ENTOURAGE MINING LTD.
(An Exploration Stage Company)
INTERIM FINANCIAL STATEMENTS
MARCH 31, 2013
(Stated in Canadian Dollars)
(UNAUDITED – PREPARED BY MANAGEMENT)
THE ACCOMPANYING INTERIM FINANCIAL STATEMENTS FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2013 HAVE NOT BEEN REVIEWED OR AUDITED BY THE COMPANY’S AUDITORS. |
1
NOTICE OF NO AUDITOR REVIEW OF INTERIM FINANCIAL STATEMENTS
Under National Instrument 51-102, Part 4, subsection 4.3(3)(a), if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.
The accompanying unaudited interim financial statements of the Company have been prepared by and are the responsibility of the Company’s management. The Company’s independent auditor has not performed a review of these financial statements in accordance with the standards established by the Canadian Institute of Chartered Accountants for a review of interim financial statements by an entity’s auditor.
“Paul Shatzko”
Paul Shatzko
Chairman and Director
July 5, 2013
2
ENTOURAGE MINING LTD.
(An Exploration Stage Company)
BALANCE SHEETS
(Stated in Canadian Dollars)
(UNAUDITED – PREPARED BY MANAGEMENT)
March 31, 2013 | December 31, 2012 | |||
$ | $ | |||
ASSETS | ||||
Current | ||||
Cash | 699 | 1,764 | ||
Prepaid expenses (Note 7) | 1,001 | 2,085 | ||
Other receivable | 1,437 | 1,295 | ||
3,137 | 5,144 | |||
Equipment, net of depreciation(Note 3) | 632 | 671 | ||
3,769 | 5,815 | |||
LIABILITIES | ||||
Current | ||||
Accounts payable | 206,240 | 196,658 | ||
Loans payable (Note 5) | 44,297 | 43,600 | ||
Due to related parties (Note 7) | 6,127 | 6,126 | ||
256,664 | 246,384 | |||
STOCKHOLDERS’ DEFICIT | ||||
Capital Stock(Note 6) | ||||
Authorized: | ||||
Unlimited common voting shares without par value | ||||
Issued: | ||||
13,742,223 common shares (December 31, 2012 – 13,742,223) | 13,490,513 | 13,490,513 | ||
Additional paid in capital | 3,323,866 | 3,308,866 | ||
Deficit accumulated during the exploration stage | (17,067,274 | ) | (17,039,948 | ) |
(252,895 | ) | (240,569 | ) | |
3,769 | 5,815 | |||
CONTINGENCIES AND COMMITMENTS(Notes 1 and 4) | ||||
SUBSEQUENT EVENT(Note 10) | ||||
Approved by the Board of Directors: | ||||
“Paul Shatzko” | “James Turner” |
The accompanying notes are an integral part of these unaudited interim financial statements.
3
ENTOURAGE MINING LTD.
(An Exploration Stage Company)
INTERIM STATEMENTS OF OPERATIONS
(Stated in Canadian Dollars)
(UNAUDITED – PREPARED BY MANAGEMENT)
THREE MONTHS ENDED MARCH 31, | June 16, 1995 (inception) to March 31, 2013 | |||||||
2013 | 2012 | |||||||
$ | $ | $ | ||||||
Expenses | ||||||||
Depreciation | 39 | 53 | 7,212 | |||||
Consulting | - | - | 272,950 | |||||
Consulting – stock based compensation | - | - | 2,926,980 | |||||
Financing fee – stock based compensation | - | - | 90,096 | |||||
Interest and bank charges | 996 | 51 | 29,353 | |||||
Management fees (Note 7) | 15,000 | 15,000 | 1,230,654 | |||||
Mineral property costs | - | (44,401 | ) | 11,324,777 | ||||
Office and sundry | 6,240 | 8,005 | 632,094 | |||||
Professional fees | 4,931 | 1,838 | 664,114 | |||||
Travel and promotion | 120 | 180 | 310,171 | |||||
Gain/(Loss) Before Other Items | (27,326 | ) | 19,274 | (17,488,401 | ) | |||
Fair value adjustment of derivative liabilities | - | 1,115 | 333,965 | |||||
Gain on write-off of debt | - | - | 20,000 | |||||
Gain/(Loss) Before Income Taxes | (27,326 | ) | 20,389 | (17,134,436 | ) | |||
Deferred income tax recovery | - | - | 67,162 | |||||
Net Gain/(Loss) and Comprehensive Loss | (27,326 | ) | 20,389 | (17,067,274 | ) | |||
Gain/(Loss) Per Share, basic and diluted | $ | 0.00 | $ | 0.00 | ||||
Weighted Average Common Shares Outstanding | 13,742,223 | 10,368,103 |
The accompanying notes are an integral part of these unaudited interim financial statements.
4
ENTOURAGE MINING LTD.
(An Exploration Stage Company)
STATEMENTS OF STOCKHOLDERS’ DEFICIT
(Stated in Canadian Dollars)
(UNAUDITED – PREPARED BY MANAGEMENT)
NUMBER OF SHARES | AMOUNT | OBLIGATION TO ISSUE SHARES | ADDITIONAL PAID-IN CAPITAL | DEFICIT ACCUMULATED DURING EXPLORATION STAGE | TOTAL | |||||||||||
$ | $ | $ | $ | $ | ||||||||||||
Share issued for cash | 1 | 1 | - | - | - | 1 | ||||||||||
Loss for the period | - | - | - | - | (38,624 | ) | (38,624 | ) | ||||||||
Balance, December 31, 1995 | 1 | 1 | - | - | (38,624 | ) | (38,623 | ) | ||||||||
Shares issued for cash | 913,000 | 276,500 | - | - | - | 276,500 | ||||||||||
Loss for the year | - | - | - | - | (210,592 | ) | (210,592 | ) | ||||||||
Balance, December 31,1996 | 913,001 | 276,501 | - | - | (249,216 | ) | 27,285 | |||||||||
Loss for the year | - | - | - | - | (74,529 | ) | (74,529 | ) | ||||||||
Balance, December 31, 1997 | 913,001 | 276,501 | - | - | (323,745 | ) | (47,244 | ) | ||||||||
Loss for the year | - | - | - | - | (60,148 | ) | (60,148 | ) | ||||||||
Balance, December 31, 1998 | 913,001 | 276,501 | - | - | (383,893 | ) | (107,392 | ) | ||||||||
Loss for the year | - | - | - | - | (70,046 | ) | (70,046 | ) | ||||||||
Balance, December 31, 1999 | 913,001 | 276,501 | - | - | (453,939 | ) | (177,438 | ) | ||||||||
Loss for the year | - | - | - | - | (66,855 | ) | (66,855 | ) | ||||||||
Balance, December 31, 2000 | 913,001 | 276,501 | - | - | (520,794 | ) | (244,293 | ) | ||||||||
Loss for the year | - | - | - | - | (58,749 | ) | (58,749 | ) | ||||||||
Balance, December 31, 2001 | 913,001 | 276,501 | - | - | (579,543 | ) | (303,042 | ) | ||||||||
Forgiveness of amounts due to related party | - | - | - | 200,671 | - | 200,671 | ||||||||||
Loss for the year | - | - | - | - | (59,428 | ) | (59,428 | ) | ||||||||
Balance, December 31, 2002 | 913,001 | 276,501 | - | 200,671 | (638,971 | ) | (161,799 | ) | ||||||||
April 25, 2003 – shares issued for mineral property | 600,000 | 60,000 | - | - | - | 60,000 | ||||||||||
Loss for the year | - | - | - | - | (319,515 | ) | (319,515 | ) | ||||||||
Balance, December 31, 2003 | 1,513,001 | 336,501 | - | 200,671 | (958,486 | ) | (421,314 | ) | ||||||||
February 5, 2004 – shares issued for cash at $2.20 per share | 99,750 | 219,450 | - | - | - | 219,450 | ||||||||||
February 5, 2004 – deferred tax recovery on 10,800 flow-through shares | - | (2,376 | ) | - | - | - | (2,376 | ) | ||||||||
June 8, 2004 – shares issued for cash at $4.04 per share | 69,800 | 282,331 | - | - | - | 282,331 | ||||||||||
August 24, 2004 – stock options exercised at $3.30 per share | 10,000 | 32,983 | - | - | - | 32,983 |
The accompanying notes are an integral part of these unaudited interim financial statements.
5
ENTOURAGE MINING LTD.
(An Exploration Stage Company)
STATEMENTS OF STOCKHOLDERS’ DEFICIT
(Stated in Canadian Dollars)
(UNAUDITED – PREPARED BY MANAGEMENT)
NUMBER OF SHARES | AMOUNT | OBLIGATION TO ISSUE SHARES | ADDITIONAL PAID-IN CAPITAL | DEFICIT ACCUMULATED DURING EXPLORATION STAGE | TOTAL | |||||||||||
$ | $ | $ | $ | $ | ||||||||||||
December 31, 2004 – shares issued for cash at $1.80 per share inclusive of 13,250 shares as finders’ fees | 294,800 | 510,876 | - | - | - | 510,876 | ||||||||||
August 24, 2004 – shares issued for mineral property database at $3.90 per share | 15,000 | 58,788 | - | - | - | 58,788 | ||||||||||
September 24, 2004 – shares returned on cancellation of escrow | (375,000 | ) | (7,500 | ) | - | 7,500 | - | - | ||||||||
Stock based compensation | - | - | - | 421,000 | - | 421,000 | ||||||||||
Loss for the year | - | - | - | - | (956,446 | ) | (956,466 | ) | ||||||||
Balance, December 31, 2004 | 1,627,351 | 1,431,053 | - | 629,171 | (1,914,932 | ) | 145,292 | |||||||||
January 6, 2005, refund for overpayment in 2004 private placement | - | (3,000 | ) | - | - | (3,000 | ) | |||||||||
March 21, 2005, shares issued for property acquisition at US $3.00 per share | 12,500 | 45,604 | - | - | - | 45,604 | ||||||||||
Sept. 22, 2005, flow-through shares Issued at $2.00 per share | 29,500 | 59,000 | - | - | - | 59,000 | ||||||||||
September, 2005, deferred tax recovery on 29,500 flow-through shares | - | (20,119 | ) | - | - | (20,119 | ) | |||||||||
Sept. 22, 2005, units issued at US $1.50 per unit | 55,000 | 97,152 | - | - | - | 97,152 | ||||||||||
Oct. 7, 2005, units issued at US $1.10 per unit | 127,500 | 165,154 | - | - | - | 165,154 | ||||||||||
Oct.-Dec 2005, shares issued on exercise of stock options at US $1.50 per share | 25,000 | 44,147 | - | - | 44,147 | |||||||||||
Oct. 2005, shares issued on exercise of warrants at $3.00 per share | 5,000 | 15,000 | - | - | - | 15,000 |
The accompanying notes are an integral part of these unaudited interim financial statements.
6
ENTOURAGE MINING LTD.
(An Exploration Stage Company)
STATEMENTS OF STOCKHOLDERS’ DEFICIT
(Stated in Canadian Dollars)
(UNAUDITED – PREPARED BY MANAGEMENT)
NUMBER OF SHARES | AMOUNT | OBLIGATION TO ISSUE SHARES | ADDITIONAL PAID-IN CAPITAL | DEFICIT ACCUMULATED DURING EXPLORATION STAGE | TOTAL | |||||||||
$ | $ | $ | $ | $ | ||||||||||
Nov. 17, 2005, units issued at US $1.50 per share inclusive of 20,000 shares finders’ fees | 553,334 | 944,800 | - | - | - | 944,800 | ||||||||
Stock based compensation | - | - | - | 163,400 | - | 163,400 | ||||||||
Forgiveness of amounts due to related party | - | - | - | 102,327 | - | 102,327 | ||||||||
Obligation to issue shares | - | - | 8,638,667 | - | 8,638,667 | |||||||||
Loss for the year | - | - | - | (10,068,841 | ) | (10,068,841 | ) | |||||||
Balance, December 31, 2005 | 2,435,185 | 2,778,791 | 8,638,667 | 894,898 | (11,983,773 | ) | 328,583 | |||||||
January 3, 2006, shares issued for property acquisition at a market price of US $1.50 per share | 4,888,889 | 8,638,667 | (8,638,667 | ) | - | - | - | |||||||
Jan.-Aug. 2006, shares issued on exercise of stock options at US $1.50 per share | 41,000 | 69,317 | - | - | - | 69,317 | ||||||||
February 2006, shares issued on exercise of warrants at $3.00 per share | 74,450 | 223,350 | - | - | - | 223,350 | ||||||||
March 7, 2006, shares issued for property acquisition at US $3.60 per share | 12,500 | 51,772 | - | - | - | 51,772 | ||||||||
May 24, 2006, shares issued for flow-through private placement at US $2.50 per share | 34,000 | 93,585 | - | - | - | 93,585 | ||||||||
Aug.-Nov. 2006, shares issued on exercise of warrants at US $2.50 per share | 95,500 | 269,149 | - | - | - | 269,149 | ||||||||
Dec. 2006, shares issued for flow-through private placement at $2.30 per share | 20,000 | 46,000 | - | - | - | 46,000 | ||||||||
Stock based compensation | - | - | - | 2,027,384 | - | 2,027,384 | ||||||||
Deferred tax recovery on 54,000 flow-through shares | - | (44,667 | ) | - | - | (44,667 | ) | |||||||
Loss for the year | - | - | - | - | (2,973,161 | ) | (2,973,161 | ) | ||||||
Balance, December 31, 2006 | 7,601,524 | 12,125,964 | - | 2,922,282 | (14,956,934 | ) | 91,312 |
The accompanying notes are an integral part of these unaudited interim financial statements.
7
ENTOURAGE MINING LTD.
(An Exploration Stage Company)
STATEMENTS OF STOCKHOLDERS’ DEFICIT
(Stated in Canadian Dollars)
(UNAUDITED – PREPARED BY MANAGEMENT)
NUMBER OF SHARES | AMOUNT | OBLIGATION TO ISSUE SHARES | ADDITIONAL PAID-IN CAPITAL | DEFICIT ACCUMULATED DURING EXPLORATION STAGE | TOTAL | ||||||||||
$ | $ | $ | $ | $ | |||||||||||
Balance, December 31, 2006, carried forward | 7,601,524 | 12,125,964 | - | 2,922,282 | (14,956,934 | ) | 91,312 | ||||||||
March 12, 2007, shares issued for Property option payment at market price of US$3.00 per share | 50,000 | 175,530 | - | - | - | 175,530 | |||||||||
March 27, 2007, shares issued for options exercise at US$1.50 per share | 5,000 | 8,760 | - | - | - | 8,760 | |||||||||
March 31, 2007, shares issued for Private Placement at US$1.50 per share net of finder’s fee of $4,537 | 26,669 | 41,647 | - | - | - | 41,647 | |||||||||
Stock based compensation | - | - | - | 113,074 | - | 113,074 | |||||||||
April 3, 2007, shares issued for Options exercise at US$1.50 per share | 5,000 | 8,507 | - | - | - | 8,507 | |||||||||
June 18, 2007, shares issued for debt at US$2.00 per share | 10,000 | 23,306 | - | - | 23,306 | ||||||||||
Loss for the year | - | - | - | - | (598,783 | ) | (598,783 | ) | |||||||
Balance, December 31, 2007 | 7,698,193 | 12,383,714 | - | 3,035,356 | (15,555,717 | ) | (136,647 | ) | |||||||
Loss for the year | - | - | - | - | (414,840 | ) | (414,840 | ) | |||||||
Balance, December 31, 2008 | 7,698,193 | 12,383,714 | - | 3,035,356 | (15,970,557 | ) | (551,487 | ) |
The accompanying notes are an integral part of these unaudited interim financial statements.
8
ENTOURAGE MINING LTD.
(An Exploration Stage Company)
STATEMENTS OF STOCKHOLDERS’ DEFICIT
(Stated in Canadian Dollars)
(UNAUDITED – PREPARED BY MANAGEMENT)
NUMBER OF SHARES | AMOUNT | OBLIGATION TO ISSUE SHARES | ADDITIONAL PAID-IN CAPITAL | DEFICIT ACCUMULATED DURING EXPLORATION STAGE | TOTAL | |||||||||||
$ | $ | $ | $ | $ | ||||||||||||
Balance, December 31, 2008, carried forward | 7,698,193 | 12,383,714 | - | 3,035,356 | (15,970,557 | ) | (551,487 | ) | ||||||||
Subscriptions received | - | - | 26,375 | - | - | 26,375 | ||||||||||
June 22, 2009, shares issued for Private Placement at US$0.15 per share | 4,037,500 | 683,057 | - | - | - | 683,057 | ||||||||||
Transfer derivative liability for warrants granted in the year | - | (339,311 | ) | - | - | - | (339,311 | ) | ||||||||
Warrants exercise at US$0.20 per share during the year | 353,000 | 74,692 | - | - | - | 74,692 | ||||||||||
Transfer derivative liability for warrants exercised in the year | - | 59,689 | - | - | - | 59,689 | ||||||||||
July 24, 2009, shares returned to treasury in exchange for US$85,000 cash payment | (4,500,000 | ) | (95,753 | ) | - | - | - | (95,753 | ) | |||||||
December 16, 2009, shares issued For amendment to property option agreement at a market price of US$0.395 per share | 150,000 | 62,260 | 62,260 | - | - | 124,520 | ||||||||||
Stock based compensation | - | - | 228,510 | - | 228,510 | |||||||||||
Loss for the year (restated – Note 12) | - | - | - | - | (1,092,043 | ) | (1,092,043 | ) | ||||||||
Balance, December 31, 2009 | 7,738,693 | 12,828,348 | 88,635 | 3,263,866 | (17,062,600 | ) | (881,751 | ) |
The accompanying notes are an integral part of these unaudited interim financial statements.
9
ENTOURAGE MINING LTD.
(An Exploration Stage Company)
STATEMENTS OF STOCKHOLDERS’ DEFICIT
(Stated in Canadian Dollars)
(UNAUDITED – PREPARED BY MANAGEMENT)
NUMBER OF SHARES | AMOUNT | OBLIGATION TO ISSUE SHARES | ADDITIONAL PAID-IN CAPITAL | DEFICIT ACCUMULATED DURING EXPLORATION STAGE | TOTAL | ||||||||||||
$ | $ | $ | $ | $ | |||||||||||||
Balance, December 31, 2009, carried forward | 7,738,693 | 12,828,348 | 88,635 | 3,263,866 | (17,062,600 | ) | (881,751 | ) | |||||||||
February 3, 2010, shares issued for amendment to property option agreement at a market price of US$0.395 per share | 150,000 | 62,260 | (62,260 | ) | - | - | - | ||||||||||
February 18, 2010, shares issued for private placement at US$0.15 per share, net of finance fee | 1,613,162 | 247,214 | (26,375 | ) | - | - | 220,839 | ||||||||||
Transfer derivative liability for warrants granted in the year | - | (125,435 | ) | - | - | - | (125,435 | ) | |||||||||
Warrants exercise at US$0.20 per share during the year | 766,248 | 159,620 | - | - | - | 159,620 | |||||||||||
Transfer derivative liability for warrants exercised in the year | - | 134,800 | - | - | - | 134,800 | |||||||||||
Income for the year | - | - | - | - | 263,194 | 263,194 | |||||||||||
Balance, December 31, 2010 | 10,268,103 | 13,306,807 | - | 3,263,866 | (16,799,406 | ) | (228,733 | ) | |||||||||
February 22, 2011, shares issued for property option payment at US$0.15 per share market price | 100,000 | 15,000 | - | - | - | 15,000 | |||||||||||
Loss for the year | - | - | - | - | (189,503 | ) | (189,503 | ) | |||||||||
Balance, December 31, 2011 | 10,368,103 | 13,321,807 | - | 3,263,866 | (16,988,909 | ) | (403,236 | ) | |||||||||
April 13, 2012, units issued for private placement at $0.05 per share | 3,074,120 | 153,706 | - | - | - | 153,706 | |||||||||||
April 20, 2012, shares issued for property at $0.05 per share | 300,000 | 15,000 | - | - | - | 15,000 | |||||||||||
Recognition of 9 months management fees $5,000/month | - | - | - | 45,000 | - | 45,000 | |||||||||||
Loss for the year | - | - | - | - | (51,039 | ) |
| (51,039 | ) | ||||||||
Balance, December 31, 2012 | 13,742,223 | 13,490,513 | - | 3,308,866 | (17,039,948 | ) |
| (240,569 | ) |
10
ENTOURAGE MINING LTD.
(An Exploration Stage Company)
STATEMENTS OF STOCKHOLDERS’ DEFICIT
(Stated in Canadian Dollars)
(UNAUDITED – PREPARED BY MANAGEMENT)
NUMBER OF SHARES | AMOUNT | OBLIGATION TO ISSUE SHARES | ADDITIONAL PAID-IN CAPITAL | DEFICIT ACCUMULATED DURING EXPLORATION STAGE | TOTAL | ||||||||||
$ | $ | $ | $ | $ | |||||||||||
Balance, December 31, 2012, carried forward | 13,742,223 | 13,490,513 | - | 3,308,866 | (17,039,948 | ) | (240,569 | ) | |||||||
Recognition of 3 months management fees $5,000/month | - | - | - | 15,000 | - | 15,000 | |||||||||
Loss for the period | - | - | - | - | (27,326 | ) |
| (27,326 | ) | ||||||
Balance, March 31, 2013 | 13,742,223 | 13,490,513 | - | 3,323,866 | (17,067,274 | ) |
| (252,895 | ) |
11
ENTOURAGE MINING LTD.
(An Exploration Stage Company)
INTERIM STATEMENTS OF CASH FLOWS
(Stated in Canadian Dollars)
(UNAUDITED – PREPARED BY MANAGEMENT)
THREE MONTHS ENDED MARCH 31, | June 16, 1995 (inception) to March 31, 2013 | |||||
2013 | 2012 | |||||
$ | $ | $ | ||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||
Net Income (Loss ) | (27,326 | ) | 20,389 | (17,067,274 | ) | |
Adjustments to reconcile net loss to net cash from operating activities: | ||||||
Depreciation | 39 | 53 | 7,212 | |||
Stock based compensation | - | - | 3,017,076 | |||
Shares issued for mineral property acquisition | - | - | 9,184,881 | |||
Shares issued for debt | - | - | 23,306 | |||
Non-cash management fees | 15,000 | - | 60,000 | |||
Deferred tax recovery | - | - | (67,162 | ) | ||
Fair value adjustment of derivative liabilities | - | (1,115 | ) | (333,965 | ) | |
Gain on write-off of debt | - | - | (20,000 | ) | ||
Changes in non-cash operating working capital items: | ||||||
Prepaid expenses | 1,084 | - | (1,001 | ) | ||
Other receivable | (142 | ) | (1,145 | ) | (1,437 | ) |
Accounts payable and accrued liabilities | 9,582 | 8,206 | 226,240 | |||
NET CASH FLOWS USED IN OPERATINGACTIVITIES | (1,763 | ) | 26,388 | (4,972,124 | ) | |
CASH FLOWS USED IN INVESTING ACTIVITIES | ||||||
Legal settlement | - | - | (95,753 | ) | ||
Equipment | - | - | (7,845 | ) | ||
NET CASH FLOWS USED IN INVESTINGACTIVITIES | - | - | (103,598 | ) | ||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||
Loan payable | 697 | (36,493 | ) | 44,297 | ||
Due to related parties | 1 | (104,964 | ) | 309,125 | ||
Net proceeds on sale of common stock | - | - | 4,722,999 | |||
Obligation to issue shares | - | 153,706 | - | |||
NET CASH FLOWS FROM FINANCINGACTIVITIES | 698 | 12,249 | 5,076,421 | |||
INCREASE (DECREASE) IN CASH | (1,065 | ) | 38,637 | 699 | ||
CASH, BEGINNING OF PERIOD | 1,764 | 1,278 | - | |||
CASH, END OF PERIOD | 699 | 39,915 | 699 |
SUPPLEMENTAL CASH FLOW INFORMATION AND NON-CASH INVESTING AND FINANCING ACTIVITIES(Note 9)
The accompanying notes are an integral part of these interim financial statements.
12
ENTOURAGE MINING LTD.
(An Exploration Stage Company)
NOTES TO INTERIM FINANCIAL STATEMENTS
THREE MONTH PERIOD ENDED MARCH 31, 2013
(Stated in Canadian Dollars)
(UNAUDITED – PREPARED BY MANAGEMENT)
1. | ORGANIZATION AND BASIS OF PRESENTATION |
Organization
The Company was incorporated in the Province of British Columbia, Canada on June 16, 1995. The Company is in the business of mineral exploration. The address of the Company’s corporate office and principal place of business is Suite 614 – 475 Howe St., Vancouver, British Columbia, V6C 2B3. The Company’s shares are publically traded on the Over-The-Counter Bulletin Board in the United States. The Company is a reporting issuer in both the United States and in British Columbia.
Exploration Stage Activities
The Company has not produced any revenues from its principal business or commenced significant commercial operations and is considered an exploration stage company as defined by SEC Guide 7 with reference to Financial Accounting Standards Board (FASB) issued Accounting Standards Codification (ASC) topic 915. In the exploration stage, management devotes most of its activities to conducting exploratory programs and developing business plans.
Going Concern Uncertainty
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. This contemplates that assets will be realized and liabilities and commitments satisfied in the normal course of business. The Company has accumulated a net loss of $17,067,274 since its inception. There is a wording capital deficiency of $253,527 and the Company has no sources of operating revenue. The continuance of the Company is dependent upon its ability to obtain additional financing as needed to pursue new business opportunities and ultimately upon generating profitable operations from its mineral property exploration and development activities. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management has plans to seek additional capital through private placements of its common stock and loans from related parties to fund expenditures for the next year. Although there are no assurances that management’s plans will be realized, management believes that the Company will be able to continue operations in the future. The financial statements do not include any adjustments relating 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.
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Accounting policies followed in the preparation of the March 31, 2013 unaudited interim financial statements are consistent with those used in the preparation of the annual audited financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements that would substantially duplicate the disclosures contained in the audited financial statements for the most recent year, December 31, 2012, as reported in Form 20-F, have been omitted. Operating results for the three months ended March 31, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.
3. | EQUIPMENT |
Three months ended March 31, 2013 | Year ended December 31, 2012 | |||||
Cost | Accumulated depreciation | Net Book Value | Cost | Accumulated depreciation | Net Book Value | |
$ | $ | $ | $ | $ | $ | |
Office furniture | 2,812 | 2,409 | 403 | 2,812 | 2,388 | 424 |
Computer equipment | 5,033 | 4,804 | 229 | 5,033 | 4,786 | 247 |
7,845 | 7,213 | 632 | 7,845 | 7,174 | 671 |
1
ENTOURAGE MINING LTD.
(An Exploration Stage Company)
NOTES TO INTERIM FINANCIAL STATEMENTS
THREE MONTH PERIOD ENDED MARCH 31, 2013
(Stated in Canadian Dollars)
(UNAUDITED – PREPARED BY MANAGEMENT)
4. | MINERAL EXPLORATION PROPERTIES |
(b) | Doran Property, Quebec |
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i) | By agreement dated March 15, 2005, the Company obtained an option to acquire a 100% interest in certain mineral properties in south-central Quebec (the “Doran Property”) in exchange for cash payments of $220,000, the issuance of 75,000 common shares and the expenditure of $1,000,000 on the Doran Property over three years, as follows: | |||
| ||||
a. | $35,000 and 12,500 common shares within ten business days of the date of approval of the agreement (paid and issued); | |||
b. | $35,000 and 12,500 common shares on or before March 15, 2006 (paid and issued); and expending $200,000 on or before March 15, 2006 (incurred); | |||
c. | $75,000 (paid) and 25,000 common shares on or before March 15, 2007 (issued); and expending $300,000 on or before March 15, 2007 (incurred by Abbastar Holdings Inc. (“Abbastar”) – Note 4b iii); and | |||
d. | $75,000 (paid by Abbastar – Note 4b iii) and 25,000 common shares on or before March 15, 2008 (issued); and expend an additional $500,000 on or before March 15, 2008 (incurred by Abbastar – Note 4b iii). |
All the above terms have been met and the Company earned 100% interest in the property subject to Abbastar’s interest (Note 4b iii)). The Company has allowed certain claims to lapse, and at March31, 2013 held a total of 18 claims. Subsequent to March 31, 2013, a further 15 claims lapsed.
ii) | The property interest is subject to a 2.5% Net Smelter Return (NSR). The Company has the right to purchase up to three-fifths of the NSR, or 1.5%, for $1,750,000. | |||
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iii) | On February 13, 2007 the Company entered into an option agreement (the “Option”) with Abbastar, a TSX Venture Exchange listed company, whereby Abbastar may earn up to a 70% interest in the Doran Property by making a one time cash payment of $100,000 (received) Abbastat incurring exploration expenditures of $5,000,000 on the Doran Property over 4 years (The Company retains the right to purchase the NSR on the Doran Property). The terms of the Option provide that Abbastar may earn its interest in the Doran property as follows: | |||
a. | 20% interest by spending $500,000 in exploration costs on or before February 13, 2008 (incurred); | |||
b. | 15% additional interest by expending an additional $1,000,000 on or before February 13, 2009 (incurred); | |||
c. | 15% additional interest by expending an additional $1,500,000 on or before February 13, 2010; and | |||
d. | 20% additional interest by expending an additional $2,000,000 on or before February 13, 2011. |
As of March 31, 2013, Abbastar had earned a 35% interest in the Doran property but has allowed the balance of their option to expire.
2
ENTOURAGE MINING LTD.
(An Exploration Stage Company)
NOTES TO INTERIM FINANCIAL STATEMENTS
THREE MONTH PERIOD ENDED MARCH 31, 2013
(Stated in Canadian Dollars)
(UNAUDITED – PREPARED BY MANAGEMENT)
5. | LOANS PAYABLE |
On September 16, 2010, an arms length party loaned the Company $24,615 (2012: $24,872) (US $25,000) for an initial period of 90 days bearing interest at 12% per annum. The loan is unsecured. The loan has been amended to be payable on demand. As at March 31, 2013, accrued interest of $7,502 (2012 - $6,844) was included on the loan payable.
During the year ended December 31, 2011, a non-arms length party loaned the Company $10,000 for an initial period of 90 days bearing interest at 12% per annum. The loan is unsecured. The loan has been amended to be payable on demand. As at March 31, 2013, accrued interest of $2,179 (2012 - $1,884) was included in the loan payable.
6. | CAPITAL STOCK |
a) | Issued Shares |
Pursuant to a non-brokered private placement, the Company issued at total of 3,074,120 Units on April 13, 2012 for total proceeds of $153,706 at $0.05 per unit. Each unit consists of one common share of the Company and one half share purchase warrant. Each whole warrant is exercisable on or before April 13, 2013 at a price of $0.10 per share and on or before April 13, 2014 at a price of $0.15 per share.
On March 30, 2012, the Company agreed to purchase the 10% interest earned by Ansell Capital in the Pires Gold Project for $10,000 cash and the issuance of 300,000 shares from treasury. The shares have been issued at a fair value of $0.05 per common share.
During the year ended December 31, 2012, the Company recorded $45,000 for management fees waived as an increase to additional paid in capital.
During the three month period ended March 31, 2013, the Company recorded $15,000 for management fees waived as an increase to contributed surplus.
b) | Stock Options |
In February 2004, the Company implemented a Stock Option Plan (“SOP”) for its officers, directors and employees to allow for up to 160,000 share purchase options to be granted at US $2.50 per share, for a period not to exceed five years. In November 2004, the SOP was amended to provide for the issuance of up to 220,000 incentive stock options to directors, officers, employees and non-investor relations consultants. During January 2006, the Company increased the stock option plan from 220,000 shares to 720,000 shares.
Activity under the SOP is summarized as follows:
Activity under the SOP is summarized as follows: | ||||
Options Outstanding | Weighted Average Exercise Price (U.S. $) | Weighted Average Life | ||
Balance, December 31, 2010 | 720,000 | 0.35 | 3.60 | |
Options cancelled during the year | 720,000 | 0.35 | - | |
Balance, December 31, 2011, 2012 and March 31, 2013 | - | - | - |
There has been no activity in number of options outstanding during the period ended March 31, 2013.
3
ENTOURAGE MINING LTD.
(An Exploration Stage Company)
NOTES TO INTERIM FINANCIAL STATEMENTS
THREE MONTH PERIOD ENDED MARCH 31, 2013
(Stated in Canadian Dollars)
(UNAUDITED – PREPARED BY MANAGEMENT)
6. | CAPITAL STOCK(continued) |
c) | Warrants |
On January 25, 2010, pursuant to a private placement, 1,613,162 warrants at an exercise price of US $0.25 per share were issued. Each warrant was exchangeable for one common share and expired on January 25, 2011. During the year ended December 31, 2011, the expiry date of the warrants was extended one year to January 25, 2012 with no other changes to the terms of the warrants. The fair value of the term extension was calculated to be $63,708 using the Black-Scholes option pricing model with the following assumptions: (1) dividend yield of 0%, (2) expected volatility of 164%, (3) risk free interest rate of 1.32% and, (4) expected life of 1 year. The $63,708 was recorded as a stock-based financing fee. The warrants expired unexercised on January 25, 2012.
On April 13, 2012, pursuant to a private placement, 1,537,060 warrants at an exercise price of $0.10 in the first year and $0.15 in the second year were issued. Activity in warrants is summarized as follows:
Warrants Outstanding | Weighted Average Exercise Price | Weighted Average Life | ||
Balance, December 31, 2010 and 2011 | 1,613,162 | US $0.25 | 0.07 | |
Issued during the year | 1,537,060 | $0.10/$0.15 | 1.00/2.00 | |
Exercised during the year | - | - | - | |
Expired during the year | (1,613,162) | US $0.25 | - | |
Balance, December 31, 2012 | 1,537,060 | $0.10/$0.15 | 0.28/1.28 | |
Exercised during the period | - | - | - | |
Balance, March 31, 2013 | 1,537,060 | $0.10/$0.15 | 1.03 |
7. | RELATED PARTY TRANSACTIONS |
Amounts payable to related parties as of March 31, 2013 of $6,127 (March 31, 2012 - $6,126) are owing to directors, former directors, a company controlled by an officer and to a public company with directors in common, for management fees, consulting fees and for expenses paid on behalf of the Company. The amounts are non-interest bearing, unsecured, and have no fixed terms of repayment.
During the period ended March 31, 2013, the Company incurred $15,000 (March 31, 2012 - $15,000; March 31, 2011 - $15,000) in management fees to its directors and officers. Effective April 1, 2012, the directors of the Company agreed to waive their management fees until the Company has the financial resources to extinguish their debt. In accordance with U.S. GAAP, the Company recorded $15,000 in management fees as an increase to additional paid-in capital.
During the year ended December 31, 2012, the Company advanced $1,001 (2011 - $nil) to a director of the Company for expenses to be incurred. As at March 31, 2013, this amount was included in prepaid expenses.
The above transactions have been recorded at their exchange amount being the amount of consideration established and agreed to by the related parties.
4
ENTOURAGE MINING LTD.
(An Exploration Stage Company)
NOTES TO INTERIM FINANCIAL STATEMENTS
THREE MONTH PERIOD ENDED MARCH 31, 2013
(Stated in Canadian Dollars)
(UNAUDITED – PREPARED BY MANAGEMENT)
8. | SUPPLEMENTAL CASH FLOW INFORMATION AND NON-CASH INVESTING AND FINANCING ACTIVITIES |
Period ended March 31, 2013 | Period ended March 31, 2012 | ||
Cash paid during the year for: | $ | $ | |
Interest | - | 500 | |
Income taxes | - | - |
The Company did not have any non-cash transactions during the periods ended March 31, 2013 and 2012.
9. | FINANCIAL INSTRUMENTS |
The FASB ASC topic 820 on fair value measurement and disclosures establishes three levels of inputs that may be used to measure fair value: quoted prices in active markets for identical assets or liabilities (referred to as Level 1), observable inputs other than Level 1 that are observable for the asset or liability either directly or indirectly (referred to as Level 2), and unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities (referred to as Level 3).
The carrying values and fair values of the Company’s financial instruments are as follows:
MARCH 31, 2013 | DECEMBER 31, 2012 | ||||||||||
LEVEL | CARRYING VALUE | FAIR VALUE | CARRYING VALUE | FAIR VALUE | |||||||
Financial assets | |||||||||||
Cash | 1 | $ | 699 | $ | 699 | $ | 1,764 | $ | 1,764 | ||
Other receivable | 3 | 1,437 | 1,437 | 1,295 | 1,295 | ||||||
$ | 2,136 | $ | 2,136 | $ | 3,056 | $ | 3,056 | ||||
Financial liabilities | |||||||||||
Accounts payable | 3 | $ | 206,240 | $ | 206,240 | $ | 196,658 | $ | 196,658 | ||
Loans payable | 3 | 44,297 | 44,297 | 43,600 | 43,600 | ||||||
Due to related parties | 3 | 6,127 | 6,127 | 6,126 | 6,126 | ||||||
$ | 256,664 | $ | 256,664 | $ | 246,384 | $ | 246,384 |
10. | SUBSEQUENT EVENT |
On June 27, 2013, the Company entered in a loan agreement with a non-related party in the amount of $40,000 which is unsecured, bears interest at 0.5% per annum compounded annually and is due on demand within 15 days written notice.
5