U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
FAIRVIEW ENERGY CORPORATION, INC.
---------------------------------
(Exact name of Registrant as specified in its charter)
NEVADA 4911 Applied For
------------- --------------------------- ----------------
(State or other Standard Industrial IRS Employer
jurisdiction of Classification Identification
incorporation or Number
organization)
Fairview Energy Corporation, Inc.
Bruce Velestuk, President
585 Milsom Wynd
Delta, British Columbia
Canada V4M 2T6
------------------------------ ----------
(Name and address of principal (Zip Code)
executive offices)
Registrant's telephone number,
including area code: (604)943-5200
Fax: (604)943-5209
--------------
Approximate date of commencement of
Proposed sale to the public: as soon as practicable after
the effective date of this
Registration Statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. | |
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. |__|
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |__|
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |__|
If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following. |__|
CALCULATION OF REGISTRATION FEE
-----------------------------------------------------------------------
TITLE OF EACH PROPOSED PROPOSED
CLASS OF MAXIMUM MAXIMUM
SECURITIES OFFERING AGGREGATE AMOUNT OF
TO BE AMOUNT TO BE PRICE PER OFFERING REGISTRATION
REGISTERED REGISTERED SHARE (1) PRICE (2) FEE (2)
-----------------------------------------------------------------------
Common Stock $1,478,500 $0.40 $1,478,500 $174.02
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(1) Based on the last sales price on September 26, 2005
(2) Estimated solely for the purpose of calculating the registration
fee in accordance with Rule 457 under the Securities Act.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.
SUBJECT TO COMPLETION, Dated January 6, 2006
Agent for service of process: Empire Stock Transfer Inc.
7251 West Lake Mead Boulevard, Suite 300
Las Vegas, Nevada, 89128
Telephone: 702-562-4091
2
PROSPECTUS
Fairview Energy Corporation, Inc.
3,696,250 SHARES
COMMON STOCK
----------------
The selling shareholders named in this prospectus are offering all of the shares
of common stock offered through this prospectus.
Our common stock is presently not traded on any market or securities exchange.
----------------
The purchase of the securities offered through this prospectus involves a high
degree of risk. See section entitled "Risk Factors" on pages 6 - 10.
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
The selling shareholders will sell our shares at $0.40 per share until our
shares are quoted on the OTC Bulletin Board, and thereafter at prevailing market
prices or privately negotiated prices. We determined this offering price based
upon the price of the last sale of our common stock to investors. While we
intend to apply to have our stock trade on the OTC Bulletin Board following the
effectiveness of our registration statement, our common stock may not be
accepted for quotation.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
----------------
The Date Of This Prospectus Is: January 6, 2006
3
Table Of Contents
PAGE
Summary .................................................................... 5
Risk Factors .............................................................. 7
- If we do not obtain additional financing, our business
will fail.......................................................... 7
- Because we have not commenced business operations, we
face a high risk of business failure .............................. 7
- Because our continuation as a going concern is in doubt,
we will be forced to cease business operations unless we can
generate profitable operations in the future....................... 7
- If we are unable to hire and retain key personnel, then we
may not be able to implement our business plan..................... 8
- Because there are certain risks inherent in hydro-electric
development that could result in the company becoming subject
to liability, we face a high risk of business failure ............. 8
- If we are not able to acquire a water resource, our
business will fail ................................................ 8
- If we are not able to meet the assessment requirements of
the regulatory authorities, our business will fail ................ 8
- If we are not able to secure the investment to build the
Project, our business will fail ................................... 9
- If we are not able to obtain an agreement from BC Hydro or
Powerex to purchase electricity from us on acceptable terms,
we will not be able to establish a hydro-electric project
and our business will fail ....................................... 9
- If a market for our common stock does not develop, share-
holders may be unable to sell their shares ........................ 9
- A purchaser is purchasing penny stock which limits his or
her ability to sell the stock ..................................... 9
Use of Proceeds ........................................................... 10
Determination of Offering Price ........................................... 10
Dilution .................................................................. 10
Selling Shareholders ...................................................... 10
Plan of Distribution ...................................................... 14
Legal Proceedings ......................................................... 16
Directors, Executive Officers, Promoters and Control Persons............... 16
Security Ownership of Certain Beneficial Owners and Management............. 18
Description of Securities ................................................. 18
Interest of Named Experts and Counsel ..................................... 18
Disclosure of Commission Position of Indemnification for
Securities Act Liabilities ................................................ 18
Organization Within Last Five Years ....................................... 19
Description of Business ................................................... 19
Plan of Operations ............................................ ........... 24
Description of Property ................................................... 25
Certain Relationships and Related Transactions ............................ 25
Market for Common Equity and Related Stockholder Matters .................. 25
Executive Compensation .................................................... 27
Financial Statements ...................................................... 28
Changes in and Disagreements with Accountants ............................. 39
4
Summary
Prospective investors are urged to read this prospectus in its entirety.
Fairview Energy Corporation, Inc. was incorporated in the State of Nevada on
July 29, 2005. We intend to commence business operations in the hydro-electric
energy sector by identifying and developing "run-of-river" projects in the
province of British Columbia. "Run of river" hydro-electric projects involve the
diversion of water in a river or stream into a pipe that runs downhill. A
turbine is installed at the end of the pipe which turns when water travels
through the pipe. The turbine is attached to a generator, which produces
electricity that is fed into a power grid for consumer and commercial use.
We are a start-up company that has not generated any revenue from operations
since our incorporation on July 29, 2005. We have been researching potential
project sites, and to date has identified a number of possibilities. However, we
need to further evaluate the potential of these sites and will need additional
capital to do this. To qualify a potential project site, there are a number of
studies to be completed to verify actual potential.
We will identify potential available streams or rivers and as required conduct
watershed hydrology assessments on the water resource to determine the water
resource potential. At least twelve months of detailed in-stream hydrology is
required to accurately determine the potential of the resource. If the data is
not currently available, we will conduct the hydrology assessment. Prior to
generating any revenue, there are four phases of which there is considerable
time and expense needed in order to succeed.
We estimate that the cost to complete our business plan is approximately
$3,695,000 consisting of:
1. $20,000 to conduct the hydrology, environmental and fisheries
assessments;
2. $25,000 for administrative costs, including management fees payable to our
president, professional fees and general business expenses;
3. $250,000 to purchase or pay the development fees for a water resource;
and
4. $2,400,000 million in debt financing will be required for the construction
of the project. Up to $1,000,000 in equity financing will also be
required.
There is no assurance that we will be able to obtain financing to cover the
costs of our business plan. We do not have any current plans to raise these
funds.
We were incorporated on July 29, 2005 under the laws of the state of Nevada. Our
principal offices are located at 585 Milsoom Wynd, Delta, British Columbia,
Canada, V4M 2T6. Our telephone number is (604)943-5200.
5
The Offering:
Securities Being Offered Up to 3,696,250 shares of common stock.
Offering Price The selling shareholders will sell our shares at
$0.40 per share until our shares are quoted on the
OTC Bulletin Board, and thereafter at p revailing
market prices or privately negotiated prices. There
is no guarantee that our stock will be quoted for
trading on the OTC Bulletin Board. We determined
this offering price based upon the price of the
last sale of our common stock to investors.
Terms of the Offering The selling shareholders will determine when and
how they will sell the common stock offered in
this prospectus.
Termination of the Offering The offering will conclude when all of the
3,696,250 shares of common stock have been sold,
the shares no longer need to be registered to be
sold or we decide to terminate the registration
of the shares.
Securities Issued
And to be Issued 6,946,250 shares of our common stock are issued and
outstanding as of the date of this prospectus. All
of the common stock to be sold under this
prospectus will be sold by existing shareholders.
Use of Proceeds We will not receive any proceeds from the sale of
the common stock by the selling shareholders.
Summary Financial Information
Balance Sheet
October 31, 2005
(audited)
Cash $29,879
Total Assets $29,879
Liabilities $ 5,544
Total Stockholders' Equity $24,335
Statement of Operations
6
From Incorporation on
July 29, 2005 to October 31, 2005
(audited)
Revenue $ 0
Net Loss (7,140)
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
prospectus 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 cash on hand is sufficient to cover the anticipated initial assessment
studies and a portion of administrative expenses. We will require additional
funding in order to continue to develop a property and to build a facility on
the property, if warranted. We anticipate spending $20,000 to conduct various
environmental and assessment studies, $250,000 to purchase or pay the
development fees for a water resource and $3,400,000 million for the
construction portion of the project if all permits and approvals are granted by
the Land and Water regulatory body of British Columbia.
We will need to raise additional funds in order to cover the cost of developing
or purchasing a water resource. We will likely arrange this through shareholder
or third party loans or through the sale of our common stock. We do not have any
arrangements in place for any equity or debt financing.
We do not currently have any arrangements for financing and may not be able to
find such financing if required. We currently do not have any operations and we
have no income. As well, we will not receive any funds from this registration.
BECAUSE WE HAVE NOT COMMENCED BUSINESS OPERATIONS, WE FACE A HIGH RISK OF
BUSINESS FAILURE.
We have not yet commenced business operations and accordingly, we have no way to
evaluate the likelihood that our business will be successful. We were
incorporated on July 29, 2005 and to date have been involved primarily in
organizational activities, researching potential project sites and identifying a
number of possibilities. Potential investors should be aware of the difficulties
normally encountered by development stage companies and the high rate of failure
of such enterprises. Prior to earning revenue, of which there is no assurance,
we will likely incur costs of about $3,695,000. We therefore expect to incur
significant losses in the foreseeable future. If we are unable to purchase a
water resource and construct a hydro-electric facility on it, we will not earn
profits or be able to continue operations.
BECAUSE OUR CONTINUATION AS A GOING CONCERN IS IN DOUBT, WE WILL BE FORCED TO
CEASE BUSINESS OPERATIONS UNLESS WE CAN GENERATE PROFITABLE OPERATIONS IN THE
FUTURE.
We have incurred losses since our inception of $7,140. Further losses are
anticipated in the development of our business. As a result, there is
substantial doubt about our ability to continue as a going concern. Our ability
to continue as a going concern is dependent upon our ability to generate
profitable operations in the future and/or to obtain the necessary financing to
meet our obligations and repay our liabilities arising from normal business
operations when they come due. If we cannot raise financing to meet our
obligations, we will be insolvent and will cease business operations.
7
IF WE ARE UNABLE TO HIRE AND RETAIN KEY PERSONNEL, THEN WE MAY NOT BE ABLE TO
IMPLEMENT OUR BUSINESS PLAN.
We depend on the services of our president, Bruce Velestuk, for our potential
success. The loss of the services of Mr. Velestuk would result in the failure of
our business. If we lost his services, it would be difficult to find a
replacement with similar skills, experience and industry contacts. We do not
have any written agreement with Mr. Velestuk to provide his management and
consulting services to us. If he decides to terminate his relationship with us,
which he may do without notice or cause, our business plan will fail.
BECAUSE THERE ARE CERTAIN RISKS INHERENT IN HYDRO-ELECTRIC DEVELOPMENT THAT
COULD RESULT IN THE COMPANY BECOMING SUBJECT TO LIABILITY, WE FACE A HIGH RISK
OF BUSINESS FAILURE.
There are certain risks inherent in energy production that could result in us
becoming subject to liability for environmental liability, property damage or
personal injury. Although we intend to apply for insurance in accordance with
industry standards to address such risks, such insurance has limitations that
may not be sufficient to cover the full extent of such liabilities. In addition,
such risks may not, in all circumstances be insurable. In certain circumstances,
we may elect not to obtain insurance to address specific risks due to the high
premiums. The payment of such uninsured liabilities would reduce the funds
available to us. The occurrence of a significant event that the we are not fully
insured against, or the insolvency of the insurer of such event, could result in
our insolvency and the loss of any investment in our stock.
IF WE ARE NOT ABLE TO ACQUIRE A WATER RESOURCE OUR BUSINESS WILL FAIL.
We have been researching potential project sites, and to date has identified a
number of possibilities. However, in the initial phase of our business
development, we need to further evaluate the potential of these sites and will
need additional capital to do this. To qualify a potential project site there
are a number of studies to be completed to verify actual hydro-electric project
potential. If we are unable to acquire a suitable site, our business will fail.
IF WE ARE NOT ABLE TO MEET THE ASSESSMENT REQUIREMENTS OF THE REGULATORY
AUTHORITIES, OUR BUSINESS WILL FAIL.
The Land and Water regulatory body of British Columbia must sign off on
fisheries and environmental impact studies, navigable waters studies, final
engineering design, final project parameters and final infrastructure costs
relating to a proposed "run of river" hydro-electric project. We must also
conduct hearings and public consultations and secure First Nation approval for
any project. Our failure to obtain an approval may permanently cancel or delay
the proposed project.
8
IF WE ARE NOT ABLE TO SECURE THE INVESTMENT TO BUILD THE PROJECT, OUR BUSINESS
WILL FAIL.
Once all necessary permits have been obtained, we will have to raise additional
funds to finance a "run of river" project. In addition to requiring up to
$250,000 to cover costs of obtaining necessary permits, we will also need to
raise $3,400,000 in order to fund construction of the project. While we hope to
attain $2,400,000 of the capital cost of construction by way of debt financing
and the remainder of $1,000,000 through equity financing, we have no
arrangements in this regard. If we are not able to secure financing, our
business will fail.
IF WE ARE NOT ABLE TO OBTAIN AN AGREEMENT FROM BC HYDRO OR POWEREX TO PURCHASE
ELECTRICITY FROM US ON ACCEPTABLE TERMS, WE WILL NOT BE ABLE TO ESTABLISH A
HYDRO-ELECTRIC PROJECT AND OUR BUSINESS WILL FAIL.
Even if we demonstrate a significant hydro-electric resource on a site that we
acquire, we may not be able to secure a purchaser for any electricity that we
produce on acceptable terms. Without a purchaser for electricity that we
potentially produce from a property, we will not be able to proceed with our
business plan.
IF A MARKET FOR OUR COMMON STOCK DOES NOT DEVELOP, SHAREHOLDERS MAY BE UNABLE TO
SELL THEIR SHARES.
There is currently no market for our common stock and no certainty that a market
will develop. We currently plan to apply for listing of our common stock on the
over the counter bulletin board upon the effectiveness of the registration
statement, of which this prospectus forms a part. Our shares may never trade on
the bulletin board. If no market is ever developed for our shares, it will be
difficult for shareholders to sell their stock. In such a case, shareholders may
find that they are unable to achieve benefits from their investment.
A PURCHASER IS PURCHASING PENNY STOCK WHICH LIMITS HIS OR HER ABILITY TO SELL
THE STOCK.
The shares offered by this prospectus constitute penny stock under the 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, thus limiting investment liquidity. Any
broker-dealer engaged by the purchaser for the purpose of selling his or her
shares in our company will be subject to rules 15g-1 through 15g-10 of the
Exchange Act. Rather than creating a need to comply with those rules, some
broker-dealers will refuse to attempt to sell penny stock.
Please refer to the "Plan of Distribution" section for a more detailed
discussion of penny stock and related broker-dealer restrictions.
Forward-Looking Statements
This prospectus 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 may 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 prospectus.
9
Use Of Proceeds
We will not receive any proceeds from the sale of the common stock offered
through this prospectus by the selling shareholders.
Determination Of Offering Price
The selling shareholders will sell our shares at $0.40 per share until our
shares are quoted on the OTC Bulletin Board, and thereafter at prevailing market
prices or privately negotiated prices. There is no guarantee that our stock will
be quoted for trading on the OTC Bulletin Board. We determined this offering
price, based upon the price of the last sale of our common stock to investors.
Dilution
The common stock to be sold by the selling shareholders is common stock that is
currently issued and outstanding. Accordingly, there will be no dilution to our
existing shareholders.
Selling Shareholders
The selling shareholders named in this prospectus are offering all of
the 3,696,250 shares of common stock offered through this prospectus. These
shares were acquired from us in private placements that were exempt from
registration under Regulation S of the Securities Act of 1933. The shares
include the following:
1. 3,675,000 shares of our common stock that the selling shareholders
acquired from us in an offering that was exempt from registration under
Regulation S of the Securities Act of 1933 and was completed on August 21,
2005; and
2. 21,250 shares of our common stock that the selling shareholders acquired
from us in an offering that was exempt from registration under Regulation
S of the Securities Act of 1933 and was completed on September 26, 2005.
The following table provides as of the date of this prospectus, information
regarding the beneficial ownership of our common stock held by each of the
selling shareholders, including:
1. the number of shares owned by each prior to this offering;
2. the total number of shares that are to be offered for each;
3. the total number of shares that will be owned by each upon
completion of the offering; and
4. the percentage owned by each upon completion of the offering.
10
Total Number
Of Shares To Total Shares Percent
Be Offered For Owned Upon Owned Upon
Name Of Shares Owned Selling Completion Completion
Selling Prior To This Shareholders of this Of This
Stockholder Offering Account Offering Offering
------------------------------------------------------------------------------------------------
Maribel Karmazyn 325,000 325,000 Nil Nil
203 - 65B Street
Delta, BC V4M 2T6
Lorelei Velestuk 325,000 325,000 Nil Nil
585 Milsom Wynd
Delta, BC V4M 2T6
Woody Turnquist 325,000 325,000 Nil Nil
8095 York Avenue
Crofton, BC V0R 1R0
Dawnlea Tait 200,000 200,000 Nil Nil
3584 Triumph Street
Vancouver, BC V5K 1V1
Laurie Hunsberger 200,000 200,000 Nil Nil
401 - 8668 Osler Street
Vancouver, BC V6P 4E6
Dean Caviness 225,000 225,000 Nil Nil
5481 123rd Street
Surrey, BC V3X 3H8
Deagan Reimer 325,000 325,000 Nil Nil
606 E 48th Avenue
Vancouver, BC V5W 2E6
Bruce Mede 225,000 225,000 Nil Nil
2844 Kilpatrick Road
Nanaimo, BC V9R 6W6
Dave May 225,000 225,000 Nil Nil
581 Obed Avenue
Victoria, BC V9A 1K6
Dave Ball 225,000 225,000 Nil Nil
1980 Charles Street
Vancouver, BC V5L 2T9
Steve Jones 325,000 325,000 Nil Nil
606 E 48th Avenue
Vancouver, BC V5W 2E6
11
Total Number
Of Shares To Total Shares Percent
Be Offered For Owned Upon Owned Upon
Name Of Shares Owned Selling Completion Completion
Selling Prior To This Shareholders of this Of This
Stockholder Offering Account Offering Offering
------------------------------------------------------------------------------------------------
Herb Tait 200,000 200,000 Nil Nil
585 Milsom Wynd
Delta, BC V4M 2T6
Deborah McBride 175,000 175,000 Nil Nil
5251 Cambridge Court
Delta, BC V4M 3Z1
Elizabeth Erickson 200,000 200,000 Nil Nil
1680 58th Street
Delta, BC V4L 1X4
Shannon Fitton 175,000 175,000 Nil Nil
211 - 4500 Westwater Drive
Richmond, BC V7E 6S1
Dave Karmazyn 1,200 1,200 Nil Nil
203 - 65B Street
Delta, BC V4L 1W9
Catherine Mede 1,500 1,500 Nil Nil
2844 Kilpatrick Roadd
Nanaimo, BC V9R 6W6
Kim May 1,300 1,300 Nil Nil
581 Obed Avenue
Victoria, BC V9A 1K6
Shirley Tait 1,100 1,100 Nil Nil
585 Milsom Wynd
Delta, BC V4M 2T6
Russell Fitton 1,400 1,400 Nil Nil
211 - 4500 Westwater Drive
Richmond B.C. V7E 6S1
Robert McBride 1,600 1,600 Nil Nil
5251 Cambridge Court
Delta, BC V4M 3Z1
Carolyn Windsor-Sturm 1,000 1,000 Nil Nil
PO Box 100
Penticton, BC V2A 6J9
Ivan Milosnovic 1,100 1,100 Nil Nil
7 - 12000, HWY 33 East
Kelowna, BC V1P 1K4
Marian Velestuk 1,500 1,500 Nil Nil
9395 Sunset Road
Kelowna, BC
12
Total Number
Of Shares To Total Shares Percent
Be Offered For Owned Upon Owned Upon
Name Of Shares Owned Selling Completion Completion
Selling Prior To This Shareholders of this Of This
Stockholder Offering Account Offering Offering
------------------------------------------------------------------------------------------------
Kavinder Dhillon 1,400 1,400 Nil Nil
10386 - 143 Street
Surrey, BC V3T 4T6
Sally Wong 1,200 1,200 Nil Nil
2070 Quilchena Crescent
Vancouver, B.C. V6M 1E3
Douglas Dunn 1,250 1,250 Nil Nil
48 - 8863 216th Street
Langley, BC V1M 2G9
Kathryn Witter 1,250 1,250 Nil Nil
402 - 1859 Spyglass Place
Vancouver, BC V5Z 4K6
Allen Crowley 1,200 1,200 Nil Nil
72 Mount Cascade Close SE
Calgary, AB T2Z 2K5
Bruce Hodding 1,250 1,250 Nil Nil
5364 West River Boltom Road
Duncan, BC V9L 6J6
Chris Turley 1,000 1,000 Nil Nil
201 - 4438 W 10th Avenue
Vancouver, BC V6R 4R8
Catherine Edwards 1,000 1,000 Nil Nil
4027 W 31st Avenue
Vancouver, BC V6S 1Y7
Total: 3,696,250 3,696,250 Nil Nil
We have the following relationships amongst our shareholders:
1. Lorelei Velestuk is Bruce Velestuk's wife;
2. Maribel Karmazyn is Bruce Velestuk's sister-in-law;
3. Dawnlea Tait is Bruce Velestuk's sister-in-law;
4. Bruce Mede is Bruce Velestuk's brother-in-law;
5. Deberah McBride is Bruce Velestuk's sister-in-law
6. Shannon Fitton is Bruce Velestuk's neice;
7. Dave Karmazyn is Bruce Velestuk's brother-in-law;
8. Catherine Mede is Bruce Velestuk's sister-in-law;
9. Shirley Tait is Bruce Velestuk's mother-in-law;
10. Robert McBride is Bruce Velestuk's brother-in-law;
11. Carolyn Windsor-Sturm is Bruce Velestuk's cousin;
12. Marian Velestuk is Bruce Velestuk's sister; and
Otherwise, none of the selling shareholders:
(1) has had a material relationship with us other than as a shareholder at
any time within the past three years;
13
(2) has ever been one of our officers or directors; or
(3) is a broker-deal or an affiliate of a broker-dealer.
Plan Of Distribution
The selling shareholders may sell some or all of their common stock in one or
more transactions, including block transactions. Such sales may be private
transactions whereby they sell our stock to individuals or groups or in
transactions conducted through the facilities of a stock exchange or quotation
system, if such a quotation or listing occurs.
The selling shareholders may pledge all or a portion of the securities owned as
collateral for margin accounts or in loan transactions, and the securities may
be resold pursuant to the terms of such pledges, margin accounts or loan
transactions. Upon default by such selling shareholders, the pledge in such loan
transaction would have the same rights of sale as the selling shareholders under
this prospectus. The selling shareholders may also enter into exchange traded
listed option transactions, which require the delivery of the securities listed
under this prospectus. If our securities are qualified for quotation on the over
the counter bulletin board, the selling shareholders may also transfer
securities owned in other ways not involving market makers or established
trading markets, including directly by gift or other transfer without
consideration, and upon any such transfer the transferee would have the same
rights of sale as such selling shareholders under this prospectus.
The selling shareholders will sell our shares at $0.40 per share until our
shares are quoted on the OTC Bulletin Board, and thereafter at prevailing market
prices or privately negotiated prices. There is no guarantee that our stock will
be quoted for trading on the OTC Bulletin Board. We determined this offering
price arbitrarily based upon the price of the last sale of our common stock to
investors.
The selling shareholders may also sell their shares directly to market makers
acting as principals, brokers or dealers, who may act as agent or acquire the
common stock as principal. Any broker or dealer participating in such
transactions as agent may receive a commission from the selling shareholders,
or, if they act as agent for the purchaser of such common stock, from such
purchaser. The selling shareholders will likely pay the usual and customary
brokerage fees for such services. Brokers or dealers may agree with the selling
shareholders to sell a specified number of shares at a stipulated price per
share and, to the extent such broker or dealer is unable to do so while acting
as agent for the selling shareholders, to purchase, as principal, any unsold
shares at the price required to fulfill the respective broker's or dealer's
commitment to the selling shareholders.
If a selling security holder enters into an agreement, after effectiveness of
this registration statement, to sell shares to a broker-dealer as principal and
the broker-dealer is acting as an underwriter, then we will file a
post-effective amendment identifying the broker-dealer, providing the required
information on the plan of distribution, revising the appropriate disclosures in
the registration statement and filing the agreement as an exhibit to the
registration statement.
14
Brokers or dealers who acquire shares as principals may thereafter resell such
shares from time to time in transactions in a market or on an exchange, in
negotiated transactions or otherwise, at market prices prevailing at the time of
sale or at negotiated prices, and in connection with such re-sales may pay or
receive commissions to or from the purchasers of such shares. These transactions
may involve cross and block transactions that may involve sales to and through
other brokers or dealers. We can provide no assurance that all or any of the
common stock offered will be sold by the selling shareholders.
In connection with an application to have our securities quoted on the OTC
Bulletin Board, we anticipate that we will request a broker-dealer to act as a
market maker in order to sponsor our 15c211 application with the NASD. We have
not had any preliminary discussions with any market maker. There is no guarantee
that we will be able to arrange for a market maker to sponsor our quotation
application. We do not plan to contact any market makers until the effectiveness
of our registration statement.
We are bearing all costs relating to the registration of the common stock. These
are estimated to be $18,000. The selling shareholders, however, will pay any
commissions or other fees payable to brokers or dealers in connection with any
sale of the common stock.
The selling shareholders must comply with the requirements of the Securities Act
and the Exchange Act in the offer and sale of the common stock. In particular,
during such times as the selling shareholders may be deemed to be engaged in a
distribution of the common stock, and therefore be considered to be an
underwriter, they must comply with applicable law and may, among other things:
1. Not engage in any stabilization activities in connection with our common
stock;
2. Furnish each broker or dealer through which common stock may be offered,
such copies of this prospectus, as amended from time to time, as may be
required by such broker or dealer; and
3. Not bid for or purchase any of our securities or attempt to induce any
person to purchase any of our securities other than as permitted under the
Exchange Act.
The Securities Exchange Commission has also adopted rules that regulate
broker-dealer practices in connection with transactions in penny stocks. Penny
stocks are generally equity securities with a price of less than $5.00 (other
than securities registered on certain national securities exchanges or quoted on
the Nasdaq system, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
system).
The penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from those rules, deliver a standardized risk
disclosure document prepared by the Commission, which:
* contains a description of the nature and level of risk in the market for
penny stocks in both public offerings and secondary trading;
* contains a description of the broker's or dealer's duties to the customer
and of the rights and remedies available to the customer with respect to a
violation of such duties;
15
* contains a brief, clear, narrative description of a dealer market,
including "bid" and "ask" prices for penny stocks and the significance of
the spread between the bid and ask price;
* contains a toll-free telephone number for inquiries on disciplinary
actions;
* defines significant terms in the disclosure document or in the conduct of
trading penny stocks; and
* contains such other information and is in such form (including language,
type, size, and format) as the Commission shall require by rule or
regulation;
The broker-dealer also must provide, prior to proceeding with any transaction in
a penny stock, the customer:
* with bid and offer quotations for the penny stock;
* details of the compensation of the broker-dealer and its salesperson in the
transaction;
* the number of shares to which such bid and ask prices apply, or other
comparable information relating to the depth and liquidity of the market
for such stock; and
* monthly account statements showing the market value of each penny stock
held in the customer's account.
We have disclosed all methods by which selling security holders may transfer
their registered shares, of which we are aware.
Neither we nor our selling security holders intend to use:
a) any means of distributing or delivering our prospectus other than by
hand or by mail; or
b) any forms of prospectus other than printed versions;
As well, neither we nor our selling security holders have any arrangements with
a third party to host or access our preliminary prospectus on the Internet.
In addition, the penny stock rules require that prior to a transaction in a
penny stock not otherwise exempt from those rules; the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitability statement.
These disclosure requirements will have the effect of reducing the trading
activity in the secondary market for our stock because it will be subject to
these penny stock rules. Therefore, stockholders may have difficulty selling
those securities.
Legal Proceedings
We are not currently a party to any legal proceedings. Our address for service
of process in Nevada is 7251 West Lake Mead Boulevard, Suite 300, Las Vegas,
Nevada, 89128.
Directors, Executive Officers, Promoters And Control Persons
16
Our executive officers and directors and their respective ages as of the date of
this prospectus are as follows:
Directors:
Name of Director Age
Bruce Velestuk 45
Executive Officers:
Name of Officer Age Office
--------------------- ----- -------
Bruce Velestuk 45 President, Chief
Executive Officer,
Treasurer, Secretary
and a 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. Velestuk graduated from the Simon Fraser University with a degree in
Business Administration in 1987. In 1997, Mr. Velestuk achieved his Certified
Management Accountant accreditation. From November 1992 to November 1995, he was
the Canadian marketing manager for a Logical Methods Software Ltd., a Vancouver
based private company involved in distributing accounting software to
businesses.
From November 1995 to December 1999, Mr. Velestuk was the corporate controller
for IPAC Chemical Company, Ltd., a Vancouver based private company involved in
the manufacturing and distribution of chemicals. In December 1999 he joined KPMG
as a management system assessor until October 2002. Since then, he has worked
extensively as a management system consultant and ISO 9001 Management System
Auditor, for Link Management Ltd. a Vancouver based private company involved in
providing ISO quality systems to businesses.
As well, since 1996, Mr. Velestuk has been the registered proponent for two
run-of-river projects located in southwestern British Columbia. Both of these
projects are in the permitting phase with the British Columbia provincial
government's Land and Water ministry.
Term of Office
Our directors are appointed for a one-year term to hold office until the next
annual general meeting of our shareholders or until removed from office in
accordance with our bylaws. Our officers are appointed by our board of directors
and hold office until removed by the board.
Significant Employees
We have no significant employees other than our sole director, Mr. Bruce
Velestuk.
17
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
prospectus, and by the officers and directors, individually and as a group.
Except as otherwise indicated, all shares are owned directly.
Amount of
Title of Name and address beneficial Percent
Class of beneficial owner ownership of class
--------------------------------------------------------------------------------
Common Bruce Velestuk 3,250,000 46.8%
Stock President, Chief
Executive Officer
Secretary,
Treasurer and a Director
585 Milsom Wynd
North Vancouver, B.C., Canada
Common All officers and directors 3,250,000 46.8%
Stock as a group that consists of
one person
The percent of class is based on 6,946,250 shares of common stock issued and
outstanding as of the date of this prospectus.
Description Of Securities
General
Our authorized capital stock consists of 75,000,000 shares of common stock at a
par value of $0.001 per share.
Common Stock
As of January 6, 2006, there were 6,946,250 shares of our common stock issued
and outstanding that are held by 33 stockholders of record.
Holders of our common stock are entitled to one vote for each share on all
matters submitted to a stockholder vote. Holders of common stock do not have
cumulative voting rights. Therefore, holders of a majority of the shares of
common stock voting for the election of directors can elect all of the
directors. A vote by the holders of a majority of our outstanding shares is
required to effectuate certain fundamental corporate changes such as
liquidation, merger or an amendment to our articles of incorporation.
Holders of common stock are entitled to share in all dividends that the board of
directors, in its discretion, declares from legally available funds. In the
event of a liquidation, dissolution or winding up, each outstanding share
entitles its holder to participate pro rata in all assets that remain after
payment of liabilities and after providing for each class of stock, if any,
having preference over the common stock.
Holders of our common stock have no pre-emptive rights, no conversion rights and
there are no redemption provisions applicable to our common stock.
18
Preferred Stock
We do not have an authorized class of preferred stock.
Dividend Policy
We have never declared or paid any cash dividends on our common stock. We
currently intend to retain future earnings, if any, to finance the expansion of
our business. As a result, we do not anticipate paying any cash dividends in the
foreseeable future.
Share Purchase Warrants
We have not issued and do not have outstanding any warrants to purchase shares
of our common stock.
Options
We have not issued and do not have outstanding any options to purchase shares of
our common stock.
Convertible Securities
We have not issued and do not have outstanding any securities convertible into
shares of our common stock or any rights convertible or exchangeable into shares
of our common stock.
Interests Of Named Experts And Counsel
No expert or counsel named in this prospectus as having prepared or certified
any part of this prospectus or having given an opinion upon the validity of the
securities being registered or upon other legal matters in connection with the
registration or offering of the common stock was employed on a contingency
basis, or had, or is to receive, in connection with the offering, a substantial
interest, direct or indirect, in the registrant. Nor was any such person
connected with the registrant as a promoter, managing or principal underwriter,
voting trustee, director, officer, or employee.
The financial statements included in this prospectus and the registration
statement have been audited by Dale Matheson Carr-Hilton LaBonte, Chartered
Accountants, to the extent and for the periods set forth in their report
appearing elsewhere in this document and in the registration statement filed
with the SEC, and are included in reliance upon such report given upon the
authority of said firm as experts in auditing and accounting.
Disclosure Of Commission Position Of Indemnification For
Securities Act Liabilities
Our directors and officers are indemnified as provided by the Nevada Revised
Statutes and our Bylaws. These provisions provide that we shall indemnify a
director or former director against all expenses incurred by him by reason of
him acting in that position. The directors may also cause us to indemnify an
officer, employee or agent in the same fashion. Due to Securities and Exchange
Commission opinion, we will not indemnify our directors and officers for
Securities Act liabilities.
We have been advised that in the opinion of the Securities and Exchange
Commission indemnification for liabilities arising under the Securities Act is
against public policy as expressed in the Securities Act, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities is asserted by one of our directors, officers, or controlling
persons in connection with the securities being registered, we will, unless in
the opinion of our legal counsel the matter has been settled by controlling
precedent, submit the question of whether such indemnification is against public
policy to a court of appropriate jurisdiction. We will then be governed by the
court's decision.
19
Organization Within Last Five Years
We were incorporated on July 29, 2005 under the laws of the state of Nevada. On
that date, Bruce Velestuk was appointed as our sole director. As well, Mr.
Welestuk was appointed as our president, treasurer, secretary, chief executive
officer and sole promoter.
Description Of Business
Business Development
We were incorporated in the State of Nevada on July 29, 2005. We are a
development stage company that has not generated any revenue from operations
since our incorporation on July 29, 2005.
Our business plan will focus its resources on developing renewable energy
sources that create environmentally friendly, hydro-electric energy by
identifying run-of-river projects in the province of British Columbia. "Run of
river" hydro-electric projects involve the diversion of water in a river or
stream into a pipe that runs downhill. A turbine is installed at the end of the
pipe which turns when water travels through the pipe. The turbine is attached to
a generator, which produces electricity that is fed into a power grid for
consumer and commercial use.
Run-of-River Projects
Run-of-River hydro projects use simple proven technology and have been used
since the early 1900's to generate electricity.
Run-of-river hydro plants, which do not require dams, rely on the natural
downward flow of the stream to guide water through pipes to a generating
station. The force of the water spins a turbine, which drives an electric
generator that creates electricity. The electricity is then fed into the grid by
normal power lines.
Hydro-electric power plants convert the kinetic energy contained in falling
water into electricity. The energy in flowing water is ultimately derived from
the sun, and is therefore constantly being renewed. Energy contained in sunlight
evaporates water from the oceans and deposits it on land in the form of rain.
Differences in land elevation result in rainfall runoff, and allow some of the
original solar energy to be captured as hydro-electric power.
Run-of-River projects are dramatically different in design, appearance and
impact from conventional hydroelectric projects. There are two main differences.
First, there is no water storage other than the limited amount required to
submerge the intake pipe. Second, there is no alteration of downstream flows,
since all diverted water is returned to the stream below the powerhouse.
20
A typical run-of-river project consists of the following: an intake structure at
which water is diverted, a pipeline (penstock) through which it travels
downhill, a small powerhouse, and a tailrace where the water is returned to the
stream above -- or as close a possible to -- a barrier to fish movement.
Potential run-of-river sites must offer a significant gradient (elevation drop)
and sufficient annual precipitation rates. Glacial ice fields offer a unique
form of storage capacity and, where available, can further enhance project
viability. Potential sites tend to exist at high altitudes, characterized by
features such as fast flows, steep canyons, waterfalls and other natural
barriers. These features reduce the suitability of such sites for potentially
competing land uses such as recreation and, most importantly, limit fish
presence and diversity.
British Columbia is fortunate to have a large number of such sites, particularly
in the coastal mountain ranges.
Run-of-river projects can be developed on appropriate sites with little if any
negative impact on either aquatic or terrestrial habitat.
To develop a fully operating hydro-electric project, we need to complete four
separate business phases:
Phase 1 Identify, qualify and acquire the land use rights of a potential
project site
Phase 2 Research and perform all necessary assessments needed to meet the
requirements of the regulatory authorities and British Columbia
Hydro, a government funded corporation that administers the
transmission and sale of electricity in British Columbia.
Phase 3 Once all criteria is met, negotiate and execute a power purchase
agreement with British Columbia Hydro, and secure the investment to
build the project and begin construction.
Phase 4 Building and commissioning the run-of-river project through
independent contractors.
We have been researching potential project sites, and to date has identified a
number of possibilities. However, in the initial phase, we need to further
evaluate the potential of these sites and will need additional capital to do
this. To qualify a potential project site, there are a number of studies to be
completed to verify actual potential. These consist of the following;
PHASE ONE
o Initial assessment to assess viability (access, hydrology,
transmission, environmental). This would be in the form of site
visit, local knowledge, and search of available data.
o Watershed Hydrologic Surveys and Estimates
o Initial Geo-technical consultations
o Initial First Nation consultation and meetings
o Preliminary Fisheries Analysis
o Initial contact with Municipality
o Preliminary Engineering, including construction costs estimates,
hydrology and financial feasibility
21
o Initial in-stream flow and head estimates
o Initial feasibility on penstock length, location and cost
o Cost estimates for powerhouse, including capacity studies
o Monthly production and revenue estimates based on watershed hydrology
and 35 year historical data
o Financial modeling of profitability and capital costs to determine
penstock and turbine size. Various vendor quotations.
o Interconnect studies to determine interconnect strategy
o BC Hydro Interconnect Study that confirm inter-connect feasibility and
provides costs and quotes for interconnection.
o Crown Land Applications (if applicable)
o LWBC filings and applications (if applicable)
At the end of Phase One, we must have acquired the right to the project and be
satisfied that the property has the potential to be developed as a
hydro-electric project.
PHASE TWO
It is during this phase that the investment into detailed studies is conducted,
with a view to final permitting. The respective regulatory authorities must sign
off on the following final permits, with overall approval granted by the Land
and Water regulatory body of British Columbia:
o fisheries and environmental impact studies
o navigable waters studies
o Fisheries Department approval
In addition, we must determine final engineering design, project parameters,
infrastructure costs and project feasibility. We must also conduct hearings,
public consultations and secure First Nation final approval with respect to the
project.
This phase is estimated to cost up to approximately $250,000 depending on the
local conditions and amount of studies required. The process can take from 12 to
36 months to complete, depending on amount of information readily available,
timing, and difficulties encountered.
Mr. Bruce Velestuk, will be the project manager for this phase. Consultants with
specialized skills will be extensively used. The addition of one more key
management person will be required.
PHASE THREE
Once permitting has progressed to the point where the company is comfortable
that the project is financially viable and all regulatory approvals have been
obtained, we must then seek a buyer for the electricity (typically, British
Columbia Hydro or Powerex), and secure financing for the construction of the
project. The total construction cost of a project will be approximately
$3,400,000. While we hope to attain $2,400,000 of the capital cost of
construction by way of debt financing and the remainder of $1,000,000 through
equity financing, we have no arrangements in this regard.
During this phase, we must also enter into arrangements with independent
contractors for construction of the run of river project, negotiate and secure
22
financing and enter into a power purchase agreement for the sale of all
electricity generated by the project. Typically, financing will be subject to us
entering into a power purchase agreement with a set price per kilowatt hour over
a set agreement term (typically 20 years).
PHASE FOUR
The construction of the run of river hydro-electric project will be administered
by independent contractors with extensive experience in the construction of
hydro-electric projects. A number of large firms operate in the area with this
type of experience. Final commissioning will occur under the observance of all
stakeholders including British Columbia Hydro, the British Columbia government,
and us.
An experienced project manager will be hired to represent us during this phase.
Mr. Velestuk will oversee the entire project. The addition of one more key
management person will be required.
Power Purchase Agreement
The most likely purchaser of any power that is derived from a run of river
project will be sold to British Columbia Hydro. There is no guarantee that we
will be able to sell the electricity to BC Hydro at a price that will allow us
to be profitable. Should we be unable to sell electricity from our
hydro-electric project to BC Hydro, then we will be forced to sell the power on
the open market. There is no guarantee that we will be permitted to use the
transmission lines owned by BC Hydro to sell electricity to third parties. This
could result in a material impact to our business plan.
We have not entered into any discussions with potential power purchasers and
cannot be assured that we will be able to reach an agreement on acceptable
terms.
Competitive Business Conditions
We will compete for available sites, development leases, licenses and
concessions and skilled industry personnel with other energy companies, many of
which have significantly greater financial resources than us. In addition to the
major utility companies, our competitors will include major integrated
alternative energy companies, numerous other smaller and independent energy
companies and individual producers and operators.
The energy industry is highly competitive. Our competitors for the acquisition,
production and development of alternative energy projects, and for capital to
finance such activities, include companies that have greater financial and
personnel resources available to them than the Company. Our ability to
successfully bid on and acquire property rights, to develop alternative energy
supplies, to participate in future opportunities and to identify and enter into
commercial arrangements with customers will be dependent upon developing and
maintaining close working relationships with our future industry partners and
joint operators and our ability to select and evaluate suitable properties and
to consummate transactions in a highly competitive environment.
23
Government Approvals and Environmental Laws
All categories of hydro-electric energy production present environmental risks
and hazards and are subject to environmental regulation pursuant to a variety of
international conventions and federal, provincial and municipal laws and
regulations. Environmental legislation provides for, among other things,
restrictions and prohibitions of water releases left in the creek after energy
production.
The legislation also requires that generating facilities and production sites be
operated, maintained, abandoned and reclaimed to the satisfaction of applicable
regulatory authorities. Compliance with such legislation can require significant
expenditures and a breach may result in the imposition of fines and penalties,
some of which may be material. Environmental legislation is involving in a
manner expected to result in stricter standards and enforcement, larger fines
and liability and potentially increased capital expenditures and operating
costs. The discharge of hazardous substances or other pollutants into the air,
soil or water may give rise to liabilities to governments and third parties and
may require us to incur costs to remedy such discharge. No assurance can be
given that environmental laws will not result in a curtailment of production or
a material increase in the costs of production, development or acquisition
activities or otherwise adversely affect our financial condition, results of
operations or prospects.
In addition, in order to proceed with a run of river hydro-electric project, we
will need to obtain fisheries, environmental and navigable waters approvals from
departments of the British Columbia government.
Employees
We have no employees as of the date of this prospectus other than Mr. Bruce
Velestuk, our president and sole director.
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.
Reports to Security Holders
Although we are not required to deliver a copy of our annual report to our
security holders, we will voluntarily send a copy of our annual report,
including audited financial statements, to any registered shareholder who
requests it. We will not be a reporting issuer with the Securities & Exchange
Commission until our registration statement on Form SB-2 is declared effective.
24
We have filed a registration statement on form SB-2 under the Securities Act of
1933 with the Securities and Exchange Commission with respect to the shares of
our common stock offered through this prospectus. This prospectus is filed as a
part of that registration statement, but does not contain all of the information
contained in the registration statement and exhibits. Statements made in the
registration statement are summaries of the material terms of the referenced
contracts, agreements or documents of the company. We refer you to our
registration statement and each exhibit attached to it for a more detailed
description of matters involving the company, and the statements we have made in
this prospectus are qualified in their entirety by reference to these additional
materials. You may inspect the registration statement, exhibits and schedules
filed with the Securities and Exchange Commission at the Commission's principal
office in Washington, D.C. Copies of all or any part of the registration
statement may be obtained from the Public Reference Section of the Securities
and Exchange Commission, 100 F Street, N.E., Washington, D.C., 20549. Please
call the Commission at 1-800-SEC-0330 for further information on the operation
of the public reference rooms. The Securities and Exchange Commission also
maintains a web site at http://www.sec.gov that contains reports, proxy
statements and information regarding registrants that file electronically with
the Commission. Our registration statement and the referenced exhibits can also
be found on this site.
Plan Of Operations
Our plan of operations for the twelve months following the date of this
prospectus is to conduct watershed hydrology assessments on selected properties
that have the potential to host a run of river hydro-electric project. At least
twelve months of detailed in-stream hydrology is required to accurately
determine the potential of the resource. If the data is not currently available,
we will conduct the hydrology assessment at a cost of approximately $10,000.
We will also conduct initial environmental and fisheries assessments using known
public domain resource sources, and those available from the Department of
Fisheries and Oceans, a federal regulatory agency at a cost of $10,000.
Hydrology and the environmental data will provide the constraints for the
economic modeling to be initially performed.
We will focus on projects that have a capacity of under 10 megawatts as they are
felt to be of less environmental impact and therefore have shorter approval
processes. We intend to have evaluated and selected a property in southwestern
British Columbia by December 2006.
In addition to the above costs, we anticipate spending an additional $25,000 per
year on administrative costs, including management fees payable to our
president, professional fees and general business expenses. Total expenditures
over the next 12 months are therefore expected to be $45,000.
Our cash on hand is sufficient to cover the anticipated initial assessment
studies and a portion of administrative expenses. We will require additional
funding in order to continue to develop a property and to construct a run of
river project on the property, if warranted.
We anticipate that additional funding will be in the form of the sale of equity
and director loans. We also anticipate that up to 75% of the construction costs
of a run of river project will be funded through debt financing. We do not
currently have any arrangement for any equity or debt financing or director
loans.
25
We have not attained profitable operations and are dependent upon obtaining
financing to complete our business plan.
Results Of Operations For The Period From Inception Through October 31, 2005
We have not earned any revenues from our incorporation on July 29, 2005 to
October 31, 2005. We do not anticipate earning revenues until we establish a
hydro project on a site, secure an energy purchase agreement and erect turbines
on the site, of which there is no guarantee.
We incurred operating expenses in the amount of $7,140 for the period from our
inception on July 29, 2005 to October 31, 2005. These operating expenses were
comprised of legal fees of $1,500, audit and accounting fees of $3,963, office
and sundry expenses of $327, and rent of $1,350.
We have not attained profitable operations and are dependent upon obtaining
financing to complete our business plan.
Certain Relationships And Related Transactions
Bruce Velestuk, our president, provided a cash advance of $81 to us during the
period ended October 31, 2005. This amount is unsecured, non-interest bearing
and has no specific terms of repayment. Mr. Velestuk also provides office
premises to us. The office premises are valued by management at $450 per month.
During the period ended October 31, 2005, donated rent expense of $1,350 was
charged to operations.
Otherwise, none of the following parties has, since our date of incorporation,
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;
* our sole promoter, Bruce Velestuk;
* Any member of the immediate family of any of the foregoing persons.
Market For Common Equity And Related Stockholder Matters
No Public Market for Common Stock
There is presently no public market for our common stock. We anticipate
retaining an authorized OTC Bulletin Board market maker in order to sponsor our
application for quotation of our common stock on the over the counter bulletin
board upon the effectiveness of the registration statement of which this
prospectus forms a part. However, we can provide no assurance that our shares
will be traded on the bulletin board or, if traded, that a public market will
materialize.
26
Stockholders of Our Common Shares
As of the date of this registration statement, we have 32 registered
shareholders.
Rule 144 Shares
A total of 3,250,000 shares of our common stock are available for resale to the
public after August 5, 2006 in accordance with the volume and trading
limitations of Rule 144 of the Act. In general, under Rule 144 as currently
in effect, a person who has beneficially owned shares of a company's common
stock for at least one year is entitled to sell within any three month period a
number of shares that does not exceed the greater of:
1. 1% of the number of shares of the company's common stock then outstanding
which, in our case, will equal 694,625 shares as of the date of this
prospectus; or
2. the average weekly trading volume of the company's common stock during the
four calendar weeks preceding the filing of a notice on Form 144 with respect
to the sale.
Sales under Rule 144 are also subject to manner of sale provisions and notice
requirements and to the availability of current public information about the
company.
Under Rule 144(k), a person who is not one of the company's affiliates at any
time during the three months preceding a sale, and who has beneficially owned
the shares proposed to be sold for at least two years, is entitled to sell
shares without complying with the manner of sale, public information, volume
limitation or notice provisions of Rule 144.
As of the date of this prospectus, persons who are our affiliates hold all of
the 3,250,000 shares that may be sold pursuant to Rule 144.
Registration Rights
We have not granted registration rights to the selling shareholders or to any
other persons.
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.
27
Executive Compensation
Summary Compensation Table
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 period from our inception on July 29, 2005 to October 31, 2005,
our fiscal year end.
Annual Compensation
Other Restricted Options/ LTIP Other
Stock * SARs payouts Comp
Name Title Year Salary Bonus Comp. Awarded (#) ($)
-----------------------------------------------------------------------
Bruce Pres., 2005 $0 0 0 0 0 0 0
Velestuk CEO &
Dir.
Stock Option Grants
We have not granted any stock options to the executive officers since our
inception.
Consulting Agreements
We do not have any employment or consulting agreement with our directors or
officers. We do not pay Mr. Velestuk any amount for acting as the director of
the Company.
Financial Statements
Index to Financial Statements:
1. Auditors' Report;
2. Audited financial statements for the period from our inception on July 29,
2005 to October 31, 2005, including:
a. Balance Sheet;
b. Statement of Operations;
c. Statement of Stockholders' Equity;
d. Statement of Cash Flows; and
e. Notes to Financial Statements
28
FAIRVIEW ENERGY CORPORATION, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
October 31, 2005
BALANCE SHEET
STATEMENT OF OPERATIONS
STATEMENT OF CASH FLOWS
STATEMENT OF STOCKHOLDERS' EQUITY
NOTES TO FINANCIAL STATEMENTS
29
[DALE MATHESON Partnership of: Robert J Burkart, Inc. James F Carr-Hilton, Ltd.
[CARR-HILTON LABONTE Alvin F Dale, Ltd. Peter J Donaldson, Inc. R.J. LaBonte, Ltd.
------------------- Robert J Matheson, Inc. Fraser G Ross, Ltd.
[CHARTERED ACCOUNTANTS LOGO]
--------------------------------------------------------------------------------
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of Fairview Energy Corporation Inc.
We have audited the balance sheets of Fairview Energy Corporation Inc.(a
development stage company) as at October 31, 2005 and the statements of
operations, stockholders' equity and cash flows for the period from inception on
July 29, 2005 to October 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 audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform an audit to obtain reasonable assurance 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, these financial statements present fairly, in all material
respects, the financial position of the Company as at October 31, 2005 and the
statements of operations, stockholders' equity and cash flows for the period
from inception on July 29, 2005 to October 31, 2005 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 to the
financial statements, to date the Company has reported losses since inception
from operations and requires additional funds to meet its obligations and fund
the costs of its operations. These factors raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in this
regard are described in Note 1. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
"Dale Matheson Carr-Hilton LaBonte"
CHARTERED ACCOUNTANTS
Vancouver, B.C.
November 31, 2005
30
FAIRVIEW ENERGY CORPORATION, INC.
(A Development Stage Company)
BALANCE SHEET
October 31, 2005
(Stated in US Dollars)
----------------------
2005
ASSETS
Current assets
Cash $ 29,879
================
LIABILITIES
Current liabilities
Accounts payable and accrued liabilities $ 5,463
Due to related party - Note 4 81
----------------
5,544
----------------
STOCKHOLDERS' EQUITY
Capital stock - Note 3 Authorized:
75,000,000 common shares, par value $0.001 per share
Issued and outstanding:
6,946,250 common shares 6,946
Additional paid-in capital 23,179
Donated capital 1,350
Deficit accumulated during the development stage (7,140)
----------------
24,335
----------------
$ 29,879
================
The accompanying notes are an integral part of these financial statements
31
FAIRVIEW ENERGY CORPORATION, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
for the period July 29, 2005 (Date of Inception) to October 31, 2005
(Stated in US Dollars)
--------------------
2005
----
Expenses
Accounting and audit fees $ 3,963
Donated rent - Note 4
1,350
Legal fees 1,500
Office and sundry 327
---------------
Net loss for the period $ (7,140)
===============
Basic loss per share $ (0.00)
===============
Weighted average number of shares outstanding 5,508,054
===============
The accompanying notes are an integral part of these financial statements
32
FAIRVIEW ENERGY CORPORATION, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY for
the period July 29, 2005 (Date of Inception) to October
31, 2005
(Stated in US Dollars)
Deficit
Accumulated
Common Shares Additional During the
------------------------- Paid-in Donated Development
Number Par Value Capital Capital Stage Total
------ --------- ------- ------- ----- -----
Capital stock issued for cash
- at $0.001 3,250,000 $ 3,250 $ - $ - $ - $ 3,250
- at $0.005 3,675,000 3,675 14,700 - - 18,375
- at $0.40 21,250 21 8,479 - - 8,500
Donated rent - - - 1,350 - 1,350
Net loss for the period - - - - (7,140) (7,140)
----------- ------------- -------------- ------------- -------------- -----------
Balance, October 31, 2005 6,946,250 $ 6,946 $ 23,179 $ 1,350 $ (7,140) $ 24,335
=========== ============= ============== ============= ============== ===========
The accompanying notes are an integral part of these financial statements
33
FAIRVIEW ENERGY CORPORATION, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
for the period July 29, 2005 (Date of Inception) to October 31, 2005
(Stated in US Dollars)
--------------------
2005
----
Cash flows from operating activities
Net loss for the period $ ( 7,140)
Adjustments to reconcile net loss to net cash from
operating activities:
Non-cash donated rent 1,350
Accounts payable and accrued liabilities 5,463
----------------
Net cash used in operating activities ( 327)
----------------
Cash flows from financing activities
Due to related party 81
Capital stock issued 30,125
----------------
Net cash from financing activities 30,206
----------------
Increase in cash during the period and cash, end of period $ 29,879
================
Supplemental disclosure of cash flow information Cash paid for:
Interest $ -
================
Income taxes $ -
================
The accompanying notes are an integral part of these financial statements
34
FAIRVIEW ENERGY CORPORATION, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
October 31, 2005
Note 1 Nature and Continuance of Operations
------------------------------------
The Company was incorporated in the State of Nevada on July 29,
2005 and is in the development stage.
The Company will focus its resources on developing renewable
energy sources that create "green" hydro-electric energy, by
identifying run-of-river projects in the province of British
Columbia.
Going Concern
These financial statements have been prepared on the going concern
basis of accounting. The Company has incurred losses since
inception resulting in an accumulated deficit of $7,140 and
further losses are anticipated in the development of its business
raising doubt about the Company's ability to continue as a going
concern. The ability to continue as a going concern is dependent
upon the Company generating 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 anticipates that funding for the Company's operations
for the next 12 months will be available through cash on hand,
advances from the sole director or additional equity financing.
Note 2 Summary of Significant Accounting Policies
------------------------------------------
Basis of Presentation
---------------------
These financial statements have been prepared in accordance with
generally accepted accounting principles in the United States of
America and are presented in US dollars.
Development Stage Company
-------------------------
The Company complies with Financial Accounting Standards
Board Statement No. 7 for its characterization of the Company
as a development stage enterprise.
Use of Estimates and Assumptions
--------------------------------
The preparation of financial statements in conformity with United
States generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the period. Actual results could differ from those
estimates.
35
Fairview Energy Corporation, Inc.
(A Development Stage Company)
Notes to the Financial Statements
October 31, 2005
Note 2 Summary of Significant Accounting Policies - (cont'd)
------------------------------------------
Foreign Currency Translation
----------------------------
The financial statements are presented in United States dollars.
In accordance with Statement of Financial Accounting Standards No.
52, "Foreign Currency Translation", foreign denominated monetary
assets and liabilities are translated to their United States
dollar equivalents using foreign exchange rates which prevailed at
the balance sheet date. Revenue and expenses are translated at
average rates of exchange during the period. Gains or losses
resulting from foreign currency transactions are included in
results of operations
Fair Value of Financial Instruments
-----------------------------------
The carrying value of cash, accounts payable and accrued
liabilities and amount sdue to related parties approximates their
fair value because of the short maturity of these instruments. It
is management's determination 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 plans of action based on the then
known facts.
Income Taxes
------------
The Company follows the liability method of accounting for income
taxes. Under this method, deferred income tax assets and
liabilities are recognized for the estimated tax consequences
attributable to differences between the financial statement
carrying values and their respective income tax basis (temporary
differences). The effect on deferred income tax assets and
liabilities of a change in tax rates is recognized in income in
the period that includes the enactment date. At October 31, 2005 a
full deferred tax asset valuation allowance has been provided and
no deferred tax asset benefit has been recorded.
Basic and Diluted Loss Per Share
--------------------------------
Basic earnings per share includes no dilution and is computed by
dividing income available to common stockholders by the weighted
average number of common shares outstanding for the period.
Dilutive earnings per share reflects the potential dilution of
securities that could share in the earnings of the Company.
Because the Company does not have any potentially dilutive
securities, the accompanying presentation is only of basic loss
per share.
36
Fairview Energy Corporation, Inc.
(A Development Stage Company)
Notes to the Financial Statements
October 31, 2005
Note 2 Summary of Significant Accounting Policies - (cont'd)
------------------------------------------
Stock Based Compensation
In December 2002, the Financial Accounting Standards Board
("FASB") issued Financial Accounting Standard No. 148, "Accounting
for Stock-Based Compensation - Transition and Disclosure" ("SFAS
No. 148"), an amendment of Financial Accounting Standard No. 123
"Accounting for Stock-Based Compensation" ("SFAS No. 123"). The
purpose of SFAS No. 148 is to: (1) provide alternative methods of
transition for an entity that voluntarily changes to the fair
value based method of accounting for stock-based employee
compensation, (2) amend the disclosure provisions to require
prominent disclosure about the effects on reported net income of
an entity's accounting policy decisions with respect to
stock-based employee compensation, and (3) to require disclosure
of those effects in interim financial information. The disclosure
provisions of SFAS No. 148 were effective for the Company for the
period ended December 31, 2003.
The Company has elected to account for stock-based employee
compensation arrangements in accordance with the provisions of
Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees", ("APB No. 25") and comply with the
disclosure provisions of SFAS No. 123 as amended by SFAS No. 148
as described above. In addition, in accordance with SFAS No. 123
the Company applies the fair value method using the Black-Scholes
option-pricing model in accounting for options granted to
consultants. Under APB No. 25, compensation expense is recognized
based on the difference, if any, on the date of grant between the
estimated fair value of the Company's stock and the amount an
employee must pay to acquire the stock. Compensation expense is
recognized immediately for past services and pro-rata for future
services over the option-vesting period.
Recent Accounting Pronouncements
In December 2004, the Financial Accounting Standards Board
("FASB") issued SFAS No. 123 (Revised 2004) ("SFAS No. 123R"),
"Share-Based Payment." SFAS No. 123R requires that the
compensation cost relating to share-based payment transactions be
recognized in financial statements. That cost will be measured
based on the fair value of the equity or liability instruments
issued. SFAS No. 123R represents the culmination of a two-year
effort to respond to requests from investors and many others that
the FASB improve the accounting for share-based payment
arrangements with employees. The scope of SFAS No.123R includes a
wide range of share-based compensation arrangements including
share options, restricted share plans, performance-based awards,
share appreciation rights, and employee share purchase plans. SFAS
No. 123R replaces SFAS No. 123, "Accounting for Stock-Based
Compensation", and supersedes APB Opinion No. 25, "Accounting for
Stock Issued to Employees". SFAS No. 123, as originally issued in
1995, established as preferable a fair-value-based method of
accounting for share-based payment transactions with employees.
37
Fairview Energy Corporation, Inc.
(A Development Stage Company)
Notes to the Financial Statements
October 31, 2005
Note 2 Summary of Significant Accounting Policies - (cont'd)
------------------------------------------
Recent Accounting Pronouncements - (cont'd)
However, that statement permitted entities the option of
continuing to apply the guidance in APB Opinion No. 25, as long as
the footnotes to the financial statements disclosed what net
income would have been had the preferable fair-value-based method
been used. Although those disclosures helped to mitigate the
problems associated with accounting under APB Opinion No. 25, many
investors and other users of financial statements believed that
the failure to include employee compensation costs in the income
statement impaired the transparency, comparability, and
credibility of financial statements. Public entities that file as
small business issuers will be required to apply Statement 123R in
the first interim or annual reporting period that begins after
December 15, 2005. The adoption of this standard is not expected
to have a material impact on the Company's results of operations
or financial position.
In December 2004, the FASB issued SFAS No. 153, "Exchanges of
Nonmonetary Assets - An Amendment of APB Opinion No. 29". SFAS No.
153 is the result of a broader effort by the FASB to improve
financial reporting by eliminating differences between GAAP in the
United States and GAAP developed by the International Accounting
Standards Board (IASB). As part of this effort, the FASB and the
IASB identified opportunities to improve financial reporting by
eliminating certain narrow differences between their existing
accounting standards. SFAS No. 153 amends APB Opinion No. 29,
"Accounting for Nonmonetary Transactions", that was issued in
1973. The amendments made by SFAS No. 153 are based on the
principle that exchanges of nonmonetary assets should be measured
based on the fair value of the assets exchanged. Further, the
amendments eliminate the narrow exception for nonmonetary
exchanges of similar productive assets and replace it with a
broader exception for exchanges of nonmonetary assets that do not
have "commercial substance." Previously, APB Opinion No. 29
required that the accounting for an exchange of a productive asset
for a similar productive asset or an equivalent interest in the
same or similar productive asset should be based on the recorded
amount of the asset relinquished. The provisions in SFAS No.153
are effective for nonmonetary asset exchanges occurring in fiscal
periods beginning after June 15, 2005. Early application is
permitted and companies must apply the standard prospectively. The
effect of adoption of this standard is not expected to have a
material impact on the Company's results of operations and
financial position.
FASB has also issued SFAS No. 151 Inventory Cost and 152
Accounting for Real Estate Time Sharing Transactions but they will
not have any relationship to the operations of the Company,
therefore a description and its impact on the Company's operations
for each, have not been disclosed.
In March 2005, the SEC staff issued Staff Accounting Bulletin
No. 107 ("SAB 107") to give guidance on the implementation of
SFAS No. 123R. The Company will consider SAB 107 during the
implementation of SFAS No. 123R.
Note 3 Capital Stock
-------------
The total number of common shares authorized that may be issued by
the Company is 75,000,000 shares with a par value of one tenth of
one cent ($0.001) per share.
During the period from July 29, 2005 (Inception) to October 31,
2005, the Company issued 6,946,250 shares of common stock for
total proceeds of $30,125.
At October 31, 2005 there were no outstanding stock options or
warrants and has not recorded any stock based compensation to
date.
38
Fairview Energy Corporation, Inc.
(A Development Stage Company)
Notes to the Financial Statements
October 31, 2005
Note 4 Related Party Transactions
--------------------------
a) The President provided a cash advance of $81 to the Company
during the period ended October 31, 2005. This amount is
unsecured, non-interest bearing and has no specific terms of
repayment.
b) The President provides office premises to the Company. The
office premises are valued by management at $450 per month.
During the period ended October 31, 2005, donated rent
expense of $1,350 was charged to operations. Related party
transactions are recorded at exchange amounts agreed by both
parties.
Note 5 Income Taxes
------------
The significant components of the Company's potential deferred tax
assets are as follows:
October 31,
2005
--------------
Deferred Tax Assets
Non-capital loss carryforward $ 1,071
Less: valuation allowance for potential deferred tax asset (1,071)
--------------
$ -
==============
There were no temporary differences between the Company's tax and
financial bases that result in deferred tax assets, except for the
Company's net operating loss carryforwards amounting to
approximately $7,140 at October 31, 2005, which may be available
to reduce future year's taxable income. These carryforwards will
expire, if not utilized, commencing in 2025. Management believes
that the realization of the benefits from these deferred tax
assets appears uncertain due to the Company's limited operating
history and continuing losses. Accordingly a full, deferred tax
asset valuation allowance has been provided and no deferred tax
asset benefit has been recorded.
39
Changes In And Disagreements With Accountants
We have had no changes in or disagreements with our accountants.
Until ________________, all dealers that effect transactions in these securities
whether or not participating in this offering, may be required to deliver a
prospectus. This is in addition to the dealer's obligation to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
Part II
Information Not Required In The Prospectus
Indemnification Of Directors And Officers
Our officers and directors are indemnified as provided by the Nevada Revised
Statutes and our bylaws.
Under the NRS, director immunity from liability to a company or its shareholders
for monetary liabilities applies automatically unless it is specifically limited
by a company's articles of incorporation that is not the case with our articles
of incorporation. Excepted from that immunity are:
(1) a willful failure to deal fairly with the company or its
shareholders in connection with a matter in which the director
has a material conflict of interest;
(2) a violation of criminal law (unless the director had
reasonable cause to believe that his or her conduct was lawful
or no reasonable cause to believe that his or her conduct was
unlawful);
(3) a transaction from which the director derived an improper
personal profit; and
(4) willful misconduct.
Our bylaws provide that we will indemnify our directors and officers to the
fullest extent not prohibited by Nevada law; provided, however, that we may
modify the extent of such indemnification by individual contracts with our
directors and officers; and, provided, further, that we shall not be required to
indemnify any director or officer in connection with any proceeding (or part
thereof) initiated by such person unless:
(1) such indemnification is expressly required to be made by law;
(2) the proceeding was authorized by our Board of Directors;
(3) such indemnification is provided by us, in our sole discretion,
pursuant to the powers vested us under Nevada law; or
(4) such indemnification is required to be made pursuant to the
bylaws.
40
Our bylaws provide that we will advance all expenses incurred to any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that he is or was our director or
officer, or is or was serving at our request as a director or executive officer
of another company, partnership, joint venture, trust or other enterprise, prior
to the final disposition of the proceeding, promptly following request. This
advanced of expenses is to be made upon receipt of an undertaking by or on
behalf of such person to repay said amounts should it be ultimately determined
that the person was not entitled to be indemnified under our bylaws or
otherwise.
Our bylaws also provide that no advance shall be made by us to any officer in
any action, suit or proceeding, whether civil, criminal, administrative or
investigative, if a determination is reasonably and promptly made: (a) by the
board of directors by a majority vote of a quorum consisting of directors who
were not parties to the proceeding; or (b) if such quorum is not obtainable, or,
even if obtainable, a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, that the facts known to the
decision- making party at the time such determination is made demonstrate
clearly and convincingly that such person acted in bad faith or in a manner that
such person did not believe to be in or not opposed to our best interests.
Other Expenses Of Issuance And Distribution
The estimated costs of this offering are as follows:
Securities and Exchange Commission registration fee $ 174.02
Transfer Agent Fees $ 1,000.00
Accounting and auditing fees and expenses $ 5,000.00
Legal fees and expenses $ 10,000.00
Printing costs $ 200.00
Edgar filing fees $ 1,500.00
-----------
Total $ 17,874.02
===========
All amounts are estimates other than the Commission's registration fee.
We are paying all expenses of the offering listed above. No portion of these
expenses will be borne by the selling shareholders. The selling shareholders,
however, will pay any other expenses incurred in selling their common stock,
including any brokerage commissions or costs of sale.
41
Recent Sales Of Unregistered Securities
We completed an offering of 3,250,000 shares of our common stock at a price of
$0.0015 per share to Bruce Velestuk on August 5, 2005. Mr. Velestuk is our
president, chief executive officer treasurer, secretary and a director. The
total amount received from this offering was $3,250. These shares were issued
pursuant to Regulation S of the Securities Act.
We completed an offering of 3,675,000 shares of our common stock at a price of
$0.005 per share to a total of 15 purchasers on August 21, 2005. The total
amount received from this offering was $18,375. We completed this offering
pursuant to Regulation S of the Securities Act.
The purchasers in this offering were as follows:
Name of Subscriber Number of Shares
------------------ ----------------
Maribel Karmazyn 325,000
Lorelei Velestuk 325,000
Woody Turnquist 325,000
Dawnlea Tait 200,000
Laurie Hunsberger 200,000
Dean Caviness 225,000
Deagan Reimer 325,000
Bruce Mede 225,000
Dave May 225,000
Dave Ball 225,000
Steve Jones 325,000
Herb Tait 200,000
Deborah McBride 175,000
Elizabeth Erickson 200,000
Shannon Fitton 175,000
We completed an offering of 21,250 shares of our common stock at a price of
$0.40 per share to a total of 17 purchasers on August 25, 2005. The total amount
received from this offering was $8,500. We completed this offering pursuant to
Regulation S of the Securities Act.
The purchasers in this offering were as follows:
Name of Subscriber Number of Shares
------------------ ----------------
Dave Karmazyn 1,200
Catherine Mede 1,500
Kim May 1,300
Shirley Tait 1,100
Russell Fitton 1,400
Robert McBride 1,600
Sally Wong 1,200
Carolyn Windsor-Sturm 1,000
Kavinder Dhillon 1,400
Ivan Milosnovic 1,100
Marian Velestuk 1,500
Douglas Dunn 1,250
42
Kathryn Witter 1,250
Allen Crowley 1,200
Bruce Hodding 1,250
Chris Turley 1,000
Catherine Edwards 1,000
Regulation S Compliance
Neither we, a distributor, any respective affiliates nor any person on behalf of
any of the foregoing made any directed selling efforts in the United States;
Offering restrictions were, and are, implemented;
No offer or sale was made to a U.S. person or for the account or benefit of a
U.S. person;
Each purchaser of the securities certifies that it was not a U.S. person and was
not acquiring the securities for the account or benefit of any U.S. person;
Each purchaser of the securities agreed to resell such securities only in
accordance with the provisions of Regulation S, pursuant to registration under
the Act, or pursuant to an available exemption from registration; and agreed not
to engage in hedging transactions with regard to such securities unless in
compliance with the Act;
The securities contain a legend to the effect that transfer is prohibited except
in accordance with the provisions of Regulation S, pursuant to registration
under the Act, or pursuant to an available exemption from registration; and that
hedging transactions involving those securities may not be conducted unless in
compliance with the Act; and
We are required, either by contract or a provision in its bylaws, articles,
charter or comparable document, to refuse to register any transfer of the
securities not made in accordance with the provisions of Regulation S pursuant
to registration under the Act, or pursuant to an available exemption from
registration; provided, however, that if any law of any Canadian province
prevents us from refusing to register securities transfers, other reasonable
procedures, such as a legend described in paragraph (b)(3)(iii)(B)(3) of
Regulation S have been implemented to prevent any transfer of the securities not
made in accordance with the provisions of Regulation S.
Exhibits
Exhibit
Number Description
3.1 Articles of Incorporation
3.2 Bylaws
5.1 Legal opinion to be provided prior to effective date
23.1 Consent of Dale Matheson Carr-Hilton LaBonte,
Chartered Accountants
43
The undersigned registrant hereby undertakes:
1. To file, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(a) include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933;
(b) reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information set forth
in this registration statement; and notwithstanding the forgoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the commission pursuant to Rule 424(b) if, in
the aggregate, the changes in the volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth
in the "Calculation of Registration Fee" table in the effective
registration Statement; and
(c) include any additional or changed material information on the plan of
distribution.
2. That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
3. To remove from registration by means of a post-effective amendment any of
the securities being registered hereby which remain unsold at the
termination of the offering.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to our directors, officers and controlling
persons pursuant to the provisions above, or otherwise, we have been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act, and
is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities, other
than the payment by us of expenses incurred or paid by one of our directors,
officers, or controlling persons in the successful defense of any action, suit
or proceeding, is asserted by one of our directors, officers, or controlling
person sin connection with the securities being registered, we will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification is against public policy as expressed in the Securities Act, and
we will be governed by the final adjudication of such issue.
44
Signatures
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in the City of
Vancouver, Province of British Columbia on December o, 2005.
Fairview Energy Corporation, Inc.
By: /s/ Bruce Velestuk
------------------------------
Bruce Velestuk, President, Chief
Executive Officer, Treasurer,
Secretary and Director
SIGNATURE CAPACITY IN WHICH SIGNED DATE
/s/ Bruce Velestuk President, Chief Executive January 6, 2006
----------------------- Officer, Treasurer, Secretary,
principal financial officer,
principal accounting officer
and Director
45