Item 1. Business
Dolat Ventures, Inc, was incorporated in the State of Nevada, United States of America, on April 13, 2006. Its fiscal year end is February 28. The Registrant has not been a party to any bankruptcy, receivership or similar proceedings. Our principal executive offices are located at 545 Eighth Avenue, Suite 401, New York, NY 10018, and our telephone number at that address is (212) 502-6657.
We are an exploration stage enterprise and have not started operations or generated or realized any revenues from our business operations. The Company is engaged in the business of mining and wholesale distribution of diamonds and precious gemstones.
In September of 2009, Nigar Lila, a major shareholder and affiliate of the Company consummated one Stock Purchase Agreement with Gary Tice whereby Gary Tice acquired from the Nigar Lila a total 4,000,000 restricted shares of common stock of the Registrant, resulting in a change of control of Registrant.
On November 17, 2009, the Company entered into an Agreement and Plan of Acquisition for the acquisition 100% of the outstanding capital stock of Dove Diamonds and Mining, Inc., a Nevada corporation (“Dove”). On December 15, 2009 the acquisition of Dove by the Registrant became effective, and Dove became the Company’s direct wholly owned subsidiary. On December 18 2009, pursuant to the acquisition agreement between Dove and the Registrant, 20,622,000 restricted shares of the Company’s common stock were issued to Dovid Hauck, the Registrant’s President and Director, resulting in a change of control of the Registrant.
Subsequent to the year ended February 28, 2010, on April 13, 2010, Dolat acquired 75% of the outstanding capital stock of Millennium Mining, LLC, a Sierra Leone Limited Liability Company (“Millennium”) from Dovid Hauck, the Registrant’s President and Director, through a share exchange transaction with Mr. Hauck.
Overview of Dove Diamonds & Mining
Dove Diamonds & Mining was incorporated in the state of Nevada on May 19, 2009. Dove is headquartered in New York, NY. Dove intends to acquire equipment, mining operations and mining locations, and to establish distribution channels to sell its diamonds to wholesalers and retailers in the United States and globally. Dove has no plans to sell directly to consumers currently.
With the acquisition of Millennium Mining, Dolat Ventures intends to mine through its Sierra Leone Operations and send its precious gems and metals to be refined to Dove Diamonds & Mining.
Overview of Millennium Mining, LLC
Millennium Mining LLC was incorporated in Sierra Leone as a Private Limited Liability Company on March 3, 2008 and commenced commercial operations after obtaining its license from the Ministry of Mineral Resources (Sierra Leone) shortly thereafter. Millennium’s core operations are to mine, extract, refine, and purify precious metals and stones. Millennium buys, sells, distributes and exports diamond bauxite, rutile gold, silver and all other precious minerals in Sierra Leone and internationally. We presently conduct all of our mining operations through Millennium Mining LLC.
Current Business
Dolat is currently in the early stages of acquiring diamonds, gems and precious stones from a variety of locations throughout the African continent. Primarily focused on the West African country of Sierra Leone We are in an organized search for mineral locations, suppliers and sellers of diamonds, gems and precious stones.
World diamond prices began to decline in the fourth quarter of 2008 and continued to decline throughout the first quarter of 2009. While prices have now begun to stabilize, they continue to be lower on a year-over-year basis. However, many industry professionals believe the current market is influenced by the expectation that prices for rough Diamonds will rise again in 2010. As a result, we intend for Dove to gain a competitive advantage by entering the market at a low point, and establish itself as a major diamond wholesaler as the market begins to improve. Our long term goals include obtaining a facility to process, cut, assemble and polish rough diamonds and gems.
There is no assurance that a commercially viable mineral deposit, a reserve, exists in our claim or can be shown to exist until sufficient and appropriate exploration is done and a comprehensive evaluation of such work concludes economic and legal feasibility.
Our Current Business
Dove is currently in the early stages of acquiring diamonds, gems and precious stones from a variety of locations throughout the African continent. Primarily focused on the West African country of Sierra Leone We are in an organized search for mineral locations, suppliers and sellers of diamonds, gems and precious stones.
Our business is subject to the risks inherent with a natural resource based company in its early exploration stage of development. These risks include, but are not limited to: limited capital resources; limited industry operating experience; possible delays due to weather, manpower and equipment shortage and regulatory processing practices; possible cost overruns due to price increases in services, supplies and equipment; and the general speculative nature of exploring a raw mineral property for minerals.
Compliance with Environmental Laws
Our business is subject to extensive governmental controls and regulations which are amended from time to time. We are unable to predict what additional legislation or amendments may be proposed that might affect its business or the time at which any such proposals, if enacted, might become effective. Such legislation or amendments, however, could require increased capital and operating expenditures and could prevent or delay certain of Our operations.
Facilities
We do not own facilities of any kind.
Employees
We do not intend to hire employees until our business has been successfully launched and has sufficient reliable sales revenues. Our officers and Directors will provide work as necessary to bring us to the point of earning revenues. Human resource planning will be part of an ongoing process that will include constant evaluation of our operations. We do not expect to hire any employees before the end of this calendar year. However, in the event that we are able to raise sufficient capital and proceed with an exploration and import program we may hire a number of employees to aid in our operations.
Since we became a reporting company we are responsible for filing various forms with the United States Securities and Exchange Commission (the “SEC”) such as periodic reports on Form 10-K and Form 10-Q.
The shareholders may read and copy any material filed by us with the SEC at the SEC’s Public Reference Room at 100 F Street N.W., Washington, DC, 20549. The shareholders may obtain information on the operations of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information, which we have filed electronically with the SEC by assessing, the website using the following address: http://www.sec.gov.
Item 1A.
Item 1A. Risk Factors
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
Item 1B.
Item 1B. Unresolved Staff comments
There are no unresolved comments from the SEC.
Item 2.
Item 2. Properties
We do not hold ownership or leasehold interest in any property.
Item 3.
Item 3. Legal Proceedings
We may be involved from time to time in ordinary litigation, negotiation and settlement matters that will not have a material effect on our operations or finances. There are no known pending legal proceedings to which the Registrant or its management is a party or of which any of their property is the subject, no such proceedings are known to have been threatened, and no such proceedings are known to be contemplated by governmental authorities.
PART II
Item 5.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Only a limited market exists for our securities. There is no assurance that a regular trading market will develop, or if developed, that it will be sustained. Therefore, a shareholder in all likelihood will be unable to resell his securities in our Company. Furthermore, it is unlikely that a lending institution will accept our securities as pledged collateral for loans unless a regular trading market develops.
The total number of common shares authorized that may be issued by the Company is 250,000,000 shares with a par value of one tenth of one cent ($0.001) per share. The total number of preferred shares authorized that may be issued by the Company is 1,000,000 shares with a par value of one tenth of one cent ($0.001) per share.
Our Company’s common shares are currently traded on the Pinksheet’s OTCQB market tier, under the symbol “DOLV.”
As of May 17, 2010, the stock was trading at a market price of $0.47; however, the Company’s Common Stock is thinly traded with a limited market. The closing price of $0.47 was from the last reported sale date of May 17, 2010.
Fiscal Year 2010
High Bid
Low Bid
Fourth Quarter 12-01-09 to 02-28-10
$0.90
$0.35
Third Quarter 09-01-09 to 11-30-09
$0.85
$0.20
Second Quarter 06-01-09 to 08-31-09
$0.55
$0.09
First Quarter 03-01-09 to 05-31-09
$0.01
$0.09
Fiscal Year 2008
High Bid
Low Bid
Fourth Quarter 12-01-08 to 02-28-09
$0.00
$0.00
Third Quarter 09-01-08 to 11-30-08
$0.00
$0.00
Second Quarter 06-01-08 to 08-31-08
$0.00
$0.00
First Quarter 03-01-08 to 05-31-08
$0.00
$0.00
Shareholders
At June 13, 2010, we had 117 shareholders of record of our common stock, including shares held by brokerage clearing houses, depositories or otherwise unregistered form.
We have no outstanding options or warrants, or other securities convertible into, common equity.
Dividend Policy
We have not declared any cash dividends. We do not intend to pay dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations.
Section 15(g) of the Securities Exchange Act of 1934
Our shares are covered by section 15(g) of the Securities Exchange Act of 1934, as amended that imposes additional sales practice requirements on broker/dealers who sell such securities to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouses). For transactions covered by the Rule, the broker/dealer must make a special suitability determination for the purchase and have received the purchaser’s written agreement to the transaction prior to the sale. Consequently, the Rule may affect the ability of broker/dealers to sell our securities and also may affect your ability to sell your shares in the secondary market.
Section 15(g) also imposes additional sales practice requirements on broker/dealers who sell penny securities. These rules require a one page summary of certain essential items. The items include the risk of investing in penny stocks in both public offerings and secondary marketing; terms important to in understanding of the function of the penny stock market, such as “bid” and “offer” quotes, a dealers “spread” and broker/dealer compensation; the broker/dealer compensation, the broker/dealers duties to its customers, including the disclosures required by any other penny stock disclosure rules; the customers rights and remedies in causes of fraud in penny stock transactions; and, the FINRA’s toll free telephone number and the central number of the North American Administrators Association, for information on the disciplinary history of broker/dealers and their associated persons.
Securities authorized for issuance under equity compensation plans
We have no equity compensation plans and accordingly we have no shares authorized for issuance under an equity compensation plan.
Recent Sales of Unregistered Securities
During the period from April 13, 2006 (date of inception) to February 28, 2009, the Company issued 6,600,000 shares of common stock for cash proceeds of $ 29,000. During the year ended February 28, 2010, the company sold 1,803,279 shares of common stock, which has not been issued, for cash proceeds of $325,000. The Company incurred $17,500 of expense related to the sale of these shares.
The company issued 20,622,000 shares of stock to an individual in exchange for 100% of the shares of the outstanding capital stock of Dove Diamonds and Mining, Inc., a development stage company.
Item 6.
Item 6. Selected Financial Data
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
Item 7.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation.
This section of the report includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this annual report. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.
Overview
The following discussion is an overview of the important factors that management focuses on in evaluating our businesses, financial condition and operating performance and should be read in conjunction with the financial statements included in this Annual Report on Form 10-K. This discussion contains forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those anticipated in these forward looking statements as a result of any number of factors, including those set forth in this Annual Report and elsewhere in the Company’s Quarterly Reports on Form 10-Q and other public filings.
All written and oral forward-looking statements made in connection with this Annual Report on Form 10-K that are attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. Given the uncertainties that surround such statements, you are cautioned not to place undue reliance on such forward-looking statements.
Results of Operations
We did not earn any revenues for the year ended February 28, 2010, nor have we earned any revenues from inception on April 13, 2006 to February 28, 2010. We do not anticipate earning revenues until such time as we have entered into commercial production of our mineral properties. We are presently in the exploration stage of our business and we can provide no assurance that we will discover commercially exploitable levels of mineral resources on our properties, or if such resources are discovered, that we will enter into commercial production of our mineral properties.
For the year ended February 28, 2010, we incurred operating expenses in the amount of $48,798 which mainly comprised of professional fees totaling $44,589 and general administrative expenses totaling $4,209. For the year ended February 28, 2009, we have incurred a total operating expense in the amount of $40,794 which mainly comprises of professional fees totaling $27,378 and general and administrative expenses totaling $9,179.
We incurred total operating expenses in the amount of $97,759 from inception on April 13, 2006 through February 28, 2010. These operating expenses comprised of professional fees totaling $71,967, mineral property costs totaling $10,771 and general administrative expenses totaling $15,021.
Liquidity and Capital Resources
As at February 28, 2010, we had a cash balance of $1,792.
We anticipate generating revenue from the sale of diamonds and gemstones beginning in the third quarter of this year. If additional funds are required, the additional funding will come from equity financing from the sale of our common stock. If we are successful in completing an equity financing, existing shareholders will experience dilution of their interest in our company.
We are currently in negotiations with an existing shareholder for additional capital from the sale of common stock and we are in negotiations with conventional equity funds.
Our future financial results depend on our ability to raise additional capital through the sale of our stock.
Use of Proceeds
Net cash provided by financing activities from inception on April 13, 2006 through February 28, 2010 was $385,682 as a result of proceeds received from the sale of our common stock and related party advances. At February 28, 2010, we had a cash balance of $1,792, $28,809 in accounts payables and $6,435 in advances from a related party. From April 13, 2006 through February 28, 2010, the following table indicates how those proceeds have been spent to date:
Future Operations
As of February 28, 2010 we had a working capital surplus of $264,548.
We anticipate that with the operating revenues and sale of common stock we will be able to meet our current operating and capital expenses. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of current stockholders.
Future Financings
We anticipate continuing equity sales of our common stock to supplement our business operations. Issuances of additional shares will result in dilution to existing stockholders.
Contractual Obligations
As a “smaller reporting company”, we are not required to provide tabular disclosure obligations.
Going Concern
We are in the development stage, have not yet achieved profitable operations and are dependent on our ability to raise capital from stockholders or other sources to meet obligations arising from normal business operations when they become due. Therefore, in their report on our audited financial statements for the year ended February 28, 2010, our independent auditors included an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern. Our financial statements contain additional note disclosure describing the circumstances that lead to this disclosure by our independent auditors.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements including arrangements that would affect our liquidity, capital resources, market risk support and credit risk support or other benefits.
Recent Accounting Pronouncements
Management does not expect any financial statement impact from any recently-issued pronouncements.
Item 7A.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
Item 8.
Item 8. Financial Statements and Supplementary Data.
Index to the Audited Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED STATEMENTS OF OPERATIONS
CONSOLIDATED STATEMENTS OF CASH FLOWS
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm
To the Board of Directors of
Dolat Ventures, Inc.
(An Exploration Stage Company)
New York, NY
We have audited the accompanying consolidated balance sheets of Dolat Ventures, Inc. (the “Company”) as of February 28, 2010 and 2009, and the related consolidated statements of operation, stockholders' equity (deficit), and cash flows for the years ended February 28, 2010 and 2009 and for the period from April 13, 2006 (inception) through February 28, 2010. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Dolat Ventures, Inc. as of February 28, 2010 and 2009, and the results of its operations and its cash flows for each of the years in the two-year period ended February 28, 2010 and for the period from April 13, 2006 (inception) through February 28, 2010 in conformity with accounting principles generally accepted in the United States of America.
As discussed in Note 1 to the consolidated financial statements, the Company's absence of significant revenues, recurring losses from operations, and its need for additional financing in order to fund its projected loss in 2011 raise substantial doubt about its ability to continue as a going concern. The 2010 consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
LBB & Associates Ltd., LLP
Houston, Texas
June 11, 2010
Dolat Ventures, Inc
(An Exploration Stage Company)
Consolidated Balance Sheets
(The accompanying notes are an integral part of these consolidated financial statements)
Dolat Ventures, Inc
(An Exploration Stage Company)
Consolidated Statements of Operations
(The accompanying notes are an integral part of these consolidated financial statements)
Dolat Ventures, Inc
(An Exploration Stage Company)
Consolidated Statements of Cash Flows
(The accompanying notes are an integral part of these consolidated financial statements)
Dolat Ventures, Inc
(An Exploration Stage Company)
Statements of Consolidated Stockholders’ Equity (Deficit)
(The accompanying notes are an integral part of these consolidated financial statements)
Dolat Ventures, Inc
(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
February 28, 2010
1. NATURE AND CONTINUANCE OF OPERATIONS
The Company was incorporated in the State of Nevada on April 13, 2006 and was a start-up, exploration stage company until its recent acquisitions of Dove Diamond and Mining, Inc. its wholly owned subsidiary. Effective December 15, 2009, the Company acquired all of the stock of Dove Diamonds and Mining, Inc. a Nevada Corporation incorporated in May, 2009 (”Dove”). Dove currently mines Diamonds and will import and wholesale rough diamonds and gemstones. In April, 2010, the Company acquired 75% of the outstanding shares of stock of Millennium Mining, LLC, which is currently mining diamonds in Sierra Leone.
These financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has incurred a loss since inception resulting in an accumulated deficit of $97,759 as at February 28, 2010 and further losses are anticipated in the development of its business raising substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand and loans from directors and or private placement of common stock.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in US dollars. The fiscal year end of the company and its wholly owned subsidiary is February 28.
Exploration Stage Company
The Company is an “exploration stage company” as defined in the Securities and Exchange Commission Industry Guide 7, and is subject to compliance with ASC 930 “Development Stage Companies”. The Company is devoting its resources to establishing the new business, and its planned operations have not yet commenced, accordingly, no revenues have been earned during the period from April 13, 2006 (date of inception) to February 28, 2010.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
Use of Estimates and Assumptions
The preparation of financial statements in conformity with 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.
Dolat Ventures, Inc
(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
February 28, 2010
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Consolidation Policy
The consolidated financial statements include the accounts of the company and its subsidiaries. All significant inter-company transactions and balances have been eliminated in consolidation. The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America.
Fair Value of Financial Instruments
The carrying amounts of cash and current liabilities approximate fair value due to the short maturity of these instruments. These fair value estimates are subjective in nature and involve uncertainties and matters of significant judgment, and, therefore, cannot be determined with precision. Unless otherwise noted, it is management’s opinion the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.
Mineral Exploration Costs
In accordance with Securities and Exchange Commission Industry Guide 7, the Company charges mineral property acquisition costs and exploration costs to operations as incurred.
When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs incurred to develop such property are capitalized. The capitalized costs will be amortized using the units-of-production method over the estimated life of the probable reserve.
The beneficial owner holds the right to the claims which give him or his designated agent the right to mine and recover all of the metals contained within the surface boundaries of the lease vertically downward. In the event he were to grant another deed which is subsequently registered prior to the Company’s deed, the third party would obtain good title and the Company would have nothing.
Foreign Currency Translation
The financial statements are presented in United States dollars. In accordance with ASC 830 ‘‘Foreign Currency Matters’’, foreign denominated monetary assets and liabilities are translated into their United States dollar equivalents using foreign exchange rates which prevailed at the balance sheet date. Non monetary assets and liabilities are translated at the exchange rates prevailing at the transaction date. Revenue and expenses are translated at average rates of exchange during the year. Gains or losses resulting from foreign currency transactions are included in results of operations.
Environmental Costs
Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations, and which do not contribute to current or future revenue generation, are expensed. Liabilities are recorded when environmental assessments and/or remedial efforts are probable, and the cost can be reasonably estimated. Generally, the timing of these accruals coincides with the earlier of completion of a feasibility study or the Company’s commitments to plan of action based on the then known facts.
Income Taxes
The Company has adopted the provisions of FASB ASC Topic 740, “Income Taxes ” (“ASC 740”). As required under ASC 740, the Company accounts for income taxes using an asset and liability approach, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statements and tax bases of assets and liabilities at the applicable tax rates. A valuation allowance is utilized when it is more likely than not, that some portion of, or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
Dolat Ventures, Inc
(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
February 28, 2010
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income Taxes, continued
ASC 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Under ASC 740, the Company recognizes tax benefits only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement. A liability for “unrecognized tax benefits” is recorded for any tax benefits claimed in our tax returns that do not meet these recognition and measurement standards.
Basic and Diluted Loss Per Share
The Company computes loss per share in accordance with ASC 260, ‘‘Earnings per Share’’ which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period including stock options and warrants using the treasury method. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive.
Impairment or Disposal of Long-Lived Assets
The Company reviews long-lived assets for indicators of impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If the review indicates that the carrying amount of the asset may not be recoverable, the potential impairment is measured based on a projected discounted cash flow method using a discount rate that is considered to be commensurate with the risk inherent in the Company’s current business model. For purposes of recognition and measurement of an impairment loss, a long-lived asset is grouped with other assets at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets.
Dolat Ventures, Inc
(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
February 28, 2010
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recent Accounting Pronouncements
Effective July 1, 2009, we adopted the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 105, "Generally Accepted Accounting Principles." ASC 105 establishes the FASB Accounting Standards Codification(tm) ("Codification") as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with GAAP for SEC registrants. All guidance contained in the Codification carries an equal level of authority. The Codification supersedes all existing non-SEC accounting and reporting standards. The FASB will now issue new standards in the form of Accounting Standards Updates ("ASUs"). The FASB will not consider ASUs as authoritative in their own right. ASUs will serve only to update the Codification, provide background information about the guidance and provide the bases for conclusions on the changes in the Codification. References made to FASB guidance have been updated for the Codification throughout this document.
3. MINERAL INTEREST
Paula Property, British Columbia, Canada
During the year ended February 28, 2009, the Company determined that the Paula Property was impaired and wrote off $1,394. During the year ended February 28, 2010, the Company acquired additional claims totaling $154. This was impaired and written off in 2010.
4. ACQUISITION OF SUBSIDIARY
Effective December 15, 2009, the Company acquired 100% of the outstanding capital stock of a development stage company, Dove Diamonds and Mining, Inc., a Nevada Corporation, (“Dove” and also the “Subsidiary”) through a share exchange transaction. In consideration of their shares of Dove, the Dove shareholder collectively received Twenty Million Six Hundred Twenty Two Thousand (20,622,000) restricted common shares of the Company, which resulted in a change of control. For accounting purposes, Dove is considered a newly created entity. The net assets acquired were $560, consisting of cash.
In conjunction with the acquisition of Dove, on December 30, 2009, Shmuel Dovid Hauck was nominated and elected by the Board of Directors as President of Dolat Venture, Inc. upon the resignation of Gary Tice, who served as President. Mr. Hauck was also appointed to the Board of Directors on December 30, 2009.
5. RELATED PARTY TRANSACTIONS
As of February 28, 2009 the Company had received $24,660 from associates of the Company’s management. These advances were unsecured and non-interest bearing.
During the year ended February 28, 2010 the Company received an additional $7,022 from Company’s management, for a total of $31,682. During the year ended February 28, 2010, $25,247 of this debt was forgiven, which is an increase in paid in capital.
During the year ended February 28, 2010, Dove advanced $298,000 to a company, Millennium Mining, LLC, which is majority owned by the Company’s president and majority shareholder. Subsequent to year end, the Company merged with this related entity.
For the years ended February 28, 2010 and February 28, 2009 the Company paid a total of $220 and $2,500, respectively, to the Company’s sole officer for administrative services rendered to the Company.
Dolat Ventures, Inc
(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
February 28, 2010
5. RELATED PARTY TRANSACTIONS , continued
On September 29, 2009, Mr. Gary Tice and Ms. Nigar Lila executed a stock Purchase Agreement, pursuant to which Ms. Lila agreed to sell all of her holding ins Dolat to Mr. Tice fro $250,000. Ms. Lila resigned from the Board of Directors on September 22, 2009 and was replaced by Gary Tice, who was appointed President the same day.
6. STOCKHOLDERS’ EQUITY
As of February 28, 2010, he total number of common shares authorized that may be issued by the Company is 75,000,000 shares with a par value of $0.001 per share.
During the period from April 13, 2006 (date of inception) to February 28, 2009, the Company issued 6,600,000 shares of common stock for cash proceeds of $ 29,000. During the year ended February 28, 2010, the company sold 1,803,279 shares of common stock, which has not been issued, for cash proceeds of $325,000. The Company incurred $17,500 of expense related to sale of these shares.
The Company issued 20,622,000 shares of stock to two individuals in exchange for 100% of the shares of the outstanding capital stock of Dove Diamonds and Mining, Inc., a development stage company.
At February 28, 2010, there were no outstanding stock options or warrants.
7. INCOME TAXES
As of February 28, 2010, the Company had net operating loss carry forwards of approximately $97,759 that may be available to reduce future years’ taxable income through 2030. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.
The components of the deferred tax asset, the statutory tax rate, the effective tax rate and the elected amount of the valuation allowance are indicated below:
The change in the valuation allowance for the years ending February 28, 2010 and February 28, 2009 was $16,588 and $13,870 respectively. The effective rate differs from the statutory rate due to the valuation allowance.
8. SUBSEQUENT EVENTS
On April 13, 2010, the Company entered into a Share Exchange Agreement with Millennium Mining LLC, a Sierra Leon Limited Liability Company. Under this agreement, the company acquired 75% of the capital stock of Millennium in exchange for thirty million (30,000,000) shares of the Company’s common stock. Millennium is an operating entity in the business of mining and wholesale distribution of diamonds and precious gemstones. The shares of stock acquired were owned by the President and majority shareholder of Dolat Ventures, Inc
Dolat Ventures, Inc
(An Exploration Stage Company)
Notes to the Consolidated Financial Statements
February 28, 2010
8. SUBSEQUENT EVENTS, continued
On April 13, 2010, the Board of Directors of the Company filed an amendment to the articles of incorporation to increase the authorized capital stock of the Company to 250,000,000 shares of common stock, par value $0.001 and 1,000,000 shares of preferred stock, par value $0.001.
On April 20, 2010, the Board of Directors issued 18,009,660 restricted shares of its common stock to various individuals and entities for services and support of the Company.
On May 24, 2010, the Board of Directors issued 83,334 shares for $25,000.
On May 26, 2010, the Board issued 300,000 shares for services provided to the Company.
On May 18, 2010 a shareholder advanced $150,000 to the Company.
The 1,803,279 shares related to funds received during the year ended February 28, 2010 were issued in May 2010.
Item 9.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
None.
Item 9A.
Item 9A. Controls and Procedures
(a) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES.
As of the end of the period covered by this Annual Report on Form 10-K, we conducted an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) of our disclosure controls and procedures (as defined in Rules13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, the CEO and CFO concluded that, because of the material weaknesses in our internal control over financial reporting described below, our disclosure controls and procedures were not effective as of February 28, 2010. The Company has taken the steps described below to remediate such material weaknesses.
(b) INTERNAL CONTROL OVER FINANCIAL REPORTING.
The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company’s internal controls over financial reporting include policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; (2) provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’ assets that could have a material effect on our financial statements. Under the supervision and with the participation of our management, including the Chief Executive Officer we evaluated the effectiveness of our internal control over financial reporting as of February 28, 2010. In its evaluation, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on our assessment and the criteria described above, management has concluded that, as of February 28, 2010, our internal control over financial reporting was not effective. We have noted the following deficiencies in our control environment:
1. Deficiencies in Our Control Environment. Our control environment did not sufficiently promote effective internal control over financial reporting throughout the organization. This material weakness exists because of the aggregate effect of multiple deficiencies in internal control which affect our control environment, including: a) the lack of an effective risk assessment process for the identification of fraud risks; b) the lack of an internal audit function or other effective mechanism for ongoing monitoring of the effectiveness of internal controls; c) deficiencies in our accounting system and controls; d) and insufficient documentation and communication of our accounting policies and procedures as of February 28, 2010.
2. Deficiencies in the staffing of our financial accounting department. The number of qualified accounting personnel with experience in public company SEC reporting and GAAP is limited. This weakness does not enable us to maintain adequate controls over our financial accounting and reporting processes regarding the accounting for non-routine and non-systematic transactions. There is a risk that a material misstatement of the financial statements could be caused, or at least not be detected in a timely manner, by this shortage of qualified resources.
3. Deficiencies in Segregation of Duties. The limited number of qualified accounting personnel results in an inability to have independent review and approval of financial accounting entries. Furthermore, management and financial accounting personnel have wide-spread access to create and post entries in our financial accounting system. There is a risk that a material misstatement of the financial statements could be caused, or at least not be detected in a timely manner, due to insufficient segregation of duties. Because of its inherent limitation, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Our financial accounting staff is actively attending and receiving training. Management is still determining additional measures to remediate deficiencies related to staffing.
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities Exchange Commission that permit the company to provide only management’s report in this annual report.
Changes in Internal Controls Over Financial Reporting
There were no changes that occurred during the fourth quarter of the fiscal year covered by the Annual Report on Form 10-K that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting
Item 9B.
Item 9B. Other Information
On May 4, 2010, pursuant to the acquisition agreement between Dove and the Registrant, 20,622,000 restricted shares of the Company’s common stock were issued to Dovid Hauck, the Registrant’s President and Director, resulting in a change of control of the Registrant: As a result of the issuance of shares, Mr. Hauck now controls greater than 50% of the voting capital stock of the Registrant.
PART III
Item 10.
Item 10. Directors, Executive Officers and Corporate Governance
Our executive officers and directors and their respective ages as of the date of this Annual Report on Form 10-K are as follows:
Name
Age
Date Appointed
Position
Shmuel Dovid Hauck
President, Director
Shlomo Bleier
Secretary, COO
The directors will serve for a period of one year, or until a successor is duly elected at the next annual shareholders meeting. Officers hold their positions at the will of the Board of Directors, absent any employment agreement. There are no arrangements, agreements or understandings between non-management shareholders and management under which non-management shareholders may directly or indirectly participate in or influence the management of Dolat’s affairs. There is a family relationship among our directors or executive officers. Mr. Shlomo Bleier is the father-in-law of Shmuel Dovid Hauck, the President and Director of the Company.
Shmuel Dovid Hauck, President and Director
Since 2003, Mr. Hauck has been involved in mining diamonds, gold and other precious stones and metals in Sierra Leone. Mr. Hauck has spent his entire professional career involved in the diamond business both on the physical mining and wholesale sides. For nearly six years he has operated numerous companies throughout Sierra Leone and from 2001 to 2004, he was also salesperson and manager of Forest Diamonds, a diamond wholesaler with offices worldwide. Mr. Hauck is the founder of Millennium Mining LLC of Sierra Leone. Mr. Hauck’s extensive experience in the diamond mining business led to the conclusion that he should serve as Director of Registrant.
Shlomo Bleier, Secretary and Chief Operating Officer
Mr. Bleier has worked in the diamond industry for over 35 years and has been involved in mining operations in Brazil and Sierra Leone for the past 10 years. In 1973, Mr. Bleier moved
from Israel to New York City where he joined the diamond industry and worked as a diamond cutter and polisher specializing in large stones; managing the process from rough to finished product. From 1993 to 1999, he worked for Simcha Diamond Ltd. in Brazil, where he successfully mined gold and diamonds. From 2000 to 2004 he was a partner in S & T Mining Group, a Sierra Leone mining operation where he served as head administrator of operations, prospecting, surveying and mining. Since 2004 he has been active in many diamond projects based in Sierra Leone. With nearly 10 years experience operating in Sierra Leone, Mr. Bleier has extensive experience in all aspects of mining for diamonds from initial inception to finished product. On May 19, 2009 Dove Diamonds and Mining. Inc. elected Mr. Bleier to be its Secretary and Chief Operating Officer. Mr. Bleier was also elected to Dove’s Board of Directors on May 19, 2009. He has been a member of the Diamond Club of New York since 1980.
To the best of our knowledge, none of our directors or executive officers, during the past ten years, has been involved in any legal proceeding of the type required to be disclosed under applicable SEC rules, including:
1.
Any petition under the Federal bankruptcy laws or any state insolvency law being filed by or against, or a receiver, fiscal agent or similar officer being appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;
2.
Conviction in a criminal proceeding, or being a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses); 
3.
Being the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities:
i.
Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
ii.
Engaging in any type of business practice; or
iii.
Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;
4.
Being the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (3)(i) of this section, or to be associated with persons engaged in any such activity;
5.
Being found by a court of competent jurisdiction in a civil action or by the Securities and Exchange Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;
6.
Being found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;
7.
Being the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:
i.
Any Federal or State securities or commodities law or regulation; or
ii.
Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or
iii.
Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
8.
Being the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
Section 16(a) Beneficial Ownership Reporting Compliance
Code of Ethics
We have adopted a corporate code of ethics. We believe our code of ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of code violations; and provide accountability for adherence to the code. A copy of the code of ethics is filed as an exhibit to this report.
Audit Committee and Charter
We do not have a separately-designated audit committee of the board. Audit committee functions are performed by Shmuel Dovid Hauck, who also serves as an officer of the Company. None of our directors are deemed independent. Mr. Hauck is responsible for: (1) selection and oversight of our independent accountant; (2) establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls and auditing matters; (3) establishing procedures for the confidential, anonymous submission by our employees of concerns regarding accounting and auditing matters; (4) engaging outside advisors; and, (5) funding for the outside auditory and any outside advisors engagement by the audit committee.
Audit Committee Financial Expert
None of our directors or officers has the qualifications or experience to be considered a financial expert. We believe the cost related to retaining a financial expert at this time is prohibitive. Further, because of our limited operations, we believe the services of a financial expert are not warranted.
Item 11.
Item 11. Executive Compensation
There are no formal written employment arrangements in place. We do not have any agreements or understandings that would change the terms of compensation during the course of the year.
There has been no compensation awarded to, earned by, or paid to any of our executive officers or directors from our inception on April 13, 2006 through February 28, 2010.
In order to retain cash flows and conserve expenses, the Company retains the specialized services of directors and officers. As of February 28, 2010, the Company retained the services of Shmuel Dovid Hauck - President, and since January 25, 2009 - Secretary. The Company currently has not finalized Executive Officer Compensation levels with Mr. Hauck.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth, as of the date of this Annual Report on Form 10-K, the total number of shares owned beneficially by each of our directors, officers and key employees,
individually and as a group, and the present owners of 5% or more of our total outstanding shares. The stockholders listed below have direct ownership of his/her shares and possess voting and dispositive power with respect to the shares.
Name of Beneficial Owner
Amount of Direct Ownership
Position
Percent of Class*
Shmuel Dovid Hauck
40,311,000
President & Director
52.07%
Shlomo Bleier
10,311,000
Secretary, Chief Operating Officer
13.32%
Gary Tice
4,000,000
5.2%
Rivie Schwebel
5,166,666
6.7%
All Officers and Directors
50,622,000
77.29%
* Based on 77,418,273 shares outstanding as of June 11, 2010
Item 13.
Item 13. Certain Relationships and Related Transactions, and Director Independence
As described in Item I, Part I of this Annual Report on Form 10-K, on December 15, 2009, the Registrant acquired 100% of the outstanding capital stock of Dove Diamonds and Mining, Inc. The capital stock of Dove was acquired from Dovid Hauck, the Registrant’s President and Director and Shlomo Bleier, the Registrant’s Secretary and COO, in exchange for a total of 20,622,000 restricted shares of the Registrant’s common stock.
As described in Item I, Part I of this Annual Report on Form 10-K, on April 13, 2010, the Registrant acquired 75% of the outstanding capital stock of Millennium Mining, LLC. The capital stock of Millennium was acquired from Dovid Hauck, the Registrant’s President and Director in exchange for 30,000,000 restricted shares of the Registrant’s common stock.
Item 14.
Item 14. Principal Accountant Fees and Services
(1) Audit Fees
The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for our audit of annual financial statements and review of financial statements included in our Form 10-Qs or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years was:
$13,500
LBB & Associates Ltd., LLP
$9,000
LBB & Associates Ltd., LLP
(2) Audit-Related Fees
There is no fee billed in each of the last two fiscal years for assurance and related services by the principal accountants that are reasonably related to the performance of the audit or review of our financial statements and are not reported in the preceding paragraph.
(3) Tax Fees
There is no fee billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning.
(4) All Other Fees
There is no fee billed in each of the last two fiscal years for the products and services provided by the principal accountant, other than the services reported in paragraphs (1), (2), and (3).
(5) Our audit committee’s pre-approval policies and procedures described in paragraph (c)(7)(i) of Rule 2-01 of Regulation S-X were that the audit committee pre-approve all accounting related activities prior to the performance of any services by any accountant or auditor.
(6) There is no hour expended on the principal accountant’s engagement to audit our financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full time and permanent employees.
PART IV
Item 15.
Item 15. Exhibits and Financial Statement Schedules
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
DOLAT VENTURES, INC.
By: /s/ Shmuel Dovid Hauck, President & Director
Date: June 16, 2010
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: /s/ Shmuel Dovid Hauck, President & Director
Date: June 16, 2010