UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 June 30, 2010
o Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from _______________ to _______________
Commission File Number 0 - 52280
(Exact name of Small Business Issuer as specified in its charter)
Nevada | 98-0504670 |
(State or other jurisdiction of incorporation) | (IRS Employer Identification No.) |
609 – 475 Howe Street, Vancouver BC V6C 2B3
(Address of principal executive offices)
(604) 682-1643
(Issuer’s telephone number)
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 o No þ
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 o No o
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.
| Large accelerated filer | o | Accelerated filer | o |
| | | | |
| Non-accelerated filer | o | Smaller reporting company | þ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No þ
There are 13,947,000 common shares of Scout Exploration, Inc. issued and outstanding as of August 29, 2012.
PART I - FINANCIAL INFORMATION
Item 1. | Financial Statements |
Scout Exploration, Inc.
(an Exploration Stage Enterprise)
Interim Financial Statements
(Unaudited) (presented in US dollars)
June 30, 2010
(a Development Stage Company)
(Unaudited) (Presented in US Dollars)
INDEX
| |
| | | | | | |
(an Exploration Stage Company) | | | | | | |
Interim Balance Sheets | | | | | | |
(Unaudited) (Presented in US Dollars) | | | | | | |
| | | | | | |
| | (Unaudited) June 30, 2010 | | | September 30, 2009 | |
| | | | | | |
Assets | | | | | | |
Current | | | | | | |
Cash | | $ | 202 | | | $ | - | |
| |
| | | | | | | | |
Liabilities | | | | | | | | |
Current | | | | | | | | |
Bank indebtedness | | $ | - | | | $ | 282 | |
Accounts payable and accrued liabilities (note 5) | | | 253,214 | | | | 209,864 | |
Note payable (note 4) | | | 13,705 | | | | - | |
Due to related parties (note 5) | | | 22,678 | | | | 21,628 | |
| | | 289,597 | | | | 231,774 | |
| | | | | | | | |
Stockholders' Deficit | | | | | | | | |
Preferred stock | | | | | | | | |
Authorized: 1,000,000 shares with par value of $0.01 | | | | | | | | |
Issued: Nil (September 30, 2009 - Nil) | | | - | | | | - | |
Common stock | | | | | | | | |
Authorized: 50,000,000 shares with par value of $0.001 | | | | | | | | |
Issued: 8,947,000 (September 30, 2009 - 8,947,000) | | | 8,947 | | | | 8,947 | |
Subscriptions received in advance | | | 4,100 | | | | 4,100 | |
Subscriptions receivable | | | (5,246 | ) | | | (5,246 | ) |
Additional paid in capital | | | 996,853 | | | | 996,853 | |
Deficit accumulated during the exploration stage | | | (1,294,049 | ) | | | (1,236,428 | ) |
| | | (289,395 | ) | | | (231,774 | ) |
| | $ | 202 | | | $ | - | |
| |
| | | | | | | | |
Going Concern (Note 1) | | | | | | | | |
The accompanying notes are an integral part of the interim financial statements.
| |
| | | | | | | | | | | | | | | | | | | | | |
(an Exploration Stage Company) | | | | | | | | | | | | | | | | | | | | | |
Interim Statements of Stockholders' Deficit | | | | | | | | | | | | | | | | | | | |
(Unaudited) (Presented in US Dollars) | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
From Incorporation on February 1, 1999 to June 30, 2010 | |
| | | | | | | | | | | | | | | | | Deficit | | | | |
| | | | | | | | | | | | | | | | | accumulated | |
| | Shares of | | | | | | Additional | | | Subscriptions | | | | | | during the | | | | |
| | common | | | Capital | | | paid-in | | | received | | | Subscriptions | | | exploration | | | | |
| | stock | | | stock | | | capital | | | in advance | | | receivable | | | stage | | | Total | |
| | | | | | | | | | | | | | | | | | | | | |
Balance February 1, 1999 | | | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | |
Subscriptions received in advance | | | - | | | | - | | | | - | | | | 37,100 | | | | - | | | | - | | | | 37,100 | |
Net loss for the period | | | - | | | | - | | | | - | | | | - | | | | - | | | | (32,002 | ) | | | (32,002 | ) |
Balance September 30, 1999 | | | - | | | | - | | | | - | | | | 37,100 | | | | - | | | | (32,002 | ) | | | 5,098 | |
Net loss for the year | | | - | | | | - | | | | - | | | | - | | | | - | | | | (3,829 | ) | | | (3,829 | ) |
Balance September 30, 2000 | | | - | | | | - | | | | - | | | | 37,100 | | | | - | | | | (35,831 | ) | | | 1,269 | |
Issue common shares for cash | | | 3,700,000 | | | | 3,700 | | | | 33,300 | | | | (37,000 | ) | | | - | | | | - | | | | - | |
Net loss for the year | | | - | | | | - | | | | - | | | | - | | | | - | | | | (3,754 | ) | | | (3,754 | ) |
Balance September 30, 2001 | | | 3,700,000 | | | | 3,700 | | | | 33,300 | | | | 100 | | | | - | | | | (39,585 | ) | | | (2,485 | ) |
Net loss for the year | | | - | | | | - | | | | - | | | | - | | | | - | | | | (3,216 | ) | | | (3,216 | ) |
Balance September 30, 2002 | | | 3,700,000 | | | | 3,700 | | | | 33,300 | | | | 100 | | | | - | | | | (42,801 | ) | | | (5,701 | ) |
Net loss for the year | | | - | | | | - | | | | - | | | | - | | | | - | | | | (3,120 | ) | | | (3,120 | ) |
Balance September 30, 2003 | | | 3,700,000 | | | | 3,700 | | | | 33,300 | | | | 100 | | | | - | | | | (45,921 | ) | | | (8,821 | ) |
Net loss for the year | | | - | | | | - | | | | - | | | | - | | | | - | | | | (3,127 | ) | | | (3,127 | ) |
Balance September 30, 2004 | | | 3,700,000 | | | | 3,700 | | | | 33,300 | | | | 100 | | | | - | | | | (49,048 | ) | | | (11,948 | ) |
Net loss for the year | | | - | | | | - | | | | - | | | | - | | | | - | | | | (10,776 | ) | | | (10,776 | ) |
Balance September 30, 2005 | | | 3,700,000 | | | | 3,700 | | | | 33,300 | | | | 100 | | | | - | | | | (59,824 | ) | | | (22,724 | ) |
Issue common shares for cash | | | 1,700,000 | | | | 1,700 | | | | 83,300 | | | | - | | | | - | | | | - | | | | 85,000 | |
Issue common shares for mineral property | | | 500,000 | | | | 500 | | | | 24,500 | | | | - | | | | - | | | | - | | | | 25,000 | |
Net loss for the year | | | - | | | | - | | | | - | | | | - | | | | - | | | | (85,201 | ) | | | (85,201 | ) |
Balance September 30, 2006 | | | 5,900,000 | | | | 5,900 | | | | 141,100 | | | | 100 | | | | - | | | | (145,025 | ) | | | 2,075 | |
Issuance of common stock for cash and subscription receivable | | | 1,400,000 | | | | 1,400 | | | | 208,600 | | | | - | | | | (75,000 | ) | | | - | | | | 135,000 | |
Net loss | | | - | | | | - | | | | - | | | | - | | | | - | | | | (131,869 | ) | | | (131,869 | ) |
Balance September 30, 2007 | | | 7,300,000 | | | | 7,300 | | | | 349,700 | | | | 100 | | | | (75,000 | ) | | | (276,894 | ) | | | 5,206 | |
Cash received for | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
subscriptions receivable | | | - | | | | - | | | | - | | | | - | | | | 75,000 | | | | - | | | | 75,000 | |
Issuance of common stock | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
for consulting services | | | 150,000 | | | | 150 | | | | 74,850 | | | | - | | | | - | | | | - | | | | 75,000 | |
Issuance of common stock for cash | | | 1,397,000 | | | | 1,397 | | | | 557,403 | | | | 4,000 | | | | (23,000 | ) | | | - | | | | 539,800 | |
Net loss | | | - | | | | - | | | | - | | | | - | | | | - | | | | (792,378 | ) | | | (792,378 | ) |
Balance September 30, 2008 | | | 8,847,000 | | | | 8,847 | | | | 981,953 | | | | 4,100 | | | | (23,000 | ) | | | (1,069,272 | ) | | | (97,372 | ) |
Cash received for | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
subscriptions receivable | | | - | | | | - | | | | - | | | | - | | | | 17,754 | | | | - | | | | 17,754 | |
Shares issued for consulting services | | | 100,000 | | | | 100 | | | | 14,900 | | | | - | | | | - | | | | - | | | | 15,000 | |
Net loss | | | - | | | | - | | | | - | | | | - | | | | - | | | | (167,156 | ) | | | (167,156 | ) |
Balance September 30, 2009 | | | 8,947,000 | | | | 8,947 | | | | 996,853 | | | | 4,100 | | | | (5,246 | ) | | | (1,236,428 | ) | | | (231,774 | ) |
Net loss | | | - | | | | - | | | | - | | | | - | | | | - | | | | (57,621 | ) | | | (57,621 | ) |
Balance June 30, 2010 | | | 8,947,000 | | | $ | 8,947 | | | $ | 996,853 | | | $ | 4,100 | | | $ | (5,246 | ) | | $ | (1,294,049 | ) | | $ | (289,395 | ) |
| |
The accompanying notes are an integral part of the interim financial statements.
| |
| | | | | | | | | | | | | | | |
(an Exploration Stage Company) | | | | | | | | | | | | | | | |
Interim Statements of Operations | | | | | | | | | | | | | | | |
(Unaudited) (Presented in US Dollars) | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| | Cumulative from inception through June 30 | | | Three months ended June 30 | | | Nine months ended June 30 | |
| | 2010 | | | 2010 | | | 2009 | | | 2010 | | | 2009 | |
| | | | | | | | | | | | | | | |
Administrative expenses | | | | | | | | | | | | | | | |
Accounting and audit | | $ | 187,906 | | | $ | 3,500 | | | $ | 4,562 | | | $ | 11,500 | | | $ | 19,371 | |
Bank charges and interest | | | 13,513 | | | | 1,889 | | | | 4,097 | | | | 3,850 | | | | 4,267 | |
Consulting fees | | | 117,983 | | | | - | | | | 869 | | | | - | | | | 15,869 | |
Directors’ fees (note 5) | | | 92,000 | | | | 12,000 | | | | 6,000 | | | | 18,000 | | | | 18,000 | |
Filing fees, dues and subscriptions | | | 16,824 | | | | (719 | ) | | | 1,004 | | | | 114 | | | | 5,391 | |
Foreign exchange loss (gain) | | | 18,135 | | | | (5,697 | ) | | | 5,223 | | | | 630 | | | | 638 | |
Legal | | | 138,207 | | | | - | | | | - | | | | 1,296 | | | | 269 | |
Magazine rights | | | 5,100 | | | | - | | | | - | | | | - | | | | - | |
Management fees (note 5) | | | 35,575 | | | | - | | | | - | | | | - | | | | - | |
Office and administration (note 5) | | | 164,666 | | | | - | | | | 9,187 | | | | 20,431 | | | | 26,905 | |
Promotion and travel | | | 57,144 | | | | - | | | | 300 | | | | - | | | | 1,909 | |
Transfer agent | | | 19,376 | | | | 1,200 | | | | 600 | | | | 1,800 | | | | 1,800 | |
| | | 866,429 | | | | 12,173 | | | | 31,842 | | | | 57,621 | | | | 94,419 | |
| | | | | | | | | | | | | | | | | | | | |
Resource property expenses | | | | | | | | | | | | | | | | | | | | |
Acquisition costs | | | 30,000 | | | | - | | | | - | | | | - | | | | - | |
Exploration costs | | | 860 | | | | - | | | | - | | | | - | | | | - | |
| | | 30,860 | | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | |
Loss from impairment of investment | | | 396,760 | | | | - | | | | - | | | | - | | | | - | |
| | | | | | | | | | | | | | | | | | | | |
Loss and comprehensive loss | | $ | (1,294,049 | ) | | $ | (12,173 | ) | | $ | (31,842 | ) | | $ | (57,621 | ) | | $ | (94,419 | ) |
| | | | | | | | | | | | | | | | | | | | |
Basic and diluted loss per share | | | | | | $ | (0.00 | ) | | $ | (0.00 | ) | | $ | (0.01 | ) | | $ | (0.01 | ) |
| | | | | | | | | | | | | | | | | | | | |
Basic and diluted weighted average shares outstanding | | | | 8,947,000 | | | | 8,947,000 | | | | 8,947,000 | | | | 8,917,696 | |
| |
The accompanying notes are an integral part of the interim financial statements.
| |
| | | | | | | | | |
(an Exploration Stage Company) | | | | | | | | | |
Interim Statements of Cash Flows | | | | | | | | | |
(Unaudited) (Presented in US Dollars) | | | | | | | | | |
| | | | | | | | | |
| | Cumulative from inception through June 30 | | | Nine months ended June 30 | |
| | 2010 | | | 2010 | | | 2009 | |
| | | | | | | | | |
Cash flows from operating activities | | | | | | | | | |
Net loss | | $ | (1,294,049 | ) | | $ | (57,621 | ) | | $ | (94,419 | ) |
Adjustments to reconcile net loss to net cash | | | | | | | | | | | | |
used in operating activities | | | | | | | | | | | | |
Services settled by issuance of stock | | | 115,100 | | | | - | | | | 15,000 | |
Loss from impairment of investment | | | 396,760 | | | | - | | | | - | |
Expenses paid by subsidiary and forgiven | | | 20,480 | | | | - | | | | - | |
Unrealized foreign exchange | | | 17,185 | | | | 5,593 | | | | 410 | |
Accrued interest | | | 1,854 | | | | 1,854 | | | | - | |
Changes in operating assets and liabilities | | | | | | | | | | | | |
Prepaid expenses | | | - | | | | - | | | | 4,280 | |
Accounts payable and accrued liabilities | | | 240,435 | | | | 38,035 | | | | 9,157 | |
| | | (502,235 | ) | | | (12,139 | ) | | | (65,572 | ) |
| | | | | | | | | | | | |
Cash flows from investing activities | | | | | | | | | | | | |
Acquisition of investment | | | (417,240 | ) | | | - | | | | - | |
| | | | | | | | | | | | |
Cash flows from financing activities | | | | | | | | | | | | |
Proceeds from Issuance of common stock | | | 889,554 | | | | - | | | | 17,754 | |
Advances from related parties | | | 22,678 | | | | 1,050 | | | | 21,628 | |
Proceeds from issuance of note | | | 11,851 | | | | 11,851 | | | | - | |
Repayment of bank indebtedness | | | - | | | | (282 | ) | | | - | |
| | | 924,083 | | | | 12,619 | | | | 39,382 | |
| | | | | | | | | | | | |
Effect of exchange rate changes on cash | | | (4,406 | ) | | | (278 | ) | | | (410 | ) |
| | | | | | | | | | | | |
(Decrease) increase in cash | | | 202 | | | | 202 | | | | (26,600 | ) |
| | | | | | | | | | | | |
Cash at beginning of the period | | | - | | | | - | | | | 31,560 | |
| | | | | | | | | | | | |
Cash at end of the period | | $ | 202 | | | $ | 202 | | | $ | 4,960 | |
| |
| | | | | | | | | | | | |
Supplemental disclosure with respect to cash flows (Note 6) | | | | | | | | | |
The accompanying notes are an integral part of the interim financial statements.
Notes to the Interim Financial Statements
(Unaudited) (Presented in US dollars)
1. | Nature of operations and going concern |
Scout Exploration, Inc. (the “Company”) was incorporated in the State of Nevada on February 1, 1999. The Company was initially engaged in the business of designing, developing and marketing educational products. On April 10, 2006 the Company changed its name from Virtual Curricula Corp. to Scout Exploration, Inc.
The Company’s continuing operations, as intended, are dependent on management’s ability to raise required funding through future equity issuances, asset sales or a combination thereof, which is not assured. These financial statements have been prepared on a going concern basis, which assumes the realization of assets and liquidation of liabilities in the normal course of business.
At June 30, 2010, the Company had suffered losses from exploration stage activities to date, and has a working capital deficit of $289,395. Although management is currently attempting to implement its business plan, and is seeking additional sources of equity or debt financing, there is no assurance these activities will be successful. These factors raise substantial doubt about the ability of the Company to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
The interim financial statements presented herein have been prepared by the Company in accordance with the accounting policies in its audited financial statements for the year ended September 30, 2009 and should be read in conjunction with the notes thereto.
In the opinion of management, all adjustments (consisting only of normal recurring adjustments) which are necessary to provide a fair presentation of operating results for the interim period presented have been made. The results of operations for the period presented is not necessarily indicative of the results to be expected for the year.
Interim financial data presented herein are unaudited, except for the balance sheet at September 30, 2009, which has been derived from the audited financial statements at that date.
On March 4, 2006 the Company signed a letter of agreement with a non-arms length private Canadian Corporation for a 100% interest in and to the Wheaton River AAV 1-9 Claims situated in the Whitehorse Mining District of the Yukon Territory, Canada. Terms of the purchase require a cash payment of $5,000 by March 31, 2006 (paid) and $20,000 on or before September 30, 2006 (subsequently deferred until such a time as the Company is able to secure financing), and the issuance of 500,000 common shares of the Company (issued at fair value of $0.05 per common share). The Vendor will retain a 3% net smelter royalty, up to 2% of which can be re-purchased for $2,000,000.
Notes to the Interim Financial Statements
(Unaudited) (Presented in US dollars)
The note payable has a principal amount of $10,000, bears interest at 25% per annum, and was due on June 21, 2010. As further consideration the lender will be issued shares of the Company’s capital stock having an aggregate value of $2,500.
The interest and principal were not paid as required on the maturity date and the note is currently in default.
5. | Related party transactions |
| a) | During the period ended June 30, 2010, directors’ fees of $18,000 (2009 - $18,000) were paid or accrued to two directors of the Company. |
| b) | During the period ended June 30, 2010, office and administration fees and management fees of $20,431 (2009 - $26,624) were paid or accrued to corporations controlled by a Director of the Company. |
| c) | At June 30, 2010, $100,604 (September 30, 2009 - $64,630) owed to Directors and corporations controlled by a Director of the Company was included in accounts payable. The balance is due on demand, has no specific terms of repayments, is non-interest bearing and is unsecured, and accordingly fair value cannot be reliably determined. |
| d) | As of June 30, 2010, advances due to directors in the amount of $22,678 (September 30, 2009 – $21,628) are outstanding. The advances are due on demand, have no specific terms of repayment, are non-interest bearing and unsecured, and accordingly fair value cannot be reliably determined. |
The above transactions occurred in the normal course of operations and were measured at the exchange amount which represented the consideration established and agreed to by the related parties.
6. | Supplemental disclosure with respect to cash flows |
Supplemental cash flow information for the six months ended June 30 is as follows:
| | 2010 | | | 2009 | |
Interest paid | | $ | - | | | $ | - | |
Income taxes paid | | $ | - | | | $ | - | |
7. | Financial instruments and risk management |
The Company’s financial instruments include bank indebtedness, accounts payable and accrued liabilities. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. The fair value of these financial instruments approximates their carrying values, unless otherwise noted.
Notes to the Interim Financial Statements
(Unaudited) (Presented in US dollars)
7. | Financial instruments and risk management (continued) |
The Company expects to raise equity predominantly in United States dollars. The Company is conducting business in Canada where financial transactions are based on the Canadian dollar. As such, the Company is subject to risks due to fluctuations in the exchange rates for the U.S. and Canadian dollar. The Company does not enter into derivative financial instruments to mitigate its exposure to foreign currency risk.
At June 30, 2010 the Company had the following financial assets and liabilities denominated in Canadian dollars:
| | CDN Dollars | |
Cash | | $ | 49 | |
Accounts payable and accrued liabilities | | $ | 125,929 | |
At June 30, 2010 CDN dollar amounts were converted at a rate of $1.06 Canadian dollars to $1.00 US dollar.
On September 14, 2011 and as amended on July 31, 2012, the Company entered into a letter of intent with IDS Offshore Inc. (“IDS”) pursuant to which the Company may acquire the exclusive rights to certain intellectual property and patents surrounding the rapid oil boom project held and developed by IDS (the “Project”), for total cash consideration of $4,265,000 payable at various dates over a 3 year period commencing on July 31, 2012, and issuance of 5,000,000 common shares of the Company on signing the amended letter of intent (issued), and a total 7,500,000 common shares of the Company upon completion of various phases of the Project.
Item 2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
Cautionary Note Regarding Forward Looking Statements
This report contains forward-looking statements that involve risks and uncertainties, including statements regarding our capital needs, business plans and expectations. Such forward-looking statements involve risks and uncertainties regarding the market price of precious and base metals, oil and gas, availability of funds, government regulations, operating costs, exploration costs, outcomes of exploration programs and other factors. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. Forward-looking statements can be identified by terminology such as “may”, “will”, “should”, “expect”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “potential” or “continue”, the negative of such terms or other comparable terminology. Our actual results may differ materially. In evaluating these statements, you should consider various factors. These factors may cause actual results to differ materially from any forward-looking statement. While these forward-looking statements are made in good faith and reflect our current judgment regarding our business plans, actual results from our operations will almost always vary, sometimes materially, from any future performance suggested herein.
General
The following discussion and analysis should be read in conjunction with our financial statements for the three and nine months ended June 30, 2010, and notes related thereto appearing elsewhere in this report.
Plan of Operations
Over the next year our plan of operations is to review our existing mineral property, evaluate potential acquisitions of additional mineral properties, and secure financing for the Company to carry out its operations.
As of June 30, 2010, we had $202 cash on hand and negative working capital of $289,395.
We will need to obtain additional financing in order to continue our plan of operations.
We believe that debt financing will not be a feasible alternative, as we do not have sufficient unencumbered tangible assets to secure any debt financing. We anticipate that additional financing will be equity financing from the sale of our common stock. However, we do not have any financing arranged and nor can we provide investors with any assurance that we will be able to raise sufficient funding from such potential equity financings. In the absence of such financing, we will not be able to continue exploration or development of our mineral claims and our business plan will then fail. Even if we are successful in obtaining equity financing to fund exploration of our mineral claims and acquisition of additional mineral properties as well as other operational costs, there is no assurance of success from such exploration activities. In the event we do not continue to obtain additional financing, we will be forced to abandon our mineral claims.
Future Financing
We anticipate we will continue to rely on equity sales of our common stock to finance our business operations. Issuances of additional shares will result in dilution to our existing shareholders. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our planned exploration or development activities.
Results of Operations
General and administrative expenses were decreased for the three months ended June 30, 2010 at $12,173 compared to $31,842 for the three months ended June 30, 2009, mainly as a result of a foreign exchange gain and reduced office and administration.
Our loss for the three months ended June 30, 2010 was $12,173 as compared to $31,842 for the three months ended June 30, 2009.
Item 3 | Quantitative and Qualitative Disclosures about Market Risk |
Not applicable.
Item 4 | Controls and Procedures |
Disclosure Controls and Procedures
As required by Rule 13a-15 of the Exchange Act, our principal executive officer and principal financial officer evaluated our company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. Based on this evaluation, these officers concluded that as of the end of the period covered by this report, these disclosure controls and procedures were not effective to ensure that the information required to be disclosed by our company in reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities Exchange Commission and include controls and procedures designed to ensure that such information is accumulated and communicated to our company's management, including our company's principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. The conclusion that our disclosure controls and procedures were not effective was due to the presence of the following material weaknesses in internal control over financial reporting which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines. Management anticipates that such disclosure controls and procedures will not be effective until the material weaknesses are remediated.
We plan to take steps to enhance and improve the design of our internal controls over financial reporting. During the period covered by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we plan to implement the following changes during our fiscal year ending September 30, 2011: (i) appoint additional qualified personnel to address inadequate
segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out above are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.
Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within our 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.
Changes in Internal Control over Financial Reporting
During the quarter ended December 31, 2010, there were no changes in our internal control over financial reporting or in other factors that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
None.
Item 2 | UNREGISTERED SALES OF EQUITY SECURITIES. |
None.
Item 3 | DEFAULTS UPON SENIOR SECURITIES. |
None.
Item 4 | (REMOVED AND RESERVED) |
None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: September 6, 2012
SCOUT EXPLORATION, INC.
By: /s/ John Roozendaal
Name: John Roozendaal
Title: President and Chief Executive Officer
By: /s/ Jason Walsh
Name: Jason Walsh
Title: Treasurer and Principal Accounting Officer