UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| | |
x | | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended November 30, 2010 |
OR |
o | | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number: 000-52372
BLACK TUSK MINERALS, INC.
(Exact name of registrant as specified in its charter)
| | |
Nevada | | 20-3366333 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
| | |
7425 Arbutus Street | | |
Vancouver, British Columbia, Canada | | V6P 5T2 |
(Address of principal executive offices) | | (Zip Code) |
(778) 999-2575
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes
No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes
No
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 (Check one):
Large accelerated filer ![[blacktusk10qfqe11302010v1010.gif]](https://capedge.com/proxy/10-Q/0001350770-11-000003/blacktusk10qfqe11302010v1010.gif)
Accelerated filer ![[blacktusk10qfqe11302010v1012.gif]](https://capedge.com/proxy/10-Q/0001350770-11-000003/blacktusk10qfqe11302010v1012.gif)
Non-accelerated filer ![[blacktusk10qfqe11302010v1014.gif]](https://capedge.com/proxy/10-Q/0001350770-11-000003/blacktusk10qfqe11302010v1014.gif)
Smaller reporting company ![[blacktusk10qfqe11302010v1016.gif]](https://capedge.com/proxy/10-Q/0001350770-11-000003/blacktusk10qfqe11302010v1016.gif)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)
Yes
No
Number of common shares outstanding at January 24, 2011: 943,790
TABLE OF CONTENTS
PART I.
FINANCIAL INFORMATION
ITEM 1.
Financial Statements
ITEM 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations…
ITEM 3.
Quantitative and Qualitative Disclosures About Market Risk
ITEM 4T.
Controls and Procedures
PART II.
OTHER INFORMATION
ITEM 1.
Legal Proceedings
ITEM 1A.
Risk Factors
ITEM 2.
Unregistered Sales of Equity Securities and Use of Proceeds
ITEM 3.
Defaults Upon Senior Securities
ITEM 4.
Submission of Matters to a Vote of Security Holders
ITEM 5.
Other Information
ITEM 6.
Exhibits
SIGNATURES
PART I. FINANCIAL INFORMATION
ITEM 1.
Financial Statements
![[blacktusk10qfqe11302010v1022.gif]](https://capedge.com/proxy/10-Q/0001350770-11-000003/blacktusk10qfqe11302010v1022.gif)
![[blacktusk10qfqe11302010v1024.gif]](https://capedge.com/proxy/10-Q/0001350770-11-000003/blacktusk10qfqe11302010v1024.gif)
![[blacktusk10qfqe11302010v1026.gif]](https://capedge.com/proxy/10-Q/0001350770-11-000003/blacktusk10qfqe11302010v1026.gif)
![[blacktusk10qfqe11302010v1028.gif]](https://capedge.com/proxy/10-Q/0001350770-11-000003/blacktusk10qfqe11302010v1028.gif)
![[blacktusk10qfqe11302010v1030.gif]](https://capedge.com/proxy/10-Q/0001350770-11-000003/blacktusk10qfqe11302010v1030.gif)
![[blacktusk10qfqe11302010v1032.gif]](https://capedge.com/proxy/10-Q/0001350770-11-000003/blacktusk10qfqe11302010v1032.gif)
![[blacktusk10qfqe11302010v1034.gif]](https://capedge.com/proxy/10-Q/0001350770-11-000003/blacktusk10qfqe11302010v1034.gif)
![[blacktusk10qfqe11302010v1036.gif]](https://capedge.com/proxy/10-Q/0001350770-11-000003/blacktusk10qfqe11302010v1036.gif)
![[blacktusk10qfqe11302010v1038.gif]](https://capedge.com/proxy/10-Q/0001350770-11-000003/blacktusk10qfqe11302010v1038.gif)
![[blacktusk10qfqe11302010v1040.gif]](https://capedge.com/proxy/10-Q/0001350770-11-000003/blacktusk10qfqe11302010v1040.gif)
![[blacktusk10qfqe11302010v1042.gif]](https://capedge.com/proxy/10-Q/0001350770-11-000003/blacktusk10qfqe11302010v1042.gif)
![[blacktusk10qfqe11302010v1044.gif]](https://capedge.com/proxy/10-Q/0001350770-11-000003/blacktusk10qfqe11302010v1044.gif)
ITEM 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
As used in this quarterly report on Form 10-Q, and unless otherwise indicated, the terms “we,” “us,” “our,” “Black Tusk” and the “Company” refer to Black Tusk Minerals Inc. All dollar amountsin this quarterly report on Form 10-Q are expressed in U.S. dollars unless otherwise indicated.
Forward-Looking Statements
Certain statements in this quarterly report on Form 10-Q constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements concern our anticipated results and developments in our operations in future periods, planned exploration and development of our properties, plans related to our business and matters that may occur in the future. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management. We use words like “expects,” “believes,” “intends,” “anticipates,” “plans,” “targets,” “projects” or “estimates”in this quarterly report on Form 10-Q. When used, these words and other, similar words and phrases or statements that an event, action or result “will,” “may,” “could,” or “should” result, occur, be taken or be achieved, identify “forward-looking” statements. Such forward-looking statements are subject to certain risks and uncertainties, both known and unknown, and assumptions, including, without limitation, risks related to:
| | |
| • | our failure to obtain additional financing; |
| • | our inability to continue as a going concern; |
| • | the unique difficulties and uncertainties inherent in the mineral exploration business; |
| • | the inherent dangers involved in mineral exploration; |
| • | our President’s inability or unwillingness to devote a sufficient amount of time to our business operations; |
| • | environmental, health and safety laws in Peru; |
| • | governmental regulations and processing licenses in Peru; |
| • | uncertainty as to the termination and renewal of our Peruvian mining concessions; |
| • | our drilling and exploration program and Banking Feasibility Study; |
| • | our development projects in Peru; |
| • | Peruvian economic and political conditions; |
| • | the Peruvian legal system; |
| • | native land claims in Peru; |
| • | natural hazards in Peru; and |
| • | our common stock. |
The preceding bullets outline some of the risks and uncertainties that may affect our forward-looking statements. For a full description of such risks and uncertainties, see the heading “Risk Factors” in our annual report on Form 10-K for our fiscal year ended May 31, 2010, filed with the SEC on September 15, 2010. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected.
Our management has included projections and estimates in this quarterly report on Form 10-Q, which are based primarily on management's experience in the industry, assessments of our results of operations, discussions and negotiations with third parties and a review of information filed by our competitors with the Securities and Exchange Commission or otherwise publicly available. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events, except as required by law.
We qualify all the forward-looking statements containedin this quarterly report on Form 10-Q by the foregoing cautionary statements.
3
Company Overview
We were incorporated on August 8, 2005 under the laws of the state of Nevada. Our principal offices are located in Vancouver, British Columbia, Canada. Our corporate address is 7425 Arbutus Street, Vancouver, British Columbia V6P 5T2, our telephone number is (778) 999-2575, and our website address is www.blacktuskminerals.com.
We are an Exploration Stage Company, as defined by Statement of Financial Accounting Standard (“SFAS”) No.915 “Development Stage Entities”. Our principal business is the acquisition and exploration of mineral resources. We have not presently determined whether our properties contain mineral reserves that are economically recoverable.
On August 24, 2006, we entered into a sale and acquisition agreement whereby we acquired a 100% interest in one unpatented mineral claim, representing 440.8066 hectares, or 17.63 mineral units, known as the GOLDEN BEAR claim. The GOLDEN BEAR claim is located on the east shore of Harrison Lake in the New Westminster Mining District, British Columbia, Canada. On December 31, 2007, the Company allowed the GOLDEN BEAR claim to lapse.
On August 13, 2007, we entered into a term sheet with Leonard Raymond De Melt, an individual, and Marlene Ore Lamilla, an individual, detailing the principal terms of our proposed acquisition of certain mining concessions and pediments located in the District of Huanza, Province of Huarochiri, Department of Lima (the “Peru Properties”) owned by Ms. Lamilla.
On December 5, 2007, we entered into a master purchase agreement with Black Tusk Peru SAC, a Peruvian corporation and our newly-formed subsidiary, Leonard Raymond De Melt, and Marlene Ore Lamilla (the “Master Purchase Agreement”), pursuant to which we agreed to issue an aggregate of 400,000 split-adjusted common shares, par value $0.001 per share, of the Company to Ms. Lamilla and her designees in consideration for the transfer by Ms. Lamilla to Black Tusk Peru of the Peru Properties. As additional consideration for the transfer of the Peru Properties, Black Tusk Peru agreed to grant to Ms. Lamilla (or her designee) a 1% royalty on the net smelter returns upon commercial production on the Peru Properties.
Concurrently with the execution of the Master Purchase Agreement, Ms. Lamilla and Black Tusk Peru entered into a mining concessions and claims transfer agreement, dated as of December 5, 2007 (the “Peru Transfer Agreement”), to govern the transfer and registration of the Peru Properties under Peruvian law.
On April 24, 2008, we consummated the transactions contemplated by the Master Purchase Agreement and the Peru Transfer Agreement. Our consummation of the Master Purchase Agreement and the Peru Transfer Agreement was contingent upon, among other things, the formalization of the Peru Transfer Agreement into a public deed before a Peruvian notary public, recordation of the Peru Transfer Agreement with the appropriate Peruvian governmental entity and registration of the Peru Properties in the name of “Black Tusk Minerals Peru SAC” with the appropriate Peruvian registries. All of the Peru Properties have been registered with the appropriate Peruvian registries.
4
Selected Financial Data
The selected financial information presented below as of and for the periods indicated is derived from our financial statements contained elsewhere in this report and should be read in conjunction with those financial statements.
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| | | | |
INCOME STATEMENT DATA | | For the six months ended November 30,2010 | | For the six months ended November 30, 2009 |
| | | | |
Revenue | $ | 0 | $ | 0 |
Operating Expenses | $ | 66,847 | $ | 680,282 |
Net Income (Loss) | $ | (72,749) | $ | (695,432) |
Net Income (Loss) per Common share* | $ | (0.07) | $ | (0.74) |
Weighted Average Number of Common Shares Outstanding | | 981,000 | | 939,000 |
* Basic and diluted
| | | | |
| | | | |
BALANCE SHEET DATA | | At November 30, 2010 | | At May 31, 2010 |
| | | | |
Working Capital (Deficiency) | $ | (334,429) | $ | (270,436) |
Total Assets | $ | 1,172 | $ | 397 |
Accumulated Deficit | $ | (2,798,054) | $ | (2,725,305) |
Shareholders’ Equity (Deficit) | $ | (390,854) | $ | (322,605) |
Our historical results of operations may differ materially from our future results.
You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and related notes appearing elsewhere in this quarterly report on Form 10-Q. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors. See the heading “Forward-Looking Statements” above.
The discussion and analysis of the financial condition and results of operations are based upon the financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the company to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of any contingent liabilities at the financial statement date and reported amounts of revenue and expenses during the reporting period. On an on-going basis the company reviews its estimates and assumptions. The estimates were based on historical experience and other assumptions that the company believes to be reasonable under the circumstances. Actual results are likely to differ from those estimates under different assumptions or conditions, but the company does not believe such differences will materially affect our financial position or results of operations. Critical accounting policies, the policies the Company believes are most important to the presentation of its financial statements and require the most difficult, subjective and complex judgments, are outlined below in “Critical Accounting Policies,” and have not changed significantly.
Plan of Operation
GOLDEN BEAR Claim
On April 24, 2006, we purchased the GOLDEN BEAR claim from Nicholson and Associates Natural Resources Development Corp. of Vancouver, British Columbia for $7,500, inclusive of the assessment costs, which sum consisted of filing fees of $160, geological report costs of $3,000, and the property purchase payment of $4,340.
In order to maintain the GOLDEN BEAR claim in good standing, we were required to make minimal expenditures on the claim or pay renewal fees to the B.C. Ministry of Energy and Mines. Pursuant to 35(1) of the Mineral Tenure Act, a mineral or placer claim forfeits automatically when exploration and development work or payment instead of work has not been registered by the end of the expiry date of the claim. On December 31, 2007, the Company allowed the GOLDEN BEAR claim to lapse.
We did not earn any revenues from the GOLDEN BEAR claim.
Peru Properties
Our business strategy to date has been focused on acquiring and developing advanced stage and past producing properties throughout the Americas. To that end, in 2008, we acquired the Peru Properties. Our objective is to increase value of our shares through the exploration, development and extraction of mineral deposits, beginning with the Peru Properties. The development and extraction may be performed by us or may be performed by potential partners or independent contractors.
On August 31, 2009, a Canadian National Instrument 43-101 (“NI 43-101”) compliant technical report relating to the Peru Properties entitled “Geological Evaluation of the Huanza Property” dated August 28, 2009 (the “Technical Report”) was published and filed on SEDAR at www.sedar.com. The Technical Report was prepared and authored by Glen MacDonald P.Geo., a “qualified person” as defined in NI 43-101, at the request of Robert Krause, a mineral geologist for the Company. The Technical Report is based on information collected by Mr. MacDonald during a site visit to the Peru Properties performed in August 2009, information provided to Mr. MacDonald by the Company, and other information obtained by Mr. MacDonald from sources within the public domain. Readers are encouraged to review the Technical Report in its entirety for more information regarding the Peru Properties.
The Technical Report recommends an exploration program on the Peru Properties during the Company’s fiscal year ending May 31, 2011 at a cost of $225,000, which includes satellite imagery, an airborne geophysical survey and a ground follow-up geology, soil geochemistry and rock sampling program. A drilling decision will be made following a review of results of this initial exploration work.
The Company’s plans for the next twelve months are to focus on the exploration program of the Peru Properties recommended by the Technical Report. We estimate that cash requirements of approximately $575,000 will be required for exploration, administration costs and to fund working capital during the next twelve months. We do not currently have any commitments to fund these costs. Therefore, we need to raise an additional $575,000 in debt or equity financing in the next twelve months. We believe that such funds, if raised, will be sufficient to meet our liquidity requirements through November 30, 2011. Failure to raise needed financing could result in our having to discontinue our mining exploration and development business.
5
Results of Operations
Three-month period ended November 30, 2010 compared to three-month period ended November 30, 2009
We did not earn any revenues for the three months ended November 30, 2010 and have not earned any revenues to date. We do not anticipate earning revenues until such time as we have entered into commercial production of our mineral properties. We are presently in the exploration stage of our business and we can provide no assurance that we will discover commercially exploitable levels of mineral resources on our properties, or if such resources are discovered, that we will enter into commercial production of our mineral properties.
We incurred operating expenses in the amount of $23,490 for the three months ended November 30, 2010 compared to $94,882 for the three months ended November 30, 2009. Operating expenses for the three month period ended November 30, 2010 included: (a) professional fees of $8,331 ($39,047) for the same period in 2009), (b) donated office rent of $750 ($750 for the same period in 2009); (c) donated management services of $1,500 ($1,500 for the same period in 2009); (d) mineral property costs of $0 ($0 for the same period on 2009); (e) general and administrative costs of $12,796 ($53,585) for the same period in 2009); and (f) amortization costs of $113 ($0) for the same period in 2009). The decrease of $71,392 in operating expenses for the three months ended November 30, 2010 compared to November 30, 2009 is primarily the result of a decrease in general and administrative costs and professional fees.
We incurred a net loss in the amount of $26,256 for the three months ended November 30, 2010, compared to $101,557 for the three months ended November 30, 2009. Our decreased loss was primarily attributable to general and administrative costs and professional fees.
Six-month period ended November 30, 2010 compared to six-month period ended November 30, 2009
We incurred operating expenses in the amount of $66,847 for the six months ended November 30, 2010 compared to $680,282 for the six months ended November 30, 2009. Operating expenses for the six month period ended November 30, 2010 included: (a) professional fees of $23,945 ($68,256) for the same period in 2009), (b) donated office rent of $1,500 ($1,500 for the same period in 2009); (c) donated management services of $3,000 ($3,000 for the same period in 2009); (d) mineral property costs of $20,697 ($42,143 for the same period on 2009); (e) general and administrative costs of $17,517 ($543,425) for the same period in 2009); and (f) amortization costs of $188 ($0) for the same period in 2009). The decrease of $613,435 in operating expenses for the six months ended November 30, 2010 compared to November 30, 2009 is the result of a decrease in general and administrative costs of $525,908 due primarily to the recording of stock-based com pensation for vested options, mineral property costs and professional fees.
We incurred a net loss in the amount of $72,749 for the six months ended November 30, 2010, compared to $695,432 for the six months ended November 30, 2009. Our decreased loss was primarily attributable to general and administrative costs, mineral property costs and professional fees.
Liquidity and Capital Resources
As at November 30, 2010, the Company had current assets of $7, consisting of cash and current liabilities of $334,436. The current liabilities consist of accounts payable ($67,969), accrued liabilities ($2,435) and amounts due to related parties ($264,032). As of the Company’s year ended May 31, 2010, the Company had current assets of $397 and current liabilities of $270,833. The increase in current liabilities between these two periods is primarily the result of an increase in accounts payable and amounts due to related parties primarily resulting from the indebtedness of the Company to a company owned by the president of the Company of $261,032 at November 30, 2010 compared to $221,734 at May 31, 2010, representing expenses paid on behalf of the Company and advances provided to the Company. This amount is unsecured, non-interest bearing, and due on demand.
As at November 30, 2010, the Company had a working capital deficit of $334,429, compared to a deficit of $270,436 as at May 31, 2010. We estimate that cash requirements of approximately $575,000 will be required for exploration and administration costs, and to fund working capital during the next twelve months. There can be no assurance that we will be successful in raising the required capital or that actual cash requirements will not exceed our estimates. Failure to raise needed financing could result in our having to discontinue our mining exploration and development business.
As at November 30, 2010, we had a cumulative deficit of $2,798,054 compared to $2,725,305 as at May 31, 2010. We expect to incur further losses during the remainder of our fiscal year ending May 31, 2011.
Given that we have not achieved profitable operations to date, our cash requirements are subject to numerous contingencies and risks beyond our control, including operational and development risks, competition from well-funded competitors, and our ability to manage growth. We can offer no assurance that the Company will generate cash flow sufficient to achieve profitable operations or that our expenses will not exceed our projections. If our expenses exceed estimates, we will require additional capital beyond our current $575,000 estimate during the next twelve months.
We do not currently have any commitments to fund our capital requirements of $575,000 over the next twelve months. Therefore, we need to raise $575,000 in debt or equity financing in the next twelve months. There can be no assurance that such additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. Unprecedented disruptions in the credit and financial markets have had a significant material adverse impact on a number of financial institutions and have limited access to capital and credit for many companies. These disruptions could, among other things, make it more difficult for the Company to obtain, or increase its cost of obtaining, capital and financing for its operations. If we are unable to obtain additional or alternative financing on a timely basis and are unable to generate sufficient revenues and cash flows, we will be unable to meet our capital requirements and will be unable to continue as a going concern.
Since we have not yet earned any revenues from our planned operations and as of November 30, 2010 had a working capital deficit of $334,429 and an accumulated deficit since inception of $2,798,054, there is substantial doubt about the Company’s ability to continue as a going concern. The continuation of the Company as a going concern is dependent upon continued financial support from the Company’s shareholders, the ability of the Company to obtain necessary financing to continue operations, and the attainment of profitable operations. The Company can give no assurance that future financing will be available to it on acceptable terms if at all or that it will attain profitability. These factors raise substantial doubt about our ability to continue as a going concern.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Critical Accounting Policies
Basis of Presentation
These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. These consolidated financial statements include the accounts of the Company and its wholly-owned Peruvian subsidiary, Black Tusk Minerals Peru SAC. All inter-company accounts and transactions have been eliminated. The Company’s fiscal year-end is May 31.
On October 11, 2010, the Company effected a 50:1 reverse stock-split of its issued and outstanding common stock. The issued and outstanding share capital decreased from 47,189,262 shares of common stock to 943,785 shares of common stock. All per share amounts, number and exercise price of stock options; warrants and conversion price of convertible debt have been retroactively restated to reflect the reverse stock-split.
Interim Consolidated Financial Statements
The interim unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Securities and Exchange Commission (“SEC”) Form 10-Q. They do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. Therefore, these interim unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the year ended May 31, 2010, included in the Company’s Annual Report on Form 10-K filed on September 15, 2010 with the SEC.
The interim consolidated financial statements included herein are unaudited; however, they contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to present fairly the Company’s consolidated financial position at November 30, 2010, and the consolidated results of its operations and consolidated cash flows for the three months and six months ended November 30, 2010 and November 30, 2009. The results of operations for the three months and six months ended November 30, 2010 are not necessarily indicative of the results to be expected for future quarters or the full year ending May 31, 2011.
Use of Estimates
The preparation of consolidated financial statements in accordance with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. The Company regularly evaluates estimates and assumptions related to impairment of its mineral properties, valuation of donated capital, stock-based compensation, valuation of financial instruments and deferred income tax asset valuations. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results expe rienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
Comprehensive Loss
ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at November 30, 2010 and 2009, the Company has no items that represent a comprehensive loss and therefore, has not included a schedule of comprehensive loss in the financial statements. The Company’s Peruvian subsidiary uses the US dollar for its transactions and accounts for its operations in US dollars, which does not give rise to comprehensive income or loss.
Basic and Diluted Net Income (Loss) Per Share
The Company computes net income (loss) per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential split-adjusted shares if their effect is anti-dilutive. Split-adjusted shares underlying these securities totalled 89,014 as at November 30, 2010 (2009 – 130,275).
Cash and Cash Equivalents
The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.
Mineral Property Costs
The Company has been in the exploration stage since its inception on August 8, 2005 and has not yet realized any revenues from its planned operations. It is primarily engaged in the acquisition and exploration of mineral properties. Mineral property exploration costs are expensed as incurred. Mineral property acquisition costs are initially capitalized. The Company assesses the carrying costs for impairment under ASC 360,Property, Plant, and Equipment at each fiscal quarter end. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs then incurred to develop such property, are capitalized. Such costs will be amortized using the units-of-production method over the estimated life of the probable reserve. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to operations.
Long-Lived Assets
In accordance with ASC 360,Property, Plant, and Equipment, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life.
Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.
Financial Instruments and Fair Value Measures
The Company’s financial instruments consist principally of cash, accounts payable, amounts due to related parties and convertible notes. Pursuant to ASC 820,Fair Value Measurements and Disclosures and ASC 825,Financial Instruments the fair value of the Company’s cash equivalents is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The Company’s convertible notes are recorded using the amortized cost basis, with the discount amortized to interest expense over the term of the notes. The fair value of convertible notes is determined using "Level 2" inputs and approximate carrying value. The Company believes that the recorded values of all of the Company’s other financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates or durations.
The Company’s operations are in Canada, which results in exposure to market risks from changes in foreign currency rates. The financial risk is the risk to the Company’s operations that arise from fluctuations in foreign exchange rates and the degree of volatility of these rates. Currently, the Company does not use derivative instruments to reduce its exposure to foreign currency risk.
Income Taxes
The Company accounts for income taxes using the asset and liability method in accordance with ASC 740,Income Taxes. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.
Foreign Currency Translation
The Company’s functional and reporting currency is the United States dollar ("US dollars"). The Company’s Peruvian subsidiary uses the US dollar for its transactions and accounts for its operations in US dollars. Monetary assets and liabilities denominated in foreign currencies are translated in accordance with ASC 830,Foreign Currency Translation Matters, using the exchange rate prevailing at the balance sheet date. Gains and losses arising on settlement of foreign currency denominated transactions or balances are included in the determination of income. Foreign currency transactions are primarily undertaken in Canadian dollars. The Company has not, to the date of these financials statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.
Stock-based Compensation
The Company records stock-based compensation in accordance with ASC 718,Compensation - Stock Based Compensation, and ASC 505-50,Equity Based Payments to Non-Employees using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.
Recently Issued Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
ITEM 3.
Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
ITEM 4T.
Controls and Procedures
Disclosure Controls and Procedures
At the end of the period covered by this quarterly report on Form 10-Q for the six months ended November 30, 2010, an evaluation was carried out by the Company’s President, who is the Company’s Chief Executive Officer and interim Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a – 15(e) and Rule 15d – 15(e) under the Exchange Act). Based on that evaluation the President concluded that as of the end of the period covered by this report on Form 10-Q, the Company’s disclosure controls and procedures were adequately designed and effective in ensuring that: (i) information required to be disclosed by the Company in reports that it files or submits to the Securities and Exchange Commission under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms and (ii) material information required to be disclosed in the Company’s reports filed under the Exchange Act is accumulated and communicated to the Company’s President as appropriate, to allow for accurate and timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There were no changes in the Company’s internal control over financial reporting (as defined in Rule 13(a)-15(f) and 15(d)-15(f) under the Exchange Act) during the quarter ended November 30, 2010 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1.
Legal Proceedings
None.
ITEM 1A.
Risk Factors
Not applicable.
ITEM 2.
Unregistered Sales of Equity Securities and Use of Proceeds
None
ITEM 3.
Defaults Upon Senior Securities
None.
ITEM 4.
Submission of Matters to a Vote of Security Holders
None.
ITEM 5.
Other Information
Effective November 19, 2010, the Company re-established its quotation on the OTC Bulletin Board.
ITEM 6.
Exhibits
| |
Exhibit Number | Description |
31.1 | Certification of Principal Executive Officer and Principal Financial and Accounting Officer pursuant to Rule 13a-14(a) of the Exchange Act |
32.1 | Certification of Principal Executive Officer and Principal Financial and Accounting Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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SIGNATURES
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.
BLACK TUSK MINERALS INC.
Dated:January 24, 2011
By:__/s/ Gavin Roy________________________
Gavin Roy, President
(Principal Executive Officer and Principal Financial and Accounting Officer)
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EXHIBIT 31.1
CERTIFICATION
I, Gavin Roy, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of Black Tusk Minerals Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Dated: January 24, 2011
By:__/s/ Gavin Roy________________________
Gavin Roy, President
(Principal Executive Officer and Principal Financial and Accounting Officer)
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EXHIBIT 32.
CERTIFICATION PURSUANT TO
18 U.S.C. §1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Black Tusk Minerals, Inc. (the “Company”) on Form 10-Q for the period ended November 30, 2010, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Gavin Roy, Chief Executive Officer and interim Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)
The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: January 24, 2011
By:__/s/ Gavin Roy________________________
Gavin Roy, President
(Principal Executive Officer and Principal Financial and Accounting Officer)
A signed original of this written statement required by Section 906 has been provided to Black Tusk Minerals, Inc. and will be retained by Black Tusk Minerals, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
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