UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended November 30, 2011
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from __________ to __________
Commission File Number: 333-138148
AMERICAN PARAMOUNT GOLD CORP
(Exact name of registrant as specified in its charter)
Nevada 20-5243308
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
50 West Liberty Street, Suite 880, Reno, NV 89501
(Address of principal executive offices) (Zip Code)
(former address-141 Adelaide Street W, Suite 240, Toronto, ON)
Registrant's telephone number including area code: (778) 478-7480
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] YES [ ] NO
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to post such files). Yes [ ] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a small reporting company. See
the definitions of "large accelerated filer", "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
Number of common shares outstanding at June 15, 2014: 1,612,500
AMERICAN PARAMOUNT GOLD CORP.
(fka Zebra Resources Inc.)
(An exploration Stage Company)
INDEX
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets at November 30, 2011 (unaudited) and
August 31, 2011 (audited) 3
Statements of Operations for the three months ended November 30, 2011
and 2010 (unaudited) 4
Statements of Cash Flows for the three months ended November 30, 2011
and 2010 (unaudited) 5
Notes to Financial Statements (unaudited) 6
2
American Paramount Gold Corp.
(fka Zebra Resources Inc.)
Balance Sheets - Presented in U.S. Dollars
November 30, August 31,
2011 2011
------------ ------------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash $ 16,261 $ 71,552
Sales Tax receivable 19,647 35,126
Prepaids and deposits -- 39,629
------------ ------------
TOTAL CURRENT ASSETS 35,908 146,357
------------ ------------
Mining claims -- 250,000
Website, net -- 14,618
Equipment, net -- 1,075
------------ ------------
TOTAL ASSETS $ 35,908 $ 412,050
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
LIABILITIES
CURRENT LIABILITIES
Bank overdraft $ -- $ 21,882
Accounts payable and accrued liabilities 153,932 122,740
Convertible loans payable 831,596 779,877
------------ ------------
TOTAL CURRENT LIABILITIES 985,528 924,499
------------ ------------
TOTAL LIABILITIES 985,528 924,499
------------ ------------
STOCKHOLDERS' DEFICIT
Common stock
3,750,000 authorized shares, par value $0.001
1,612,500 shares issued and outstanding 1,613 1,613
Additional paid-in capital 3,291,370 3,291,370
Stock payable 476,191 476,191
Deficit accumulated during the exploration stage (4,718,794) (4,281,623)
------------ ------------
TOTAL STOCKHOLDERS' DEFICIT (949,620) (512,449)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 35,908 $ 412,050
============ ============
The accompanying notes are an integral part of
these interim financial statements
3
American Paramount Gold Corp.
(fka Zebra Resources Inc.)
Statements of Operations - Presented in U.S. Dollars
(Unaudited)
For the Three Months Ended
November 30,
2011 2010
------------ ------------
OPERATING EXPENSES
Consulting $ 14,725 $ 2,496,769
Exploration 121,640 117,211
General and administrative 11,052 25,783
Management fees -- 33,212
Professional fees 3,739 41,738
------------ ------------
TOTAL EXPENSES 151,156 2,714,713
OTHER EXPENSES
Impairment of mining claims 250,000 --
Impairment of capital assets 15,693 --
Amortization of debt discount -- 4,196
Interest expense 20,322 9,585
------------ ------------
TOTAL OTHER EXPENSE 286,015 13,781
------------ ------------
NET LOSS $ (437,171) $ (2,728,494)
============ ============
NET LOSS PER COMMON SHARE - BASIC $ (0.27) $ (1.69)
============ ============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING - BASIC 1,612,500 1,612,500
============ ============
The accompanying notes are an integral part of
these interim financial statements
4
American Paramount Gold Corp.
(fka Zebra Resources Inc.)
Statements of Cash Flows - Presented in US Dollars
(Unaudited)
For the Three Months Ended
November 30,
2011 2010
---------- ----------
CASH FLOW FROM OPERATING ACTIVITIES
Net loss $ (437,171) $ (5,233)
Adjustments to reconcile net loss to net
cash used in operating activities:
Impairment of capital assets 15,693 --
Impairment of mining claims 250,000 --
Changes in operating assets and liabilities:
Decrease (increase) in sales tax receivable 15,479 --
Decrease (increase) in prepaids and deposits 39,629 --
Increase (decrease) in accounts payable and
accrued liabilities 32,911 1,350
---------- ----------
NET CASH USED IN OPERATING ACTIVITIES (89,409) (3,883)
---------- ----------
CASH FLOW FROM FINANCING ACTIVITIES
Bank overdraft (21,882) --
Convertible loan proceeds - related party 50,000 --
---------- ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 28,118 --
---------- ----------
INCREASE (DECREASE) IN CASH (55,291) (3,883)
CASH, BEGINNING OF PERIOD 71,552 7,419
---------- ----------
CASH, END OF PERIOD $ 16,261 $ 3,536
========== ==========
The accompanying notes are an integral part of
these interim financial statements
5
American Paramount Gold Corp.
(fka Zebra Resources Inc.)
Notes to the Financial Statements
November 30, 2011
(Stated in U.S. Dollars)
1. DESCRIPTION OF THE BUSINESS AND HISTORY
American Paramount Gold Corp., a Nevada corporation, (the "Company") was
incorporated in the State of Nevada on July 20, 2006 as Zebra Resources Inc. The
Company was formed to engage in the acquisition, exploration and development of
natural resource properties.
UNAUDITED INTERIM FINANCIAL STATEMENTS
The unaudited interim consolidated financial statements of the Company have been
prepared in accordance with United States generally accepted accounting
principles ("GAAP") for interim financial information and the rules and
regulations of the Securities and Exchange Commission ("SEC"). They do not
include all information and footnotes required by GAAP for complete financial
statements. Except as disclosed herein, there have been no material changes in
the information disclosed in the notes to the financial statements for the year
ended August 31, 2011, included in the Company's Annual Report on Form 10-K,
filed with the SEC. The interim unaudited financial statements should be read in
conjunction with those audited financial statements included in Form 10-K. In
the opinion of management, all adjustments considered necessary for fair
presentation, consisting solely of normal recurring adjustments, have been made.
Operating results for the three month period ended November 30, 2011 are not
necessarily indicative of the results that may be expected for the year ending
August 31, 2012.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 2014, the FASB issued ASU 2014-10, "Development Stage Entities (Topic
915): Elimination of Certain Financial Reporting Requirements, Including an
Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation".
The Company elected to early adopt the guidance in FASB Topic 915 as of November
30, 2011 and no longer provides the accounting disclosures for development stage
companies. Accordingly, the figures for the period from inception to the current
period are no longer provided and all references to development stage operations
have been removed.
Other recent accounting pronouncements with future effective dates are not
expected to have an impact on the Company's financing statements.
2. MINERAL PROPERTIES
On April 16, 2010, the Company entered into an option agreement to acquire a
100% long-term lease interest in 189 unpatented mining claims situated in the
Walker Lane Structural Belt in Nye County, Nevada (the "Cap Gold Project"). The
189 claims making up the Cap Gold Project form a contiguous block of
approximately 3,960 acres. The Company paid $125,000 to secure the option,
giving it the right to acquire a 100% long-term lease interest in the Cap Gold
Project. To exercise the option the Company must: (i) make ongoing yearly
advance production royalty cash payments during the term of the agreement of
$125,000 in years two through five, $150,000 in years six through twelve,
$200,000 in years 13 through 20 and $300,000 in years 21 through 30; (ii) incur
expenditures on exploration of the Cap Gold Project of not less than an
aggregate of $1,250,000 over five years; and (iii) make production royalty
payments from production from the property after the advance production royalty
cash payments described above have been repaid to the Company from production
from the property. At the Company's election, the production royalty may be
calculated either on a sliding scale or on a fixed production royalty basis, and
must range from 1% to a maximum of 3%.
On March 9, 2012, based on recently released drill results, the Board of
Directors decided the company could not justify the further expense of
continuing with its planned drill program at Cap Gold, Nye County, Nevada, USA.
The Company advised the owners that it was cancelling the option agreement and
the property is fully impaired as at November 30, 2011.
6
3. CONVERTIBLE LOAN
On April 22, 2010, the Company entered into a convertible loan agreement with
Monaco Capital Inc., a major shareholder ("Monaco") wherein Monaco agreed to
loan the Company up to $500,000 at an interest rate of 10% per annum. The
principal amount of any funds advanced and accrued interest is due one year from
the advancement date. The loan (including accrued interest) is convertible into
common shares of the Company at a conversion price of the volume weighted
average price for the Company's stock during the 10 day period ending on the
latest complete trading day prior to conversion.
As at November 30, 2011, interest of $67,191 (August 31, 2011 - $47,258) is
included in accounts payable.
4. COMMON STOCK
On November 28, 2011, the Company amended its Articles of Incorporation to
implement a forty for one reverse stock split of its authorized and issued and
outstanding common shares from 150,000,000 shares of common stock with a par
value of $0.001 to 3,750,000 shares of common stock with a par value of $0.001.
All share and per share information have been retroactively restated to reflect
this.
5. RELATED PARTY TRANSACTIONS
During the three months ended November 30, 2011, consulting fees of $14,725
(November 30, 2010 - $Nil) were incurred to the President of the Company.
6. IMPAIRMENT OF CAPITAL ASSETS
During the 3 month period ended November 30, 2011, management determined that
costs capitalized to the development of the Company's website of $14,618 and
equipment with the carrying value of $1,075 would be unrecoverable and has fully
impaired the assets accordingly.
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This quarterly report contains forward-looking statements. These statements
relate to future events or our future financial performance. In some cases, you
can identify forward-looking statements by terminology such as "may", "should",
"expects", "plans", "anticipates", "believes", "estimates", "predicts",
"potential" or "continue" or the negative of these terms or other comparable
terminology. These statements are only predictions and involve known and unknown
risks, uncertainties and other factors, including the risks in the section
entitled "Risk Factors" that may cause our or our industry's actual results,
levels of activity, performance or achievements to be materially different from
any future results, levels of activity, performance or achievements expressed or
implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Except as required by applicable law,
including the securities laws of the United States, we do not intend to update
any of the forward-looking statements to conform these statements to actual
results.
Our unaudited interim financial statements are stated in United States dollars
and are prepared in accordance with United States generally accepted accounting
principles. The following discussion should be read in conjunction with our
Company's audited financial statements and 10-K for the year ended August 31,
2011 and unaudited interim financial statements and the related notes that
appear elsewhere in this quarterly report.
In this quarterly report, unless otherwise specified, all references to "common
stock" refer to common shares in the capital of our company and the terms "we",
"us" and "our" mean American Paramount Gold Corp.
GENERAL OVERVIEW
We were incorporated under the laws of the State of Nevada on July 20, 2006
under the name Zebra Resources, Inc. At inception, we were an exploration stage
company engaged in the acquisition, exploration and development of mineral
properties.
On February 26, 2011, Monaco Capital Inc. acquired a controlling interest in our
company by purchasing 20,000,000 shares of our common stock in a private
transaction.
On March 17, 2011, we effected a 1 old for 2 new forward stock split of our
issued and outstanding common stock. As a result, our authorized capital
increased from 75,000,000 to 150,000,000 shares of common stock and our issued
and outstanding increased from 32,000,000 shares of common stock to 64,000,000
shares of common stock, all with a par value of $0.001.
Also effective March 17, 2011, we changed our name from Zebra Resources, Inc. to
American Paramount Gold Corp., by way of a merger with our wholly owned
subsidiary American Paramount Gold Corp., which was formed solely for the change
of name.
The name change and forward stock split became effective with the
Over-the-Counter Bulletin Board at the opening for trading on April 12, 2011
under the stock symbol APGA. Our CUSIP number is 02882T 05.
On April 16, 2011, we entered into an agreement with Royce L. Hackworth and
Belva L. Tomany in respect of an option to acquire 189 unpatented mining claims
situated in the Walker Lane Structural Belt in Nye County, Nevada known as the
Cap Gold Project. The 189 claims making up the Cap Gold Project form a
contiguous block of approximately 3,960 acres (1,602 hectares). We paid $125,000
to secure the option, giving us the right acquire a 100% long-term lease
interest in the Cap Gold Project. To exercise the option we must: (i) make
ongoing yearly advance production royalty cash payments during the term of the
agreement of $125,000 in years two (2) through five (5), $150,000 in years six
(6) through twelve (12), $200,000 in years 13 through 20 and $300,000 in years
21 through 30; (ii) incur expenditures on exploration of the Cap Gold Project of
not less than an aggregate of $1,250,000 over five (5) years; and (iii) make
8
production royalty payments from production from the property after the advance
production royalty cash payments described above have been repaid to our company
from production from the property. At our company's election, the production
royalty may be calculated either on a sliding scale or on a fixed production
royalty basis, and must range from 1% to a maximum of 3%.
On April 22, 2011, we entered into a convertible loan agreement with Monaco
Capital Inc., wherein Monaco Capital Inc. has agreed to loan our company up to
$500,000. The loan (and accrued interest) is convertible in whole or in part
into common shares of our company at a conversion price of $1.05 and will bear
interest at 10% per annum. The principal amount of the loan and accrued interest
is due and payable one year from the advancement date. We may at any time during
the term of the loan prepay any sum up to the full amount of the loan and
accrued interest then outstanding for an additional 10% of such amount. At
November 30, 2011, Monaco Capital Inc. has advanced $400,933. The balance sheet
at November 30, 2011 records the loan value at $394,338 due to the unamortized
beneficial conversion feature on the convertible debt totalling $6,595. The
initial beneficial conversion feature was valued at $16,833 of which $10,238 was
amortized. Accrued interest relating to the loan totalling $18,331 as at
November 30, 2011 was recorded in accounts payable and accrued liabilities.
On July 30, 2011, our directors approved the adoption of the 2011 stock option
plan which permits our company to issue up to 6,500,000 shares of our common
stock to directors, officers, employees and consultants of our company upon the
exercise of stock options granted under the 2011 plan.
On July 28, 2011, we obtained an extra-provincial license to carry on business
in the Province of Ontario, Canada. Our Ontario corporation number is 1827852.
On November 9, 2011, we entered into a non-binding letter of intent to acquire
the Kisita Gold Mine Property, an operational gold property four hours northwest
of the capital city of Kampala, Uganda. The acquisition was subject to further
negotiation and due diligence of the project satisfactory to us. On December 9,
2011 our company, having performed the due diligence required to acquire the
Kisita Gold Mine Property, advised Lonsdale Acquisition Corporation that we
declined to proceed with the purchase agreement under its current terms and
conditions. Discussions with Lonsdale Acquisition Corporation are ongoing.
On November 28, 2011, the Nevada Secretary of State accepted for filing a
Certificate of Change, wherein the corporation amended our Articles of
Incorporation to implement a forty (40) for one (1) reverse stock split of our
authorized and issued and outstanding common shares such that our company's
authorized capital will be decreased from 150,000,000 shares of common stock
with a par value of $0.001 to 3,750,000 shares of common stock with a par value
of $0.001 and, correspondingly, its issued and outstanding shares of common
stock shall decrease from 64,500,000 shares of common stock to 1,612,500 shares
of common stock. No fractional shares shall be issued and fractional shares
shall be rounded up. The reverse split was effective at the opening of trading
on January 26, 2012.
On March 9, 2012 based on recently released drill results the Board of Directors
decided the company could not justify the further expense of continuing with its
planned drill program at Cap Gold, Nye County, Nevada, USA. The Company advised
the owners that it was cancelling its option agreement.
OUR CURRENT BUSINESS
We are an exploration stage mining company engaged in the identification,
acquisition, and exploration of metals and minerals with a focus on gold
mineralization.
Since we are an exploration stage company, there is no assurance that a
commercially viable mineral reserve exists on any of our current or future
properties, To date, we do not know if an economically viable mineral reserve
exists on our property and there is no assurance that we will discover one. Even
if we do eventually discover a mineral reserve on our property, there can be no
assurance that we will be able to develop our property into a producing mine and
extract those resources. Both mineral exploration and development involve a high
degree of risk and few properties which are explored are ultimately developed
into producing mines.
9
CASH REQUIREMENTS
We intend to conduct exploration activities on our newly optioned property over
the next twelve months. We estimate our operating expenses and working capital
requirements for the next twelve month period to be as follows:
ESTIMATED EXPENSES FOR THE NEXT TWELVE MONTH PERIOD
General, administrative, and corporate expenses $ 50,000
Operating expenses $ 50,000
Exploration $ 500,000
----------
TOTAL $ 600,000
==========
At present, our cash requirements for the next 12 months outweigh the funds
available to maintain or develop our properties. Of the $600,000 that we require
for the next 12 months, we had $18,000 in cash as of November 30, 2011. In order
to improve our liquidity, we intend to pursue additional equity financing from
private investors or possibly a registered public offering. Other than as set
out below, we currently do not have any arrangements in place for the completion
of any further private placement financings and there is no assurance that we
will be successful in completing any further private placement financings. If we
are unable to achieve the necessary additional financing, then we plan to reduce
the amounts that we spend on our business activities and administrative expenses
in order to be within the amount of capital resources that are available to us.
On April 22, 2011, we entered into a convertible loan agreement with Monaco
Capital Inc., wherein Monaco Capital Inc. has agreed to loan our company up to
$500,000. The loan is convertible into common shares of our company at a
conversion price of $1.05. On December 6, 2011 Monaco Capital Inc. advanced
$100,000 To date, $500,933 has been advanced under the April 2011 loan
agreement. On December 17, 2011, we entered into a convertible loan agreement
with Monaco Capital which replaces the original convertible loan agreement
entered into on April 22, 2011 in its entirety. Under the December 17, 2011
convertible loan agreement, Monaco Capital has agreed to loan our company up to
$5,000,000. The loan bears interest at a rate of 10% per annum.
During the quarter ended November 30, 2011, Monaco Capital Inc. advanced
$50,000. The total advanced under the Convertible Loan as at November 30, 2011
is $831,596.
RESULTS OF OPERATIONS - THREE MONTHS ENDED NOVEMBER, 2011 AND 2010
The following summary of our results of operations should be read in conjunction
with our financial statements for the three month period ended November 30, 2011
and 2010 which are included herein.
Our operating results for the three months ended November 30, 2011, for the
three months ended November 30, 2010 and the changes between those periods for
the respective items are summarized as follows:
Change Between
Three Months Three Months Three Month
Ended Ended Period Ended
November 30, November 30, November 30,
2011 2010 2011
---------- ---------- ----------
($) ($) ($)
Revenue Nil Nil Nil
Consulting expenses (14,725) (2,496,769) 2,482,044
Exploration expenses (121,640) (117,211) 4,429
General and administrative (11,052) (25,783) 14,731
Management fees -- (33,212) 33,212
Professional fees (3,739) (41,738) 37,999
Impairment of mining claims (250,000) -- 250,000
Impairment of capital assets (15,693) -- 15,693
Amortization of debt discount -- (4,196) (4,196)
Interest expense (20,322) (9,585) (10,737)
---------- ---------- ----------
Net loss from operations (437,171) (2,728,494) 2,291,323
========== ========== ==========
10
REVENUES
We have not generated revenues since inception and we do not anticipate earning
revenues in the near future.
CONSULTING EXPENSES
Consulting expenses decreased by $2,482,044 for the three months ended November
30, 2011 as compared to the three months ended November 30, 2010.
EXPLORATION EXPENSES
Exploration expenses increased by $4,429 during the three months ended November
30, 2011 as compared to the three months ended November 30, 2010 due to our work
on the Cap Gold Project.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses decreased by $14,731 during the three months
ended November 30, 2011 as compared to the three months ended November 30, 2010.
MANAGEMENT FEES
Management fees decreased by $33,212 during the three months ended November 30,
2011 as compared to the three months ended November 30, 2010.
PROFESSIONAL FEES
Professional fees decreased by $37,999 during the three months ended November
30, 2011 compared to the three months ended November 30, 2010.
LIQUIDITY AND FINANCIAL CONDITION
WORKING CAPITAL
November 30, August 31,
2011 2011
--------- ---------
Current assets $ 37,647 $ 146,357
Current liabilities 985,528 924,499
--------- ---------
Working capital (deficit) $(949,620) $(778,142)
========= =========
OPERATING ACTIVITIES
Net cash used by operating activities was $105,321 for the three months ended
November 30, 2011 compared with cash used by operating activities of $3,883 in
the same period in 2010.
INVESTING ACTIVITIES
Net cash used in investing activities was $Nil for the three months ended
November 30, 2011 compared to net cash used in investing activities of $Nil in
the same period in 2010.
FINANCING ACTIVITIES
Net cash from financing activities for the three months ended November 30, 2011
was $51,719 and for the three months ended November 30, 2010 was Nil.
11
CONTRACTUAL OBLIGATIONS
As a "smaller reporting company", we are not required to provide tabular
disclosure obligations.
OFF-BALANCE SHEET ARRANGEMENTS
We have no significant off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that are material to
stockholders.
APPLICATION OF CRITICAL ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of the 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 amount of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
NET LOSS PER COMMON SHARE
Our company computes net loss per share in accordance with ASC 260, "Earnings
per Share" and SEC Staff Accounting Bulletin No. 98 (SAB 98). Under the
provisions of ASC 260 and SAB 98, basic net loss per share is computed by
dividing the net loss available to common stockholders for the period by the
weighted average number of shares of common stock outstanding during the period.
The calculation of diluted net loss per share gives effect to common stock
equivalents; however, potential common shares are excluded if their effect is
anti-dilutive. For the period from inception (July 20, 2006) through November
30, 2011, our company had no potentially dilutive securities.
STOCK-BASED COMPENSATION
On August 1, 2009, the company adopted the fair value recognition provisions of
FASB ASC 718-10. 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 505-10. 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 505-10.
MINERAL PROPERTY COSTS
The Company has been in the exploration stage since its formation July 20, 2006
and has not yet realized any revenues from its planned operations. It is
primarily engaged in the acquisition and exploration of mining properties.
Mineral property acquisitions are capitalized and exploration costs are charged
to operations as incurred. When it has been determined that a mineral property
can be economically developed as a result of establishing proven and probable
reserves, the costs incurred to develop such property, are capitalized. Such
costs will be depleted using the units-of-production method over the estimated
life of the probable reserve.
Although the Company has taken steps to verify title to mineral properties in
which it has an interest, according to the usual industry standards for the
stage of exploration of such properties, these procedures do not guarantee the
Company's title. Such properties may be subject to prior agreements or transfers
and title may be affected by undetected defects.
GOING CONCERN
Our company has incurred a net loss $437,171 for the three month period ended
November 30, 2011 [2010 - $2,728,494] and at November 30, 2011 had a deficit
12
accumulated during the development stage of $4,718,794. Since inception (July
20, 2006) to November 30, 2011, our company has commenced limited operations,
raising substantial doubt about our company's ability to continue as a going
concern. Our company will seek additional sources of capital through the
issuance of debt or equity financing, but there can be no assurance our company
will be successful in accomplishing its objectives.
The ability of our company to continue as a going concern is dependent on
additional sources of capital and the success of our company's plan. The
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 the outcome of this
uncertainty.
At this time, we cannot provide investors with any assurance that we will be
able to raise sufficient funding from the sale of our common stock or through a
loan from our directors, shareholders or investors to meet our obligations over
the next twelve months. Other than a convertible loan agreement with Monaco
Capital Inc., we do not have any further arrangements in place for any future
debt or equity financing.
ITEM 4. CONTROLS AND PROCEDURES
MANAGEMENT'S REPORT ON DISCLOSURE CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our reports filed under the Securities
Exchange Act of 1934, as amended, is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission's rules and forms, and that such information is accumulated and
communicated to our management, including our president (also our principal
executive officer) and our chief financial officer (also our principal financial
officer and principal accounting officer), to allow for timely decisions
regarding required disclosure.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There have been no changes in our internal controls over financial reporting
that occurred during the quarter ended November 30, 2011 that have materially or
are reasonably likely to materially affect, our internal controls over financial
reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We know of no material, existing or pending legal proceedings against our
company, nor are we involved as a plaintiff in any material proceeding or
pending litigation. There are no proceedings in which any of our directors,
executive officers or affiliates, or any registered or beneficial stockholder,
is an adverse party or has a material interest adverse to our interest.
ITEM 1A. RISK FACTORS
Much of the information included in this quarterly report includes or is based
upon estimates, projections or other "forward-looking statements". Such
forward-looking statements include any projections or estimates made by us and
our management in connection with our business operations. While these
forward-looking statements, and any assumptions upon which they are based, are
made in good faith and reflect our current judgment regarding the direction of
our business, actual results will almost always vary, sometimes materially, from
any estimates, predictions, projections, assumptions, or other future
performance suggested herein. We undertake no obligation to update
forward-looking statements to reflect events or circumstances occurring after
the date of such statements.
Such estimates, projections or other "forward-looking statements" involve
various risks and uncertainties as outlined below. We caution readers of this
quarterly report that important factors in some cases have affected and, in the
future, could materially affect actual results and cause actual results to
differ materially from the results expressed in any such estimates, projections
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or other "forward-looking statements". In evaluating us, our business and any
investment in our business, readers should carefully consider the following
factors.
RISKS ASSOCIATED WITH MINING
OUR PROPERTY IS IN THE EXPLORATION STAGE. THERE IS NO ASSURANCE THAT WE CAN
ESTABLISH THE EXISTENCE OF ANY MINERAL RESOURCE ON OUR PROPERTY IN COMMERCIALLY
EXPLOITABLE QUANTITIES. UNTIL WE CAN DO SO, WE CANNOT EARN ANY REVENUES FROM
OPERATIONS AND IF WE DO NOT DO SO WE WILL LOSE ALL OF THE FUNDS THAT WE EXPEND
ON EXPLORATION. IF WE DO NOT DISCOVER ANY MINERAL RESOURCE IN A COMMERCIALLY
EXPLOITABLE QUANTITY, OUR BUSINESS COULD FAIL.
Despite exploration work on our mineral property, we have not established that
it contains any mineral reserve, nor can there be any assurance that we will be
able to do so. If we do not, our business could fail.
A mineral reserve is defined by the Securities and Exchange Commission in its
Industry Guide 7 as that part of a mineral deposit which could be economically
and legally extracted or produced at the time of the reserve determination. The
probability of an individual prospect ever having a "reserve" that meets the
requirements of the Securities and Exchange Commission's Industry Guide 7 is
extremely remote; in all probability our mineral resource property does not
contain any "reserve" and any funds that we spend on exploration will probably
be lost.
Even if we do eventually discover a mineral reserve on our property, there can
be no assurance that we will be able to develop our property into a producing
mine and extract those resources. Both mineral exploration and development
involve a high degree of risk and few properties which are explored are
ultimately developed into producing mines.
The commercial viability of an established mineral deposit will depend on a
number of factors including, by way of example, the size, grade and other
attributes of the mineral deposit, the proximity of the resource to
infrastructure such as a smelter, roads and a point for shipping, government
regulation and market prices. Most of these factors will be beyond our control,
and any of them could increase costs and make extraction of any identified
mineral resource unprofitable.
MINERAL OPERATIONS ARE SUBJECT TO APPLICABLE LAW AND GOVERNMENT REGULATION. EVEN
IF WE DISCOVER A MINERAL RESOURCE IN A COMMERCIALLY EXPLOITABLE QUANTITY, THESE
LAWS AND REGULATIONS COULD RESTRICT OR PROHIBIT THE EXPLOITATION OF THAT MINERAL
RESOURCE. IF WE CANNOT EXPLOIT ANY MINERAL RESOURCE THAT WE MIGHT DISCOVER ON
OUR PROPERTY, OUR BUSINESS MAY FAIL.
Both mineral exploration and extraction require permits from various foreign,
federal, state, provincial and local governmental authorities and are governed
by laws and regulations, including those with respect to prospecting, mine
development, mineral production, transport, export, taxation, labor standards,
occupational health, waste disposal, toxic substances, land use, environmental
protection, mine safety and other matters. There can be no assurance that we
will be able to obtain or maintain any of the permits required for the continued
exploration of our mineral properties or for the construction and operation of a
mine on our properties at economically viable costs. If we cannot accomplish
these objectives, our business could fail.
We believe that we are in compliance with all material laws and regulations that
currently apply to our activities but there can be no assurance that we can
continue to remain in compliance. Current laws and regulations could be amended
and we might not be able to comply with them, as amended. Further, there can be
no assurance that we will be able to obtain or maintain all permits necessary
for our future operations, or that we will be able to obtain them on reasonable
terms. To the extent such approvals are required and are not obtained, we may be
delayed or prohibited from proceeding with planned exploration or development of
our mineral properties.
IF WE ESTABLISH THE EXISTENCE OF A MINERAL RESOURCE ON OUR PROPERTY IN A
COMMERCIALLY EXPLOITABLE QUANTITY, WE WILL REQUIRE ADDITIONAL CAPITAL IN ORDER
14
TO DEVELOP THE PROPERTY INTO A PRODUCING MINE. IF WE CANNOT RAISE THIS
ADDITIONAL CAPITAL, WE WILL NOT BE ABLE TO EXPLOIT THE RESOURCE, AND OUR
BUSINESS COULD FAIL.
If we do discover mineral resources in commercially exploitable quantities on
our property, we will be required to expend substantial sums of money to
establish the extent of the resource, develop processes to extract it and
develop extraction and processing facilities and infrastructure. Although we may
derive substantial benefits from the discovery of a major deposit, there can be
no assurance that such a resource will be large enough to justify commercial
operations, nor can there be any assurance that we will be able to raise the
funds required for development on a timely basis. If we cannot raise the
necessary capital or complete the necessary facilities and infrastructure, our
business may fail.
MINERAL EXPLORATION AND DEVELOPMENT IS SUBJECT TO EXTRAORDINARY OPERATING RISKS.
WE DO NOT CURRENTLY INSURE AGAINST THESE RISKS. IN THE EVENT OF A CAVE-IN OR
SIMILAR OCCURRENCE, OUR LIABILITY MAY EXCEED OUR RESOURCES, WHICH WOULD HAVE AN
ADVERSE IMPACT ON OUR COMPANY.
Mineral exploration, development and production involve many risks which even a
combination of experience, knowledge and careful evaluation may not be able to
overcome. Our operations will be subject to all the hazards and risks inherent
in the exploration for mineral resources and, if we discover a mineral resource
in commercially exploitable quantity, our operations could be subject to all of
the hazards and risks inherent in the development and production of resources,
including liability for pollution, cave-ins or similar hazards against which we
cannot insure or against which we may elect not to insure. Any such event could
result in work stoppages and damage to property, including damage to the
environment. We do not currently maintain any insurance coverage against these
operating hazards. The payment of any liabilities that arise from any such
occurrence would have a material adverse impact on our company.
MINERAL PRICES ARE SUBJECT TO DRAMATIC AND UNPREDICTABLE FLUCTUATIONS.
We expect to derive revenues, if any, either from the sale of our mineral
resource property or from the extraction and sale of ore. The price of those
commodities has fluctuated widely in recent years, and is affected by numerous
factors beyond our control, including international, economic and political
trends, expectations of inflation, currency exchange fluctuations, interest
rates, global or regional consumptive patterns, speculative activities and
increased production due to new extraction developments and improved extraction
and production methods. The effect of these factors on the price of base and
precious metals, and therefore the economic viability of any of our exploration
properties and projects, cannot accurately be predicted.
THE MINING INDUSTRY IS HIGHLY COMPETITIVE AND THERE IS NO ASSURANCE THAT WE WILL
CONTINUE TO BE SUCCESSFUL IN ACQUIRING MINERAL CLAIMS. IF WE CANNOT CONTINUE TO
ACQUIRE PROPERTIES TO EXPLORE FOR MINERAL RESOURCES, WE MAY BE REQUIRED TO
REDUCE OR CEASE OPERATIONS.
The mineral exploration, development, and production industry is largely
un-integrated. We compete with other exploration companies looking for mineral
resource properties. While we compete with other exploration companies in the
effort to locate and acquire mineral resource properties, we will not compete
with them for the removal or sales of mineral products from our properties if we
should eventually discover the presence of them in quantities sufficient to make
production economically feasible. Readily available markets exist worldwide for
the sale of mineral products. Therefore, we will likely be able to sell any
mineral products that we identify and produce.
In identifying and acquiring mineral resource properties, we compete with many
companies possessing greater financial resources and technical facilities. This
competition could adversely affect our ability to acquire suitable prospects for
exploration in the future. Accordingly, there can be no assurance that we will
acquire any interest in additional mineral resource properties that might yield
reserves or result in commercial mining operations.
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RISKS RELATED TO OUR COMPANY
THE FACT THAT WE HAVE NOT EARNED ANY OPERATING REVENUES SINCE OUR INCORPORATION
RAISES SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE TO EXPLORE OUR MINERAL
PROPERTIES AS A GOING CONCERN.
We have not generated any revenue from operations since our incorporation and we
anticipate that we will continue to incur operating expenses without revenues
unless and until we are able to identify a mineral resource in a commercially
exploitable quantity on our mineral property and we build and operate a mine. We
had cash in the amount of $16,261 as of November 30, 2011. At November 30, 2011,
we had working capital deficit of $949,620. We incurred a net loss of $437,171
for the three month period ended November 30, 2011 and $4,718,794 since
inception. We estimate our average monthly operating expenses to be
approximately $50,000, including mineral property costs, management services and
administrative costs. Should the results of our planned exploration require us
to increase our current operating budget, we may have to raise additional funds
to meet our currently budgeted operating requirements for the next 12 months. As
we cannot assure a lender that we will be able to successfully explore and
develop our mineral property, we will probably find it difficult to raise debt
financing from traditional lending sources. We have traditionally raised our
operating capital from sales of equity securities, but there can be no assurance
that we will continue to be able to do so. If we cannot raise the money that we
need to continue exploration of our mineral property, we may be forced to delay,
scale back, or eliminate our exploration activities. If any of these were to
occur, there is a substantial risk that our business would fail.
These circumstances lead our independent registered public accounting firm, in
their report dated November 29, 2009, to comment about our company's ability to
continue as a going concern. Management has plans to seek additional capital
through a private placement of its capital stock. These conditions raise
substantial doubt about our company's ability to continue as a going concern.
Although there are no assurances that management's plans will be realized,
management believes that our company will be able to continue operations in the
future. 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 our company
cannot continue in existence. We continue to experience net operating losses.
RISKS ASSOCIATED WITH OUR COMMON STOCK
TRADING ON THE OTC BULLETIN BOARD MAY BE VOLATILE AND SPORADIC, WHICH COULD
DEPRESS THE MARKET PRICE OF OUR COMMON STOCK AND MAKE IT DIFFICULT FOR OUR
STOCKHOLDERS TO RESELL THEIR SHARES.
Our common stock is quoted on the OTC Bulletin Board service of the Financial
Industry Regulatory Authority. Trading in stock quoted on the OTC Bulletin Board
is often thin and characterized by wide fluctuations in trading prices, due to
many factors that may have little to do with our operations or business
prospects. This volatility could depress the market price of our common stock
for reasons unrelated to operating performance. Moreover, the OTC Bulletin Board
is not a stock exchange, and trading of securities on the OTC Bulletin Board is
often more sporadic than the trading of securities listed on a quotation system
like NASDAQ or a stock exchange like NYSE Amex. Accordingly, shareholders may
have difficulty reselling any of their shares.
OUR STOCK IS A PENNY STOCK. TRADING OF OUR STOCK MAY BE RESTRICTED BY THE SEC'S
PENNY STOCK REGULATIONS AND FINRA'S SALES PRACTICE REQUIREMENTS, WHICH MAY LIMIT
A STOCKHOLDER'S ABILITY TO BUY AND SELL OUR STOCK.
Our stock is a penny stock. The Securities and Exchange Commission has adopted
Rule 15g-9 which generally defines "penny stock" to be any equity security that
has a market price (as defined) less than $5.00 per share or an exercise price
of less than $5.00 per share, subject to certain exceptions. Our securities are
covered by the penny stock rules, which impose additional sales practice
requirements on broker-dealers who sell to persons other than established
customers and "accredited investors". The term "accredited investor" refers
generally to institutions with assets in excess of $5,000,000 or individuals
with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or
$300,000 jointly with their spouse. The penny stock rules require a
broker-dealer, prior to a transaction in a penny stock not otherwise exempt from
16
the rules, to deliver a standardized risk disclosure document in a form prepared
by the SEC which provides information about penny stocks and the nature and
level of risks in the penny stock market. The broker-dealer also must provide
the customer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction and
monthly account statements showing the market value of each penny stock held in
the customer's account. The bid and offer quotations, and the broker-dealer and
salesperson compensation information, must be given to the customer orally or in
writing prior to effecting the transaction and must be given to the customer in
writing before or with the customer's confirmation. In addition, the penny stock
rules require that prior to a transaction in a penny stock not otherwise exempt
from these rules, the broker-dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor interest
in, and limit the marketability of, our common stock.
In addition to the "penny stock" rules promulgated by the Securities and
Exchange Commission, the Financial Industry Regulatory Authority has adopted
rules that require that in recommending an investment to a customer, a
broker-dealer must have reasonable grounds for believing that the investment is
suitable for that customer. Prior to recommending speculative low priced
securities to their non-institutional customers, broker-dealers must make
reasonable efforts to obtain information about the customer's financial status,
tax status, investment objectives and other information. Under interpretations
of these rules, the Financial Industry Regulatory Authority believes that there
is a high probability that speculative low-priced securities will not be
suitable for at least some customers. The Financial Industry Regulatory
Authority's requirements make it more difficult for broker-dealers to recommend
that their customers buy our common stock, which may limit your ability to buy
and sell our stock.
OTHER RISKS
TRENDS, RISKS AND UNCERTAINTIES
We have sought to identify what we believe to be the most significant risks to
our business, but we cannot predict whether, or to what extent, any of such
risks may be realized nor can we guarantee that we have identified all possible
risks that might arise. Investors should carefully consider all of such risk
factors before making an investment decision with respect to our common stock.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On October 6, 2011, we granted an aggregate of 5,400,000 stock options to ten
individuals, including directors, officers, consultants and employees, pursuant
to our 2011 stock option plan, at an exercise price of $0.68 per share. Of the
5,400,000 stock options, 400,000 options are exercisable until October 6, 2012
and 5,000,000 options are exercisable until October 6, 2015. All the stock
options vested upon issuance.
ITEM 3. DEFAULT UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
On July 14, 2014, the Company appointed Harold Schneider as director, Interim
President, Chief Financial Officer and Secretary Treasurer.
Our board of directors now consists of Harold Schneider.
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ITEM 6. EXHIBITS
Exhibit
No. Description
------- -----------
(3) ARTICLES OF INCORPORATION AND BYLAWS
3.1 Articles of Incorporation (incorporated by reference from our
Registration Statement on Form SB-2 filed on October 23, 2006).
3.2 By-laws (incorporated by reference from our Registration Statement on
Form SB-2 filed on October 23, 2006).
3.3 Articles of Merger (incorporated by reference from our Current Report
on Form 8-K filed on April 12, 2011).
3.4 Certificate of Change (incorporated by reference from our Current
Report on Form 8-K filed on April 12, 2011).
(10) MATERIAL CONTRACTS
10.1 Mineral Lease Agreement between Royce L. Hackworth and Belva L. Tomany
and our company dated April 16, 2011. (incorporated by reference from
our Current Report on Form 8-K filed on April 19, 2011).
10.2 Consulting agreement with Vista Partners LLC dated January 29, 2011
(31) RULE 13A-14(A)/15D-14(A) CERTIFICATIONS
31.1* Section 302 Certification of the Principal Executive Officer under
Sarbanes-Oxley Act of 2002
31.2* Section 302 Certification of the Principal Financial Officer and
Principal Accounting Officer under Sarbanes-Oxley Act of 2002
(32) SECTION 1350 CERTIFICATIONS
32.1* Section 906 Certification of the Principal Executive Officer under
Sarbanes-Oxley Act of 2002
32.2* Section 906 Certification of the Principal Financial Officer and
Principal Accounting Officer under Sarbanes-Oxley Act of 2002
101* Interactive data files pursuant to Rule 405 of Regulation S-T
----------
* Filed herewith.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
AMERICAN PARAMOUNT GOLD CORP.
(Registrant)
Date: April 14, 2015 /s/ Harold Schneider
------------------------------------------------
Harold Schneider
President, Chief Executive Officer and Director
(Principal Executive Officer)
Date: April 14, 2015 /s/ Harold Schneider
------------------------------------------------
Harold Schneider
Chief Financial Officer, Secretary and Treasurer
(Principal Financial Officer and Principal
Accounting Officer)
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