UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., 20549
FORM 10-QSB
(Mark one)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the Quarterly period ended September 30, 2006
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________to___________
Commission file number 333-102117
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MAYFAIR MINING & MINERALS, INC.
-------------------------------
(Exact name of small business issuer as specified in its charter)
Nevada 45-0487294
- ------ ----------
(State or other jurisdiction of incorporation (IRS Employer Identification No.)
or organization)
The Priory, Haywards Heath, West Sussex, RH16 3LB, UK
- -----------------------------------------------------
(Address of principal executive offices)
44-(1444)-255149
- ----------------
(Issuer's Telephone Number)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Former address:-
Paxhill, Park Lane, Lindfield, West Sussex, RH16 2QY, UK.
- --------------------------------------------------------------------------------
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDING DURING THE
PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [ ] No [ ].
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date:
Outstanding as of December 8, 2006: 16,369,000 common shares.
FORWARD-LOOKING STATEMENTS
This Annual Report contains forward-looking statements that are not based on
historical fact and that involve predictions of future events based on
assessments of certain risks, developments, and uncertainties. Such forward
looking statements, within the meaning of the Private Securities Litigation
Reform Act of 1995, can be identified by the use of forward-looking terminology
such as "may", "will", "should", "expect", "anticipate", estimate", "intend",
"continue", or "believe", or the negatives or other variations of these terms or
comparable terminology. Forward looking statements may include projections,
forecasts, or estimates of future performance. Forward looking statements are
based upon assumptions that we believe to be reasonable at the time such forward
looking statements are made. Whether those assumptions will be realized will be
determined by future factors, developments, and events, which are difficult to
predict and may be beyond our control. Actual factors, developments, and events
may differ materially from those assumed. Such uncertainties, contingencies, and
developments, including those discussed in Item 6 in Management's Discussion and
Analysis of Financial Condition and Results of Operations and in "Risk Factors",
could cause our future operating results to differ materially from those set
forth in any forward looking statement. Accordingly, there can be no assurance
that any such forward looking statement, projection, forecast or estimate can be
realized or that actual returns or results will not be materially lower than
those that may be estimated.
Given these uncertainties, readers are cautioned not to place undue reliance on
such forward-looking statements. The Company disclaims any obligation to update
any such factors or to publicly announce the results of any revisions to any of
the forward-looking statements contained herein to reflect future results,
events or developments.
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following interim unaudited financial statements for the period ended
September 30, 2006 have been prepared by the Company.
MAYFAIR MINING & MINERALS, INC. AND SUBSIDIARIES
(AN EXPLORATION STAGE COMPANY)
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2006
(UNAUDITED)
3
MAYFAIR MINING & MINERALS, INC. AND SUBSIDIARIES
(AN EXPLORATION STAGE COMPANY)
CONDENSED CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------- --------------- ----------------
SEPT 30 MARCH 31
2006 2006
(UNAUDITED)
- --------------------------------------------------------------------------------- --------------- ----------------
ASSETS
CURRENT
Cash $ 104,972 $ 1,122,532
Inventory 72,755 -
Accounts receivable 150,050 -
Prepaid expenses 2,378 -
--------------- ----------------
330,155 1,122,532
PROPERTY AND EQUIPMENT 233,504 58,940
MINERAL PROPERTY INTERESTS 716,376 64,286
OTHER ASSETS - -
--------------- ----------------
$ 1,280,035 1,245,758
================================================================================= =============== ================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 373,334 $ 103,952
--------------- ----------------
MINORITY INTEREST - 9,218
--------------- ----------------
TOTAL LIABILITIES 373,334 113,170
SHAREHOLDERS' EQUITY
COMMON STOCK
Authorized:75,000,000 shares, par value $0.001 per share Issued and
outstanding:
15,510,000 shares at September 30, 2006 and
12,149,000 shares at March 31, 2006 15,510 12,149
Common stock subscribed 140,750 1,170,500
Additional paid-in capital 4,931,574 1,759,935
DEFICIT ACCUMULATED DURING THE EXPLORATION STAGE (4,181,133) (1,809,996)
--------------- ----------------
TOTAL SHAREHOLDERS, EQUITY 906,701 1,132,588
--------------- ----------------
$ 1,280,035 $ 1,245,758
================================================================================= =============== ================
The accompanying notes are an integral part of these consolidated financial statements.
4
MAYFAIR MINING & MINERALS, INC. AND SUBSIDIARIES
(AN EXPLORATION STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
- ---------------------------------------- ------------------ ---------------- ------------------ ----------------- -----------------
CUMULATIVE
PERIOD FROM
INCEPTION
AUGUST 14
THREE MONTHS ENDED SIX MONTHS ENDED 2002 TO
SEPTEMBER 30 SEPTEMBER 30 SEPTEMBER 30
2006 2005 2006 2005 2006
- ---------------------------------------- ------------------ ---------------- ------------------ ----------------- -----------------
SALES $ 37,971 $ -- $ 87,997 $ -- $ 87,997
EXPENSES
Exploration expense $ 252,591 $ 7,479 $ 530,131 $ 37,081 $ 662,395
Office and sundry 12,550 26,438 74,239 35,312 173,563
Organizational costs -- -- -- -- 1,215
Professional fees 73,491 25,025 140,347 33,228 308,813
Salaries 37,154 19,169 74,114 34,816 159,406
Stock-based compensation -- -- 1,372,000 -- 2,407,000
Travel 29,502 15,048 62,060 32,206 183,456
Mineral property acquisition
costs (Note 3) -- -- 40,461 -- 41,832
Management fees 90,000 36,000 175,000 77,000 395,736
------------ ------------ ------------ ------------ ------------
LOSS FOR THE PERIOD BEFORE MINORITY
INTERESTS (457,317) (129,159) (2,380,355) (249,643) (4,245,419)
MINORITY INTEREST IN LOSS OF
SUBSIDIARY -- 5,286 25,490 17,662 64,286
------------ ------------ ------------ ------------ ------------
NET LOSS FOR THE PERIOD (457,317) (123,873) $ (2,354,865) $ (231,981) $ (4,181,133)
============ ============ ============ ============ ============
BASIC AND DILUTED (LOSS) PER
SHARE (0.03) (0.01) $ (0.15) $ (0.02)
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 15,510,000 12,149,000 13,535,055 12,149,000
============ ============ ============ ============
The accompanying notes are an integral part of these consolidated financial statements.
5
MAYFAIR MINING & MINERALS, INC. AND SUBSIDIARIES
(AN EXPLORATION STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
CUMULATIVE
PERIOD FROM
INCEPTION
SIX MONTHS ENDED AUGUST 14 2002
SEPTEMBER 30 TO SEPT 30
2006 2005 2006
- ------------------------------------------------------------ ------------------ ----------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(2,354,865) $ (231,981) $(4,181,133)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH USED BY
OPERATING ACTIVITIES
Stock-based compensation 1,372,000 -- 2,407,000
Minority interest in loss of consolidated subsidiary (25,490) (17,662) (64,286)
Charitable donation of office furniture 50,000 -- 50,000
Amortization -- 1,843 --
CHANGES IN ASSETS AND LIABILITIES:
Inventory (72,755) -- (72,755)
Accounts receivable (150,050) -- (150,050)
Prepaid expenses (2,378) 150 (2,378)
Accounts payable and accrued liabilities 269,382 (766) 373,334
----------- ----------- -----------
NET CASH USED IN OPERATING ACTIVITIES (914,156) (248,416) (1,640,268)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (459,154) (21,237) (518,094)
----------- ----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (459,154) (21,237) (518,094)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Common stock issued 215,000 74,500 2,142,000
Share subscriptions received 140,750 -- 140,750
Capital stock issue costs -- -- (19,416)
----------- ----------- -----------
NET CASH PROVIDED BY FINANCIAL ACTIVITIES 355,750 74,500 2,263,334
----------- ----------- -----------
NET (DECREASE) INCREASE IN CASH (1,017,560) (195,153) 104,972
CASH, BEGINNING OF PERIOD 1,122,532 495,745 --
----------- ----------- -----------
CASH, END OF PERIOD $ 104,972 $ 300,592 $ 104,972
=========== =========== ===========
INTEREST PAID $ -- $ -- $ --
INCOME TAXES PAID $ -- $ -- $ --
=========== =========== ===========
NON CASH INVESTING AND FINANCING ACTIVITIES
Issuance of stock in exchange for acquisition of equipment $ 50,000 $ -- $ 50,000
6
MAYFAIR MINING & MINERALS, INC. AND SUBSIDIARIES
(AN EXPLORATION STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
SEPTEMBER 30, 2006
(UNAUDITED)
COMMON STOCK DEFICIT
------------------------------------------- ACCUMULATED
ADDITIONAL SHARE DURING THE
PAID-IN SUBSCRIPTIONS EXPLORATION
SHARES AMOUNT CAPITAL RECEIVED STAGE TOTAL
----------- ----------- ----------- ----------- ----------- -----------
Shares issued for cash at
$0.001 7,000,000 $ 7,000 $ -- $ -- $ -- $ 7,000
Related party loan payable
contributed as capital -- -- 16,536 -- -- 16,536
Net loss for the period -- -- -- -- (3,291) (3,291)
----------- ----------- ----------- ----------- ----------- -----------
Balance, March 31, 2003 7,000,000 7,000 16,536 -- (3,291) 20,245
Related party loan payable
Contributed as capital -- -- 7,075 -- -- 7,075
Shares issued for cash at
$0.10, net of share issue
costs of $19,416 1,500,000 1,500 129,084 -- -- 130,584
Net loss for the year -- -- -- -- (31,472) (31,472)
----------- ----------- ----------- ----------- ----------- -----------
Balance, March 31, 2004 8,500,000 8,500 152,695 -- (34,763) 126,432
Repayment of related party
loan contributed as capital -- -- (23,611) -- -- (23,611)
Shares issued for cash at $0.15 3,500,000 3,500 521,500 -- -- 525,000
Stock-based compensation -- -- 659,000 -- -- 659,000
Net loss for the year -- -- -- -- (801,478) (801,478)
----------- ----------- ----------- ----------- ----------- -----------
Balance, March 31, 2005 12,000,000 12,000 1,309,584 -- (836,241) 485,343
Shares issued for cash at
$ 0.50 149,000 149 74,351 -- -- 74,500
Share subscriptions received -- -- -- 1,170,500 -- 1,170,500
Stock-based -- 376,000
Compensation
Net loss for the year -- -- 376,000 -- (973,755) (973,755)
----------- ----------- ----------- ----------- ----------- -----------
Balance, March 31, 2006
Continued 12,149,000 $ 12,149 $ 1,759,935 $ 1,170,500 $(1,809,996) $ 1,132,588
=========== =========== =========== =========== =========== ===========
The accompanying notes are an integral part of these consolidated financial statements
7
MAYFAIR MINING & MINERALS, INC. AND SUBSIDIARIES
(AN EXPLORATION STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
SEPTEMBER 30, 2006
(UNAUDITED)
COMMON STOCK DEFICIT
-------------------------------------------- ACCUMULATED
ADDITIONAL SHARE DURING THE
PAID-IN SUBSCRIPTIONS EXPLORATION
SHARES AMOUNT CAPITAL RECEIVED STAGE TOTAL
----------- ----------- ----------- ----------- ----------- -----------
Continued
- ---------
Balance, March 31, 2006 12,149,000 $ 12,149 $ 1,759,935 $ 1,170,500 $(1,809,996) $ 1,132,588
Shares issued for cash at
$0.50 430,000 430 214,570 -- -- 215,000
Shares allocated from share
subscriptions 2,341,000 2,341 1,168,159 (1,170,500) -- --
Shares issued for acquisition
of office furniture 100,000 100 49,900 -- -- 50,000
Shares issued for acquisition
of subsidiary 490,000 $ 490 367,010 -- -- 367,500
Share options received -- -- -- 30,000 -- 30,000
Stock based compensation -- -- $ 1,372,000 -- -- 1,372,000
Net loss for the period -- -- -- -- $(1,913,820) $(1,913,820)
----------- ----------- ----------- ----------- ----------- -----------
Balance, June 30, 2006 15,510,000 $ 15,510 $ 4,931,574 $ 30,000 $(3,723,816) $ 1,253,268
Share options received 93,750 93,750
Share subscriptions received 17,000 17,000
Net loss for the period (457,317) (457,317)
----------- ----------- ----------- ----------- ----------- -----------
Balance, 30 Sept, 2006 15,510,000 15,510 $ 4,931,574 $ 140,750 $(4,181,133) $ 906,701
=========== =========== =========== =========== =========== ===========
The accompanying notes are an integral part of these consolidated financial statements.
8
MAYFAIR MINING & MINERALS, INC. AND SUBSIDIARIES
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2006
(UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
The unaudited financial information in the accompanying financial
statements reflects all adjustments, which in the opinion of management are
necessary to fairly state the Company's financial position and the results
of its operations for the periods presented. This report on Form 10-QSB
should be read in conjunction with the Company's financial statements and
notes thereto included in the Company's Form 10-KSB for the fiscal year
ended March 31, 2006. The Company assumes that the users of the interim
financial information herein have read or have access to the audited
financial statements for the preceding fiscal year and that the adequacy of
additional disclosure needed for a fair presentation may be determined in
that context. Accordingly, footnote disclosure, which would substantially
duplicate the disclosure contained in the Company's Form 10-KSB for the
fiscal year ended March 31, 2006, has been omitted. The results of
operations for the six-month period ended September 30, 2006, are not
necessarily indicative of results for the entire year ending March 31,
2007.
The accompanying consolidated financial statements of the Company have been
prepared in accordance with generally accepted accounting principles in the
United States. Because a precise determination of many assets and
liabilities is dependent upon future events, the preparation of financial
statements for a period necessarily involves the use of estimates which
have been made using careful judgement.
The accompanying consolidated financial statements have, in management's
opinion, been properly prepared within reasonable limits of materiality and
within the framework of the significant accounting policies summarized
below:
Basis of Consolidation.
The accompanying consolidated financial statements include the accounts of
Mayfair Mining & Minerals, Inc., its wholly-owned subsidiaries Mayfair
Mining & Minerals (UK) Ltd. Mayfair Mining & Minerals (Madagascar) and
Mayfair Gemstones Ltd, and its 70%-owned subsidiary Mayfair Mining and
Minerals (Zambia) Ltd. All significant inter-company balances and
transactions have been eliminated in consolidation.
Organization
The Company was incorporated in the State of Nevada, U.S.A., on August 14,
2002.
9
MAYFAIR MINING & MINERALS, INC. AND SUBSIDIARIES
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2006
(UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Exploration Stage Activities
The Company has been in the exploration stage since its formation and has
only realized revenues from its planned operations in the last two
quarters. It is primarily engaged in the acquisition and exploration of
mining properties. Upon location of commercial minable reserves, the
Company expects to actively prepare the site for its extraction and enter a
development stage.
Going Concern
The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. As shown in the accompanying
financial statements, the Company has accumulated a deficit of $4,181,133
for the period from inception, August 14, 2002, to September 30, 2006, and
has sales of $87,997. The future of the Company is dependent upon its
ability to obtain financing and upon future profitable operations from the
development of its mineral properties. Management has plans to seek
additional capital through a public offering of its common stock.
Accordingly there is substantial doubt about the company's ability to
continue as a going concern. The financial statements do not include any
adjustments relating to the recoverability and classification of recorded
assets, or the amounts of and classification of liabilities that might be
necessary in the event the Company cannot continue in existence.
Organizational and Start Up Costs
Costs of start up activities, including organizational costs, are expensed
as incurred.
Inventory
Inventory is valued on a production cost basis and consists of stocks of
sapphires.
10
MAYFAIR MINING & MINERALS, INC. AND SUBSIDIARIES
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2006
(UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Cash and Cash Equivalents
Cash equivalents comprise certain highly liquid instruments with a maturity
of three months or less when purchased. As of September 30, 2006 and 2005,
cash and cash equivalents consists of cash only.
Accounts Receivable
No allowance has been made for doubtful accounts. The Company believes that
the receivables are fully collectible.
Mineral Property Acquisition Payments and Exploration Costs
The Company records its interest in mineral properties at cost. The Company
expenses all costs incurred on mineral properties to which it has secured
exploration rights, other than acquisition costs, prior to the
establishment of proven and probable reserves. If and when proven and
probable reserves are determined for a property and a feasibility study
prepared with respect to the property, then subsequent exploration and
development costs of the property will be capitalized.
The Company regularly performs evaluations of any investment in mineral
properties to assess the recoverability and/or the residual value of its
investments in these assets. All long-lived assets are reviewed for
impairment whenever events or circumstances change which indicate the
carrying amount of an asset may not be recoverable.
Property and Equipment
Vehicle, equipment and web-site costs are depreciated on a straight-line
basis over useful lives ranging from 3 to 8 years.
11
MAYFAIR MINING & MINERALS, INC. AND SUBSIDIARIES
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2006
(UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES (Continued)
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 revenues and expenses for
the reporting period. Actual results could differ from these estimates.
Foreign Currency Translation
The Company's functional currency is the U.S. dollar. Transactions in
foreign currency are translated into U.S. dollars as follows:
i) monetary items at the rate prevailing at the balance sheet date;
ii) non-monetary items at the historical exchange rate;
iii) revenue and expense at the average rate in effect during the
applicable accounting period.
Gains and losses on translation are recorded in the consolidated statement
of operations.
Income Taxes
The Company has adopted Statement of Financial Accounting Standards No. 109
- "Accounting for Income taxes" (SFAS 109). This standard requires the use
of an asset and liability approach for financial accounting, and reporting
on income taxes. If it is more likely than not that some portion or all of
a deferred tax asset will not be realized, a valuation allowance is
recognized.
Stock Based Compensation
The Company has adopted the recommendations of Statement of Financial
Accounting Standards No. 123 (revised 2004) - "Stock Based Payment" to
account for stock based transactions with employees, officers, directors,
and outside consultants. Accordingly, the fair value of stock options is
charged to operations or resource property costs as appropriate, with an
offsetting credit to contributed surplus. The fair value of stock options
which vest immediately is recorded at the date of grant; the fair value of
options which vest in future is recognized on a straight-line basis over
the vesting period. Any consideration received on exercise of stock options
together with the related portion of contributed surplus is credited to
share capital.
12
MAYFAIR MINING & MINERALS, INC. AND SUBSIDIARIES
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2006
(UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Environmental Remediation and Reclamation Expenditures
The operations of the Company may in the future be affected from time to
time in varying degree by changes in environmental regulations, including
those for future removal and site restoration costs. Both the likelihood of
new regulations and their overall effect upon the Company vary greatly and
are not predictable.
The Company is in the early stages of exploring its resource properties.
Remediation and reclamation expenditures will be charged against earnings
as incurred. No remediation and reclamation expenditure have been incurred
to date.
Basic and Diluted Loss Per Share
In accordance with SFAS No. 128 - "Earnings Per Share", the basic loss per
common share is computed by dividing net loss available to common
stockholders by the weighted average number of common shares outstanding.
Diluted loss per common share is computed similar to basic loss per common
share except that the denominator is increased to include the number of
additional common shares that would have been outstanding if the potential
common shares had been issued and if the additional common shares were
dilutive. At September 30, 2006 and 2005, any outstanding stock equivalents
were anti-dilutive so basic and diluted loss per share are the same.
Financial Instruments
The carrying amounts of financial instruments, including cash and accounts
payable and accrued liabilities, approximate their fair value.
13
MAYFAIR MINING & MINERALS, INC. AND SUBSIDIARIES
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2006
(UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES (Continued)
Long-Lived Assets Impairment
Long-lived assets are reviewed for impairment when circumstances indicate
the carrying value of an asset may not be recoverable in accordance with
the guidance established in Statement of Financial Accounting Standards
("SFAS") No. 144, ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED
ASSETS . For assets that are to be held and used, an impairment loss is
recognized when the estimated undiscounted cash flows associated with the
asset or group of assets is less than their carrying value. If impairment
exists, an adjustment is made to write the asset down to its fair value,
and a loss is recorded as the difference between the carrying value and
fair value. Fair values are determined based on discounted cash flows or
internal and external appraisals, as applicable. Assets to be disposed of
are carried at the lower of carrying value or estimated net realizable
value. As at September 30, 2006 and 2005, the Company does not believe any
adjustment for impairment is required
p) Asset Retirement Obligations
The Company has adopted SFAS No. 143, ACCOUNTING FOR ASSET RETIREMENT
OBLIGATIONS which requires that the fair value of a liability for an asset
retirement obligation be recognized in the period in which it is incurred.
SFAS No. 143 requires a liability to be recorded for the present value of
the estimated site restoration costs with corresponding increase to the
carrying amount of the related long-lived asset. The liability will be
accreted and the asset will be depreciated over the life of the related
assets. Adjustments for changes resulting from the passage of time and
changes to either the timing or amount of the original present value
estimate underlying the obligation will be made. The Company has not
recorded any asset retirement obligation to date as the amounts, if any,
are not significant at this time.
2. RECENT ACCOUNTING PRONOUNCEMENTS
In December 2004, FASB issued Statement of Financial Accounting Standards
No. 123 (revised 2004) ("SFAS 123"), "Share-Based Payment". The Statement
establishes fair value as the measurement objective in accounting for
share-based payment arrangements and requires all entities to apply a
fair-value-based measurement in accounting for share-based payment
transactions with employees. The Company adopted SFAS 123 effective April
1, 2004.
14
MAYFAIR MINING & MINERALS, INC. AND SUBSIDIARIES
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2006
(UNAUDITED)
2. RECENT ACCOUNTING PRONOUNCEMENTS (Continued)
In March 2005, the Securities and Exchange Commission, (SEC issued Staff
Accounting Bulletin No.107 (SAB 107) which provides guidance regarding the
interaction of SFAS 123(R) and certain SEC rules and regulations. The new
guidance includes the SEC's view on the valuation of share-based payment
arrangements for public companies and may simplify some of SFAS 123(R)'s
implementation challenges for registrants and enhance the information
investors receive.
In September 2006 the FASB issued FASB Statement No. 157, FAIR VALUE
MEASUREMENTS (SFAS 157). SFAS 157 provides enhanced guidance for using fair
value to measure assets and liabilities. The standard also responds to
investors' requests for expanded information about the extent to which
companies measure assets and liabilities at fair value, the information
used to measure fair value, and the effect of fair value measurements on
earnings. The standard applies whenever other standards require (or permit)
assets or liabilities to be measured at fair value. The standard does not
expand the use of fair value in any new circumstances. SFAS 157 is
effective for financial statements issued for fiscal years beginning after
November 15. 2007, and interim periods within those fiscal years. Early
adoption is permitted. The Company is currently evaluating the effect that
the adoption of SFAS 157 will have on its financial position and results of
operations.
In July 2006, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation 48 (FIN 48). Accounting for Uncertainty in Income Taxes. FIN
48 clarifies the accounting for uncertainty in income taxes recognized in
an enterprise's financial statements in accordance with Statement of
Financial Accounting Standard (SFAS 109). Accounting for Income Taxes. This
Interpretation defines the minimum recognition threshold a tax position is
required to meet before being recognized in the financial statements. FIN
48 is effective for fiscal years beginning after December 15, 2006. The
Company is currently evaluating the effect that the adoption of FIN 48 will
have on its financial position and results of operations.
In August 2005, the FASB issued SFAS 154, Accounting Changes and Error
Corrections. This statement applies to all voluntary changes in accounting
principle and to changes required by an accounting pronouncement if the
pronouncement does not include specific transition provisions, and it
changes the requirements for accounting for and reporting them. Unless it
is impractical, the statement requires retrospective application of the
changes to prior periods' financial statements. This statement is effective
for accounting changes and correction of errors made in fiscal years
beginning after December 15, 2005. SFAS 154 is not expected to have a
material impact on the Company's financial statements.
15
MAYFAIR MINING & MINERALS, INC. AND SUBSIDIARIES
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2006
(UNAUDITED)
3. MINERAL PROPERTY INTERESTS
a) Zambia
On January 17, 2005, the Company entered into an agreement with two
Zambian private companies under which Mayfair Mining & Minerals
(Zambia) Limited ("Mayfair Zambia"), a private company, was formed.
(`The Agreement')
Under the Agreement, the Company agreed to provide a loan of $150,000
to Mayfair Zambia as the first year's budget to incorporate Mayfair
Zambia and set up the infrastructure necessary to perform three years
of work programs, and to fund plant requirements to reopen an amethyst
mine. As consideration for making the loan, the Company received a 70%
equity interest in Mayfair Zambia. The Company will be repaid the loan
from proceeds from mining operations, if any.
The Company is required to advance $12,500 of loan proceeds per month
but has the right to withdraw further funding obligations at any time
if it determines that the project is no longer feasible. As at
September 30, 2006, the Company had advanced $388,315 (September 30,
2005 - $77,000).
The two Zambian private companies transferred all their rights and
interests to mining licenses in three prospective mining projects to
Mayfair Zambia in return for a 30% equity interest. The mineral
properties acquired under the Arrangement have been recorded at an
estimated fair value of $64,286.
Under the terms of the Agreement, two principals of the non-controlling
interest holders are employed under contract to direct the day to day
working operations of Mayfair Zambia at a monthly salary of $2,500 each
from 1 April 2006. The employment contract is for one year and is
automatically renewable each year unless either party provides one
month's termination notice. For the six months ended September 30,
2006, the company paid $30,000 (September 30, 2005 - $18,000)
The Agreement is for a ten year term, and shall continue for successive
ten year terms unless otherwise terminated.
16
MAYFAIR MINING & MINERALS, INC. AND SUBSIDIARIES
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2006
(UNAUDITED)
3. MINERAL PROPERTY INTERESTS (Continued)
Mayfair Zambia's summarized financial information is as follows:
2006 2005
Current Assets $ 1,532 $ 18,195
Non-current assets 129,898 64,286
--------- ---------
131,430 82,481
Inter-company assets -- 50,500
--------- ---------
Total Assets $ 131,430 $ 132,981
========= =========
Current Liabilities $ 16,743 $ 63,317
Non-current liabilities -- 44,043
--------- ---------
16,743 107,360
Inter-company liabilities 386,053 3,000
--------- ---------
Total Liabilities $ 402,796 $ 110,360
========= =========
Net revenue $ -- $ --
Net income (loss) $(108,047) $ (41,212)
b) Madagascar
On April 18, 2006, the Company entered into an agreement to acquire a
51% interest in a Madagascan private company, Union Prospection Miniere
which controls 16 sapphire licenses covering an area of 1,487 square
kilometres for a consideration of (pound)640,000 plus legal expenses.
This was financed from existing cash reserves. On May 26, 2006, the
Company completed the agreement.
17
MAYFAIR MINING & MINERALS, INC. AND SUBSIDIARIES
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2006
(UNAUDITED)
3. MINERAL PROPERTY INTERESTS (Continued)
On June 29, 2006, the Company entered into an agreement to acquire the
remaining 49% interest in the Madagascan private company which controls
16 sapphire licenses for a consideration of 490,000 restricted common
shares in the company. The Company now owns 100% of the Madagascan
private company. The licences consist of 15 research permits, valid for
10 years and renewable for a further 5 years and 1 exploitation permit,
valid for 40 years and renewable for 20 year periods without limit. The
company has no contractual obligations in place with the Madagascan
company.
The determination of the purchase price and its allocation to the fair
values of the assets acquired and liabilities acquired as reflected in
the consolidated financial statements have been based on the Company's
valuation. The fair value of the assets and liabilities assumed in the
in the acquisition of Union Prospection Miniere are as follows:
Mineral Property Licences 652,090
Accounts receivable 60,003
Property, plant, other assets and equipment 393,860
Intangible assets 9
Accounts payable and accrued expenses (98,462)
----------
Net assets acquired 1,007,500
----------
The purchase price allocation is subject to adjustment, as the Company
is awaiting additional information related to the fair value of the
licences acquired and expects to receive this information no later than
nine months following the date of the acquisition.
Summarized below are the pro forma unaudited results of operations for
the six months ended September 30, 2006 as if the results of Union
Prospection Miniere were included for the entire period presented. The
pro forma results may not be indicative of the results that would have
occurred if the acquisition had been completed at the beginning of the
period presented or which may be obtained in the future:
For the six
months ended
September 30, 2006
------------------
Revenue $ 87,997
Net Loss $ (348,481)
18
MAYFAIR MINING & MINERALS, INC. AND SUBSIDIARIES
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2006
(UNAUDITED)
4. ACQUISITIONS
a. Mayfair Mining and Minerals (UK) Limited
On November 17, 2004, the Company acquired all of the issued and
outstanding shares of an inactive corporation owned by its principal
shareholder by assuming $10 of debt.
b. Mayfair Gemstones Limited.
On February 11, 2005, the Company incorporated Mayfair Gemstones
Limited.
c. Union Prospection Miniere.
On April 18, 2006, the Company acquired 51% of Union Prospection
Miniere. On June 29, 2006, the Company acquired the remaining 49% and
now owns 100% of Union Prospection Miniere.
5. RELATED PARTY TRANSACTIONS
During the six months ended September 30, 2006, the Company paid management
fees amounting to $85,000 (September 30, 2005 - $60,000) to two directors.
Of this amount, $15,000 (September 30,2005 - $5,000) was outstanding and
included in accounts payable and accrued liabilities at September 30, 2006.
During the six months ended September 30, 2006, the Company paid management
fees amounting to $72,000 (September 30, 2005 - $17,000) to two members of
its advisory board. Of this amount $12,000 (September 30, 2005 - $2,000)
was outstanding and included in accounts payable and accrued liabilities at
September 30, 2006.
6. CAPITAL STOCK
Common Shares
During the quarter ended September 30, 2006, the Company received $93,750
for the take up of 62,500 options to subscribe for shares of common stock
at a price of $0.15 per share. At September 30, 2006, these shares had not
been issued.
During the quarter ended 30 September 2006, the Company received
subscriptions for 34,000 shares of common stock for cash at a price of
$0.50 per share. At September 30, 2006, these shares had not been issued.
As of September 30, 2006 there were 108 registered holders of common stock.
There were 15,510,000 shares issued of which 13,052,550 are restricted.
19
MAYFAIR MINING & MINERALS, INC. AND SUBSIDIARIES
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2006
(UNAUDITED)
7. STOCK OPTIONS
Stock Option transactions are summarized as follows:
WEIGHTED WEIGHTED
NUMBER AVERAGE REMAINING
OF EXERCISE CONTRACTUAL
SHARES PRICE LIFE
PER SHARE IN YEARS
----------------------------------
Outstanding and exercisable as at
April, 2006 1,800,000 $ 0.15 2.45
Granted 200,000 0.15 2.67
Granted 2,000,000 0.50 2.67
----------------------------------
Balance as at June 30 2006 and
September 30, 2006 4,000,000 $ 0.32
==================================
The weighted average fair value per stock option granted during the
three months ended June 30, 2006 was $0.64 (June 30, 2005 - $Nil)
Stock based compensation expense recorded for the quarter ended June
30, 2006 included $ 529,000 for employees, officers and directors, and
$ 843,000 for consultants, for a total of $ 1,372,000. The compensation
comprised options, all of which were outstanding at September 30, 2006.
The following weighted average assumptions were used for the
Black-Scholes valuations of stock options granted:
Dividend yield 0
Expected volatility 175%
Risk free interest rate 3.25%
Expected life from the date of grant 3 years
Changes in the subjective input assumptions can materially affect the
fair value estimate and, therefore, the existing models do not
necessarily provide a reliable measure of the fair value of the
Company's stock options.
20
MAYFAIR MINING & MINERALS, INC. AND SUBSIDIARIES
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2006
(UNAUDITED)
8. INCOME TAXES
The Company is subject to United States income taxes, and United Kingdom
and Zambia income taxes (to the extent of its operations in the United
Kingdom, Zambia and Madagascar). The Company had no income tax expense
during the reported periods due to net operating losses.
a) A reconciliation of income tax expense to the amount computed at the
statutory rates is as follows: 6 Months to Year to
September 30 March 31
2006 2006
----------- -----------
Loss for the period $(2,371,137) $(1,026,243)
Average statutory tax rate 35% 35%
Expected income tax provision (830,000) (359,000)
Non-deductible stock based compensation 480,000 131,000
Increase in valuation allowance 350,000 228,000
----------- -----------
Income tax expense $ -- $ --
=========== ===========
b) Significant components of the Company's deferred income tax assets are
as follows:
September 30 March 31
2006 2006
----------- -----------
Total income tax operating loss carry forward $ 1,838,000 $ 830,000
Statutory tax rate 35% 35%
Deferred income tax asset 643,000 290,000
Valuation allowance (643,000) (290,000)
----------- -----------
$ - $ -
=========== ===========
21
MAYFAIR MINING & MINERALS, INC. AND SUBSIDIARIES
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2006 AND 2005
(STATED IN U.S. DOLLARS)
9. INCOME TAXES (Continued)
c) The Company has incurred operating losses for tax purposes of
approximately $830,000 which, if unutilized, may expire depending on
the jurisdiction. Future tax benefits, which may arise as a result of
these losses and which are subject to the fiscal laws in the
jurisdictions concerned at the time of claiming relief, have not been
recognized in these consolidated financial statements, and have been
offset by a valuation allowance. The following table lists the fiscal
year in which the loss was incurred and the expiration date of the
operating loss carry forwards if applicable by jurisdiction:
EXPIRATION
DATE OF
INCOME TAX
OPERATING
NET LOSS CARRY
LOSS FORWARDS
---------------- -----------------
United States
-------------
2003 $ 3,000 2023
2004 32,000 2024
2005 136,000 2025
2006 434,000 2026
2007 808,000 2027
Zambia
------
2005 9,000 2010
2006 175,000 2011
2007 154,000 2012
United Kingdom
--------------
2006 41,000 *
2007 38,000 *
Total income tax operating loss
carry forward $ 1,830,000
-------------
* Tax losses incurred in the United Kingdom can be carried forward indefinitely
and offset against future profits of the same trade.
22
MAYFAIR MINING & MINERALS, INC. AND SUBSIDIARIES
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2006
(UNAUDITED)
9. FAIR VALUE OF FINANCIAL INSTRUMENTS
The related method of determining fair value and carrying value of the
Corporation's financial instruments were as follows: the fair value of current
assets and current liabilities approximates their carrying amounts due to the
short-term maturity of these instruments. The Corporation is exposed to market,
credit and currency risks arises in the normal course of the Corporation's
business. Derivative financial instruments are not used to reduce exposure to
the above risks.
CONCENTRATION OF CREDIT RISK - Financial instruments that potentially expose the
Corporation to concentrations of credit risk consist primarily of cash and cash
equivalent. Management of the Corporation believes the likelihood of incurring
material losses due to concentration of credit risk is remote.
INTEREST RATE RISK - The Corporations potential interest rate risk is minimal
and management considers the risk insignificant.
FOREIGN CURRENCY RISK - The Corporation undertakes transactions denominated in
foreign currencies. Accordingly, these activities may result in foreign currency
exposure. The Corporation does not hedge its foreign currency risk.
10. SEGMENT INFORMATION
The Company operates in one reportable segment, being the exploration of mineral
properties, in Zambia and Madagascar.
23
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATIONS.
Some discussions in this report include a number of forward-looking statements
that reflect our current views with respect to future events and financial
performance. Forward-looking statements are often identified by words like:
believe, expect, estimate, anticipate, intend, project and similar expressions,
or words which, by their nature, refer to future events. You should not place
undue certainty on these forward-looking statements, which apply only as of the
date of this report. These forward-looking statements are subject to certain
risks and uncertainties that could cause actual results to differ materially
from historical results or our predictions, especially since we are engaged in
the mining industry, one fraught with uncertainties and risks of operations.
We are an exploration-stage company, and have not yet generated or realized any
revenues from our business operations. As of September 30, 2006, we had cash
resources of $104,972. We expect to raise additional capital through equity
private placements, convertible debenture offerings or bank loan facilities
which are currently under discussion with a number of interested investors.
In October of 2002, we acquired the rights to explore the mineral property in
British Columbia containing six one unit claims. The property is located in an
area where exploration dates from 1891. According to MINDEP Computer Files at
the University of British Columbia, silver, lead and zinc were found in the
claims adjacent to the property.
On May 10, 2004, the company commissioned an independent geologist to commence
Phase 1 of the company's exploration program. This program commenced in
September, 2004 and in late January, 2005 the company received the consulting
geologist's report on the soil geochemistry and geology of the Silver Stone 1-6
Mineral Claims. The report states, in summary, that a program of soil
geochemical sampling with geological observations on a 10.0 km grid was carried
out at the Silver Stone claim group. No anomalous values were detected and only
several threshold soil values of up 4.0 ppm silver and 69 ppm lead were found.
The consulting geologist recommended, in his report dated January 25, 2005 that
no additional exploration should be planned for the property. This first phase
of the program and report were completed at minimal cost to the Company. . The
Company has relinquished its option on this property.
On January 17, 2005 the company signed a joint venture agreement with the
Nyendwa Family and their associated corporations. Pursuant to the Agreement, the
Company incorporated a new Zambian joint venture company - Mayfair Mining and
Minerals (Zambia) Limited. The new Zambian joint venture company is owned 70% by
Mayfair Mining and Minerals (UK) Ltd. and 30% by the Nyendwa Family of Kafue,
Zambia. Mayfair Mining and Minerals (UK) Ltd. is a wholly owned subsidiary of
Mayfair Mining and Minerals, Inc. In return for their 30% shareholdings, the
Nyendwa family has transferred into the Zambian joint venture company three
prospective mining projects.
24
The Company allocated US $ 150,000.00 during fiscal 2005 for the purposes of
sampling and testing of the bedrock, elluvial and alluvial gold and platinum
group metals in Funswe River and Nansenga Stream and also for the
re-establishment of production and processing of amethyst in the Mapatizya
mining concessions. This work has now been substantially completed and
production of gold and amethyst has commenced during calendar 2006. The budget
for further work on the properties has been increased to $750,000 for the coming
year. The Company has established the headquarters of the Zambian subsidiary in
Kafue, a town 30 kilometers from Lusaka.
RESULTS OF OPERATIONS
>From Inception to September 30, 2006.
In October of 2002, we acquired the rights to explore a mineral property in
British Columbia containing six one unit claims.
On May 10, 2004, the company commissioned an independent geologist to commence
Phase 1 of the company's exploration program. This program commenced in
September, 2004 and in late January the company received the consulting
geologist's report on the soil geochemistry and geology of the Silver Stone 1-6
Mineral Claims. The report states, in summary, that a program of soil
geochemical sampling with geological observations on a 10.0 km grid was carried
out at the Silver Stone claim group. No anomalous values were detected and only
several threshold soil values of up 4.0 ppm silver and 69 ppm lead were found.
The consulting geologist recommended, in his report dated January 25, 2005 that
no additional exploration should be planned for the property. This first phase
of the program and report were completed at minimal cost to the company. The
Company has relinquished its option on this property.
On August 13, 2004 the company was given clearance to trade on the OTC Bulletin
Board regulated by the NASD, under the trading symbol "MFMM".
During November 2004 the company completed a private placement equity funding
with a number of accredited investors and European institutions for gross
proceeds to the company of US $525,000 by the sale of 3,500,000 shares at a
price of $0.15 cents. This funding was utilized for working capital requirements
for our mining projects in Zambia. Combined with the balance of the funds
remaining from our initial public offering of $150,000 and the subsequent
private placements completed, we anticipate we will be able to satisfy our cash
requirements for the next twelve months. The future of the Company is dependent
upon its ability to obtain financing and upon future profitable operations from
the development of its mineral properties, of which there can be no assurance.
25
The company also placed a further 149,000 units during the fiscal year 2006. The
units were issued at a price of $0.50 unit for gross proceeds of $74,500 in a
private placement. Each unit consists of one share of restricted common stock
and one warrant to purchase one share of restricted common stock at an exercise
price of $0.60 per share at any time within the next two years. Net cash
provided by financing activities from inception to September 30, 2006, was
$2,263,334 as a result of proceeds received from private placement share
subscriptions and loans from the Company's Director.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2006, our total assets were $1,280,035 and our total
liabilities were $373,334.
EVENTS PRIOR TO THIS QUARTER
On April 10, 2006 the company closed a private placement financing for gross
proceeds of $1,385,500. The offering consisted of 2,771,000 units at $0.50
cents, comprised of one restricted share of common stock and one warrant to
purchase one restricted share of common stock, exercisable at US $0.60 at any
time within 2 years of the offering.
On April 11, 2006, the company announced that Mr. Klaus Fey had been appointed
as the Marketing Manager of the company's Zambian subsidiary. Mr. Fey was
responsible for the sales and marketing of product for the company's amethyst
mining operations. Sadly, on May 24, 2006 Mr. Fey passed away due to an attack
of malaria. His duties have been assumed by his assistant and the local
management of the Zambian subsidiary.
On April 18, 2006, the company announced that it had acquired 51% of the
outstanding shares of Union Prospection Miniere (UPM), a Madagascan private
limited company in a cash transaction with Sapphire Fields Limited, a
corporation existing under the laws of the British Virgin Islands. The total
consideration for this acquisition was US $640,000 plus legal expenses. This
included an independent geological report of the sapphire properties by John
Langlands of ACA Howe International Limited. ACA Howe International Limited is
an internationally recognised, independent geological and mining consultancy
with offices in Canada, where it was established in 1961, and in the United
Kingdom, where it has operated since 1978. As a result of this transaction
Mayfair Mining has acquired control of 16 sapphire licenses covering an area of
1,487 square kilometres in the Ilakaka sapphire mining district in Southern
Madagascar. On May 26, 2006, the company announced that it had closed and
completed the acquisition of control of Union Prospection Miniere, Madagascar.
On May 8, 2006, the company announced that it had retained The Vine Group, a
boutique Investment Banking and Corporate Advisory firm with international
affiliations. The Vine Group's mandate is to increase the company's shareholder
base and raise investor awareness and goodwill within the Chinese investor
community in North America and China.
26
On June 2, 2006, the company awarded the following Employee Stock Options,
reserved as of February 7, 2005. The options were granted at an option exercise
price of US$0.15 per share and must be exercised within three (3) years from
date of grant or the options are null, void and worthless:
Islee Oliva Salinas, Consultant, UK - 50,000
Evelyn YK Lee, Consultant, North America - 50,000
Karen McHugh, Consultant, UK - 50,000
Peter Mills, Head of Accounting - 50,000
On June 2, 2006, the company awarded the following Employee Stock Options,
reserved as of February 8, 2006, to the following individuals. The options were
granted at an option exercise price of US $0.50 per share and must be exercised
within three (3) years from date of grant or the options are null, void and
worthless.
Clive de Larrabeiti, President- 500,000 shares
Michael Smith, Vice President- 100,000 shares
Michael Morrison, Legal Counsel- 150,000 shares
Claudio Morandi, Corporate Finance Consultant- 100,000 shares
Dany Goreeba, Managing Director, UK - 100,000
Ali Abood, Advisory Board Member - 50,000
Christopher Davie, Director - 50,000
Earl Young, Advisory Board Member - 500,000
Midgaard Capital, Inc. - Consultants, North America - 350,000
Vine Group, Corporate Finance Consultants - 50,000
Peter Mills, Head of Accounting - 50,000
EVENTS DURING THE QUARTER
On July 3, 2006, the company announced that it had acquired the remaining 49% of
the outstanding shares of Union Prospection Miniere in a share transaction with
the remaining shareholders, who are residents of Madagascar. The company now
owns 100% of UPM.
On July 11, 2006, the company filed an 8-K with the SEC, dated July 11, 2006
reporting the change of auditors from Morgan & Company, Chartered Accountants of
Vancouver, Canada to Chantrey Vellacott DFK of London, England.
On July 20, 2006, Christopher Davie resigned as a Director of the Company,
citing increasing responsibilities in his other ventures. There was no
disagreement between the Company and Mr. Davie on any issue.
27
EVENTS SUBSEQUENT TO THE QUARTER
On October 5, 2006, the following persons exercised their $0.15 cent employee
incentive stock options in the following amounts.
Clive de Larrabeiti - 500,000
Dany Goreeba - 125,000
Peter Mills - 50,000
Paul Chung - 50,000
Claudio Morandi - 100,000
There are now 1,175,000 employee incentive stock options remaining to be
exercised at $0.15.
On October 16, 2006, Clive de Larrabeiti, the CEO and President of the issuer
lent the company $100,000. On November 8th, 2006 Clive de Larrabeiti lent the
company a further $39,500.
On November 2, 2006 the company gave notice to The Vine Group that it was
terminating the contract between them and the company, effective November 3,
2006, culminating on November 30, 2006.
During November, 2006 the company decided to restructure management of the
Madagascan subsidiary and to put in place a comprehensive financing structure
and an updated business plan for its sapphire mining operations. This is in
furtherance of the Company's proposed efforts to resume mining operations during
calendar 2007.
LIQUIDITY AND CAPITAL RESOURCES
We issued 7,000,000 founders shares on August 14, 2002 for the amount of $7,000.
We further issued 1,500,000 shares during November, 2003 upon the completion of
our public offering for the amount of $150,000. We issued 3,500,000 shares
during November, 2004 in a private placement for the amount of $525,000 and
issued an additional 149,000 shares during May, 2005 for the amount of $74,500.
Since our inception, Mr. de Larrabeiti advanced to us the total sum of $23,611,
which was used for organizational and start-up costs, operating capital and
offering expenses incurred prior to the completion of this offering. The loan
was repaid in full from the proceeds of the private placement in November, 2004.
As of September 30, 2006 our total assets were $1,280,035 and our total
liabilities were $373,334. On April 10, 2006 the company closed a private
placement financing for gross proceeds of $1,385,500. The offering consisted of
2,771,000 units at $0.50 cents, comprised of one restricted share of common
stock and one warrant to purchase one restricted share of common stock,
exercisable at US $0.60 at any time with 2 years of the offering.
28
On October 16, 2006, Clive de Larrabeiti, the CEO and President of the issuer
lent the company $100,000. On November 8th, 2006 Clive de Larrabeiti lent the
company a further $39,500. Negotiations with a number of investment institutions
are ongoing and the company expects further investment funding forthcoming
within the next months.
CONTROLS AND PROCEDURES
In connection with this report, management carried out an evaluation, under the
supervision and with the participation of the management, including the
President and principal accounting officer, of the effectiveness of the design
and operation of the Company's disclosure controls and procedures pursuant to
Exchange Act Rule 13a-14. Based upon the foregoing, the President and principal
accounting officer concluded that the Company's disclosure controls and
procedures are effective in connection with the filing of this Report on Form
10-QSB, as at September 30, 2006. There were significant changes in the
Company's internal controls due to the employment of a full time book keeper and
Head of Accounting. These were positions that were previously handled on a part
time basis. As a result of this change, there are appropriate segregation of
duties within the Company as a means of internal control.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a)
Exhibit No. Description
- ----------- -----------
3.1* Articles of Incorporation
3.2* Bylaws
4.1* Specimen Stock Certificate
10.1* Bill of Sale Absolute
10.2* Statement of Trustee
10.3* Deed
10.4* Agreement between Clive de Larrabeiti and the Company
10.5* Agreement between Locke Goldsmith and Clive de Larrabeiti
10.6* Escrow Agreement
*Filed as an Exhibit to the Company's Registration Statement on Form SB-2, dated
December 25, 2002, and incorporated herein by this reference.
29
REPORTS ON FORM 8-K
A Form 8-K was filed on January 17, 2005.
A Form 8- K was filed on May 31, 2005.
A Form 8-K was filed on June 3, 2005.
A Form 8-K was filed on April 13, 2006.
A Form 8-K was filed on June 28, 2006.
A Form 8-K was filed on July 7, 2006.
A Form 8-K was filed on July 20, 2006.
A Form 8-K was filed on September 14, 2006.
A Form 8-K was filed on October 4, 2006.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Dated: December 8, 2006
MAYFAIR MINING & MINERALS, INC.
BY: /S/ CLIVE DE LARRABEITI
--------------------------------
Clive de Larrabeiti
President and Director
(who also performs the function of chief financial officer and principal
accounting officer)
30
I, Clive de Larrabeiti, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Mayfair Mining &
Minerals, Inc., for the period ended September 30, 2006.
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respect the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report.
4. I am responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. As the registrant's sole certifying officer, I have disclosed, based on my
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. I have indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of my most recent
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
(Signature) /s/ "Clive de Larrabeiti"
-----------------------------------------
Clive de Larrabeiti
(Title) President, Chief Executive Officer and Director
(Date) December 8, 2006
Item 7.
- -------
SIGNATURES
- ----------
IN ACCORDANCE WITH THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED.
MAYFAIR MINING & MINERALS, INC.
By: /s/ Clive de Larrabeiti
------------------------------
Clive de Larrabeiti
President and Director (who also performs the function of chief financial
officer and principal accounting officer)
December 8, 2006
31