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 August 31, 2016
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _____________ to _____________
Commission File Number 000-54327
FIRST AMERICAN SILVER CORP.
(Exact name of registrant as specified in its charter)
Nevada 98-0579157
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
1031 Railroad St., Ste 102B, Elko, NV 89801 USA 99623
(Address of principal executive offices) (Zip Code)
775-287-1664
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report)
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 submit and post such files). [ ] YES [X] NO
Indicate by checkmark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller 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) [X] YES [ ] NO
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant has filed all documents and reports required to be
filed by Sections 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
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
62,320,567 common shares issued and outstanding as of October 17, 2016
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements ................................................ 3
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations ............................................... 13
Item 3. Quantitative and Qualitative Disclosures About Market Risk .......... 18
Item 4. Controls and Procedures ............................................. 18
PART II - OTHER INFORMATION
Item 1. Legal Proceedings ................................................... 18
Item 1A. Risk Factors ....................................................... 18
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds ......... 18
Item 3. Defaults Upon Senior Securities ..................................... 18
Item 4. Mine Safety Disclosures ............................................. 18
Item 5. Other Information ................................................... 19
Item 6. Exhibits ............................................................ 19
SIGNATURES .................................................................. 21
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Our unaudited interim financial statements for the three and six month periods
ended August 31, 2016 form part of this quarterly report. They are stated in
United States Dollars (US$) and are prepared in accordance with United States
Generally Accepted Accounting Principles.
3
FIRST AMERICAN SILVER CORP.
TABLE OF CONTENTS
AUGUST 31, 2016
Condensed Balance Sheets as of August 31, 2016 and
November 30, 2015 (unaudited) 5
Condensed Statements of Operations for the three and nine months
ended August 31, 2016 and 2015 (unaudited) 6
Condensed Statements of Cash Flows for the nine months ended
August 31, 2016 and 2015 (unaudited) 7
Notes to the Condensed Financial Statements (unaudited) 8
4
FIRST AMERICAN SILVER CORP.
CONDENSED BALANCE SHEETS (unaudited)
August 31, November 30,
2016 2015
------------ ------------
ASSETS
Current Asset
Cash $ 1,981 $ --
Prepaid expenses -- 2,068
------------ ------------
Total Current Assets 1,981 2,068
------------ ------------
Other Asset
Reclamation bond 591 591
------------ ------------
Total Other Assets 591 591
------------ ------------
Total Assets $ 2,572 $ 2,659
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Accounts payable $ 176,453 $ 156,540
Accrued expenses 62,446 48,935
Due to related party -- 26,417
Loan payable 8,100 8,100
Notes payable - current portion 236,750 207,750
------------ ------------
Total Liabilities 483,749 447,742
------------ ------------
Stockholders' Equity (Deficit)
Preferred stock, par value $0.001, 20,000,000 shares authorized,
no shares issued and outstanding -- --
Common stock, par value $0.001, 3,500,000,000 shares authorized,
62,819,882 shares issued and outstanding (2015 - 62,320,567) 62,820 62,321
Additional paid-in capital 1,178,873 1,170,995
Common stock payable 15,120 9,720
Accumulated deficit (1,737,990) (1,688,119)
------------ ------------
Total Stockholders' Equity (Deficit) (481,177) (445,083)
------------ ------------
Total Liabilities and Stockholders' Equity (Deficit) $ 2,572 $ 2,659
============ ============
The accompanying notes are an integral part of these financial statements.
5
FIRST AMERICAN SILVER CORP.
CONDENSED STATEMENTS OF OPERATIONS (unaudited)
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
August 31, August 31, August 31, August 31,
2016 2015 2016 2015
------------ ------------ ------------ ------------
REVENUES $ -- $ -- $ -- $ --
----------- ----------- ----------- -----------
OPERATING EXPENSES
Accounting and legal 3,251 -- 14,035 1,750
Consulting fees -- 22,500 21,277 70,258
Transfer agent and filing fees 960 634 5,674 7,276
General and administrative -- -- 156 --
----------- ----------- ----------- -----------
TOTAL OPERATING EXPENSES 4,211 23,134 41,142 79,284
----------- ----------- ----------- -----------
LOSS FROM OPERATIONS (4,211) (23,134) (41,142) (79,284)
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSES)
Other income -- -- 6,850 --
Interest expense (4,773) (10,892) (15,579) (38,495)
----------- ----------- ----------- -----------
TOTAL OTHER INCOME (EXPENSE) (4,773) (10,892) (8,729) (38,495)
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAX (8,984) (34,026) (49,871) (117,779)
PROVISION FOR INCOME TAX -- -- -- --
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ (8,984) $ (34,026) $ (49,871) $ (117,779)
=========== =========== =========== ===========
LOSS PER SHARE: BASIC AND DILUTED $ (0.00) $ (0.00) $ (0.00) $ (0.00)
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
BASIC AND DILUTED 62,819,882 62,808,567 62,601,676 62,597,391
=========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements.
6
FIRST AMERICAN SILVER CORP.
CONDENSED STATEMENTS OF CASH FLOWS (unaudited)
Nine Months Nine Months
Ended Ended
August 31, August 31,
2016 2015
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period $ (49,871) $ (117,779)
Adjustments to Reconcile Net Loss to Net Cash Provided
by (Used In) Operating Activities:
Stock issued for loan extension fees and services 13,777 9,720
Changes in operating assets and liabilities:
Prepaid expenses 2,068 16,719
Accounts payable (6,504) 54,312
Accrued expenses 13,511 12,056
---------- ----------
NET CASH USED IN OPERATING ACTIVITIES (27,019) (24,972)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from related party -- 24,972
Proceeds from notes payable 29,000 --
---------- ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 29,000 24,972
---------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,981 --
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- --
---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,981 $ --
========== ==========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for income taxes $ -- $ --
========== ==========
Cash paid for interest $ -- $ --
========== ==========
The accompanying notes are an integral part of these financial statements
7
FIRST AMERICAN SILVER CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
AUGUST 31, 2016 (Unaudited)
NOTE 1 - NATURE OF OPERATIONS
Mayetok, Inc. ("the Company") was incorporated in the state of Nevada on April
29, 2008. On June 8, 2010, the Company changed its name to First American Silver
Corp.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
EXPLORATION STAGE COMPANY
On June 10, 2014, the Financial Accounting Standards Board ("FASB") issued
update ASU 2014-10, Development Stage Entities (Topic 915). Amongst other
things, the amendments in this update removed the definition of development
stage entity from Topic 915, thereby removing the distinction between
development stage entities and other reporting entities from US GAAP. In
addition, the amendments eliminate the requirements for development stage
entities to (1) present inception-to-date information on the statements of
income, cash flows and shareholders equity, (2) label the financial statements
as those of a development stage entity; (3) disclose a description of the
development stage activities in which the entity is engaged and (4) disclose in
the first year in which the entity is no longer a development stage entity that
in prior years it had been in the development stage. The amendments are
effective for annual reporting periods beginning after December 31, 2014 and
interim reporting periods beginning after December 15, 2015, however entities
are permitted to early adopt for any annual or interim reporting period for
which the financial statements have yet to be issued. The Company has elected to
early adopt these amendments and accordingly have not labeled the financial
statements as those of a development stage entity and have not presented
inception-to-date information on the respective financial statements.
BASIS OF PRESENTATION
The financial statements of the Company have been prepared in accordance with
generally accepted accounting principles in the United States of America and are
presented in US dollars.
The unaudited interim condensed financial statements included herein have been
prepared by First American Silver Corp. (the "Company") in accordance with
accounting principles generally accepted in the United States of America and the
rules of the Securities and Exchange Commission (the "SEC"). We suggest that
these interim financial statements be read in conjunction with the audited
financial statements and notes thereto included in our Form 10-K for the year
ended November 30, 2015, as filed with the SEC. We believe that all adjustments,
consisting of normal recurring adjustments, necessary for a fair presentation of
financial position and the results of operations for the interim periods
presented have been reflected herein and that the disclosures made are adequate
to make the information not misleading. The results of operations for interim
periods are not necessarily indicative of the results to be expected for the
full year. Notes to the financial statements which would substantially duplicate
the disclosure contained in the audited financial statements for the most recent
fiscal year as reported in Form 10-K have been omitted
ACCOUNTING BASIS
The Company uses the accrual basis of accounting and accounting principles
generally accepted in the United States of America ("GAAP" accounting). The
Company has adopted a November 30 fiscal year end.
RISKS AND UNCERTAINTIES
The Company's operations are subject to significant risk and uncertainties
including financial, operational, technological, and regulatory risks including
the potential risk of business failure. See Note 10 regarding going concern
matters.
8
FIRST AMERICAN SILVER CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
AUGUST 31, 2016 (Unaudited)
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with maturities of three
months or less to be cash equivalents. At August 31, 2016 and November 30, 2015,
respectively, the Company had $0 and $0 of unrestricted cash to be used for
future business operations.
The Company's bank accounts are deposited in insured institutions. The funds are
insured up to $250,000. At times, the Company's bank deposits may exceed the
insured amount. Management believes it has little risk related to the excess
deposits.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments consist of cash, prepaid expenses, accounts
payable, accrued expenses, notes payable, and note payable-related party. The
carrying amount of these financial instruments approximates fair value due to
either length of maturity or interest rates that approximate prevailing market
rates unless otherwise disclosed in these financial statements.
CONCENTRATIONS OF CREDIT RISK
The Company maintains its cash in bank deposit accounts, the balances of which
at times may exceed federally insured limits. The Company continually monitors
its banking relationships and consequently has not experienced any losses in
such accounts. The Company believes it is not exposed to any significant credit
risk on cash and cash equivalents.
STOCK-BASED COMPENSATION
The Company accounts for employee stock-based compensation in accordance with
the guidance of ASC Topic 718, COMPENSATION - STOCK COMPENSATION which requires
all share-based payments to employees, including grants of employee stock
options, to be recognized in the financial statements based on their fair
values. There has been no stock-based compensation issued to employees.
The Company follows ASC Topic 505-50, formerly EITF 96-18, "ACCOUNTING FOR
EQUITY INSTRUMENTS THAT ARE ISSUED TO OTHER THAN EMPLOYEES FOR ACQUIRING, OR IN
CONJUNCTION WITH SELLING GOODS AND SERVICES," for stock options and warrants
issued to consultants and other non-employees. In accordance with ASC Topic
505-50, these stock options and warrants issued as compensation for services
provided to the Company are accounted for based upon the fair value of the
services provided or the estimated fair market value of the option or warrant,
whichever can be more clearly determined. The fair value of the equity
instrument is charged directly to compensation expense and additional paid-in
capital over the period during which services are rendered.
INCOME TAXES
Income taxes are computed using the asset and liability method. Under the asset
and liability method, deferred income tax assets and liabilities are determined
based on the differences between the financial reporting and tax bases of assets
and liabilities and are measured using the currently enacted tax rates and laws.
A valuation allowance is provided for the amount of deferred tax assets that,
based on available evidence, are not expected to be realized. It is the
Company's policy to classify interest and penalties on income taxes as interest
expense or penalties expense. As of August 31, 2016, there have been no interest
or penalties incurred on income taxes.
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 the financial statements and the
reported amount of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
9
FIRST AMERICAN SILVER CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
AUGUST 31, 2016 (Unaudited)
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
REVENUE RECOGNITION
The Company is in the exploration stage and has yet to realize revenues from
operations. Once the Company has commenced operations, it will recognize
revenues when delivery of goods or completion of services has occurred provided
there is persuasive evidence of an agreement, acceptance has been approved by
its customers, the fee is fixed or determinable based on the completion of
stated terms and conditions, and collection of any related receivable is
probable.
BASIC INCOME (LOSS) PER SHARE
Basic income (loss) per share is calculated by dividing the Company's net loss
applicable to common shareholders by the weighted average number of common
shares during the period. Diluted earnings per share is calculated by dividing
the Company's net income available to common shareholders by the diluted
weighted average number of shares outstanding during the year. The diluted
weighted average number of shares outstanding is the basic weighted number of
shares adjusted for any potentially dilutive debt or equity.
NOTE 3 - PREPAID EXPENSES
Prepaid expenses consisted of the following:
August 31, November 30,
2016 2015
-------- --------
Loan extension fees $ -- $ 2,068
-------- --------
Total prepaid expenses $ -- $ 2,068
======== ========
NOTE 4 - NOTES PAYABLE
Notes payable consisted of the following at August 31, 2016:
Date of Note Note Amount Interest Rate Maturity Date Collateral Interest Accrued
------------ ----------- ------------- ------------- ---------- ----------------
February 5, 2013 $15,000 8% February 5, 2015 (default) None $ 4,284
February 22, 2013 $30,000 8% February 22, 2015 (default) None $ 8,456
April 17, 2013 $ 7,500 8% April 17, 2015 (default) None $ 2,025
June 12, 2013 $ 6,250 8% June 12, 2015 (default) None $ 1,611
June 18, 2013 $50,000 8% June 18, 2015 (default) None $16,822
August 22, 2013 $55,000 8% August 22, 2015 (default) None $17,720
November 1, 2013 $25,000 8% November 1, 2015 (default) None $ 7,666
March 10, 2014 $12,000 8% March 10, 2015 (default) None $ 2,380
October 15, 2015 $ 7,000 8% June 15, 2016 (default) None $ 492
February 3, 2016 $ 4,000 8% February 3, 2017 None $ 185
April 6, 2016 $25,000 8% April 16, 2017 None $ 805
-------- -------
Total $236,750 $62,446
======== =======
10
FIRST AMERICAN SILVER CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
AUGUST 31, 2016 (Unaudited)
NOTE 5 - CAPITAL STOCK
The Company has 20,000,000 preferred shares authorized at a par value of $0.001
per share.
The Company has 3,500,000,000 common shares authorized at a par value of $0.001
per share.
On April 11, 2014, the Company issued 486,000 shares to extend a certain loan
for one year. The value of these shares has been included in prepaid expenses
and will amortize to interest expense over the term of the extension period (1
year).
On April 30, 2014, the Company issued 1,000,000 shares valued at $19,910 based
on the stock closing price on the date of the grant to its president. The
issuance paid $12,500 of accounts payable owing, and consulting fees of $7,410.
On August 14, 2014, the Company issued 148,500 shares to extend a certain loan
for one year. The value of these shares has been included in prepaid expenses
and will amortize to interest expense over the term of the extension period (1
year).
On August 14, 2014, the Company issued 888,000 shares valued at $17,760 based on
the stock closing price on the date of the grant to its president. The issuance
paid $8,883 of accounts payable owing, and consulting fees of $8,877.
On October 17, 2014, the Company issued 1,080,000 shares to extend a certain
loan for one year. The value of these shares has been included in prepaid
expenses and will amortize to interest expense over the term of the extension
period (1 year).
On November 1, 2014, 270,000 shares became issuable to extend a certain loan for
one year. The value of these shares has been included in prepaid expenses and
will amortize to interest expense over the term of the extension period (1
year). The shares issuable are included in common stock payable.
On February 3, 2015, 108,000 shares became issuable to extend a certain loan for
one year. The value of these shares has been included in prepaid expenses and
will amortize to interest expense over the term of the extension period (1
year). The shares issuable are included in common stock payable.
On February 22, 2015, 324,000 shares became issuable to extend a certain loan
for one year. The value of these shares has been included in prepaid expenses
and will amortize to interest expense over the term of the extension period (1
year). The shares issuable are included in common stock payable.
On February 16, 2016, the Company issued 769,315 shares to its president valued
at $13,777 based on the stock closing price on the date of the grant.
11
FIRST AMERICAN SILVER CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
AUGUST 31, 2016 (Unaudited)
NOTE 6 - GOING CONCERN
The accompanying financial statements have been prepared assuming that First
American Silver, Inc. will continue as a going concern. The Company has a
working capital deficit, has not yet received revenue from sales of products or
services, and has incurred losses from operations. These factors raise
substantial doubt about the Company's ability to continue as a going concern.
Without realization of additional debt or capital, it would be unlikely for the
Company to continue as a going concern. The financial statements do not include
any adjustments that might result from this uncertainty.
The Company's activities to date have been supported by debt and equity
financing. It has sustained losses in all previous reporting periods with an
inception to date loss of approximately $1,738,000 as of August 31, 2016.
Management continues to seek funding from its shareholders and other qualified
investors.
NOTE 7 - SUBSEQUENT EVENTS
In accordance with SFAS 165 (ASC 855-10) the Company has analyzed its operations
subsequent to August 31, 2016 to the date these financial statements were
issued, and has determined that it does not have any material subsequent events
to disclose.
12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD LOOKING STATEMENTS
This quarterly report contains forward-looking statements. These statements
relate to future events or our future financial performance. In some cases, you
can identify forward-looking statements by terminology such as "may", "should",
"expects", "plans", "anticipates", "believes", "estimates", "predicts",
"potential" or "continue" or the negative of these terms or other comparable
terminology. These statements are only predictions and involve known and unknown
risks, uncertainties and other factors that may cause our or our industry's
actual results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements. Although
we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. Except as required by applicable law, including the securities
laws of the United States, we do not intend to update any of the forward-looking
statements to conform these statements to actual results.
Our unaudited financial statements are stated in United States Dollars (US$) and
are prepared in accordance with United States Generally Accepted Accounting
Principles. The following discussion should be read in conjunction with our
financial statements and the related notes that appear elsewhere in this
quarterly report. The following discussion contains forward-looking statements
that reflect our plans, estimates and beliefs. Our actual results could differ
materially from those discussed in the forward-looking statements. Factors that
could cause or contribute to such differences include, but are not limited to,
those discussed below and elsewhere in this quarterly report.
Our financial statements are stated in United States Dollars (US$) and are
prepared in accordance with United States Generally Accepted Accounting
Principles.
In this quarterly report, unless otherwise specified, all dollar amounts are
expressed in United States dollars and all references to "common shares" refer
to the common shares in our capital stock.
As used in this quarterly report, the terms "we", "us", "our" and "our company"
mean First American Silver Corp., unless otherwise indicated.
GENERAL OVERVIEW
We were incorporated in the State of Nevada on April 29, 2008, under the name
"Mayetok, Inc.". As Mayetok, Inc. we were engaged in the development of a
website to market vacation properties in the Ukraine.
On June 8, 2010, we initiated a one (1) old for 35 new forward stock split of
our issued and outstanding common stock. As a result, our authorized capital
increased from 100,000,000 to 3,500,000,000 shares of common stock and the
issued and outstanding increased from 2,200,000 shares of common stock to
77,000,000 shares of common stock, all with a par value of $0.001.
Also on June 8, 2010, we changed our name from "Mayetok, Inc." to "First
American Silver Corp.", by way of a merger with our wholly owned subsidiary
First American Silver Corp., which was formed solely for the change of name. We
changed the name of our company to reflect the new direction of our company in
the business of acquiring, exploring and developing mineral properties. As of
June 2010, we had abandoned our former business plan of seeking to market
vacation properties.
Our name change and forward stock split became effective with the
Over-the-Counter Bulletin Board at the opening of trading on June 16, 2010, on
which date we adopted the new stock symbol "FASV".
OUR CURRENT BUSINESS
In 2014, we abandoned our mineral property business and initiated efforts to
enter a new line of business. To-date, although our company has engaged in a
number of negotiations in respect of new business lines, we have not yet
consummated any transactions or started any new commercial activities.
13
RESULTS OF OPERATIONS
THREE MONTHS ENDED AUGUST 31, 2016 COMPARED TO THE THREE MONTHS ENDED AUGUST 31,
2015
We had a net loss of $8,984 for the three month period ended August 31, 2016,
which was $25,042 less than the net loss of $34,026 for the three month period
ended August 31, 2015. The change in our results over the two periods is a
result of decreased consulting fees and interest expense offset by an increase
in accounting and legal fees.
The following table summarizes key items of comparison and their related
increase (decrease) for the three month periods ended August 31, 2016 and August
31, 2015:
Change Between
Three Month
Three Months Three Months Periods Ended
Ended Ended August 31, 2016
August 31, August 31, and August 31,
2016 2015 2015
-------- -------- --------
Accounting and legal $ 3,251 $ -- $ 3,251
Consulting fees -- 22,500 (22,500)
Transfer agent and filing fees 960 634 326
Interest/Other (income) expense 4,773 10,892 (6,119)
-------- -------- --------
Net loss $ (8,984) $(34,026) $(25,042)
======== ======== ========
NINE MONTHS ENDED AUGUST 31, 2016 COMPARED TO THE NINE MONTHS ENDED AUGUST
31, 2015
We had a net loss of $49,871 for the nine month period ended August 31, 2016,
which was $67,908 less than the net loss of $117,779 for the nine month period
ended August, 2015. The change in our results over the two periods is a result
of decreased consulting fees and interest expense offset by an increase in
accounting and legal fees.
The following table summarizes key items of comparison and their related
increase (decrease) for the nine month periods ended August 31, 2016 and August
31, 2015:
Change Between
Nine Month
Nine Months Nine Months Periods Ended
Ended Ended August 31, 2016
August 31, August 31, and August 31,
2016 2015 2015
---------- ---------- ----------
Accounting and legal $ 14,035 $ 1,750 $ 12,285
Consulting fees 21,277 70,258 (48,981)
Transfer agent and filing fees 5,674 7,276 (1,602)
General and administrative 156 -- 156
Interest/Other (income) expense 8,729 38,495 (29,766)
---------- ---------- ----------
Net loss $ (49,871) $ (117,779) $ (67,908)
========== ========== ==========
REVENUE
We have not earned any revenues since our inception and we do not anticipate
earning revenues in the upcoming quarter.
LIQUIDITY AND CAPITAL RESOURCES
Our balance sheet as of August 31, 2016 reflects current assets of $1,981. We
had cash in the amount of $1,981 and a working capital deficit in the amount of
$481,768 as of August 31, 2016. We have sufficient working capital to enable us
to carry out our stated plan of operation for the next twelve months.
14
WORKING CAPITAL
At At
August 31, November 30,
2016 2015
---------- ----------
Current assets $ 1,981 $ 2,068
Current liabilities 483,749 447,742
---------- ----------
Working capital $ (481,768) $ 445,674)
========== ==========
We anticipate generating losses and, therefore, may be unable to continue
operations further in the future.
CASH FLOWS
Nine Months Ended
August 31, August 31,
2016 2015
---------- ----------
Net cash (used in) operating activities $ (27,019) $ (24,972)
Net cash provided by (used in) financing activities 29,000 24,972
--------- ---------
Net (decrease) in cash during period $ 1,981 $ --
========= =========
OPERATING ACTIVITIES
Net cash used in operating activities during the nine months ended August 31,
2016 was $27,019, an increase of $2,047 from the $24,972 net cash outflow during
the nine months ended August 31, 2015.
FINANCING ACTIVITIES
Cash from financing activities during the nine months ended August 31, 2016 was
$29,000 as compared to $24,972 in cash provided by financing activities during
the nine months ended August 31, 2015.
We estimate that our operating expenses and working capital requirements for the
next 12 months to be as follows:
ESTIMATED NET EXPENDITURES DURING THE NEXT TWELVE MONTHS
General and administrative expenses $14,000
Professional fees 10,000
-------
TOTAL $24,000
=======
To date we have relied on proceeds from the sale of our shares in order to
sustain our basic, minimum operating expenses; however, we cannot guarantee that
we will secure any further sales of our shares. We estimate that the cost of
maintaining basic corporate operations (which includes the cost of satisfying
our public reporting obligations) will be approximately $2,000 per month. Due to
our current cash position of approximately $1,981 as of August 31, 2016, we
estimate that we have sufficient cash to sustain our basic operations for the
next twelve months.
We are not aware of any known trends, demands, commitments, events or
uncertainties that will result in or that are reasonably likely to result in our
liquidity increasing or decreasing in any material way.
FUTURE FINANCINGS
We anticipate continuing to rely on equity sales of our common stock in order to
continue to fund our business operations. Issuances of additional shares will
result in dilution to our existing stockholders. There is no assurance that we
will achieve any additional sales of our equity securities or arrange for debt
or other financing to fund our planned business activities.
15
We presently do not have any arrangements for additional financing for the
expansion of our exploration operations, and no potential lines of credit or
sources of financing are currently available for the purpose of proceeding with
our plan of operations.
OFF-BALANCE SHEET ARRANGEMENTS
We have no 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, and capital
expenditures or capital resources that are material to stockholders.
CRITICAL ACCOUNTING POLICIES
EXPLORATION STAGE COMPANY
On June 10, 2014, the Financial Accounting Standards Board ("FASB") issued
update ASU 2014-10, Development Stage Entities (Topic 915). Amongst other
things, the amendments in this update removed the definition of development
stage entity from Topic 915, thereby removing the distinction between
development stage entities and other reporting entities from US GAAP. In
addition, the amendments eliminate the requirements for development stage
entities to (1) present inception-to-date information on the statements of
income, cash flows and shareholders equity, (2) label the financial statements
as those of a development stage entity; (3) disclose a description of the
development stage activities in which the entity is engaged and (4) disclose in
the first year in which the entity is no longer a development stage entity that
in prior years it had been in the development stage. The amendments are
effective for annual reporting periods beginning after December 31, 2014 and
interim reporting periods beginning after December 15, 2015, however entities
are permitted to early adopt for any annual or interim reporting period for
which the financial statements have yet to be issued. The Company has elected to
early adopt these amendments and accordingly have not labeled the financial
statements as those of a development stage entity and have not presented
inception-to-date information on the respective financial statements.
BASIS OF PRESENTATION
The financial statements of the Company have been prepared in accordance with
generally accepted accounting principles in the United States of America and are
presented in US dollars.
The unaudited interim condensed financial statements included herein have been
prepared by First American Silver Corp. (the "Company") in accordance with
accounting principles generally accepted in the United States of America and the
rules of the Securities and Exchange Commission (the "SEC"). We suggest that
these interim financial statements be read in conjunction with the audited
financial statements and notes thereto included in our Form 10-K for the year
ended November 30, 2015, as filed with the SEC. We believe that all adjustments,
consisting of normal recurring adjustments, necessary for a fair presentation of
financial position and the results of operations for the interim periods
presented have been reflected herein and that the disclosures made are adequate
to make the information not misleading. The results of operations for interim
periods are not necessarily indicative of the results to be expected for the
full year. Notes to the financial statements which would substantially duplicate
the disclosure contained in the audited financial statements for the most recent
fiscal year as reported in Form 10-K have been omitted
ACCOUNTING BASIS
The Company uses the accrual basis of accounting and accounting principles
generally accepted in the United States of America ("GAAP" accounting). The
Company has adopted a November 30 fiscal year end.
RISKS AND UNCERTAINTIES
The Company's operations are subject to significant risk and uncertainties
including financial, operational, technological, and regulatory risks including
the potential risk of business failure. See Note 10 regarding going concern
matters.
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CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with maturities of three
months or less to be cash equivalents. At August 31, 2016 and November 30, 2015,
respectively, the Company had $0 and $0 of unrestricted cash to be used for
future business operations.
The Company's bank accounts are deposited in insured institutions. The funds are
insured up to $250,000. At times, the Company's bank deposits may exceed the
insured amount. Management believes it has little risk related to the excess
deposits.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments consist of cash, prepaid expenses, accounts
payable, accrued expenses, notes payable, and note payable-related party. The
carrying amount of these financial instruments approximates fair value due to
either length of maturity or interest rates that approximate prevailing market
rates unless otherwise disclosed in these financial statements.
CONCENTRATIONS OF CREDIT RISK
The Company maintains its cash in bank deposit accounts, the balances of which
at times may exceed federally insured limits. The Company continually monitors
its banking relationships and consequently has not experienced any losses in
such accounts. The Company believes it is not exposed to any significant credit
risk on cash and cash equivalents.
STOCK-BASED COMPENSATION
The Company accounts for employee stock-based compensation in accordance with
the guidance of ASC Topic 718, COMPENSATION - STOCK COMPENSATION which requires
all share-based payments to employees, including grants of employee stock
options, to be recognized in the financial statements based on their fair
values. There has been no stock-based compensation issued to employees.
The Company follows ASC Topic 505-50, formerly EITF 96-18, "ACCOUNTING FOR
EQUITY INSTRUMENTS THAT ARE ISSUED TO OTHER THAN EMPLOYEES FOR ACQUIRING, OR IN
CONJUNCTION WITH SELLING GOODS AND SERVICES," for stock options and warrants
issued to consultants and other non-employees. In accordance with ASC Topic
505-50, these stock options and warrants issued as compensation for services
provided to the Company are accounted for based upon the fair value of the
services provided or the estimated fair market value of the option or warrant,
whichever can be more clearly determined. The fair value of the equity
instrument is charged directly to compensation expense and additional paid-in
capital over the period during which services are rendered.
INCOME TAXES
Income taxes are computed using the asset and liability method. Under the asset
and liability method, deferred income tax assets and liabilities are determined
based on the differences between the financial reporting and tax bases of assets
and liabilities and are measured using the currently enacted tax rates and laws.
A valuation allowance is provided for the amount of deferred tax assets that,
based on available evidence, are not expected to be realized. It is the
Company's policy to classify interest and penalties on income taxes as interest
expense or penalties expense. As of August 31, 2016, there have been no interest
or penalties incurred on income taxes.
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 the financial statements and the
reported amount of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
REVENUE RECOGNITION
The Company is in the exploration stage and has yet to realize revenues from
operations. Once the Company has commenced operations, it will recognize
revenues when delivery of goods or completion of services has occurred provided
there is persuasive evidence of an agreement, acceptance has been approved by
its customers, the fee is fixed or determinable based on the completion of
stated terms and conditions, and collection of any related receivable is
probable.
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BASIC INCOME (LOSS) PER SHARE
Basic income (loss) per share is calculated by dividing the Company's net loss
applicable to common shareholders by the weighted average number of common
shares during the period. Diluted earnings per share is calculated by dividing
the Company's net income available to common shareholders by the diluted
weighted average number of shares outstanding during the year. The diluted
weighted average number of shares outstanding is the basic weighted number of
shares adjusted for any potentially dilutive debt or equity.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a "smaller reporting company", we are not required to provide the information
required by this Item.
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 (our principal executive
officer, principal financial officer and principle accounting officer) to allow
for timely decisions regarding required disclosure.
As of the end of the quarter covered by this report, we carried out an
evaluation, under the supervision and with the participation of our president
(our principal executive officer, principal financial officer and principle
accounting officer), of the effectiveness of the design and operation of our
disclosure controls and procedures. Based on the foregoing, our president (our
principal executive officer, principal financial officer and principle
accounting officer) concluded that our disclosure controls and procedures were
effective as of the end of the period covered by this quarterly report.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
During the period covered by this report there were no changes in our internal
control over financial reporting that materially affected, or are reasonably
likely to materially affect, our internal control 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
As a "smaller reporting company", we are not required to provide the information
required by this Item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
18
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
Exhibit
Number Description
------ -----------
(3) (I) ARTICLES OF INCORPORATION; (II) BY-LAWS
3.1 Articles of Incorporation (Incorporated by reference to our
Registration Statement filed on Form S-1 on February 25, 2009).
3.2 By-laws (Incorporated by reference to our Registration Statement filed
on Form S-1 on February 25, 2009)
3.3 Certificate of Amendment (Incorporated by reference to our Registration
Statement filed on Form S-1 on February 25, 2009).
3.4 Articles of Merger (Incorporated by reference to our Current Report
filed on Form 8-K on July 15, 2010).
3.5 Certificate of Change (Incorporated by reference to our Current Report
filed on Form 8-K on July 15, 2010).
(10) MATERIAL CONTRACTS
10.1 Property Option Agreement between our company and All American
Resources LLC with respect to the Mountain City claim dated November
26, 2010 (Incorporated by reference to our Current Report filed on Form
8-K on December 21, 2010).
10.2 Property Option Agreement between our company and All American
Resources LLC with respect to the Eagan Canyon claim dated November 26,
2010 (Incorporated by reference to our Current Report filed on Form 8-K
on December 21, 2010).
10.3 Property Option Agreement between our company and All American
Resources LLC with respect to the Muncy Creek claim dated November 26,
2010 (Incorporated by reference to our Current Report filed on Form 8-K
on December 21, 2010).
10.4 Mining Lease and Option to Purchase Agreement between our company,
Pyramid Lake LLC and Anthony A. Longo dated April 15, 2011
(Incorporated by reference to our Current Report filed on Form 8-K on
May 17, 2011).
10.5 License and Assignment Agreement between Thomas J. Menning and our
company dated September 16, 2011(incorporated by reference to our
Current Report filed on Form 8-K on October 14, 2011).
10.6 2011 Stock Option Plan (incorporated by reference to our Current Report
filed on Form 8-K on November 14, 2011).
10.8 Foxglove Promissory Note dated June 28, 2015 (incorporated by reference
to our Quarterly Report filed on Form 10-Q on October 14, 2015).
10.9 $7,000 Convertible Promissory Note dated October 15, 2015 issued to
Consorcio Empresarial Vesubio SA (incorporated by reference to our
Quarterly Report filed on Form 10-Q on October 14, 2015).
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(31) RULE 13A-14(A) / 15D-14(A) CERTIFICATIONS
31.1* Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
of the Principal Executive Officer, Principal Financial Officer and
Principal Accounting Officer.
(32) SECTION 1350 CERTIFICATIONS
32.1* Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
of the Principal Executive Officer, Principal Financial Officer and
Principal Accounting Officer.
101* INTERACTIVE DATA FILE
101.INS XBRL Taxonomy Extension Schema Document
101.SCH XBRL Taxonomy Extension Calculation Linkbase Document
101.CAL XBRL Taxonomy Extension Definition Linkbase Document
101.DEF XBRL Taxonomy Extension Label Linkbase Document
101.LAB XBRL Taxonomy Extension Presentation Linkbase Document
101.PRE XBRL Instance Document
----------
* 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.
FIRST AMERICAN SILVER CORP.
(Registrant)
Dated: October 21, 2016 /s/ Brian Goss
-------------------------------------
Brian Goss
President, Chief Executive Officer,
Treasurer, Secretary and Director
(Principal Executive Officer,
Principal Financial Officer
and Principal Accounting Officer)
21