SEC Company Response from TYLERSTONE VENTURES CORP (CIK 0001157443) — Apr 18, 2005
TYLERSTONE VENTURES CORP (CIK 0001157443)
Date: April 18, 2005 · CIK: 0001157443 · Accession: 0001157443-05-000013
AI Filing Summary & Sentiment
File numbers found in text: 333-121660
Referenced dates: April 5, 2005
Letter
April 18, 2005 United States Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. Mail Stop 04-06 ATTENTION: MR. MARK P. SHUMAN BRANCH CHIEF - LEGAL -----------------------
Re: Amendment No. 1 to Form SB-2 File No. 333-121660 Filed on March 14, 2005
Dear Mr. Shuman:
I have received your letter dated April 5, 2005 from Mr. Neil Miller of your office regarding the filing of the above noted Form SB-2.
Any page references in this letter refer to the attached "red-lined" copy of the Form SB-2. The responses to your comments are in the number order as indicated in the above noted letter.
FORM SB-2 ---------- GENERAL -------
1. The following sentence has been inserted on cover page:
"Shares will be sold only to investors in British Columbia and in accordance with the securities regulations of British Columbia (refer to page 17)."
SUMMARY FINANCIAL INFORMATION, PAGE 2 -----------------------------------------
2. The summary data has been revised to conform with the information shown on the applicable financial statements.
RISK FACTORS, PAGE 2 -----------------------
3. The Risk Factor mentioned under this comment has been revised to emphasize the rights to the minerals on the Tylerstone will be lost if we are unable to undertake exploration work thereon or pay cash to the Ministry on or before February 24, 2006. It has been revised as follows:
"IF THE COMPANY DOES NOT MAINTAIN THE TYLERSTONE IN GOOD STANDING ON OR BEFORE FEBRUARY 24, 2006, IT WILL LOSE ITS INTEREST TO THE MINERAL RIGHTS THEREON.
If the Company is unable to maintain the Tylerstone in good standing on or before February 24, 2006 by not completing either assessment work or paying $3,100 in cash to the Ministry, it will lose its interest in the mineral rights on the Tylerstone. If this occurs, the Company will no longer have any interest in any mineral properties and, therefore, will have no assets to assist in its future development. This situation might result in the Company no longer being a going concern and money invested by shareholders would be lost without any opportunity of recovery."
4. This Risk Factor on page 9 has been changed as following to conform with your comment:
"SINCE INCEPTION THE COMPANY HAS HAD LIMITED OPERATIONS AND HAS INCURRED ACCUMULATED LOSSES OF $145,834.
Since its inception on September 24, 1998, the Company has had limited operations other than undertaking annual assessment work on the Tylerstone claim. As at February 28, 2005, the Company has incurred accumulated losses of $145,834 without realizing any revenue from any source. Without increasing its operations, the Company will be considered by the investment community to be basically an inactive company without any future potential. This being the case, the Company will find it extremely difficult to raise money from investors thereby resulting in the directors and officers continually supplying money to the Company or, if they choice not to do so, allowing the Company to eventually lose the rights to the Tylerstone and cease operations all together."
5. The Risk Factor has been revised to conform with the comments in your letters dated January 25 and April 5, 2005 as to follows:
"IT IS DOUBTFUL IF THE COMPANY WILL BE ABLE TO FUND OPERATIONS FOR THE NEXT SIX MONTHS IF IS DOES NOT RECEIVE FUNDS FROM THIS OFFERING.
The minimum period of operations the Company could fund, relying on advances from its officers and directors, would be six months if no funds were received under this offering. In the event the directors and officers are unwilling to fund operations, the Company could not operate at all. Since the Company has no minimum offering under this prospectus, any money raised might have an insignificant effect on financing operations. Therefore, the only other potential source of funding, other than this offering, would be personal advances made by the Company's officers and directors. Even if the market price of gold, silver, lead and zinc were to reach extremely higher prices, it would take years before the Company would be able to sell any minerals from the Tylerstone. Therefore, no reliance should be placed on the sale of minerals as a means of raising funds. The Company will require $227,500 in exploration costs plus, assuming not all of Phase III is undertaken, and an additional $65,278 to pay expenses for the next twelve months which includes $26,100 in Offering Expenses."
USE OF PROCEEDS, PAGES 12-15 --------------------------------
6. In response to this comment, the Use of Proceeds has been limited to one table to include all the information which will be more understandable to investors. Footnotes have been included where applicable and other information has been included under Description of Business.
7. The accounts payable have been revised to February 28, 2005. In response to this comment, the following schedule has been included under "Business Development - Liquidity and Capital Resources" in order to indicate the monies required over the next twelve months as shown on page 41:
<TABLE> <CAPTION>
Total Accounts Estimated Required Payable Expenses Funds for Feb. 28, for Next 12 Description 2005 12 months Months ------------------- --------- --------- ---------- <S> <C> <C> <C> <C> Accounting and audit. $ 12,325 $ 2,200 $ 14,525 Filing fees. . - 400 400 Legal. . . . . 14,670 3,000 17,670 Office . . . . 765 1,000 1,765 Printing . . . - 1,000 1,000 Rent . . . . . 20,245 - 20,245 Transfer agent 8,473 1,200 9,673 -------- -------- -------
Total. . . . . $ 56,478 $ 8,800 $ 65,278 ======= ======== ======= </TABLE>
This is the Company's best estimate of the amount of dollars which will be required during the forthcoming year to meet its current obligations and maintain its operations. Since the Company is expecting to raise funds for exploration activities, there has been no inclusion in the above figures for exploration expenses. In the Use of Proceeds schedule on page 12, the exploration expenses have been included therein.
In order not to duplicate expenses, as indicated in your comment, the above noted total funds required for the next twelve months has been reduced by the Offering Expenses as shown in the following schedule since they are separately shown in the Use of Proceeds schedule:
<TABLE> <CAPTION>
Total Required Accounts Funds for Deduct: Payable less Next 12 Offering Offering Description Months Expenses Expenses ----------- --------- --------- ------------- <S> <C> <C> <C> Accounting And audit . $ 14,525 $ 7,500 $ 7,025 Filing fees. . . 400 400 - Legal. . . . . . 17,670 15,000 2,670 Office . . . . . 1,765 1,000 765 Printing . . . . 1,000 1,000 - Rent . . . . . . 20,245 - 20,245 Transfer agent's fees 9,673 1,200 8,473 -------- ------- -------
Total. . . . $ 65,278 $ 26,100 $ 39,178 ====== ======= ======= </TABLE>
There are no contingent arrangements with our accountants, auditors or lawyers for professional services rendered. None of them will receive a direct or indirect interest in our Company. Regardless as to how much is raised under this Offering, the above noted parties will receive no additional funds other than what they have invoiced for work done. The following statement has been made on page 42:
"None of the Company's in-house accountants, independent accountants, attorneys or any other party have been engaged on a contingent arrangement whereby their remuneration is contingent on the amount of money raised under this Offering. None of the above mentioned individuals will receive a direct or indirect interest in the Company."
PLAN OF DISTRIBUTION ----------------------
8. In response to this comment the following changes have been made:
EXHIBIT 99.1 - SUBSCRIPTION AGREEMENT
a. Under section D, the following wording has been inserted:
" .promptly within three business days of the subscription being rejected ."
I feel I should qualify the word "promptly" and therefore have given a time duration of three days since the postal system might not be able to deliver the returned check in one or two days.
b. Under page 15, "Plan of Distribution" in the first paragraph the following sentence has been added:
"If any of the subscriptions are rejected, the Company will return promptly subscribers funds within three business days from the time the subscription is rejected."
c. Under page 1 - "Offering Summary" the following paragraph has been inserted:
"The Company has the right to accept or reject any subscription in whole or in part, for any reason or for no reason. If any subscription is rejected, all funds received by the Company from a rejected subscription will be returned to the subscriber promptly within three business days of the subscription being rejected without interest being paid on the amount or deductions being made thereto."
DESCRIPTION OF BUSINESS, PAGE 29 ------------------------------------
Business Development, page 29
9. To enlighten an investor to the Ministry's assessment requirements the following paragraph has been inserted as the second paragraph under this section as follows:
"The Ministry has granted to the Company the exclusive rights to the minerals on the Tylerstone from the date the Company first "staked" the Tylerstone. In order to keep these rights, each year the Company is required to spend money on the Tylerstone; either by way of assessment work (being the physical exploration work on the property) or by paying cash in lieu. If the latter happens, the Company pays the money directly to the Ministry. Each year the Company must pay $155 per unit. Since there are 20 units comprising the Tylerstone, the Company will have to pay approximately $3,100 in either physical work or cash in lieu of work not done to maintain the Tylerstone in good standing for a further twelve month period. In the event the Company does more assessment work than required for the year, the residual balance can be carried forward and applied to future years. If the Company does not undertake the physical assessment work and does not pay the Ministry the equivalent money in cash, all rights to the minerals on the Tylerstone will cease effective on the anniversary date; being February 24 of the year in question.
10. In response to this comment, I feel it is difficult to determine at this time what "encouraging" results would be since it would depend upon the grade, the tonnage which could be block out and the price of precious metals at the time. The old timers, in the 1930's, drove an adit (tunnel) following a vein structure but did not record their results. Therefore, there had to be some mineralization on the Tylerstone or the adit would not have been driven. In those days, gold was $35 an ounce and required higher grades and tonnage to make it feasible to mine it. We have not investigated this adit but will be taking samples from it during Phase I.
From our perspective, soil and rock sampling yielding one tenth of an ounce of gold per ton would be encouraging although lesser value in a common area would also be encouraging enough for us to continue our exploration program. By itself, this grade would not make it economically to mine but would be encouraging because the Tylerstone might, in other areas, yield higher grades. Even if the grades are good, the other factor which must be considered is the tonnage identified during our exploration programs. If the tonnage is low, being under 100,000 tons grading a quarter of an ounce per ton, it might not be economical to mine unless gold prices were considerable higher. We would at least like to block out in excess of 100,000 tons but it is unlikely this will occur until we have completed the drilling program under Phase III. It might be too promotional to put this information into the prospectus since it might sound like the Company is confident in blocking out in excess of 100,000 tons at economic grades.
In the Bralorne area, silver is a by-product; associated with the gold but not necessary in economic quantities and grades to be mined by itself although it will reduce the overall recovery cost when sold along with the gold.
To respond to your comment, the paragraph on page 34 has been amended as follows:
"The Company is considered to be in the pre-exploration stage and will be in this stage until it has completed Phase I to III. The Company's work program is designed on a progressive basis whereby the results of earlier Phases determine the detail of the next Phase. The final decision to proceed to a further Phase will be the responsibility of Laurence Stephenson, in conjunction with the Board of Directors' approval, after the Company has received analysis and recommendations from its independent consulting professional geologists for the last completed Phase. The factors which will determine whether Phase II is undertaken will be the gold and silver content from soil and rock samples under Phase I. If there is an indication of the presence of gold, even in lesser grades than would make it economic to recover, the Company will consider Phase II since it will allow the Company to further investigate and obtain geological information on the area where the gold grades were identified. Initially, gold grades of one tenth of an ounce per ton would be encouraging. By the end of Phase III, the Company will have a better understanding of the potential of the Tylerstone. Whether or not the Company can identify economic tonnage and grades by the end of Phase III is uncertain and maybe unlikelyThe total number of days, as determined above, "
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS - PAGES 39-40 --------------------------------------------------------------------------------
11. The following paragraph has been inserted on page 38 in response to this comment.
"The commencement of Phase I is contingent on the selling of a minimum number of share to provide $16,500 necessary to complete the ex
Show Raw Text
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<TEXT>
(LETTERHEAD)
April 18, 2005
United States Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C.
20549
Mail Stop 04-06
ATTENTION: MR. MARK P. SHUMAN
BRANCH CHIEF - LEGAL
-----------------------
Dear Mr. Shuman:
Re: Amendment No. 1 to Form SB-2
File No. 333-121660
Filed on March 14, 2005
I have received your letter dated April 5, 2005 from Mr. Neil Miller of your
office regarding the filing of the above noted Form SB-2.
Any page references in this letter refer to the attached "red-lined" copy of the
Form SB-2. The responses to your comments are in the number order as indicated
in the above noted letter.
FORM SB-2
----------
GENERAL
-------
1. The following sentence has been inserted on cover page:
"Shares will be sold only to investors in British Columbia and in accordance
with the securities regulations of British Columbia (refer to page 17)."
SUMMARY FINANCIAL INFORMATION, PAGE 2
-----------------------------------------
2. The summary data has been revised to conform with the information shown
on the applicable financial statements.
RISK FACTORS, PAGE 2
-----------------------
3. The Risk Factor mentioned under this comment has been revised to
emphasize the rights to the minerals on the Tylerstone will be lost if we are
unable to undertake exploration work thereon or pay cash to the Ministry on or
before February 24, 2006. It has been revised as follows:
"IF THE COMPANY DOES NOT MAINTAIN THE TYLERSTONE IN GOOD STANDING ON OR BEFORE
FEBRUARY 24, 2006, IT WILL LOSE ITS INTEREST TO THE MINERAL RIGHTS THEREON.
If the Company is unable to maintain the Tylerstone in good standing on or
before February 24, 2006 by not completing either assessment work or paying
$3,100 in cash to the Ministry, it will lose its interest in the mineral rights
on the Tylerstone. If this occurs, the Company will no longer have any interest
in any mineral properties and, therefore, will have no assets to assist in its
future development. This situation might result in the Company no longer being
a going concern and money invested by shareholders would be lost without any
opportunity of recovery."
4. This Risk Factor on page 9 has been changed as following to conform with
your comment:
"SINCE INCEPTION THE COMPANY HAS HAD LIMITED OPERATIONS AND HAS INCURRED
ACCUMULATED LOSSES OF $145,834.
Since its inception on September 24, 1998, the Company has had limited
operations other than undertaking annual assessment work on the Tylerstone
claim. As at February 28, 2005, the Company has incurred accumulated losses of
$145,834 without realizing any revenue from any source. Without increasing its
operations, the Company will be considered by the investment community to be
basically an inactive company without any future potential. This being the
case, the Company will find it extremely difficult to raise money from investors
thereby resulting in the directors and officers continually supplying money to
the Company or, if they choice not to do so, allowing the Company to eventually
lose the rights to the Tylerstone and cease operations all together."
5. The Risk Factor has been revised to conform with the comments in your
letters dated January 25 and April 5, 2005 as to follows:
"IT IS DOUBTFUL IF THE COMPANY WILL BE ABLE TO FUND OPERATIONS FOR THE NEXT SIX
MONTHS IF IS DOES NOT RECEIVE FUNDS FROM THIS OFFERING.
The minimum period of operations the Company could fund, relying on advances
from its officers and directors, would be six months if no funds were received
under this offering. In the event the directors and officers are unwilling to
fund operations, the Company could not operate at all. Since the Company has no
minimum offering under this prospectus, any money raised might have an
insignificant effect on financing operations. Therefore, the only other
potential source of funding, other than this offering, would be personal
advances made by the Company's officers and directors. Even if the market
price of gold, silver, lead and zinc were to reach extremely higher prices, it
would take years before the Company would be able to sell any minerals from the
Tylerstone. Therefore, no reliance should be placed on the sale of minerals as
a means of raising funds. The Company will require $227,500 in exploration
costs plus, assuming not all of Phase III is undertaken, and an additional
$65,278 to pay expenses for the next twelve months which includes $26,100 in
Offering Expenses."
USE OF PROCEEDS, PAGES 12-15
--------------------------------
6. In response to this comment, the Use of Proceeds has been limited to one
table to include all the information which will be more understandable to
investors. Footnotes have been included where applicable and other information
has been included under Description of Business.
7. The accounts payable have been revised to February 28, 2005. In response
to this comment, the following schedule has been included under "Business
Development - Liquidity and Capital Resources" in order to indicate the monies
required over the next twelve months as shown on page 41:
<TABLE>
<CAPTION>
Total
Accounts Estimated Required
Payable Expenses Funds for
Feb. 28, for Next 12
Description 2005 12 months Months
------------------- --------- --------- ----------
<S> <C> <C> <C> <C>
Accounting
and audit. $ 12,325 $ 2,200 $ 14,525
Filing fees. . - 400 400
Legal. . . . . 14,670 3,000 17,670
Office . . . . 765 1,000 1,765
Printing . . . - 1,000 1,000
Rent . . . . . 20,245 - 20,245
Transfer agent 8,473 1,200 9,673
-------- -------- -------
Total. . . . . $ 56,478 $ 8,800 $ 65,278
======= ======== =======
</TABLE>
This is the Company's best estimate of the amount of dollars which will be
required during the forthcoming year to meet its current obligations and
maintain its operations. Since the Company is expecting to raise funds for
exploration activities, there has been no inclusion in the above figures for
exploration expenses. In the Use of Proceeds schedule on page 12, the
exploration expenses have been included therein.
In order not to duplicate expenses, as indicated in your comment, the above
noted total funds required for the next twelve months has been reduced by the
Offering Expenses as shown in the following schedule since they are separately
shown in the Use of Proceeds schedule:
<TABLE>
<CAPTION>
Total
Required Accounts
Funds for Deduct: Payable less
Next 12 Offering Offering
Description Months Expenses Expenses
----------- --------- --------- -------------
<S> <C> <C> <C>
Accounting
And audit . $ 14,525 $ 7,500 $ 7,025
Filing fees. . . 400 400 -
Legal. . . . . . 17,670 15,000 2,670
Office . . . . . 1,765 1,000 765
Printing . . . . 1,000 1,000 -
Rent . . . . . . 20,245 - 20,245
Transfer
agent's fees 9,673 1,200 8,473
-------- ------- -------
Total. . . . $ 65,278 $ 26,100 $ 39,178
====== ======= =======
</TABLE>
There are no contingent arrangements with our accountants, auditors or lawyers
for professional services rendered. None of them will receive a direct or
indirect interest in our Company. Regardless as to how much is raised under
this Offering, the above noted parties will receive no additional funds other
than what they have invoiced for work done. The following statement has been
made on page 42:
"None of the Company's in-house accountants, independent accountants, attorneys
or any other party have been engaged on a contingent arrangement whereby their
remuneration is contingent on the amount of money raised under this Offering.
None of the above mentioned individuals will receive a direct or indirect
interest in the Company."
PLAN OF DISTRIBUTION
----------------------
8. In response to this comment the following changes have been made:
EXHIBIT 99.1 - SUBSCRIPTION AGREEMENT
a. Under section D, the following wording has been inserted:
" .promptly within three business days of the subscription being
rejected ."
I feel I should qualify the word "promptly" and therefore have given a time
duration of three days since the postal system might not be able to deliver the
returned check in one or two days.
b. Under page 15, "Plan of Distribution" in the first paragraph the
following sentence has been added:
"If any of the subscriptions are rejected, the Company will return promptly
subscribers funds within three business days from the time the subscription is
rejected."
c. Under page 1 - "Offering Summary" the following paragraph has been
inserted:
"The Company has the right to accept or reject any subscription in whole or
in part, for any reason or for no reason. If any subscription is rejected, all
funds received by the Company from a rejected subscription will be returned to
the subscriber promptly within three business days of the subscription being
rejected without interest being paid on the amount or deductions being made
thereto."
DESCRIPTION OF BUSINESS, PAGE 29
------------------------------------
Business Development, page 29
9. To enlighten an investor to the Ministry's assessment requirements the
following paragraph has been inserted as the second paragraph under this section
as follows:
"The Ministry has granted to the Company the exclusive rights to the
minerals on the Tylerstone from the date the Company first "staked" the
Tylerstone. In order to keep these rights, each year the Company is required
to spend money on the Tylerstone; either by way of assessment work (being the
physical exploration work on the property) or by paying cash in lieu. If the
latter happens, the Company pays the money directly to the Ministry. Each year
the Company must pay $155 per unit. Since there are 20 units comprising the
Tylerstone, the Company will have to pay approximately $3,100 in either physical
work or cash in lieu of work not done to maintain the Tylerstone in good
standing for a further twelve month period. In the event the Company does more
assessment work than required for the year, the residual balance can be carried
forward and applied to future years. If the Company does not undertake the
physical assessment work and does not pay the Ministry the equivalent money in
cash, all rights to the minerals on the Tylerstone will cease effective on the
anniversary date; being February 24 of the year in question.
10. In response to this comment, I feel it is difficult to determine at this
time what "encouraging" results would be since it would depend upon the grade,
the tonnage which could be block out and the price of precious metals at the
time. The old timers, in the 1930's, drove an adit (tunnel) following a vein
structure but did not record their results. Therefore, there had to be some
mineralization on the Tylerstone or the adit would not have been driven. In
those days, gold was $35 an ounce and required higher grades and tonnage to make
it feasible to mine it. We have not investigated this adit but will be taking
samples from it during Phase I.
From our perspective, soil and rock sampling yielding one tenth of an ounce
of gold per ton would be encouraging although lesser value in a common area
would also be encouraging enough for us to continue our exploration program. By
itself, this grade would not make it economically to mine but would be
encouraging because the Tylerstone might, in other areas, yield higher grades.
Even if the grades are good, the other factor which must be considered is the
tonnage identified during our exploration programs. If the tonnage is low,
being under 100,000 tons grading a quarter of an ounce per ton, it might not be
economical to mine unless gold prices were considerable higher. We would at
least like to block out in excess of 100,000 tons but it is unlikely this will
occur until we have completed the drilling program under Phase III. It might be
too promotional to put this information into the prospectus since it might sound
like the Company is confident in blocking out in excess of 100,000 tons at
economic grades.
In the Bralorne area, silver is a by-product; associated with the gold but not
necessary in economic quantities and grades to be mined by itself although it
will reduce the overall recovery cost when sold along with the gold.
To respond to your comment, the paragraph on page 34 has been amended as
follows:
"The Company is considered to be in the pre-exploration stage and will be
in this stage until it has completed Phase I to III. The Company's work program
is designed on a progressive basis whereby the results of earlier Phases
determine the detail of the next Phase. The final decision to proceed to a
further Phase will be the responsibility of Laurence Stephenson, in conjunction
with the Board of Directors' approval, after the Company has received analysis
and recommendations from its independent consulting professional geologists for
the last completed Phase. The factors which will determine whether Phase II is
undertaken will be the gold and silver content from soil and rock samples under
Phase I. If there is an indication of the presence of gold, even in lesser
grades than would make it economic to recover, the Company will consider Phase
II since it will allow the Company to further investigate and obtain geological
information on the area where the gold grades were identified. Initially, gold
grades of one tenth of an ounce per ton would be encouraging. By the end of
Phase III, the Company will have a better understanding of the potential of the
Tylerstone. Whether or not the Company can identify economic tonnage and grades
by the end of Phase III is uncertain and maybe unlikelyThe total number of
days, as determined above, "
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS - PAGES 39-40
--------------------------------------------------------------------------------
11. The following paragraph has been inserted on page 38 in response to this
comment.
"The commencement of Phase I is contingent on the selling of a minimum number of
share to provide $16,500 necessary to complete the ex