SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Form 10-K, press releases and certain information provided periodically in writing or verbally by our officers or our agents contain statements which constitute forward-looking statements. The words “may”, “would”, “could”, “will”, “expect”, “estimate”, “anticipate”, “believe”, “intend”, “plan”, “goal”, and similar expressions and variations thereof are intended to specifically identify forward-looking statements. These statements appear in a number of places in this Form 10-K and include all statements that are not statements of historical fact regarding the
intent, belief or current expectations of us, our directors or our officers, with respect to, among other things: (i) our liquidity and capital resources; (ii) our financing opportunities and plans; (iii) our ability to generate revenues; (iv) competition in our business segments; (v) market and other trends affecting our future financial condition or results of operations; (vi) our growth strategy and operating strategy; and (vii) the declaration and/or payment of dividends.
Investors and prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. The factors that might cause such differences include, among others, those set forth in Part I, Item IA of this annual report on Form 10-K, entitled Risk Factors. Except as required by law, we undertake no obligation to update any of the forward-looking statements in this Form 10-K after the date of this
report.
ITEM 1. DESCRIPTION OF BUSINESS.
OVERVIEW
We are an exploration stage mining company that has briefly conducted other businesses, including wireless and mobile software and management consulting. We are actively in the process of interviewing geological firms for our mineral properties and raising funds to develop those properties. We have previously entered into two agreements with Coastal Uranium Holdings Ltd. to acquire its rights and options to acquire an undivided 50% right, title and interest in certain mineral claims in the Athabasca region. We have made commitments to spend resources on the exploration and evaluation of our properties in 2012.
CORPORATE HISTORY AND DEVELOPMENT
Overview
Vanguard Minerals Corporation, formerly Knewtrino, Inc., (the “Company”) was originally incorporated as Mongolian Explorations Ltd. on August 25, 2003, under the laws of the State of Nevada. We were originally founded to conduct mineral explorations in Mongolia. Although we did exploratory feasibility work on mineral lease development, we abandoned our mineral exploration efforts in April, 2006 due to the deteriorating political and security situation in Mongolia and specifically due to intense protests over North American mining concessions in that country which jeopardize the safety of our consultants as well as undermining our confidence that we will ever be able to see a return
on our continued investments to develop the properties.
During the abandonment of our mining properties, we appointed an interim chief executive officer, Jenifer Osterwalder, who helped transition the wind down of our Mongolian exploration business. Thereafter, we appointed a new chief executive officer, Vladimir Fedyunin, and attempted to develop a business around cell phone enabled wireless applications as we had no mining properties at the time. Toward that end, we acquired the intellectual property of wireless technology start-up Instant Wirefree, Inc., a Nevada corporation. Unfortunately, we were not able to make the transition to the ultra-competitive
field of cell phone wireless applications. In June, 2007, we made the decision to abandon this line of business and to no longer pursue commercialization of any product in the wireless space. Instead, we have returned to our original, core focus of mining, where the company has its roots, however, we wished to find a more politically stable and less dangerous environment to mine in than Mongolia.
1
In September, 2007, we changed our name to Vanguard Minerals Corporation to reflect our renewed commitment to our traditional core business of mineral exploration. In November 2007, the Company entered into an agreement with Coastal Uranium Holdings Ltd. to acquire its right and option to acquire an undivided 50% right, title and interest in certain mineral claims in the Athabasca region. The option was acquired through payment of $57,585 in cash as well as 2,000,000 common shares of the Company. On April 6, 2008, we entered into another agreement with Coastal Uranium Holdings Ltd., whereby we acquired a 50% undivided right, title and interest to the mineral claim
numbered S-110476 in the Athabasca region of Canada in exchange for $250,000 CAD ($248,508 USD) and 4,000,000 common shares of Vanguard Minerals corporation. In addition, we have agreed to take on the financial responsibility of Coastal to fund development of the mineral property that is the subject of claim S-110476.
In February, 2010, James Price was appointed President, Chief Executive Officer and Sole Director of the Company. Vladimir Fedyunin, the former President and CEO, remained as Principal Financial and Accounting Officer until late 2010. Mr. Fedyunin left the company later in 2010.
On April 16, 2010, we effected a 300 for 1 reverse stock split in our common shares for shareholders of record as of that date.
On April 20, 2010, the Company initiated a new line of business doing business as Vanguard Management in hopes that proceeds from management consulting would assist the company in funding its mineral exploration as well as provide growth capital. The Company ceased this management consulting business in June, 2011. We did receive some cash and some stock in exchange for management consulting services. All this stock has been liquidated or returned. We did enter into a related party transaction with Genesis Venture Fund India I, LP that involved a swap of stock and management consulting services. That transaction has been
rescinded.
In April 2010, we traded 1,000,000 common shares of Vanguard for 1,000,000 shares of a company, PEI Worldwide Holdings, Inc.
On June 7, 2011, the registrant completed a rescission whereby the 1,000,000 shares previously issued in exchange for the PEI shares were cancelled and the 1,000,000 shares of PEI were returned to the purchasers.
On June 13, 2011, we entered into an agreement with Sean Rice to serve as our President, Chief Executive Officer and Principal Financial and Accounting Officer in exchange for a grant of 150,000 of our common stock vesting over a period of four years. Mr. Rice will also earn a salary of $120,000 per year, but such salary will not accrue or be payable until the Company has received aggregate financing proceeds from the sale of its common stock of $2,000,000 within a 12 month period. The agreement does not provide for any severance or accrual of unpaid
salary and is an at-will employment agreement.
2
James Price no longer has any role in our company and is no longer a shareholder and has not been involved with the Company in any capacity since June, 2011.
Our company is exclusively focused on the development of our Athabasca, Canada mineral properties.
We were able to complete a financing for $250,000 for sales of our common stock in June, 2011 and are actively working on the exploration of our Uranium Properties, although legal and regulatory hurdles and vetting of proper consultants and supporting teams, given the shortness of the exploration season, may mean that our next drilling and trenching program may not begin until June 2012, by which time we expect to have secured additional funding to explore beyond our currently intended drill program and geophysical surveys and corresponding ore body identification and 3D modeling.
Our financing was subject to escrow conditions, which, as of the date of this filing, have been removed and funds released to us.
We have made commitments to spend at least $100,000 on our mineral properties in 2012 and as much as $200,000 or more. Our properties are at an early stage of exploration and development. As with our previous properties in Mongolia, there can be no assurances the properties will meet our expectations. We may abandon the properties or liquidate them if our efforts to explore and develop the properties in 2012 do not prove fruitful. There are a number of issues that could cause us to abandon or sell the properties. Please see the Risk Factor discussion for a further enumeration of these risks.
Our principal executive offices are located at 2700 Glen Point Circle, Richmond, VA 23233. Our phone number is (804) 767-7154.
PRINCIPAL PRODUCTS AND SERVICES
We are a development stage mineral exploration company currently engaged in the process of evaluating mineral exploration opportunities and exploring ways to diversify ourselves outside of mining. We have some experience in land acquisition and evaluation and our chief executive officer has been involved in real estate/site acquisition for a number of companies in the utilities sector. We are in the process of exploring and developing our current mineral properties and seeking new properties to acquire.
PRINCIPAL MARKETS
We intend to compete in the market for mineral exploration and exploitation of mineral resources and the acquisition and development of land for resources and other purposes. We have not yet determined any other fields we may compete in.
3
ADVERTISING AND MARKETING
We do not currently market or advertise any products or services, however, we anticipate that we may have to market any mineral products and resources discovered in the course of our mineral exploration activities. We have not yet determined what other fields, outside of mineral exploration and land acquisition, we may compete in.
COMPETITION
The mineral exploration field is filled with substantial, well-financed, multi-national competitors, although as we have not defined the specific area of mineral exploration in which we would compete, it is difficult for us to indicate the names of the specific competitors in that area. We have not yet determined what other fields, outside of mineral exploration, we may compete in.
SIGNIFICANT CUSTOMERS
As of the date of this annual report on Form 10-K for the fiscal year ended December 31, 2011, we are not and do not anticipate becoming dependent upon any single or group of major customers.
INTELLECTUAL PROPERTY
We intend to rely for our business on trade secrets in order to protect our intellectual property that relate mostly to data surrounding our mineral properties.
We cannot be certain that the precautions we will take to safeguard trade secrets will provide meaningful protection from unauthorized use. If we must pursue litigation in the future to enforce or otherwise protect our intellectual property rights, or to determine the validity and scope of the proprietary rights of others, we may not prevail and will likely have to make substantial expenditures and divert valuable resources in the process. Moreover, we may not have adequate remedies if our intellectual property is appropriated or our trade secrets are disclosed.
Trademarks
We do not currently have any trademarks in registration, although we have a few marks that we intend to file pending additional funding.
4
Trade Secrets
Whenever we deem it important for purposes of maintaining competitive advantages, we require parties with whom we share, or who otherwise are likely to become privy to, our trade secrets or other confidential information to execute and deliver to us confidentiality and/or non-disclosure agreements. Among others, this may include employees, consultants and other advisors, each of whom we may require to execute such an agreement upon commencement of their employment, consulting or advisory relationships. These agreements generally provide that all confidential information developed or made known to the individual by us during the course of the individual’s relationship with us is to be kept
confidential and not to be disclosed to third parties except under specific circumstances.