Item 1. Financial Statements.
PROSPERO MINERALS CORP.
(A Exploration Stage Company)
Yearly Report on Form 10-K for the
Period Ending March 31, 2007
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Prospero Minerals Corp.’s unaudited financial statements for the year ended March 31, 2007 are included with this Form 10-K. The unaudited financial statements for the year ended March 31, 2007 include:
Condensed Consolidated Balance Sheets:
March 31, 2007 and March 31, 2006
Condensed Consolidated Statements of Losses:
Twelve Months Ended March 31, 2007 and 2006
For the Period July 23, 2002 (Date of Inception) through March 31, 2007
Condensed Consolidated Statements of Deficiency in Stockholders’ Equity
For the period July 23, 2002 (Date of Inception) through March 31, 2007
Condensed Consolidated Statements of Cash Flows:
Twelve Months Ended March 31, 2007 and 2006
For the Period July 23, 2002 (Date of Inception) through March 31, 2007
Notes to Unaudited Condensed Consolidated Financial Information:
March 31, 2007
Item 2.
Item 2. Management’s Plan of Operation.
THE FOLLOWING PRESENTATION OF MANAGEMENT’S PLAN OF OPERATIONS OF PROSPERO MINERALS CORP. SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION INCLUDED HEREIN.
Form 10-K
Prospero Minerals Corp.
Forward Looking Statements
This report on Form 10-K contains certain forward-looking statements within the meaning of Section 21e of the Securities Exchange Act of 1934 , as amended, and other applicable securities laws. All statements other than statements of historical fact are “ forward-looking statements ” for purposes of these provisions, including any projections of earnings, revenues, or other financial items; any statements of the plans, strategies, and objectives of management for future operation; any statements concerning proposed new products, services, or explorations; any statements regarding future economic conditions or performance; statements of belief; and any statement of assumptions underlying any of the foregoing. Such forward-looking statements are subject to inherent risks and uncertainties, and actual results could differ materially from those anticipated by the forward-looking statements.
Overview
Prospero was incorporated on July 23, 2002, under the laws of the State of Nevada. Prospero is an exploration stage company engaged in the acquisition and exploration of mineral properties.
On June 20, 2006, Prospero Minerals Corp. announced its name change from “Corumel Minerals Corp.” to “Prospero Minerals Corp.” and increased its authorized capital.
On March 28, 2003, Prospero entered into a Property Acquisition Agreement whereby it purchased a 100% interest in six mineral claims known as the Thor Group mineral claims. The Thor Group mineral claims are located near Harrison Lake in the New Westminster Mining Division of the Province of British Columbia.
After Prospero acquired the Thor Group mineral claims it incorporated a wholly owned subsidiary known as CMC Exploration Corporation (“CMC”), a British Columbia corporation, which was formed for the purpose of carrying out Prospero’s mineral exploration program. Upon forming CMC, Prospero transferred all of its 100% ownership interest in the Thor Group mineral claims to CMC.
Acquisition of the Thor Group mineral claims
Prospero purchased Thor Group mineral claims from William A. Howell, a graduate geologist, for his out-of-pocket costs incurred in staking and registering the claims. Prospero agreed to leave the claims registered in Mr. Howell’s name for reasons of convenience in the reporting of exploration work done on the claims.
Prospero launched an initial exploration program at a cost of approximately $7,500. Mr. Howell governed the initial exploration program operations conducted on the Thor Group mineral claims. As operator, Mr. Howell had the full right, power and authority to do everything necessary or desirable to carry out the program and the project and to determine the manner of exploration of the property. As the operator throughout the initial exploration program, Mr. Howell earned a 15% undivided interest in the Thor Group mineral claims as partial compensation for his services.
If after the initial exploration phase further exploration programs are recommended and Mr. Howell remains as the operator throughout the initial phase, the Property Acquisition Agreement requires that Prospero and a sole purpose company to be formed by Mr. Howell enter into a formalized joint venture. The purpose of the joint venture will be to further explore the property containing the Thor Group mineral claims with the eventual goal of putting the property into commercial mining production should both a feasibility report recommending commercial production be obtained and a decision to commence commercial production be made. The feasibility report refers to a detailed written report of the results of a comprehensive study on the economic feasibility of placing the property or a portion of the property into commercial mining production.
If this opportunity does not materialize with Mr. Howell and Prospero’s consulting geologists favor further exploration, Prospero intends to proceed alone on the same basis as Prospero would have were the joint venture formed.
Due to a lack of funding, Prospero was largely dormant during the twelve months ended December 31, 2006 and carried on minimal business, consisting of primarily administrative. Prospero did not carry on any work related to the Thor Group mineral claims.
Results of Operations
Prospero did not earn any revenues from inception through the reporting period ending March 31, 2007. Prospero does not anticipate earning revenues until such time as it has entered into commercial production of its mineral properties. Prospero has deferred the proposed drilling program on the Thor Group mineral claims until it has sufficient funding to proceed. Prospero has not yet determined whether the results of Phase 1 claims of the mineral exploration program on the Thor Group mineral are sufficiently positive to enable Prospero to proceed with further exploration programs. Prospero can provide no assurance that it will discover commercially exploitable levels of mineral resources on its properties, or if such resources are discovered, that Prospero will enter into commercial production of its mineral properties.
Prospero incurred expenses in the amount of $1,961,397, for the twelve month period March 31, 2007. From the period on inception on July 23, 2002 to March 31, 2007, Prospero incurred expenses in the amount of $2,472,604. These operating expenses were primarily related to professional fees in connection with Prospero’s corporate organization relating to audit fees and legal fees. Prospero anticipates its operating expenses will increase as it undertakes its plan of operations, provided further exploration is recommended. This increase will be attributable to further geological exploration and the professional fees associated with complying with the reporting requirements under the Securities Exchange Act of 1934 .
Prospero incurred a loss in the amount of $1,961,397 for the twelve month period ended March 31, 2007 and a loss in the amount of $2,472,604 for the period from inception of July 23, 2002 through March 31, 2007. Prospero’s loss was entirely attributable to general and administrative expenses, which included operating expenses and professional fees.
Form 10-K
Prospero Minerals Corp.
Liquidity and Capital Resources
Prospero had cash of $19 as of March 31, 2007, compared to cash in the amount of $53,855 as of its fiscal year end on March 31, 2006. Prospero had a working capital deficit of ($2,472,604) as of March 31, 2007, compared to working capital deficit of $511,206 as of March 31, 2006. Prospero’s liabilities as of March 31, 2007, total $2,497,665 relate to advances from related parties, accounts payable and accrued liabilities, including professional fees for legal and audit services.
Prospero’s independent certified public accountants have stated in their report included in Prospero’s March 31, 2006 Form 10-KSB, that Prospero has not generated revenues and has incurred operating losses and that Prospero is dependent upon management's ability to develop profitable operations. These factors among others may raise substantial doubt about the Prospero’s ability to continue as a going concern.
Prospero had cash in the amount of $19 as of March 31, 2007. Prospero’s total expenditures over the next twelve months are anticipated to be approximately $1.4 Million dollars. Prospero does not have plans to purchase any significant equipment or change the number of its employees during the next twelve months. Accordingly, over the next twelve months, Prospero will need to obtain additional financing in the event that further exploration is recommended.
Thor Claims
Prospero spent $7,500 on the completion of the fieldwork component of Phase 1 of the mineral exploration program on the Thor Group mineral claims. Mr. Howell earned his 15% interest in the property by acting as operator during Phase 1 and Prospero has an 85% interest. In February 2004, Prospero received the final report for Phase 1 of the mineral exploration program from B.J. Price. Mr. Howell, the operator, was one of the geologists who did the fieldwork. B.J. Price supervised the work and wrote the report.
The work carried out during Phase I confirmed the presence of highly altered zones that, although not strongly mineralized, are of significant size and are worthy of diamond drilling. A drill program was proposed in the final report, consisting of drilling four holes x 100 meters each, IP surveys (6 mines), geological supervision and reporting, mobilization and demobilization, for a total estimated cost of $70,000. The purpose of these drill holes is for geological information concerning the nature of the altered and mineralized zones. Also additional infrared polarization surveys are recommended, following which the drilling plan should be reviewed.
As a result of a lack of funding, Prospero has been dormant and thus, no further work has been conducted or completed on the Thor Claims.
Critical Accounting Policies
Prospero’s discussion and analysis of its financial condition and results of operations, including the discussion on liquidity and capital resources, are based upon its financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Actual results could differ from those estimates. On an on going basis, management re-evaluates its estimates and judgments, including but not limited to, those related to revenue recognition and collectibility of accounts receivable. Critical accounting policies identified are as follows:
Exploration Stage Activities
Prospero has been in the base and precious mineral exploration business since its formation. Prospero has not commenced significant operations and is considered an exploration stage company.
Principles of Consolidation
The consolidated financial statements include Prospero’s accounts and its subsidiary’s. All significant intercompany balances and transactions have been eliminated.
Mineral Property Payments and Exploration Costs
Prospero expenses all costs related to the acquisition, maintenance and exploration of mineral claims in which Prospero has secured exploration rights prior to establishment of proven and probable reserves. To date, Prospero has not established the commercial feasibility of its exploration prospects; therefore, all costs are being expensed.
Reclamation and Abandonment Costs
The Financial Accounting Standards Board (“ FASB ”) issued Statement of Financial Accounting Standards No. 143 (“ SFAS 143 ”), “ Accounting for Asset Retirement Obligations ” which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. This statement establishes a uniform methodology for accounting for estimated reclamation and abandonment costs whereby reclamation and closure costs including site rehabilitation will be recorded at the estimated present value of reclamation liabilities and will increase the carrying amount of the related asset. These reclamation costs will be allocated to expense over the life of the related assets and will be adjusted for changes resulting from the passage of time and revisions to either the timing or the amount of the original present value estimate. Prospero’s adoption of SFAS No. 143 did not have a material impact on its operations or financial position.
Internal and External Sources of Liquidity
Prospero has funded its operations primarily from the issuance of common stock.
Inflation
Prospero does not believe that inflation will have a material impact on its future operations.
Off-Balance Sheet Arrangements
Prospero does not have any off-balance sheet arrangements.
Form 10-K
Prospero Minerals Corp.
Item 3.
Item 3. Controls and Procedures
(a)
Evaluation of disclosure controls and procedures.
The term “disclosure controls and procedures” (defined in SEC Rule 13a-15(e)) refers to the controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within required time periods. The Company’s management, with the participation of the Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this annual report (the “Evaluation Date”). Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer has concluded that, as of the Evaluation Date, such controls and procedures were effective.
(b)
Changes in internal controls.
The term “internal control over financial reporting” (defined in SEC Rule 13a-15(f)) refers to the process of a company that is 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 management, with the participation of the Chief Executive Officer and Chief Financial Officer, has evaluated any changes in the Company’s internal control over financial reporting that occurred during the fiscal year covered by this annual report, and they have concluded that there was no change to the Company’s internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1.
Legal Proceedings
Prospero is not a party to any pending legal proceedings and, to the best of Prospero’s knowledge, none of Prospero’s assets are the subject of any pending legal proceedings.
Item 2.
Unregistered Sale of Equity Securities and Use of Proceeds
There have been no sales of unregistered securities within the quarter ended September 30, 2006 that would be required to be disclosed pursuant to Item 701 of Regulation S-B.
Item 3.
Defaults Upon Securities
None.
Item 4.
Item 4.
Submission of Matters to a Vote of Security Holders
None.
Item 5.
Item 5.
Acquisition of Cavitation Concepts Corporation Technology
On October 31, 2006 Prospero Minerals completed the acquisition from Cavitation Concepts Corporation of all of the assets pertaining to Cavitations’ water purification business. In exchange for the assets, Prospero Minerals issued 10 million shares of its common stock to Cavitation Concepts Corporation. The parties valued the shares at $1,000. based on their assessment of the fair value of the transferred assets.
The sale of the shares by Prospero Minerals to Cavitations Concepts was exempt pursuant to Section 4(2) of the Securities Act since the sale was not made in a public offering and was made to an entity whose principals had access to detailed information about Prospero Minerals and which was acquiring the shares for its own account. There were no underwriters.
Form 10-K
Prospero Minerals Corp.
Item 6.
Item 6. Exhibits
(a)
Index to and Description of Exhibits
Exhibit
Description
Status
Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Included
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Included
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, Prospero Minerals Corp. has caused this report to be signed on its behalf by the undersigned duly authorized person.
PROSPERO MINERALS CORP.
By:/s/ Etoile Pinder
Name: Etoile Pinder
Title : Chief Financial Officer
Dated: June 28, 2007
Form 10-K
Prospero Minerals Corp.
Exhibit 31
Form 10-K
Prospero Minerals Corp.
PROSPERO MINERALS CORP.
CERTIFICATIONS PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
CERTIFICATION
I, Etoile Pinder, certify that:
1. I have reviewed this yearly report on Form 10-K of Prospero Minerals Corp.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;
4. The small business issuer’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the small business issuer and we have:
a) designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) evaluated the effectiveness of the small business issuer’s disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and
c) presented in this report any change in the small business issuer’s internal controls over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and
5. The small business issuer’s other certifying officers and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent function):
a) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial data; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls.
Date: June 28, 2007
By:/s/ Etoile Pinder
Ms. Etoile Pinder
Chief Financial Officer
Form 10-K
Prospero Minerals Corp.
Exhibit 32
Form 10-K
Prospero Minerals Corp.
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Yearly Report of Prospero Minerals Corp. (“Prospero”) on Form 10-K for the period ending March 31, 2007 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Etoile Pinder, Chief Financial Officer, certify, pursuant to s.906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of Prospero.
By:/s/ Etoile Pinder
Ms. Etoile Pinder
Chief Financial Officer
June 28 2007