PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The
information in this report for the nine months ended September 30, 2007, is
unaudited but includes all adjustments (consisting only of normal recurring
accruals, unless otherwise indicated) which Newport Gold, Inc. ("Newport" or the
"Company") considers necessary for a fair presentation of the financial
position, results of operations, changes in stockholders' equity and cash flows
for those periods.
The
condensed consolidated financial statements should be read in conjunction with
Newport's financial statements and the notes thereto contained in Newport's
Audited Financial Statements for the year ended December 31, 2006, in the Form
10KSB and filed with the SEC on April 20, 2007.
Interim results are not necessarily
indicative of results for the full fiscal year.
3
NEWPORT
GOLD, INC.
(An Exploration Stage Company)
Condensed Consolidated Balance Sheets
(US Dollars)
|
|
September
30, 2007 (Unaudited)
|
December
31, 2006
(Audited)
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
Current
|
|
|
|
Cash
|
|
$
70,580
|
$
129,366
|
Prepaid expenses
|
|
9,304
|
0
|
|
|
|
|
|
|
79,884
|
129,366
|
|
|
|
|
Long-Term
|
|
|
|
Mining claims
|
|
385,903
|
285,576
|
Computer equipment, less
|
|
|
|
accumulated amortization
|
|
|
|
of $2,266 ($1,510 in 2006)
|
|
3,090
|
3,390
|
|
|
|
|
Total
Assets
|
|
$
468,877
|
$
418,332
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' (Deficit) Equity
|
|
|
|
|
|
|
|
Current
|
|
|
|
Accounts payable
|
|
$
206,299
|
$
135,715
|
Due to related parties (note 4)
|
|
193,578
|
193,578
|
|
|
|
|
|
|
399,877
|
329,293
|
|
|
|
|
Loan
Payable
(note 5)
|
|
200,000
|
0
|
|
|
|
|
Total
Liabilities
|
|
599,877
|
329,293
|
|
|
|
|
|
|
|
|
Stockholders' (Deficit) Equity
|
|
|
|
|
|
|
|
Capital
Stock
|
|
|
|
Authorized
|
|
|
|
100,000,000 Common shares par value of $0.001 per share
|
|
|
|
Issued and outstanding
|
|
|
|
15,175,000 and 15,075,000 Common shares at September 30, 2007 and
December 31, 2006, respectively
|
|
15,175
|
15,075
|
Additional paid-in capital
|
|
815,475
|
770,575
|
Other
Comprehensive Income (Loss)
|
|
49,332
|
(6,432)
|
Accumulated Deficit
|
|
(1,010,982)
|
(690,179)
|
|
|
|
|
Total
Stockholders' (Deficit) Equity
|
|
(131,000)
|
89,039
|
|
|
|
|
Total
Liabilities and Stockholders' (Deficit) Equity
|
|
$
468,877
|
$
418,332
|
See notes to condensed consolidated financial
statements.
4
NEWPORT
GOLD, INC.
(An Exploration Stage Company)
Condensed Consolidated Statements of Operations
(US Dollars)
(Unaudited)
|
Nine Months Ended
September 30,
|
Three
Months Ended
September 30,
|
Cumulative Period
From July 16, 2003
(Inception) through
September 30,
|
|
2007
|
2006
|
2007
|
2006
|
2007
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
Salaries
|
$
0
|
$
110,000
|
$
0
|
$
0
|
$
110,000
|
Accounting and legal
|
77,959
|
35,753
|
42,680
|
13,334
|
206,446
|
Investor relations (note
4)
|
0
|
13,390
|
0
|
0
|
114,525
|
Expenditures on resource
property (note 3)
|
0
|
0
|
0
|
0
|
53,465
|
Office and travel
|
12,811
|
34,572
|
6,507
|
14,034
|
87,724
|
Geological consulting fees
|
216,865
|
26,719
|
95,210
|
15,069
|
420,854
|
Filing fees and transfer
agent
|
12,392
|
0
|
9,766
|
0
|
22,971
|
Amortization expenses
|
776
|
1,132
|
268
|
377
|
2,286
|
Foreign exchange gain
|
0
|
0
|
0
|
0
|
(7,289)
|
|
|
|
|
|
|
Net Loss
|
320,803
|
221,566
|
154,431
|
42,814
|
1,010,982
|
Other Comprehensive (Income) Loss
|
(55,764)
|
3,263
|
(25,755)
|
(2,375)
|
(49,332)
|
|
|
|
|
|
|
Total Comprehensive Loss
|
$
265,039
|
$
224,829
|
$
128,676
|
$
40,439
|
$
961,650
|
|
|
|
|
|
|
Loss Per Share
|
$ 0.02
|
$ 0.02
|
$ 0.01
|
$ 0.00
|
|
|
|
|
|
|
|
Weighted Average Number of
Shares Outstanding
|
15,137,637
|
11,375,000
|
15,175,000
|
11,375,000
|
|
See
notes to condensed consolidated financial statements.
5
NEWPORT
GOLD, INC.
(An Exploration Stage Company)
Condensed Consolidated Statements of Stockholders' (Deficit) Equity
Period from July 16, 2003 (Inception) to September 30, 2007
(US Dollars)
(Unaudited)
|
Shares
|
Par Value
|
Additional Paid-In Capital
|
Share Subscriptions Received
|
Other Comprehensive
Income
(Loss)
|
Accumulated Deficit During Exploration
Stage
|
Total Stockholders' (Deficit) Equity
|
|
|
|
|
|
|
|
|
Share subscriptions
|
|
|
|
|
|
|
|
- cash
|
0
|
$
0
|
$
0
|
$ 93,150
|
$
0
|
$
0
|
$ 93,150
|
- property
|
0
|
0
|
0
|
22,500
|
0
|
0
|
22,500
|
Foreign currency
|
|
|
|
|
|
|
|
translation
adjustment
|
0
|
0
|
0
|
0
|
(3,409)
|
0
|
(3,409)
|
Net loss
|
0
|
0
|
0
|
0
|
0
|
(161,681)
|
(161,681)
|
|
|
|
|
|
|
|
|
Balance,
|
|
|
|
|
|
|
|
December 31, 2003
|
0
|
0
|
0
|
115,650
|
(3,409)
|
(161,681)
|
(49,440)
|
Foreign currency
|
|
|
|
|
|
|
|
translation
adjustment
|
0
|
0
|
0
|
0
|
(1,124)
|
0
|
(1,124)
|
Net loss
|
0
|
0
|
0
|
0
|
0
|
(95,960)
|
(95,960)
|
|
|
|
|
|
|
|
|
Balance,
|
|
|
|
|
|
|
|
December 31, 2004
|
0
|
0
|
0
|
115,650
|
(4,533)
|
(257,641)
|
(146,524)
|
Share subscriptions
|
|
|
|
|
|
|
|
- cash
|
0
|
0
|
0
|
144,000
|
0
|
0
|
144,000
|
Foreign currency
|
|
|
|
|
|
|
|
translation
adjustment
|
0
|
0
|
0
|
0
|
(2,476)
|
0
|
(2,476)
|
Net loss
|
0
|
0
|
0
|
0
|
0
|
(93,207)
|
(93,207)
|
|
|
|
|
|
|
|
|
Balance,
|
|
|
|
|
|
|
|
December 31, 2005
|
0
|
0
|
0
|
259,650
|
(7,009)
|
(350,848)
|
(98,207)
|
Share subscriptions
|
|
|
|
|
|
|
|
- cash
|
|
|
|
|
|
|
|
Common shares issued
|
|
|
|
|
|
|
|
for cash
|
12,575,000
|
12,575
|
523,075
|
0
|
0
|
0
|
535,650
|
Common shares issued
|
|
|
|
|
|
|
|
for mining claims
|
2,500,000
|
2,500
|
247,500
|
0
|
0
|
0
|
250,000
|
Common shares issued
|
|
|
|
|
|
|
|
for share
subscriptions
|
0
|
0
|
0
|
(259,650)
|
0
|
0
|
(259,650)
|
Foreign currency
|
|
|
|
|
|
|
|
translation
adjustment
|
0
|
0
|
0
|
0
|
577
|
0
|
577
|
Net loss
|
0
|
0
|
0
|
0
|
0
|
(339,331)
|
(339,331)
|
|
|
|
|
|
|
|
|
Balance,
|
|
|
|
|
|
|
|
December 31, 2006
|
15,075,000
|
15,075
|
770,575
|
-
|
(6,432)
|
(690,179)
|
89,039
|
Common share issued
|
|
|
|
|
|
|
|
for mining claims
|
100,000
|
100
|
44,900
|
0
|
0
|
0
|
45,000
|
Translation adjustment
|
0
|
0
|
0
|
0
|
55,764
|
0
|
55,764
|
Net loss
|
0
|
0
|
0
|
0
|
0
|
(320,803)
|
(320,803)
|
Balance,
|
|
|
|
|
|
|
|
September 30, 2007
|
15,175,000
|
$
15,175
|
$
815,475
|
$
0
|
$
49,332
|
$
(1,010,982)
|
$
(131,000)
|
See notes to condensed consolidated financial statements.
6
NEWPORT GOLD, INC.
(An Exploration Stage Company)
Condensed Consolidated Statements of Cash Flows
(US Dollars)
(Unaudited)
|
Nine
Months Ended
September 30,
|
Cumulative
Period
From July 16, 2003
(Inception) through
September 30, 2007
|
|
2007
|
2006
|
|
|
|
|
|
Operating Activities
|
|
|
|
Net loss
|
$
(320,803)
|
$
(221,566)
|
$
(1,010,982)
|
Item not involving cash:
|
|
|
|
Depreciation
|
776
|
1,132
|
2,286
|
|
|
|
|
Operating Cash Flow
|
(320,027)
|
(220,434)
|
(1,008,696)
|
|
|
|
|
Changes in Operating Assets and Liabilities
|
|
|
|
Prepaid expenses
|
(8,378)
|
(40,000)
|
(8,352)
|
Accounts payable
|
42,601
|
5,598
|
271,101
|
Due to related parties
|
(29,892)
|
36,586
|
159,605
|
Cash Used in Operating Activities
|
(315,696)
|
(218,250)
|
(586,342)
|
|
|
|
|
Investing Activities
|
|
|
|
Computer equipment
|
0
|
(5,034)
|
(5,034)
|
Expenditures on resource
property - shares
|
0
|
0
|
(12,364)
|
Cash Used in Investing Activities
|
0
|
(5,034)
|
(17,398)
|
|
|
|
|
Financing Activities
|
|
|
|
Loan proceeds
|
180,091
|
0
|
180,091
|
Common shares issued
|
0
|
156,000
|
276,000
|
Subscriptions received
|
0
|
0
|
237,150
|
Cash Provided by Financing Activities
|
180,091
|
156,000
|
693,241
|
|
|
|
|
Inflow (Outflow) of Cash
|
(135,605)
|
(67,284)
|
89,501
|
Effect of Exchange Rate Change on Cash
Balance held in Foreign Currencies
|
76,819
|
(3,293)
|
18,921
|
Cash, Beginning of Period
|
129,366
|
151,520
|
0
|
|
|
|
|
Cash, End of Period
|
$
70,580
|
$
80,943
|
$
70,580
|
|
|
|
|
Non-Cash Investing and Financing Activity
|
|
|
|
Common stock issued for
property
|
$
45,000
|
$ 0
|
$
317,500
|
|
|
|
|
Supplemental Disclosures
|
|
|
|
Interest paid
|
$
0
|
$
0
|
$
0
|
Income taxes paid
|
$
0
|
$
0
|
$
0
|
See notes to condensed consolidated financial statements.
7
NEWPORT
GOLD, INC.
(An Exploration Stage Company)
Notes to Condensed Consolidated Financial Statements
Nine Months Ended September 30, 2007 and 2006 and the Period from July 16, 2003
(Inception) to September 30, 2007
(US Dollars)
(Unaudited)
1.
OPERATIONS AND BASIS OF PRESENTATION
The
Company was incorporated under the laws of Nevada on July 16, 2003, and is
involved in the acquisition, exploration and development of mineral and energy
properties. The Company is currently evaluating opportunities both in the
mineral sector and otherwise. The Company is in the exploration stage and
follows the provisions of Statement No. 7 of the Financial Accounting Standards
Board ("FASB").
These condensed consolidated financial statements include the accounts of the
Company and its wholly-owned Canadian subsidiary, 2038052 Ontario Inc.,
incorporated under the laws of the province of Ontario, Canada. All intercompany
transactions and balances have been eliminated.
Recent accounting pronouncements
(i)
FAS 157,
"Fair Value Measurements"
. This new standard
provides guidance for using fair value to measure assets and liabilities and
applies whenever other standards require (or permit) assets or liabilities to be
measured at fair value but does not expand the use of fair value in any new
circumstances. The provisions of this statement are effective for
financial statements issued for fiscal years beginning after November 15, 2007,
and interim periods within those fiscal years. The Company expects that
this new pronouncement will have no impact on the Company's condensed
consolidated financial statements.
(ii)
FAS 159,
"Fair Value Option for Financial Assets and Financial
Liabilities"
. The fair value option established by this statement
permits all entities to choose to measure eligible items at fair value at
specified election dates. Most of the provisions of this statement apply
only to entities that elect the fair value option. However, the amendment
to FASB Statement No. 115,
"Accounting for Certain Investments in Debt and
Equity Securities"
, applies to all entities with available-for-sale and
trading securities. This statement is effective as of the beginning of an
entity's first fiscal year that begins after November 15, 2007. The
Company expects that this new pronouncement will have no impact on the Company's
condensed consolidated financial statements.
2.
GOING-CONCERN
These condensed
consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America on a
going-concern basis. This presumes funds will be available to finance on-going
development, operations and capital expenditures and the realization of assets
and the payment of liabilities in the normal course of operations for the
foreseeable future.
8
NEWPORT
GOLD, INC.
(An Exploration Stage Company)
Notes to Condensed Consolidated Financial Statements
Nine Months Ended September 30, 2007 and 2006 and the Period from July 16, 2003
(Inception) to September 30, 2007
(US Dollars)
(Unaudited)
2.
GOING-CONCERN
(Continued)
The general business
strategy of the Company is to explore and research an existing mineral property
and to potentially acquire further claims either directly or through the
acquisition of operating entities. The continued operations of the Company
depends upon the recoverability of mineral property reserves, confirmation of
the Company's interest in the underlying mineral claims, the ability of the
Company to obtain necessary financing to complete the development of these
claims and upon the future profitable production of the claims. Management
intends to raise additional capital through share issuances to finance
operations and invest in the Burnt Basin Properties as described in note 3.
The Company has a working
capital deficit of $319,993 (December 31, 2006 - $199,927), has accumulated
losses during the exploration stage of $1,010,982 (December 31, 2006 -
$690,179), has not generated any operating revenue to date, and has no capital
resources presently available to meet obligations, which normally can be
expected to be incurred by similar companies. These factors raise substantial
doubt about the Company's ability to continue as a going-concern, which is
dependent on the Company's ability to obtain and maintain an appropriate level
of financing on a timely basis and to achieve sufficient cash flows to cover
obligations and expenses. The outcome of the above matters cannot be predicted
at this time. These financial statements do not give effect to any adjustments
to the amounts and classifications of assets and liabilities, which might be
necessary should the Company be unable to continue as a going-concern.
3.
RESOURCE PROPERTIES
The Company adopted the
provisions of EITF 04-2, "Whether Mineral Rights are Tangible or Intangible
Assets", and FSP FAS 141-1 and 142-1, which concluded that mineral rights are
tangible assets. Accordingly, the Company capitalizes certain costs
related to the acquisition of mineral rights.
(a)
On June 18, 2003, the Company entered into an option agreement to acquire
nine mineral claims consisting of 47 units, each unit consisting of
approximately 25 hectares, title to which is held by an unrecorded warranty
deed. The mineral claims are located 25 kilometres northeast of the city of
Grand Forks, British Columbia, Canada, known as the Burnt Basin mineral claims
numbered 393541, 393542, and 393681 to 393687. The option agreement is subject
to an underlying agreement dated July 29, 2002 between the property owners and
the optionor.
Under the terms of the option agreement, the
Company can acquire a 100% undivided interest in the property, subject to two
separate net smelter return royalties ("NSR") (totaling 2%), and cash and share
payments totaling $12,364 (Cdn $17,000) (paid) and 225,000 shares of common
stock. The Company also had to incur exploration expenses totaling $215,000 (Cdn
$250,000) over a three-year period, ending June 18, 2006 (extended to June 18,
2008).
The first NSR consists of a 1% NSR payable to the
property owner capped at $215,000 (Cdn $250,000), that will be provided by
making annual $8,600 (Cdn $10,000) prepaid NSR payments beginning in September,
2003 ($24,010 (Cdn $30,000) paid to December 31, 2005). A further 1% NSR is
payable to the optionor. One-half of the latter 1% NSR may be bought out for the
sum of $430,000 (Cdn $500,000).
To date, the Company has not performed any work on
the property other than some mapping and compilation. The Company is presently
in the pre-exploration state and there is no assurance that a commercially
viable mineral deposit exists in the property until further exploration is done
and a comprehensive evaluation concludes economic and legal feasibility. The
Company intends to develop mineral deposits it finds, or enter into a joint
venture with another mining company with more experience at that stage of
operation.
9
NEWPORT
GOLD, INC.
(An Exploration Stage Company)
Notes to Condensed Consolidated Financial Statements
Nine Months Ended September 30, 2007 and 2006 and the Period from July 16, 2003
(Inception) to September 30, 2007
(US Dollars)
(Unaudited)
3.
RESOURCE PROPERTIES
(Continued)
(b)
By an agreement dated November 17, 2006, the Company acquired an option
to earn a 20%
interest of a 50% interest held by
the optionors in certain mineral exploration rights located in Inner Mongolia,
China.
In order
to earn its interest in the property, the Company issued 2,200,000 common shares
to the optionors and an additional 300,000 common shares to the vendor of the
property.
The common shares were
valued by the Company at $0.10 per share. The Company also granted a total of
2.2% NSR to the optionors on all metals produced from the optionors' interest in
the property. The optionors also granted the Company a first right of refusal on
acquiring the remainder of their 50% interest for a period of one year.
The Company must issue a
total of 800,000 common shares to the vendor by February 1, 2009 and incur
$750,000 of exploration expenditures, $250,000 in the first year (extended to
February 1, 2008 in consideration of 100,000 common shares of the Company, fair
valued at $0.45 per share).
4.
RELATED PARTY TRANSACTIONS
(i) As of September 30, 2007, the total balance
owing for investor relations by the estate of the son of the president of the
Company was $48,239 (December 31, 2006 - $48,239). The amount owed is without
interest or stated terms of repayment and is unsecured
.
(ii) As of September 30, 2007, the president is
owed $145,339 (December 31, 2006 - $145,339), which amount is included in due to
related parties. The amount owed is without interest or stated terms of
repayment and is unsecured.
All transactions with related parties are in the normal course of operations and
are measured at the exchanged amount, which is the amount of consideration
agreed to between the parties.
5. LOAN
PAYABLE
The Company's loan
payable
is without interest or stated terms of repayment and is
unsecured.
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
General
The following discussion and analysis should be
read in conjunction with the financial statements, including the notes thereto,
appearing elsewhere in this document.
The "Plan of Operations" of Newport is
incorporated by reference from the Newport's Form SB-1, as amended, filed with
the SEC on June 8, 2005.
Plan of
Operations
.
Newport is a pre-exploration company
incorporated under the laws of the State of Nevada on July 16, 2003. We
commenced our business operations in 2006.
Burnt Basin, B.C.
Results to date show a large zinc, lead, copper,
silver soil geochemical anomaly 200-400 meters in width and over 1km in
length. Within this area untested airborne conductors have been found as
well as many random occurring outcrops which have yielded many values in excess
of 12% combined lead and zinc. The latter outcrops also contain silver,
copper and gold values.
Numerous other smaller zinc, lead, copper, gold
soil geochemical anomalies were defined elsewhere on the grid, many of which are
unrelated to any know mineralization. A strong 100m x 150m copper- gold
soil anomaly was also defined several hundred meters to the northwest of the
Upper Eva Bell showing, which is also unrelated to any known mineralization.
A new discovery of sphalerite-magnetite
mineralization was made 800 meters to the northwest of the Halifax Zone with
values to 15.4% zinc.
Unexpected Area: A new discovery of
massive galena mineralization was also made, 1km north of the Halifax zone with
values to 51.5% lead, 1.3 % zinc and 327g/t silver. A second area of
mineralization, 200 meters to the north, returned values to 1.03% zinc and a
third area of mineralization a further 250 meters to the north, returned values
to 17.1 g/t gold, 15.4 g/t silver, 1% lead and 0.6% zinc.
Contact Area: High precious metals values
to 59 g/t gold and 74.9 g/t silver were obtained from sampling at the Contact
Zone. This zone was discovered during the 2005 work program.
Hastings Area: A historically known area
of massive magnetite-sphalerite mineralization was located, 500 m south of the
Halifax, with values to 32.3% zinc returned from samples collected.
Burnt Basin Area: A new quartz vein discovery
was made, 1 km west of the Motherlode, with values to 4.6 g/t gold.
Aldeen area: A new quartz vein discovery
was made, 1km north of the Eva Bell, with values to 4.9g/t gold.
Field work was carried out under the supervision
of Linda Caron M.Sc. Geology.
China
A deep Induced Polarization survey was commenced
over a portion of the property where near surface I.P. anomalies had been
defined last year. The purpose is to define anomalies at depth below the
oxidized zone.
No results are available yet but will be
released when all the data has been received and interpreted.
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Inner Mongolia Property
On November 17, 2006, Newport acquired an option
to earn a 20% interest in a 50% interest held by the optionors in certain
mineral exploration rights located in Inner Mongolia, China (the "Inner Mongolia
Property"). This property is held by Noront Resources Ltd. ("Noront" NOT TSX-V)
through BaoTou Noront Mineral Development Co. and consists of 5.16 km (2)
situated about 100 km north of BaoTou City. The option agreement is subject to
an underlying agreement dated February 1, 2006 between Noront and the optionors.
In order to earn its interest in the property, Newport issued 2,200,000 common
shares to the optionors and an additional 300,000 common shares to Noront at
$0.10 per share. Newport also granted a total of 2.2% NSR to the optionors on
all metals produced from the optionors' interest in the property. The optionors
also granted Newport a first right of refusal on acquiring the remainder of
their 50% interest for a period of one year. Newport must issue a total of
800,000 common shares to Noront by February 1, 2009 and incur $750,000 of
exploration expenditures, with a first year obligation to issue 300,000 shares
(issued as noted above) an incur $250,000 of exploration expenditures by
February 1, 2007. Newport received an extension on completing the required
expenditures to February 1, 2008 in consideration for 100,000 shares of Newport,
fair valued at $0.45 per share.
Newport has recently received a geological
report on the Inner Mongolia Property prepared by Newport's Consulting Geologist
Daniel Huang M.Sc. Diamond drilling on the Inner Mongolia Property is planned
during the summer of 2007. In order to proceed with this project, Newport will
have to raise at least $300,000 through private placements or other capital
avenues.
Off-balance sheet arrangements
As of September 30, 2007, Newport has had no
off-balance sheet arrangements.
Loss Per Period/General and Administrative
Expenses
Newport's net loss for the nine months ended
September 30, 2007, was $320,803, compared to a loss of $221,566, for the nine
month period ending September 30, 2006.
Most of the loss for the current period is due
to geological consulting fees totaling $216,865 ($26,719 - September 30, 2006).
Accounting and legal expenses were $77,959 compared to $35,753 for the same
nine-month period ended September 30, 2006. Office and travel expenses were
$12,811 compared to $34,572 for the same nine month period ended September 30,
2006. .
Liquidity and Capital Resources
As of September 30, 2007, the Company had total
cash on hand of $70,580 ($80,943 - September 30, 2006). Newport also had
$599,877 in liabilities ($329,293 - September 30, 2006) of which $193,578 is
owed to related parties ($193,578 - September 30, 2006) and $206,299 is owed for
accounts payable ($135,715 - September 30, 2006).
Management estimates that Newport will need
approximately $590,000 over the next twelve months to follow through with its
plan of operation. Newport has budgeted $50,000 for legal expenses, $50,000 for
accounting and audit expenses, $75,000 for administration, $60,000 for office,
$20,000 for travel expenses, $200,000 for Burnt Basin exploration costs,
$200,000 for exploration work on the Mongolia Property and $15,000 for transfer
agent expenses. Newport intends to raise additional capital through additional
private placements of its equity securities and, if available on satisfactory
terms, debt financing to achieve our goals and objectives for the next twelve
months.
Recent Accounting Pronouncements
In September 2006,
the Financial Accounting Standards Board ("FASB") issued SFAS No. 157, "Fair
Value Measurements". SFAS No. 157 defines fair value, establishes a framework
for measuring fair value and expands disclosures about fair value measurements.
This statement is effective for financial statements issued for fiscal years
beginning after November 15, 2007, and interim periods within those fiscal
years. The Company expects that this new pronouncement will have no impact on
the Company's condensed consolidated financial statements.
12
FAS 159,
"Fair Value Option for Financial Assets and Financial Liabilities"
.
The fair value option established by this statement permits all entities to
choose to measure eligible items at fair value at specified election dates.
Most of the provisions of this statement apply only to entities that elect the
fair value option. However, the amendment to FASB Statement No. 115,
"Accounting for Certain Investments in Debt and Equity Securities", applies to
all entities with available-for-sale and trading securities. This
statement is effective as of the beginning of an entity's first fiscal year that
begins after November 15, 2007. The Company expects that this new
pronouncement will have no impact on the Company's condensed consolidated
financial statements.
Critical Accounting Policies
The Company adopted the provisions of EITF 04-2,
"Whether Mineral Rights are
Tangible or Intangible Assets"
, and
FSP FAS 141-1 and 142-1, which concluded that mineral rights are tangible
assets. Accordingly, the Company capitalizes certain costs related to the
acquisition of mineral rights
"Safe Harbor" Statement under the Private
Securities Litigation Reform Act of 1995
This Form 10-QSB
report may contain certain "forward-looking" statements as such term is defined
in the Private Securities Litigation Reform Act of 1995 or by the Securities and
Exchange Commission in its rules, regulations and/or releases, which represent
our expectations or beliefs, including but not limited to, statements concerning
our economic performance, financial condition, growth and marketing strategies,
availability of additional capital, ability to attract suitable personal and
future operational plans. For this purpose, any statements contained herein that
are not statements of historical fact may be deemed to be forward-looking
statements. Without limiting the generality of the foregoing, words such as
"may," "will," "expect," "believe," "anticipate," "intend," "could," "estimate,"
"might," or "continue" or the negative or other variations thereof or comparable
terminology are intended to identify forward-looking statements. These
statements by their nature involve substantial risks and uncertainties, certain
of which are beyond our control, and actual results may differ materially
depending on a variety of important facts, including but not limited to those
risk factors in Newport's Registration Statement on Form SB-1, as amended, filed
with the SEC on June 8, 2005.
ITEM 3: CONTROLS AND PROCEDURES
A.
DISCLOSURE CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
: Based on the
management's evaluation (with the participation of the Chief Executive Officer
and Chief Financial Officer), the Chief Executive Officer and Chief Financial
Officer have concluded that as of September 30, 2007, the Company's disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended, (the "Exchange Act")) are effective
to provide reasonable assurance that information required to be disclosed in
this quarterly report on Form 10-QSB is recorded, processed, summarized and
reported within the time periods specified in Securities and Exchange Commission
rules and forms.
Changes
in Internal Control over Financial Reporting
: There was no change in
the Company's internal control over financial reporting (as required by the
Exchange Act) during the last quarter that has materially affected, or is
reasonably likely to materially affect, the Company's internal control over
financial reporting.
13
B. MANAGEMENT'S ANNUAL REPORT ON INTERNAL
CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting for the Company. There was no change in
the Company's internal control over financial reporting (as required by the
Exchange Act) during the last quarterly period that has materially affected, or
is reasonably likely to materially affect, the Company's internal control over
financial reporting. There were no significant deficiencies or material
weaknesses, and therefore no corrective actions were taken or may occur and not
be detected.
This quarterly report does not include an
attestation report of the company's registered public accounting firm regarding
internal control over financial reporting. Management's report was not subject
to attestation by the company's registered public accounting firm pursuant to
temporary rules of the Securities and Exchange Commission that permit the
Company to provide only management's report in this quarterly report.
14