Canadian Empire Exploration (CXPJF) Inactive
Filed: 30 Aug 06, 12:00am
| CANADIAN EMPIRE EXPLORATION CORP. | |||||||||
| (the "Company") | |||||||||
| INTERIM CONSOLIDATED REPORT | |||||||||
| FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005 | |||||||||
| (UNAUDITED) |
CANADIAN EMPIRE EXPLORATION CORP. | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
AS AT JUNE 30, 2006 AND DECEMBER 31, 2005 | |||||||
(UNAUDITED) | |||||||
JUNE 30, 2006 | DECEMBER 31, 2005 | ||||||
| $ | $ | ||||||
| ASSETS | |||||||
Current Assets | |||||||
| Cash and cash equivalents | 10,452 | 17,450 | |||||
| Accounts receivable | 3,710 | 3,330 | |||||
| 14,162 | 20,780 | ||||||
Reclamation deposits | - | 11,300 | |||||
| 14,162 | 32,080 | ||||||
| LIABILITIES | |||||||
Current liabilities | |||||||
| Accounts payable and accrued liabilites | 125,146 | 203,060 | |||||
| Due to related party | 8,040 | 120,534 | |||||
| Convertible promissory note due to related party | 150,000 | - | |||||
| 283,186 | 323,594 | ||||||
| SHAREHOLDERS' DEFICIENCY | |||||||
Capital stock (note 3) | 21,813,128 | 21,811,752 | |||||
Contributed surplus | 460,853 | 438,591 | |||||
Deficit | (22,543,005 | ) | (22,541,857 | ) | |||
| (269,024 | ) | (291,514 | ) | ||||
| 14,162 | 32,080 | ||||||
Nature of operations and going concern (note 1) |
"John S. Brock" | "Wayne J. Roberts" | ||
| John S. Brock | Wayne J. Roberts | ||
CANADIAN EMPIRE EXPLORATION CORP. | |||||||||||||
CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT | |||||||||||||
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005 | |||||||||||||
(UNAUDITED) | |||||||||||||
6 MONTHS ENDED JUNE 30, 2006 | 6 MONTHS ENDED JUNE 30, 2005 | 3 MONTHS ENDED JUNE 30, 2006 | 3 MONTHS ENDED JUNE 30, 2005 | ||||||||||
| $ | $ | ||||||||||||
Administration expenses | |||||||||||||
| Bank charges | 256 | 438 | 123 | 144 | |||||||||
| Foreign exchange loss (gain) | 35 | (102 | ) | 69 | (42 | ) | |||||||
| Tax penalty on flow-through shares renounced | - | 5,813 | - | 3,331 | |||||||||
| Consulting | - | 125 | - | - | |||||||||
| Insurance | 1,700 | 12,538 | 1,700 | 1,910 | |||||||||
| Legal and audit | 12,627 | 8,116 | 8,616 | 7,643 | |||||||||
| Office operations and facilities | 859 | 19,140 | 385 | 9,039 | |||||||||
| Management and administrative services | 4,110 | 13,568 | 1,992 | 7,331 | |||||||||
| Shareholder communication | 2,455 | 3,715 | 1,604 | 2,247 | |||||||||
| Transfer agent and regulatory fees | 24,855 | 19,701 | 18,660 | 10,558 | |||||||||
| 46,898 | 83,052 | 33,150 | 42,161 | ||||||||||
Other Expenses (income) | |||||||||||||
| General exploration expenditures | 969 | 4,360 | (66 | ) | 1,541 | ||||||||
| Write-off of exploration expenditures | 219 | 64,130 | 219 | 41 | |||||||||
| Write-off of mineral property expenditures | 954 | 14,510 | 954 | - | |||||||||
| Stock-based compensation | 22,263 | 45,262 | - | 21,376 | |||||||||
| Forgivness of amount due to related party | (70,154 | ) | - | (70,154 | ) | - | |||||||
| Interest income | (0 | ) | (26 | ) | (0 | ) | - | ||||||
| (45,749 | ) | 128,236 | (69,047 | ) | 22,958 | ||||||||
Loss for the period | 1,148 | 211,288 | (35,897 | ) | 65,119 | ||||||||
Deficit - beginning of period | 22,541,857 | 21,076,533 | 22,578,903 | 21,222,702 | |||||||||
Deficit - end of period | 22,543,005 | 21,287,821 | 22,543,005 | 21,287,821 | |||||||||
Basic and diluted loss per common share | $ | 0.00 | $ | 0.01 | ($0.00 | ) | $ | 0.00 | |||||
Weighted average number of common shares | 36,372,699 | 35,127,694 | 36,381,033 | 36,331,033 | |||||||||
CANADIAN EMPIRE EXPLORATION CORP. | |||||||||||||
CONSOLIDATED STATEMENTS OF DEFERRED EXPLORATION AND MINERAL PROPERTY EXPENDITURES | |||||||||||||
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005 | |||||||||||||
(UNAUDITED) | |||||||||||||
6 MONTHS ENDED JUNE 30, 2006 | 6 MONTHS ENDED JUNE 30, 2005 | 3 MONTHS ENDED JUNE 30, 2006 | 3 MONTHS ENDED JUNE 30, 2005 | ||||||||||
| $ | $ | ||||||||||||
Exploration and mineral property expenditures | |||||||||||||
during the period | |||||||||||||
| Accomodation | - | 1,556 | - | 1,556 | |||||||||
| Assays and geochemical analysis | - | 19,504 | - | 1,054 | |||||||||
| Consulting | - | 20,705 | - | 4,200 | |||||||||
| Drilling | - | - | - | - | |||||||||
| Expediting | 1 | 40 | - | 9 | |||||||||
| Field supplies | - | 1,242 | - | 924 | |||||||||
| Fuel | - | - | - | - | |||||||||
| Maps, printing and drafting | 841 | 8,727 | 766 | 7,997 | |||||||||
| Project management fees | 88 | 7,046 | 82 | 2,909 | |||||||||
| Property acquisition costs | 953 | 4,063 | - | 3,853 | |||||||||
| Salaries and wages | 259 | 32,146 | 259 | 18,162 | |||||||||
| Surveys | - | - | - | - | |||||||||
| Transportation | - | 3,851 | - | 2,153 | |||||||||
Expenditures during the period | 2,142 | 98,880 | 1,107 | 42,817 | |||||||||
Balance - beginning of period | - | 944,932 | 0 | 919,577 | |||||||||
| Less: | |||||||||||||
| General exploration expenditures | 969 | 4,360 | (66 | ) | 1,541 | ||||||||
| Write-off of exploration expenditures | 219 | 64,130 | 219 | 41 | |||||||||
| Write-off of mineral property expenditures | 954 | 14,510 | 954 | - | |||||||||
| 2,142 | 83,000 | 1,107 | 1,582 | ||||||||||
Balance - end of period | 0 | 960,812 | 0 | 960,812 | |||||||||
CANADIAN EMPIRE EXPLORATION CORP. | |||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||
FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005 | |||||||||||||
(UNAUDITED) | |||||||||||||
6 MONTHS ENDED JUNE 30, 2006 | 6 MONTHS ENDED JUNE 30, 2005 | 3 MONTHS ENDED JUNE 30, 2006 | 3 MONTHS ENDED JUNE 30, 2005 | ||||||||||
| $ | $ | ||||||||||||
Cash flows from operating activities | |||||||||||||
| Loss for the period | (1,148 | ) | (211,288 | ) | 35,897 | (65,119 | ) | ||||||
| Items not affecting cash | |||||||||||||
| Stock-based compensation | 22,263 | 45,262 | 0 | 21,376 | |||||||||
| Write-off of exploration expenditures | 219 | 64,130 | 219 | 41 | |||||||||
| Write-off of mineral property expenditures | 954 | 14,510 | 954 | - | |||||||||
| 22,288 | (87,386 | ) | 37,071 | (43,702 | ) | ||||||||
| Changes in non-cash working capital items | (190,788 | ) | 8,141 | (63,310 | ) | 6,451 | |||||||
| (168,500 | ) | (79,245 | ) | (26,239 | ) | (37,251 | ) | ||||||
Cash flows from financing activities | |||||||||||||
| Share issue | 1,375 | - | 1,375 | - | |||||||||
| Convertible debt | 150,000 | - | - | - | |||||||||
| Share issue costs | - | - | - | - | |||||||||
| 151,375 | - | 1,375 | - | ||||||||||
Cash flows from investing activities | |||||||||||||
| Property acquisition and maintenance costs | (953 | ) | (535 | ) | (953 | ) | (325 | ) | |||||
| Deferred exploration expenditures | (219 | ) | (90,454 | ) | (219 | ) | (37,423 | ) | |||||
| Reclamation deposit returned | 11,300 | - | 11,300 | - | |||||||||
| 10,128 | (90,989 | ) | 10,127 | (37,748 | ) | ||||||||
Increase (decrease) in cash and cash equivalents | (6,997 | ) | (170,234 | ) | (14,737 | ) | (74,999 | ) | |||||
Cash and cash equivalents - beginning of period | 17,450 | 451,514 | 25,190 | 356,279 | |||||||||
Cash and cash equivalents - end of period | 10,452 | 281,280 | 10,452 | 281,280 | |||||||||
CANADIAN EMPIRE EXPLORATION CORP. NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005 (UNAUDITED, PREPARED BY MANAGEMENT) |
1-
Nature of operations and going concern
The company is in the business of acquiring, exploring and developing mineral properties and has not yet determined whether its properties contains ore reserves that are economically recoverable. The recoverability of amounts shown for resource assets is dependent upon the existence of economically recoverable reserves, the ability of the company to obtain the necessary financing to complete the exploration and development of its properties, and upon future profitable production or proceeds from the disposition of the properties.
The company's continuing operations are dependent on its ability to secure additional financing. There can be no assurance that the company will be successful in raising the required financing. As at June 30, 2006, the Company had cash and cash equivalents of $10,452 and working capital deficit of $272,734.
The company's ability to continue operating is dependent on management's ability to secure additional financing. Management is actively pursuing such additional sources of financing, and while it has been successful in doing so in the past, there can be no assurance it will be able to do so in the future. Because of this uncertainty, there is substantial doubt about the ability of the company to continue as a going concern.
These financial statements have been prepared in accordance with Canadian generally accepted accounting principles with the assumption that the company will be able to realize its assets and discharge its liabilities in the normal course of business rather than through a process of forced liquidation.
2-
Significant accounting policies
The accompanying unaudited financial statements have been prepared in accordance with Canadian generally accepted accounting principles on a basis consistent with those outlined in the company's audited financial statements for the year ended December 31, 2005. These notes do not include all of the information and disclosures required by Canadian generally accepted accounting principles for audited financial statements. These interim financial statements should be read in conjunction with the most recent annual financial statements of the company.
3-
Capital stock
Authorized: 250,000,000 common shares without par value, of which 36,389,366 common shares were issued as at June 30, 2006 (December 31, 2005: 36,364,366).
Stock options
As at June 30, 2006, common shares under option are as follows:
Number of shares outstanding | Number of shares | Exercise price ($) | Expiry date |
1,365,000 | 1,365,000 | 0.15 | January 3, 2008 |
100,000 | 100,000 | 0.15 | August 21, 2008 |
2,458,000 | 2,458,000 | 0.10 | September 17, 2009 |
3,923,000 | 3,923,000 | ||
Stock option information
The company applies the fair value method of accounting for stock options and, accordingly, the fair value of stock options of $22,263 has been included in administrative expenses. The fair value of options granted was estimated at the date of grant based on the Black-Scholes option-priding model, using the following assumptions:
CANADIAN EMPIRE EXPLORATION CORP. NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2006 AND 2005 (UNAUDITED, PREPARED BY MANAGEMENT) |
2004 | 2003 | |
Expected dividend yield | Nil | Nil |
Average risk-free interest rate | 4.0% | 3.25 – 4.9% |
Expected life | 5 years | 5 years |
Expected volatility | 114% | 94% - 171% |
Warrants
There were no warrants outstanding and exercisable at June 30, 2006.
4-
Related party transactions
The company has management agreements with Badger & Co. Management Corp. ("Badger & Co."), a company owned by John S. Brock (Chief Executive Officer, President and a director of the company), Wayne J. Roberts (Vice-President Exploration and a director of the company) and Jeannine P. M. Webb (Chief Financial Officer and Secretary of the company).
Under the agreements with Badger & Co., the company was charged from January 1 to June 30, 2006 for the following:
·
Cost of operations and administration: $2,108
·
Fees for professional services provided at per diem rates: $4,369
·
Exploration salaries and wages and project management fees: $88
In connection with these charges and amounts reimbursable at cost to Badger & Co., the company owed $8,040 to Badger & Co. at June 30, 2006 (December 31, 2005: $120,534). During the period January 1 to June 30, 2006, Badger & Co. forgave an amount receivable from the company in the amount of $70,154 in connection with charges incurred by the company during 2005.
On February 2, 2006, the company arranged, subject to regulatory approval, the private placement of $150,000 principal amount convertible promissory note with John S. Brock Limited, a company owned by John S. Brock and Wayne J. Roberts. The Promissory Note is unsecured, bears interest at 6% per annum and is due on demand. The principal amount of the Note is convertible at the holder’s option into common shares of the Company, for a maximum of 5 years, on the basis of one common share for every $0.165 of principal amount converted during the first two years and thereafter, the conversion rate increases 10% per year over the previous year’s conversion rate.