Drilling was initiated at the Belleville project on December 5,
2011. The plan was to drill two to four angle drill holes into a pediment
covered geophysical anomaly interpreted to be a buried structure, which could be
mineralized, similar to nearby veins within the exposed mountain range. The
first hole, drilled at -45 degrees using an RC rig, was lost after drilling 120
feet of alluvium. A second hole at -60 degrees was attempted and was also lost
before reaching bedrock. Upon encountering unexpectedly thick alluvium
(gravel), the company contracted an expert in reverse circulation mud drilling
to supervise the drilling of the IP target and brought in special equipment to
facilitate placing casing through the gravel. Following this work, we again
attempted to drill the IP target in January, 2012 with a mud rotary hole being
attempted. After a number of problems 90 feet of casing was finally installed. A
tricone bit was then used to extend the hole to avoid the heavy vibration caused
by a hammer bit. Initially this was successful down to 200 feet where the hole
remained in gravel. Caving again became a problem and to avoid losing the entire
drill string the hole was abandoned at 235 feet.
The single deepest hole drilled at Belleville was logged and
sent for geochemical analysis to check for possible alluvial gold. Anomalous
gold ranging from 0.04 to 0.08 g/t was detected from 65 to 70 feet, 190 to 200
feet and 225 to 230 feet. Although these values are anomalous they are far below
what would be considered ore grade mineralization.
All American Gold reviewed other targets on the property for
future exploration with its technical team. Minquest and TAC along with our
engineers reviewed the property to determine alternate drilling locations or a
method of avoiding the alluvium and being able to continue to be able to drill
the planned target. TAC agreed to postpone our obligation to make further
payments on the property by one year, to delay the 2012 exploration program
until at least May 31, 2013, and to extend the option agreement by one full
year.
Our engineers advised that given the current mining climate,
the high cost of a projected exploration program that did not indicate positive
results would come from the exploration efforts that there was insufficient merit to the project and All American was advised
to not continue with further efforts to explore the project. At this time no
further work on the IP target is planned given the unstable nature of the
alluvium. As a result, we have no further obligations under the Property
Acquisition Agreement.
The Goldfield West Property is an advanced exploration property
with defined targets comprised of 105 unpatented mining claims covering a total
of 850 hectares, or 2100 acres. The property is located approximately 3.5 hours
northwest of Las Vegas, Nevada, by car, and approximately 3 miles west of the
town of Goldfield. The Goldfield West property is accessible by well-graded dirt
roads.
Geologically, the Goldfield West property encompasses an area
of Tertiary volcanic and volcanoclastic rocks. The USGS (US Geological Survey)
and several mineral exploration companies hypothesize that the western edge of a
caldera rim runs through the property. Historic work conducted has led to the
completion of 138 drill holes. Combined geophysical surveys, geochemical
sampling and 23 reverse circulation drill holes within the Nevada Eagle and
South targets have tended to confirm the existence of a gold-bearing
hydrothermal system associated with the argillization and silification of host
rocks proximal to feeder structures.
Four near-vertical feeder faults were identified in the three
sections drilled (See Figures 2, 3 and 4 below). Faults were identified by
intervals containing much higher silver values than those within the
volcaniclastic hosted gold/silver zones. Volcaniclastic hosted mineralization
spread from these feeders. It is hypothesized that densely welded tuffaceous
rocks at depth are brittle enough to form openings in which high-grade veins
might form. The targets identified can easily be tested with angle RC holes
which will need to be approximately 1,500 feet in depth.
Drill holes GFW1101 and 1102 were drilled on Section 83300N
(Feet North) on the same section as GFW1002C, a steeply dipping core hole
drilled in 2010 which defined the stratigraphy of the area and contained
numerous +0.01 g/t gold intercepts with some quartz/sulfide veining. GFW1101
intersected 10 feet of 0.17 g/t gold and 18.6 g/t silver at 140-150 feet. The
hole has an additional 160 feet total thickness of +0.10 g/t gold, but no other
high silver grades. This intercept appears to be a north-south trending steeply
west dipping feeder fault. The association of high silver with or without gold
in feeder faults was discovered while drilling the Nevada Eagle vein extension
several years ago. Brittle rocks occur roughly 900 to 1,100 feet below the
surface on Section 83300N and where the interpreted fault crosses these rocks is
a high-grade vein target.
Drill holes GFW1103 and 1104 were drilled on Section 83500N.
GWF1103 contained two high silver intervals, postulated to be two feeder faults.
From 215 to 225 feet the hole assays 13.3 g/t silver and from 320 t0 330 feet
assays 25.1 g/t Ag. GFW1004 contains 36.7 g/t silver from 215-220 feet. These
three interpreted faults were given the same orientation as those on Section
83300N. Again, brittle rocks occur roughly 900 to 1,100 feet below the surface
and where the interpreted faults cross these rocks are high-grade vein targets.
Geochemical results for all five holes using a 0.10 g/t gold equivalent (AuEq)
cut off are shown in the table below.
GFW1105 was drilled on Section 87900N in an area where a
historic vertical drill hole (MZ4) had intersected a thick section of anomalous
gold. This hole intersected 0.65 g/t gold and 28.7 g/t silver from 170 to 180
feet. This indicated feeder fault was interpreted as parallel to the feeder
faults further south and the target depth is interpreted as the same.
The results show thick sections of nearly flat-lying
volcaniclastic hosted gold/silver mineralization with values averaging 0.3 to
0.5 g/t AuEq with infrequent near vertical feeder faults as shown by high silver
values. While the flat-lying mineralization is not currently economic the
extensive volume of mineralization indicates major feeder faults were active in
the area.
As a result of the current mining climate and the challenge of
raising sufficient capital to carry out a further drill program, TAC elected to
terminate the Option Agreement on May 31, 2013. Richard Kern, M.S., (P.Geo. and
SME member) of Reno, Nevada, is the Companys qualified person on the project.
On May 7, 2012, we entered into a non-binding Letter of Intent
(the Desert Pacific Bell Flats LOI) with Desert Pacific Exploration, Inc.
(Desert Pacific) that set out the general terms and conditions between Desert
Pacific and the Corporation for the Bell Flats mineral property located in
Churchill County, Nevada, which allowed us to exclusively investigate the
mineral property for a forty-five (45) day period until June 22, 2012, and
whereby the Corporation has an exclusive right to enter into a mining option
agreement with Desert Pacific at any time prior to June 22, 2012. In
consideration of signing the Letter of Intent, we paid to Desert Pacific sum of
$2,500 concurrently with the execution and delivery of the LOI.
The Bell Flats Project is comprised of 14 unpatented mining
claims covering a total of 280 acres within the Nevada mining district,
Churchill County, Nevada and is located approximately 5 miles north of Gabbs,
Nevada and 25 miles north of the Paradise Peak mine. This project represents an
advanced stage exploration property with no defined resource. Extensive soil and
rock sampling, geophysical surveys and drilling have identified several
alteration zones along a corridor approximately 3,500 meters in length. Gold and
silver occur developed along the contact of jasperoid and argillized Tertiary
volcanic rock intermittently along the corridor. The mineralization has been
encountered from surface to depths of 160 meters in drilling. Gold values exceed 5.1 g/t in trenching
while silver values reach 200 g/t from historic drilling. The mineralized zone
is open in all directions. A Santa Fe type model is indicated for the project
based on the geology and alteration.
On June 22, 2012, the Board of Directors following consultation
with our geological engineer elected not to proceed with exploration work or to
enter into an option agreement with Desert Pacific in regards to the Essex
mineral property. After reviewing all of the available data our engineers
concluded that there was insufficient merit to the projects and that All
American was advised to not enter into a mining option agreement with Desert
Pacific to explore the project. As a result, All American has no further
obligations under the Letters of Intent on either project.
On November 1, 2012, we entered into a Mineral Property
Acquisition Agreement with James Hason that set out the general terms and
conditions between Hason and the Corporation in regards to the Alex mineral
property located in the Vernon Mining Division, British Columbia, Canada, which
allows us an option to investigate and purchase the property until March 31,
2013, by making payment of $6,000 upon the execution of the Agreement. Hason may
extend the option until October 30, 2013, by our making an additional payment of
USD $2,000 on or before March 31, 2013. In consideration of signing the
Agreement, we have paid to Hason the sum of $6,000 concurrently with the
execution and delivery of the Agreement.
On March 31, 2013, the Board, following consultation with our
geological engineer, elected not to proceed with exploration work or to enter
into an option agreement in regards to the Hason Mineral Claims. Our engineers
advised that given the current mining climate, the high cost of a projected
exploration program that did not indicate positive results that might come from
the exploration efforts, there was insufficient merit to the project and All
American was advised to not enter into a mining option agreement to explore the
project. We, therefore, terminated the agreement with the vendor and as a
result, have no further obligations under the Mineral Property Acquisition.
We do not claim to have any ores or reserves whatsoever at this
time on any of our mineral properties.
We are currently seeking other projects and mineral interests
in which we may become involved that will have merit as potential positive
mining projects.
RESULTS OF OPERATIONS
|
Year Ended
May 31
|
|
|
2013
|
|
2012
|
Revenue
|
$
|
Nil
|
$
|
Nil
|
Operating Expenses
|
$
|
53,017
|
$
|
1,666,020
|
Net Profit (Loss)
|
$
|
(53,017)
|
$
|
(1,666,020)
|
COMMON SHARES: Since inception we have used common stock, notes
payable, a convertible debenture and an advance from both related and
non-related parties to raise money for our optioned mineral acquisitions and
corporate expenses. Net cash provided by financing activities in the current
fiscal year ended May 31, 2013, was $37,000 which was provided by to non-related
party through the issuance of a promissory note. Net cash provided by financing
activities from inception on May 17, 2006, was $1,016,000 ($599,000 as proceeds
received from sales of our common stock $355,000 through a convertible debenture
plus a net borrowing of $62,000).
Revenue
We have not earned any revenues since our inception.
Expenses
Our operating expenses for the year ended May 31, 2013 and 2012
are outlined in the table below:
|
Year Ended May 31
|
|
2012
|
|
2012
|
Exploration mining property - USA
|
$ (12,677)
|
|
$ 341,330
|
Exploration mining property - Canada
|
6,000
|
|
-
|
Bank charges
|
257
|
|
758
|
Loss on currency exchange
|
-
|
|
504
|
Loss on conversion of debt
|
-
|
|
71,996
|
Imputed interest expense promissory notes
& advances
|
1,503
|
|
1,525
|
Interest expense - promissory notes &
advances
|
768
|
|
869
|
Interest expense convertible debenture
|
-
|
|
108,199
|
Consulting
|
12,000
|
|
9,000
|
Office
|
9,014
|
|
18,060
|
Professional fees
|
13,852
|
|
20,058
|
Investor relations
|
-
|
|
45,000
|
Public relations
|
4,535
|
|
11,390
|
Registration and filing fees
|
10,976
|
|
11,328
|
Management fees
|
3,000
|
|
1,014,000
|
Transfer agent
|
1,200
|
|
7,680
|
Travel and meals
|
2,588
|
|
4,323
|
TOTAL
|
$53,017
|
|
$1,666,020
|
Operating expenses for the year ended May 31, 2013, decreased
by approximately 97% compared to the similar period in 2012 largely due to the
lack of significant exploration expenditures and the lack of the underlying
potential cost of the issuance of option stock under a consulting agreement with
an executive officer which amounted to a charge of $1,000,000 in 2012. Excluding
this charge, the decrease relative to the previous year would only have been
approximately 92%. During the past year we continued our business plan, elected
to not proceed with further exploration work on the Goldfield West and
Belleville properties as a result of costs, the lack of significant results from
earlier exploration and the loss of a partner and made due diligence enquiries
on two other projects in Nevada and British Columbia.
19
During the year ended May 31, 2013, All American incurred
operating expenses of $53,017 as compared to $1,666,020 for the prior year and a
total of $2,259,721 for the period from inception on May 17, 2006, to May 31,
2013. The costs incurred can be further subdivided into the following
categories. The significant decrease was the result of a lack of an exploration
program during the current year.
EXPLORATION OF MINING PROPERTY CHINA: No costs were incurred
in the past two years pertaining to the phase I exploration program on our
optioned exploration property in China, the Gao Feng gold property under which
the option was terminated in 2011. Since inception on May 17, 2006, we have
incurred a total of $20,000 in resource property exploration expenses in China.
This cost category will have no further costs incurred in the future.
EXPLORATION AND ACQUISITION EXPENSES MINING PROPERTIES
CANADA: $6,000 was paid in the current year under discussion as part of the
exploration expenses of an optioned property in B.C. while $0 (nil) was expended
in the similar year ended May 31, 2012. For the period May 17, 2006 (inception)
through May 31, 2013, All American has incurred $6,000 in total on expenses in
the acquisition of the option on the Alex mining property. The option on the
property was not exercised; as a result, this cost category will have no further
costs incurred in the future.
EXPLORATION AND ACQUISITION EXPENSES MINING PROPERTIES
U.S.A.: At the end of the pervious year, $13,677 was recorded as a payable to
TAC and $1,000 was recorded as being receivable from TAC in regards to the
expenses incurred on the Goldfields West and Belleville properties during fiscal
2012. During the current year, the options on both properties were terminated as
a result of poor results and the high cost of returning to the projects. As a
result we and TAC agreed to write off all outstanding amounts against either
project. Therefore, we incurred a net credit of $12,677 against the exploration
expenses of the optioned properties in Nevada during the current fiscal year.
For the similar period last year, $341,330 was expended on exploration costs.
For the period May 17, 2006 (inception) through May 31, 2013, All American has
incurred $632,460 in total on expenses in the acquisition of the option on the
Goldfields West, Belleville and Iowa Canyon properties as well as the Letters of
Intent on the Essex and Bell Flats projects. Since all of these projects have
had the option terminated or the option period expired, this cost category will
have no further costs incurred in the future unless we are able to acquire new
mining properties in the United States.
BANKING AND RELATED CHARGES: $257 in banking and related
charges were incurred in the current fiscal year while $758 was incurred for the
year ended May 31, 2012. For the period May 17, 2006 (inception), through May
31, 2013, All American has incurred a total of $2,679 on such expenses.
LOSS ON CURRENCY EXCHANGE: All American incurred a $0 (nil)
loss in currency exchange for the year ended May 31, 2013, and lost $504 for the
year ended May 31, 2012. From inception on May 17, 2006, to May 31, 2013, we
have incurred a total of $1,233 in losses on currency exchange.
IMPUTED INTEREST EXPENSE Prior to the current year, a former
officer and director had advanced $20,000 in the form of a non-interest bearing
promissory note and a non-related party had advanced $10,500 in the form of a
non-interest bearing loan. An imputed interest of $1,503 was, therefore, deemed
to have been incurred in the current fiscal year ended on May 31, 2013, which
was calculated using an interest rate of 5% (five percent) which is the interest
rate that was payable on comparable notes and advances that we have recently
incurred. $1,525 in imputed expenses were incurred for the year ended May 31,
2012. For the period May 17, 2006 (inception), through May 31, 2013, All
American has incurred a total of $3,029 on imputed interest expenses.
INTEREST EXPENSE PROMISSORY NOTES AND ADVANCES: During fiscal
2011 - 2012 a director, through a wholly owned corporation loaned $40,000 (of
which $20,000 has been repaid) to All American in the form of a promissory note
which bears interest at the rate of 5% and is due and payable on April 30, 2012;
although the note is currently due, the payee has agreed not to call the note
especially in light of the repayment of $20,000 that was made during the prior
year. In addition, a non-related party advanced $37,000 to the Corporation
during the current year which is secured by a promissory note.
20
Interest costs of $768 regarding notes payable and advances
from officers and other related or non-related parties which had been arranged
in prior fiscal years as well as the referenced advance were incurred in the
current fiscal year; $869 was incurred for the period ended May 31, 2012. All
other advances and loans were paid in full, including accrued interest, prior to
the end of the year. For the period May 17, 2006 (inception), through May 31,
2013, All American has incurred a total of $4,281 on such expenses.
INTEREST EXPENSE CONVERTIBLE DEBENTURE: On November 10, 2011,
the Corporation issued $355,000 in a non-interest bearing convertible debentures
to a single creditor in exchange for cash proceeds used to make the payment due
to TAC under the Goldfields agreement in the amount of $300,000 as well as
$55,000 which was allocated to working capital. The amount due under the
convertible note could be converted at any time, at the option of the holder,
into common shares of the Corporation at a conversion price of seventy five
percent (75%) of the average closing bid prices for the ten trading days
immediately preceding the date that the Corporation receives notice of
conversion of the convertible notes. In accordance with ASC 470-20, the
Corporation determined that there was a beneficial conversion feature on the
convertible notes with an intrinsic value of $118,500. The Corporation recorded
$118,500 as additional paid-in capital and reduced the carrying value of the
convertible notes to $237,000. The carrying values of the convertible notes are
to be accreted over the term of the convertible notes up to their face value of
$355,500. The debenture was converted to shares on July 13, 2011. During the
year ended May 31, 2013, the Corporation accreted interest of $0 (nil) and
$108,199 for the similar period ended May 31, 2012. Since inception on May 17,
2006, we have incurred a total of $118,500 in interest accretable on such notes.
In the future, this cost category may change based on financing activities.
LOSS ON CONVERSION OF DEBENTURE: Based on the terms of the
above noted convertible debenture agreement we should have issued 765,027 shares
but over allotted the number of shares to be issued (875,000) through an error
in calculating the closing price as stipulated under the agreement. The value of
those over allotted shares (109,973 shares) was $71,996 which is reflected in
the financial statements as being a loss on the conversion and recorded in the
statements as such. $0 (nil) in losses on conversion of debts was incurred for
the year ended May 31, 2012. A total of $71,996 has been incurred in the period
from inception on May 17, 2006, to May 31, 2013.
CONTRIBUTED ADMINISTRATIVE SUPPORT: No contributed expenses
(for contributed administrative costs) were incurred for the year ended May 31,
2013, or 2012. For the period May 17, 2006 (inception), through May 31, 2013, a
total of $300 in contributed expenses has been reflected in the financial
statements. All contributed expenses are reported as contributed costs with a
corresponding credit to additional paid-in capital. The Corporations first
president periodically contributed administrative services to the Corporation
for the period from inception up to and including May 31, 2008. The time and
effort was recorded in the accompanying financial statements based on the
prevailing rates for such services, which equalled $50 per hour based on the
level of services performed.
CONSULTING FEES: We incurred $12,000 in consulting fees for the
year ended May 31, 2013, and $9,000 for the year ended May 31, 2012. For the
period May 17, 2006 (inception), through May 31, 2013, $40,500 was recorded for
such costs. This category will vary from year to year dependent on corporate
capital raising and potential acquisition activities. During the past year the
fees were incurred mainly for advice on potential acquisitions and listing and
quotation service options available to All American as well as services relating
to the electronic trading of our common stock and consulting services provided
to the Corporation by its current senior officer.
OFFICE EXPENSES: $9,014 in office costs were incurred in the
past year. By comparison, $18,060 was incurred for the previous fiscal year
ended May 31, 2012. For the period May 17, 2006 (inception), through May 31,
2013, a total of $47,779 has been spent on office related expenses. Such
expenses include telephone, courier, photocopying, office supplies, trade
publication subscriptions and general office costs.
ORGANIZATIONAL COSTS: No charges for organizational costs were
incurred for the years ended on May 31, 2013, and 2012. Since inception to May
31, 2013, we have incurred a total of $300 in organizational expenses. We expect
infrequent charges.
21
PROFESSIONAL FEES: All American incurred $13,852 in
professional fees for the fiscal year ended on May 31, 2013, and $20,058 in the
previous fiscal year. From inception to May 31, 2013, we have incurred $119,242
in professional fees mainly spent on legal, consulting and accounting matters.
This expense category will vary depending on corporate capital raising
activities.
CORPORATE SERVICES: No corporate service costs were incurred
for the years ended May 31, 2013, or 2012. For the period May 17, 2006
(inception), through May 31, 2013, All American has spent a total of $5,000 on
such expenses.
INVESTOR RELATIONS FEES: All American incurred $0 (nil) in
investor relation fees for the fiscal year ended on May 31, 2013, and $45,000 in
the previous fiscal year. From inception to May 31, 2013, we have incurred
$45,000 in investor relations fees to develop corporate awareness to the
investing community.
PUBLIC RELATINS COSTS: All American incurred $4,535 in public
relations costs for the fiscal year ended on May 31, 2013, and $11,390 in the
previous fiscal year. From inception to May 31, 2013, we have incurred $21,445
in public relations costs.
REGISTRATION AND FILING FEES: We incurred $10,976 in
registration and filing fees for the year ended May 31, 2013, and $11,328 for
the year ended May 31, 2012. For the period May 17, 2006 (inception), through
May 31, 2013, $44,487 was recorded for such costs. This category will vary from
year to year dependent on the filing activities of the Company with various
regulators.
MANAGEMENT FEES AND COMPENSATION: On December 1, 2011, the
Corporation entered into a consulting agreement with Brent Welke, our president
and a director, for a term of 36 months, whereby Mr. Welke has agreed to manage
the affairs of the Corporation. As compensation, we agreed to pay Mr. Welke
$1,000 per month, pursuant to the terms of the consulting agreement and issued
2,500,000 shares of the Corporations common stock valued at the last issuance
price of $0.005 per share. On July 1, 2011, the Corporation entered into a
consulting agreement with Gaspar R. Gonzalez, our treasurer and a director, for
a term of 36 months, whereby Mr. Gonzalez has agreed to manage the financial
affairs of the Corporation. As compensation, we have agreed to pay him $1,000
per month for 36 months, pursuant to the terms of the consulting agreement and
issued 2,000,000 shares of the Corporations common stock valued at the last
trading price prior to entering into the agreement of $0.50 per share which
created an accounting entry of $1,000,000 which was charged to the management
fee and compensation category. $3,000 in management fee costs were incurred in
the current year as a result, while $1,014,000 was incurred for the year ended
May 31, 2012, which includes the deemed value of the 2,000,000 shares of common
stock issued to Mr. Gonzalez under his consulting agreement. For the period May
17, 2006 (inception), through May 31, 2013, All American has incurred $1,043,477
on management fees and compensation.
TRANSFER AGENT FEES: $1,200 was spent on transfer agent costs
and attendant expenses in the year ended on May 31, 2013, while $7,680 was spent
in the corresponding period for 2012. For the period May 17, 2006 (inception),
through May 31, 2013, a total of $18,084 has been spent on transfer agent
expenses.
TRAVEL AND MEAL EXPENSES: $2,588 was spent in travel and meal
costs in the year ended on May 31, 2013, while $4,323 was spent in the
corresponding period for 2012. For the period May 17, 2006 (inception), through
May 31, 2013, a total of $13,929 has been spent on travel and meal expenses.
RESEARCH AND DEVELOPMENT: All American has not incurred any
expenses for research and development since inception on May 17, 2006.
INCOME TAX PROVISION: As a result of operating losses, there
has been no provision for the payment of income taxes to date in 2012 - 2013 or
from the date of inception.
At the end of the current fiscal year, May 31, 2013, and as of
the date of this report, All American had 96,636,122 common shares issued and
outstanding.
22
Liquidity and Financial Condition
Working Capital
|
|
|
|
|
|
|
At May 31,
2013
|
|
At May 31,
2012
|
Current Assets
|
$
|
$ 1,003
|
$
|
22,301
|
Current Liabilities
|
$
|
$ 83,463
|
$
|
53,248
|
Working Capital
|
$
|
$ (82,460)
|
$
|
(30,947)
|
Cash Flows
|
|
|
|
|
|
|
At May 31,
2013
|
|
At May 31,
2012
|
Net Cash Used in Operating Activities
|
$
|
(57,255)
|
$
|
(453,712)
|
Net Cash Provided by (Used In) Investing Activities
|
$
|
0
|
$
|
0
|
Net Cash Provided by Financing Activities
|
$
|
37,000
|
$
|
465,000
|
Increase (Decrease) In Cash During The Period
|
$
|
(20,255)
|
$
|
11,288
|
As of May 31, 2013, our company had a working capital deficit
of $82,460.
Use of Proceeds
Net cash provided by financing activities from inception on May
17, 2006, to May 31, 2013, was $1,016,000 as a result of proceeds received from
the sale of our common stock ($599,000), proceeds of a convertible debenture
($355,000) and the net amount of advances from officers and related and
non-related parties ($62,000). During that same period, the following table
indicates how those proceeds have been spent to date:
Exploration of mining property - China
|
$ 20,000
|
Exploration of mining properties - U.S.A.
|
632,460
|
Exploration of mining properties - Canada
|
6,000
|
Banking and related charges
|
2,679
|
Loss on currency exchange
|
1,233
|
Loss on conversion of debt
|
71,996
|
Imputed interest expense promissory note & advances
|
3,029
|
Interest expense promissory note & advances
|
4,281
|
Interest expense convertible debenture
|
118,500
|
Consulting
|
40,500
|
Office expenses
|
47,779
|
Organizational costs
|
300
|
Professional fees
|
119,242
|
Corporate services
|
5,000
|
Investor relations
|
45,000
|
Public relations
|
21,445
|
Registration and filing fees
|
44,487
|
Management fees
|
1,043,477
|
Transfer agent
|
18,084
|
Travel and meals
|
13,929
|
Total Use of
Proceeds to May 31, 2013
|
$2,259,421
|
Future Operations
Presently, our revenues are not sufficient to meet operating
and capital expenses. We have incurred operating losses since inception which is
likely to continue through fiscal 2013 2014. Management projects that we may
require $500,000 to fund our ongoing operating expenses and working capital
requirements for the next twelve months, broken down as follows:
23
Operating expenses
|
$100,000
|
New project exploration expenses
|
200,000
|
Repayment of debt
|
100,000
|
Working capital
|
100,000
|
Total
|
$500,000
|
As at May 31, 2013, we had a working capital deficit of
$82,460. We plan to raise the additional capital required to meet the balance of
our estimated funding requirements for the next twelve months primarily through
private placements of our stock or prospectus offerings, loans or advances from
officers, directors and shareholders and the possible sale of part of our
interest in our mineral properties. We do not anticipate that we will be able to
satisfy any of these funding requirements internally until we significantly
increase revenues.
There is substantial doubt about our ability to continue as a
going concern because our business is dependent upon obtaining further
financing. The issuance of additional equity securities by us could result in a
significant dilution in the equity interests of current stockholders. Obtaining
commercial loans, assuming those loans would be available, will increase our
liabilities and future cash commitments.
Future Financings
We will require additional financing in order to enable us to
proceed with our plan of operations, as discussed above in order to continue
operations. There can be no assurance that additional financing will be
available to us when needed or, if available, that it can be obtained on
commercially reasonable terms. If we are not able to obtain the additional
financing on a timely basis, we will not be able to meet our other obligations
as they become due. We are pursuing various alternatives to meet our immediate
and long-term financial requirements.
We anticipate continuing to rely on equity sales of our common
stock in order to fund our business operations. Issuances of additional shares
will result in dilution to existing stockholders. There is no assurance that we
will achieve any additional sales of equity securities or arrange for debt or
other financing to fund our planned business activities.
We presently do not have any arrangements for additional
financing and no potential lines of credit or sources of financing are currently
available for the purpose of proceeding with our plan of operations.
Contractual Obligations
As a smaller reporting company we are not required to provide
tabular disclosure obligations.
Going Concern
We are in the exploration 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 May 31, 2013, our independent auditors
included an explanatory paragraph regarding concerns about our ability to
continue as a going concern. Our financial statements contain additional note
disclosure describing the circumstances that lead to this disclosure.
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.
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Critical Accounting Policies
The discussion and analysis of our financial condition and
results of operations are based upon our financial statements, which have been
prepared in accordance with the accounting principles generally accepted in the
United States of America. Preparing financial statements requires management to
make estimates and assumptions that affect the reported amounts of assets,
liabilities, revenue, and expenses. These estimates and assumptions are affected
by managements application of accounting policies. We believe that
understanding the basis and nature of the estimates and assumptions involved
with the following aspects of our financial statements is critical to an
understanding of our financial statements.
Functional Currency
The Companys functional
currency is the United States dollar.
Cash and Cash Equivalents
The Company considers all
highly liquid securities with original maturities of three months or less when
acquired to be cash equivalents. There were no cash equivalents at May 31, 2013.
Financial Instruments
At May 31, 2013, the fair value
of the Companys financial instruments approximate their carrying value based on
their terms and interest rates.
Mineral Interests
Mineral interest acquisition costs
include cash consideration and the estimated fair value of common shares issued
for mineral properties, based on recent share issuances. Exploration and
development expenditures are expensed in the period incurred until such time as
the Company establishes the existence of commercial feasibility, at which time
these costs will be deferred. Administrative expenditures are expensed in the
period incurred. Mineral interest acquisition costs and related interest and
financing costs may be deferred until the property is placed into production,
sold or abandoned. Mineral interest acquisition costs will be deferred only when
and if proven and probable reserves have been found to exist. No proven or
probable reserves are currently known to exist. Any deferred costs will be
amortized on a unit-of-production basis over the estimated proven and probable
reserves of the property following commencement of commercial production or
written off if the property is sold, allowed to lapse or abandoned.
Earnings (Loss) per Common Share
The Company
computes net income (loss) per share in accordance with ASC Topic
Earnings
per Share
. The basic net loss per common share is computed by dividing the
net loss by the weighted average number of common shares outstanding; basic loss
per share excludes the impact of common stock equivalents. Diluted net loss per
share gives effect to all dilutive potential common shares outstanding during
the period using the as if converted basis, i.e., it utilizes the average
market price per share when applying the treasury stock method in determining
common stock equivalents. For the year ended May 31, 2013, and for the period
May 17, 2006 (date of inception), through May 31, 2013, there were no variances
between the basic and diluted loss per share as there were no potential dilutive
securities.
Income Taxes
The Company has adopted ASC Topic
Accounting for Income Taxes
as of inception. The Company recognizes
deferred tax assets and liabilities based on differences between the financial
reporting and tax bases of assets and liabilities using the enacted tax rates
and laws that are expected to be in effect when the differences are expected to
be recovered. Under this method, deferred tax liabilities and assets are
determined based on the difference between the financial statement and tax bases
of assets and liabilities using enacted tax rates in effect for the year in
which the differences are expected to reverse. The Company provides a valuation
allowance for deferred tax assets for which it does not consider realization of
such assets to be more likely than not.
Foreign Currency Translation
The Companys
functional and reporting currency is the United States dollar and where
necessary the accounts of the Companys foreign operations have been translated
into United States dollars in accordance with ASC Topic
Foreign Currency Translation
. Assets
and liabilities of those operations are translated in U.S. dollars using
exchange rates as of the balance sheet date; income and expenses are translated
using the average exchange rates for the reporting period. Translation
adjustments are deferred in accumulated other comprehensive income (loss), a
separate component of shareholders deficit.
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Fair Value of financial Instruments.
ASC disclosures
about fair value of financial instruments define the fair value of a financial
instrument as the amount at which the instrument could be exchanged in a current
transaction between willing parties. The carrying values of the Companys
financial instruments, which include cash, accounts receivable, and accrued
expenses, approximate fair values due to the short-term maturities of such
instruments.
Use of Estimates in the Preparation of Financial Statements.
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, the disclosure of contingent assets and liabilities at
the date of the financial statements, and the reported amounts of revenues and
expenses during the reporting periods. Actual results could differ from those
estimates and assumptions.
Recently Adopted and Enacted Accounting Pronouncements
In February 2013, the Financial Accounting Standards Board
(FASB) issued Accounting Standards Update (ASU) No. 2013-02,
Comprehensive
Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other
Comprehensive Income
, to improve the transparency of reporting these
reclassifications.
Other comprehensive income includes gains and losses that are
initially excluded from net income for an accounting period. Those gains and
losses are later reclassified out of accumulated other comprehensive income into
net income. The amendments in the ASU do not change the current requirements for
reporting net income or other comprehensive income in financial statements. All
of the information that this ASU requires already is required to be disclosed
elsewhere in the financial statements under U.S. GAAP. The new amendments will
require an organization to:
-
Present (either on the face of the statement where net income is presented
or in the notes) the effects on the line items of net income of significant
amounts reclassified out of accumulated other comprehensive income - but only
if the item reclassified is required under U.S. GAAP to be reclassified to net
income in its entirety in the same reporting period; and
-
Cross-reference to other disclosures currently required under U.S. GAAP
for other reclassification items (that are not required under U.S. GAAP) to be
reclassified directly to net income in their entirety in the same reporting
period. This would be the case when a portion of the amount reclassified out
of accumulated other comprehensive income is initially transferred to a
balance sheet account (e.g., inventory for pension-related amounts) instead of
directly to income or expense.
The amendments apply to all public and private companies that
report items of other comprehensive income. Public companies are required to
comply with these amendments for all reporting periods (interim and annual). The
amendments are effective for reporting periods beginning after December 15,
2012, for public companies. Early adoption is permitted. The adoption of ASU No.
2013-02 is not expected to have a material impact on our financial position or
results of operations.
In January 2013, the FASB issued ASU No. 2013-01,
Balance
Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets
and Liabilities
, which clarifies which instruments and transactions are
subject to the offsetting disclosure requirements originally established by ASU
2011-11. The new ASU addresses preparer concerns that the scope of the
disclosure requirements under ASU 2011-11 was overly broad and imposed
unintended costs that were not commensurate with estimated benefits to financial
statement users. In choosing to narrow the scope of the offsetting disclosures,
the Board determined that it could make them more operable and cost effective
for preparers while still giving financial statement users sufficient
information to analyze the most significant presentation differences between
financial statements prepared in accordance with U.S. GAAP and those prepared
under IFRS. Like ASU 2011-11, the amend-ents in this update will be effective for fiscal periods
beginning on, or after January 1, 2013. The adoption of ASU 2013-01 is not
expected to have a material impact on our financial position or results of
operations.
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In October 2012, the FASB issued Accounting Standards Update
ASU 2012-04, Technical Corrections and Improvements in Accounting Standards
Update No. 2012-04. The amendments in this update cover a wide range of Topics
in the Accounting Standards Codification. These amendments include technical
corrections and improvements to the Accounting Standards Codification and
conforming amendments related to fair value measurements. The amendments in this
update will be effective for fiscal periods beginning after December 15, 2012.
The adoption of ASU 2012-04 is not expected to have a material impact on our
financial position or results of operations.
In August 2012, the FASB issued ASU 2012-03, Technical
Amendments and Corrections to SEC Sections: Amendments to SEC Paragraphs
Pursuant to SEC Staff Accounting Bulletin (SAB) No. 114, Technical Amendments
Pursuant to SEC Release No. 33-9250, and Corrections Related to FASB Accounting
Standards Update 2010-22 (SEC Update) in Accounting Standards Update No.
2012-03. This update amends various SEC paragraphs pursuant to the issuance of
SAB No. 114. The adoption of ASU 2012-03 is not expected to have a material
impact on our financial position or results of operations.
In July 2012, the FASB issued ASU 2012-02, Intangibles
Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for
Impairment in Accounting Standards Update No. 2012-02. This update amends ASU
2011-08,
Intangibles Goodwill and Other (Topic 350): Testing
Indefinite-Lived Intangible Assets for Impairment
and permits an entity
first to assess qualitative factors to determine whether it is more likely than
not that an indefinite-lived intangible asset is impaired as a basis for
determining whether it is necessary to perform the quantitative impairment test
in accordance with Subtopic 350-30,
Intangibles - Goodwill and Other -
General Intangibles Other than Goodwill
. The amendments are effective for
annual and interim impairment tests performed for fiscal years beginning after
September 15, 2012. Early adoption is permitted, including for annual and
interim impairment tests performed as of a date before July 27, 2012, if a
public entitys financial statements for the most recent annual or interim
period have not yet been issued or, for nonpublic entities, have not yet been
made available for issuance. The adoption of ASU 2012-02 has not had a material
impact on our financial position or results of operations.
In December 2011, the FASB issued ASU 2011-12, Deferral of the
Effective Date for Amendments to the Presentation of Reclassifications of Items
out of Accumulated Other Comprehensive Income in Accounting Standards Update No.
2011-05. This update defers the requirement to present items that are
reclassified from accumulated other comprehensive income to net income in both
the statement of income where net income is presented and the statement where
other comprehensive income is presented. The adoption of ASU 2011-12 has not had
a material impact on our financial position or results of operations.
In December 2011, the FASB issued ASU No. 2011-11 Balance
Sheet: Disclosures about Offsetting Assets and Liabilities (ASU 2011-11).
This Update requires an entity to disclose information about offsetting and
related arrangements to enable users of its financial statements to understand
the effect of those arrangements on its financial position. The objective of
this disclosure is to facilitate comparison between those entities that prepare
their financial statements on the basis of U.S. GAAP and those entities that
prepare their financial statements on the basis of IFRS. The amended guidance is
effective for annual reporting periods beginning on or after January 1, 2013,
and interim periods within those annual periods. The Company is currently
evaluating the impact, if any, that the adoption of this pronouncement may have
on its results of operations or financial position.