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WESTGATE ACQUISITIONS CORPORATION
TABLE OF CONTENTS
Page
PART I
Item 1.
Business ..............................................................................................................
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Item 1A.
Risk Factors.......................................................................................................... Factors
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Item 1B.
Unresolved Staff Comments................................................................................. Comments
10
Item 2. Properties..............................................................................................................
Properties
10
Item 3.
Legal Proceedings................................................................................................. Proceedings
10
Item 4.
Mine Safety Disclosures....................................................................................... Disclosures
10
PART II
Item 5.
Market for Registrant’sRegistrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities.............................................................................. Securities
10
Item 6.
Selected Financial Data......................................................................................... Data
12
Item 7.
Management's Discussion and Analysis of Financial Condition and
Results of Operations........................................................................................... Operations
12
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk................................ Risk
14
Item 8.
Financial Statements and Supplementary Data...................................................... Data
14
Item 9.
Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure....................................................................................... Disclosure
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Item 9A.
Controls and Procedures....................................................................................... Procedures
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Item 9B
Other Information................................................................................................. Information
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PART III
Item 10.
Directors, Executive Officers and Corporate Governance.................................... Governance
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Item 11.
Executive Compensation...................................................................................... Compensation
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Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.............................................................................................. Matters
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Item 13.
Certain Relationships and Related Transactions and Director Independence........ Independence
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Item 14.
Principal Accounting Fees and Services................................................................ Services
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PART IV
Item 15.
Exhibits, Financial Statement Schedules............................................................... Schedules.
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Signatures............................................................................................................. Signatures
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PART I
Item 1. Business.
Business.
Business Development
History
Westgate Acquisitions Corporation is an exploration stage company incorporated on September 8, 1999 under the laws ofin the State of Nevada. On November 30, 1999, the company filed with the SEC a registration statement on Form SB-2 under the Securities Act of 1933 to register the Company’sCompany’s outstanding shares. The registration statement was subsequently abandoned. On February 6, 2008, the company filed a registration statement on Form 10 under the Securities Exchange Act of 1934.
On December 12, 2013, we finalized the acquisition from Blue Cap Development Corp. of certain mining and/or mineral claims and/or leases located in Sections 15, 16, 21, 22, T 8 S, R 15 E,in the New Mexico Principal Meridian, Lincoln County, New Mexico (the “Claims”). Initially we were to acquire certain other claims located in the vicinity of the acquired Claims, but our final agreement with from Blue Cap substituted the Claims described above.Development Corp. According to SEC Industry Guide No. 7, we are classified or considered an exploration stage mining company, which is defined as a company engaged in the search for mineral deposits or reserves of precious and base metal targets, which are not in either the development or production stage. We have no known mineral reserves and our proposed preliminary studies of the Claims is exploratory in nature.
In anticipation of acquiring the Claims, on July 13, 2012 our Board of Directors unanimously approved a forward split of our 1.5 million issued and outstanding shares of common stock on a twenty (20) shares for one (1) share basis. Contemporaneous with the forward stock split, which became effective on July 18, 2012, three principal stockholders, Edward F. Cowle, H. Deworth Williams and Geoff Williams, agreed to contribute back to the company for cancellation an aggregate of 1,250,000 pre-split shares of common stock. Following the forward stock split and share cancellation, we had 5.0 million shares of common stock issued and outstanding.
In consideration for the Claims, we issued to Blue Cap 1.0 million shares of Westgate’s authorized, but previously unissued common stock. The amount of sharesconsideration was negotiated between the parties and the 1.0 million shares represent 16.67% of Westgate’sWestgate’s 6.0 million total outstanding shares presently outstanding. All references to common stock herein and in our financial statements have been retroactively restated to incorporate the effect of the forward stock-split.
Current Business
Following the acquisition of the Claims we have become engaged in the mineral exploration business. We are in the process of developing an exploration program to search for possible deposits of rare earth elements on the Claims. Rare earth elements are essential for a diverse and expanding array of high-technology applications and for many current and emerging alternative energy technologies, such as electric vehicles, energy-efficient lighting, and wind power. Examples of products that use rare earth elements are computer hard drives, smart phones, TV screens and wind turbines. Rare earth elements are also critical for a number of key defense systems such as lasers, radar, missile-guidance systems and other electronics. Management anticipates that the company will need to secure adequate funding to implement an exploration program. There can be no assurance that we will be able to secure the necessary funding to fulfill our goals, or that any future funding will be available on terms favorable to the company, or at all.
We have engaged the services of Minex Exploration to conduct preliminary studies of claims. We intend to conductour Claims. Our exploration activities will be for rare earth, gold, silver and other minerals in various phases. Therephases, but there can be no assurance that a commercially viable mineral deposit exists on our property. ExtensiveWe believe that extensive exploration will be required before we can make a final evaluation as to the economic and legal feasibility of any potential deposit. We willintend to continue to examine the possibility of acquiring additional viable mineral leases that could potentially enhance our portfolio.
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Exploration of Properties
Our mineral lease properties are located 7 miles northeast of Capitan, in Lincoln County, New Mexico (the “Capitan Property”). The area is generally characterized by an average elevation of approximately 5500 feet and is made up of gentle rising hills and ridges to about 6200 feet to the west and 5600 feet to the east. The ridges and elevation decrease to the south to an elevation of 5800 feet. The highest elevation in the district is Polvadera Mountain at an elevation of 7292 feet, located approximately 6000 feet due North West of our claims.
Terrain
The terrain is moderate rolling to steep, heavily vegetated with grass, juniper, pine, carrizo, and several species of cactus. Exfoliated Alaskite forms talus slopes of cobble to boulder size. Outcrop composes approximately 40% of the claim block, with the remainder composed of loose talus, dirt and cobble sized cover. The elevation varies from 6500 feet on the south and southeast, to nearly 8200 feet in the north and northwest.
All of theThe Claims are located in four blocks in a semi-remote area with no infrastructure in place. The only access to the properties is by historic gravel or dirt roads and trails. There is no current access to water or power, although we do not foresee a need during the firstinitial phases of exploration. Typically, all contract personnel carry their own water and have portable generators for their operations, including phase two drill programs. Drilling operators supply tanker trucks for their water needs.
In the event an ore body is discovered as a result of our exploration programs, significant additional fundingsfunding would be necessary to proceed. In order to satisfyWe believe this need, we anticipatecould be accomplished by seeking a strategic partnership or joint venture with a much larger mining company in order to fund additional heavy exploration drilling, feasibility studies and establishing mining operations. A feasibility study would detail the costs to provide all infrastructure including, but not limited to, pumping water from underground sources or building lakes to hold such water needs, building electrical lines to the area for needed power or using stand-alone large generator systems to provide necessary power. It is our intentWe intend to remain an exploration company and to seek a partner to further explore and operate our properties. Presently, there can be no assurance that we will discover minerals in a commercially viable amount or that we would be able to secure a strategic partner to provide necessary funding to become operational.
Regulatory Requirements
In order to maintain the company’scompany’s claims and/or leases, we must make annual maintenance fee payments to the Bureau Land Management (“BLM”(“BLM”) and State of New Mexico, due the 1st of September of each year. Payment to the BLM is $155 per claim. We currently own 8 BLM mineral leases.
Phase one of our exploration program, completing a preliminary geological report on our BLM mineral lease claims, require no permits or bonding, provided there is no surface land disturbance of more than one-third acre. Phase two, provided preliminary geological reports are favorable, will proceed with a drill program to confirm mineralization on these target areas from the surface to depth. If initial core samples show evidence of rare earth mineralization, a geological, grid maps will be produced to lay out an extensive drill program to define a potential mineable ore body. Phase two will require an “Access“Access and Land Use Permit”Permit” from the BLM and State of New Mexico. Generally, this will require about 30 days for the filing process and cost approximately $12,000 for a bond to assure the reclamation of the subject areas. We anticipateIf we are successful in raising the requisite funds, we believe that processing the paperwork for the permit and securing the requisite bond can be completed during the secondthird quarter of 20142016 so that the permits can be in place to begin phase two during the secondlatter half of 2014.2016.
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Maps of Properties
The following are maps (figure 1) and pictures of the company’scompany’s properties.
History of Claims
Property Location and Description:
The Capitan Property is situated on approximately 165 acres located 7 miles northeast of Capitan, in Lincoln County, New Mexico, in Sections 15, 16, 21 and 22, Township 8 South, Range 15 East, New Mexico Principal Meridian. The property consists of 8 lode mining claims, CAP 3-10. The claims block is located on public land under the administration of the USFS. The Capitan Property is bounded by state and private land to the south. (figure(Figure 1, property map). A long history of mining is associated with the area. Historic mines are found throughout Lincoln and adjoining counties. It should be noted that we have no known mineral reserves and our initial studies of the Claims is exploratory in nature.
Geology:
The Capitan Mountains are an East-West trending range composed of Alaskite, an alkaline feldspar granitoid, which hosts thorium rich mineralization in the form of Thorite. (Griswold, 1959). The claim block is generally underlain by relatively homogeneous Alaskite, which in field sample is off white to pink, fine to medium grained rock, primarily composed of plagioclase with minor quartz and biotite, Mineralization occurs in the form of veins and zones hosted in the Alaskite country rocks.
Minex Exploration was engaged to stake our Claims and preform preliminary geologic assessment of the Capitan Property. Geologic work includes vein identification and mapping, representative outcrop and float sampling, vein rock assaying using Radiation Solutions RS-125, and mapping of structural and lithologic details. Veins are recognizable in hand specimen and via scintillometer readings. The veins are randomly oriented throughout the claim block, and range from less than 1 cm to over 1.5 m width, and a strike length of and from 10cm to 10 meters. Zones of radioactivity were identified using the scintillometer only, as there was no outcrop. These zones could possibly represent a buried vein or the complete erosion of a thorium rich vein and assimilation into the surrounding country rock. Field assay results were representative of the contacts between the host rock which was generally non-radioactive, and the distinct secondary intrusive suite of thorite bearing veins. Nineteen rock samples were collected and are representative of the vein extent on the Capitan Property. Preliminary assay results indicated a presence of Uranium and Thorium, although these results should not be considered conclusive.
Because weWe currently lack the requisite funds to fully explore our mineral claims, we will have to obtain additional funding to fully complete our business plan.claims. In order to raise capital to fund our business plan, the most likely method available to us would be the private sale of securities. Because we are an exploration stage company, it is unlikely that we could make a public sale of securities or be able to borrow any significant sum from either a commercial or private lender. There can be no
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assurance that we will be able to obtain additional funding when and if needed, or that such funding, if available, can be obtained on acceptable terms. It may be necessary for officers, directors or principal stockholders to advance funds and we intend to hold expenses to a minimum and accrue expenses as possible until such time as adequate funding is secured. Further, directors and officers will defer any compensation until such time as our business warrants and adequate funds are available. As of the date hereof, we have not made any arrangements or definitive agreements for additional funding.
We do not intend to hire employees in the immediate future, with the possible exception of part-time clerical assistance on an as-needed basis. Outside advisors or consultants will be used only if they can be obtained for minimal cost or on a deferred payment basis. Management is confident that it will be able to operate in this manner and to continue its search for business opportunities during the next twelve months. Also, we do not anticipate making any significant capital expenditures until we can successfully complete an acquisition or merger.
In the event our exploration program is successful and an ore body is discovered, significant additional funding would be necessary to proceed. In order to satisfy this need, we anticipate seeking a strategic partnership or joint venture with a much larger mining company in order to fund additional heavy exploration drilling, feasibility studies and establishing mining operations. A feasibility study would detail the costs to provide all infrastructure including, but not limited to, pumping water from underground sources or building lakes to hold such water needs, building electrical lines to the area for needed power or using stand-alone large generator systems to provide necessary power. It is our intent to remain an exploration company and to seek a partner to further explore and operate our properties. Presently, there can be no assurance that we will discover minerals in a commercially viable amount or that we would be able to secure a strategic partner to provide necessary funding to become operational.
We anticipate needing to raise additional funds during the next 12 months to complete our exploration commitments.
TOTAL FUNDING REQUIREMENTS -- $35,000$40,000
Phase one of our exploration plan is intended to define possible mineralized zones on our properties, which will further define potential drill targets. We will seek a mineral exploration report from a qualified, licensed geologist, which will describe in detail all of the exploration data, testing results and all other operations performed on the properties as well as a definitive further exploration program with suggested costs to enter into and perform the next phase of the expected exploration.
We estimate that exploration expenditures to complete the initial phase will be approximately $19,300.$23,000. Each phase of our proposed exploration will be assessed to determine whether the results warrant further work. If exploration results on the initial phases do not warrant drilling or further exploration, we will suspend operations on the property. We will then seek additional exploration properties and additional funding with which to conduct the work. In the event that we are unable to obtain additional financing or additional properties, we may not be able to continue active business operations.
Historically, we have incurred operating losses and will not be able to exist indefinitely without securing additional operating funds. In the view of our independent auditors, we require additional funds to maintain our operations and these conditions raise substantial doubt about our ability to continue as a going concern.
Plan Ofof Operations
Our plan of operation reflects our objectives and anticipated growth for the next 12 months and beyond, identifying cash requirements to fulfill our business objectives. We will need to raise additional funds during the next 12 months to complete our exploration commitments and to pay for general business expenses. We believe current funds are sufficient to complete requisite initial geological reports as well as cover general and administrative expenses for at least the next six months. However, we estimate that we will need up to an additional $50,000 during the next twelve months to complete the second phase of exploration and to commence an exploration program on our properties including the cost to exercise the option to acquire the additional claims and general expenses. We intend to explore a possible private placement of our securities and/or debt financing to raise the additional fund, although no definitive plan has been formulated and there can be no assurance that we will be able to realize the necessary funds.
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In the event we complete our planned initial exploration programs and successfully identify a mineral deposit, we will need substantial additional funds for drilling and engineering studies to determine whether the mineral deposit is commercially viable. If we are unable tocannot raise additional funds for this work, we would be unable to proceed, even if a mineral deposit is discovered.
We anticipate that exploration on our properties will be conducted as Phase One (A) and Phase One (B). Because we are an exploration stage company, we have no known mineral reserves and the preliminary studies of our Claims will be exploratory in nature.
Phase One (A)
Goal: Review existing work, check filing status (county, BLM), property visit, Geochem sampling grid pattern for target identification and comprehensive property assessment, preliminary geology map, Plan of Operations completion.
Phase One (A) – Estimated Exploration Costs:
·
:Office
· Office: Publication review, filing review, phone work. Geologist 6 hrs.
$ 450500
·
Field: 10 days
-Geologist+Field Assistant. [geo-$500/day, tech-$300/day for 10 days
$ 8,000
-Lodging [2 rooms Carizozo, 8 nights
$ 1,1001,500
-Flights [two round trip avg.]
$ 1,200
-Contingency [10%]
$ 1,000
·
Supplies
-Truck Rental [10 days at avg. of $175/day]
$ 1,7502,000
-ATV Rental [10 days at $100/day]
$ 1,000
-Analytical tools [xrf, scintillometer, etc.]
$ 1,000
-Sample bags [rock and soil geochem bags]
$ 100
-Miscellaneous supplies [as needed]
$ 4001,000
·
Analysis
-Blanks and Standards [1 blank, 2 standards]
$ 250350
-Shipping costs [to lab or return]
$ 250350
-Analysis [~300 samples at ~$10/sample]
$ 3,000
·
Reporting and Research
-Report final, Phase One (A)
-Geology report
-Updated maps
-Assay data plotted/contoured
-Data base completed
-Geologist, office time-~20 hrs.
$ 1,5002,000
TOTAL Phase One (A)
$21,00023,000
Phase One (B)
Goal: Based on Phase One (A) results, refine targets, locate and perform trenching, obtain metallurgical samples for milling and processing tests. Complete geological and geochemical mapping based on new trench results and ground time. Rank targets, investigate mills, processing options etc. Complete all needed permitting for sampling, trench work, access and related tasks.
Phase One (B) – Estimated Exploration Costs:
·
Field
-Mechanical trenching,~1000 ft.
-Geologist and assistant [3 days at $800/day] **
$ 2,4002,500
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-Geological mapping and map production
-Geologist [5 days at $500/day] **
$ 2,500
-Sampling
-Further infill sampling based on Phase I (A) results
$ 500
·
Supplies
-Trackhoe rental, Kubota KX91 or equivalent
[6 days at $300/day]
$ 1,8002,000
-Sampling supplies [as needed]
$ 400500
-Truck Rental [10 days at avg. of $175/day]
$ 1,750
-ATV Rental [10 days at $100/day]
$ 1,000
-Contingency [10%]
$ 1,1002,000
·
Analysis
-Analysis [~150 samples at ~$10/sample]
$ 1,5002,000
-Shipping
$ 250
·
Reporting and Finalization
-Final property report
-Maps in original and digital format
-Comprehensive database of work results to date
-Geologist and assistant
$ 1,5002,000
TOTAL Phase One (B)
$14,70017,000
Our total exploration expenditures for Phase One (A) and Phase One (B) are expected to be approximately $35,700.$40,000. We currently have approximately $17,000$3,700 in available funds. Each phase of our proposed exploration will be assessed to determine whether the results warrant further work. If exploration results on the initial phases do not warrant drilling or further exploration, we will suspend operations on the property. We will then seek additional exploration properties and additional funding with which to conduct the work. In the event that we are unable to obtain additional financing or additional properties, we may not be able to continue active business operations.
Historically, we have incurred operating losses and will not be able to exist indefinitely without securing additional operating funds. In the view of our independent auditors, we require additional funds to maintain our operations and these conditions raise substantial doubt about our ability to continue as a going concern.
We will not be conducting any product research or development over the next 12 months and do not expect to purchase any plant or significant equipment during that time. We do not have employees and do not expect add employees over the next 12 months, except for possible consultants and part-time clerical help. We anticipate that our current management team will satisfy our requirements for the foreseeable future.
Competition
The exploration for and exploitation of mineral reserves is highly competitive with many local, national and international companies in the marketplace. We must compete against several established companies in the industry that are better financed and/or who have closer working relationships with productive mining companies. WeOne possible plan will most likelybe to seek a strategic relationship with a morean established and larger mining company to provide assistance, if exploration results so warrant. We have not entered into any agreements with any third parties to produce any minerals from our property, nor have we identified any potential partners in that regards, nor is there any assurance we will be able to secure such agreements. If we are unable to identify and/or partner with any third parties to assist us in attaining “production grade”“production grade” minerals, we will likely be unsuccessful in producing any such minerals.
Government Regulation
Because we are engaged in the mineral exploration activities, we are exposed to many governmental and environmental risks associated with our business. We are currently in the initial exploration stages and management has not determined whether significant site reclamation costs will be required.
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Environmental and other government regulations at the federal, state and local level may include:
? ●
surface impact;
? ●
water acquisition and treatment;
? ●
site access;
? ●
reclamation;
? ●
wildlife preservation;
? ●
licenses and permits; and
? ●
maintaining the environment.
Regulatory compliance in the mining industry is complex and the failure to meet and satisfy various requirements can result in fines, civil or criminal penalties or other limitations.
In the eventIf we are able to secure funding necessary to implement a bona fide exploration program, we will be subject to regulation by numerous governmental authorities. In order to maintain our claims, we must make annual payments to the BLM and the State of New Mexico. If we proceed to phase two drilling, we must secure an Access and Land Use Permit. Subsequently, operating and environmental permits will be required from applicable regulatory bodies using technical applications filed by us. The failure or delay in obtaining regulatory approvals or licenses will adversely affect our ability to explore our property and otherwise carry out our business plan.
Any exploration or ultimate production on United States Federal land will have to comply with the Federal Land Management Planning Act, which has the effect generally of protecting the environment. Any exploration or ultimate production on private property, whether owned or leased, will have to comply with the Endangered Species Act and the Clean Water Act. The costs of complying with environmental concerns under any of these acts vary on a case-by-case basis. In many instances the cost can be prohibitive to development. Environmental costs associated with a particular project must be factored into the overall cost evaluation of whether to proceed with the project.
There are noPresently, our only costs to us at the present time except for annual fee payments related to the claims are for annual assessment fees and reclamation bonding requirements of the Bureau of Land Management in connection with compliance with environmental laws. However, because we anticipate engaging in natural resource projects, these costs could occur at any time and the potential liability extensive.
Trademarks and Copyrights
We do not own any patents, trademarks or copyrights.
Employees
We presently do not have any employees and do not anticipate adding employees until our business operations and financial resources so warrant. We consider our current management to be sufficient to satisfy our requirements for the foreseeable future. Our exploration program will be contracted to independent, qualified engineering and consulting firms.
Facilities
Facilities
We currently use as our principal place of business the business office of our President and director, Geoff Williams, in Salt Lake City, Utah. We have no written agreement and currently pay no rent for use of the facilities. At such time as our business warrants and we have sufficient funds, we will likely secure commercial office space from which to conduct business. We have no current plans to secure such commercial office space.
Industry Segments
No information is presented regarding industry segments. We are presently an exploration stage company engaged in the mineral exploration business and considered an exploration stage mining company. Reference is made to the statements of income included in this Form 10-K for a report of our operating history for the past two fiscal years.
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Item 1A.
Risk Factors.
This item is not required for a smaller reporting company.
Item 1B.
Unresolved Staff Comments.
This item is not required for a smaller reporting company.
Item 2.
Description of Property.
We do not presently own any property.
Item 3.
Legal Proceedings.
There are no material pending legal proceedings to which the company or any subsidiary is a party, or to which any property is subject and, to the best of our knowledge, no such action against us is contemplated or threatened.
Item 4.
Mine Safety Disclosures.
Not applicable.
PART II
Item 5.
Item 5. Market for Registrant’sRegistrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
There is not currently, nor has there been, a public trading market for our common stock. As of the date hereof, there are approximately 33 stockholders of record of our common stock. We are requestinganticipate making an application through a broker/dealer to make an initial application to FINRA to have our shares quoted on the OTCBB.OTCQB or OTC Pinks. The application consists of current corporate information, financial statements and other documents as required by Rule 15c2-11 of the Exchange Act.
Inclusion on the OTCQB or OTC Pink will permit price quotations for our shares to be published by that service, although we do not anticipate a public trading market in our shares in the immediate future. Except for the application, to the OTCQB, we have no plans, proposals, arrangements or understandings with any person concerning the development of a trading market in any of our securities. There can be no assurance that our shares will be accepted for quotation and trading on the OTCQB or any other recognized trading market. Also, there can be no assurance that a public trading market will develop following acceptance by the OTCQBfor trading or at any other time in the future or, that if such a market does develop, that it can be sustained.
The ability of individual stockholders to trade their shares in a particular state may be subject to various rules and regulations of that state. A number of states require that an issuer's securities be registered in their state or appropriately exempted from registration before the securities are permitted to trade in that state. Presently, we have no plans to register our securities in any particular state.
Penny Stock Rule
It is unlikely that our securities will be listed on any national or regional exchange or The NASDAQ Stock Market in the foreseeable future. Therefore our shares most likely will be subject to the provisions of Section 15(g) and Rule 15g-9 of the Exchange Act, commonly referred to as the “penny stock”“penny stock” rule. Section 15(g) sets forth certain requirements for broker-dealer transactions in penny stocks and Rule 15g-9(d)(1) incorporates the definition of penny stock as that used in Rule 3a51-1 of the Exchange Act.
The SEC generally defines a penny stock to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions. Rule 3a51-1 provides that any equity security is considered to be a penny stock unless that security is:
| registered and traded on a national securities exchange meeting specified criteria set by the SEC; |
| |
| authorized for quotation on the NASDAQ Stock Market; |
| |
| issued by a registered investment company; |
| |
| excluded from the definition on the basis of price (at least $5.00 per share) or the issuer's net tangible assets; or |
| |
| exempted from the definition by the SEC. |
Broker-dealers who sell penny stocks to persons other than established customers and accredited investors, are subject to additional sales practice requirements. An accredited investor is generally defined as a person with assets in excess of $1,000,000, excluding their principal residence, or annual income exceeding $200,000, or $300,000 together with their spouse.
For transactions covered by these rules, broker-dealers must make a special suitability determination for the purchase of such securities and receive the purchaser's written consent to the transaction prior to the purchase. Additionally, the rules require the delivery, prior to the first transaction, of a risk disclosure document relating to the penny stock market. A broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements must be sent to clients disclosing recent price information for the penny stocks held in the account and information on the limited market in penny stocks. Consequently, these rules may restrict the ability of broker-dealers to trade and/or maintain a market in our common stock and may affect the ability of stockholders to sell their shares.
These requirements may be considered cumbersome by broker-dealers and impact the willingness of a particular broker-dealer to make a market in our shares, or they could affect the value at which our shares trade. Classification of the shares as penny stocks increases the risk of an investment in our shares.
Rule 144
All of the 6,000,000 shares of our common stock presently outstanding are deemed to be “restricted securities”“restricted securities” as defined by Rule 144 under the Securities Act of 1933 (the “Securities Act”). Rule 144 is the common means for a stockholder to resell restricted securities and for affiliates, to sell their securities, either restricted or non-restricted control shares. The SEC amended Rule 144, effective February 15, 2008.
Under the amended Rule 144, an affiliate of a company filing reports under the Exchange Act who has held their shares for more than six months, may sell in any three-month period an amount of shares that does not exceed the greater of:
?●
the average weekly trading volume in the common stock, as reported through the automated quotation system of a registered securities association, during the four calendar weeks preceding such sale, or
?● 1% of the shares then outstanding.
Sales by affiliates under Rule 144 are also subject to certain requirements as to the manner of sale, filing appropriate notice and the availability of current public information about the issuer.
A non-affiliate stockholder of a reporting company who has held their shares for more than six months, may make unlimited resales under Rule 144,provided only that the issuer has available current public information about itself. After a one-year holding period, a non-affiliate may make unlimited sales with no other requirements or limitations.
An important exception to the availability of the amended Rule 144 is that Rule 144 is not available for either a reporting or non-reporting shell company, unless the company:
? ●
has ceased to be a shell company;
? ●
is subject to the Exchange Act reporting obligations;
?
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●
has filed all required Exchange Act reports during the preceding twelve months; and
? ●
at least one year has elapsed from the time the company filed with the SEC, current Form 10 type information reflecting its status as an entity that is not a shell company.
Because we were classified as a “shell”“shell” company, stockholders who currently hold restricted shares of common stock, will not be able to rely on Rule 144 until one year after we ceased to be a shell company and have filed with the SEC adequate information that we are no longer a shell company. On December 17, 2013, we filed a Form 8-K Current Report announcing that were completed the Acquisition Agreement and that we were no longer considered a shell company. The information included in the Form 8-K was intended to be adequate information that would otherwise be included in a registration statements. Accordingly, our stockholders, both affiliates and non-affiliates, would not become eligible to use Rule 144 until one year from the initial filing of the Form 8-K.
We cannot predict the effect any future sales under Rule 144 may have on the market price of our common stock, if a market for our shares develops, but such sales may have a substantial depressing effect on such market price.
Dividends Policy
We have never declared cash dividends on our common stock, nor do we anticipate paying any dividends on our common stock in the foreseeable future.
Item 6.
Selected Financial Data.
This item is not required for a smaller reporting company.
Item 7.
ManagementItem 7. Management’s’s Discussion and Analysis of Financial Condition and Results of Operations.
The following information should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this Form 10-K.
We are an exploration stage company reflecting the acquisition of certain mining and/or mineral claims in December 2013. Ongoing operating expenses, including preparing and filing reports with the SEC, have historically been paid for by stockholder advances. We believe that necessary funds to maintain corporate viability and to fund our planned exploration will most likely be provided by officers, directors or principal stockholders or from private sales of securities, either debt or equity. However, there is no assurance that we will be able to realize such funds on terms favorable to the company, or at all.
Forward Looking and Cautionary Statements
This report contains forward-looking statements relating to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,“may,” “will” “should,“will” “should," “expect,“expect," "intend," "plan," anticipate," "believe," "estimate," "predict," "potential," "continue," or similar terms, variations of such terms or the negative of such terms. These statements are only predictions and involve known and unknown risks, uncertainties and other factors. Although forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment, actual results could differ materially from those anticipated in such statements. 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.
Results of Operations
We haveWestgate has not reportedrealized revenues since its inception. For the year ended December 31, 2014,2015, we incurred a net loss of $40,586,$45,232, compared to a loss of $24,055$40,586 for the year ended December 31, 2013. From inception through2014. For the year ended December 31, 2014, we have a cumulative net loss of $199,225. During 2014,2015, general and administrative expenses increased to $29,333$33,194 compared to $25,937 in 2013,$29,333 during 2014, primarily attributed to an increaseincreases in professional expenses for accounting and legal fees related to requisite filings with the SEC and the Blue Cap transaction completed in December 2013.fees. Also in 2014,2015, interest expense increased to $11,253$12,038 compared to $7,696$11,253 in 2013,2014, due to an increase
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in notes payable to related parties and the accompanying increase in accrued interest. The increasedFrom inception through December 31, 2015, we have recorded a cumulative net loss in 2014 also reflects a gain on forgiveness of debt of $9,595 recorded in 2013 that partially offset the 2013 loss.$244,457.
Liquidity and Capital Resources
ExpensesOngoing expenses incurred during 20142015 and 20132014 have been paid for by advances and loans from a stockholder. At December 31, 2014,2015, we had currenttotal assets consisting of cash of $16,002$3,778 compared to cash of $25,021$16,002 at December 31, 2013. In 2013,2014. Our cash asset was derived from a $25,070 loan from a stockholder made a loan to the company of $25,070.in 2013. At December 31, 2014,2015, we had current liabilities of $167,510$194,518 compared to $141,942$167,510 at December 31, 2013.2014. The increase in liabilities at December 31, 20132015 is primarily attributed to the $17,833$14,255 increase in note payable - related party, from $99,886 at December 31, 2013 to $117,719 at December 31, 2014 to $131,944 at December 31, 2015, due to new loans from stockholders, and the $11,253$12,038 increase in accrued interest – related party, from $29,263 at December 31, 2013 to $40,516 at December 31, 2014 to $52,554 at December 31, 2015, which reflects the increase in related party note payable. The increase was partially offset by the $3,518 decrease in accountsAccounts payable from $12,793also increased $745 to $10,020 at December 31, 2013 to2015 from $9,275 at December 31, 2014. At December 31, 2015, our total stockholders’ deficit was $190,740 compared to $151,508 at December 31, 2014.
Due to our limited cash reserves, we anticipate that we will need tomost likely continue to rely on stockholders to pay expenses until such time as we can successfully find a source of outside funding or that our operations begin to generate revenues.
In the opinion of management, inflation has not and will not have a material effect on our operations until such time as we successfully complete an acquisition or merger. At that time, management will evaluate the possible effects of inflation related to our business and operations following a successful acquisition or merger.
Net Operating Loss
We have accumulated a net operating loss carryforwards of approximately $77,592$244,186 as of December 31, 2014.2015. This loss carry forward may be offset against future taxable income through the year 2034.2035. The use of these losses to reduce future income taxes will depend on the generation of sufficient taxable income prior to the expiration of the net operating loss carryforwards. In the event of certain changes in control, there will be an annual limitation on the amount of net operating loss carryforwards that can be used. No tax benefit has been reported in the financial statements for the year ended December 31, 20142015 because it has been fully offset by a valuation reserve. The use of future tax benefit is undeterminable because we presently have no operations.
Inflation
Inflation
In the opinion of management, inflation has not and will not have a material effect on our operations in the immediate future. Management will continue to monitor inflation and evaluate the possible future effects of inflation on our business and operations.
Recent Accounting Pronouncements
The companyManagement has evaluatedconsidered all recent accounting pronouncements and their adoption hasissued since the last audit of the company’s financial statements. We believe that these recent pronouncements will not had nor is not expected to have a material impacteffect on the company’sour financial position or statements.
In June 2014, the Financial Accounting Standards Board issued Accounting Standards Update No. 2014-10, which eliminated certain financial reporting requirements of companies previously identified as “Development Stage Entities” (Topic 915). The amendments in this ASU simplify accounting guidance by removing all incremental financial reporting requirements for development stage entities. The amendments also reduce data maintenance and, for those entities subject to audit, audit costs by eliminating the requirement for development stage entities to present inception-to-date information in the statements of income, cash flows, and shareholder equity. Early application of each of the amendments is permitted for any annual reporting period or interim period for which the entity’s financial statements have not yet been issued (public business entities) or made available for issuance (other entities). Upon adoption, entities will no longer present or disclose any information required by Topic 915. The Company has adopted this standard and will not report inception to date financial information.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.
Critical Accounting Policies
JOBS Act
The JOBS Act provides that, so long as a company qualifies as an “emerging“emerging growth company,” it will, among other things:
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be exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that its independent registered public accounting firm provide an attestation report on the effectiveness of its internal control over financial reporting;
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be exempt from the “say“say on pay”pay” and “say“say on golden parachute”parachute” advisory vote requirements of the Dodd-Frank Wall Street Reform and Customer Protection Act (the “Dodd-Frank Act”), and certain disclosure requirements of the Dodd-Frank Act relating to compensation of its chief executive officer and be permitted to omit the detailed compensation discussion and analysis from proxy statements and reports filed under the Securities Exchange Act of 1934; and
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instead provide a reduced level of disclosure concerning executive compensation and be exempt from any rules that may be adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotations or a supplement to the auditor’sauditor’s report on the financial statements.
It should be noted that notwithstanding our status as an emerging growth company, we would be eligible for these exemptions as a result of our status as a “smaller“smaller reporting company”company” as defined by the Securities Exchange Act of 1934.
Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. An emerging growth company can therefore delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to take advantage of the benefits of this extended transition period and, therefore, will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk.
This item is not required for a smaller reporting company.
Item 8.
Financial Statements and Supplementary Data.
Financial statements for the fiscal years ended December 31, 20142015 and 20132014 have been examined to the extent indicated in their reports by Sadler, Gibb & Associates, L.L.C, independent registered public accountants and have been prepared in accordance with accounting principles generally accepted in the United States of America and pursuant to regulations promulgated by the SEC.
