used in operating activities:
Amortization and depreciation expenses 22,062 - -
Deferred compensation expense 400,000 280,000 100,000
Gain on cancellation of amortization (16,500) - -
Loss on disposal of assets 59,641 - -
Decrease in deposits 14,925 - -
Decrease in prepaid expense 796,250 352,000 444,250
Increase (decrease) in accounts payable 424,081 4,462 (8,035)
Increase (decrease) in related party payable 553,565 37,500 (6,099)
Increase (decrease) in wages payable 214,964 147,230 -
Increase in interest payable 162,950 4,753 14,553
Increase in accrued expenses 40,918 2,634 (35,186)
Expenses paid by issuance of common stock
subscribed 45,000 - 45,000
Expenses paid by issuance of common stock 1,125,378 470,000 -
------------------- ----------------- ------------------
Net cash used in operating activities (1,330,186) (87,609) 217,527
------------------------------------- ------------------
Cash Flows from Investing Activities
Deposits paid (14,925) - -
Investment in mining rights - 15,000 (15,000)
Purchase of fixed assets (65,203) - -
------------------ ----------------- ------------------
Net cash used in investing activities (80,128) 15,000 (15,000)
------------------ ----------------- ------------------
Continued
-18-
Anglotajik Minerals, Inc.
(A Company in the Exploration Stage)
Statements of Cash Flows
Cumulative
During the For the Year For the Year
Exploration Stage Ended Ended
December 31, December 31, December 31,
2003 2003 2002
------------------ ----------------- ------------------
Cash Flows from Financing Activities
Proceeds received from issuance of stock $ 454,635 $ - $ 250,000
Proceeds received from officer advances 92,592 68,518 18,600
Proceeds from bank overdraft 30,551 32 -
Payment on bank overdraft (9,915) (453) (9,462)
Payment of officers advances (5,474) - -
Payment on line of credit (22,574) - (22,574)
Proceeds received from line of credit 870,499 - -
------------------ ----------------- ------------------
Net cash provided by financing activities 1,410,314 68,097 236,564
------------------ ----------------- ------------------
Net increase in cash - (4,511) 4,037
Cash and cash equivalents at (Inception)
at December 31, 2003 and 2002 - 5,105 1,068
------------------ ----------------- ------------------
Cash and cash equivalents at
December 31, 2003 and 2002 $ - $ 594 $ 5,105
================== ================= ==================
Supplementary Information
During the years ended December 31, 2003 and 2002, no amounts were paid for
either interest or income taxes.
On October 13, 2003, the company issued 1,000,000 common shares for legal
services valued at $370,000.
In August 2003 the company issued 16,999,984 common shares to shareholders in
exchange for interest payable of $150,519.
In July 2003 the Company issued 286,713 common shares to the President to
relieve an advance of $48,773 and set up a receivable of $51,227. Also in July
2003 a $100,000 signing bonus was paid via the issuance of 279,720 common
shares.
-19-
In May 2003 the Company issued 2,797 common shares in exchange for consulting
expenses of $13,500. Also in May 2003 the Company issued 13,986 common shares to
the President pursuant to a stock option agreement, to relieve $100,000 in
officer advances and consulting fees payable.
In April 2003 the mining rights contract and the related shares were cancelled.
In June 2002 the Company issued 20,797 shares of its common stock for consulting
services of $75,000.
The accompanying notes are an integral part of these financial statements.
-20-
Anglotajik Minerals, Inc.
(A Company in the Exploration Stage)
Notes to the Financial Statements
NOTE 1 - Summary of Significant Accounting Policies
a. Organization
Anglotajik Minerals, Inc. (the "Company") was incorporated in the State of
Nevada in August 1997, under the name Meximed Industries, Inc. In January
1999 the Company changed its name to Digital Video Display Technology
Corporation and in July 2001 to Iconet, Inc. With new management in the
middle of 2003 the company again changed its name to Anglotajik Minerals,
Inc. The Company is considered to be in the exploration stage as its
operations principally involve research and exploration, market analysis,
and other business planning activities, and no revenue has been generated
from its business activities.
These financial statements have been prepared assuming that the Company
will continue as a going concern. The Company is currently in the
exploration stage and existing cash and available credit are insufficient
to fund the Company's cash flow needs for the next year. The Company plans
to raise additional capital through private placements. The preparation of
financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual
results could differ from those estimates.
b. Cash and cash equivalents
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or
less to be cash equivalents. As of December 31, 2003, and 2002, the Company
held no cash equivalents.
c. Fair Value of Financial Instruments
Unless otherwise indicated, the fair values of all reported assets and
liabilities which represent financial instruments (none of which are held
for trading purposes) approximate the carrying values of such amounts.
d. Provision for Income taxes
No provision for income taxes has been recorded due to net operating loss
carryforwards totaling over $5.1 million that will be offset against future
taxable income. Thes NOL carryforwards begin to expire in the year 2017. No
tax benefit has been reported in the financial statements because the
Company believes there is a 50% or greater chance the carryforward will
expire unused.
-21-
The deferred tax asset and the valuation account is as follows at December
31, 2003 and 2002:
December 31,
--------------------------------
2003 2002
--------------- ---------------
Deferred tax asset:
Deferred noncurrent tax asset $ 1,787,725 $ 1,287,659
Valuation allowance (1,787,725) (1,287,659)
--------------- ---------------
Total - -
================ ===============
e. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. In these financial statements, assets, liabilities
and earnings involve extensive reliance on managements estimates. Actual
results could differ from those estimates.
f. Earning (loss) per share
Net loss per share is provided in accordance with Statement of Financial
Accounting Standards (SFAS) No. 128 Earnings Per Share. Basic loss per
share for each period is computed by dividing net loss by the weighted
average number of shares of common stock outstanding during the period.
Diluted loss per share is computed in a manner consistent with that of
basic loss per share while giving effect to all potentially dilutive common
shares that were outstanding during the period. The number of additional
shares is calculated by assuming that outstanding stock options were
exercised and that the proceeds from such exercises were used to acquire
shares of common stock at the average market price during the reporting
period. The weighted averages for the years ended December 31, 2003, and
2002, and from inception reflect the reverse stock split of 1:200 that was
approved by the board of directors in July 2001, the 1:143 reverse stock
split effective July 16, 2003 and the 2:1 forward split on September 15,
2003.
NOTE 2 - New Technical Pronouncements
In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation-Transition and Disclosure-an amendment of FAS 123. SFAS No. 148
amends SFAS No. 123, Accounting for Stock- Based Compensation, to provide
alternative methods of transition for an entity that voluntarily changes to the
fair value based method of accounting for stock-based employee compensation. It
also amends the disclosure provisions of SFAS No. 123 to require prominent
-22-
disclosure about the effects on reported net income of an entity's accounting
policy decisions with respect to stock-based employee compensation. This
Statement also amends APB Opinion No. 28, Interim Financial Reporting, to
require disclosure about those effects in interim financial information. SFAS
No. 148 is effective for annual and interim periods beginning after December 15,
2002. The adoption of the interim disclosure provisions of SFAS No. 148 did not
have an impact on the Company's financial position, results of operations or
cash flows. The Company is currently evaluating whether to adopt the fair value
based method of accounting for stock-based employee compensation in accordance
with SFAS No. 148 and its resulting impact on the Company's financial
statements.
In January 2003, the Emerging Issues Task Force ("EITF") issued EITF Issue No.
00-21, Accounting for Revenue Arrangements with Multiple Deliverables. This
consensus addresses certain aspects of accounting by a vendor for arrangements
under which it will perform multiple revenue-generating activities,
specifically, how to determine whether an arrangement involving multiple
deliverables contains more than one unit of accounting. EITF Issue No. 00-21 is
effective for revenue arrangements entered into in fiscal periods beginning
after June 15, 2003, or entities may elect to report the change in accounting as
a cumulative-effect adjustment. The adoption of EITF Issue No. 00-21 did not
have a material impact on the Company's financial statements.
In January 2003, the FASB issued Interpretation ("FIN") No. 46, Consolidation of
Variable Interest Entities. Until this interpretation, a company generally
included another entity in its consolidated financial statements only if it
controlled the entity through voting interests. FIN No. 46 requires a variable
interest entity, as defined, to be consolidated by a company if that company is
subject to a majority of the risk of loss from the variable interest entity's
activities or entitled to receive a majority of the entity's residual returns.
FIN No. 46 is effective for reporting periods ending after December 15, 2003.
The adoption of FIN No. 46 did not have an impact on the Company's financial
statements.
In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities, which amends and clarifies
accounting for derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities under SFAS No. 133. SFAS
No. 149 is effective for contracts entered into or modified after June 30, 2003
and for hedging relationships designated after June 30, 2003. The adoption of
SFAS No. 149 will not have an impact on the Company's financial statements.
In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. SFAS No. 150
changes the accounting guidance for certain financial instruments that, under
previous guidance, could be classified as equity or "mezzanine" equity by now
requiring those instruments to be reported as liabilities. SFAS No. 150 also
requires disclosure relating to the terms of those instruments and settlement
alternatives. SFAS No. 150 is generally effective for all financial instruments
entered into or modified after May 31, 2003, and is otherwise effective at the
beginning of the first interim period beginning after June 15, 2003. The
adoption of SFAS No. 150 did not have an impact on the Company's financial
statements.
-23-
In December 2003, the SEC issued SAB No. 104. SAB No. 104 revises or rescinds
portions of the interpretative guidance included in Topic 13 of the codification
of staff accounting bulletins in order to make this interpretive guidance
consistent with current authoritative accounting and auditing guidance and SEC
rules and regulations. It also rescinds the Revenue Recognition in Financial
Statements Frequently Asked Questions and Answers document issued in conjunction
with Topic 13. Selected portions of that document have been incorporated into
Topic 13. The adoption of SAB No. 104 in December 2003 did not have an impact on
the Company's financial position, results of operations or cash flows.
NOTE 3 - Stock Options
The Company applies APB Opinion 25 and related interpretations in accounting for
its stock option plans. No compensation cost has been recognized during the year
ended December 31, 2003. Deferred compensation is recorded only when the market
price exceeds the option price at the grant date. Compensation is recorded using
the straight-line method over the vesting period.
In September 2001 the Company issued an option to purchase 13,986 shares of
common stock at $0.10 per share to a Director of the Company. The Company
accrued $400,000 in deferred compensation costs, as the option price at the
grant date was less than the market price. The option expires in September 2006.
The compensation cost will be accrued over the vesting period. Compensation
costs of $280,000 and $100,000 were included in the statements of operation for
the years ended December 31, 2003, and 2002, respectively.
In September 2003 the Company issued an option to purchase 699,301 shares of
common stock at $0.21 per share to a Director of the Company. The Company did
not accrue any deferred compensation costs, as the option price was greater that
the market price on the date of grant. The option expires in July 2011. Had
compensation cost for the Company's stock-based compensation plan been
determined based on the fair value at the grant date for awards under those
plans consistent with the method of FASB Statement 123, the Company's net loss
and loss per share would have been increased to the pro forma amounts indicated
below:
2003
-------------
Net loss:
As reported $ 1,381,726
Pro forma $ 1,383,918
Loss per share:
As reported $ 0.17
Pro forma $ 0.17
The Company has determined the pro-forma information as if the Company had
accounted for the stock option granted on July 1, 2003, under the fair value
method of SFAS 123. The Black-Scholes option-pricing model was used with a risk
free interest rate of 4.67%; dividend yield of 0.0%; a volatility factor of 214%
and an expected life of 8 years. The fair value of the stock options granted in
July 2003 is $0.01 per share. If the Company had recognized deferred
compensation cost based on the fair value method, it would have increased
deferred compensation by $6,577. It would also have increased the compensation
cost for the year by $2,192.
-24-
NOTE 4 - Related Party Transactions
During the years ended December 31, 2003, and 2002, the Company charged $37,500,
and $276,084 respectively, to consulting expense, and $0 and $80,000,
respectively, to legal fees for services rendered by directors or stockholders
of the Company. Outstanding balances payable for consulting and legal fees to
these related parties were $450,465 and $481,065 at December 31, 2003, and 2002,
respectively.
The President of Anglotajik Minerals, Inc. advanced the Company funds to pay
expenses. During the year ended December 31, 2003, travel and other office
expenses of $62,073 were paid by an officer.
In May 2003 the Company issued 13,986 shares of its common stock to the officer
pursuant to a stock option dated September 1, 2001. This issuance relieved
officer advances payable and consulting fees payable by $31,900 and $68,100,
respectively.
In July 2003 the Board of Directors authorized the issuance of 286,713
restricted common shares to the President to relieve the shareholder advance of
$48,773 and for a receivable of $51,227 from the President.
During the third quarter of 2003, the President was the only member of the Board
of Directors. In July 2003 the Company issued an option to purchase 699,301
shares of common stock at $0.21 per share to a Director of the Company. Also in
July 2003 a signing bonus of $100,000 was paid to the President via the issuance
of 279,720 shares of restricted common stock. Wages payable to the President of
$120,000 for 3rd and 4th quarter were accrued during the year.
During the year ended December 31, 2003, the Company issued a total of
16,999,984 common shares to each of the shareholders to whom interest was due on
an old line of credit. The issuance of these shares relieved the entire
outstanding payable of $150,519.
NOTE 5 - Stockholders' Equity
In July 2003 the Board of Directors authorized the issuance of 286,713
restricted common shares to the President in exchange for a shareholder advance
of $48,773 and a receivable from the President of $51,227. The President is the
only member of the Board of Directors. Also in July 2003 a signing bonus of
$100,000 was paid to the President via the issuance of 279,720 shares of
restricted common stock.
In July 2003 a reverse stock split of 1:143 was authorized by the Board of
Directors, and the number of authorized shares was increased to 300 million. The
financial statements have been retroactively restated to reflect the reverse
stock split.
In August 2003 the Company issued 16,999,984 common shares to the shareholders
to whom interest was due on the line of credit. The issuance of these shares
relieved the entire outstanding payable of $150,519.
-25-
In September 2003 a 2:1 forward stock split was authorized by the Board of
Directors. The financial statements have been retroactively restated to reflect
the forward stock split.
On October 13, 2003 the board of directors authorized the issuance of 1,000,000
shares of restricted common stock to a law firm for services valued at $370,000.
NOTE 6 - Commitments and Contingencies
There are various claims and lawsuits pending against the Company arising in the
normal course of the Company's business. Although the amount of liability at
December 31, 2003, cannot be ascertained, management is of the opinion that any
resulting liability will not materially affect the Company's financial position.
Merrill Lynch Canada Inc., has filed suit against the Company regarding a
dispute related to the sale of its restricted common stock by an unrelated third
party to Merrill Lynch. At this time the Company does not know if it will
sustain a loss, or the amount of the loss.
The Company settled an action by a bank regarding an overdraft. The settlement
carried an interest rate of 9.0% and twelve monthly payments of $3,321. The
Company made three payments before defaulting on this settlement. The amount due
as of December 31, 2003 is $28,343. Related interest of $4,692 has also been
accrued by the Company.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES.
On February 13, 2004 the board of directors of Anglotajik Minerals, Inc.
appointed the firm of Chisholm, Bierwolf and Nilson of Salt Lake City, Utah to
be the company's certifying accountants for the fiscal year ending December 31,
2003.
Our former auditors, Mark Bailey and Co, notified us in a letter dated
November 14, 2003 that as of December 1, 2003 they will cease to perform audits
for Exchange Act reporting issuers such as us, and accordingly will resign as
auditor for Anglotajik Minerals, Inc. as of that date. Mark Bailey and Co. has
served as our independent auditor since 1999.
On April 7, 2004 we filed with the SEC an amended Current Report of Form
8-K disclosing information about the change of auditing firms. A statement by
Mark Bailey and Co. was included as Exhibit 16 to that amended Current Report.
The information disclosed under Item 4 of that amended Current Report as well as
the entire Exhibit 16 thereto are incorporated by reference into this Annual
Report.
-26-
ITEM 8A. CONTROLS AND PROCEDURES.
Our Chief Executive Officer, who also serves as Acting Chief Financial
Officer (the "Certifying Officer") is responsible for establishing and
maintaining disclosure controls and procedures for the Company. The Certifying
Officer has designed such disclosure controls and procedures to ensure that
material information is made known to him, particularly during the period in
which this report was prepared. The Certifying Officer has evaluated the
effectiveness of the Company's disclosure controls and procedures as of the date
of this report and believes that the disclosure controls and procedures are
effective based on the required evaluation.
There have been no significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date
of their evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT.
The following are our director, executive officer and key personnel.
================================================================================
NAME AGE POSITION(S) SERVICE BEGAN
--------------------------------------------------------------------------------
Matthew Markin President, CEO, CFO June 2003
Director
George Al-Zein Executive Director in Tajikistan October 2003
Gulia Muradova Public Relations Officer October 2003
Vladislav Minaev Chief Geologist February 2003
================================================================================
MATTHEW MARKIN is currently our sole executive officer and director. He holds
graduate degrees in science from Capilano College and the University of British
Columbia, both in Vancouver. Since 1999 Mr Markin has served as president of The
Markin Group of Companies in Los Angeles, California, consultants to large and
small businesses in the areas of strategic planning, business development,
capital formation, mergers and acquisitions, and related matters. From 1992 to
1999 he served as vice president of Canyon Financial Group, and investment
banking firm. Previously, he founded and operated a successful real estate
development company specializing in commercial and apartment buildings. Mr.
Markin currently devotes about 90% of working hours to our affairs.
-27-
We know of no existing agreements or arrangements which might result in a
change of control.
Key Personnel
GEORGE AL-ZEIN is Executive Director of Operations in the Republic of
Tajikistan. Mr. Al-Zein has an extensive background consulting in international
business operations and government liaison, including such activities in
Tajikistan. He will oversee the Company's operations in Tajikistan and serve as
our liaison with the various ministries of the federal government and local
authorities.
GULIA MURADOVA is Public Relations Officer for the Company. She is an
internationally registered translator, regularly serving in that capacity for
international conferences. Ms. Muradova was the official translator for the
President of Tajkistan during a recent conference in Dushanbe, and has been
working with the Asian Development Bank offices in Dushanbe.
DR. VLADISLAV MINAEV is our Chief Geologist (effective subsequently to the
period covered by this report). Dr. Minaev is a 1960 Gold Medal graduate of the
Leningrad Mining Institute (now the St. Petersburg State Mining Institute) Since
1969 Dr. Minaev has served as Scientific Worker, Senior investigator, Scientific
secretary, and Leading Scientific Worker in the Institute of Geology (IG) of
Academy of Sciences, Republik of Tajikistan (Dushanbe, Tajikistan), including
1998-1999 field work as geologist-consultant in "Alpproject" (Kumtor Gold Co.,
Kyrgyz-Canada Joint venture), and as consultant in 2000 to Berne University for
Pamir's mineral resources and natural hazards (for economy planning). Dr. Minaev
has been published in approximately 95 journals and publications.
Compliance with Section 16(a) of the Exchange Act.
To our knowledge, no beneficial owner of our securities who is required to
file reports under Section 16(a) of the Securities Exchange Act of 1934, as
amended, has failed to file any such report as of the date of filing this Annual
Report.
Audit Committee Financial Expert and Code of Ethics
During the fiscal year ended December 31, 2003 we underwent a management
reorganization. Currently, our President, Matthew Markin, serves as Chief
Executive Officer, Chief Financial Officer, principal accounting officer, and
Chairman of the Audit Committee. We have not appointed an independent director
to serve on the Audit Committee who is a "financial expert" as defined by
Section 407 of the Sarbanes-Oxley Act of 2002 and implementing rules promulgated
by the SEC, but expect to do so before the end of our fiscal year ended December
31, 2004. We have not yet adopted a code of ethics pursuant to Section 496 of
the Sarbane-Oxley Act, but expect to do so during the current fiscal year.
-28-
ITEM 10. EXECUTIVE COMPENSATION.
The following table sets forth a summary of compensation received by each
of our officers and directors who received compensation from the Company during
either of our most recent fiscal years.
==============================================================================================
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------ -------------
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ALL OTHER($) OPTIONS (#)
------------------------------ ----------- ------------ ---------- ------------ -------------
Matthew Markin 2003 120,000(1) 0 100,000(2) 699,301(3)
President, CEO ----------- ------------ ---------- ------------ -------------
2002 0 0 0 0
------------------------------ ----------- ------------ ---------- ------------ -------------
Randy Miller 2003 68,100(4) 0 0 0
President, CEO ----------- ------------ ---------- ------------ -------------
2002 0 0 0 0
==============================================================================================
(1) Per the Company's employment contract with the President. 100% deferred.
(2) Sign-on bonus paid in 279,720 shares of common stock valued at $.3575 per share
(3) Exercisable at $.21 per share through July 2011.
(4) Paid in shares of Company stock.
No funds were set aside or accrued by the Company during fiscal year 2003
or 2002 to provide pension, retirement or similar benefits for directors or
executive officers.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.
The following are all of the individuals or groups known to us to be the
beneficial owner of more than five percent of any class of our equity
securities, and each officer and director who is the beneficial owner of equity
securities.
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=========================================================================================================
TITLE OF CLASS AMOUNT AND
NAME AND ADDRESS OF NATURE OF
BENEFICIAL OWNER POSITION BENEFICIAL PERCENT
OWNERSHIP OF CLASS
---------------------------------------------------------------------------------------------------------
Common Stock Matthew Markin President, Chief Executive 1,265,735(1) 6.4%
$.001 par value 11400 W. Olympic Blvd. Officer, Acting Chief (direct)
Suite 200 Financial Officer, Director
Los Angeles, CA 90064
Common Stock Randy Miller 1,006,994(2) 5.4%
$.001 par value 8 Gaucho Drive (direct)
Rolling Hills Estates
CA 90274
Common Stock Weir & Foulds LLP 1,000,000(3) 5.0%
$.001 par value c/o Wayne Egan (direct)
Barrister & Solicitor
130 King St. West Ste 1600
Toronto, ON M5X 1J5 CANADA
---------------------------------------------------------------------------------------------------------
Common Stock Officers and Directors 1,265,735 6.4%
$.001 par value as a Group
=========================================================================================================
(1) Ownership includes options to purchase 699,301 shares at $.21 through July
2011.
(2) Ownership includes options to purchase 1,000,000 restricted shares at $.10
per share through September 15, 2006. Mr. Miller is a former executive
officer and director of the Company.
(3) Issued in payment for legal services to us in connection with our
exploration operations in Tajikistan.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
During the years ended December 31, 2003, and 2002, we received legal and
consulting services from a director and stockholder. We charged $37,500 in 2003
and $276,084 in 2002 to consulting expense, and $0 and $80,000, respectively, to
legal fees for services rendered by directors or stockholders of the Company.
Outstanding balances payable for consulting and legal fees to these related
parties were $450,465 and $481,065 at December 31, 2003, and 2002, respectively.
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Our former President, Randy Miller, advanced the Company funds to pay
expenses. During the year ended December 31, 2003, travel and other office
expenses of $62,073 were paid by Mr. Miller.
In May 2003 the Company issued 13,986 shares of its common stock to Mr.
Miller pursuant to a stock option dated September 1, 2001. This issuance
relieved officer advances payable and consulting fees payable by $31,900 and
$68,100, respectively.
In July 2003 the Board of Directors authorized the issuance of 286,713
restricted common shares to the President to relieve the shareholder advance of
$48,773 and for a receivable of $51,227 from the President.
In July 2003 the Company issued to the President an option to purchase
699,301 shares of common stock at $0.21 per share. Also in July 2003 a signing
bonus of $100,000 was paid to the President via the issuance of 279,720 shares
of restricted common stock. Wages payable to the President of $120,000 for 3rd
and 4th quarter were accrued during the year.
During the year ended December 31, 2003, the Company issued a total of
16,999,984 common shares to each of the shareholders to whom interest was due on
the old line of credit. The issuance of these shares relieved the entire
outstanding payable of $150,519.
ITEM 13. EXHIBITS AND REOPRTS ON FORM 8-K.
Exhibits
No. Description
------- -----------
23 Consent of Former Auditor
31.1 Certification of CEO / CFO
32.1 Certification of CEO / CFO
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ANGLOTAJIK MINERALS INC.
Dated: April 29, 2004 /s/ Matthew Markin
----------------------------------
President, Chief Executive Officer
In accordance with the Exchange Act, this report has been signed by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
/s/ Matthew Markin President, Chief Executive April 29, 2004
-------------------------- Officer, Acting Chief
Financial Officer, Secretary,
Director
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