| Summary of Significant Accounting Policies [Text Block] | 2.
Summary of Significant Accounting Policies
a)
Basis of Presentation
These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States (“US GAAP”), and are expressed in United States. dollars. These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Kilimanjaro Mining Company, Inc. (“Kilimanjaro”), Lake Victoria Resources Company, (T) Ltd., Jin 179 Company Tanzania Ltd. and Chrysos 197 Company Tanzania Ltd. Significant intercompany accounts and transactions have been eliminated. The Company’s fiscal year-end is March 31.
These 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 of the information and footnotes required by generally accepted accounting principles for complete consolidated financial statements. Therefore, these interim consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto for the year ended March 31, 2015, included in the Company’s Annual Report on Form 10-K filed on June 30, 2015 with the SEC.
The 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 financial position at June 30, 2015, and the results of its operations and cash flows for the three months ended June 30, 2015. The results of operations for the period ended June 30, 2015 are not necessarily indicative of the results to be expected for future quarters or the full year.
b)
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 consolidated financial statements and the reported amounts of revenue and expenses in the reporting period. The Company regularly evaluates estimates and assumptions related to valuation of long-lived assets, mineral property costs, asset retirement obligations, forward gold sale liability, stock-based compensation, and deferred income tax assets. 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 experienced 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.
c)
Business Combinations
The Company follows the guidance in ASC 805, Business Combinations, and ASC 810, Consolidation. The Company has no non-controlling interests. As at June 30, 2015, the Company does not have any non- controlling interests.
d)
Basic and Diluted Net Income (Loss) Per Share
The Company computes net income (loss) per share in accordance with ASC 260, Earnings per Share, which requires presentation of both basic and diluted earnings per share (EPS) on the face of consolidated statement of comprehensive loss. Basic EPS is computed by dividing net income (loss) available to common stockholders (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 shares if their effect is anti dilutive. As of June 30, 2015, the Company had
9,400,000
potentially dilutive securities outstanding.
e)
Cash and Cash Equivalents
The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance or may be redeemed without significant penalties to be cash equivalents.
As of June 30, 2015 and March 31, 2015, the Company has approximately $1,300
and $1,400, respectively, deposited at FDIC insured banks in the United States. FDIC deposit insurance covers the balance of each depositor’s account up to $250,000
per insured bank.
As of June 30, 2015 and March 31, 2015, the Company has approximately $40,000
and $131,000, respectively, deposited in banks in Canada. CDIC deposit insurance covers the balance of each depositor’s account up to $100,000
per insured bank. These deposits include $5,472
(CAD$6,900) and $6,466
(CAD$6,900), respectively, of guaranteed investment certificates bearing variable interest at prime rate less
1.90% which is restricted in use for corporation credit cards.
As of June 30, 2015, the Company has Tanzania shillings of
4,200,000
(approximately $1,900) and $5,400
deposited in Tanzania. The Deposit Insurance Board in Tanzania insures up to
1,500,000
Tanzanian Shillings (approximately $690
as of June 30, 2015) per customer per bank. Any amount beyond the basic insurance amount may expose the Company to a loss.
f)
Property and Equipment
Property and equipment consists of mining tools and equipment, furniture and equipment and computers and software which are depreciated on a straight-line basis over their expected lives of five years.
g)
Mineral Property Costs
Under US GAAP mineral property acquisition costs are ordinarily capitalized when incurred using ASC 805- 20-55-37, whether Mineral Rights are Tangible or Intangible Assets. The carrying costs are assessed for impairment under ASC 360-10-35-21, Accounting for Impairment or Disposal of Long-Lived Assets, whenever events or changes in circumstances indicate that the carrying costs may not be recoverable. The Company expenses as incurred all property maintenance and exploration costs.
The Company also evaluates the carrying value of acquired mineral property rights in accordance with ASC 930-360-35-1, Mining Assets: Impairment and Business Combinations, using the Value Beyond Proven and Probable (VBPP) method. The fair value of a mining asset generally includes both VBPP and an estimate of the future market price of the minerals.
When the Company has capitalized mineral property development costs, these properties will be assessed for impairment whenever events or changes in circumstances indicate that the carrying costs may not be recoverable. Once a property reaches the production stage, the related capitalized costs will be amortized, using the units of production method. The Company records its interests in mining properties and areas of geological interest at cost.
h)
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 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.
i)
Asset Retirement Obligations
The Company accounts for asset retirement obligations in accordance with the provisions of ASC 440, Asset Retirement and Environmental Obligations which requires the Company to record the fair value of an asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of tangible long-lived assets that result from the acquisition, construction, development and/or normal use of the assets. The Company did not have any asset retirement obligations as of June 30, 2015.
j)
Financial Instruments
ASC 825, Financial Instruments requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 825 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 825 prioritizes the inputs into three levels that may be used to measure fair value:
Level 1
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
The Company’s financial instruments consist principally of cash and cash equivalents, accounts payable, accounts payable to related party, other payables, note payable, and forward gold sale liability.
Pursuant to ASC 825, the fair value of cash and cash equivalents are determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets.
The Company has classified its forward gold sales liability as a derivative liability. The fair value of the derivative liability is determined based on “Level 2” inputs. The initial forward sale of gold is recorded at the fair value of consideration received. The forward gold sale liability is revalued to fair value at each subsequent reporting period end based on quoted forward gold prices at re-valuation dates with any increase or decrease in the fair value of the liability being recognized through comprehensive income or loss.
The Company believes that the recorded values of accounts payable, accounts payable to related party, other payables, and note payable approximate their current fair values because of their nature and respective relatively short maturity dates or durations.
Assets and liabilities measured at fair value on a recurring basis were presented on the Company’s consolidated balance sheet as of June 30, 2015 as follows:
Fair Value Measurements Using
Quoted Prices in Significant
Active Markets Other Significant
For Identical Observable Unobservable Balance
Instruments Inputs Inputs June 30,
(Level 1) (Level 2) (Level 3) 2015
$ $ $ $
Assets:
Cash and cash equivalents
49,100
–
–
49,100
Liabilities:
Forward gold sales liability
–
131,953
–
131,953
k)
Foreign Currency Translation
The Company’s functional and reporting currency is the United States dollar. Monetary assets and liabilities denominated in foreign currencies are translated to United States dollars in accordance with ASC 740, Foreign Currency Matters, using the exchange rate prevailing at the consolidated balance sheet date. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income.
To the extent that the Company incurs transactions that are not denominated in its functional currency, they are undertaken in Canadian dollars and the Tanzanian Schillings. A portion of business transactions in Tanzania and mineral option purchase agreements are denominated in Tanzanian Schillings. The Company has not, to the date of these consolidated financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.
l)
Segment Information
At June 30, 2015, approximately $15,000
of property and equipment (March 31, 2015 - $18,000) is located in Tanzania and $3,000
(March 31, 2015 - $4,000) in Canada. Mineral properties totaling $250,150
(March 31, 2015 - $250,150) are located in Tanzania. Although Tanzania is considered economically stable, it is always possible that unanticipated events in foreign countries could disrupt the Company’s operations.
m)
Comprehensive Loss
ASC 220, Comprehensive Income, establishes standards for the reporting and display of other comprehensive loss and its components in the consolidated financial statements. As at June 30, 2015 and 2014, the Company had no items that represent other comprehensive loss, and therefore has not included a schedule of comprehensive loss in the consolidated financial statements.
n)
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.
o)
Stock-Based Compensation
The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Based Compensation and ASC 505, Equity Based Payments to Non-Employees, which requires the measurement and recognition of compensation expense based on estimated fair values for all share-based awards made to employees and directors, including stock options.
ASC 718 requires companies to estimate the fair value of share-based awards on the date of grant using an option-pricing model. The Company uses the Black-Scholes option-pricing model as its method of determining fair value. This model is affected by the Company’s stock price as well as assumptions regarding a number of subjective variables. These subjective variables include, but are not limited to the Company’s expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviours. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the consolidated statement of comprehensive loss over the requisite service period.
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.
p)
Recent Accounting Pronouncements
The Company has evaluated all recent accounting pronouncements and determined that they would not have a material impact on the Company’s consolidated financial statements or disclosures. |
