23-Dec-2009
Annual Report
Item 7.
Management's Discussion and Analysis of Financial Condition and Results of Operations.
Forward-looking statements
This report contains "forward-looking statements" relating to us which represent our current expectations or beliefs, including statements concerning our operations, performance, financial condition and growth. For this purpose, any statement contained in this report that are not statements of historical fact are forward-looking statements. Without limiting the generality of the foregoing, words such as "may", "anticipation", "intend", "could", "estimate", or "continue" or the negative or other comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, such as credit losses, dependence on management and key personnel and variability of quarterly results, our ability to continue our growth strategy and competition, certain of which are beyond our control. Should one or more of these risks or uncertainties materialize or should the underlying assumptions prove incorrect, actual outcomes and results could differ materially from those indicated in the forward-looking statements.
The following discussion and analysis should be read in conjunction with the information set forth in our audited financial statements for the period ended September 30, 2009.
Plan of Operation
Our plan of operation for the twelve months following the date of this annual report is to carry out exploration work on our two recently acquired properties located in Esmeralda County, Nevada and to continue to review other potential acquisitions in the resource and non-resource sectors. During the next 12 months we have committed to expend an aggregate of $300,000 in exploration work on the two properties.
As well, we anticipate spending an additional $400,000 on administrative fees, including fees we will incur in complying with reporting obligations. Total expenditures over the next 12 months are therefore expected to be $700,000.
We currently have sufficient funds on hand to cover our anticipated expenses for the next 12 months. We anticipate that additional funding will be required in the future in the form of equity financing from the sale of our common stock or from director loans. However, we do not have any arrangements in place for any future equity financing.
Results of Operations
We did not earn any revenues for the year ended September 30, 2009. We incurred operating expenses in the amount of $196,054 for the year ended September 30, 2009, compared to $39,413 for the year ended September 30, 2008, consisting of general and administrative expenses, legal and accounting fees, management fees and stock based compensation. At September 30, 2009, we had assets of $1,232,712 ($704 - September 30, 2008) consisting of cash and cash equivalents and we had total liabilities recorded at $79,232 ($52,168 - September 30, 2008).
These consisted
of accounts payable and accrued liabilities of $15,355 ($8,500 - September 30, 2008) and $63,877 due to a related party ($43,668 - September 30, 2008).
We have not attained profitable operations and are depending upon obtaining financing to continue to search for a new acquisition. For these reasons our auditors believe that there is substantial doubt that we will be able to continue as a going concern.
We have had no operating revenues since our inception on March 10, 2005 through September 30, 2009, and have incurred operating expenses in the amount of $311,418 for the same period. Our activities have been financed from the proceeds of share subscriptions and director loans.
For the fiscal year ended September 30, 2009, general and administrative expenses were $85,042 ($8,484 - September 30, 2008), legal and accounting were $33,352 ($16,129 - September 30, 2008), management fees were $12,000 ($12,000 - September 30, 2008), rent expense was $Nil ($2,800 - September 30, 2008) and stock based compensation was $65,660 ($Nil - September 30, 2008). For the period from inception on March 10, 2005 through September 30, 2009, general and administrative expenses were $99,227, management fees were $48,000, rent expense was $7,600 and mineral property expenditures were $9,000.
General and administrative expenses and legal and accounting fees were nearly four times higher in fiscal 2009 as a result of increased activity related to our recent acquisition of two mineral properties and two recently completed private placements. In addition, we incurred stock based compensation of $65,660 in fiscal 2009, compared to $Nil in fiscal 2008.
During fiscal 2009, we recorded an extinguishment of accrued liabilities of $8,500 for accrued and unpaid legal services as we have now been released of all liabilities and no further fees are owing.
During the year ended September 30, 2009, we incurred a net loss of $(186,561), which resulted in an accumulated deficit of $(301,925).
Our financial statements are prepared in accordance with U.S. generally accepted accounting principles. We have expensed all development costs related to our establishment.
Liquidity and Capital Resources
We had cash and cash equivalents of $1,232,712 as of September 30, 2009, compared to a cash position of $704 at September 30, 2008. During the year ended September 30, 2009, we raised an aggregate of $450,000 by the issuance of 1,250,000 common shares at a price of $0.36 per share. Subsequent to the year ended September 30, 2009, we completed a private placement of 740,740 units at a price of $1.35 per unit for total proceeds of $1,000,000.
Since inception through to and including September 30, 2009, we have raised $475,500 through private placements of our common shares and we have received contributed capital by related parties of $63,877.
We expect to run at a loss for at least the next twelve months. We have no agreements for additional financing and cannot provide any assurance that additional funding will be available to finance our operations on acceptable terms in order to enable us to complete our plan of operations. There are no assurances that we will be able to achieve further sales of our common stock or any other form of additional financing. If we are unable to achieve the financing
necessary to continue our plan of operations, then we will not be able to continue our exploration of our mineral claims and our venture will fail.
Off-balance sheet arrangements
We have no off-balance sheet arrangements including arrangements that would affect our liquidity, capital resources, market risk support and credit risk support or other benefits.
Item 7A.
