(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.
These statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these interim financial statements be read in conjunction with the financial statements of the Company for the period ended October 31, 2012 and notes thereto included in the Company’s 10-K annual report. The Company follows the same accounting policies in the preparation of interim reports.
Results of operations for the interim period are not indicative of annual results.
Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles 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 the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ significantly from those estimates.
Cash and cash equivalents
For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. The carrying value of these investments approximates fair value.
Stock-based compensation
The Company records stock based compensation in accordance with the guidance in ASC Topic 505 and 718 which requires the Company to recognize expenses related to the fair value of its employee stock option awards. This eliminates accounting for share-based compensation transactions using the intrinsic value and requires instead that such transactions be accounted for using a fair-value-based method. The Company recognizes the cost of all share-based awards on a graded vesting basis over the vesting period of the award.
The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with FASB ASC 718-10 and the conclusions reached by the FASB ASC 505-50. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by FASB ASC 505-50.
Earnings per share
The Company follows ASC Topic 260 to account for the earnings per share. Basic earnings per common share (“EPS”) calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding. During periods when common stock equivalents, if any, are anti-dilutive they are not considered in the computation.
SUJA MINERALS CORPORATION
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Fair value of financial instruments
The carrying amounts reflected in the balance sheets for accounts payable and accrued expenses approximate the respective fair values due to the short maturities of these items. The Company does not hold any investments that are available-for-sale.
As required by the Fair Value Measurements and Disclosures Topic of the FASB ASC, fair value is measured based on a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: (Level 1) observable inputs such as quoted prices in active markets; (Level 2) inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and (Level 3) unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
The three levels of the fair value hierarchy are described below:
Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2: Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability;
Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).
Recent pronouncements
The Company has evaluated all the recent accounting pronouncements through June 2013 and believes that none of them will have a material effect on the Company’s financial statement.
NOTE 2 – GOING CONCERN
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. As noted above, the Company is in the development stage and, accordingly, has not yet generated revenues from operations. Since its inception, the Company has been engaged substantially in financing activities and developing its business plan and incurring start up costs and expenses. As a result, the Company incurred accumulated net losses from Inception (April 28, 2010) through the period ended April 30, 2013 of ($347,363). In addition, the Company’s development activities since inception have been financially sustained through debt and equity financing.
The ability of the Company to continue as a going concern is dependent upon its ability to raise additional capital from the sale of common stock and, ultimately, the achievement of significant operating revenues. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.
SUJA MINERALS CORPORATION
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 3 – PROPERTY OPTION – RELATED PARTY
On August 9, 2010, the Company executed an option to acquire a 100% undivided interest on mineral claims in Canada. As part of the agreement, the Company agreed to issue 10,000,000 shares of common stock valued at $0.01 per share and issued a promissory note for $8,400 which was due by August 31, 2010. The second payment of $76,800 was due by August 31, 2011. The Company agreed to payments of $50,000 due by August 31, 2012 and payments of $50,000 for the next four years. The Company must pay $250,000 per year for the following five year periods until such time as the project is abandoned or put into production. The options will be deemed exercised upon satisfaction of all the above stated terms; at which point the Company will have acquired 100% interest in the property. Once it is put into production, the payments of $250,000 per year will cease and the Company will pay $3 per ton adjusted annual by the Canadian Cost of Living Index.
As of October 31, 2010, the Company issued 10,000,000 shares of common stock and has paid a total of $1,755 as part of the agreement. As a result of the transaction, the counterparty is now considered a related party since it is a shareholder of the Company.
On June 15, 2011, the Company renegotiated the payment terms of the option agreement. The promissory note was amended to account for the increase in the payment amount in the amended option agreement. See Note 4 for details of the promissory note. The counterparty retained the 10,000,000 shares of common stock and the first payment has increased to Canadian Dollars “CAD” $26,000 and is due on April 30, 2012. The second payment of CAD $76,800 is due on August 31, 2013. The Company agreed to payments of $50,000 due by August 31, 2014 and payments of $50,000 for the next four years. The Company must pay $250,000 per year for the following five year periods until such time as the project is abandoned or put into production. The options will be deemed exercised upon satisfaction of all the above stated terms; at which point the Company will have acquired 100% interest in the property. Once it is put into production, the payments of $250,000 per year will cease and the Company will pay $3 per ton adjusted annual by the Canadian Cost of Living Index.
On April 15, 2012, the Company renegotiated the payment terms of the option agreement. The first payment of $26,000 is due on July 31, 2012. The second payment of $76,800 is due on August 31, 2012. The rest of the terms remain the same.On July 15, 2012, the Company renegotiated the payment terms of the option agreement. The first payment of $26,000 which was originally due on August 31, 2012 has been extended to October 31, 2012. The rest of the terms remain the same.
On October 15, 2012, the Company renegotiated the payment terms of the option agreement. The first payment of $26,000 which was due on October 31, 2012 has been extended to January 31, 2013. The second payment of $76,800 is due on August 31, 2014. The third through seventh payment of $50,000 is due on August 31, 2015 and for each year thereafter. The rest of the terms remain the same.
On January 15, 2013, the Company renegotiated the payment terms of the option agreement. The first payment of $26,000 which was due on January 31, 2013 has been extended to April 30, 2013. The rest of the terms remain the same.
On April 15, 2013, the Company renegotiated the payment terms of the option agreement. The first payment of $26,000 which was due on January 31, 2013 has been extended to August 31, 2013. The rest of the terms remain the same.
During the three months ended April 30, 2013, the Company impaired $128,478 of the mineral property option cost.
As of April 30, 2013 and October 31, 2012, the Company has an outstanding principal amount of $26,723 and $26,723, respectively, in notes payable related to the agreement.
SUJA MINERALS CORPORATION
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 4 – NOTES PAYABLE – RELATED PARTY
Note Payable with Officer, Director and Shareholder
On February 14, 2011, the Company had a verbal arrangement with Matt Reams, an officer, director and shareholder of the Company, for a total of $430. During the year ended October 31, 2012, the Company received an additional loan from Matt Reams for $555. The unsecured loan is due upon demand and bears interest at 8% per annum. As of April 30, 2013 and October 31, 2012, the principal amount of the loan is $985 and $985, respectively.
During the three months ended April 30, 2013 and 2012, the interest expense totaled $20 and $20, respectively. During the six months ended April 30, 2013 and 2012, the interest expense totaled $40 and $36, respectively. As of April 30, 2013, the Company had accrued interest of $139.
Note Payable with Shareholder
On August 9, 2010, the Company executed a promissory note for $8,400. The loan was due on August 9, 2011 and bears interest at 5% per annum. The Company paid a total of $1,755 in principal payments and the accrued interest on the loan commenced on September 1, 2010. On June 15, 2011, the promissory note was amended and increased to CAD $26,000 which is approximately $26,723. The increase in the loan amount was due to the increase in the amended property option. See Note 3. The loan is due on April 30, 2013 and bears interest at 5% per annum.
During the three months ended April 30, 2013 and 2012, the interest expense totaled $334 and $334, respectively. During the six months ended April 30, 2013 and 2012, the interest expense totaled $668 and $668, respectively. As of January 31, 2013, the Company had accrued interest of $2,768.
NOTE 5 – NOTES PAYABLE
On March 15, 2012, the Company executed a promissory note for $15,000. The loan was due on March 15, 2013 and bears interest at 5% per annum. As of April 30, 2013, the loan was in default and accrues interest at 10% per annum from the date of default.
During the three months ended April 30, 2013 and 2012, the interest expense totaled $281 and $94, respectively. During the six months ended April 30, 2013 and 2012, the interest expense totaled $469 and $94, respectively. As of April 30, 2013, the Company had accrued interest of $938.
On August 15, 2012, the Company executed a promissory note for $9,420. The loan is due on August 15, 2013 and bears interest at 5% per annum. As of April 30, 2013, the principal balance of the promissory note was $9,420.
During the three months ended April 30, 2013, the interest expense totaled $118. During the six months ended April 30, 2013, the interest expense totaled $236. As of April 30, 2013, the Company had accrued interest of $387.
On October 15, 2012, the Company executed a promissory note for $7,440. The loan is due on October 15, 2013 and bears interest at 5% per annum. As of April 30, 2013, the principal balance of the promissory note was $7,440.
During the three months ended April 30, 2013, the interest expense totaled $93. During the six months ended April 30, 2013, the interest expense totaled $186. As of April 30, 2013, the Company had accrued interest of $220.
SUJA MINERALS CORPORATION
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 5 – NOTES PAYABLE (CONTINUED)
On October 5, 2012, the Company executed a promissory note for $4,000. The loan is due on October 5, 2013 and bears interest at 5% per annum. As of April 30, 2013, the principal balance of the promissory note was $4,000.
During the three months ended April 30, 2013, the interest expense totaled $50. During the six months ended April 30, 2013, the interest expense totaled $74. As of April 30, 2013, the Company had accrued interest of $74.
On April 30, 2013, the Company executed a promissory note for $13,362. The loan is due on April 30, 2014 and bears interest at 5% per annum. As of April 30, 2013, the principal balance of the promissory note was $13,362.
During the three months ended April 30, 2013, the interest expense totaled $105. During the six months ended April 30, 2013, the interest expense totaled $105. As of April 30, 2013, the Company had accrued interest of $105.
NOTE 6 – STOCKHOLDERS’ EQUITY
The Company is authorized to issue 75,000,000 shares of its $0.001 par value common stock.
Common Stock
During the six months ended April 30, 2013, there have been no other issuances of common stock.
NOTE 7 – WARRANTS AND OPTIONS
As of April 30, 2013, there were no warrants or options outstanding to acquire any additional shares of common stock.
NOTE 8 – RELATED PARTY TRANSACTIONS
During the three months ended April 30, 2013, the Company authorized a bonus of $0 for the President of the Company. During the six months ended April 30, 2013, the Company authorized a bonus of $5,000 for the President of the Company. As of April 30, 2013, the entire amount was unpaid and is recorded to accrued payroll. As of April 30, 2013, the balance of $35,000 in accrued payroll is due to the President of the Company.
