51,211,000 x $1.185$0.04 (August 31,201031, 2011 bid/ask price) = $23,476,035$2,048,440
Note - If a determination as to whether a particular person or entity is an affiliate cannot be made without involving unreasonable effort and expense, the aggregate market value of the common stock held by non-affiliates may be calculated on the basis of assumptions under the circumstances, provided that the assumptions are set forth in this Form.
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date:
As at June 15, 2011,13, 2012, there were 40,811,00089,331,000 shares of Common Stock issued and outstanding.
Documents Incorporated By Reference –None
Table of Contents
| FORWARD LOOKING INFORMATION | |
| PART I | |
| Item 1. Business | |
| Item 1A. Risk Factors | 4 |
| Item 1B. Unresolved Staff Comments | 4 |
| Item 2. Properties | 4 |
| Item 3. Legal Proceedings | |
| Item 4. (Removed and Reserved) | |
| PART II | |
| Item 5. Market for Company's Common Equity, Related Stockholder | |
| Matters and Issuer Purchases of Equity Securities | |
| Item 6. Selected Financial Data | |
| Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations | |
| Item 7A. Quantitative and Qualitative Disclosures about Market Risk | |
| Item 8. Financial Statements and Supplementary Data | 12 |
| Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 13 |
| Item 9A. Controls and Procedures | 13 |
| Item 9B. Other Information | 14 |
| PART III | |
| Item 10. Directors, Executive Officers and Corporate Governance | 14 |
| Item 11. Executive Compensation | 17 |
| Item 12. Security Ownership of Certain Beneficial Owners and Management and | |
| Related Stockholder Matters | 18 |
| Item 13. Certain Relationships and Related Transactions, and Director Independence | 19 |
| Item 14. Principal Accountant Fees and Services | 20 |
| PART IV | |
| Item 15. Exhibits and Financial Statement Schedules | 21 |
| SIGNATURES |
1
FORWARD LOOKING INFORMATION
This annual report contains forward-looking statements as that term is defined in thePrivate Securities Litigation Reform Act of 1995. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors", that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Item 1. Description of Business.
General Development of Business
In the fall of 2008, our shareholders began selling shares they held in us pursuant to a registration statement filed on Form S-1 with the Securities and Exchange Commission. The terms of the offering is outlined in the Form S-1 registration statement and in the Rule 424(b)(4) prospectus, both of these documents can be found in their entirety on the SEC's website at www.sec.gov, under Registration Number 333-152075.
Our Business
We are a start-up, pre-exploration-stage company, and have not yet generated or realized any revenues from our business operations. We must raise additional capital in order to continue to implement our plan and stay in business. Sillenger has acquired a 100% interest in three mineral claims located in the Atlin Mining Division, British Columbia, Canada, in consideration for CDN$379 (the "Bulkley mineral claims"). On May 15, 2009 the Company abandoned the mineral titles and re-staked them in order to reduce exploration costs. The Company’s rights to these claims are registeredexpired in the name of our former President, who has executed a trust agreement with us June 4, 2009, whereby she agrees to hold the claims in trust on our behalf. To date we have not performed any exploration or work on the claim.2011.
On June 2,May 26, 2010, Sillenger announced that,introduced its proprietary Claims Licensing Program (“CLP”) which is designed to help governments to provide a fast-track process for issuing the necessary documentation to resource companies. The system helps reduce risk to exploration companies and helps market a country as an attractive investment destination.
On June 1, 2010, Sillenger, through its relationshipbusiness partnership with FCMI Global Inc. (“FCMI”), whereby FCMI assigned trademarks, intellectual properties, contracts and its African affiliates, the Company hadagreements to Sillenger in exchange for 5% (percent) of Sillenger’s annual net income per Sillenger’s audited financial statements, entered into a contract with the Governmentgovernment of the Republic of Equatorial Guinea to conduct an airborne geophysical survey of the continental region (27,000 sq. km)certain specific areas of Equatorial Guinea, known as Rio Muni, as well as 30 km of Continental Platform (4,500 sq. km) off the Atlantic coastline.Guinea. The survey was intended to provide the Ministry of Mines, Industry and Energy of Equatorial Guinea a geological database of the region highlighting the locations where there may be the presence of mineral, hydrocarbon or groundwater deposits, and a preliminary identification of which subsurface structures which may present exploration potential, and to identify the likeliest exploration targets within those deposits.
On June 11, 2010, Sillenger retained Fugro Airborne Surveys, a subsidiary of one of the world’s leading geophysics companies, Fugro Group, to conduct the airborne geophysical survey of the Rio Muni region of Equatorial Guinea. The survey will helpwould have helped to reveal the locations of potential deposits, and provide a detailed reading of the subsurface structures. The estimated cost of the survey was $8,300,000, and the survey would entail flying 69,000 line kms at a 400 - meter line spacing. The survey was slated to begin sometime in July 2010, as soon as Sillenger and Fugro completed their preparations but it actually began in or about November 2010.
2
In October 2010, the Company entered into negotiations with a prominent investment group to finance the cost of this survey. As part of these negotiations, Sillenger fully assigned its commitment with Fugro Airborne Surveys to a third-party wholly owned subsidiary of Ivory Resources (“Ivory”), a private company that was formed by Toronto-based Salida Capital L.P. and Lionhart Trading Company for the purpose of funding the airborne geophysical survey for Equatorial Guinea.
third party. On April 28, 2011, Sillenger executed a settlementan agreement with Ivory Resources Inc. (“Ivory”), Brilliant Resources Inc. (formerly Brilliant Mining Corp.) (“Brilliant”) and others, whereby Sillenger agreed to accept and receive 7,407,407 units of Brilliant (“Unit”) [with a 4 month hold period]escrow] in exchange for Ivory acquiring from Sillenger anthe agreement with the government of the Republic of Equatorial Guinea, which included certain preferential rights to request mining and/or oil concessions. Each Unit consists of one Common Sharecommon share of Brilliant and one Common Share purchase warrant of Brilliant.warrant. Each Warrant will entitle the holder thereof to acquire one Common Share of Brilliant upon the payment of $0.45 per Warrant at any time until 24 months following the date of issuance. As part of the agreement, amounts payable to FCMI were forgiven. On July 12, 2011, the Company closed its transaction with Ivory, Brilliant and others.
The transaction fits into Sillenger’s business model as the Brilliant Units represent Sillenger’s carried interest in the Equatorial Guinea project, and comprise a tangible asset with a value of over $2,000,000 CDN. If the Brilliant shares perform well, the Units have the potential for significant value add for Sillenger’s shareholders.
The Brilliant transaction also serves as an endorsement of Sillenger’s business plan, and enables Sillenger to replicate a proven concept for the next countries with which the Company is pursuing partnerships.
On September 16, 2011, Sillenger entered into an agreement with First African Exploration Corp. (“First African”), whereby First African will serve as the Company’s exclusive representative for obtaining, negotiating and performing contracts with countries in Africa and the Middle East, in connection with mining, hydrocarbons, water, and other natural resource projects. A former non-executive director of the Company is also a shareholder of First African. The compensation payable under this agreement is dependent on and contingent upon the Company obtaining financing and entering into a contract with a target country, and the Company receiving financing for the performance of the contract.
On November 25, 2011, Sillenger entered into an agreement with the Republic of Benin (“Benin Agreement”). Pursuant to the terms of the Benin Agreement, Sillenger will conduct an airborne geophysical survey of the landmass of Benin and the offshore territory in the Gulf of Guinea. The purpose of the survey is to compile a geophysical information database of Benin’s mining, hydrocarbon and water deposits, and analyze such data to identify the likeliest exploration targets within those deposits for potential mining and exploration opportunities. The government is particularly interested in the potential size of some of their base metal deposits, which can often be determined when utilizing some of these technologies. The term of the Benin Agreement is two (2) years from the date of the Benin Agreement, which can be extended by agreement of the parties.
Under the Benin Agreement, Sillenger will be granted certain exclusive preferential rights with respect to fifteen percent (15%) of the surface area of the Airborne Survey, but also has first right of refusal on all unclaimed resource concessions for the duration of the contract period. The Benin Agreement requires Benin to provide the required permits, licenses, etc. to conduct the survey and to pursue any mining and or exploration opportunities.
The Company is currently in the process of exploring potential sources of financing for the Benin Agreement.
Competitive Conditions
The mineral exploration business is an extremely competitive industry. We are competing with many other exploration companies looking for minerals. We are one of the smallest exploration companies and a very small participant in the mineral exploration business. Being a junior mineral exploration company, we compete with other companies like ours for financing and joint venture partners. Additionally, we compete for resources such as professional geologists, camp staff, helicopters and mineral exploration supplies.1
Dependence on Major Customers
We have no customers at this time.
Intellectual Property and Agreements
We have no intellectual property such as patents or trademarks. Additionally, we have no royalty agreements or labor contracts.
Government Approvals and Regulations
We are required to comply with all regulations defined in the Mineral Tenure Act of the Province of British Columbia and regulations in Guinea-Bissau.
Benin. The effect of these existing regulations on our business is that we are able to carry out our exploration program as we have described in this prospectus. However, it is possible that a future government could change the regulations that could limit our ability to explore our claim, but we believe this is highly unlikely.
3
Research and Development Expenditures
We have not incurred any research or development expenditures since our inception on February 14, 2007.
Costs and Effects of Compliance with Environmental Laws
We currently have no costs to comply with environmental laws concerning our exploration program.
Employees
We have one (1) full time orand no part time employees. On May 12, 2010, Mr. Gillespie was appointed as our President and Chief Executive Officer. Mr. Gillespie has agreed to allocate a portion ofall his time to our activities, without compensation. We anticipate that our business plan can be implemented through the efforts of independent geologists and consultants we retain on a contract basis.
Reports to Securities Holders
We are required to file annual reports on Form 10-K and quarterly reports on Form 10-Q with the SEC on a regular basis, and will be required to timely disclose certain material events (e.g., changes in corporate control; acquisitions or dispositions of a significant amount of assets other than in the ordinary course of business; and bankruptcy) in a current report on Form 8-K.
You may read and copy any materials we file with the SEC at their Public Reference Room Office, 100 F Street, NE, Room 1580, Washington, D.C. 20549-0102. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Additionally, the SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. These materials are also available electronically in Canada on SEDAR at www.sedar.com.
Item 1A. Risk Factors.
No disclosure is required hereunder as the Company is a "smaller reporting company," as defined in Item 10(f) of Regulation S-K.
Item 1B. Unresolved Staff Comments.
None. Note: No disclosure is required hereunder as the Company is a "smaller reporting company," as defined in Item 10(f) of Regulation S-K.
Item 2. Description of Property.
| Tenure Number | Claim Number | Number | Good to Date | Status | Area |
| 605454 | Bulkley 1 | 208930 100% | 2010/June/04 | GOOD | 294.4642 |
| 605457 | Bulkley 2 | 208930 100% | 2010/June/04 | GOOD | 310.8017 |
| 605459 | Bulkley 3 | 208930 100% | 2010/June/04 | GOOD | 343.6187 |
Item 3. Legal Proceedings.
Sillenger is not a partyjoint defendant to a statement of claim filed against the Company and other defendants on February 2, 2012 for damages in the amount of $190,000. Sillenger filed a statement of defense dated April 9, 2012 explicitly denying any legal proceedings.liability. Further, Sillenger has stated in the statement of defense that it was provided a comprehensive release in respect of the transaction referred to by the defendant and has asked that the claims against Sillenger be dismissed.
Item 4.(Removed (Removed and Reserved) Not Applicable.
4
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market Information
Our common shares became quoted on the Over-the-Counter Bulletin Board on December 8, 2008, under the symbol "“SLGXSLGX”". On April 4, 20102011 our common shares were removed from the OTCBB and moved to the OTCQB market, under the symbol "“SLGXSLGX”". The following quotations reflect the high and low bids for our common stock based on inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions. The high and low bid prices for our common shares (obtained from QuoteMedia.com) from March 1, 2009 to February 28, 20112010 to May 31, 2012 were as follows:
| May 31, 2011 | $ | 0.22 | $ | 0.03 | ||||
| February 28, 2011 | $ | 0.55 | $ | 0.29 | ||||
| November 30. 2010 | $ | 0.81 | $ | 0.40 | ||||
| August 31, 2010 | $ | 1.70 | $ | 0.67 | ||||
| May 31, 2010 | $ | 1.59 | $ | 0.10 | ||||
| February 28, 2010 | $ | 0.10 | $ | 0.10 | ||||
| November 30, 2009 | $ | 0.10 | $ | 0.10 | ||||
| August 31, 2009 | $ | 0.105 | $ | 0.10 | ||||
| May 31, 2009 | $ | 0.30 | $ | 0.195 | ||||
| February 28, 2009 | $ | 0.00 | $ | 0.00 |
| High | Low | |||||||
| May 31, 2012 | $ | 0.01 | $ | 0.01 | ||||
| February 29, 2012 | $ | 0.01 | $ | 0.01 | ||||
| November 30, 2011 | $ | 0.01 | $ | 0.01 | ||||
| August 31, 2011 | $ | 0.05 | $ | 0.04 | ||||
| May 31, 2011 | $ | 0.07 | $ | 0.07 | ||||
| February 28, 2011 | $ | 0.29 | $ | 0.29 | ||||
| November 30, 2010 | $ | 0.60 | $ | 0.60 | ||||
| August 31, 2010 | $ | 0.85 | $ | 0.80 | ||||
| May 31, 2010 | $ | 1.60 | $ | 1.54 | ||||
| February 28, 2010 | $ | 0.10 | $ | 0.10 |
Note
(1) The quotations above reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.
(2) Sillenger was first quoted on the OTCBB on December 8, 2008 under the symbol "SLGX.OB"
Holders of Common Stock
As of June 14, 201113, 2012, we had 2891 stockholders of record holding 40,811,00089,331,000 shares of common stock.
Dividend Policy
There are no restrictions in our articles of incorporation or bylaws that restrict us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where, after giving effect to the distribution of the dividend:
1. weWe would not be able to pay our debts as they become due in the usual course of business; or
2. Our total assets would be less than the sum of our total liabilities, plus the amount that would be needed to satisfy the rights of shareholders who have preferential rights superior to those receiving the distribution.
We declared a six share for every one share issued and outstanding stock dividend in March 2009. The record date for this stock dividend was March 25, 2009 and the pay date was March 27, 2009. As a result of the issuance of this stock dividend our issued and outstanding share capital increased from 5,853,000 shares to 40,971,000 shares of common stock.
We do not plan to declare any further dividends in the foreseeable future.
Equity Compensation Plan
We do not have any securities authorized for issuance under any equity compensation plans.
5
Recent Sales of Unregistered Securities
On December 14, 2009, we issued 50,000 shares of our Common Stock to one investor, for an aggregate purchase price of $10,000. We relied on the exemption provided by Rule 903 of Regulation S of the Securities Act of 1934 to the subscriber on the basis that the sale of the shares was completed in an offshore transaction, as defined in Rule 902(h) of Regulation S. The Company did not engage in any directed selling efforts, as defined in Regulation S, in the United States in connection with the sale of the shares. The investor represented to us that he was not a U.S. person, as defined in Regulation S, and was not acquiring the shares for the account or benefit of a U.S. person. person
On July 27, 2011, the Company issued and sold an aggregate of 4,400,000 common stock units at a purchase price of $0.05 per unit receiving proceeds of $230,544. Each Unit is comprised of (i) one share of the Company's common stock (the "Shares") and (ii) a two-year ½ warrant to purchase 0.50 shares of the Company's common stock (the "Warrants"). The exercise price applicable to the Warrants is $0.10 per Share.
On September 12, 2011, the Company issued and sold an aggregate of 3,500,000 common stock units at a purchase price of $0.05 per unit receiving proceeds of $176,508. Each Unit is comprised of (i) one share of the Company's common stock (the "Shares") and (ii) a two-year ½ warrant to purchase 0.50 shares of the Company's common stock (the "Warrants"). The exercise price applicable to the Warrants is $0.10 per Share.
On December 6, 2011, the Company issued and sold an aggregate of 1,300,000 common stock units at a purchase price of $0.05 per unit receiving proceeds of $68,561. Each Unit is comprised of (i) one share of the Company's common stock (the "Shares") and (ii) a two-year ½ warrant to purchase 0.50 shares of the Company's common stock (the "Warrants"). The exercise price applicable to the Warrants is $0.10 per Share.
In April 2012, the Company issued and sold an aggregate of 25,550,000 shares at a purchase price of $0.01 receiving proceeds of $255,500.
The subscription agreementagreements executed between us and the investorinvestors included statements that the securities had not been registered pursuant to the Securities Act of 1933 and that the securities may not be offered or sold in the United States unless the securities are registered under the Securities Act of 1933 or pursuant to an exemption from the Securities Act of 1933. The investorinvestors agreed by execution of the subscription agreementagreements for the shares: (i) to resell the securities purchased only in accordance with the provisions of Regulation S, pursuant to registration under the Securities Act of 1933 or pursuant to an exemption from registration under the Securities Act of 1933; (ii) that we are required to refuse to register any sale of the securities purchased unless the transfer is in accordance with the provisions of Regulation S, pursuant to registration under the Securities Act of 1933 or pursuant to an exemption from registration under the Securities Act of 1933; and (iii) not to engage in hedging transactions with regards to the securities purchased unless in compliance with the Securities Act of 1933. All securities issued were endorsed with a restrictive legend confirming that the securities had been issued pursuant to Regulation S of the Securities Act of 1933 and could not be resold without registration under the Securities Act of 1933 or an applicable exemption from the registration requirements of the Securities Act of 1933.
Item 6. Selected Financial Data.
No disclosure is required hereunder as the Company is a "smaller reporting company," as defined in Item 10(f) of Regulation S-K.
Item 7. Management Discussion and Analysis or Plan of Operations.
The disruptions in the credit and financial markets through 2009 and 20102011 and the more recent economic crisis in Europe have had a significant material adverse impact on a number of financial institutions and have limited access to capital and credit for many companies. While 20102011 seemingly was a turnaround period for stock markets, and a muted positive improvement in consumer optimism and general business conditions, the global economy, particularly Europe, still appears to be somewhat tepid, and it is still difficult for many junior resource companies to obtain financing. These market conditions could continue to make it difficult for us to obtain, or increase our cost of obtaining, capital and financing for our operations. Our access to additional capital on the equity markets also may not be available on terms acceptable to us or at all.
2012 Business Environment (continued)
On May 26, 2010, Sillenger decided to seek a strategic and/or financial partnerintroduced its proprietary Claims Licensing Program (“CLP”) which is designed to help take Sillenger forward. We entered into discussions withgovernments to provide a fast-track process for issuing the necessary documentation to resource companies. The system helps reduce risk to exploration companies and helps market a country as an interested party with the goal of raising capital and conducting a work program on the Bulkley claims, and possibly some other projects. Unfortunately the two sides could not reach an acceptable deal and we parted ways. With the price of gold at record levels, management believes it would be prudent to continue seeking potential partners.attractive investment destination.
On June 2,1, 2010, Sillenger, announced that, through its relationshipbusiness partnership with FCMI Global Inc. (“FCMI”), whereby FCMI assigned trademarks, intellectual properties, contracts and its African affiliates, the Company hadagreements to Sillenger in exchange for 5% (percent) of Sillenger’s annual net income per Sillenger’s audited financial statements, entered into a contract with the Governmentgovernment of the Republic of Equatorial Guinea to conduct an airborne geophysical survey of the continental region (27,000 sq. km)certain specific areas of Equatorial Guinea, known as Rio Muni, as well as 30 km of Continental Platform (4,500 sq. km) off the Atlantic coastline.Guinea. The survey was intended to provide the Ministry of Mines, Industry and Energy of Equatorial Guinea a geological database of the region highlighting the locations where there may be the presence of mineral, hydrocarbon or groundwater deposits, and a preliminary identification of which subsurface structures which may present exploration potential, and to identify the likeliest exploration targets within those deposits.
On June 11, 2010, Sillenger retained Fugro Airborne Surveys, a subsidiary of Fugro Group, to conduct the airborne geophysical survey of the Rio Muni region of Equatorial Guinea. The survey would have helped to reveal the locations of potential deposits, and provide a detailed reading of the subsurface structures.
In AugustOctober 2010, the Company entered into negotiations to finance the cost of this survey. As part of these negotiations, Sillenger received a government delegation from Guinea-Bissau. During their visit, Sillenger arranged meetings in Ottawafully assigned its commitment with Fugro and also with Government of Canada officials from the Ministry of Foreign Affairs. Sillenger also arranged forAirborne Surveys to a meeting and presentation by the Ministry of Forestry and Mines of the Province of Ontario, one of the world’s leading mining jurisdictions.
third party. On April 28, 2011, Sillenger executed a settlementan agreement with Ivory Resources Inc. (“Ivory”), Brilliant Resources Inc. (formerly Brilliant Mining Corp.) (“Brilliant”) and others, whereby Sillenger agreed to accept and receive 7,407,407 units of Brilliant (“unit”) [with a 4 month hold period]escrow] in exchange for Ivory acquiring from Sillenger anthe agreement with the government of the Republic of Equatorial Guinea, which included certain preferential rights to request mining and/or oil concessions. Each Unit consists of one Common Sharecommon share of Brilliant and one Common Share purchase warrant of Brilliant.warrant. Each Warrant will entitle the holder thereof to acquire one Common Share of Brilliant upon the payment of $0.45 per Warrant at any time until 24 months following the date of issuance. As part of the agreement, amounts payable to FCMI were forgiven. On July 12, 2011, the Company closed its transaction with Ivory, Brilliant and others.
On November 25, 2011, Sillenger entered into an agreement with the Republic of Benin (“Benin Agreement”). Pursuant to the terms of the Benin Agreement, Sillenger will conduct an airborne geophysical survey of the landmass of Benin and the offshore territory in the Gulf of Guinea. The purpose of the survey is to compile a geophysical information database of Benin’s mining, hydrocarbon and water deposits, and analyze such data to identify the likeliest exploration targets within those deposits for potential mining and exploration opportunities. The government is particularly interested in the potential size of some of their base metal deposits, which can often be determined when utilizing some of these technologies. The term of the Benin Agreement is two (2) years from the date of the Benin Agreement, which can be extended by agreement of the parties.
Under the Benin Agreement, Sillenger will be granted certain exclusive preferential rights with respect to fifteen percent (15%) of the surface area of the Airborne Survey, but also has first right of refusal on all unclaimed resource concessions for the duration of the contract period. The Benin Agreement requires Benin to provide the required permits, licenses, etc. to conduct the survey and to pursue any mining and or exploration opportunities.
The Company is pursuing partnerships.currently in the process of exploring potential sources of financing for the Benin Agreement.
7
Financial Condition and Liquidity
Common Stock - Management anticipates Sillenger's external sources of liquidity will be private placements for equity conducted outside the United States. During the year ended February 28, 2010,29, 2012, Sillenger completed a private placement on December 14, 2009 where Sillenger issued 50,000placements for 9,200,000 units consisting of 9,200,000 common shares and 4,600,000 warrants for the purchase of its common stock at $0.20 per share for proceeds of $10,000 .shares raising in aggregate $475,612. There were no share issuances during the year ended February 28, 2011. Subsequent to the year end in April 2012, the Company closed and sold an aggregate of 25,500,000 shares at $0.01 per share receiving proceeds of $255,550.
Liquidity - At February 28, 2011,29, 2012, Sillenger had total assets of $509 consisting of cash$2,263,040 ($6,700509 - February 28, 2010)2011). Sillenger had $2,737,891$1,299,308 ($ 7,5992,737,891 - February 28, 2010)2011) in liabilities, most of which is mostly owed for
are Accounts Payable.
Sillenger' internal sources of liquidity will be loans that may be available to Sillenger from management. Although Sillenger has no written arrangements with any of its directors andor officers, Sillenger expects that the directors and officers will provide Sillenger with internal sources of liquidity, if it is required.
There are no assurances that Sillenger will be able to achieve further sales of its common stock or any other form of additional financing. If Sillenger is unable to achieve the financing necessary to continue its plan of operations, then Sillenger will not be able to continue its exploration programs and its business will fail.
Off-Balance Sheet Arrangements—Arrangements—We do not have any material off-balance sheet arrangements.
Result of Operation
For the years ended February 29, 2012 and February 28, 2011 and the period from February 14, 2007 to February 29, 2012:
Income
Revenue - Sillenger has not generated revenue from its business operations and does not expect to generate any revenue in the near future.
Other income - On July 12, 2011, upon closing the transaction for outright sale of Sillenger’s rights under its agreement with the government of the Republic of Equatorial Guinea, the Company recorded $4,369,208 as “Other income” consisting of $2,489,054 representing debt forgiven and $1,880,154 representing the fair value of the Units of Brilliant Resources.
Expenses
Summary - Total expenses were $2,736,483$2,136,735 for the year ended February 28, 201129, 2012 ($19,5982,638,182 – February 28, 2010)2011). Expenses have increaseddecreased as compared to the year ended February 28, 20102011 by $2,716,885 from $19,598 in the previous year ended February 28, 2010.$501,447. A total of $2,798,532$4,836,966 in expenses has been incurred by Sillenger since inception on February14,February 14, 2007 through to February 28, 2011. The increase in costs over the past year is primarily related to Sillenger having filed a registration statement to qualify shares held by its stockholders for resale.29, 2012. The costs can be subdivided into the following categories.
categories:
| 1. | Contract fees – represents set-up costs incurred for the Company’s contract with the Republic of Benin signed on November 25, 2011. |
| 2. | General and |
Business contracts. |
Professional professional fees. |
Sillenger continues to carefully control its expenses and overall costs as it moves forward with the continued development of its business plan. Sillenger does not have any full time paid employees and engages personnel through outside consulting contracts or agreements or other such arrangements.
8
The Company has classified its investment as available for sale and Cash Equivalents
Estimates
The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions relate to, but are not limited to, estimation of accrued liabilities.liabilities and the valuation of investment. Actual results could differ from those estimates.
Foreign Currency Translation and Transactions
The Company’s reporting and functional currency is the U.S. dollar. Foreign currency denominated monetary balance sheet items are translated into U.S. dollars at the prevailing exchange rates in effect at the end of the reporting period, the historical rate for non-monetary balance sheet items and shareholders’ equity (deficit), and the average rate for the year for revenues, expenses, gains and losses. Foreign currency gains or losses on translation are included in the statementstatements of operations.comprehensive income (loss).
Fair Value of Financial Instruments
The Company adoptedfollows ASC Topic 820 for all financial assets and liabilities measured at fair value on a recurring basis. The Company adopted ASC Topic 820 effective February 28, 2010, for all non-financial assets and liabilities. ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants at the measurement date. The statement establishes market or observable inputs as the preferred sources of values, followed by assumptions based on hypothetical transactions in the absence of market inputs. The statement requires fair value measurements be classified and disclosed in one of the following categories:
Level 1 – Quoted prices in active markets for identical assets and liabilities.
Level 2 – Quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations whose inputs are observable or whose significant value drivers are observable.
Level 3 – Significant inputs to the valuation model are unobservable.
Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement.
The carrying amounts on the accompanying balance sheet for cash, accounts payable and accrued liabilities are carried at cost, which approximates fair value.
Income Taxes
Income taxes are accounted for under the asset and liability method prescribed by ASC Topic 740 – Income Taxes. Deferred income taxes are recognized for the tax consequences in future years for differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax incurred for the period and the change during the period of deferred tax assets and liabilities.
In accordance with accounting literature related to uncertainty in income taxes, tax benefits from uncertain tax positions that are recognized in the financial statements are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement.
The Company recognizes interest and penalties, if any, related to uncertain tax positions in selling, general and administrative expenses. No interest and penalties related to uncertain tax positions were accrued at February 29, 2012 and February 28, 2011 and 2010.2011.
9
Summary of Critical Accounting Policies (continued)
Basic lossearnings (loss) per share is computed by dividing net lossearnings (loss) by the weighted average number of common shares outstanding for the periods. Diluted lossearnings (loss) per share reflects, in addition to the weighted average number of common shares, the potential dilution of stock whichresulting from exercise of warrants. The warrants were excluded from the calculation of diluted earnings (loss) per share because their effect is not applicable to Sillenger as of February 28, 2011 and 2010.
anti-dilutive.
anti-dilutive.
Plan of Operations
Our business plan up until April 2010 was to proceed with the exploration of the Bulkley claims to determine whether there are commercially exploitable reserves of base and precious metals. Beginning in May 2010, we have concentrated our focus on pursuing opportunities in African countries.
We will also need to seek additional funding to pursue the new ventures in Africa identified by our new President and Chief Executive Officer Mr. John Gillespie. We anticipate that additional funding will be in the form of equity financing from the sale of our common stock. However, we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock to fund additional phases of the exploration program previously set out for the Buckley claim should we decide to proceed or any new projects identified in Africa. We believe that debt financing will not be an alternative for funding any further phases in our exploration program or potential projects in Africa or elsewhere. The risky nature of these enterprises and lack of tangible assets places debt financing beyond the credit-worthiness required by most banks or typical investors of corporate debt until such time as an economically viable mine or project can be demonstrated. We do not have any arrangements in place for any future equity financing.
Based on the nature of our business, we anticipate incurring operating losses in the foreseeable future. We base this expectation, in part, on the fact that very few mineral claims in the exploration stage ultimately develop into producing, profitable mines. Our future financial results are also uncertain due to a number of factors, some of which are outside our control. These factors include, but are not limited to:
● our ability to raise additional funding;
● the market price for gold;
● the results of our proposed exploration programs on the mineral property; and
● our ability to find joint venture partners for the development of our property interests
Due to our lack of operating history and present inability to generate revenues, our auditors have stated their opinion that there currently exists substantial doubt about our ability to continue as a going concern.
Subsequent EventsEvent
Recent Accounting Pronouncements
In September 2011, the FASB issued new accounting guidance intended to simplify goodwill impairment testing. Entities will be allowed to perform a qualitative assessment on goodwill impairment to determine whether it is more likely than not (defined as having a likelihood of more than 50 percent) that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. This guidance is effective for goodwill impairment tests performed in interim and annual periods for fiscal years beginning after December 15, 2011. The adoption of this guidance did not have material impact on the Company’s results of operations or financial position.
In June 2011, the FASB issued new guidance on the presentation of comprehensive income. Specifically, the new guidance allows an entity to recent accounting pronouncementspresent components of net income and other comprehensive income in one continuous statement, referred to as the impactstatement of these pronouncements on our consolidated financial statements, see Note 4, “Recently Issued Accounting Standardscomprehensive income, or in two separate, but consecutive statements. The new guidance eliminates the current option to report other comprehensive income and Recently Adopted Accounting Pronouncements,”its components in the Notesstatement of changes in equity. While the new guidance changes the presentation of comprehensive income, there are no changes to the Financial Statementscomponents that are recognized in net income or other comprehensive income under current accounting guidance. The Company has early-adopted this Annual Report on Form 10-K.guidance.
In May 2011, the FASB issued amendments to fair value measurement and disclosure requirements. This guidance amends U.S. GAAP to conform with measurement and disclosure requirements in International Financial Reporting Standards (“IFRS”). The amendments change the wording used to describe the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. This includes clarification about the application of existing fair value measurement and disclosure requirements and those that change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements. In addition, to improve consistency in application across jurisdictions, some changes in wording are necessary to ensure that U.S. GAAP and IFRS fair value measurement and disclosure requirements are described in the same way (for example, using the word ―shall rather than ―should to describe the requirements in U.S. GAAP). This amended guidance is to be applied prospectively and is effective for the Company beginning with its third quarter of fiscal year 2012. The adoption of this guidance did not have material impact on the Company’s results of operations or financial position.
Item 7A. QuantitiveQuantitative and QualitiveQualitative Disclosure About Market Risk.
No disclosure is required hereunder as the Company is a "smaller reporting company," as defined in Item 10(f) of Regulation S-K.
Item 8. Financial Statements and Supplementary Data.
The financial statements and schedules that constitute Item 8 of Form 10-K immediately follow on the next page.
Sillenger Exploration Corp.
(An Exploration Stage Company)
February 28, 201129, 2012
| Index | |
| Balance Sheets as of February 29, 2012 and February 28, 2011 | |
| Statements of | |
| February 29, 2012 and February 28, 2011 | |
| February 14, 2007 (Inception) | |
| Statements of Cash Flows for the years ended | |
| February 29, 2012 and February 28, 2011 | |
| February 14, 2007 (Inception) | |
Statements of Stockholders' Equity (Deficit) for the period from February 14, 2007 (Inception) to February 29, 2012 | F - 5 |
| Notes to |
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of
Sillenger Exploration Corp.
We have audited the accompanying balance sheets of Sillenger Exploration Corp., (an Exploration Stage Company) (the “Company”) as of February 29, 2012 and February 28, 2010 and 2009,2011 and the related statements of operations,comprehensive income (loss), stockholders’ equity (deficit), and cash flows for the years then ended, and for the period from February 14, 2007 (date of inception) throughto February 28, 2010.29, 2012. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the auditsaudit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company has determined that it is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Sillenger Exploration Corp. as of February 28, 201029, 2012 and 2009, and the results of its operations and its cash flows for the periods then ended and the period from February 14, 2007 (date of inception) through February 28, 2010 in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2, the Company has no revenue from sales of products or services and has incurred losses from operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans with regard to these matters are described in Note 2. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Signed: “MSCM LLP” | |
| Chartered Accountants | |
| Licensed Public Accountants |
Toronto, Ontario
June 13, 2012
F - 1
| Sillenger Exploration Corp. | ||||||||
| (An Exploration Stage Company) | ||||||||
| Balance Sheets | ||||||||
| February 29, | February 28, | |||||||
| 2012 | 2011 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| �� | ||||||||
| Cash | $ | 88,337 | $ | 509 | ||||
| Prepaid expenses | 37,500 | - | ||||||
| Advances (Note 6) | 48,480 | - | ||||||
| 174,317 | 509 | |||||||
| Investment (Note 5) | 2,088,723 | - | ||||||
| Total Assets | $ | 2,263,040 | $ | 509 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable (Note 6) | $ | 1,279,358 | $ | 2,709,006 | ||||
| Accrued liabilities | 19,950 | 28,885 | ||||||
| Total liabilities | 1,299,308 | 2,737,891 | ||||||
| Stockholders' equity (deficit) | ||||||||
| Common stock $0.001 par value, | ||||||||
| 300,000,000 in 2012 and 75,000,000 in 2011 | ||||||||
| shares authorized | ||||||||
| 61,331,000 in 2012 and 40,811,000 in 2011 | ||||||||
| shares issued and outstanding | 61,331 | 40,811 | ||||||
| Additional paid-in-capital | 4,422,032 | 3,514,139 | ||||||
| Shares to be issued | 100,000 | - | ||||||
| Stock subscriptions received | 255,500 | - | ||||||
| Accumulated other comprehensive income | 208,569 | - | ||||||
| Accumulated deficit during exploration stage | (4,083,700 | ) | (6,292,332 | ) | ||||
| Total Stockholders' equity (deficit) | 963,732 | (2,737,382 | ) | |||||
| Subsequent event (Note 11) | ||||||||
| Total Liabilities and Stockholders' Equity (Deficit) | $ | 2,263,040 | $ | 509 | ||||
| The Notes to Financial Statements are an integral part of these financial statements. | ||||||||
F - 2
| Sillenger Exploration Corp. | ||||||||
| (An Exploration Stage Company) | ||||||||
| Balance Sheets | ||||||||
| February 28, 2011 and 2010 | ||||||||
| February 28, | February 28, | |||||||
| 2011 | 2010 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | 509 | $ | 6,700 | ||||
| 509 | 6,700 | |||||||
| $ | 509 | $ | 6,700 | |||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 2,709,006 | $ | - | ||||
| Accrued liabilities | 28,885 | 7,599 | ||||||
| Total liabilities | 2,737,891 | 7,599 | ||||||
| Commitments and Contingencies (Note 7) | ||||||||
| Stockholders' deficit | ||||||||
| Common stock $0.001 par value, | ||||||||
| 75,000,000 shares authorized | ||||||||
| 40,811,000 shares issued and outstanding | 40,811 | 40,811 | ||||||
| Additional paid-in-capital | 3,514,139 | 3,514,139 | ||||||
| Accumulated deficit | (6,292,332 | ) | (3,555,849 | ) | ||||
| 3 | ||||||||
| Total Stockholders' deficit | (2,737,382 | ) | (899 | ) | ||||
| Total Liabilities and Stockholders' Deficit | $ | 509 | $ | 6,700 | ||||
| The Notes to the Financial Statements are an integral part of these financial statements. | ||||||||
| Sillenger Exploration Corp. | |||||||||||||
| (An Exploration Stage Company) | |||||||||||||
| Statements of Comprehensive Income (Loss) | |||||||||||||
| Cumulative From | |||||||||||||
| Years Ended, | February 14, 2007 | ||||||||||||
| February 29, | February 28, | (Inception) to | |||||||||||
| 2012 | 2011 | February 29, 2012 | |||||||||||
| Revenues | $ | - | $ | - | $ | - | |||||||
| Operating expenses: | |||||||||||||
| Contract fees (Note 6) | 950,000 | - | 950,000 | ||||||||||
| General and administrative | 264,866 | 985,350 | 1,264,093 | ||||||||||
| Travel | 91,339 | 575,966 | 667,305 | ||||||||||
| Marketing and business development | 312,251 | 664,708 | 976,959 | ||||||||||
| Professional services | 518,279 | 412,158 | 978,609 | ||||||||||
| 2,136,735 | 2,638,182 | 4,836,966 | |||||||||||
| Other income (expense): | |||||||||||||
| Income from sale of rights (Note 5) | 4,369,208 | - | 4,369,208 | ||||||||||
| Foreign exchange loss | (23,841 | ) | (98,301 | ) | (122,142 | ) | |||||||
| 4,345,367 | (98,301 | ) | 4,247,066 | ||||||||||
| Income (loss) before income taxes | 2,208,632 | (2,736,483 | ) | (589,900 | ) | ||||||||
| Income taxes (Note 9) | - | - | - | ||||||||||
| Net income (loss) | 2,208,632 | (2,736,483 | ) | (589,900 | ) | ||||||||
| (4,247,067 | ) | ||||||||||||
| Other comprehensive income | |||||||||||||
| Unrealized gain on investment - no tax effect (Note 5) | 208,569 | - | 208,569 | ||||||||||
| Comprehensive income (loss) | $ | 2,417,201 | $ | (2,736,483 | ) | $ | (381,331 | ) | |||||
| Net income (loss) per share: | |||||||||||||
| Basic | $ | 0.04 | $ | (0.07 | ) | ||||||||
| Diluted | $ | 0.04 | $ | (0.07 | ) | ||||||||
| Weighted average shares outstanding | |||||||||||||
| Basic | 50,621,055 | 40,811,000 | |||||||||||
| Diluted | 50,621,055 | 40,811,000 | |||||||||||
| The Notes to Financial Statements are an integral part of these financial statements. | |||||||||||||
F - 3
| Sillenger Exploration Corp. | ||||||||||||
| (An Exploration Stage Company) | ||||||||||||
| Statements of Operations | ||||||||||||
| Years Ended February 28, 2011 and 2010 | ||||||||||||
| Cumulative From | ||||||||||||
| February 14, 2007 | ||||||||||||
| Years Ended February 28, | (Inception) to | |||||||||||
| 2011 | 2010 | February 28, 2011 | ||||||||||
| Revenues | $ | - | $ | - | $ | - | ||||||
| Operating expenses: | ||||||||||||
| General and Administrative | 985,350 | 3,539 | 999,227 | |||||||||
| Travel | 575,966 | 575,966 | ||||||||||
| Business development | 664,708 | 664,708 | ||||||||||
| Professional services | 412,158 | 16,059 | 460,330 | |||||||||
| 2,638,182 | 19,598 | 2,700,231 | ||||||||||
| Other income | ||||||||||||
| Foreign exchange loss | $ | 98,301 | $ | - | $ | 98,301 | ||||||
| Net Loss and Comprehensive Loss | $ | 2,736,483 | $ | 19,598 | $ | 2,798,532 | ||||||
| Net Loss per share: Basic and Diluted | $ | (0.07 | ) | $ | (0.00 | ) | ||||||
| Weighted average shares outstanding: Basic and Diluted | 40,811,000 | 40,781,833 | ||||||||||
| The Notes to the Financial Statements are an integral part of these financial statements. | ||||||||||||
| Sillenger Exploration Corp. | ||||||||||||||
| (An Exploration Stage Company) | ||||||||||||||
| Statements of Cash Flows | ||||||||||||||
| Cumulative From | ||||||||||||||
| Years Ended | February 14, 2007 | |||||||||||||
| February 29, | February 28, | (Inception) to | ||||||||||||
| 2012 | 2011 | February 29, 2012 | ||||||||||||
| Cash Flows from Operating Activities | ||||||||||||||
| Net income (loss) | $ | 2,208,632 | $ | (2,736,483 | ) | $ | (589,900 | ) | ||||||
| Items not affecting cash | ||||||||||||||
| Expenses paid by stock | 270,500 | - | 270,500 | |||||||||||
| Income from sale of rights | (4,369,208 | ) | - | (4,369,208 | ) | |||||||||
| Write-off of equipment | - | 27,522 | 27,522 | |||||||||||
| (1,890,076 | ) | (2,708,961 | ) | (4,661,086 | ) | |||||||||
| Changes in non-cash working capital items | ||||||||||||||
| Accounts payable | 1,304,206 | 2,709,006 | 4,013,211 | |||||||||||
| Accrued liabilities | ) | (8,935 | ) | 21,286 | 19,951 | |||||||||
| Advances | (48,480 | ) | - | (48,480 | ) | |||||||||
| Cash Flows (Used in) Generated from Operating Activities | (643,285 | ) | 21,331 | (676,404 | ) | |||||||||
| Cash Flows from Investing Activities | ||||||||||||||
| Equipment acquired | - | (27,522 | ) | (27,522 | ) | |||||||||
| Cash Flows from Financing Activities | ||||||||||||||
| Stock subscriptions received | 255,500 | - | 255,500 | |||||||||||
| Proceeds from issuance of common stock | 475,613 | - | 536,763 | |||||||||||
| Cash Flows Provided by Financing Activities | 731,113 | - | 792,263 | |||||||||||
| Net Increase (Decrease) in Cash | 87,828 | (6,191 | ) | 88,337 | ||||||||||
| Cash, Beginning of Period | 509 | 6,700 | - | |||||||||||
| Cash, End of Period | $ | 88,337 | $ | 509 | $ | 88,337 | ||||||||
| Supplemental Cash Flow Information | ||||||||||||||
| Interest paid | $ | - | $ | - | $ | - | ||||||||
| Income taxes paid | $ | - | $ | - | $ | - | ||||||||
| Non-Cash Financing Transactions | ||||||||||||||
| Increase in paid-in capital from stock dividend | $ | - | $ | - | $ | 3,458,862 | ||||||||
| Increase in accumulated deficit for stock dividend | $ | - | $ | - | $ | 3,493,800 | ||||||||
| The Notes to Financial Statements are an integral part of these financial statements. | ||||||||||||||
F - 4
| Sillenger Exploration Corp. | ||||||||||||
| (An Exploration Stage Company) | ||||||||||||
| Statements of Cash Flows | ||||||||||||
| Years Ended February 28, 2011 and 2010 | ||||||||||||
| Cumulative From | ||||||||||||
| February 14, 2007 | ||||||||||||
| Years Ended February 28, | (Inception) to | |||||||||||
| 2011 | 2010 | February 28, 2011 | ||||||||||
| Cash Flows from Operating Activities | ||||||||||||
| Net Loss | $ | (2,736,483 | ) | $ | (19,598 | ) | $ | (2,798,532 | ) | |||
| Items not affecting cash | ||||||||||||
| Write-off of equipment | 27,522 | - | 27,522 | |||||||||
| Foreign exchange loss | - | - | - | |||||||||
| (2,708,961 | ) | (19,598 | ) | (2,771,010 | ) | |||||||
| Changes in non-cash working capital items | ||||||||||||
| Accounts payable | 2,709,006 | - | 2,709,006 | |||||||||
| Accrued expenses | 21,286 | 599 | 28,885 | |||||||||
| Cash Flows Generated From (Used in) Operating Activities | 21,331 | (18,999 | ) | (33,119 | ) | |||||||
| Cash Flows from Investing Activities | ||||||||||||
| Equipment acquired | (27,522 | ) | - | (27,522 | ) | |||||||
| Cash Flows used in Investing Activities | (27,522 | ) | - | (27,522 | ) | |||||||
| Cash Flows from Financing Activities | ||||||||||||
| Proceeds from issuance of common stock | - | 10,000 | 61,150 | |||||||||
| Cash Flows Provided by Financing Activities | - | 10,000 | 61,150 | |||||||||
| Net Increase (Decrease) in Cash | (6,191 | ) | (8,999 | ) | 509 | |||||||
| Cash, Beginning of Period | 6,700 | 15,699 | - | |||||||||
| Cash, End of Period | 509 | 6,700 | 509 | |||||||||
| Supplemental Cash Flow Information | ||||||||||||
| Interest paid | $ | - | $ | - | $ | - | ||||||
| Income taxes paid | $ | - | $ | - | $ | - | ||||||
| Non-Cash Financing Transaction | ||||||||||||
| Increase in paid-in capital from stock dividend | $ | - | $ | 3,458,862 | $ | 3,458,862 | ||||||
| Increase in accumulated deficit for stock dividend | $ | - | $ | 3,493,800 | $ | 3,493,800 | ||||||
| The Notes to the Financial Statements are an integral part of these financial statements. | ||||||||||||
| Sillenger Exploration Corp. | ||||||||||||||||||||||||||||||||
| (An Exploration Stage Company) | ||||||||||||||||||||||||||||||||
| Statements of Stockholders' Equity (Deficit) | ||||||||||||||||||||||||||||||||
| For the Period From February 14, 2007 (Inception) to February 29, 2012 | ||||||||||||||||||||||||||||||||
| Common Stock | Additional paid-in | Shares to | Stock subscriptions | Accumulated other comprehensive | Accumulated deficit during exploration | |||||||||||||||||||||||||||
| Shares | Amount | capital | be issued | received | income | Total | ||||||||||||||||||||||||||
| Issuance of common stock for cash to a founder | 3,000,000 | $ | 3,000 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 3,000 | |||||||||||||||||
| Net loss for the period | - | - | - | - | - | - | (7 | ) | (7 | ) | ||||||||||||||||||||||
| Balance, February 28, 2007 | 3,000,000 | 3,000 | - | - | - | - | (7 | ) | 2,993 | |||||||||||||||||||||||
| Issuance of common stock for cash at $0.01 per share | 2,325,000 | 2,325 | 20,925 | - | - | - | - | 23,250 | ||||||||||||||||||||||||
| Issuance of common stock for cash at $0.05 per share | 498,000 | 498 | 24,402 | - | - | - | - | 24,900 | ||||||||||||||||||||||||
| Net loss for the period | - | - | - | - | - | - | (10,054 | ) | (10,054 | ) | ||||||||||||||||||||||
| Balance, February 29, 2008 | 5,823,000 | 5,823 | 45,327 | - | - | - | (10,061 | ) | 41,089 | |||||||||||||||||||||||
| Net loss for the period | - | - | - | - | - | - | (32,390 | ) | (32,390 | ) | ||||||||||||||||||||||
| Balance, February 28, 2009 | 5,823,000 | 5,823 | 45,327 | - | - | - | (42,451 | ) | 8,699 | |||||||||||||||||||||||
| Stock dividend | 34,938,000 | 34,938 | 3,458,862 | - | - | - | (3,493,800 | ) | - | |||||||||||||||||||||||
| Issuance of common stock for cash at $0.20 per share | 50,000 | 50 | 9,950 | - | - | - | - | 10,000 | ||||||||||||||||||||||||
| Net loss for the period | - | - | - | - | - | - | (19,598 | ) | (19,598 | ) | ||||||||||||||||||||||
| Balance, February 28, 2010 | 40,811,000 | 40,811 | 3,514,139 | - | - | - | (3,555,849 | ) | (899 | ) | ||||||||||||||||||||||
| Net loss for the period | - | - | - | - | - | - | (2,736,483 | ) | (2,736,483 | ) | ||||||||||||||||||||||
| Balance, February 28, 2011 | 40,811,000 | 40,811 | 3,514,139 | - | - | - | (6,292,332 | ) | (2,737,382 | ) | ||||||||||||||||||||||
| Issuance for common stock units for cash | 9,200,000 | 9,200 | 466,413 | - | - | - | - | 475,613 | ||||||||||||||||||||||||
| Issuance for common stock for services | 7,700,000 | 7,700 | 300,300 | - | - | - | - | 308,000 | ||||||||||||||||||||||||
| Issuance of common stock for debt settlement | 3,620,000 | 3,620 | 141,180 | - | - | - | - | 144,800 | ||||||||||||||||||||||||
| Shares to be issued | - | - | - | 100,000 | - | - | - | 100,000 | ||||||||||||||||||||||||
| Stock subscriptions received | - | - | - | - | 255,500 | - | - | 255,500 | ||||||||||||||||||||||||
| Unrealized gain on investment | - | - | - | - | - | 208,569 | - | 208,569 | ||||||||||||||||||||||||
| Net income for the period | - | - | - | - | - | - | 2,208,632 | 2,208,632 | ||||||||||||||||||||||||
| Balance, February 29, 2012 | 61,331,000 | $ | 61,331 | $ | 4,422,032 | $ | 100,000 | $ | 255,500 | $ | 208,569 | $ | (4,083,700 | ) | $ | 963,732 | ||||||||||||||||
| The Notes to Financial Statements are an integral part of these financial statements. | ||||||||||||||||||||||||||||||||
F - 5
| Sillenger Exploration Corp. | ||||||||||||||||||||
| (An Exploration Stage Company) | ||||||||||||||||||||
| Statements of Stockholders' Equity (Deficit) | ||||||||||||||||||||
| Period From February 14, 2007 (Inception) to February 28, 2011 | ||||||||||||||||||||
| Common Stock | Additional paid-in | Accumulated | ||||||||||||||||||
| Shares | Amount | capital | deficit | Total | ||||||||||||||||
| Issuance of common stock for cash to founders | 3,000,000 | $ | 3,000 | $ | - | $ | $ | 3,000 | ||||||||||||
| Net loss for the period ended February 28, 2007 | - | - | - | (7 | ) | (7 | ) | |||||||||||||
| Balance February 28, 2007 | 3,000,000 | 3,000 | - | (7 | ) | 2,993 | ||||||||||||||
| Issuance of common stock for cash at $.01 per share | 2,325,000 | 2,325 | 20,925 | - | 23,250 | |||||||||||||||
| Issuance of common stock for cash at $.05 per share | 498,000 | 498 | 24,402 | 24,900 | ||||||||||||||||
| Net loss for the year ended February 29, 2008 | - | - | - | (10,054 | ) | (10,054 | ) | |||||||||||||
| Balance, February 29, 2008 | 5,823,000 | 5,823 | 45,327 | (10,061 | ) | 41,089 | ||||||||||||||
| Net loss for the year ended February 28, 2009 | - | - | - | (32,390 | ) | (32,390 | ) | |||||||||||||
| Balance, February 28, 2009 | 5,823,000 | 5,823 | 45,327 | (42,451 | ) | 8,699 | ||||||||||||||
| Stock dividend | 34,938,000 | 34,938 | 3,458,862 | (3,493,800 | ) | - | ||||||||||||||
| Issuance of common stock for cash at $.20 per share | 50,000 | 50 | 9,950 | - | 10,000 | |||||||||||||||
| Net loss for the year ended February 28, 2010 | - | - | - | (19,598 | ) | (19,598 | ) | |||||||||||||
| Balance, February 28, 2010 | 40,811,000 | 40,811 | 3,514,139 | (3,555,849 | ) | (899 | ) | |||||||||||||
| Net loss for the year ended February 28, 2011 | - | - | - | (2,736,483 | ) | (2,736,483 | ) | |||||||||||||
| Balance, February 28, 2011 | 40,811,000 | $ | 40,811 | $ | 3,514,139 | $ | (6,292,332 | ) | $ | (2,737,382 | ) | |||||||||
| The Notes to the Financial Statements are an integral part of these financial statements. | ||||||||||||||||||||
Sillenger Exploration Corp.
(An Exploration Stage Company)
Notes Toto Financial Statements
Years Ended February 29, 2012 and February 28, 2011 and 2010
| 1 | Basis of Presentation and Nature of Business |
Sillenger Exploration Corp. (“Sillenger” or the “Company”) was incorporated in Nevada on February 14, 2007. Sillenger is an exploration stage company and has not yet realized any revenues from its planned operations. During the period ended February 28,29, 2008, the Company had acquired a 100% interest in three mining claims in the Bulkley mining district of British Columbia, Canada for cash consideration of $379. The property was being held in trust for the Company by a third party. On May 15, 2009, the Company abandoned the mineral titles and re-staked them in order to reduce exploration costs. The Company’s rights to these claims expired in June 2011.
On May 26, 2010, Sillenger introduced its proprietary CLP Claims Licensing Program (“CLP”) which is designed to help governments to provide a fast-track process for issuing the necessary documentation to resource companies. The system helps reduce risk to exploration companies and helps market a country as an attractive investment destination. This program is based on Mr. Gillespie’s (the Company’s majority shareholder, President and CEO) proprietary land claims management system.
On June 1, 2010, Sillenger, through its business partnership with FCMI Global Inc., (“FCMI”), whereby FCMI assignsassigned trademarks, intellectual properties, contracts and agreements to Sillenger in exchange for 5% (percent) of Sillenger’s annual net income as per Sillenger’s audited financial statements, entered into a contract with the Governmentgovernment of the Republic of Equatorial Guinea to conduct an airborne geophysical survey of the continental region (27,000 sq. km)certain specific areas of Equatorial Guinea, known as Rio Muni, as well as 30 km of Continental Platform (4,500 sq. km) off the Atlantic coastline.Guinea. The survey willwas to provide the Ministry of Mines, Industry and Energy of Equatorial Guinea a geological database of the region highlighting the locations where there may be the presence of mineral, hydrocarbon or groundwater deposits, and a preliminary identification of subsurface structures which may present exploration potential, and to identify the likeliest exploration targets within those deposits.
In exchange, Sillenger was granted the mineral and hydrocarbon rights to 15% of the claim blocks in the entire area surveyed, as chosen by Sillenger, as well as a preferential right to any other claims that Sillenger desires.
The business partnership with FCMI entailsentailed fully reimbursing FCMI for expenses it incursincurred in negotiating trademarks, intellectual properties, contracts and agreements that arewere assigned to Sillenger. At February 28, 2011 the amount included under accounts payable and reimbursable to FCMI amounted to $2,475,587.
On June 11, 2010, Sillenger retained Fugro Airborne Surveys, a subsidiary of Fugro Group, to conduct the airborne geophysical survey of the Rio Muni region of Equatorial Guinea. The survey will helpwould have helped to reveal the locations of potential deposits, and provide a detailed reading of the subsurface structures.
In October 2010, the Company entered into negotiations to finance the cost of this survey. As part of these negotiations, Sillenger fully assigned its commitment with Fugro Airborne Surveys to a third party. On April 28, 2011, Sillenger executed an agreement with Ivory Resources Inc. (“Ivory”), Brilliant Resources Inc. [formerly Brilliant Mining Corp.] (“Brilliant”) and others, whereby Sillenger agreed to accept and receive 7,407,407 units of Brilliant (“unit”) [with a 4 month escrow] (Note 5) in exchange for Ivory acquiring from Sillenger anthe agreement with the government of the Republic of Equatorial Guinea, which included certain preferential rights to request mining and/or oil concessions. Each Unitunit consists of one common share of Brilliant and one Common Sharecommon share purchase warrant. Each Warrantwarrant will entitle the holder thereof to acquire one Common Sharecommon share of Brilliant upon the payment of $0.45 per Warrantwarrant at any time until 24 months following the date of issuance. As part of the agreement, allamounts payable to FCMI were forgiven. On July 12, 2011, the assetsCompany closed its transaction with Ivory, Brilliant and others.
On September 16, 2011, Sillenger entered into an agreement with First African Exploration Corp. (“First African”), whereby First African will serve as the Company’s exclusive representative for obtaining, negotiating and performing contracts with countries in Africa and the Middle East, in connection with mining(Note 6), hydrocarbons, water, and other natural resource projects. Sillenger’s obligations under this agreement include: use First African on an exclusive basis, pay set-up and execution fees to First African for the services provides and for country contracts successfully procured, include First African in any local, regional or international ventures as a 10% shareholder.
On November 25, 2011, Sillenger entered into an agreement with the Republic of FCMI Global Inc., includingBenin (“Benin Agreement”). Pursuant to the amounts receivableterms of the Benin Agreement, Sillenger will conduct an airborne geophysical survey of the landmass of Benin and the offshore territory in the Gulf of Guinea. The purpose of the survey is to compile a geophysical information database of Benin’s mining, hydrocarbon and water deposits, and analyze such data to identify the likeliest exploration targets within those deposits for potential mining and exploration opportunities. The government is particularly interested in the potential size of some of their base metal deposits, which can often be determined when utilizing some of these technologies. The term of the Benin Agreement is two (2) years from Sillenger Exploration Corp., would be transferred to a newly set up wholly owned subsidiary of Sillenger. As of the date of filingthe Benin Agreement, which can be extended by agreement of the parties. The execution of the Benin Agreement was supposed to have been started by May 25, 2012, failing which the Republic of Benin has an option to terminate; this 10K,option has not been exercised.
F - 6
Sillenger Exploration Corp.
(An Exploration Stage Company)
Notes to Financial Statements
Years Ended February 29, 2012 and February 28, 2011
| 1 | Basis of Presentation and Nature of Business (continued) |
Under the agreement had not closedBenin Agreement, Sillenger will be granted certain exclusive preferential rights with respect to fifteen percent (15%) of the surface area of airborne survey, but also has first right of refusal on all unclaimed resource concessions for the duration of the contract period. The Benin Agreement requires the Republic of Benin to provide the required permits, licenses, etc. to conduct the survey and to pursue any mining and or exploration opportunities.
The Company is currently in the process of exploring potential sources of financing for the Benin Agreement.
| 2 | Going Concern |
Sillenger has recurring lossesnegative working capital of $1,124,991 and hasan accumulated operating lossesdeficit during the exploration stage of $2,798,532$4,083,700 as of February 28, 2011.29, 2012. Sillenger's financial statements are prepared using generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, Sillenger has not realized any revenues.revenues from operations. Without raising additional capital or realization of its investments, there would be substantial doubt about Sillenger’s ability to continue as a going concern. Sillenger's management plans on raising cash from public or private debt or equity financing, on an as needed basis, and in the longer term, from revenues from the acquisition and exploration and development of mineral interests, if found. Sillenger's ability to continue as a going concern is dependent on these additional cash financings, and, ultimately, upon achieving profitable operations through the development of mineral interests.
| 3 | Summary of Critical Accounting Policies |
The Company has classified its investment as available for sale and Cash Equivalentsrecorded it at fair market value and any associated gain or loss, net of tax, is recorded as “other comprehensive income (loss)”.
Estimates
The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions relate to, but are not limited to, estimation of accrued liabilities.liabilities and the valuation of investment. Actual results could differ from those estimates.
Foreign Currency Translation and Transactions
The Company’s reporting and functional currency is the U.S. dollar. Foreign currency denominated monetary balance sheet items are translated into U.S. dollars at the prevailing exchange rates in effect at the end of the reporting period, the historical rate for non-monetary balance sheet items and shareholders’stockholders’ equity (deficit), and the average rate for the year for revenues, expenses, gains and losses. Foreign currency gains or losses on translation are included in the statementstatements of operations.comprehensive income (loss).
F - 7
Sillenger Exploration Corp.
(An Exploration Stage Company)
Notes to Financial Statements
Years Ended February 29, 2012 and February 28, 2011
| 3 | Summary of Critical Accounting Policies (continued) |
Fair Value of Financial Instruments
The Company adopted ASCfollows Accounting Standards Codification (“ASC”) Topic 820 for all financial assets and liabilities measured at fair value on a recurring basis. The Company adopted ASC Topic 820 effective February 28, 2010, for all non-financial assets and liabilities. ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants at the measurement date. The statement establishes market or observable inputs as the preferred sources of values, followed by assumptions based on hypothetical transactions in the absence of market inputs. The statement requires fair value measurements be classified and disclosed in one of the following categories:
Level 1 – Quoted prices in active markets for identical assets and liabilities.liabilities;
Level 2 – Quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations whose inputs are observable or whose significant value drivers are observable.observable; and
Level 3 – Significant inputs to the valuation model are unobservable.
Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement.
Income Taxes
Income taxes are accounted for under the asset and liability method prescribed by ASC Topic 740 – Income Taxes. Deferred income taxes are recognized for the tax consequences in future years for differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax incurred for the period and the change during the period of deferred tax assets and liabilities.
In accordance with accounting literature related to uncertainty in income taxes, tax benefits from uncertain tax positions that are recognized in the financial statements are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement.
The Company recognizes interest and penalties, if any, related to uncertain tax positions in selling, general and administrative expenses. No interest and penalties related to uncertain tax positions were accrued at February 29, 2012 and February 28, 2011 and 2010.2011.
Basic lossearnings (loss) per share is computed by dividing net lossearnings (loss) by the weighted average number of common shares outstanding for the periods. Diluted lossearnings (loss) per share reflects, in addition to the weighted average number of common shares, the potential dilution of stock whichresulting from the exercise of warrants. The warrants were excluded in the calculation of diluted earnings (loss) per share because their effect is not applicableanti-dilutive.
F - 8
Sillenger Exploration Corp.
(An Exploration Stage Company)
Notes to Sillenger as ofFinancial Statements
Years Ended February 29, 2012 and February 28, 2011 and 2010.
| 4 | Recently Issued Accounting Standards And Recently Adopted Accounting Pronouncements |
In August 2009,September 2011, the FASB issued the FASBFinancial Accounting Standards Update No. 2009-05 “Fair Value Measurement and Disclosures Topic 820 – Measuring Liabilities at Fair Value”, which provides amendmentsBoard (“FASB”) issued new accounting guidance intended to subtopic 820-10, Fair Value Measurements and Disclosures – Overall, for the fair value measurementsimplify goodwill impairment testing. Entities will be allowed to perform a qualitative assessment on goodwill impairment to determine whether it is more likely than not (defined as having a likelihood of liabilities. The guidance provided in this update was effective for the first reporting period beginning after issuance. This update provides clarificationmore than 50 percent) that in circumstances in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using one or more of the following techniques: (1) a valuation technique that uses: (a) the quoted price of the identical liability when traded as an asset; or (b) quoted prices for similar liabilities or similar liabilities when traded as assets; or (2) another valuation technique that is consistent with the principles of topic 820; two examples would be an income approach, such as a present value technique, or a market approach, such as a technique that is based on the amount at the measurement date that the reporting entity would pay to transfer the identical liability or would receive to enter into the identical liability. The amendments in this update also clarify that when estimating the fair value of a liability,reporting unit is less than its carrying amount as a reporting entitybasis for determining whether it is not requirednecessary to include a separate input or adjustment to other inputs relating toperform the existence of a restriction that prevents the transfer of the liability. The amendmentstwo-step goodwill impairment test. This guidance is effective for goodwill impairment tests performed in this update also clarify that both a quoted price in an active marketinterim and annual periods for the identical liability when traded as an asset in an active market when no adjustments to the quoted price of the asset are required are Level 1 fair value measurements.fiscal years beginning after December 15, 2011. The adoption of thethis guidance did not have a material effectimpact on the Company’s financial position, results of operations cash flows or related disclosures.financial position.
In June 2011, the FASB issued new guidance on the presentation of comprehensive income. Specifically, the new guidance allows an entity to present components of net income and other comprehensive income in one continuous statement, referred to as the statement of comprehensive income, or in two separate, but consecutive statements. The new guidance eliminates the current option to report other comprehensive income and its components in the statement of changes in equity. While the new guidance changes the presentation of comprehensive income, there are no changes to the components that are recognized in net income or other comprehensive income under current accounting guidance. The Company has early-adopted this guidance.
In May 2011, the FASB issued amendments to fair value measurement and disclosure requirements. This guidance amends U.S. GAAP to conform with measurement and disclosure requirements in International Financial Reporting Standards (“IFRS”). The amendments change the wording used to describe the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. This includes clarification about the application of existing fair value measurement and disclosure requirements and those that change a particular principle or requirement for measuring fair value or for disclosing information about fair value measurements. In addition, to improve consistency in application across jurisdictions, some changes in wording are necessary to ensure that U.S. GAAP and IFRS fair value measurement and disclosure requirements are described in the same way (for example, using the word ―shall rather than ―should to describe the requirements in U.S. GAAP). This amended guidance was to be applied prospectively and was effective for the Company beginning with its third quarter of fiscal year 2012. The adoption of this guidance did not have material impact on the Company’s results of operations or financial position.
F - 9
Sillenger Exploration Corp.
(An Exploration Stage Company)
Notes to Financial Statements
Years Ended February 29, 2012 and February 28, 2011
| 5 | Investment |
Investment represents 7,407,407 Units (“Units”) of Brilliant, a publicly traded entity on the Toronto Venture Stock Exchange. Each Unit, with a fair market value of approximately of $0.25CDN at the time of initial recognition, consists of one common share of Brilliant and one common share purchase warrant. Each warrant will entitle the holder thereof to acquire one common share of Brilliant upon the payment of $0.45CDN per warrant at any time until 24 months following the date of issuance.
The shares have been valued using observable market prices and the warrants have been valued using the Black-Scholes option-pricing model.
The Units were received as part compensation to Sillenger for giving up its rights pertaining to Sillenger’s agreement with the government of the Republic of Equatorial Guinea. In addition, as part of this agreement, amounts payable by Sillenger to FCMI of $2,489,054 were forgiven.
On July 12, 2011, upon closing of the above transaction, the Company recognized $4,369,208 as “Other income” consisting of $2,489,054 representing amounts payable by Sillenger to FCMI, now forgiven, and $1,880,154 representing the fair value on July 12, 2011, of the Units of Brilliant.
On February 29, 2012, the fair value of the Units of Brilliant was $2,088,723. The fair value of the Units consists of the fair market value of the shares of $1,721,763 and the fair value of warrants valued using the Black-Scholes option-pricing model of $366,960. The increase in the value of the Units from the initial measurement date of July 12, 2011 of $208,569 was recorded as a component of other comprehensive income as “Unrealized gain on investment”.
The key inputs used in the February 29, 2012 and July 12, 2011 fair value calculations of the warrants are as follows:
| February 29, 2012 | July 12, 2011 | |||||||
| Current exercise price | $ | 0.45CDN | $ | 0.45CDN | ||||
| Time to expiration (in years) | 1.25 | 2.0 | ||||||
| Risk-free interest rate | 1.10 | % | 1.08 | % | ||||
| Estimated volatility | 93 | % | 77 | % | ||||
| Dividend | NIL | NIL | ||||||
| Stock price at period end date | $ | 0.23CDN | $ | 0.23CDN | ||||
| 6 | Related Party Transactions |
On April 28, 2011, Sillenger entered into an agreement with a former director to compensate him for his role in procuring the agreements with the government of the Republic of Equatorial Guinea. Under the terms of the agreement, Sillenger has agreed to pay $150,000 and issue 2,000,000 Sillenger common shares (note 7). The $150,000 payment was contingent upon raising $400,000 of equity financing. The $150,000 was recognized as an expense for the year ended February 29, 2012. $66,000 of this amount remains unpaid as of February 29, 2012 and is included in accounts payable.
As of February 29, 2012, the Company had advanced $48,480 to First African in accordance with the terms of the agreement signed with First African (“First African Agreement”) on September 16, 2011. The advance is for short-term working capital financing and is interest free. A former non-executive director of Sillenger is a part shareholder of First African.
Under the terms of the First African Agreement, First African has two primary obligations: one, assist Sillenger to procure and set-up country contracts in Africa and the Middle East and two, assist with the execution phase of the contracts procured. First African is entitled to a fee for the successful completion of each of the two phases. Subsequent to the year end, on June 5, 2012, the Company and First African agreed to a fee of $950,000 for successful implementation of the set-up phase of the contract with the Republic of Benin dated November 25, 2011. The fee of $950,000 is due immediately and has been recorded as contract fees expense for the year ended February 29, 2012 and set-up as accounts payable as of February 29, 2012. Should this fee not be paid by November 30, 2012, the unpaid amount will be subject to an annual interest rate of 9%.
F - 10
Sillenger Exploration Corp.
(An Exploration Stage Company)
Notes Toto Financial Statements
Years Ended February 29, 2012 and February 28, 2011 and 2010
| Stockholders’ Equity (Deficit) |
At inception, Sillenger issued 3,000,000 shares of stock to its founding shareholder for $3,000 cash. During the period ended February 28,29, 2008, Sillenger issued 2,823,600 shares of stock for $48,150 cash. During the year ended February 28, 2010, the Company issued 50,000 shares of stock for $ 10,000$10,000 cash. Also, during the year ended February 28, 2010, the companyCompany declared a 6 to 1 stock dividend valued at $0.10 per share at the grant date resulting in the issuance of 34,938,000 shares and a non-cash chargetransaction recorded to additional paid-in capital of $3,458,862 and accumulated deficit during exploration stage of $3,493,800.
There were no transactions affecting shareholders’stockholders’ deficit in the year ended February 28, 2011 other than the net loss, being the comprehensive loss. During the year ended February 29, 2012, the Company issued shares pursuant to the following transactions:
On July 27, 2011, the Company issued and sold an aggregate of 4,400,000 common stock units at a purchase price of $0.05 per unit receiving proceeds of $230,544. Each unit is comprised of (i) one share of the Company's common stock and (ii) a two-year ½ warrant to purchase 0.50 shares of the Company's common stock. The exercise price applicable to the warrants is $0.10 per share.
On August 5, 2011, the Company issued 4,000,000 shares of its common stock for a one year consulting services agreement at $0.04 per share. The agreement is with an independent energy consultant specializing in the prospect evaluation, reserve assessment, risk evaluation, subsurface geological and geophysical interpretation, and database management. On August 8, 2011, the Company issued 2,000,000 shares of its common stock at $0.04 per share to a director as part consideration for his efforts in closing the contract with the government of the Republic of Equatorial Guinea.
On September 12, 2011, the Company issued and sold an aggregate of 3,500,000 common stock units at a purchase price of $0.05 per unit receiving proceeds of $176,508. Each unit is comprised of (i) one share of the Company's common stock and (ii) a two-year ½ warrant to purchase 0.50 shares of the Company's common stock. The exercise price applicable to the warrants is $0.10 per share.
On September 14, 2011, the Company issued 200,000 shares of its common stock at $0.04 per share to a consulting firm as one time consideration for advice regarding financing matters.
On September 23, 2011, the Company issued 1,500,000 shares of its common stock at $0.04 for a sixteen month administrative services agreement commencing September 1, 2012. The agreement is with an independent consultant for bookkeeping, contracts proofing and administration services.
On November 7, 2011, the Company executed debt settlement agreement with one of its creditors. The Company issued 3,620,000 shares at $0.04 to settle a payable balance amounting to $144,800.
On December 6, 2011, the Company issued and sold an aggregate of 1,300,000 common stock units at a purchase price of $0.05 per unit receiving proceeds of $68,561. Each unit is comprised of (i) one share of the Company's common stock and (ii) a two-year ½ warrant to purchase 0.50 shares of the Company's common stock. The exercise price applicable to the warrants is $0.10 per Share.
On February 2, 2012, the Company executed debt settlement agreement with one of its creditors. The Company issued 2,500,000 shares at $0.04 to settle a payable balance amounting to $100,000. As of February 29, 2012, the $100,000 amount settled has not had any significant transactions that are requiredbeen included as “shares to be reportedissued” on the balance sheet; the shares were issued subsequent to the year end on March 3, 2012.
On January 30, 2012, the Board of Directors approved the increase in other comprehensive income.the Company’s authorized shares from 75,000,000 to 300,000,000.
In February 2012, the Company received a total of $255,500 in relation to the private placement that closed on April 5, 2012 (Note 11). This amount was shown as “stock subscriptions received” on the balance sheet as of February 29, 2012.
F - 11
Sillenger Exploration Corp.
(An Exploration Stage Company)
Notes to Financial Statements
Years Ended February 29, 2012 and February 28, 2011
| 7 | Stockholders’ Equity (Deficit) (continued) |
Warrants
As of February 28, 2011 and 2010 there were 40,811,000 shares of29, 2012, the Company has the following warrants to purchase common stock issued and outstanding.outstanding:
| Date of issue | Number of Warrants issued | Warrant Exercise Price Per Share | Warrant Expiration Date | |||
| July 27, 2011 | 2,200,000 | $ | 0.10 | July 26, 2013 | ||
| September 12, 2011 | 1,750,000 | $ | 0.10 | September 11, 2013 | ||
| December 6, 2011 | 650,000 | $ | 0.10 | December 7, 2013 | ||
| 4,600,000 | ||||||
The carrying amounts on the accompanying balance sheets for cash, advances, accounts payable and accrued liabilities are computed usingcarried at cost, which approximates fair value.
Fair Value Hierarchy
As of February 29, 2012, the fair value of the investment available for sale is valued under Level 1, except for the warrants component which is valued under Level 2. The investment is the only asset and liability method of accounting. Under the asset and liability method, a deferred tax asset or liability is recognized for estimated future tax effects attributable to temporary differences and carryforwards. The measurement of deferred income tax assets is adjusted by a valuation allowance, if necessary, to recognize future tax benefits only to the extent that, based on available evidence, it is more likely than not those benefits will be realized. The Company��s deferred tax assets were fully reservedmeasured at February 28, 2011 and February 28, 2010.fair value.
F - 12
Sillenger Exploration Corp.
(An Exploration Stage Company)
Notes Toto Financial Statements
Years Ended February 29, 2012 and February 28, 2011
| 9 | Income Taxes |
Income taxes differ from the amount that would be computed by applying the Federal statutory income tax rate of 35% as of February 29, 2012 and 2010