American Sierra Gold Corp.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Unless otherwise indicated or the context otherwise requires, all references in this Quarterly Report on Form 10-Q for the period ended January 31,April 30, 2013 (“Report”) to “we,” “us,” “our,” and the “Company” are to American Sierra Gold Corp., a Nevada corporation.
We desire to take advantage of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. This Report contains a number of forward-looking statements that reflect management’s current views and expectations with respect to our business, strategies, future results and events, and financial performance. All statements made in this Report other than statements of historical fact, including statements that address operating performance, the economy, events or developments that management expects or anticipates will or may occur in the future, including statements related to adequacy of funds from operations, cash flows and financing are forward-looking statements. In particular, the words such as “believe,” “expect,” “intend,” “anticipate,” “estimate,” “may,” “will,” “can,” “plan,” “predict,” “could,” “future,���” variations of such words, and similar expressions identify forward-looking statements, but are not the exclusive means of identifying such statements and their absence does not mean that the statement is not forward-looking.
Readers should not place undue reliance on these forward-looking statements, which are based on management’s current expectations and projections about future events, are not guarantees of future performance, are subject to risks, uncertainties and assumptions and apply only as of the date of this Report. Our actual results, performance or achievements could differ materially from historical results as well as the results expressed in, anticipated or implied by these forward-looking statements. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
For a more detailed discussion of some of the factors that may affect our business, results and prospects, see our Annual Report on Form 10-K10-K/A for the year ended July 31, 2012 filed with the Securities and Exchange Commission, on November 21, 2012, as well as various disclosures made by us in this Report and in our other reports we file with the Securities and Exchange Commission, including our periodic reports on Form 10-Q and current reports on Form 8-K. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
| | | | | | | | | Inception | |
| | | nine months ended | | | (January 30, 2007) | |
| | | April 30, | | | through | |
| | | 2012 | | | 2013 | | | April 30, 2013 | |
| Cash flows from operating activities | | | | | | | | | |
| Net loss | | $ | (46 | ) | | $ | (886 | ) | | $ | (6,146 | ) |
Adjustments to reconcile net income loss to net cash used by operating activities: | | | | | | | | | | | | |
| Stock-based compensation | | | | | | | 753 | | | | 753 | |
| Gain on forgiveness of debt | | | | | | | | | | | (478 | ) |
| Loss on write off of mineral property | | | | | | | | | | | 4,851 | |
| Loss on write off of website and joint venture | | | | | | | | | | | 36 | |
| Changes in operating assets and liabilities: | | | | | | | | | | | | |
| Prepaid expenses and other assets | | | 1 | | | | | | | | | |
| Accounts payable and accrued expenses | | | 8 | | | | (7 | ) | | | 5 | |
| Net cash used by operating activities | | | (37 | ) | | | (140 | ) | | | (979 | ) |
| Cash flows from investing activities: | | | | | | | | | | | | |
| Purchases of mineral properties | | | | | | | | | | | (1,059 | ) |
| Website development | | | | | | | | | | | (15 | ) |
| Net cash used by investing activities | | | - | | | | - | | | | (1,074 | ) |
| Cash flows from financing activities: | | | | | | | | | | | | |
| Proceeds from sales of common stock | | | 12 | | | | 40 | | | | 1,427 | |
| Proceeds from loans and notes payable borrowings | | | 10 | | | | 110 | | | | 494 | |
| Repayment of notes payable borrowings | | | | | | | (9 | ) | | | (9 | ) |
| Proceeds from borrowings from related party | | | 4 | | | | | | | | 142 | |
| Net cash provided by financing activities | | | 26 | | | | 141 | | | | 2,054 | |
| Increase (decrease) in cash and cash equivalents | | | (11 | ) | | | 1 | | | | 1 | |
| Cash and cash equivalents at beginning of period | | | 11 | | | | - | | | | - | |
| Cash and cash equivalents at end of period | | $ | - | | | $ | 1 | | | $ | 1 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Supplemental disclosures: | | | | | | | | | | | | |
| Interest paid | | $ | - | | | | | | | $ | 32 | |
| Income taxes paid | | | - | | | | - | | | | - | |
| Non-cash investing and financing activities: | | | | | | | | | | | | |
Common stock issued in connection with conversion of loans and notes payable | | $ | - | | | $ | 145 | | | $ | 48 | |
| | | | | | | | | Cumulative, | |
| | | | | | | | | Inception, | |
| | | Six months | | | Six months | | | January 30, | |
| | | ended | | | ended | | | 2007 Through | |
| | | January 31, | | | January 31, | | | January 31, | |
| | | 2012 | | | 2013 | | | 2013 | |
| | | | | | | | | | |
| Cash flows from operating activities: | | | | | | | | | |
| Net income (loss) | | $ | (20,312 | ) | | $ | (94,339 | ) | | $ | (5,354,527 | ) |
| | | | | | | | | | | | | |
Adjustments to reconcile net (loss) to cash provided (used) by developmental stage activities: | | | | | | | | | |
| Amortization | | | - | | | | - | | | | - | |
| Loss on write off of mineral property | | | - | | | | - | | | | 4,851,271 | |
| Loss on write off of website | | | - | | | | - | | | | 15,673 | |
| Loss on joint venture | | | - | | | | - | | | | 21,269 | |
| Forgiveness of debt | | | - | | | | - | | | | (478,300 | ) |
| Change in current assets and liabilities: | | | | | | | | | | | | |
| Prepaids | | | - | | | | - | | | | - | |
| Deposits | | | - | | | | - | | | | - | |
| Accounts payable and accrued expenses | | | (304 | ) | | | (6,634 | ) | | | 4,850 | |
| Net cash flows from operating activities | | | (20,616 | ) | | | (100,973 | ) | | | (939,764 | ) |
| | | | | | | | | | | | | |
| Cash flows from investing activities: | | | | | | | | | | | | |
| Website development | | | - | | | | - | | | | (15,673 | ) |
| Purchase of Mining Rights | | | - | | | | - | | | | (1,058,598 | ) |
| Net cash flows from investing activities | | | - | | | | - | | | | (1,074,271 | ) |
| | | | | | | | | | | | | |
| Cash flows from financing activities: | | | | | | | | | | | | |
| Proceeds from sale of common stock | | | 29,000 | | | | - | | | | 1,337,000 | |
| Stock subscription payable | | | - | | | | - | | | | 50,000 | |
| Proceeds from related party | | | 3,771 | | | | - | | | | 142,071 | |
| Payments to related party | | | | | | | | | | | | |
| Proceeds of notes payable | | | (20,250 | ) | | | 110,000 | | | | 485,000 | |
| (Payment) of notes payable | | | | | | | | | | | | |
| Convertible note debentures | | | - | | | | (9,250 | ) | | | - | |
| Forgiveness of debt | | | - | | | | - | | | | - | |
| Net cash flows from financing activities | | | 12,521 | | | | 100,750 | | | | 2,014,071 | |
| Net cash flows | | | (8,095 | ) | | | (223 | ) | | | 36 | |
| | | | | | | | | | | | | |
| Cash and equivalents, beginning of period | | | 10,856 | | | | 259 | | | | - | |
| Cash and equivalents, end of period | | $ | 2,761 | | | $ | 36 | | | $ | 36 | |
| | | | | | | | | | | | | |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOWS FOR: | | | | | | | | | |
| Interest | | $ | - | | | $ | - | | | $ | 31,854 | |
| Income taxes | | $ | - | | | $ | - | | | $ | - | |
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING AND INVESTING: | | | | | | | | | | | | |
| Shares issued to settle convertible debenture | | $ | - | | | $ | - | | | $ | 48,500 | |
The accompanying notes are an integral part of these financial statements.
American Sierra Gold Corp.(an Exploratory Stage Enterprise) | | | Common stock and | | | | | | |
| | | additional paid-in capital | | | Accumulated | | | | |
| | | shares | | | amount | | | Deficit | | | Total | |
| Balance at July 31, 2012 | | | 6,391,740 | | | $ | 5,201 | | | $ | (5,260 | ) | | $ | (59 | ) |
| Common stock issued upon conversion of loans | | | 2,600,000 | | | | 144 | | | | | | | | 144 | |
| Common stock issued for cash | | | 800,000 | | | | 40 | | | | | | | | 40 | |
| Common stock issued for services | | | 6,250,000 | | | | 753 | | | | | | | | 753 | |
| Net loss for the nine months ended April 30, 2013 | | | | | | | | | | | (886 | ) | | | (886 | ) |
| Balance at April 30, 2013 | | | 16,041,740 | | | $ | 6,138 | | | $ | (6,146 | ) | | $ | (8 | ) |
The accompanying notes are an integral part of these financial statements.
(FORMERLY C.E. ENTERTAINMENT, INC.)an Exploratory Stage Enterprise)
(AN EXPLORATION STAGE COMPANY)Notes to Financial Statements
NOTES TO FINANCIAL STATEMENTS
January 31,April 30, 2013 - Unaudited
Note 1 -– Business, Recent Events and Summary of Significant Accounting Policies
General Organization and Business
Business- American Sierra Gold Corp. (“American Sierra” or the “Company”) is a Nevada corporation in the exploration stage. Thecorporation. Our Company was incorporated under the laws of the State of Nevada on January 30, 2007. The original business plan of the Company was to engage in the marketing2007, and sale of Ukrainian classical music. Effectiveeffective May 19, 2009, the Companywe changed itsour name from C.E. Entertainment, Inc. to American Sierra Gold Corp. by way of a merger with itsa wholly owned subsidiary, American Sierra Gold Corp., which was formed solely for the purpose of a change in name. In addition, the Companyand we also changed its focus to aour business plan involvingto involve the acquisition, exploration, development, mining, and production of precious metals, with emphasis on gold and silver.
The CompanyProposed Exchange Offer - We are a publicly-owned precious metal mineral acquisition, exploration and development Company. Medinah Gold Inc. (“MGI”) is considered to be in the exploration stage since it has not established the existence of a commercially minable depositprivately-owned property holding and therefore has not reached the development stage.
In November 2010, the Company acquired a 100% undivided interest in sixmining company with mineral property mining claims in the Adams Ridge areacountry of British Columbia, Canada (“Adams Ridge Claims”) totaling approximately 2,479 hectares. The Adams Ridge ClaimsChile, formed in Nevada in 1999. We are held in trust for the Company by Carl Von Einsiedel, trusteeproposing to exchange 63,914,540 shares of our common stock to holders of all of the BC Land Trust,outstanding common stock of MGI (the “Exchange”). Following the exchange, MGI’s operations will become the core business of the combined entity. As of May 31, 2013, there are 16,041,740 shares of ASGC common stock outstanding owned by existing ASGC shareholders. Giving effect to the Exchange, shareholders previously owning shares of MGI would own approximately 80% of total shares outstanding, and MGI would become a wholly-owned subsidiary of ASCG. These relative security holdings and the composition of our Board of Directors and Executive Officers, the proposed structure, the size of the combining entities and the terms of the exchange of equity interests were considered in determining the accounting acquirer. Based on the weight of these factors, it was concluded that MGI is the accounting acquirer and its historical financial statements will become those of the registrant after the exchange.
Recent Events and Change of Control - During December 2012 through April 2013, in exchange for cash of approximately $185,000, including amounts previously loaned, we issued 3,300,000 shares of our common stock to the majority owner of MGI. In April 2013, our Board of Directors approved the appointment of three directors and executive officers, who were directors and executive officers of MGI, and ASGC’s former sole officer and director resigned, whose resignation did not arise from any disagreement on any matter relating to our operations, policies or practices, nor regarding the general direction of ASGC. We have also changed our primary business address from Seattle, Washington to that of MGI in Beaverton, Oregon. In connection with services to be provided as required bydirectors, we issued 2,000,000 shares of our common stock to each of the B.C. Mineral Tenure Act. The claimsthree new directors. As a result, owners of our common stock as of April 30, 2013, that previously did not own shares, now own a majority of our common stock. There have been registered with the Governmentno adjustments recognized in these financial statements relating to this change of British Columbia. The Company’s plan of operation is to conduct mineral exploration activities on the Adams Ridge Claims in order to assess whether the sites possess mineral deposits of gold or other precious metals in commercial quantities, capable of commercial extraction. The Company has ceased exploration activities due to budgetary constraints and, therefore, has not established whether there are mineral reserves at the Adams Ridge Claims sites, nor can there be any assurance that the Company will be able to commence exploration activities.control.
In February 2007, the Company commenced a capital formation activity through a Private Placement Offering (“PPO”), exempt from registration under the Securities Act of 1933, to raise up to $38,000 through the issuance 30,400,000 shares of its common stock (post forward stock split), par value $0.001 per share, at an offering price of $0.00125 per share. As of March 31, 2007, the Company closed the PPO and received proceeds of $38,000. The Company also commenced an activity to effect a Registration Statement on Form SB-2 with the Securities and Exchange Commission to register 30,400,000 shares of its outstanding shares of common stock (post forward stock split) on behalf of selling stockholders. The Registration Statement on Form SB-2 was filed with the SEC on November 7, 2007, and declared effective on November 20, 2007. The Company will not receive any of the proceeds of this registration activity once the shares of common stock are sold.
Basis of presentation
and interim financial statements- Our accounting and reporting policies conform to U.S. generally accepted accounting principles applicable to exploration stage enterprises. Changesenterprises pursuant to the provisions of Topic 26, “Accounting for Development Stage Enterprises,” as it devotes substantially all of its efforts to acquiring and exploring mining interests that will eventually provide sufficient net profits to sustain the Company’s existence. Until such interests are engaged in classification of 2011 amountsmajor commercial production, the Company will continue to prepare its financial statements and related disclosures in accordance with entities in the development stage. Mining companies subject to Topic 26 are required to label their financial statements as an “Exploratory Stage Company,” pursuant to guidance provided by SEC Guide 7 for Mining Companies.
Interim financial statements – The accompanying unaudited financial statements have been madeprepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the instructions to conform to current presentations.Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and note disclosures required by U.S. generally accepted accounting principles for complete financial statements. The accompanying unaudited financial information should be read in conjunction with the audited consolidated financial statements, including the notes thereto, as of and for the fiscal year ended July 31, 2012, included in our Annual Report on Form 10-K/A filed with the Securities and Exchange Commission. The information furnished in this report includes all adjustments (consisting of normal recurring adjustments), which are, in the opinion of management, necessary for a fair presentation of our financial position, results of operations and cash flows for periods presented. The results of operations for the interim periods ended April 30, 2013 are not necessarily indicative of the results for any future period.
Use of estimates
- The preparation of financial statements in conformity with generally accepted accounting principles 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 amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and cash equivalents -For- For purposes of the statement of cash flows, we consider all cash in banks, money market funds, and certificates of deposit with a maturity of less than three months to be cash equivalents.
Property and Equipment
The Company values its investment in property and equipment at cost less accumulated depreciation. Depreciation is computed primarily by the straight line method over the estimated useful lives of the assets ranging from five to thirty-nine years.
Fair value of financial instruments and derivative financial instruments
- We have adopted Accounting Standards Codification regarding Disclosure Aboutabout Derivative Financial Instruments and Fair Value of Financial Instruments. The carrying amounts of cash, accounts payable, accrued expenses, and other current liabilities approximate fair value because of the short maturity of these items. These fair value estimates are subjective in nature and involve uncertainties and matters of significant judgment, and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect these estimates. We do not hold or issue financial instruments for trading purposes, nor do we utilize derivative instruments in the management of foreign exchange, commodity price or interest rate market risks.
Federal income taxes
- Deferred income taxes are reported for timing differences between items of income or expense reported in the financial statements and those reported for income tax purposes in accordance with Accounting Standards Codification regarding Accounting for Income Taxes, which requires the use of the asset/liability method of accounting for income taxes. Deferred income taxes and tax benefits are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for tax loss and credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred taxes are provided for the estimated future tax effects attributable to temporary differences and carryforwards when realization is more likely than not.
Internal Website Development Costs
Under FASB ASC350-50, Website Development Costs , costs and expenses incurred during the planning and operating stages of the Company's website are expensed as incurred. Under ASC 350-50, costs incurred We record a valuation allowance in the website application and infrastructure development stages are capitalized by the Company and amortized to expense over the website's estimated useful life or period of benefit. As of July 31, 2010, and 2009, the Company capitalized $10,573 related to its internal-use website development related to a new website as work in process. During 2009, the old website development costs and related accumulated amortization were written-off to expense resulting in a loss on disposal in thefull amount of $2,267.deferred tax assets since realization of such tax benefits has not been determined by our management to be more likely than not
Net loss per share -Basic net loss per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Basic and diluted loss per share are the same since diluted loss per share excludes the effect of common stock equivalents, warrants to purchase 33,333 shares of common stock, because inclusion in the computation would be anti-dilutive.
Mineral Properties
- The Company is engaged in the business of acquiring and exploring properties that may contain precious metals, with an emphasis on gold and silver. If precious metals are found, the Company’s intention is to develop, mine and produce the precious metals. Mineral claim and other property acquisition costs are capitalized as incurred. Such costs are carriedincurred and reported as an asset of the Company until it becomes apparent through exploration activities that the cost of such properties will not be realized through mining operations. Mineral exploration costs are expensed as incurred, and when it becomes apparent that a mineral property can be economically developed as a result of establishing proven or probable reserve, the exploration costs, along with mine development cost, arewould be capitalized. The costs of acquiring mineral claims, capitalized exploration costs, and mine development costs are recognized for depletion and amortization purposes under the units-of-production method over the estimated life of the probable and proven reserves. If mineral properties, exploration, or mine development activities are subsequently abandoned or impaired, any capitalized costs are charged to operations in the current period.operations.
Impairment of Long-Lived Assets
- The Company evaluates the recoverability of long-lived assets and the related estimated remaining lives at each balance sheet date. The Company records an impairment or change in useful life whenever events or changes in circumstances indicate that the carrying amount may not be recoverable or the useful life has changed.
At the beginning of November 2010, the Company abandoned the Urique Project in Mexico and the Discovery Day Gold Project in California. Subsequent to the fiscal year ended July 31, 2010, the Company also abandoned its mineral property interests and Joint Venture project with Trinity Alps Resources, Inc.
Deferred Offering Costs
The Company defers as other assets the direct incremental costs of raising capital until such time as the offering is completed. At the time of the completion of the offering, the costs are charged against the capital raised. Should the offering be terminated, deferred offering costs are charged to operations during the period in which the offering is terminated.
Deferred Acquisition Costs
The Company defers as other assets the direct incremental costs of raising capital until such time as the offering is completed. At the time of the completion of the offering, the costs are charged against the capital raised. Should the offering be terminated, deferred offering costs are charged to operations during the period in which the offering is terminated.
Common Stock Registration Expenses
- The Company considers incremental costs and expenses related to the registration of equity securities, with the SEC, whether by contractual arrangement as of a certain date or by demand, to be unrelated to original issuance transactions. As such, subsequent registration costs and expenses are reflected in the accompanying financial statements as general and administrative expenses, and are expensed as incurred.
Net Income Per ShareRecently Issued Accounting Pronouncements - As of Common Stock
We have adopted Accounting Standards Codification regarding Earnings per Share, which requires presentation of basic and diluted EPS onfor the faceperiods ended April 30, 2013 and July 31, 2012, the Company does not expect any of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computationrecently issued accounting pronouncements to the numerator and denominator of the diluted EPS computation. In the accompanying financial statements, basic earnings per share of common stock is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. We do not have a complex capital structure requiring the computationmaterial impact on its financial condition or results of diluted earnings per share.operations.
Note 2 - Uncertainty, going concern:– Going concern
At January 31, 2013,The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company was engagedas a going concern. We have reported net losses and our operating activities have used cash since inception. We expect losses to continue in the near future, specifically, with respect to continued funding of exchange related costs prior to consummation of the proposed exchange offer, and after the exchange as we grow and further develop our operations. We had an accumulated deficit of approximately $5.3 million at July 31, 2012 and $6.1 million at April 30, 2013. We have funded our operations through sales of common stock and short-term borrowings, recently from related parties, and require additional funds for future operating expenses. While we have an agreement with a business and had suffered losses from exploration stage activitiescompany affiliated with its majority shareholders to date. In addition,continue to fund costs associated with the Company has minimal operating funds. Althoughproposed exchange offer, our management is currently attempting to identify future business opportunities and is seeking additional sources of equity or debt financing,financing. However, there is no assurance that these activitiessuch financing will be successful. Accordingly,available on a timely basis, on terms favorable to us or obtained in sufficient amounts necessary to meet our needs. In the Company must relyevent that we cannot obtain additional funds on its current officera timely basis, we may be forced to perform essential functions without compensation unless and until the business generates revenue. No amounts have been recordedcurtail or cease our activities, which would likely result in the accompanying financial statements for the valueloss to investors of the officer’s services, as it is not considered material.all or a substantial portion of their investment. These factors raise substantial doubt about the ability of the Company to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that mightmay result from the outcome of this uncertainty.
Note 3 - Related Party Loans
As of July 31, 2011, a loan from an individual who is a former Director, officer, and stockholder of the Company amounted to $27,301 (July 31, 2009 - $27,301). The loan was provided for working capital purposes, and is unsecured, non-interest bearing, and has no terms for repayment. In May 2011, this note was forgiven. The Company recognized the forgiveness as other income.
As of July 31, 2011, the Company owed to the former officers amounted to $62,500. The loan was provided for working capital purposes, and is unsecured, non-interest bearing, and has no specific terms of repayment. In May 2011, this note was forgiven. The Company recognized the forgiveness as other income.
As of July 31, 2011, loans from the Company’s former officer amounted to $48,499 (July 31, 2010 - $106,000). The loan was provided for working capital purposes, and is unsecured, non-interest bearing, and has no specific terms of repayment. In May 2011, this note was forgiven. The Company recognized the forgiveness as other income.
As of January 31, 2013, The Company received a loan from an officer in the amount of $3,771. The loan was provided for working capital purposes, and is unsecured, non-interest bearing, and has no specific terms of prepayment.
Note 4 - Loans Payable
On February 11, 2009, the Company borrowed $75,000 from a third party for working capital purposes. The loan is unsecured, bears interest at 8 percent per annum, and was due on February 11, 2010. The loan term has not been extended and is due on demand. In May 2011, this note was forgiven. The Company recognized the forgiveness as other income.
On April 3, 2009, the Company borrowed $125,000 from a third party under a promissory note. The loan is unsecured, bears interest at 10 percent per annum, and was due and payable on April 3, 2010. On July 20, 2009, the Company made a principal payment of $40,000 on this loan. On October 2, 2009, the Company made a principal payment of $25,000 on this loan. On November 9, 2009, the Company made a principal payment of $15,000 on this loan. The loan term has not been extended and is now due on demand. In May 2011, this note was forgiven. The Company recognized the forgiveness as other income.
On September 30, 2010, the Company received a loan in the amount of $110,000. The terms of this loan are in negotiations and thus there are no specific terms of repayment. In May 2011, this note was forgiven. The Company recognized the forgiveness as other income.
On October 12, 2010, the Company received a loan in the amount of $110,000. The terms of this loan are in negotiations and thus there are no specific terms of repayment. In May 2011, this note was forgiven. The Company recognized the forgiveness as other income.
On March 12, 2012, the Company received a loan in the amount of $10,000. The loan is callable at any time and carries an effective rate of 6%.
Note 3 – Mineral Properties
In November 2010, we acquired an undivided interest in six mineral claims in the Adams Ridge area of British Columbia, Canada, which claims are held in trust by a trustee of the BC Land Trust, as required by the B.C. Mineral Tenure Act, and registered with the Government of British Columbia. While our plan was to conduct mineral exploration activities on the claims in order to assess whether the sites possess mineral deposits of gold or other precious metals in commercial quantities, capable of commercial extraction, during 2011, we ceased exploration activities due to budgetary constraints and, therefore, have not established whether there are mineral reserves at the claim sites, nor can there be any assurance that we will be able to commence exploration activities.
In 2009, we entered into a property option agreement with a Canadian public company that owned ten mining concessions in southwest Chihuahua State, Mexico, and rights to acquire an additional six mining concessions in the same area (together, the “Property”), to acquire the Property. We could acquire a 90% in the Property for payments aggregating approximately $300,000 prior to April 30, 2010, and $250,000 in each of the next three years and funding capital expenditures of approximately $2.5 million during the next three years, and could later acquire the remaining 10% dependent upon future events. During the year-ended July 31, 2010, we abandoned the property option and costs were written off.
In December 2009, we entered into a joint venture agreement with an unrelated company pursuant to which we would make payments to the joint venture of $2 million over two years and in exchange would acquire a 75% ownership interest in entities owning and operating certain mineral claims and property for the production of gold in Northern California. We initially paid $125,000, in part, as a signing fee and, in part, for the exclusivity period to negotiate a definitive agreement pursuant to the parties’ non-binding letter of intent. During the year-ended July 31, 2010, the parties mutually ended the joint venture and related costs were written off.
Note 4 – Notes and Loans Payable
During May through October2011, pursuant to terms of convertible notes payable, we received approximately $54,000 for working capital purposes. Convertible notes bear interest at 8% with $45,000 due in February 2012 and $9,000 due in September 2012, and are convertible at the Companyholder’s election into shares of our common stock. The exercise price for conversion is determined based on a discount from market, the related beneficial conversion value of which was immaterial. During the year ended July 31, 2012, we issued 1,536,786 shares of our common stock upon conversion of approximately $36,000 of convertible notes. Convertible notes outstanding at July 31, 2012, approximated $9,000 and were repaid in full in September 2012.
During the fiscal year ended July 31, 2012, we received $35,000 from an investor, who is the majority stockholder of MGI, in exchange for a loan$10,000 convertible note payable, and loans payable, which bear interest at 6%, are due on demand with no specific repayment terms. Pursuant to terms of a December 5, 2012 Loan and Stock Purchase Agreement, in December 2012, we issued 2,600,000 shares of our common stock upon conversion of the convertible note and other prior loans totaling approximately $145,000, and during the three months ended April 30, 2013, we issued 800,000 shares of our common stock in exchange for cash of $40,000. Pursuant to terms of the agreement, the investor has agreed to make future loans to us with interest at 6% per annum with the investor having the right to purchase shares of our common stock at $0.05 per share in the amount of $75,000. The loan is callable at any time and is unsecured, non-interest bearing, and has no specific terms of prepayment.
The balance of these notes payable at January 31, 2013 was $145,000.future loans.
Note 5 – Convertible DebentureCommon Stock
OnEffective in May 18, 2011, the Company entered into2013, we affected a Securities Purchase Agreement with Asher Enterprises, Inc., a Delaware corporation. In connection therewith, the Companyone (1) new for fifteen (15) old reverse stock-split for our issued a convertible promissory note to Asher Enterprises, Inc. in exchange for principal funds in the amount of $45,000. The maturity date of the promissory note is February 23, 2012, whereupon all principal and interest outstanding shall be due. The holder of the note has the right to convert principal and interest outstanding into shares of common stock of the Company. The Company did not calculate the intrinsic bond discount because of immateriality. The Company has agreed to use the proceeds for general working capital purposes. This offering and sale of securities was exempt from registration under Section 4(2) of the Securities Act of 1933, as amended.
During the period between November 2011 and April 2012, Asher Enterprises, Inc. converted $35,750 of the convertible note payable into 23,051,783 shares of common stock. The current balance ofAll references to share amounts have been adjusted to give effect to this convertible note payable as of July 31, 2012 was $500. This note was fully paid off in September 2012.and prior stock-splits.
On December 12, 2011, the Company entered into a Securities Purchase Agreement with Asher Enterprises, Inc., a Delaware corporation. In connection therewith, the Company issued a convertible promissory notePursuant to Asher Enterprises, Inc. in exchange for principal funds in the amount of $8,750. The maturity date of the promissory note is September 14, 2012, whereupon all principal and interest outstanding shall be due. The holder of the note has the right to convert principal and interest outstanding into shares of common stock of the Company. The Company did not calculate the intrinsic bond discount because of immateriality. The Company has agreed to use the proceeds for general working capital purposes. This offering and sale of securities wasprivate placement offerings exempt from registration, under Section 4(2) of the Securities Act of 1933, as amended. The balance of this convertible note payable as of July 31, 2012 was $8,750. This note was fully paid off in September 2012.
Note 6 - Common Stock
Onon January 30, 2007, the Companywe issued 52,000,0003,466,667 shares of our common stock (post forward stock split) valued at a price of $0.00025 per share to Directors and officers for cash proceeds of $13,000, (See Note 9).
Inand in February 2007, the Company commenced a capital formation activity through a private placement offering, exempt from registration under Regulation S of the Securities Act of 1933, as amended (the “Securities Act”), to raise up to $38,000 through the issuance 30,400,000we issued 2,026,667 shares of its common stock (post forward stock split), par value $0.001 per share, at an offering price of $0.00125 per share. As of March 31, 2007, the Company fully subscribed the offering, and received gross proceeds of $38,000, whereupon it issued 30,400,000 shares of itsour common stock to 38 foreign, non-affiliated investors.investors for cash of $38,000.
In addition, on November 7, 2007, the Company filed a Registration Statement on Form SB-2 under the Securities Act with the SECPursuant to register 30,400,000 shares of its common stock (post forward stock split) on behalf of selling stockholders. The Registration Statement was declared effective by the SEC on November 20, 2007. The Company did not receive any proceeds from this registered sale of its common stock.
Effective May 19, 2009, the Company declared a 40:1 forward stock split of its authorized, issued, and outstanding common stock. As a result, the authorized capital of the Company was increased from 50,000,000 shares of common stock with a par value of $0.001 to 2,000,000,000 shares of common stock with a par value of $0.001, and correspondingly its issued and outstanding common stock increased from 2,060,000 shares to 82,400,000 shares. The accompanying financial statements and related notes thereto have been adjusted accordingly to reflect this forward stock split.
In July 2009, the Company commenced a private placement offering,offerings exempt from registration, under Regulation S of the Securities Act, to raise up to $137,500 through the offer and sale of up to 183,334in July 2009 we issued 12,222 shares of itsour common stock (post forward stock split), par value $0.001 per share, at an offering priceto new investors for cash of $0.75 per share to two (2) non-U.S. individuals. Gross proceeds of $137,469 were received from these investors before July 31, 2009. As a result, onapproximately $137,000, and in September 1, 2009, the Companywe issued 100,00016,667 shares of our common stock (post forward stock split) and, on November 16, 2009, the Company issued an additional 83,334 sharesto investors for cash of common stock (post forward stock split) to the investors in connection with this offering.$100,000.
In September 2009, the Company commenced aPursuant to private placement offering,offerings exempt from registration, under Regulation Sin November 2009 we issued 23,256 units for gross proceeds of the Securities Act, to raise up to $100,000 through the issuance 250,000 shares$300,000, with each unit consisting of itsone share of our common stock (post forwardand a two-year warrant to purchase one share of our common stock split), par value $0.001at a price of $22.65 per share, and in December 2009, we issued 54,645 units for gross proceeds of $500,000, with each unit consisting of one share of our common stock and a two-year warrant to purchase one share of our common stock at an offeringa price of $0.40$16.05 per share. On October 1, 2009, the Company issued 250,000 shares of common stock (post forward stock split) to investors in connection with this offering thereupon receiving $100,000 in gross proceeds.
In Novemberconnection with a former joint venture, during December 2009 the Company canceled 19,000,000through March 2010, we issued a total of 26,667 shares of our common stock (post forward stock split) that were forfeited by Mr. Wayne Gruden, a former Director and officer ofto the Company, in connection with his departure.other joint venture party.
On November 20, 2009, the Company closedPursuant to a private placement offering whereupon itexempt from registration, in May 2010 we issued 348,83753,333 units at a price of $0.86 per unit for gross proceeds of $300,000. This offer and sale of securities was exempt from registration under Regulation S of the Securities Act. Each$200,000, with each unit consistedconsisting of one share of our common stock par value $0.001 per share, and onea five-year warrant that gives the holder thereof the option to purchase one share of our common stock at a price of $1.51 over$6.60 per share.
Pursuant to terms of a periodDecember 5, 2012 Loan and Stock Purchase Agreement, in December 2012, we issued 2,600,000 shares of two years fromour common stock upon conversion of the convertible note and other prior loans totaling approximately $145,000, and during the three months ended April 30, 2013, we issued 800,000 shares of our common stock in exchange for cash of $40,000. Terms of the agreement the investor agrees to make future loans to us with interest at 6% per annum with the investor having the right to purchase shares of our common stock at $0.05 per share in the amount of future loans.
In connection with appointment of three new directors and officers of the Company in April 2013, for services to be provided we issued to each director 2,000,000 shares of our common stock. We have recorded the estimated fair value of shares, based on closing market prices at the date approved by our Board of Directors, of $720,000, which is included in general and administrative expense for the subscription agreement.three months ended April 30, 2013.
On December 11,Share Issuance Agreement - In October 2009, we entered into a Share Issuance Agreement (the “Share Agreement”) with an investment relations firm, whereby the Company closed a private placement offering whereupon it issued 819,672 units at a price of $0.61 per unit for gross proceedsfirm would advance up to $6 million to the Company, with an option for an additional $6 million, for the purchase of $500,000. The offer and sale of securities under PPO #5 was exempt from registration under Regulation S of the Securities Act.. Each unit consistedunits comprised of one share of Company common stock par value $0.001 per share, and onea warrant that gives the holder the option to purchase one share of Company common stock, par value $0.001 per share,stock. The agreement period expired December 31, 2011, and could be extended for an additional 12 months at athe discretion of either party. The price of $1.07 with a term of two years.
On October 19, 2009, as required per the Company’s joint venture agreement with Trinity Alps Property (“Trinity Alps Joint Venture”), the Company issued 2,000,000 restricted shares of common stock, par value $0.001 per share, and a warrant that gave the holder the optioneach unit is equal to purchasing up to an additional 2,000,000 shares of common stock, par value $0.001 per share,75 percent of the Company at an exerciseweighted average closing price of $1.25 per share over a period of five years. The issuance of these securities was exempt from registration under Section 4(2) of the Securities Act. This satisfied all equity issuances as required by the joint venture agreement. As of October 19, 2009, the 2,000,000 shares of common stock were valued at $1,660,000. The warrant to purchase 2,000,000 shares of the common stock of the Company, were later forfeitedas quoted by Trinity Alps Property in connection with the termination of the Trinity Alps Joint Venture and canceledNASDAQ, or other source agreed to by the Company.
On December 8, 2009,parties, for the Company issued anpreceding ten days prior to each subscription advance to purchase units. The purchase price under each Purchase Warrant to acquire one additional 300,000 shares of common stock (post forward stock split) to Trinity Alps Property in connection with the Trinity Alps Joint Venture. This transaction was valued at $249,000 on the date of issuance. This offering was exempt from registration under Section 4(2) of the Securities Act.
On March 22, 2010, the Company issued an additional 100,000 shares of common stock (post forward stock split) to Trinity Alps Property in connection with the Trinity Alps Joint Venture. The issuance of these securities was exempt from registration under Section 4(2) of the Securities Act.
On May 26, 2010, the Company closed a private placement offering whereupon it issued 800,000 units at a price of $0.25 per unit for gross proceeds of $200,000. The offer and sale of these securities was exempt from registration under Regulation S of the Securities Act. Each unit consisted of one share of common stock par value $0.001 per share, and one warrant that gaveshall be 175 percent of the holderunit price at which the option to purchase one share of common stock, par value $0.001 per share, at a price of $0.44 over a period of five years.unit containing the Purchase Warrant being exercised was issued.
During the period ending July 31, 2012, the Company issued 23,051,783 for cash for $48,500.
On May 30, 2012, the Company affected a one (1) new for fifteen (15) old reverse stock split for the Company’s issued and outstanding shares of common stock. This resulted in the authorized shares to decrease from 2,000,000,000 to 133,333,334 common stock and the outstanding balance of shares decreased from 91,253,626 to 6,083,576, all with a par value of $0.001. The record date of the reverse split was May 22, 2012.
Warrants
As of January 31, 2013, the Company had warrants outstanding as follows:
| Grant Date | | Number | | | Exercise Price | | Expiration Date |
| | | | | | | | |
| January 15, 2010 | | | 500,000 | | | $ | 1.25 | | January 15, 2015 |
| May 25, 2010 | | | 800,000 | | | $ | 0.44 | | May 26, 201 |
| Total | | | 1,300,000 | | | | | | |
Note 7 - Income Taxes
The provision (benefit) for income taxes for the years ended July 31, 2012, and 2011, were as follows:
| | | Year Ended July 31, | |
| | | 2012 | | | 2011 | |
| | | | | | | |
| Current Tax Provision: | | | | | | |
| Federal- | | | | | | |
| Taxable income | | $ | - | | | $ | - | |
| | | | | | | | | |
| Total current tax provision | | $ | - | | | $ | - | |
| | | | | | | | | |
| Deferred Tax Provision: | | | | | | | | |
| Federal- | | | | | | | | |
| Loss carryforwards | | $ | 26,785 | | | $ | 68,928 | |
| Change in valuation allowance | | | (26,785 | ) | | | (68,928 | ) |
| | | | | | | | | |
| Total deferred tax provision | | $ | - | | | $ | - | |
The Company had deferred income tax assets as of July 31, 2012, and 2011, as follows:
| | | July 31, | |
| | | 2012 | | | 2011 | |
| | | | | | | |
| Loss carryforwards | | $ | 914,260 | | | $ | 887,475 | |
| Less - Valuation allowance | | | (914,260 | ) | | | (887,475 | ) |
| | | | | | | | | |
| Total net deferred tax assets | | $ | - | | | $ | - | |
The Company provided a valuation allowance equal to the deferred income tax assets for the years ended July 31, 2012, and 2011, because it is not presently known whether future taxable income will be sufficient to utilize the loss carryforwards.
As of July 31, 2012 and 2011, the Company had approximately $5,260,188, and $5,181,408, respectively, in tax loss carryforwards that can be utilized in future periodsApril 30, 2013, there are warrants outstanding to reduce taxable income, and will begin topurchase 33,333 shares of our common stock at a per share price of $18.75, which expire in January 2015. In May 2010, we issued warrants for the year 2027.purchase of 53,333 shares at a per share price of $6.60; these warrants expired unexercised in May 2012.
Note 8 -6 – Related Party Transactions
As described in Note 4, in January 2007,During 2009 and 2010, the Company issued 52,000,000 sharesreceived working capital advances, substantially all of common stock (post forward stock split)which was cash, from its then directors, officers and majority shareholders pursuant to Directors and officersterms of the Company for cash proceeds of $13,000.loans totaling $310,000. As described in Note 3, on September 9, 2008, Mr. George Daschko resigned from the positions of President and Director. Mr. George Daschko also sold his interest in the Company of 24,000,000 shares of common stock (post forward stock split) to the newly appointed Director and officer of the Company.
As described in Note 4, as of July 31, 2010, amounts were due on demand, and consisted of $75,000, $45,000 and $110,000 from the three individuals. In May 2011, Company owed $27,301 (July 31, 2009 - $27,301)management determined through discussions with the parties that there was mutual agreement amounts previously reported as loans payable, were considered to an individual who is a former Director, officer,have been satisfied in full, and stockholderthus cancelled or forgiven, in connection with, among other things, departure of service of the individuals with the Company.
As described in Note 4, as ofDuring the fiscal year ended July 31, 2010,2012, the Company owed toreceived a loan from an officer in the former officers amounted to $62,500.amount of $3,771. The loan was provided for working capital purposes, and is unsecured, non-interest bearing, and has no specific terms of repayment.
As described in Note 4, as of July 31, 2010, a loan for working capital purposes from an officerprepayment, and stockholder of the Company amounted to $106,000. The loan is unsecured, non-interest bearing, and has no specific terms of repayment.
On September 29, 2009, the Company entered into a Consulting Agreement (the “Consulting Agreement”) with Mr. Johannes Petersen, whereby Mr. Petersen will serve as a Director and Chief Financial Officer of the Company. Pursuant to the terms of the Consulting Agreement, the Company will pay Mr. Petersen $5,000 per month, and grant to him 1,000,000 restricted shares of the Company’s common stock as compensation for providing services as a Director. On October 14, 2009, the Company’s Chief Executive Officer, Mr. Wayne Gruden, issued a private warrant to Mr. Johannes Petersen, providing him the right to acquire 1,000,000 shares of the Company’s common stock (the “Warrant Shares”) currently held by Mr. Gruden, for a three-year period. Such warrant is being provided to Mr. Petersen in connection with his Consulting Agreement described above. Simultaneously with issuing Mr. Petersen the warrant, on October 15, 2009, Mr. Gruden also agreed to return for cancellation 19,000,000 shares of the Company’s common stock currently held under his name. The cancellation of the 19,000,000 shares of common stock was effected subsequent to October 31, 2009. As of July 31, 2010, the Company owed Mr. Johannes Petersen $17,500 for his consulting services.
On November 3, 2009, the Company entered into a Consulting Agreement (the “Consulting Agreement #2”) with Mr. Wayne Gruden, whereby Mr. Gruden serves as a Director and President of the Company. Pursuant to the terms of the Consulting Agreement #2, the Company will pay Mr. Gruden $40,000 for Director Services from August 1, 2009 to November 30, 2009. Starting on December 1, 2009, the Company will pay $5,000 per month to Mr. Gruden. As of July 31, 2010, the Company owed Mr. Wayne Gruden $45,000 for his consulting services.
Note 9 - Commitments and Contingencies
During 2009 and 2008, the Company had an operating lease commitment for office space with an unrelated party. The monthly lease rate was $214 plus miscellaneous fees. For the years ended July 31, 2009, and 2008, the Company recorded rent expense of $2,200, and $2,449, respectively. The Company terminated the operating lease commitment as part of the change in its business plan.
On October 1, 2009, the Company entered into an operating lease agreement for office space with an unrelated party. The quarterly lease rate is $319. Rent expense for the year ended July 31, 2010, was $1,317.
As ofremains due at April 30, 2011, the Company made arrangements to use space currently occupied by Mr. Vandeberg. The Company pays $500 per month for use of this space as its corporate offices. The Company plans to remain in this space until it is no longer suitable for its operations or circumstances demand otherwise.
Note 10 - Contracts and Agreements
Mineral Property Option Agreement
On April 30, 2009, the Company entered into a property option agreement (the "Option Agreement") with Yale Resources Ltd., a Canadian public company (“Yale”). Yale holds a 100 percent interest in ten (10) mining concessions covering approximately 28,830 hectares in southwest Chihuahua State, Mexico. Yale also holds options to acquire an additional six (6) mining concessions covering approximately 276 hectares in the same area (the total of the mining concessions known as the “Property”).2013.
Pursuant to the terms of a September 2009 Consulting Agreement with an individual to serve as one of our directors and officers, we issued 66,667 restricted shares of our common stock, and agreed to pay $5,000 per month thereafter. In connection with this agreement one of our other former directors and officers agreed to return for cancellation 1,266,667 shares of our common stock previously issued, and in November 2009, we entered into a consulting agreement with this former director and officer pursuant to which we agreed to pay $40,000 upon entering into the Option Agreement, American Sierraagreement and $5,000 per month thereafter.
In connection with appointment of three new directors and officers of the Company in April 2013, for services to be provided we issued to each director 2,000,000 shares of our common stock. We have recorded the estimated fair value of shares, based on closing market prices at the date approved by our Board of Directors, of $720,000, which is included in general and administrative expense for the three months ended April 30, 2013. We have also agreed to pay one of the directors $5,000 per month for services to be provided. Additionally, in April 2013, we agreed to pay $5,000 to each of two individuals appointed as a Board Advisor. One of the Board Advisors was granted two (2) exclusiveour sole director and separate rights and options (the “First Option” and the “Second Option”)executive officer prior to acquire undivided legal and beneficial interests of up to 100 percent in the Property free and clear of all liens, charges, and claims of others.April 2013. The other Board Advisor is representative for our majority shareholder.
In order to exercise the First Option, which gives the Company an undivided 90 percent interest in the Property, the Company is required to (a) make the following payments to Yale: an initial payment of $300,000 (already paid by the Company); $250,000 on or before April 30, 2011; $250,000 on or before April 30, 2012; $250,000 on or before April 30, 2013; (b) fund the following expenditures: $50,000 prior to April 30, 2010; an additional $500,000 prior to April 30, 2011; an additional $800,000 prior to April 30, 2012; an additional $1,000,000 prior to April 30, 2013; and (c) make the following additional payments: $50,000 upon successful completion of a National Instrument 43-101 compliant technical report; $50,000 upon the commencement of a drilling program on the Property on or prior to August 1, 2009, (payable in stock at the election of the optionor set at the price of the first financing of the Company); $50,000 upon successful completion of the first year’s drilling work program (payable in stock at the election of the optionor set at the price of the first financing of the Company); $70,000 on or before April 30, 2011, (payable in stock at the election of the optionor set at the price of the first financing of the Company); $70,000 on or before April 30, 2012, (payable in stock at the election of the optionor set at the price of the first financing of the Company); and $70,000 on or before April 30, 2013, (payable in stock at the election of the optionor set at the price of the first financing of the Company).
Provided the Company exercises the First Option to acquire the 90 percent undivided interest in the Property, the Company may then exercise the Second Option by (a) issuing to Yale an additional 500,000 shares of common stock (post forward stock split); (b) completing sufficient drilling in order to calculate a resource estimate on or before the seventh anniversary of the effective date of the Option Agreement; and (c) paying to Yale $0.75 for every equivalent ounce of silver identified from the resource estimate prepared for the Property.
During the year-ended July 31, 2010, the company abandoned the mineral property and any costs related to the acquisition of the property have been written off.
Share Issuance Agreement
On October 12, 2009, the Company entered into a Share Issuance Agreement (the “Share Agreement”) with Tobermory Holding Ltd., a corporation organized under the laws of Nevis (“Tobermory”), whereby the Company has provided a subscription arrangement to Tobermory to advance funds and purchase up to $6,000,000 of units of the Company’s securities, with an option to purchase up to an additional $6,000,000 of units, until December 31, 2011. The completion date of December 31, 2011, may be extended for an additional 12 months at the discretion of either the Company or Tobermory.
Under the Share Agreement, each unit consists of one share of common stock of the Company, and a warrant (the “Purchase Warrant”) to purchase an additional share of common stock of the Company. The price of each unit is equal to 75 percent of the weighted average closing price of common stock of the Company, as quoted by NASDAQ, or other source agreed to by the parties, for the preceding ten days prior to each subscription advance to purchase units. The purchase price under each Purchase Warrant to acquire one additional share of common stock shall be 175 percent of the unit price at which the unit containing the Purchase Warrant being exercised was issued.
The Company shall use the proceeds under the Share Agreement for operating expenses, acquisitions, working capital, and general corporate activities.
Joint Venture Agreement
On October 19, 2009, the Company entered into a Joint Venture Agreement (the “JV Agreement”) with Trinity Alps Resources, Inc. (“Trinity Alps”), whereby the Company will contribute up to a total of $2,000,000 over a period of two years in order to obtain a 75 percent ownership interest in the entities owning and operating certain mineral claims and property for the production of gold covering approximately 950 acres in Northern California. The Company paid to Trinity Alps the aggregate sum of $125,000, in part, as a signing fee and, in part, for the exclusivity period to negotiate a definitive agreement pursuant to the parties’ non-binding letter of intent, which funds will go toward the ultimate $2,000,000 to be contributed by the Company to obtain its 75 percent interest. Under the terms of the Venture Agreement, the Company will contribute an additional $150,000 at closing and $150,000 within three months of closing (collectively, the “First Semester Payment”), as well as $300,000 within six months of closing (the “Second Semester Payment”). Both the First Semester Payment and Second Semester Payment shall be included in the aggregate sum of $2,000,000 to be contributed by the Company no later than two years from closing, to obtain its 75 percent interest.
In furtherance of the JV Agreement, the parties intend to form two entities to hold and operate the mineral claims, respectively. The Company shall receive an immediate 7 percent ownership stake in each of such entities in exchange for its initial contributions, and thereafter, will incrementally increase its ownership interest by 1 percent for each additional $40,000 contributed. Once such increases reach 40 percent, the Company shall be capped at a 40 percent ownership interest level in each entity until the full $2,000,000 is contributed and earmarked for expenditure with respect to the properties, at which point, the Company’s ownership interest shall automatically increase to 75 percent in each entity.
Further, and as an additional inducement for Trinity Alps to enter into the Transaction, the Company shall, at closing, issue to Trinity Alps 2,000,000 shares of the Company’s common stock and warrants to purchase an additional 2,000,000 shares of common stock Such shares and warrants will be held in trust, and issued in increments of 500,000 shares and warrants, respectively, at certain intervals following the closing.
Additionally, in accordance with the terms of the JV Agreement, the Company will grant Trinity Alps the right to designate such number of individuals to the Company’s Board of Directors as to constitute one-third of the full membership of the Board during the term of the Venture Agreement. After the completion of the term of the Venture Agreement, the number of individuals designated by Trinity Alps as members of the Board of Directors of the Company may be reduced from one-third to one-fifth of the full membership of the Board.
On December 8, 2009, the Company closed the JV Agreement with Trinity Alps. At closing, the Company (1) contributed $150,000 to an escrow account for the benefit of Trinity Alps, and (2) issued 2,000,000 shares of the Company’s common stock and warrants to purchase an additional 2,000,000 shares of the common stock to Trinity Alps.
This transaction has been accounted for using the equity method of accounting as the Company is been deemed to have significant influence over the operations of the Joint Venture. All equity contributions will be offset by losses suffered by the Joint Venture.
During the year-end, the company ended the Joint Venture agreement and has written off any costs associated with the property and Joint Venture.
Note 11 – Business Combination
On November 29, 2012, the Company terminated the agreement and plan of merger entered into with Medinah Gold, Inc. As a result of the termination, the Company withdrew the registration statement on Form S-4. The Company and Medinah Gold, Inc. mutually agreed to the termination agreement.
The Company now plans to offer an exchange of securities directly with Medinah shareholders on terms and conditions similar to the original merger agreement. The Company is proposing for Medinah to become a majority owned subsidiary pursuant to an exchange offer. Upon the exchange, Medinah shareholders can elect to have their shares converted into common shares of American Sierra Gold Corp on a one-for-one basis, which is expected to approximately 64,061,040 shares of common stock.
Following the exchange of a majority of the Medinah shares, the exchange will be accounted for as a majority owned subsidiary, whereby ASGC will be the continuing entity for financial reporting purposes and will be deemed, for accounting purposes, to be the acquirer of Medinah.
Note 12 - Recent Accounting Pronouncements
In December 2010, the FASB issued updated guidance on when and how to perform certain steps of the periodic goodwill impairment test for public entities that may have reporting units with zero or negative carrying amounts. This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2010, with early adoption prohibited. The adoption of this standard update did not impact the Company’s consolidated financial statements.
In May 2011, the FASB issued guidance to amend certain measurement and disclosure requirements related to fair value measurements to improve consistency with international reporting standards. This guidance is effective prospectively for public entities for interim and annual reporting periods beginning after December 15, 2011, with early adoption by public entities prohibited. The Company is currently evaluating this guidance, but does not expect its adoption will have a material effect on its consolidated financial statements.
In June 2011, the FASB issued new guidance on the presentation of comprehensive income that will require a company to present components of net income and other comprehensive income in one continuous statement or in two separate, but consecutive statements. There are no changes to the components that are recognized in net income or other comprehensive income under current GAAP. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2011, with early adoption permitted. The Company is currently evaluating this guidance, but does not expect its adoption will have a material effect on its consolidated financial statements.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
In this Report, unless otherwise specified, all dollar amounts are expressed in United States dollars. All references to “common stock” refer to the common shares in our capital stock.
OVERVIEW
Cautionary Statement for Forward-Looking Statements - This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are an exploration stage company focused on acquiring, exploringsubject to known and developing precious metal mineral properties. We were formed in Nevada on January 30, 2007. Atunknown risks, uncertainties and assumptions about us that may cause our 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 such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the timenegative of our incorporation, we were incorporatedsuch terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those listed under the name “C.E. Entertainment, Inc.,heading “Risk Factors” and those listed in our other Securities and Exchange Commission filings. The following discussion should be read in conjunction with our Financial Statements and related Notes thereto included elsewhere in this report. Unless the context otherwise requires, references in this report to “we,” and our original business plan was to engage in“us,” “ASGC,” or the sales and marketing of Ukrainian classical music.
On May 19, 2009, we changed our name“Company” refer to American Sierra Gold Corp. by way
The following is intended to provide information necessary to understand our unaudited condensed financial statements and highlight certain other information which, in the opinion of management, will enhance a mergerreader’s understanding of our financial condition, changes in financial condition and results of operations. In particular, the discussion is intended to provide information with respect to significant trends and material changes in our financial position and operating results of our business during the quarterly periods ended April 30, 2013. The following should be read in conjunction with our unaudited condensed consolidated financial statements and accompanying notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q and with our audited consolidated financial statements and accompanying notes thereto appearing in our Annual Report on Form 10-K/A for the fiscal year ended July 31, 2012 (the “Form 10-K”).
Overview
Proposed Exchange Offer - We are a publicly-owned precious metal mineral acquisition, exploration and development company. Medinah Gold Inc. (“MGI”) is a privately-owned property holding and mining company with mineral property mining claims in the country of Chile, formed in Nevada in 1999. We are proposing to exchange 63,914,540 shares of our common stock to holders of all of the outstanding common stock of MGI (the “Exchange”). Following the exchange, MGI’s operations will become the core business of the combined entity. As of May 31, 2013, there are 16,041,740 shares of ASGC common stock outstanding owned by existing ASGC shareholders. Giving effect to the Exchange, shareholders previously owning shares of MGI would own approximately 80% of total shares outstanding, and MGI would become a wholly-owned subsidiary American Sierra Gold Corp., whichof ASCG. These relative security holdings and the composition of our Board of Directors and Executive Officers, the proposed structure, the size of the combining entities and the terms of the exchange of equity interests were considered in determining the accounting acquirer. Based on the weight of these factors, it was formed solely forconcluded that MGI is the purposeaccounting acquirer and its historical financial statements will become those of changingthe registrant after the exchange.
Recent Events and Change of Control - In April 2013, our name. In addition toBoard of Directors approved the name change, weappointment of three directors and executive officers, who were directors and executive officers of MGI, and ASGC’s former sole officer and director resigned. We have also changed our intendedprimary business purposeaddress from Seattle, Washington to that of precious metal mineral exploration, development and production.
Further, effective May 19, 2009,MGI in Beaverton, Oregon. In connection with services to be provided as directors, in April 2013, we conducted a 40:1 forward stock splitagreed to issue 2,000,000 shares of our common stock to each of the three new directors, which shares were issued in May 2013. Additionally, commencing in December 2012 through April 2013, in exchange for cash of approximately $185,000, including previously loaned, we issued 3,300,000 shares of our common stock to the majority owner of MGI and outstanding common stock.one of the Company’s Advisors. As a result, owners of our authorized capital stock increased from 50,000,000 shares of common stock $0.001 par value per share, to 2,000,000,000as of April 30, 2013, that previously did not own shares, of common stock, $0.001 par value per share.
On May 30, 2012, we conductednow own a one (1) new for fifteen (15) old reverse stock split of our issued and outstanding shares of common stock on the Over-the-Counter Bulletin Board. As a result, our authorized capital decreased from 2,000,000,000 shares of common stock to 133,333,334 shares of common stock and the issued and outstanding decreased from 91,253,626 shares of common stock to 6,391,730 shares of common stock, all with a par value of $0.001. Unless specifically stated otherwise, all share amounts referenced in this Item 2 will refer to post-forward stock split share amounts.
Mining Properties
Our primary business focus is to evaluate, acquire, explore and develop precious metal mineral properties in North America; primarily gold properties. In November 2010, we acquired a 100% undivided interest in six mineral claims in the Adams Ridge area of British Columbia, Canada (the “Adams Ridge Claims”) totalling approximately 2,479 hectares. We are in the exploration stage with respect to the Adams Ridge Claims.
Our plan is to conduct mineral exploration activities on the Adams Ridge Claims in order to assess whether the sites possesses mineral deposits of gold or other precious metals in commercial quantities, capable of commercial extraction. We have not yet commenced exploration activities due to budgetary constraints and, therefore, have not established whether there are mineral reserves at the Adams Ridge Claims sites. There is no assurance that we will be able to commence exploration activities and, if we do, that we will find mineral deposits at the sites.
Even if we do eventually discover a mineral reserve on one of our sites, there can be no assurance that we will be able to develop the property into a producing mine and extract those resources. Both mineral exploration and development involve a high degree of risk and few properties that are explored are ultimately developed into producing mines.
We will only acquire additional mineral rights if an opportunity arises that we believe would justify the expenditure and we have sufficient capital available to make the acquisition.
Government Regulation
Mining operations and exploration activities are subject to various federal, state, provincial and local laws and regulations in the United States and in Canada, which govern prospecting, development, mining, production, exports, taxes, labor standards, occupational health, waste disposal, protectionmajority of the environment, mine safety, hazardous substances and other matters.
A “mineral reserve” is defined by the Securities and Exchange CommissionCompany’s common stock. There have been no adjustments recognized in its Industry Guide 7 (which can be viewed over the Internet at http://www.sec.gov/divisions/corpfin/forms/industry.htm#secguide7) as that partthese consolidated financial statements relating to this change of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination. The probability of an individual prospect ever having a “reserve” that meets the requirements of the Securities and Exchange Commission's Industry Guide 7 is extremely remote; in all probability our mineral resource property does not contain any 'reserve' and any funds that we spend on exploration will probably be lost.control.
To obtain a Free Miner's Certificate,Going Concern - The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which is required to hold a mining claim in British Columbia, Section 8(1)contemplate continuation of the B.C. Mineral Tenure Act (MTA) stipulates thatCompany as a corporation must be registered undergoing concern. We have reported net losses and our operating activities have used cash since inception. We expect losses to continue in the British Columbia Business Corporations Act. Section 8(2)near future, specifically, with respect to continued funding of exchange related costs prior to consummation of the MTA stipulatesproposed exchange offer, and after the exchange as we grow and further develop our operations. We had an accumulated deficit of approximately $5.3 million at July 31, 2012 and $6.1 million at April 30, 2013. We have funded our operations through sales of common stock and short-term borrowings, recently from related parties, and require additional funds for future operating expenses. While we have an agreement with a company affiliated with its majority shareholders to continue to fund costs associated with the proposed exchange offer, our management is currently attempting to identify future business opportunities and is seeking additional sources of equity or debt financing. However, there is no assurance that an individual applicant must eithersuch financing will be available on a residenttimely basis, on terms favorable to us or obtained in sufficient amounts necessary to meet our needs. In the event that we cannot obtain additional funds on a timely basis, we may be forced to curtail or cease our activities, which would likely result in the loss to investors of Canadaall or be authorized to work in Canada. Asa substantial portion of their investment. These factors raise substantial doubt about the Company is not registered in British Columbia, our Adams Ridge Claims are held in trust for the Company by Carl Von Einsiedel, trusteeability of the BC Land Trust. The mineral title claims have been registered with the Government of British Columbia. A copy of the trust agreement is incorporated by reference herein to this Annual Report as Exhibit 10.5.
Going Concern Consideration
Concerns have been raised by our accountants about our abilityCompany to continue as a going concern. While no formal steps have been taken byThe accompanying consolidated financial statements do not include any adjustments to reflect the Company, due topossible future effects on the doubt about our ability to continue as a going concern, werecoverability and classification of assets or the amounts and classifications of liabilities that may inresult from the future explore new business opportunities that we believe would be beneficial to our stockholders. Historically, we have been able to raise a limited amountoutcome of capital through private placements of our equity stock, but we are uncertain about our continued ability to raise funds privately. If we are unable to secure adequate capital to continue our acquisition and exploration activities, our business may fail and our stockholders may lose some or all of their investment.this uncertainty.
CRITICAL ACCOUNTING POLICIES
Critical accounting policies - Mineral property acquisition, exploration and related costs are expensed as incurred unless proven and probable reserves exist and the property may commercially be mined. When it has been determined that a mineral property can be economically developed, the costs incurred to develop such property, including costs to further delineate the ore body and develop the property for production, may be capitalized. Interest costs, if any, allocable to the cost of developing mining properties and to constructing new facilities are capitalized until operations commence. Mine development costs incurred either to develop new ore deposits, expand the capacity of operating mines, or to develop mine areas substantially in advance of current production are also capitalized. All such capitalized costs, and estimated future development costs, are then amortized using the units-of-production method over the estimated life of the ore body. Costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations.
Costs of abandoned projects are charged to operations upon abandonment. The Company evaluates, at least quarterly, the carrying value of capitalized mining costs and related property, plant and equipment costs, if any, to determine if these costs are in excess of their net realizable value and if a permanent impairment needs to be recorded. The periodic evaluation of carrying value of capitalized costs and any related property, plant and equipment costs are based upon expected future cash flows and/or estimated salvage value.when abandoned. The Company currently does not have any capitalized mining costs and therefore no adjustments are needed.costs.
See also Note 1 to the Notes to the Financial Statements included in this Report, which disclosure is incorporated herein by reference.Impact of Inflation - Inflation has not had a material effect on our operations.
RESULTS OF OPERATIONS
For easeResults of presentation in the following discussions of “Results of Operations” and “Liquidity and Capital Resources”, we round amounts less than one million dollars to the nearest thousand dollars and amounts greater than one million dollars to the nearest hundred thousand dollars.
Comparison of Results for the Six Months Ended January 31, 2013 and 2012
RevenuesOperations
We have notnever generated revenues since our inception on January 30, 2007, and do not anticipate generating any revenues unless we are successful at locating commercial quantitiesable to develop mining properties. Our general and administrative expenses consist primarily of minerals on one or morelegal, accounting and investor relations fees, and other office expenses. During the three months ended April 30, 2013, we issued shares of our Adams Ridge Claims sites,common stock to our new directors and others and recognized approximately $752,000 of stock-based compensation expense, which is included in general and administrative expenses. Following is a summary of general and administrative expenses (in thousands):
| | | three months ended | | | nine months ended | |
| | | April 30, | | | April 30, | |
| | | 2012 | | | 2013 | | | 2012 | | | 2013 | |
| Revenues | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
| General and administrative expenses | | | | | | | | | | | | | | | | |
| Legal | | | 13 | | | | 33 | | | | 13 | | | | 97 | |
| Accounting | | | 5 | | | | 2 | | | | 14 | | | | 14 | |
| Consulting and other professional fees | | | 5 | | | | 4 | | | | 6 | | | | 19 | |
| Stock-based compensation expense | | | - | | | | 752 | | | | - | | | | 752 | |
| Other | | | - | | | | 1 | | | | 7 | | | | 4 | |
| Net loss | | $ | 23 | | | $ | 792 | | | $ | 40 | | | $ | 886 | |
Our expenses vary from period, depending in large part to the availability of cash. Since commencing the proposed exchange offer in 2012, legal costs have increased relating to the proposed exchange offer and are ableexpected to extract and sell such minerals.be relatively more than prior year amounts until the exchange is complete.
Operating ExpensesLiquidity and Capital Resources
AsWe had a working capital deficit (excess of current liabilities over current assets) of $59,000 at July 31, 2012 and $8,000 at April 30, 2013. We do not have sufficient sources of funding to enable us to carry out our stated plan of operations over the next twelve months. Our cash resources decrease, weflows have had to commensurately decrease our operating expenses.been as follows (in thousands):
For the six months ended January 31, 2013 and 2012, we incurred $55,365 and $1,688, respectively, in total operating expenses, a period-to-period increase of $53,677.| | | nine months ended April 30, | |
| | | 2012 | | | 2013 | |
| Cash used by operating activities | | $ | (37 | ) | | $ | (140 | ) |
| Cash used by investing activities | | | - | | | | - | |
| Cash provided by financing activities | | | 26 | | | | 141 | |
| Increase (decrease) in cash | | $ | (11 | ) | | $ | 1 | |
The only expenses that weOperating activities used cash of $140,000 during the nine months ended April 30, 2013 as compared to $37,000 during the comparative prior year period. Cash used in operating activities relates to funding our net losses, most significant of which results from legal and other professional fees incurred with the proposed exchange offer. We expect operating activities to continue to use cash in the six months ended January 31, 2013 were consulting, investor relations, legal fees, bank charges, accounting expenses and other office expenses. The most significant increases in period-to-period expenses were for consulting services, investor relations, accounting and legal services.
Interest Expensenear future.
We had total interest expenseno investing activities during the periods presented, due primarily to the absence of $180 foravailable funding.
Our financing activities provided cash of $141,000 during the sixnine months ended January 31, 2013, compared to $1,072 for the six months ended January 31, 2012.
Net Loss
We had a net loss of $55,545 for the six months ended January 31, 2013, compared to a net loss of $2,760 for the six months ended January 31, 2012, an increase in net loss of $52,785. The period-to-period decrease in net loss was due to a significant decrease in operating expenses as discussed above.
LIQUIDITY AND CAPITAL RESOURCES
As of January 31, 2013, we had current assets totaling $36 and total liabilities of $153,621, primarily consisting of a note payable in the amount of $145,000 and accounts payable and accrued expenses in the amount of $4,850. We had a working capital deficit of $153,585 and a deficit accumulated during the exploration stage of $5,354,527 at January 31, 2013. The following table summarizes our assets, liabilities and working capital at January 31, 2013 and October 31, 2012.
| | | At January 31, 2013 | | | At October 31, 2012 | |
| | | | | | | |
| | | | | | | | |
| | | | | | | | |
Operating Activities
We had negative cash flow from operating activities of $55,365 during the six months ended January 31,April 30, 2013, as compared to negative cash flow from operating activities of $1,688$26,000 during the sixcomparative prior year period. During the nine months ended January 31, 2012.April 30, 2013, borrowings provided $110,000 and sales of our common stock provided $40,000, as compared to $10,000 provided by borrowings and $12,000 provided by sales of our common stock during the comparative prior year period. Financing activities are expected to increase as we raise capital from equity financing to fund future operations and to provide additional working capital.
Investing Activities
Cash used in investing activities during the six months ended January 31,Off-Balance Sheet Arrangements - As of April 30, 2013, and 2012 was $nil, respectively, since we did not acquirehave any mining rights during those periods. Net cash flows from investing activities from our inception, January 30, 2007, through January 31, 2013, was $1,074,271, substantially all of which was spent on acquiring mineral rights.
Financing Activities
We had financing activities during the six months ended January 31, 2013, which provided net cash of $100,750 to us, as compared with financing activities during the six months ended January 31, 2012, which provided net cash of $12,521 to us.
Net Cash Flow
Our cash and cash equivalents decreased by $223 during the six month period ended January 31, 2013, as compared to a decrease of $8,095 during the six months ended January 31, 2012.
Moving forward, we plan to seek out additional debt and/or equity financing to pay costs and expenses associated with our filing requirements with the Securities and Exchange Commission and conduct our exploration activities. We anticipate that we may need approximately $25,000 in financing within the next six months. The sale of additional equity securities, if undertaken by the Company and if accomplished, may result in dilution to our stockholders. We cannot assure you, however, that future financing will be available in amounts or on terms acceptable to us, or at all. If we are unable to secure adequate capital to continue our acquisition and exploration efforts, it will have a material adverse affect on our financial position, our business may fail and our stockholders may lose some or all of their investment.
GOING CONCERN CONSIDERATION
The Company’s financial statements in this Report have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As shown in the accompanying financial statements, the Company has no revenues and has accumulated losses since inception. These factors raise substantial doubt regarding the Company's ability to continue as a going concern.
The continuation of the Company as a going concern is dependent upon the continued financial support from its stockholders, the ability of the Company to obtain necessary equity and/or debt financing, and the attainment of profitable operations. The financial statements contained in this Report do not include any adjustments related to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue as a going concern.
MINERAL PROPERTIES
We currently have a 100% interest in six mineral claims in the Adams Ridge area of British Columbia. For more information about these claims, see the section of above entitled “Overview” contained in this Report, which disclosure is incorporated herein by reference.
CAPITAL EXPENDITURES
We do not plan to make any capital expenditures over the next six months.
OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
See Note 13 to the Notes to the Financial Statementsarrangements, as defined in this Report, which disclosure is incorporated herein by reference.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKItem 303(a) (4) (ii) of SEC Regulation S-K.
We are not required to provide disclosure under this item because we are a smaller reporting company.
ITEMItem 4. CONTROLS AND PROCEDURES3. Quantitative and Qualitative Disclosures about Market Risk
Evaluation of Not applicable.
Item 4. Controls and Procedures
Disclosure Controls and Procedures
Our executive officer evaluatedProcedures. As of the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation, under the supervision and with the participation of our senior management, including our Chief Executive Officer, who is also our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures.
Based upon that evaluation, our Chief Executive Officer, who is also our Chief Financial Officer, concluded that our disclosure controls and procedures (as definedare not effective for gathering, analyzing and disclosing the information that we are required to disclose in Rules 13a-15(e) and 15d-15(e)reports filed under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Report. Based on this evaluation, he concluded that our disclosure controls and procedures are effective to ensure that information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934, as amended, (i) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and (ii) is accumulated and communicated to our management, as appropriate, to allow timely decisions regarding required disclosure. Our disclosure controls and procedures include components of our internal control over financial reporting and, as such, are designed to provide reasonable assurance that such information is accumulated and communicated to our management. Our executive officer’s assessment of the effectiveness of our internal control over financial reporting is expressed at the level of reasonable assurance that the control system, no matter how well designed and operated, can provide only reasonable, but not absolute, assurance that the control system’s objectives will be met (see the section below in this Item 9A entitled Limitations on the Effectiveness of Internal Controls).
amended.
Changes in Internal Controls OverControl over Financial Reporting
Reporting.There have been no changes in our internal controlscontrol over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934, as amended) that occurred during the six monthsfiscal quarter ended January 31,April 30, 2013, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on the Effectiveness of Internal Controls
Our executive officer does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving our objectives and our executive officer concluded that our disclosure controls and procedures are effective at that reasonable assurance level. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the internal control. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.
This report of our executive officer shall not be deemed to be filed for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are not aware of any pending or threatened litigation against us or our officer and director in his capacity as such that could have a material impact on our operations or finances.
We are not required to provide disclosure under this item because we are a smaller reporting company.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.During December 2012 through April 2013, in exchange for cash of approximately $185,000, including amounts previously loaned, we issued 3,300,000 shares of our common stock to the majority owner of MGI. In April 2013, our Board of Directors approved the appointment of three directors and executive officers, who were directors and executive officers of MGI, and ASGC’s former sole officer and director resigned, whose resignation did not arise from any disagreement on any matter relating to our operations, policies or practices, nor regarding the general direction of ASGC. We have also changed our primary business address from Seattle, Washington to that of MGI in Beaverton, Oregon. In connection with services to be provided as directors, we issued 2,000,000 shares of our common stock to each of the three new directors. As a result, owners of our common stock as of April 30, 2013, that previously did not own shares, now own a majority of our common stock.
Pursuant to terms of a December 5, 2012 Loan and Stock Purchase Agreement, in December 2012, we issued 2,600,000 shares of our common stock upon conversion of the convertible note and other prior loans totaling approximately $145,000, and during the three months ended April 30, 2013, we issued 800,000 shares of our common stock in exchange for cash of $40,000. Terms of the agreement the investor agrees to make future loans to us with interest at 6% per annum with the investor having the right to purchase shares of our common stock at $0.05 per share in the amount of future loans.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
We are not required to provide disclosure under this item because we do not have any mining operations.
ITEM 5. OTHER INFORMATION
None.
The Exhibit Index attached to this Report is incorporated herein by reference.
Certain of the agreements filed as exhibits to this Report contain representations and warranties by the parties to the agreements that have been made solely for the benefit of the parties to the agreement. These representations and warranties:
| · | may have been qualified by disclosures that were made to the other parties in connection with the negotiation of the agreements, which disclosures are not necessarily reflected in the agreements; |
| · | may apply standards of materiality that differ from those of a reasonable investor; and |
| · | were made only as of specified dates contained in the agreements and are subject to subsequent developments and changed circumstances. |
Accordingly, these representations and warranties may not describe the actual state of affairs as of the date that these representations and warranties were made or at any other time. Investors should not rely on them as statements of fact.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| | AMERICAN SIERRA GOLD CORP. | |
| | | | |
Date: March 16, 2012June 17, 2013 | By: | /s/ James VandebergLarry Regis | |
| | | James VandebergLarry Regis | |
| | | Principal Executive Officer and Principal Accounting and Financial Officer
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| | | | |
| Exhibit No. on EDGAR | | Description of Exhibit | | Location |
| 2.1 | | Agreement and Plan of Merger by and among American Sierra Gold Corp., American Sierra Gold Merger Corp., and Medinah Gold, Inc., dated August 13, 2012. | | Incorporated herein by reference from the Company’s report on Form 8-K filed with the SEC on August 14, 2012. |
| 3.1 | | Articles of Incorporation | | Incorporated herein by reference from the Company’s registration statement on Form SB-2S-4 filed with the SEC on November 7, 2007.June 3, 2013. |
| 3.2 | | Bylaws | | Incorporated herein by reference from the Company’s registration statement on Form SB-2S-4 filed with the SEC on November 7, 2007.June 3, 2013. |
| 3.3 | | Articles of Merger | | Incorporated herein by reference from Exhibit 3.01 to the Company’s registration statementreport on Form SB-28-K, filed with the SEC on November 7, 2007.May 27, 2009. |
| 3.4 | | Certificate of Change Pursuant to Nevada Revised Statutes Section 78.209 | | Incorporated herein by reference from Exhibit 3.02 to the Company’s report on Form 8-K filed with the SEC on May 27, 2009. |
| 3.5 | | Certificate of Change Pursuant to Nevada Revised Statutes Section 78.209 | | Incorporated herein by reference from the Company’s report on Form 8-K filed with the SEC on June 4, 2012. |
| 4.1 | | Specimen Common Stock Certificate of American Sierra Gold Corp. | | Incorporated by reference from the Company’s report Form 10-Q filed with the SEC on June 20, 2011. |
4.210.1 | | Relevant provisions relating to the rights of holders of shares of the Company’s Common Stock contained in the Company’s Articles of Incorporation and Bylaws
| | Incorporated herein by reference from Exhibits 3.1 and 3.2 herein. |
10.1 | | Property Option Agreement between the Company and Yale Resources Ltd. dated April 20, 2009 | | Incorporated herein by reference from the Company’s report on Form 8-K filed with the SEC on May 5, 2009. |
10.210.1 | | Form of Subscription Agreement with Tobermory Holding Ltd. dated October 12, 2009 | | Incorporated herein by reference from Exhibit 10.1 to the Company’s report on Form 8-K filed with the SEC on September 9, 2009, and then updated on the Company’s report on Form 8-K filed with the SEC on January 4, 2010. |
| 10.1 | | Share Issuance Agreement between the Company and Tobermory Holding Ltd. dated October 12, 2009 | | Incorporated herein by reference from Exhibit 10.1 to the Company’s report on Form 8-K filed with the SEC on October 13, 2009. |
10.310.1 | | Consulting Agreement between the Company and Johannes Peterson dated September 29, 2009. | | Incorporated herein by reference from Exhibit 10.1 to the Company’s report on Form 8-K filed with the SEC on October 5, 2009. |
| 10.4 | | Joint Venture Agreement between the Company and Trinity Alps Resources, Inc. dated October 19, 2009 | | Incorporated herein by reference from theExhibit 10.4 to Company’s report on Form 10-Q filed with the SEC on December 18, 2009. |
10.410.5 | | Amendment No. 1 to Joint Venture Agreement between the Company and Trinity Alps Resources, Inc. dated October 23, 2009 | | Incorporated herein by reference from Exhibit 10.5 to the Company’s report on Form 10-Q filed with the SEC on March 23, 2010. |
10.510.6 | | Specimen Warrant Certificate of American Sierra Gold Corp. | | Incorporated herein by reference from Exhibit 10.6 to Company’s report on Form 10-Q filed with the SEC on March 23, 2010. |
| 10.7 | | Limited Liability Company Agreement of Gold Run Enterprises, Inc. | | Incorporated herein by reference from Exhibit 10.7 to Company’s report on Form 10-Q filed with the SEC on March 23, 2010. |
| 10.8 | | Limited Liability Company Agreement of Bowerman Holdings, LLC | | Incorporated herein by reference from Exhibit 10.8 to from the Company’s report on Form 10-Q filed with the SEC on March 23, 2010. |
| 10.7 | | Land Trust Agreement between the Company and Carl von Einsiedel, Trustee of BC Land Trust, dated November 4, 2010 | | Incorporated herein by reference from theExhibit 10.7 to Company’s report on Form 10-Q filed with the SEC on March 17, 2011. |
10.6 | | Form of Subscription Agreement with Tobermory Holding Ltd. dated October 12, 2009 | | Incorporated by reference from the Company’s report on Form 8-K filed with the SEC on September 9, 2009.
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| 10.7 | | Securities Purchase Agreement between the Company and Asher Enterprises, Inc. dated May 18, 2011 | | Incorporated by reference from theExhibit 10.7 to Company’s report Form 10-Q filed with the SEC on June 20, 2011. |
| 10.8 | | Convertible Promissory Note issued to Asher Enterprises, Inc. dated May 18, 2011 | | Incorporated by reference from theExhibit 10.8 to Company’s report Form 10-Q filed with the SEC on June 20, 2011. |
| 10.9 | | Securities Purchase Agreement between the Company and Asher Enterprises Inc. dated December 12, 2011 | | Incorporated by reference from theExhibit 10.9 to Company’s report Form 10-Q filed with the SEC on March 16, 2012. |
| 10.10 | | Convertible Promissory Note issued to Asher Enterprises, Inc. dated December 12, 2011 | | Incorporated by reference from theExhibit 10.10 to Company’s report Form 10-Q filed with the SEC on March 16, 2012. |
| 10.11 | | Promissory Note issued to MMC Mines, Inc. dated March 9, 2012 | | Incorporated by reference from theExhibit 10.11 to Company’s report Form 10-Q filed with the SEC on March 16, 2012. |
| 31.1 | | | | Filed herewith. |
| 31.2 | | | | Filed herewith. |
| 32.1 | | | | Filed herewith. |