ROUGE RESOURCES LTD.
FINANCIAL STATEMENTS
JANUARY 31, 2011
| ROUGE RESOURCES LTD. |
| (An Exploration Stage Company) |
| BALANCE SHEETS |
| JANUARY 31, | ||||||
| 2011 | 2010 | |||||
| ASSETS | ||||||
| Current | ||||||
| Cash | $ | 144,952 | $ | 53,623 | ||
| Other receivable | 8,419 | 1,816 | ||||
| 153,371 | 55,439 | |||||
| Restricted cash | 6,900 | 6,900 | ||||
| Mineral property interests (Note 3) | 200,879 | 105,791 | ||||
| Furniture and equipment (Note 4) | 2,886 | 1,294 | ||||
| $ | 364,036 | $ | 169,424 | |||
| LIABILITIES | ||||||
| Current | ||||||
| Accounts payable and accrued liabilities | $ | 92,523 | $ | 70,556 | ||
| Due to related parties (Note 5) | 100,913 | 1,069,901 | ||||
| 193,436 | 1,140,457 | |||||
| SHAREHOLDERS’ EQUITY (DEFICIENCY) | ||||||
| Share Capital (Note 6) | 3,110,796 | 1,613,471 | ||||
| Share Subscriptions Received | - | 100,000 | ||||
| Contributed Surplus (Note 6) | 53,357 | 53,357 | ||||
| Deficit | (2,993,553 | ) | (2,737,861 | ) | ||
| 170,600 | (971,033 | ) | ||||
| $ | 364,036 | $ | 169,424 | |||
Going concern (Note 1)
Approved on behalf of the Board of Directors:
| “Linda Smith” | “Darcy Krell” | |
| Director | Director |
The accompanying notes are an integral part of these financial statements.
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| ROUGE RESOURCES LTD. |
| (An Exploration Stage Company) |
| STATEMENTS OF OPERATIONS, COMPREHENSIVE LOSS AND DEFICIT |
| YEARS ENDED JANUARY 31 | |||||||||
| 2011 | 2010 | 2009 | |||||||
| General and Administration Expenses | |||||||||
| Amortization | $ | 439 | $ | 554 | $ | 793 | |||
| Accounting and audit fees | 37,979 | 32,107 | 53,775 | ||||||
| Accretion on promissory note (Note 5) | 14,926 | 14,007 | 11,871 | ||||||
| Management fees (Note 5) | 60,000 | 60,000 | 52,750 | ||||||
| Office and general (Note 5) | 57,661 | 40,710 | 29,579 | ||||||
| Professional fees | 27,530 | 8,232 | 16,280 | ||||||
| Transfer agent and filing fees | 45,229 | 11,308 | 11,632 | ||||||
| Travel and promotion | 11,928 | 3,685 | 18,655 | ||||||
| Loss before other item | (255,692 | ) | (170,603 | ) | (195,335 | ) | |||
| Other item | |||||||||
| Accounts payable written off | - | 51,681 | - | ||||||
| Net and Comprehensive Loss | (255,692 | ) | (118,922 | ) | (195,335 | ) | |||
| Deficit, Beginning | (2,737,861 | ) | (2,618,939 | ) | (2,423,604 | ) | |||
| Deficit, Ending | $ | (2,993,553 | ) | $ | (2,737,861 | ) | $ | (2,618,939 | ) |
| Net Loss Per Share - Basic and Diluted | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.05 | ) |
| Weighted Average Number of Shares Outstanding - Basic and Diluted | 33,578,870 | 10,565,171 | 3,597,958 | ||||||
The accompanying notes are an integral part of these financial statements.
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| ROUGE RESOURCES LTD. |
| (An Exploration Stage Company) |
| STATEMENTS OF CASH FLOWS |
| YEARS ENDED JANUARY 31 | |||||||||
| 2011 | 2010 | 2009 | |||||||
| Cash Flows Provided by (Used In): | |||||||||
| Operating Activities | |||||||||
| Net and Comprehensive Loss | $ | (255,692 | ) | $ | (118,922 | ) | $ | (195,335 | ) |
| Items not requiring use of cash: | |||||||||
| Amortization | 439 | 554 | 793 | ||||||
| Accretion on convertible promissory note | 14,926 | 14,007 | 11,871 | ||||||
| Accounts payable written off | - | (51,681 | ) | - | |||||
| (240,327 | ) | (156,042 | ) | (182,671 | ) | ||||
| Changes in operating assets and liabilities: | |||||||||
| Other receivable | (6,603 | ) | 720 | 1,528 | |||||
| Accounts payable and accrued liabilities | 21,967 | (2,411 | ) | 18,570 | |||||
| (224,963 | ) | (157,733 | ) | (162,573 | ) | ||||
| Investing Activities | |||||||||
| Mineral property interests | (95,088 | ) | (20,446 | ) | (14,906 | ) | |||
| Purchase of furniture and equipment | (2,031 | ) | - | - | |||||
| (97,119 | ) | (20,446 | ) | (14,906 | ) | ||||
| Financing Activities | |||||||||
| Advances (to) from related parties | (983,914 | ) | 126,946 | (323,664 | ) | ||||
| Shares subscriptions received | - | 100,000 | - | ||||||
| Shares issued for cash | 1,397,325 | - | 500,000 | ||||||
| 413,411 | 226,946 | 176,336 | |||||||
| Increase (Decrease) in Cash during the Year | 91,329 | 48,767 | (1,143 | ) | |||||
| Cash, Beginning of Year | 53,623 | 4,856 | 5,999 | ||||||
| Cash, End of Year | $ | 144,952 | $ | 53,623 | $ | 4,856 | |||
| Supplemental Cash Flow Information | |||||||||
| Interest paid | $ | - | $ | - | $ | - | |||
| Income taxes paid | $ | - | $ | - | $ | - | |||
The accompanying notes are an integral part of these financial statements.
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| ROUGE RESOURCES LTD. |
| (An Exploration Stage Company) |
| NOTES TO FINANCIAL STATEMENTS |
| JANUARY 31, 2011 |
| 1. | NATURE OF OPERATIONS AND GOING CONCERN |
Rouge Resources Ltd. (the “Company”) was incorporated on March 31, 1988 in British Columbia, Canada. The Company is engaged in the acquisition and exploration of mineral resource properties. The Company’ stock is quoted on the OTC Bulletin Board in the United States.
Going Concern
These financial statements have been prepared on a going concern basis, which assumes the Company will realize its assets and discharge its liabilities in the normal course of operations. Should the Company be unable to continue as a going concern significant adjustment to asset values may be necessary. The ability of the Company to continue as a going concern is dependent upon the company raising sufficient financing to complete exploration and development activities, the discovery of economically recoverable reserves, and upon future profitable operations or proceeds from disposition of resource property interests. The Company presently, has not to date determined whether its mineral property interests contain economically recoverable resources.
| 2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Basis of Presentation
The financial statements of the Company are presented in accordance with Canadian generally accepted accounting principles (“GAAP”) and are presented in its functional currency, Canadian dollars. A reconciliation of differences between the Canadian GAAP and United States (“US”) GAAP is presented in Note 11.
Financial Instruments
The Company has made the following designations of its financial instruments: cash as held for trading, other receivable as loans and receivables, accounts payable and due to related parties as other financial liabilities.
The Canadian Institute of Chartered Accountants (“CICA”) Handbook Section 3862 “Financial Instruments-Disclosure” requires an entity to classify fair value measurements in accordance with an established hierarchy that prioritizes the inputs in valuation techniques used to measure fair value. The levels and inputs which may be used to measure fair value are as follows:
| 1. | Level 1 – fair values are based on quoted prices (unadjusted) in active markets for identical assets and liabilities; |
| 2. | Level 2 – fair values are based on inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices); or |
| 3. | Level 3 – applies to assets and liabilities for inputs that are not based on observable market data, which are unobservable inputs. |
Financial instruments classified as level 1 – quoted prices in active markets included cash.
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Estimates, Assumptions and Measurement Uncertainty
The preparation of financial statements in conformity with Canadian GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses. Actual results could differ from these estimates. By their nature, these estimates are subject to measurement uncertainty and the effect on the financial statements of changes in such estimates in future periods could be material. The significant areas requiring the use of management estimates relate to the carrying values of mineral properties, allocation of cost to mineral properties, financial instruments and future income tax rates.
Mineral Property Interests
The Company records its mineral property interests at the lower of cost or estimated recoverable value. Where specific exploration programs are planned and budgeted by management, mineral exploration costs are capitalized and carried at cost until the properties to which they relate are placed into commercial production, sold, abandoned or determined by management to be impaired in value. Costs incurred for acquisition, including where applicable, option payments under acquisition agreements, are capitalized until such time as the related interest is placed into production, sold, abandoned or management has determined impairment in value.
Mineral property interests, where future cash flows are not reasonably determinable, are evaluated for impairment on a reporting period basis or as events and changes in circumstances warrant based on management’s intentions and determination of the extent to which future exploration programs are warranted and likely to be funded.
Capitalized costs for acquisition and deferred exploration represent costs incurred to date or estimated recoverable value if lower than cost. Recovery of carrying value is dependent upon future success or proceeds from disposition of the mineral interests. Upon the establishment of production, carrying values of deferred acquisition and exploration costs will be amortized over the estimated life of the resource on the unit of production method.
Impairment of Long-lived Assets
The carrying values of long-lived assets with fixed or determinable lives are reviewed for impairment whenever events or changes in circumstances indicate the recoverable value may be less than the carrying amount. Impairment determinations are based on management's estimates of undiscounted and discounted future net cash flows expected to be recovered from specific assets or groups of assets through use or future disposition. Impairment charges are recorded in the period in which determination of impairment is made by management.
Assets with indefinite or indeterminable lives are not amortized and are reviewed for impairment on a reporting period basis using management’s fair value determinations of estimated recoverable value.
Asset Retirement Obligations
The Company reviews and recognizes legal obligations associated with the retirement of tangible long-lived assets, including rights to explore or exploit natural resources. When such obligations are identified and measurable, the estimated fair values of the obligations are recognized on a systematic basis over the remaining period until the obligations are expected to be settled. Mineral property interests related to retirement obligations are capitalized as part of deferred exploration and development costs and are accounted for in the same manner as all other capitalized costs. Management is not aware of any significant known or anticipated liability or reclamation requirement arising from its past or current operations.
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Stock-Based Compensation
The Company records all stock based awards at fair value. All stock based awards to employees and non-employees are measured at the time of grant, or revision, and the fair value attributed is charged to operations, allocated to specific asset accounts, and recognized over the vesting period. Upon exercise, the fair value of share purchase options or specified warrants is allocated from the contributed surplus account to share capital.
Loss per Share
The Company uses the treasury stock method for the computation of loss per share. The treasury stock method is used to determine the dilutive effect of stock options and other dilutive instruments which assume that proceeds received from in-the-money stock options are used to repurchase common shares at the prevailing market rate. Basic net loss per share has been calculated using the weighted average number of shares outstanding during the year. Diluted loss per share is equal to the basic loss per share as the effect of dilutive instruments will be anti dilutive.
Future Income Taxes
Future income taxes are recorded using the asset and liability method whereby future tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. Future tax assets and liabilities are measured using the enacted or substantively enacted tax rates expected to apply when the asset is realized or the liability settled. The effect on future tax assets and liabilities of a change in tax rates is recognized in income in the period that substantive enactment or enactment occurs. Future income tax assets are only recorded if realization is determined to be more likely than not.
Furniture and Equipment
The Company records amortization on furniture and computer equipment using the declining balance method at a rate of 30% per annum.
Recent Accounting Pronouncements
International Financial Reporting Standards
In 2006, Canada’s Accounting Standards Board (AcSB) ratified a strategic plan that will result in the convergence of Canadian GAAP, as used by public companies, with International Financial Reporting Standards (“IFRS”) over a transitional period. The AcSB has developed and published a detailed implementation plan, with a changeover date for fiscal years beginning on or after January 1, 2011. The adoption of IFRS will require the Company to prepare its comparative figures for the year ended January 31, 2012 in accordance with IFRS. The Company continues to monitor and assess the impact of Canadian GAAP and IFRS.
Other accounting pronouncements issued by the CICA with future effective dates have been reviewed by management and determined to be either not applicable or are not expected to be significant to the financial statements of the Company.
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| 3. | MINERAL PROPERTY INTERESTS |
The balance of mineral property interests as at January 31, 2011 and 2010 are as follows:
| 2011 | 2010 | |||||
| Dotted Lake Property | ||||||
| Acquisition cost | ||||||
| Staking | $ | 15,261 | $ | 15,261 | ||
| Deferred exploration costs | ||||||
| Geological surveys | 142,637 | 69,736 | ||||
| Geological consulting fees and expenses | 33,948 | 20,794 | ||||
| 176,585 | 90,530 | |||||
| 191,846 | 105,791 | |||||
| Lampson Lake Property | ||||||
| Acquisition cost | ||||||
| Option payment | 7,000 | - | ||||
| Other acquisition cost | 2,033 | - | ||||
| 9,033 | - | |||||
| $ | 200,879 | $ | 105,791 |
During year ended January 31, 2010, the Company expanded its 100% owned holdings in the Dotted Lake Property from a single claim to 10 claims by means of staking at an additional cost of $11,055.
During year ended January 31, 2011,
i) the Company entered into an option to purchase agreement regarding an additional two claims adjacent to the Dotted Lake Property, known as the Lampson Lake Property. The Company has an exclusive option to purchase a 100% interest in these two claims by making option payments totalling $60,000 of which $7,000 was paid on signing the agreement dated April 20, 2010. The second payment of $12,000 was made subsequent to the year end on April 20, 2011 with $16,000 due in the second anniversary year of the effective date and a final payment of $25,000 due in the third anniversary year of the effective date. The property is subject to a 2% net smelter royalty when, and if, mineral exploration and development eventually leads to mining revenue from the property.
On exercise of the option, the Company’s holdings will then total 12 claims consisting of 104 mining units on 1,683 hectares. The Dotted Lake claims are currently in good standing with the Ontario Ministry of Northern Development of Mines and Forests.
ii) the Company expended $86,054 on the Dotted Lake Property comprised of $72,901 for prospecting and trenching as follow-up to the positive gold mineralization results identified from soil sampling in 2008 and 2009, and $13,154 for its consulting geologist to draft an independent technical report covering a review of all work completed on the property to date together with recommendations for further exploration work in the future.
The Company’s mineral property interests are being held in trust on behalf of the Company by an officer-director pursuant to an Amended Trust and Indemnity Agreement dated December 16, 2010.
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| 4. | FURNITURE AND EQUIPMENT |
| 2011 | 2010 | |||||
| Furniture and equipment, at cost | $ | 8,001 | $ | 5,970 | ||
| Less: Accumulated amortization | (5,115 | ) | (4,676 | ) | ||
| Net Book Value | $ | 2,886 | $ | 1,294 |
| 5. | RELATED PARTY TRANSACTIONS |
As at January 31, 2011, loans payable aggregating $100,913 (2010: $1,069,901) are owing to officers of the company and an immediate family member of an officer of the Company. These amounts are unsecured, non-interest bearing and have no specific terms of repayment.
Included in the amounts due to related parties is a convertible promissory note form an immediate family member of an officer of the Company in the amount of $Nil (2010 - $41,827). The amount was non-interest bearing and is unsecured and the maturity date was January 1, 2011. The loan was fully repaid during the year end January 31, 2011. Accretion on the conversion feature of $14,926 (2010 - $14,007) was recorded in expenses during the year ended January 31, 2011.
The following amounts were charged to the Company by a director of the Company during the years ended January 31:
| 2011 | 2010 | 2009 | |||||||
| Management fees | $ | 60,000 | $ | 60,000 | $ | 52,750 | |||
| Office rent | 30,000 | 30,000 | 18,000 | ||||||
| $ | 90,000 | $ | 90,000 | $ | 70,750 |
Related party transactions are recorded at the exchange amount, which is the consideration agreed to between the related parties.
| 6. | SHARE CAPITAL |
| a) | Common Shares |
Authorized
Unlimited common shares without par value
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Issued and outstanding
The following table summarizes common shares issued and outstanding for the years ended January 31:
| 2011 | 2010 | |||||||||||
| Number of | Number of | |||||||||||
| shares | Amount | shares | Amount | |||||||||
| Balance, beginning of year | 10,565,171 | $ | 1,613,471 | 10,565,171 | $ | 1,613,471 | ||||||
| Private Placement @ $0.05 per share | 30,000,000 | 1,500,000 | - | - | ||||||||
| Share issue costs | (2,675 | ) | - | |||||||||
| Balance, end of year | 40,565,171 | $ | 3,110,796 | 10,565,171 | $ | 1,613,471 | ||||||
During the year ended January 31, 2011, the Company completed a non-brokered private placement of 30,000,000 units at $0.05 for total proceeds of $1,500,000. Each unit consists of one common share and one non-transferable share purchase warrant. Each warrant entitles the holder to acquire one additional common share of the Company at a price of $0.10 per share for a period of two years. No fair value was attributed to the warrants. Share issuance costs of $2,675 were incurred in relation to this private placement.
| b) | Share Purchase Warrants |
The following share purchase warrants were outstanding for the years ended January 31:
| January 31, | January 31, | Exercise | |||
| 2010 | Issued | Expired | 2011 | Price | Expiry |
| April 30, | |||||
| 10,000,000 | 30,000,000 | (10,000,000) | 30,000,000 | $0.10 | 2012 |
As at January 31, 2011, the weighted average remaining life of the share purchase warrants is 1.08 years and the weighted average exercise price is $0.10.
| c) | Stock Option Plan |
The Company has adopted a stock option plan, which provides that the Board of Directors of the Company may from time to time, in its discretion, grant to directors, officers, employees and consultants to the Company, non-transferable stock options to purchase common shares, provided that the number of common shares reserved for issuance in any twelve month period will not exceed 10% of the Company’s issued and outstanding common shares. Such options will be exercisable for a period of up to five years from the date of grant. In connection with the foregoing, the number of common shares reserved for issuance to any insider in any twelve month period will not exceed 10% of the issued and outstanding common shares and the number of common shares reserved for issuance to any employee or consultant will not exceed 2% of the issued and outstanding common shares. Options may be exercised no later than 90 days following cessation of the optionee’s position with the Company or 30 days following cessation of an optionee conducting investor relations activities.
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No stock options have been granted in current and prior years and no stock options are currently outstanding.
| d) | Contributed Surplus |
| Balance, January 31, 2011 and 2010 | $ | 53,357 |
| 7. | INCOME TAXES |
A reconciliation of income tax balances at substantially enacted statutory rates is as follows:
| 2011 | 2010 | 2009 | |||||||
| Loss before income taxes | $ | 255,692 | $ | 118,922 | $ | 195,335 | |||
| Statutory tax rate | 28.5% | 30% | 31% | ||||||
| Expected income tax recovery | (72,872 | ) | (35,677 | ) | (60,554 | ) | |||
| Adjustments resulting from: | |||||||||
| Non-deductible differences | 4,254 | 4,202 | 4,064 | ||||||
| Impact of changes in tax rates | 6,362 | 12,560 | 97,175 | ||||||
| Non-capital loss not utilized | 19,380 | 18,600 | 21,390 | ||||||
| Change in valuation allowance | 42,876 | 315 | (62,075 | ) | |||||
| Future income tax benefit | $ | - | $ | - | $ | - |
Potential future tax assets of the Company are comprised of the following:
| 2011 | 2010 | |||||
| Non-capital losses carried-forward | $ | 267,750 | $ | 224,750 | ||
| Capital assets | 366 | 490 | ||||
| Mineral properties and deferred exploration | 50,000 | 50,000 | ||||
| 318,116 | 275,240 | |||||
| Less: Valuation allowance | (318,116 | ) | (275,240 | ) | ||
| Net future tax asset | $ | - | $ | - |
As at January 31, 2011, the Company has non-capital losses available for carry forward totalling approximately $1,072,000 which expire as follows:
| 2012 | $ | 84,000 | |
| 2026 | 132,000 | ||
| 2027 | 176,000 | ||
| 2028 | 152,000 | ||
| 2029 | 183,000 | ||
| 2030 | 105,000 | ||
| 2031 | 240,000 | ||
| $ | 1,072,000 |
A valuation allowance has been used to offset the net benefit related to the future tax assets as a result of the uncertainty associated with the ultimate realization of these tax assets before expiry.
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| 8. | CAPITAL MANAGEMENT |
The Company manages its capital structure, consisting of cash and share capital, and makes adjustments to it depending on the funds available to the Company for acquisition and exploration of mineral properties. The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company’s management to sustain future development of the business.
The properties in which the Company currently has interests are in the exploration stage. As such, the Company is dependent on external financing to fund its activities. In order to carry out its planned exploration and fund on-going general and administrative expenses, the Company intends to use existing working capital and raise additional amounts as needed through share issuances and loans. The Company will continue to assess new properties and seek to acquire an interest in additional properties where there is sufficient geologic or economic potential and if adequate financial resources are available to do so.
Management reviews its capital management approach on an on-going basis and believes that this approach, given the small size of the Company, is reasonable. The Company is not subject to externally imposed capital requirements and there were no changes in its approach to capital management during the year ended January 31, 2011.
| 9. | RISK MANAGEMENT |
The Company is engaged in the mineral exploration business and manages related industry risk directly. The Company is potentially at risk for environmental reclamation and for fluctuations in commodity-based market prices associated with resource property interests. Management is of the opinion that the Company addresses environmental risk and compliance in accordance with industry standards and specific project environmental requirements. There is no certainty that all environmental risks and contingencies have been addressed.
The Company is exposed in varying degrees to a variety of financial instrument related risks as follows:
| a) | Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Company’s primary exposure to credit risk is in its cash accounts. This risk is managed through the use of a major financial institution which has high credit quality as determined by the rating agencies. | |
| b) | Foreign exchange risk is the risk that the Company will be subject to foreign currency fluctuations in satisfying obligations related to its foreign activities. The Company operates primary in Canada and therefore is not exposed to foreign exchange risk arising from transactions denominated in a foreign currency. | |
| c) | Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rate. The Company’s exposure to interest rate risk relates to its ability to earn interest income on cash balances at variable rates. The fair value of the Company’s cash account is relatively small and unaffected by changes in short term interest rates. | |
| d) | Liquidity risk arises through the excess of financial obligations over available financial assets due at any point in time. The Company’s objective in managing liquidity risk is to maintain sufficient readily available capital to meet its third party obligations as they are due. |
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| 10. | MATERIAL DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (“GAAP”) |
These financial statements have been prepared in accordance with Canadian GAAP which differ in certain respects from those principles that the Company would have followed had its financial statements been prepared in accordance with US GAAP. The material differences between Canadian and US GAAP affecting the Company’s financial statements are described and quantified below.
Mineral Property Interests
Acquisition and exploration costs are accounted for in accordance with Canadian GAAP as disclosed in Note 2. For US GAAP, acquisition costs are capitalized and reviewed for impairment on a reporting period basis and exploration costs are expensed as incurred. When it has been determined that a mineral interest can be economically developed as a result of establishing proven and probable reserves, the costs incurred to develop such property are capitalized.
Equity component of convertible note, ie. contributed surplus
Under Canadian GAAP, companies allocate convertible loan proceeds between the debt component and the embedded conversion feature based on their relative fair values. Under US GAAP, companies allocate convertible loan proceeds to the embedded conversion feature only if such feature has intrinsic value. Under US GAAP, the convertible note should be treated solely as a liability since the embedded conversion feature has no intrinsic value and accordingly does not meet the requirements of an equity component.
| a) | Effect on Balance Sheets |
| 2011 | 2010 | ||||||
| Mineral property interests | |||||||
| Per Canadian GAAP | $ | 200,879 | $ | 105,791 | |||
| Deferred exploration costs written off | (178,618 | ) | (90,530 | ) | |||
| Per US GAAP | $ | 22,261 | $ | 15,261 | |||
| Liabilities | |||||||
| Per Canadian GAAP | $ | 193,436 | $ | 1,140,457 | |||
| Equity portion of convertible note | 53,357 | 53,357 | |||||
| Accretion of convertible note | (53,357 | ) | (38,430 | ) | |||
| Per US GAAP | $ | 193,436 | $ | 1,155,384 | |||
| Shareholders’ equity (deficiency) | |||||||
| Per Canadian GAAP | $ | 170,600 | $ | (971,033 | ) | ||
| Deferred exploration costs written off | (178,618 | ) | (90,530 | ) | |||
| Equity portion of convertible note | (53,357 | ) | (53,357 | ) | |||
| Accretion of convertible note | 53,357 | 38,430 | |||||
| Per US GAAP | $ | (8,018 | ) | $ | (1,076,490 | ) |
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| b) | Effect on Statements of Operations, Comprehensive Loss and Deficit |
| 2011 | 2010 | 2009 | ||||||||
| Net and comprehensive loss | ||||||||||
| Per Canadian GAAP | $ | (255,692 | ) | $ | (118,922 | ) | $ | (195,335 | ) | |
| Deferred exploration costs written off | (88,088 | ) | (9,391 | ) | (14,906 | ) | ||||
| Accretion of convertible note | 14,926 | 14,007 | 11,871 | |||||||
| Per US GAAP | $ | (328,854 | ) | $ | (114,306 | ) | $ | (198,370 | ) | |
| Net and comprehensive loss per common share, basic and diluted | ||||||||||
| Per Canadian GAAP | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.05 | ) | |
| Per US GAAP | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.06 | ) |
| c) | Effect on Statements of Cash Flows |
| 2011 | 2010 | 2009 | ||||||||
| Cash flows used in operating activities | ||||||||||
| Per Canadian GAAP | $ | (224,963 | ) | $ | (157,733 | ) | $ | (162,523 | ) | |
| Deferred exploration costs written off | (88,088 | ) | (9,391 | ) | (14,906 | ) | ||||
| Accretion of convertible note | 14,926 | 14,007 | 11,871 | |||||||
| Per US GAAP | $ | (298,125 | ) | $ | (153,117 | ) | $ | (165,608 | ) | |
| Cash flows used in investing activities | ||||||||||
| Per Canadian GAAP | $ | (97,119 | ) | $ | (20,446 | ) | $ | (14,906 | ) | |
| Deferred exploration costs written off | 88,088 | 9,391 | 14,906 | |||||||
| Per US GAAP | $ | (9,031 | ) | $ | 11,055 | $ | - |
| d) | Recent Accounting Guidance Not Yet Adopted |
The Company has reviewed recently issued accounting pronouncements and plans to adopt those that are applicable to it. It does not expect the adoption of these pronouncements to have a material impact on its financial position, results of operations or cash flows.
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