NEWS #1 FINANCIAL STATEMENTSREGENT VENTURES LTD.
IINTERIM CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2007 AND 2006
NOTICE TO READER
INTERIM CONSOLIDATED BALANCE SHEETS
INTERIM CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
REGENT VENTURES LTD.
JUNE 30, 2007
NOTICE OF NO AUDITOR REVIEW OF INTERIM FINANCIAL STATEMENTS
Under National Instrument 51-102, Part 4, subsection 4.3(3) (a), if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.
The Company’s independent auditor has not performed a review of these financial statements in accordance with standards established by the Canadian Institute of Chartered Accountants for a review of interim financial statements by an entity’s auditor.
REGENT VENTURES LTD.
INTERIM CONSOLIDATED BALANCE SHEETS
(Unaudited – see Notice to Reader)
June 30,
2007
December 31, 2006
(Audited)
ASSETS
CURRENT
Cash and cash equivalents
$ 1,281,402
$ 567,972
Short-term investments
10,073
10,073
Taxes recoverable
47,304
44,279
Due from related parties (Note 7)
72,565
55,421
Prepaid expenses and other
51,083
41,162
1,462,427
718,907
INVESTMENT IN OIL AND GAS (Note 6)
1,969,821
1,942,821
INTANGIBLE ASSETS (Note 3)
6,273
7,379
PROPERTY AND EQUIPMENT (Note 4)
9,548
10,936
INTEREST IN MINERAL PROPERTIES (Note 5)
2,089,360
1,882,001
$ 5,537,429
$ 4,562,044
LIABILITIES
CURRENT
Accounts payable and accrued liabilities
$ 54,173
$ 42,093
Due to related parties (Note 7)
68,330
73,005
122,503
115,098
SHAREHOLDERS’ EQUITY
SHARE CAPITAL (Note 8)
11,168,689
10,013,689
CONTRIBUTED SURPLUS
1,534,403
1,534,403
DEFICIT
(7,288,166)
(7,101,146)
5,414,926
4,446,946
$ 5,537,429
$ 4,562,044
Approved on behalf of the Board:
“Richard Wilson”
“Douglas Eacrett”
Richard Wilson – Director
Douglas Eacrett – Director
The accompanying notes are an integral part of these consolidated financial statements
REGENT VENTURES LTD.
INTERIM CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT
(Unaudited – see Notice to Reader)
Three months ended
June 30,
2007
Six months ended
June 30,
2007
Three months ended
June 30,
2006
Six months ended
June 30,
2006
EXPENSES
Amortization
$ 1,247
$ 2,494
$ 707
$ 1,477
Consulting fees
8,100
8,100
Interest
-
8
(461)
4,558
Management fees
15,000
30,000
15,000
25,500
Office and general
14,680
25,808
7,407
8,162
Professional fees
27,011
47,056
33,377
49,980
Property investigation
11,736
11,736
19,287
19,287
Rent
6,750
13,500
6,600
13,200
Stock-based compensation
-
-
-
461,048
Telephone
4,222
9,315
5,481
6,486
Transfer agent and filing fees
7,952
29,111
2,696
8,521
Travel and promotion
5,404
9,892
8,645
11,334
102,102
187,020
98,739
609,553
NET LOSS FOR THE YEAR
(102,102)
(187,020)
(98,739)
(609,553)
DEFICIT, BEGINNING OF YEAR
(7,186,064)
(7,101,146)
(5,870,582)
(5,359,768)
DEFICIT, END OF YEAR
$ (7,288,166)
$ (7,288,166)
$ (5,969,321)
$ (5,969,321)
LOSS PER SHARE
Basic and diluted
$ (0.003)
$ (0.014)
Weighted average number of shares outstanding
Basic and diluted
62,426,570
44,002,072
The accompanying notes are an integral part of these consolidated financial statements
REGENT VENTURES LTD.
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended
June 30,
2007
Six months ended
June 30,
2007
Three months ended
June 30,
2006
Six months ended
June 30,
2006
CASH FLOWS PROVIDED BY (USED FOR):
OPERATING ACTIVITIES
Net loss for the period
$ (102,102)
$ (187,020)
$ (98,739)
$ (609,553)
Adjusted for items not involving cash:
Amortization
1,247
2,494
707
1,477
Stock based compensation
-
-
-
461,048
(100,855)
(184,526)
(98,032)
(147,028)
Net changes in non-cash working capital items:
(Increase) decrease in prepaid expenses and other
(5,000)
(9,921)
-
-
(Increase) decrease in taxes recoverable
(1,206)
(3,025)
(3,835)
(5,085)
(Increase) decrease in due from related parties
7,574
(17,144)
(30,388)
(30,388)
(Decrease) increase in accounts payable and accrued liabilities
(638)
7,405
45,766
(136,799)
730
(22,685)
11,543
(172,272)
(100,125)
(207,211)
(86,489)
(319,300)
INVESTING ACTIVITIES
Investment in oil and gas
(13,500)
(27,000)
(197,400)
(272,400)
Mineral property acquisition and exploration expenditures
(7,005)
(207,359)
(444,095)
(444,095)
(20,505)
(234,359)
(641,495)
(716,495)
FINANCING ACTIVITIES
Issuance of share capital for cash
-
1,155,000
530,566
1,130,566
Share subscriptions
-
-
1,500,000
1,500,000
-
1,155,000
2,030,566
2,630,566
INCREASE IN CASH & CASH EQUIVALENTS
(120,630)
713,430
1,302,582
1,594,771
CASH & CASH EQUIVALENTS, BEGINNING OF PERIOD
1,402,032
567,972
295,942
3,753
CASH & CASH EQUIVALENTS, END OF PERIOD
$ 1,281,402
$ 1,281,402
$ 1,598,524
$ 1,598,524
SUPPLEMENTAL CASH INFORMATION:
Interest paid
$ -
$ -
$ -
$ -
Taxes paid
-
-
-
-
$ -
$ -
$ -
$ -
The accompanying notes are an integral part of these interim consolidated financial statements
REGENT VENTURES LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2007 AND 2006
NOTE 1 - NATURE AND CONTINUANCE OF OPERATIONS
The Company is in the business of exploring mineral properties and has not yet determined whether properties held contain reserves that are economically recoverable. The recoverability of amounts recorded for mineral properties and related deferred costs is dependent upon the discovery of economically recoverable reserves, confirmation of the Company’s interest in the properties, the ability of the Company to obtain necessary financing to complete the development, and future profitable production or proceeds from the disposition thereof.
These consolidated financial statements have been prepared on the basis of a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has experienced recurring losses, has not generated profitable operations since inception and at June 30, 2007 has accumulated losses of $7,288,166 since inception. Should the Company be unable to continue as a going concern, the realization of assets may be at amounts significantly less than carrying values. The continuation of the Company as a going concern is dependant on its ability to obtain additional equity capital to finance existing operations, attaining commercial production from its mineral properties, and attaining future profitable operations. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
NOTE 2 – BASIS OF PRESENTATION
The unaudited interim consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The unaudited interim consolidated financial statements have been prepared in accordance with the accounting principles and policies described in the Company’s annual financial statements for the year ended December 31, 2006, and should be read in conjunction with those statements. In the opinion of management, all adjustments (consisting of normal and recurring accruals) considered necessary for fair presentation of the Company’s financial position, results of operations and cash flows have been included. Operating results for the six-month period ended June 30, 2007 are not necessarily indicative of the results that may be expected for the year ended December 31, 2007.
NOTE 3 – INTANGIBLE ASSETS
June 30, 2007
December 31,
Cost
Accumulated Amortization
Net Book Value
2006
Net Book Value
Website development costs
$ 10,838
$ 4,565
$ 6,273
$ 7,379
$ 10,838
$ 4,565
$ 6,273
$ 7,379
NOTE 4 – PROPERTY AND EQUIPMENT
June 30, 2007
December 31,
Cost
Accumulated Depreciation
Net Book Value
2006
Net Book Value
Computer hardware
$ 5,676
$ 2,376
$ 3,300
$ 3,800
Mining equipment
25,000
18,912
6,088
6,958
Office equipment
808
648
160
178
$ 31,484
$ 21,936
$ 9,548
$ 10,936
REGENT VENTURES LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2007 AND 2006
NOTE 5 – INTEREST IN MINERAL PROPERTIES
Totals
Red Mountain, Yukon, Canada
Owyhee, Nevada, United States
June 30, 2007
December 31, 2006
Exploration and development costs:
Incurred during the period:
Field supplies and other
$ 3,589
$ -
$ 3,589
$ 95,873
Drilling
-
309,053
309,053
656,071
Staking
-
-
-
10,600
Food, lodging and travel
3,229
14,775
18,004
55,379
Geological consulting
-
7,000
7,000
16,500
6,818
330,828
337,646
834,423
Balance, beginning of year
1,501,404
23,869
1,525,273
690,850
Balance, end of year
1,508,222
354,697
1,862,919
1,525,273
Advances
29,810
-
29,810
160,097
Acquisition costs
196,631
-
196,631
196,631
Less: Write-off of mineral property
-
-
-
-
$ 1,734,663
$ 354,697
$ 2,089,360
$ 1,882,001
Red Mountain Property, Yukon
The Company has a 100% interest in 218 mineral claims located in the Mayo and Dawson Mining Districts in the Yukon Territories. 68 of these claims are subject to a 0.5% net smelter returns (“NSR”) royalty.
Owyhee Project, Nevada
The Company has a 100% interest in 9 patented and 54 staked mineral claims located in Nevada. The property is subject to a 2% overriding royalty. As at December 31, 2005, as a result of the Company conducting no work on the property in the year and having no planned work program the costs associated with the acquisition and exploration of the property were written-off.
NOTE 6 - INTEREST IN OIL AND GAS COMPANY
The Company has paid $1,969,821, in cash and shares, with respect to the acquisition of a 45% interest in the share capital of McCallan Oil & Gas (UK) Ltd., a United Kingdom private company (“McCallan”). This amount includes due diligence expenses of $151,321.
In March, 2006, the Company entered into a share purchase agreement with the Vendor whereby the Vendor agreed to sell to the Company a 22.5% interest in McCallan. At the time of the purchase, McCallan held a 51% interest in two joint operating agreements, one with respect to an oil and natural gas concession comprising approximately 3,480 square kilometres in the Carpathian Mountains in Poland, and the other with respect to a coal bed methane gas concession comprising 115 square kilometres in the Upper Silesian basin of Poland (collectively referred to herein as the”Concessions”). Pursuant to the terms of the agreement, the Company paid $75,000 in cash and issued 2.25 million common shares to the Vendor at closing. The Company also agreed to issue up to 25 million additional common shares to the Vendor on the basis of 1 million common shares for each oil, natural gas or coal-bed methane gas well placed into commercial production by McCallan.
In June, 2006, the Company entered into a second share purchase agreement with the Vendor to acquire an additional 22.5% interest in McCallan. Pursuant to the terms of the second agreement, the Company paid the Vendor $200,000 in cash and issued 1.3 million common shares at closing. The Company also agreed to issue up to 11.7 million additional common shares
REGENT VENTURES LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2007 AND 2006
NOTE 6 - INTEREST IN OIL AND GAS COMPANY - Cont’d
(the “Contingent Shares”) to the Vendor on the basis of 468,000 common shares for each oil, natural gas or coal bed methane gas well placed into commercial production by McCallan, to a maximum of 25 producing wells.
2.0 million of the shares from the acquisition of the first 22.5% interest and 1.15 million of the shares from the acquisition of the second 22.5% interest were subject to escrow restrictions imposed by the TSX Venture Exchange (the “Exchange”). On June 25, 2007, the Exchange advised that their requirements had been satisfied and the shares were released from escrow.
Pursuant to the terms of the second agreement, the Vendor has also granted the Company an option to acquire a further 6% interest in the shares of McCallan in the event that McCallan enters into an agreement with a major energy company with respect to one of its resource assets. The Company can acquire the further 6% interest in McCallan, to take its interest to 51%, by immediately issuing the 11,700,000 Contingent Shares to the Vendor rather than releasing them on the earn-in basis under the acquisition terms above.
On or about November 24, 2006, McCallan advised the Company that the event triggering the option had occurred and the Company issued notice to the Vendor of its intent to exercise the option to acquire an additional 6% interest in the share capital of McCallan. Subsequent to giving the notice of intent to exercise, the Company has decided to defer the exercise of the option for the time being.
NOTE 7 - RELATED PARTY TRANSACTIONS
a)
During the six-months ended June 30, 2007, the Company incurred or reimbursed the following to directors, officers and companies controlled by them: management fees of $30,000 (2006 - $25,500); and travel and promotion of $9,892 (2006 - $8,380). At June 30, 2007 a net amount of $72,565 (June 30, 2006 - $30,388) is due from these related parties for advances towards expenditures to be incurred on behalf of the Company. These amounts are unsecured, non-interest bearing and have no specific terms for repayment.
b)
During the six months ended June 30, 2007 the Company incurred $36,327 (2006 - $23,439) in professional fees to a law firm of which a director of the Company is a principal. As at June 30, 2007, the Company owed $68,330 (2006: $Nil) to this law firm. These amounts are unsecured and have no set terms of repayment.
c)
The above-noted transactions were recorded at exchange value, which was the amount of consideration established and agreed to by the related parties.
NOTE 8 - SHARE CAPITAL
Authorized:
100,000,000 common shares without par value
Shares
Value
Balance as at December 31, 2004 and 2005
40,146,596
$ 5,858,139
Issued during the year:
- for interest in oil and gas property
3,550,000
1,309,500
- for cash by way of exercise of warrants
2,225,000
445,000
- for cash by way of private placements
16,500,000
2,243,000
- for cash by way of exercise of options
1,955,659
312,605
- share issue costs
-
(154,555)
Balance as at December 31, 2006
64,377,255
$ 10,013,689
Issued during the period:
- for cash by way of exercise of warrants
5,775,000
1,155,000
Balance as at June 30, 2007
70,152,255
$ 11,168,689
NOTE 9 – STOCK OPTIONS
REGENT VENTURES LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2007 AND 2006
The Board of Directors is authorized, pursuant to the Company’s Stock Option Plan, to grant options to directors, officers, consultants or employees to acquire up to 10% of issued and outstanding common shares. The exercise price of options granted shall not be less than the price permitted by any stock exchange on which the common shares are then listed or other regulatory body having jurisdiction. A summary of the changes in the Company’s common share purchase options is presented below:
Six-months ended
June 30, 2007
Six-months ended
June 30, 2006
Number
Weighted Average Exercise Price
Number
Weighted Average Exercise Price
Balance, beginning of period
6,145,000
$ 0.25
3,264,659
$ 0.10
Granted
-
-
3,300,000
0.20
Exercised
-
-
(1,705,659)
0.10
Forfeited / Cancelled
-
-
(1,559,000)
0.10
Balance, end of period
6,145,000
$ 0.25
3,300,000
$ 0.16
Director and employee stock options are outstanding to purchase up to 3,050,000 common shares exercisable at a price of $0.20 per share up to March 16, 2008 and 3,095,000 common shares exercisable at a price of $0.30 per share up to November 30, 2008.
June 30, 2007
Exercise price
Weighted Average Remaining Contractual Life
(in years)
Outstanding
Exercisable
$0.20
.70
3,050,000
3,050,000
$0.30
1.40
3,095,000
3,095,000
Stock-based compensation plan
The Company records the fair value of compensation expense on the granting of stock options. The fair value is determined using the Black-Scholes option pricing model. For the six-months ended June 30, 2007 no stock options were granted. During the six-months ended June 30, 2006 the Company recorded a non-cash compensation charge of $461,048 upon the issuance of 3,300,000 stock options. The weighted average fair value of the options was $0.14 per share.
The fair value of share options was estimated using the Black-Scholes option pricing model with the following assumptions:
2007
2006
Risk-free interest rate
-
3.75%
Dividend yield
-
-
Expected stock price volatility
-
146.14%
Weighted average expected stock option life
-
2 years
Share purchase warrants
REGENT VENTURES LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2007 AND 2006
Share purchase warrant transactions as at June 30, 2007, are summarized as follows:
Number of Weighted average
Shares Exercise price
Outstanding, beginning of period 12,475,000 $ 0.28
Granted - $ -
Exercised (5,775,000) $ 0.20
Outstanding, end of period 6,700,000 $ 0.28
At June 30, 2007 the following share purchase warrants were outstanding entitling the holder to purchase one common share of the company for each warrant held:
Number of Warrants
Exercise Price
Expiry Date
2,300,000
$0.35
September 11, 2007
4,400,000
$0.35
September 17, 2007
6,700,000
NOTE 10 – SEGMENTED INFORMATION
The Company is primarily engaged in mining activities in Canada, Europe and the United States. Segmented operations and identifiable assets are as follows:
Six-months ended
June 30,
2007
Six-months ended
June 30,
2006
Loss from operations:
Canada
$ (165,591)
$ (608,714)
United States
(136)
(819)
Europe
-
-
$ (165,727)
$ (609,553)
Six-months ended
June 30,
2007
Six-months ended
June 30,
2006
Identifiable assets:
Canada
$ 3,212,911
$ 2,990,851
United States
354,697
-
Europe
1,969,821
834,900
$ 5,537,429
$ 3,825,751
NOTE 11 – CONTINGENT LIABILITY
REGENT VENTURES LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2007 AND 2006
As at June 30, 2007, the Company was issued a Writ and Statement of Claim for amounts owing, plus interest, totalling $106,142 from a creditor. The Company disputes the claim and has taken all necessary steps to defend the action. As at December 31, 2006, the amount in dispute, at that time $104,495, was written-off.
NOTE 12 – SUBSEQUENT EVENT
On August 1, 2007, the Company’s board of directors approved the extension for one year of the term of 6.4 million private placement warrants issued in September, 2006, and due to expire, as to two million warrants, on September 11, 2007, and as to 4.4 million warrants, on September 19, 2007. On August 8, 2007 the extension of the warrant term was accepted for filing by the TSX Venture Exchange.
The warrants will now expire as follows: two million warrants will expire on September 11, 2008, and the 4.4 million warrants will expire on September 19, 2008. The warrants entitle the holder thereof to acquire one additional share of the company at a price of 35 cents per share.