UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
Amendment No. 1
X .
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year EndedAugust 31, 2011
.
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ________ to ______
WILLOW CREEK ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
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Delaware | 000-52970 | 27-3231761 |
(State or other jurisdiction | (Commission File Number) | (IRS Employer |
of Incorporation) |
| Identification Number) |
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| 7251 W. Lake Mead Blvd., Suite 300 Las Vegas, Nevada 89128 (Address of principal executive offices) |
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| (310) 600-8757 |
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| (Registrant’s Telephone Number) |
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Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes . No X ..
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes . No X .
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 X .
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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. .
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 definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer | . | Accelerated filer | . |
Non-accelerated filer | .(Do not check if a smaller reporting company) | Smaller reporting company | X. |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes . No X .
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of February 28, 2011 was $17,218,963.20 based upon the price ($0.08) at which the common stock was last sold as of the last business day of the most recently completed second fiscal quarter, multiplied by the approximate number of shares of common stock held by persons other than executive officers, directors and five percent stockholders of the registrant without conceding that any such person is an “affiliate” of the registrant for purposes of the federal securities laws.
As of April 2, 2012, there were 269,837,040 shares of the registrant’s $0.00025 par value common stock issued and outstanding.
Documents incorporated by reference: None
EXPLANATORY NOTE
The purpose of this Amendment No. 1 to the Annual Report of Willow Creek Enterprises, Inc. (the “Company”) on Form 10-K for the year ended August 31, 2011, filed with the Securities and Exchange Commission on April 5, 2012 (the “Form 10-K”), is to provide an amended Report of the Independent Registered Public Accounting Firm and to include a copy of the previously issued report of the predecessor auditor who ceased operations during the year ended August 31, 2011, pursuant to Item 8.
Other than the aforementioned, no other changes have been made to the Form 10-K. This Amendment No. 1 to the Form 10-K speaks as of the original filing date of the Form 10-K, does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way disclosures made in the original Form 10-K.
2
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
WILLOW CREEK ENTERPRISES, INC.
AUGUST 31, 2011
| Index |
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Report of Independent Registered Public Accounting Firm | F-1 |
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Balance Sheets | F-3 |
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Statements of Operations | F-4 |
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Statements of Stockholders’ Equity (Deficit) | F-5 |
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Statement of Cash Flows | F-6 |
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Notes to the Financial Statements | F-7 |
Note: During the year ended August 31, 2011 the Company changed Independent Registered Accounting firms, due to the fact that the Company's previous Independent Registered Accounting Firm ceased operations during the year ended August 31, 2011.
3
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Willow Creek Enterprises, Inc.
(An Exploration Stage Company)
We have audited the accompanying balance sheet of Willow Creek Enterprises, Inc. (An Exploration Stage Company) as of August 31, 2011 and the related statements of operations, changes in shareholders' equity (deficit) and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of Willow Creek Enterprises, Inc. (An Exploration Stage Company) as of August 31, 2010 and the related statements of operations, changes in shareholders’ equity (deficit) and cash flows for the period from inception (January 16, 2007) through August 31, 2010 were audited by other auditors who have ceased operations. Those auditors expressed an unqualified opinion on those financial statements in their report dated December 3, 2010.
We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Willow Creek Enterprises, Inc. as of August 31, 2011, and the results of its operations and cash flows for the periods described above in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statement, the Company suffered a net loss from operations and has a net capital deficiency, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ M&K CPAS, PLLC
www.mkacpas.com
Houston, Texas
February 7, 2012
This report is a copy of the previously issued report and Jewett, Schwartz, Wolf & Associates has not reissued this report.
F-1
Report of Independent Registered Public Accounting Firm
To The Board of Directors and Stockholders
of Willow Creek Enterprises, Inc.
We have audited the accompanying consolidated balance sheets of Willow Creek (an Exploration Stage) as of August 31, 2010 and 2009, and the related statements of operations, stockholders’ (deficit) equity, and cash flows for each of the years ended August 31, 2010 and 2009 and from the period of (inception) January 16, 2007 to August 31, 2010. Willow Creek Enterprises, Inc’s management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Willow Creek Enterprises, Inc as of August 31, 2010 and 2009, and the results of its operations and its cash flows August 31, 2010 and 2009 and from the period of (inception) January 16, 2007 to August 31, 2010 in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements referred to above have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 2, the Company’s need to seek new sources or methods of financing or revenue to pursue its business strategy, raises substantial doubt about the Company’s ability to continue as a going concern. Management’s plans as to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Jewett, Schwartz, Wolfe & Associates
/s/Jewett, Schwartz, Wolfe & Associates
Hollywood, Florida
December 3, 2010
F-2
WILLOW CREEK ENTERPRISES, INC. |
(An Exploration Stage Company) |
BALANCE SHEETS |
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| August 31, 2011 |
| August 31, 2010 |
ASSETS |
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Current Assets: |
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Cash and cash equivalents | $ | 2,504 | $ | - |
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Total Current Assets |
| 2,504 |
| - |
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Mineral rights |
| 233,202 |
| - |
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TOTAL ASSETS | $ | 235,706 | $ | - |
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LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) |
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Current Liabilities: |
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Accounts payable & accrued liabilities | $ | 22,258 | $ | 45,031 |
Loans payable |
| 160,430 |
| 21,635 |
Total Current Liabilities |
| 182,688 |
| 66,666 |
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Stockholders’ Equity (Deficit): |
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Preferred stock, $0.001 par value, 10,000,000 shares authorized, none issued and outstanding |
| - |
| - |
Common stock, $0.00025 par value, 300,000,000 shares authorized, 269,837,040 and 668,799,944 (post-split) shares issued and outstanding at August 31, 2011 and 2010 respectively |
| 67,459 |
| 167,200 |
Additional paid in capital |
| 2,212,561 |
| 1,323,800 |
Deficit accumulated during the exploration stage |
| (2,227,002) |
| (1,557,666) |
Total Stockholders' Equity (Deficit) |
| 53,018 |
| (66,666) |
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | $ | 235,706 | $ | - |
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The accompanying notes are an integral part of these consolidated financial statements.
F-3
WILLOW CREEK ENTERPRISES, INC. | ||||||
(An Exploration Stage Company) | ||||||
STATEMENTS OF OPERATIONS | ||||||
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| For the Year Ended |
| For the Year Ended |
| For the Period From January 16, 2007 (Inception) to |
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| August 31, 2011 |
| August 31, 2010 |
| August 31, 2011 |
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Revenues | $ | - | $ | - | $ | - |
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Operating expenses: |
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Professional fees |
| 34,318 |
| 1,436,710 |
| 1,504,819 |
Mineral rights impairment |
| 198,993 |
| - |
| 198,993 |
General and administrative |
| 140,007 |
| 22,156 |
| 227,172 |
Total operating expenses |
| 373,318 |
| 1,458,866 |
| 1,930,984 |
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Other income (expenses) |
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Interest expense |
| (9,103) |
| - |
| (9,103) |
Debt settlement loss |
| (286,915) |
| - |
| (286,915) |
Total other income (expenses) |
| (296,018) |
| - |
| (296,018) |
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Net (loss) | $ | (669,336) | $ | (1,458,866) | $ | (2,227,002) |
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Weighted average number of shares outstanding during the period - basic and diluted |
| 326,490,272 |
| 661,260,216 |
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Net loss per share - basic and diluted | $ | (0.00) | $ | (0.00) |
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The accompanying notes are an integral part of these consolidated financial statements.
F-4
WILLOW CREEK ENTERPRISES, INC. |
(An Exploration Stage Company) |
STATEMENTS OF SHAREHOLDERS EQUITY (DEFICIT) |
| Preferred Stock |
| Common Stock |
| Additional Paid-In Capital |
| Accumulated Deficit During Exploration Stage |
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| Shares Issued |
| Par Value $.001 per share |
| Shares Issued |
| Par Value $.00025 per share |
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| Total | ||
BALANCE, JANUARY 16, 2007 (Inception) | - | $ | - |
| - | $ | - | $ | - | $ | - | $ | - |
Common stock issued to company president | - |
| - |
| 420,000,000 |
| 105,000 |
| (100,000) |
| - |
| 5,000 |
Common stock issued to non affiliate shareholders | - |
| - |
| 240,799,944 |
| 60,200 |
| 25,800 |
| - |
| 86,000 |
Net loss | - |
| - |
| - |
| - |
| - |
| (14,085) |
| (14,085) |
BALANCE, AUGUST 31, 2007 | - |
| - |
| 660,799,944 |
| 165,200 |
| (74,200) |
| (14,085) |
| 76,915 |
Net loss | - |
| - |
| - |
| - |
| - |
| (67,316) |
| (67,316) |
BALANCE, AUGUST 31, 2008 | - |
| - |
| 660,799,944 |
| 165,200 |
| (74,200) |
| (81,401) |
| 9,599 |
Net loss | - |
| - |
| - |
| - |
| - |
| (17,399) |
| (17,399) |
BALANCE, AUGUST 31, 2009 | - |
| - |
| 660,799,944 |
| 165,200 |
| (74,200) |
| (98,800) |
| (7,800) |
Company stock issued to company president August 10, 2010 | - |
| - |
| 8,000,000 |
| 2,000 |
| 1,398,000 |
| - |
| 1,400,000 |
Net loss | - |
| - |
| - |
| - |
| - |
| (1,458,866) |
| (1,458,866) |
BALANCE, AUGUST 31, 2010 | - |
| - |
| 668,799,944 |
| 167,200 |
| 1,323,800 |
| (1,557,666) |
| (66,666) |
Surrender and cancellation of company stock issued to the president October 22, 2011 | - |
| - |
| (400,000,000) |
| (100,000) |
| 100,000 |
| - |
| - |
Stock issued for debt settlement | - |
| - |
| 606,060 |
| 151 |
| 275,606 |
| - |
| 275,757 |
Company stock issued for private placement January 11, 2011 | - |
| - |
| 431,036 |
| 108 |
| 249,892 |
| - |
| 250,000 |
Warrant issued for debt settlement | - |
| - |
| - |
| - |
| 261,158 |
| - |
| 261,158 |
Imputed interest | - |
| - |
| - |
| - |
| 2,105 |
| - |
| 2,105 |
Net loss | - |
| - |
| - |
| - |
| - |
| (669,336) |
| (669,336) |
BALANCE, AUGUST 31, 2011 | - | $ | - |
| 269,837,040 | $ | 67,459 | $ | 2,212,561 | $ | (2,227,002) | $ | 53,018 |
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The accompanying notes are an integral part of these consolidated financial statements. |
F-5
WILLOW CREEK ENTERPRISES, INC. | ||||||
(An Exploration Stage Company) | ||||||
STATEMENTS OF CASH FLOWS | ||||||
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| For the year ended |
| For the year ended |
| For the Period From January 16, 2007 (Inception) to |
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| August 31, 2011 |
| August 31, 2010 |
| August 31, 2011 |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net loss | $ | (669,336) | $ | (1,458,866) | $ | (2,227,002) |
Adjustments to reconcile net (loss) to net cash used in operating activities: |
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Loss on debt settlement |
| 286,915 |
| - |
| 286,915 |
Impairment expense on mineral property |
| 198,993 |
| - |
| 198,993 |
Imputed interest |
| 2,105 |
| - |
| 2,105 |
Issuance of common stock for services rendered |
| - |
| 1,400,000 |
| 1,400,000 |
Changes in operating assets and liabilities: |
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Accounts payable & accrued liabilities |
| (22,773) |
| 36,901 |
| 22,258 |
Cash (used in) operating activities |
| (204,096) |
| (21,965) |
| (316,731) |
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CASH FLOWS TO INVESTING ACTIVITIES |
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Mineral rights acquisition |
| (432,195) |
| - |
| (432,195) |
Cash (used in) investing activities |
| (432,195) |
| - |
| (432,195) |
CASH FLOWS FROM FINANCING ACTIVITIES: |
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Proceeds from subscriptions of common stock |
| 250,000 |
| - |
| 341,000 |
Proceeds from loans payable |
| 389,970 |
| 21,635 |
| 411,605 |
Repayment of debt |
| (1,175) |
| - |
| (1,175) |
Cash provided by financing activities |
| 638,795 |
| 21,635 |
| 751,430 |
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INCREASE (DECREASE) IN CASH |
| 2,504 |
| (330) |
| 2,504 |
CASH AT BEGINNING OF PERIOD |
| - |
| 330 |
| - |
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CASH AT END OF PERIOD | $ | 2,504 | $ | - | $ | 2,504 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION |
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Cash paid for income taxes | $ | - | $ | - | $ | - |
Cash paid for interest expense | $ | - | $ | - | $ | - |
SUPPLEMENTALNON-CASH FINANCING AND INVESTING ACTIVITIES |
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Issuance of common stock for services rendered | $ | - | $ | 1,400,000 | $ | 1,400,000 |
Surrender and cancellation of common stock | $ | (100,000) | $ | - | $ | (100,000) |
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The accompanying notes are an integral part of these consolidated financial statements. |
F-6
WILLOW CREEK ENTERPRISES, INC.
(An Exploration Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the period of January 16, 2007 (inception)
through August 31, 2011
NOTE 1 - NATURE OF OPERATIONS
Willow Creek Enterprises, Inc (“Company”) was incorporated in the State of Delaware on January 16, 2007. The Company was organized to explore mineral properties, currently in The State of Nevada.
NOTE 2 – GOING CONCERN
These consolidated financial statements are presented on the basis that the Company is a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business over a reasonable length of time. As of August 31, 2011, the Company had $2,504, in cash, working capital deficit of $180,184 and stockholders’ equity of $53,018 and accumulated net losses of $2,227,002 since inception. The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Its continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis, to obtain additional financing or refinancing as may be required, to develop commercially viable mining reserves, and ultimately to establish profitable operations.
Management's plans for the continuation of the Company as a going concern include financing the Company's operations through issuance of its common stock. If the Company is unable to complete its financing requirements or achieve revenue as projected, it will then modify its expenditures and plan of operations to coincide with the actual financing completed and actual operating revenues. There are no assurances, however, with respect to the future success of these plans. Unless otherwise indicated, amounts provided in these notes to the consolidated financial statements pertain to continuing operations. The Company is not currently earning any revenues.
NOTE 3 – SUMMARY OF 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 United States (US) dollars. The Company has not produced any revenue from its principal business and is an exploration stage company as defined by the Financial Accounting Standard Board (FASB) Accounting Standard Codification (ASC) 270. “Accounting and Reporting by Development Stage Enterprises”.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary Willow Creek Development, Inc. a company incorporated under the Company Act of Alberta on August 28, 2007. All inter-company transactions have been eliminated.
Use of Estimates
The preparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of these consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Regulatory Matters
The Company and its mineral property interests are subject to a variety of Canadian national and provincial regulations governing land use, health, safety and environmental matters. The Company’s management believes it has been in substantial compliance with all such regulations, and is unaware of any pending action or proceeding relating to regulatory matters that would affect the financial position of the Company.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.
F-7
WILLOW CREEK ENTERPRISES, INC.
(An Exploration Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the period of January 16, 2007 (inception)
through August 31, 2011
NOTE 3 – SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
Stock-Based Compensation
The Company accounts for stock options issued to employees in accordance with the provisions of FASB ASC 718, “Stock Compensation”. As such, compensation cost is measured on the date of grant as the excess of current market price of the underlying stock over the exercise price. Such compensation amounts are amortized over the respective vesting periods of the option grant. The Company adopted the disclosure provisions of FASB ASC 718, “Accounting for Stock-Based Compensation,” and FASB ASC 718, which allows entities to provide pro forma net income (loss) and pro forma earnings (loss) per share disclosures for employee stock option grants as if the fair-valued based method has been applied.
The Company accounts for stock options or warrants issued to non-employees for goods or services in accordance with the fair value method of FASB ASC 718. Under this method, the Company records an expense equal to the fair value of the options or warrants issued. The fair value is computed using an options pricing model.
Impaired Asset Policy
The Company periodically reviews its long-lived assets when applicable to determine if any events or changes in circumstances have transpired which indicate that the carrying value of its assets may not be recoverable, pursuant to guidance established in ASC “Property, Plant, and Equipment". The Company determines impairment by comparing the discounted future cash flows estimated to be generated by its assets to their respective carrying amounts. If impairment is deemed to exist, the assets will be written down to fair value.
Start-up Expenses
The Company has adopted Statement of Position (SOP) No. 98-5 ("SOP 98-5"), "Reporting the Costs of Start-up Activities," which requires that costs associated with start-up activities be expensed as incurred. Accordingly, start-up costs associated with the Company's formation have been included in the Company's general and administrative expenses for the period from inception on January 16, 2007 to August 31, 2011.
Mineral Property Costs
Mineral property acquisition, exploration and development costs are expenses as incurred until such time as economic reserves are quantified. From that time forward, the Company will capitalize all costs to the extent that future cash flows from mineral resources equal or exceed the costs deferred. The deferred costs will be amortized over the recoverable reserves when a property reaches commercial production. Costs related to site restoration programs will be accrued over the life of the project. To date, the Company has established proven reserves on one of its mineral properties.
Foreign Currency Translation
The Company’s functional currency is the Canadian dollar as substantially all of the Company’s operations are in Canada. The Company used the United States dollar as its reporting currency for consistency with registrants of the Securities and Exchange Commission and in accordance with the ASC 830 “Foreign Currency Translation”.
Assets and liabilities that are denominated in a foreign currency are translated at the exchange rate in effect at the year end and capital accounts are translated at historical rates. Income statement accounts are translated at the average rates of exchange prevailing during the period. Translation adjustments from the use of different exchange rates from period to period are included in the Comprehensive Income statement account in stockholders’ (deficit) equity, if applicable. There were no translation adjustments as of August 31, 2011.
Transactions undertaken in currencies other than the functional currency of the entity are translated using the exchange rate in effect as of the transaction date. If applicable, exchange gains and losses are included in other items on the consolidated statements of operations. There were no exchange gains or losses as of August 31, 2011.
F-8
WILLOW CREEK ENTERPRISES, INC.
(An Exploration Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the period of January 16, 2007 (inception)
through August 31, 2011
NOTE 3 – SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
Basic and Diluted Loss Per Share
The Company computed basic and diluted loss per share amounts pursuant to the ASC 260 “Earnings per Share.” There are no potentially dilutive shares outstanding and, accordingly, dilutive per share amounts have not been presented in the accompanying statements of operations.
Fair Value of Financial Instruments
ASC 820, “Fair Value Measurement and Disclosures,” requires disclosures of information regarding the fair value of certain financial instruments for which it is practicable to estimate the value. For purpose of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale of liquidation.
Comprehensive Loss
ASC 220, “Reporting Comprehensive Income,” establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As of August 31, 2011, the Company has no items that represent comprehensive loss and therefore, has not included a schedule of comprehensive loss in financial statements.
Income Taxes
Income taxes are recognized in accordance with ASC 740, “Income Taxes”, whereby deferred income tax liabilities or assets at the end of each period are determined using the tax rate expected to be in effect when the taxes are actually paid or recovered. A valuation allowance is recognized on deferred tax assets when it is more likely than not that some or all of these deferred tax assets will not be realized.
Recent Accounting Pronouncements
Recent accounting pronouncements that the Company has adopted or will be required to adopt in the future are summarized below.
In August 2010, the FASB issued Accounting Standard Updates No. 2010-21 (ASU No. 2010-21) “Accounting for Technical Amendments to Various SEC Rules and Schedules” and No. 2010-22 (ASU No. 2010-22) “Accounting for Various Topics – Technical Corrections to SEC Paragraphs”. ASU No 2010-21 amends various SEC paragraphs pursuant to the issuance of Release No. 33-9026: Technical Amendments to Rules, Forms, Schedules and Codification of Financial Reporting Policies. ASU No. 2010-22 amends various SEC paragraphs based on external comments received and the issuance of SAB 112, which amends or rescinds portions of certain SAB topics. Both ASU No. 2010-21 and ASU No. 2010-22 are effective upon issuance. The amendments in ASU No. 2010-21 and No. 2010-22 will not have a material impact on the Company’s consolidated financial statements.
In April 2010, the FASB issued Accounting Standard Update No. 2010-13 “Stock Compensation” (Topic 718). ASU No. 2010-13 provides amendments to Topic 718 to clarify that an employee share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity's equity securities trades should not be considered to contain a condition that is not a market, performance, or service condition. Therefore, an entity would not classify such an award as a liability if it otherwise qualifies as equity. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. The amendments in this Update should be applied by recording a cumulative-effect adjustment to the opening balance of retained earnings. The cumulative-effect adjustment should be calculated for all awards outstanding as of the beginning of the fiscal year in which the amendments are initially applied, as if the amendments had been applied consistently since the inception of the award. The cumulative-effect adjustment should be presented separately. Earlier application is permitted. The adoption of this ASU did not have a material impact on our consolidated financial statements; however, it may affect any future stock distributions
In February 2010, the FASB issued ASU 2010-09, "Subsequent Events (Topic 855) - Amendments to Certain Recognition and Disclosure Requirements." ASU 2010-09 requires an entity that is an SEC filer to evaluate subsequent events through the date that the financial statements are issued and removes the requirements that an SEC filer disclose the date through which subsequent events have been evaluated. ASC 2010-09 was effective upon issuance and has been adopted by the Company.
F-9
WILLOW CREEK ENTERPRISES, INC.
(An Exploration Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the period of January 16, 2007 (inception)
through August 31, 2011
NOTE 3 – SUMMARY OF ACCOUNTING POLICIES (CONTINUED)
In January 2010, the FASB has published ASU 2010-02 “Consolidation (Topic 810)- Accounting and Reporting for Decreases in Ownership of a Subsidiary—a Scope Clarification,” as codified in ASC 810, “Consolidation.” ASU No. 2010-02 applies retrospectively to April 1, 2009, our adoption date for ASC 810-10-65-1 as previously discussed in this financial note. This ASU clarifies the applicable scope of ASC 810 for a decrease in ownership in a subsidiary or an exchange of a group of assets that is a business or nonprofit activity. The ASU also requires expanded disclosures. The amendments in this Update are effective for interim and annual periods ending on or after December 15, 2009, and should be applied on a retrospective basis. The adoption of this ASU did not have a material impact on our consolidated financial statements; however, it may affect future divestitures of subsidiaries or groups of assets within its scope.
In January 2010, the FASB issued Accounting Standards Update No. 2010-06 applicable to FASB ASC 820-10,Improving Disclosures about Fair Value Measurements. The guidance requires entities to disclose significant transfers in and out of fair value hierarchy levels and the reasons for the transfers and to present information about purchases, sales, issuances and settlements separately in the reconciliation of fair value measurements using significant unobservable inputs (Level 3).
Additionally, the guidance clarifies that a reporting entity should provide fair value measurements for each class of assets and liabilities and disclose the inputs and valuation techniques used for fair value measurements using significant other observable inputs (Level 2) and significant unobservable inputs (Level 3). This guidance is effective for interim and annual periods beginning after December 15, 2009 except for the disclosures about purchases, sales, issuances and settlements in the Level 3 reconciliation, which will be effective for interim and annual periods beginning after December 15, 2010. As this guidance provides only disclosure requirements, the adoption of this standard did not impact the Company’s consolidated results of operations, cash flows or financial positions.
Other ASUs not effective until after August 31, 2011, are not expected to have a significant effect on the Company’s consolidated financial position or results of operations.
NOTE 4 – MINERAL LEASES AND CLAIMS
On August 28, 2007, the Company acquired a 100% interest in numerous claims known as the Lori/Mamquam Property and is located in the Vancouver Mining Division, British Columbia. The claims were purchased for $6,000 cash and were abandoned in 2011.
On October 9, 2010, the Company entered into that certain Minerals Lease and Agreement (the “Agreement") with MinQuest, Inc., a Nevada S Corporation ("MinQuest"), giving the Company the right to conduct mineral exploration activities on and in unpatented mining claims collectively known as Dolly Varden South (the “Property”), situated in Elko County, Nevada for a term of twenty (20) years (the “Term”) with the right to renew. As consideration, the Company shall pay ten thousand dollars ($10,000) upon execution of the Agreement, and an annual payment of ten thousand dollars ($10,000) for the remainder of the Term. Additionally, pursuant to the Agreement, the Company shall be granted the subsequent right to participate in the development of minerals from the Property subject to the terms and conditions of the Agreement.
On November 17, 2010, the Company entered into a Minerals Lease and Agreement (the “Agreement") with MinQuest, Inc., a Nevada corporation ("MinQuest") whereby the Company acquired the right to conduct mineral exploration activities for a term of seven (7) years on various unpatented mining claims situated in Lyon County, Nevada collectively known as the Hercules Property. As consideration for the leased mineral rights, the Company shall pay an aggregate of $290,000 over the term of the lease and shall provide $3,500,000 in work commitments over the term of the Agreement. Additionally, MinQuest is entitled to receive a 3% royalty from all mineral production derived from the exploration and development of the Hercules Property.
On February 7, 2011, the Company entered into that certain Minerals Lease and Agreement (the “Agreement") with MinQuest, Inc., a Nevada S Corporation ("MinQuest"), giving the Company the right to conduct mineral exploration activities on and in unpatented mining claims collectively known as the Gilman Gold Property (the “Property”), situated in Lander County, Nevada for a term of twenty (20) years (the “Term”) with the right to renew. As consideration, the Company shall pay ten thousand dollars ($10,000) (the “Base Rent”) upon execution of the Agreement, and an annual payment of the Base Rent plus any applicable annual rent increases in accordance with all of the other terms and conditions of the Agreement, for the remainder of the Term. Additionally, the Company shall be granted the subsequent right to participate in the development of minerals from the Property subject to the terms and conditions of the Agreement.
F-10
WILLOW CREEK ENTERPRISES, INC.
(An Exploration Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the period of January 16, 2007 (inception)
through August 31, 2011
NOTE 4 – MINERAL LEASES AND CLAIMS (CONTINUED)
On April 20, 2011, the Company entered into an Amended Minerals Lease and Agreement with MinQuest (the “Amended Agreement”) to amend certain terms and conditions of the Original Agreement including, but not limited to, the following material changes from the Original Agreement to the Amended Agreement: i) the Term is extended from seven (7) years to twenty (20) years; ii) the payment schedule as set forth in paragraph 3(a) is amended to include increases for inflation each year after the Seventh Year Anniversary; iii) the Area of Interest as set forth in paragraph 5 is increased to include a one mile radius surrounding the current boundaries of the Hercules Property; and iv) the list of Hercules Property mining claims as set forth in Schedule A is amended to include 88 claims in the aggregate.
On April 20, 2011, the Company issued a press release announcing that it has acquired an additional two (2) mining claims as part of its Hercules Property located in Lyon County, Nevada.
NOTE 5 – IMPAIRMENT OF LONG LIVED ASSETS
The Company periodically reviews its long-lived assets when applicable to determine if any events or changes in circumstances have transpired which indicate that the carrying value of its assets may not be recoverable, pursuant to guidance established in ASC “Property, Plant, and Equipment". The Company determines impairment by comparing the discounted future cash flows estimated to be generated by its assets to their respective carrying amounts. If impairment is deemed to exist, the assets will be written down to fair value.
The amount of impairment listed below is due to acquisition costs and exploration costs associated with the Company's mineral properties prior to discovery of an indicated resource.
|
| August 31, | ||
|
| 2011 |
| 2010 |
Total Cash Spent | $ | 432,195 | $ | - |
Mineral Property Expense |
| 198,993 |
| - |
Impaired |
| - |
| - |
Total Mineral Property |
| 233,202 |
| - |
Expense Capitalized |
| - |
| - |
In March of 2011, a technical report was prepared and in accordance with 43-101 which is the current industry standard. In the report, an indicated resource of 16,554,587 short tons at an average grade of 0.024 ounces per ton, equating to 399,703 ounces of gold equivalent.
NOTE 6 – STOCKHOLDERS’ EQUITY
Between January 16, 2007 and August 31, 2007, the Company received one subscription from the Company’s sole officer and director totaling cash proceeds of $5,000 and the issuance of 105,000,000 common shares.
Between January 16, 2007 and August 31, 2007, the Company received subscriptions from 45 non-affiliate shareholders, totaling cash proceeds of $86,000 and the issuance of 60,199,986 common shares.
On February 23, 2010, the Company completed a 21-1 forward split of the Company’s issued and outstanding common shares, bringing the total of issued common shares to 165,199,986 from 7,866,666.
On August 10, 2010, the Company issued 2,000,000 shares of restricted common stock to the Company’s new incoming President there was no cash consideration paid for these shares and have been valued at $0.70 the trading value on the day the agreement was entered at $1,400,000.
On October 22, 2010, the Company retired a total of 100,000,000 common restricted shares owned by the Company’s former president.
From September 2011 to December 15, 2010, the Company accepted a $250,000 Loan from Duke Holdings Ltd. in exchange for: i) 606,060 shares of the Company’s common stock priced at $0.4125 per share, par value $0.001, and ii) a three (3) year warrant to purchase additional shares of the Company’s common stock priced at $0.4375 per share, par value $0.001, per the terms of the Stock Purchase Agreement. The net proceeds of the financing of $250,000 was allocated on a relative fair value basis as $606,060 to common shares and $606,060 to warrants. The fair value of each warrant issued was calculated using the Black-Scholes option pricing model with the following assumptions: expected life of 1.50 years; volatility of 314.31% ; no dividend yield; and a discount rate of 0.66%.
F-11
On January 11, 2011, the Company accepted, per the terms of the Stock Purchase Agreement, $250,000 from Duke Holdings Ltd. in exchange for: i) 431,032 shares of the Company’s common stock priced at $0.54 per share, par value $0.001, and ii) a three (3) year warrant to purchase additional shares of the Company’s common stock priced at $0.60 per share, par value $0.001. The net proceeds of the financing of $1,679,720 was allocated on a relative fair value basis as $1,444,653 to common shares and $235,067 to warrants. The fair value of each warrant issued was calculated using the Black-Scholes option pricing model with the following assumptions: expected life of 1.50 years; volatility of 214.17%; no dividend yield; and a discount rate of 0.60%.
Effective January 14, 2011, the Company completed a 4-1 forward split of the issued and outstanding shares of the Company. All amounts have been adjusted for the forward split.
As a result of the forward split, the 151,515 common shares and 151,515 share purchase warrants issued on December 15, 2010 would change to 606,060 common shares, and 606,060 share purchase warrants with an exercise price of $0.43.75 per share.
As a result of the forward split, the 107,758 common shares and 107,758 share purchase warrants issued on January 11, 2011 would change to 431,032 common shares, and 431,032 share purchase warrants with an exercise price of $0.60 per share.
NOTE 7 - LOANS PAYABLE
As of August 31, 2011, the Company had received a loan in the amount of $20,460 from an unrelated third party. The funds are non-interest bearing, unsecured, and do not have any specific repayment terms.
As of August 31, 2011, the Company had received loans in the amount of $389,970 from an unrelated third party, of which $250,000 was converted to 606,060 common shares and 606,060 share purchase warrants with an exercise price of $0.43.75 per share. The remaining funds $139,970 are interest bearing at a rate of 10% per annum and have imputed interest to date of $2,105. The funds are unsecured, and do not have any specific repayment terms.
NOTE 8 – INCOME TAXES
The provision (benefit) for income taxes from continued operations for the years ended August 31, 2011 and 2010 consist of the following:
|
| August 31 | ||
|
| 2011 |
| 2010 |
Current: |
|
|
|
|
Federal | $ | - | $ | - |
State |
| - |
| - |
|
| - |
| - |
Deferred: |
|
|
|
|
Federal | $ | 227,574 | $ | 494,424 |
State |
| 198,203 |
| 131,429 |
|
| 425,777 |
| 625,853 |
Valuation allowance |
| (425,777) |
| (625,853) |
Provision benefit for income taxes, net | $ | - | $ | - |
F-12
WILLOW CREEK ENTERPRISES, INC.
(An Exploration Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the period of January 16, 2007 (inception)
through August 31, 2011
NOTE 8 – INCOME TAXES (CONTINUED)
The difference between income tax expense computed by applying the federal statutory corporate tax rate and actual income tax expense is as follows:
|
| August 31 | ||
|
| 2011 |
| 2010 |
Statutory federal income tax rate |
| 34.0% |
| 34.0% |
State income taxes and other |
| 8.9% |
| 8.9% |
Valuation allowance |
| (42.9%) |
| (42.9%) |
Deferred income taxes result from temporary differences in the recognition of income and expenses for the financial reporting purposes and for tax purposes. The tax effect of these temporary differences representing deferred tax asset and liabilities result principally from the following:
|
| August 31, | ||
|
| 2011 |
| 2010 |
Net operating loss carryforward | $ | 2,227,002 | $ | 1,557,666 |
Valuation allowance |
| (2,227,002) |
| (1,557,666) |
Deferred income tax asset | $ | - | $ | - |
The Company has a net operating loss carryforward of approximately $2,227,002 available to offset future taxable income through 2020.
NOTE 9 – EARNINGS PER SHARE
Basic earnings per share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflects the potential dilution that could occur if stock options and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock or conversion of notes into shares of the Company’s common stock that could increase the number of shares outstanding and lower the earnings per share of the Company’s common stock. This calculation is not done for periods in a loss position as this would be anti-dilutive. As of August 31, 2011, there were no stock options or stock awards that would have been included in the computation of diluted earnings per share that could potentially dilute basic earnings per share in the future. The information related to basic and diluted earnings per share is as follows
|
| Ended August 31, | ||
|
| 2011 |
| 2010 |
Numerator: |
|
|
|
|
Continuing operations: |
|
|
|
|
Income from continuing operations | $ | (669,336) | $ | (1,458,866) |
Effect of dilutive convertible debt |
| - |
| - |
Total | $ | (669,336) | $ | (1,458,866) |
Discontinued operations |
| - |
| - |
Loss from discontinued operations |
| - |
| - |
Net income (loss) | $ | (669,336) | $ | (1,458,866) |
Denominator: |
|
|
|
|
Weighted average number of shares outstanding – basic and diluted |
| 326,490,272 |
| 661,260,216 |
F-13
WILLOW CREEK ENTERPRISES, INC.
(An Exploration Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the period of January 16, 2007 (inception)
through August 31, 2011
NOTE 10 – SUBSEQUENT EVENTS
During the year ended August 31, 2011 the Company evaluated the potential of any subsequent events and determined that the following events occurred subsequent to August 31, 2011.
On September 29, 2011, the Company issued an unsecured ten percent (10%) Promissory Note (the “Note”) to Duke Holdings Ltd. (“Duke”) in the amount of four thousand seven hundred US dollars ($4,700), to evidence funds loaned by Duke to the Company on September 29, 2011. The Note earns simple interest accruing at ten percent (10%) per annum and is due upon demand ten (10) days written notice by Duke.
On December 27, 2011, the Company issued an unsecured ten percent (10%) Promissory Note (the “Note”) to Duke Holdings Ltd. (“Duke”) in the amount of ten thousand US dollars ($10,000), to evidence funds lent by Duke to the Company on December 9, 2011. The Note earns simple interest accruing at ten percent (10%) per annum and is due upon demand with ten (10) days written notice by Duke.
On March 22, 2012, the Company issued an unsecured ten percent (10%) Promissory Note (the “Note”) to Duke Holdings Ltd. (“Duke”) in the amount of eighty thousand US dollars ($80,000), to evidence funds lent by Duke to the Company on March 15, 2012. The Note earns simple interest accruing at ten percent (10%) per annum and is due upon demand with ten (10) days written notice by Duke.
F-14
ITEM 15.
EXHIBITS.
(a)
Exhibits
Exhibit Number | Description of Exhibit | Filing |
3.01 | Articles of Incorporation | Filed with the SEC on November 15, 2007 as part of our Registration Statement on Form SB-2. |
3.02 | Bylaws | Filed with the SEC on November 15, 2007 as part of our Registration Statement on Form SB-2. |
10.01 | Employment Agreement between Willow Creek Enterprises, Inc. and Terry Fields dated August 9, 2010 | Filed with the SEC on August 16, 2010 as part of our Current Report on Form 8-K. |
10.02 | Form of Securities Purchase Agreement | Filed with the SEC on September 22, 2010 as part of our Current Report on Form 8-K. |
10.03 | Form of Common Stock Purchase Warrant | Filed with the SEC on September 22, 2010 as part of our Current Report on Form 8-K. |
10.04 | Minerals Lease and Agreement between Willow Creek Enterprises, Inc. and MinQuest, Inc. dated October 9, 2010 | Filed with the SEC on October 21, 2010 as part of our Current Report on Form 8-K. |
10.05 | Minerals Lease and Agreement between Willow Creek Enterprises, Inc. and MinQuest, Inc. dated November 17, 2010 | Filed with the SEC on December 2, 2010 as part of our Current Report on Form 8-K. |
10.06 | Stock Purchase Agreement between Willow Creek Enterprises, Inc. and Duke Holdings Ltd. dated December 15, 2010 | Filed with the SEC on December 16, 2010 as part of our Current Report on Form 8-K. |
10.07 | Stock Purchase Agreement between Willow Creek Enterprises, Inc. and Duke Holdings Ltd. dated January 11, 2011 | Filed with the SEC on January 21, 2011 as part of our Current Report on Form 8-K. |
10.08 | Warrant between Willow Creek Enterprises, Inc. and Duke Holdings Ltd. dated January 11, 2011 | Filed with the SEC on January 21, 2011 as part of our Current Report on Form 8-K. |
10.09 | Minerals Lease and Agreement between Willow Creek Enterprises, Inc. and MinQuest, Inc. dated February 7, 2011 | Filed with the SEC on February 15, 2011 as part of our Current Report on Form 8-K. |
10.10 | Amended Minerals Lease and Agreement between Willow Creek Enterprises, Inc. and MinQuest, Inc. dated April 20, 2011 | Filed with the SEC on April 25, 2011 as part of our Current Report on Form 8-K. |
10.11 | Promissory Note to Duke Holdings Ltd. dated July 6, 2011 | Filed with the SEC on July 8, 2011 as part of our Current Report on Form 8-K. |
10.12 | Promissory Note to Duke Holdings Ltd. dated July 19, 2011 | Filed with the SEC on July 20, 2011 as part of our Current Report on Form 8-K. |
10.13 | Promissory Note to Duke Holdings Ltd. dated August24, 2011 | Filed with the SEC on August 29, 2011 as part of our Current Report on Form 8-K. |
10.14 | Promissory Note to Duke Holdings Ltd. dated September 29, 2011 | Filed with the SEC on October 5, 2011 as part of our Current Report on Form 8-K. |
10.15 | Promissory Note to Duke Holdings Ltd. dated December 27, 2011 | Filed with the SEC on December 28, 2011 as part of our Current Report on Form 8-K. |
14.01 | Code of Ethics | Filed with the SEC on November 15, 2007 as part of our Registration Statement on Form SB-2. |
16.01 | Letter from Jewett, Schwartz, Wolfe & Associates dated June 28, 2011 | Filed with the SEC on June 29, 2011 as part of our Current Report on Form 8-K. |
31.01 | Certification of Principal Executive Officer Pursuant to Rule 13a-14 | Filed herewith. |
31.02 | Certification of Principal Financial Officer Pursuant to Rule 13a-14 | Filed herewith. |
32.01 | CEO and CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act | Filed herewith. |
[Signature Page to Follow]
4
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
WILLOW CREEK ENTERPRISES, INC.
Dated: August 21, 2012
/s/ Terry Fields
By: Terry Fields
Its: President, Principal Executive Officer& Principal
Financial Officer, Secretary and Treasurer
Pursuant to the requirement of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated:
Dated: August 21, 2012
/s/ Terry Fields
By: Terry Fields– Director
Dated: August 21, 2012
/s/ Larry Eastland
By: Larry Eastland – Director
5