UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 2007
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ________ to ________
Commission file # 000-52781
KINGSTON MINES LTD.
(Exact Name of Registrant as Specified in its Charter)
NEVADA
(State or other jurisdiction of incorporation or organization)
98-0471111
(I.R.S. Employer Identification number)
1000-888 3RD STREET SW, CALGARY AB T2P 5C5
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (403) 716-1910
Securities registered under Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK,
$0.0001 PAR VALUE
Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the Issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [ x ] No [ ]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes [X] No [ ]
As of November 30, 2007, the Issuer had 9,761,950 shares of its Common Stock
outstanding.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
KINGSTON MINES LTD.
(An exploration stage company)
Balance Sheets
November 30, 2007
(Unaudited - Prepared by Management)
(EXPRESSED IN U.S. DOLLARS)
- ----------------------------------------------------------------------------------------------------------
November 30 August 31
2007 2007
- ----------------------------------------------------------------------------------------------------------
(audited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 120,925 $ 142,608
Prepaid expenses 36 2,194
- ----------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS $ 120,961 $ 144,802
- ----------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 120,961 $ 144,802
==========================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities 10,594 212
Convertible debenture - Related Party (current) - 15,000
- ----------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 10,594 15,212
STOCKHOLDERS' EQUITY
SHARE CAPITAL
Authorized:
50,000,000 preferred shares at a par value of $0.0001 per share
Issued and outstanding: Nil
100,000,000 common shares with a par value of $0.0001 per share
Issued and outstanding: 9,761,950 common shares 576 576
(August 31, 2006: 8,000,000 common shares)
ADDITIONAL PAID-IN CAPITAL 177,044 176,932
(DEFICIT) ACCUMULATED DURING THE EXPLORATION STAGE (67,253) (47,918)
- ----------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 110,367 129,590
- ----------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 120,961 $ 144,802
==========================================================================================================
The accompanying notes are an integral part of these financial statements.
KINGSTON MINES LTD.
(An exploration stage company)
Statements of Stockholders' Equity
For the period from June 16, 2005 (inception) to November 30, 2007
(Unaudited - Prepared by Management)
(EXPRESSED IN U.S. DOLLARS)
- ------------------------------------------------------------------------------------------------------------------------
Deficit
accumulated Total
Additional during stockholders'
Preferred Stock Common Stock paid-in exploration equity
Shares Amount Shares Amount capital stage (deficiency)
- ------------------------------------------------------------------------------------------------------------------------
Issuance of common stock for cash
July 5, 2005 ($0.00005 per share) - $ - 8,000,000 $ 400 $ - $ - $ 400
Imputed interest from a shareholder - - - - 13 - 13
Loss and comprehensive loss for the period - - - - - (6,313) (6,313)
- ------------------------------------------------------------------------------------------------------------------------
Balance, August 31, 2005 - - 8,000,000 $ 400 $ 13 $ (6,313) $ (5,900)
- ------------------------------------------------------------------------------------------------------------------------
Imputed interest from a shareholder - - - - 450 - 450
Loss and comprehensive loss for the year - - - - - (19,370) (19,370)
- ------------------------------------------------------------------------------------------------------------------------
Balance, August 31, 2006 - $ - 8,000,000 $ 400 $ 463 $ (25,683) $ (24,820)
- ------------------------------------------------------------------------------------------------------------------------
Issuance of common stock for cash
July 5, 2005 ($0.10 per share) - $ - 1,761,950 $ 176 $ 176,019 $ - $ 176,195
Imputed interest from a shareholder - - - - 450 - 450
Loss and comprehensive loss for the period - - - - - (22,235) (22,235)
- ------------------------------------------------------------------------------------------------------------------------
Balance, August 31, 2007 - - 9,761,950 $ 576 $ 176,932 $ (47,918) $ 129,590
- ------------------------------------------------------------------------------------------------------------------------
Imputed interest from a shareholder - - - - 112 - 112
Loss and comprehensive loss for the period - - - - - (19,335) (19,335)
- ------------------------------------------------------------------------------------------------------------------------
Balance, November 30, 2007 - - 9,761,950 $ 576 $ 177,044 $ (67,253) $ 110,367
========================================================================================================================
The accompanying notes are an integral part of these financial statements
KINGSTON MINES LTD.
(A exploration stage company)
Statements of Operations
(Unaudited - Prepared by Management)
(EXPRESSED IN U.S. DOLLARS)
- --------------------------------------------------------------------------------------------------
Cumulative from
June 16, 2005 Three months ended
(inception) to November 30
November 30, 2007 2007 2006
- --------------------------------------------------------------------------------------------------
EXPENSES
Accounting and audit $ 23,652 $ 5,539 $ 5,056
Legal fees 3,323 - -
Bank charges 252 12 29
Filing fees 6,815 4,818 -
Interest 1,298 112 112
Consulting fees 2,803 - -
Office expenses 3,235 2,158 197
Transfer agent 5,129 375 -
Resource property acquisition and exploration costs 20,746 6,321 5,710
- --------------------------------------------------------------------------------------------------
LOSS FROM OPERATIONS 67,253 19,335 11,104
- --------------------------------------------------------------------------------------------------
NET LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD $(67,253) $ (19,335) $ (11,104)
- --------------------------------------------------------------------------------------------------
BASIC AND DILUTED LOSS PER SHARE $ (0.00) $ (0.00)
==================================================================================================
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
- - basic and diluted - 9,761,950 8,000,000
==================================================================================================
The accompanying notes are an integral part of these financial statements
KINGSTON MINES LTD.
(An exploration stage company)
Statements of Cash Flows
(Unaudited - Prepared by Management)
(EXPRESSED IN U.S. DOLLARS)
- ---------------------------------------------------------------------------------------------------------
Cumulative from
June 16, 2005 Three months ended
(inception) to November 30
November 30, 2007 2007 2006
- ---------------------------------------------------------------------------------------------------------
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES
Net (Loss) for the period $ (67,253) $ (19,335) $ (11,104)
Adjustments to reconcile net (loss) to net cash
provided by (used in) operating activities:
- - imputed interest 1,025 112 112
Changes in operating assets and liabilities
- - (increase) decrease in prepaid expenses (36) 2,158 -
- - accounts payable and accrued liabilities 10,594 10,382 5,605
- ---------------------------------------------------------------------------------------------------------
NET CASH USED IN OPERATING ACTIVITIES (55,670) (6,683) (5,387)
- ---------------------------------------------------------------------------------------------------------
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES
Increase in promissory note - Related Party - - -
Increase (decrease) in convertible debenture - Related Party - (15,000) -
Proceeds from issuance of common stock 176,595 - -
- ---------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 176,595 (15,000) -
- ---------------------------------------------------------------------------------------------------------
INCREASE IN CASH AND CASH EQUIVALENTS 120,925 (21,683) (5,387)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD - 142,608 6,804
- ---------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 120,925 $ 120,925 $ 1,417
=========================================================================================================
The accompanying notes are an integral part of these financial statements
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Kingston Mines Ltd. (hereinafter "the Company") was incorporated in the State of
Nevada, U.S.A., on June 16, 2005. The Company's fiscal year end is August 31.
The Company has been in the exploration stage since its formation and has not
yet realized any revenues from its operations. It is primarily engaged in the
acquisition and exploration of mining properties. Upon location of a
commercially minable reserve, the Company expects to actively prepare the site
for its extraction and enter a development stage. In 2005, the Company acquired
a mineral interest in a property located near the southern boundary of the Town
of Merritt in British Columbia, Canada and has not yet determined whether this
property contains reserves that are economically recoverable.
These financial statements have been prepared in accordance with generally
accepted accounting principles in the United States of America applicable to a
going concern which assume that the Company will realize its assets and
discharge its liabilities in the normal course of business. The Company has
incurred accumulated losses of $67,253 since inception and has no source of
revenue. The future of the Company is dependent upon its ability to obtain
financing and upon future acquisition, exploration and development of profitable
operations from its mineral properties. These factors create doubt as to the
ability of the Company to continue as a going concern. Realization values may
be substantially different from the carrying values as shown in these financial
statements should the Company be unable to continue as a going concern.
Management is in the process of identifying sources for additional financing to
fund the ongoing development of the Company's business.
On November 30, 2005, the board of directors approved a 2 for 1 forward stock
split of our issued and outstanding shares of common stock. These Financial
Statements of Kingston Mines Ltd. have been restated to reflect the 2 for 1
forward stock split.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Company have been prepared in accordance with
the generally accepted accounting principles in the United States of America.
Because a precise determination of many assets and liabilities is dependent upon
future events, the preparation of financial statements for a period necessarily
involves the use of estimates that have been made using careful judgment. The
financial statements have, in management's opinion been properly prepared within
reasonable limits of materiality and within the framework of the significant
accounting policies summarized below:
Accounting Method
The Company's financial statements are prepared using the accrual basis of
accounting in accordance with accounting principles generally accepted in the
United States of America.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all highly
liquid investments and short-term debt instruments with original maturities of
three months or less to be cash equivalents. As at November 30, 2007, there
were no cash equivalents.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, and disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses for the reporting period. Actual
results could differ from these estimates.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Concentration of Credit Risk
The Company places its cash and cash equivalents with high credit quality
financial institutions. As of November 30, 2007, the Company had $nil (August
31, 2007: $48,358) in a bank beyond insured limits.
Foreign Currency Transactions
The Company is located and operating outside of the United States of America.
It maintains its accounting records in U.S. Dollars as follows:
At the transaction date each asset, liability, revenue and expense is translated
into U.S. dollars by the use of the exchange rate in effect at that date. At
the period end, monetary assets and liabilities are remeasured by using the
exchange rate in effect at that date. The resulting foreign exchange gains and
losses are included in operations.
Fair Value of Financial Instruments
The Company's financial instruments as defined by Statement of Financial
Accounting Standards No. 107, "Disclosures about Fair Value of Financial
Instruments," include cash and cash equivalents, accounts payable and accrued
liabilities, promissory note and convertible debenture. Fair values were
assumed to approximate carrying value for these financial instruments, except
where noted. Management is of the opinion that the Company is not exposed to
significant interest or credit risks arising from these financial instruments.
The Company is operating outside the United States of America and has
significant exposure to foreign currency risk due to the fluctuation of currency
in which the Company operates and U.S. dollars.
Mineral Property Payments and Exploration Costs
The Company expenses all costs related to the acquisition, maintenance and
exploration of mineral claims in which it has secured exploration rights prior
to establishment of proven and probable reserves. 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 amortized using the
units-of-production method over the estimated life of the probable reserve. To
date, the Company has not established the commercial feasibility of its
exploration prospects; therefore, all costs are being expensed.
Long-lived assets impairment
Long-term assets of the Company are reviewed for impairment whenever events or
circumstances indicate that the carrying amount of assets may not be
recoverable, pursuant to guidance established in SFAS No. 144, Accounting for
the Impairment or Disposal of Long-Lived Assets.
Management considers assets to be impaired if the carrying value exceeds the
future projected cash flows from related operations (undiscounted and without
interest charges). If impairment is deemed to exist, the assets will be written
down to fair value. Fair value is generally determined using a discounted cash
flow analysis.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Assets retirement obligations
The Company has adopted SFAS No 143, Accounting for Assets Retirement
Obligations which requires that the fair value of a liability for an asset
retirement obligation be recognized in the period in which it is incurred. SFAS
No. 143 requires the Company to record a liability for the present value of the
estimated site restoration costs with corresponding increase to the carrying
amount of the related long-lived assets. The liability will be accreted and the
asset will be depreciated over the life of the related assets. Adjustments for
changes resulting from the passage of time and changes to either the timing or
amount of the original present value estimate underlying the obligation will be
made. As at November 30, 2007, the Company does not have any asset retirement
obligations.
Costs associated with environmental remediation obligations will be accrued when
it is probable that such costs will be incurred and they can be reasonably
estimated.
Stock-Based Compensation
The Company adopted SFAS No. 123(revised), "Share-Based Payment", to account for
its stock options and similar equity instruments issued. Accordingly,
compensation costs attributable to stock options or similar equity instruments
granted are measured at the fair value at the grant date, and expensed over the
expected vesting period. SFAS No. 123(revised) requires excess tax benefits be
reported as a financing cash inflow rather than as a reduction of taxes paid.
The Company did not grant any stock options during the period ended November 30,
2007.
Comprehensive Income
The Company adopted Statement of Financial Accounting Standards No. 130 (SFAS
130), Reporting Comprehensive Income, which establishes standards for reporting
and display of comprehensive income, its components and accumulated balances.
The Company is disclosing this information on its Statement of Stockholders'
Equity (Deficiency). Comprehensive income comprises equity except those
resulting from investments by owners and distributions to owners. The Company
has no elements of "other comprehensive income" for the period ended November
30, 2007.
Income Taxes
The Company has adopted Statement of Financial Accounting Standards No. 109
(SFAS 109), Accounting for Income Taxes, which requires the Company to recognize
deferred tax liabilities and assets for the expected future tax consequences of
events that have been recognized in the Company's financial statements or tax
returns using the liability method. Under this method, deferred tax liabilities
and assets are determined based on the temporary differences between the
financial statement and tax bases of assets and liabilities using enacted tax
rates in effect in the years in which the differences are expected to reverse.
Basic and Diluted Loss Per Share
In accordance with SFAS No. 128 - "Earnings Per Share", the basic loss per
common share is computed by dividing net loss available to common stockholders
by the weighted average number of common shares outstanding. Diluted loss per
common share is computed similar to basic loss per common share except that the
denominator is increased to include the number of additional common shares that
would be outstanding if the potential common shares had been issued and if the
additional common shares were dilutive.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
New Accounting Pronouncements
In June 2006, FASB issued FASB Interpretation No. 48, "Accounting for
Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109",
which prescribes a recognition threshold and measurement attribute for the
financial statement recognition and measurement of a tax position taken or
expected to be taken in a tax return. FIN 48 also provides guidance on
de-recognition, classification, interest and penalties, accounting in interim
periods, disclosure and transition. FIN 48 is effective for fiscal years
beginning after December 15, 2006. The Company does not expect the adoption of
FIN 48 to have a material effect on its financial condition or results of
operations.
In September 2006, FASB issued SFAS No. 157, "Fair Value Measurements" which
defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles (GAAP), and expands disclosures about
fair value measurements. Where applicable, SFAS No. 157 simplifies and codifies
related guidance within GAAP and does not require any new fair value
measurements. SFAS No. 157 is effective for financial statements issued for
fiscal years beginning after November 15, 2007, and interim periods within those
fiscal years. Earlier adoption is encouraged. The Company does not expect the
adoption of SFAS No. 157 to have a material effect on its financial condition or
results of operations.
In September 2006, the SEC announced Staff Accounting Bulletin No. 108 ("SAB
108"). SAB 108 addresses how to quantify financial statement errors that arose
in prior periods for purposes of assessing their materiality in the current
period. It requires analysis of misstatements using both an income statement
(rollover) approach and a balance sheet (iron curtain) approach in assessing
materiality. It clarifies that immaterial financial statement errors in a prior
SEC filing can be corrected in subsequent filings without the need to amend the
prior filing. In addition, SAB 108 provides transitional relief for correcting
errors that would have been considered immaterial before its issuance. The
Company does not expect the adoption of SAB 108 to have a material effect on its
financial condition or results of operations.
In February 2007, the FASB issued SFAS No. 159, "The fair value Option for
Financial Assets and Financial Liabilities - Including an Amendment of FASB
Statement No. 115". This statements objective is to improve financial reporting
by providing the Company with the opportunity to mitigate volatility in reported
earnings caused by measuring related assets and liabilities differently without
having to apply complex hedge accounting provisions. This statement is expected
to expand the use of fair value measurement, which is consistent with the FASB's
long-term measurement objective for accounting for financial instruments. The
adoption of SFAS 159 did not have an impact on the Company's financial
statements. The Company presently comments on significant accounting policies
(including fair value of financial instruments) in Note 2 to the financial
statements.
NOTE 3 - MINERAL PROPERTY INTEREST
On August 30, 2005 the Company acquired a 100% interest in a mineral claim from
its principal shareholder and a director of the Company, known as the "Sugarloaf
Property" located near the southern boundary of the Town of Merritt in British
Columbia, Canada, for consideration of $4,297 being the cost to the principal
shareholder, by issuance of a promissory note. The Company expensed the entire
amount.
On November 21, 2005, the Company acquired a 100% interest in four claims that
are contiguous with the Company's other mineral claim and are located near the
southern boundary of the Town of Merritt in British Columbia, Canada. The total
cost of acquisition of these claims was $463. The Company expensed entire
amount.
NOTE 4 - CONVERTIBLE DEBENTURE
On August 22, 2005, the Company issued a convertible debenture to its principal
shareholder and a director in the amount of $15,000. The convertible debenture
is unsecured, non-interest bearing, due December 31, 2007 and convertible at the
option of the holder at a price of $0.25 per share at any time. The Company
charged imputed interest at 3.0% per annum and recorded a total of $112 to the
additional paid-in capital for the period from inception to November 30, 2007.
The Company repaid the debenture in full in cash on November 29, 2007.
The Company did not incur beneficial conversion charges because the conversion
price is greater than the fair value of the equity of the Company.
NOTE 5 - PREFERRED AND COMMON STOCK
The Company has 50,000,000 shares of preferred stock authorized and none issued.
The Company has 100,000,000 shares of common stock authorized, of which
9,761,950 shares are issued and outstanding. All shares of common stock are
non-assessable and non-cumulative, with no preemptive rights.
The offering period for the Company's initial public offering expired on March
13, 2007. During the offering period, the Company sold a total 1,761,950 common
shares at $0.10 per share for cash proceeds of $176,195.
NOTE 6 - RELATED PARTY TRANSACTIONS
See Note 3 and 4.
NOTE 7 - SEGMENT INFORMATION
The Company currently conducts all of its operations in Canada
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
Our business plan is to proceed with the exploration of the Sugarloaf Property
to determine whether there are commercially exploitable reserves of valuable
minerals. We intend to proceed with the exploration program recommended by
Barry J. Price, P. Geo. Phase I of our exploration program will consist of
prospecting and mapping, analyzing rock geochemistry, auger sampling, trenching
by backhoe, and induced polarization surveys. Phase II will consist of core
sampling by diamond drilling up to five holes to a depth of 200 meters. We
anticipate that Phase I will cost approximately $72,500 while Phase II will cost
approximately $127,500. To date, we have not commenced exploration on the
Sugarloaf Property.
We expect that Phase I of our exploration program will be concluded by June 30,
2008. During Phase I we will retain a consulting geologist to review all past
exploration data relating to the Sugarloaf Property and plot relevant
information on a map. This is known as geological mapping. Based on this
mapping, the geologist will choose property areas that are most likely to host
economic mineralization. He will then conduct a sampling program focusing on
these property areas by gathering rock and soil samples from the identified
areas that appear to contain mineralization. The samples will be sent to a
laboratory for mineral analysis. By the middle of July, 2008 we should receive
the results of the sample analysis and be able to determine which property
areas, if any, contain significant mineralization.
As part of Phase I, our consulting geologist will also conduct an induced
polarization (IP) survey of the property areas from which the mineralized
samples were taken. This involves injecting electrical current into the ground,
using a generator and transmitter, and measuring the decay of the induced
currents when the current is turned off. IP surveying is the tool of choice for
locating copper deposits.
We plan to commence Phase II of the exploration program in August 2008. Phase
II will take approximately three months to complete and will consist of using
heavy equipment to drill up to five holes to a depth of 200 meters. Drilling
locations will be determined by analyzing the results of the Phase I sampling
program and IP surveys. Cylinders of rock will be removed from the drill holes
and sent to a laboratory for mineral analysis. Results will indicate the
presence of any minerals below the property surface.
Should a follow-up exploration program be undertaken, it would likely commence
in May 2009, after reviewing the results of Phase II.
We do not have any verbal or written agreement regarding the retention of any
qualified engineer or geologist for our exploration program. Mr. Barry J. Price,
the author of the geology report on the Sugarloaf Property, has indicated that
he would be prepared to oversee the exploration program, but we have not
discussed any terms of such an arrangement.
The proceeds from the sale of the securities from our initial public offering
are sufficient for us to complete Phase I of our exploration program as well as
anticipated consulting fees, professional fees and administrative expenses for
the next 12 months. We will require additional funding to complete Phase II.
We will also require additional financing to complete any follow-up exploration
work. We do not intend to pursue additional funding until we have obtained the
results of Phase I of our exploration program.
We anticipate that any additional funding that we require will be in the form of
equity financing from the sale of our common stock. There is no assurance,
however, that we will be able to raise sufficient funding from the sale of our
common stock. The risky nature of this enterprise and lack of tangible assets
places debt financing beyond the credit-worthiness required by most banks or
typical investors of corporate debt until such time as an economically viable
mine can be demonstrated. We do not have any arrangements in place for any
future equity financing. If we are unable to secure additional funding, we will
cease or suspend operations. We have no plans, arrangements or contingencies in
place in the event that we cease operations.
Our officers will only be devoting approximately six hours per week of their
time to our business. We do not foresee this limited involvement as negatively
impacting our company over the next 12 months because all exploratory work is
being performed by an outside consultant. If, however, the demands of our
business require more time of our officers, such as raising additional capital
or addressing unforeseen issues with regard to our exploration efforts, they are
prepared to adjust their timetables to devote more time to our business. They
may, however, not be able to devote sufficient time to the management of our
business, as and when needed.
We believe that the only equipment we will need to start exploration on the
Sugarloaf Property will be a backhoe. We will lease the backhoe from an
equipment rental company or hire an independent contractor who owns a backhoe to
dig the trenches we refer to in this annual report. We do not have plans to
purchase any significant equipment or to hire any employees during the next 12
months and until we have proven reserves.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES.
We are a mineral resource exploration stage company that has not begun
operations. Our capital has been obtained via issuance of common stock and
shareholder loans.
On September 12, 2006, the Securities and Exchange Commission declared our Form
SB-2 Registration Statement (Commission File No. 333-133232) effective. Our
offering commenced on September 12, 2006, and expired on March 13, 2007. We
sold a total of 1,761,950 common shares during the offering for gross proceeds
of $176,195.
As of November 30, 2007, we had total assets of $120,961 comprised of $120,925
in cash and $36 in prepaid expense. This is a decrease from $144,802 in total
assets as of August 31, 2007. The decrease was primarily attributable to debt
repayment and renewal of our mineral exploration licenses.
As of November 30, 2007, our total liabilities decreased to $10,594 from $15,212
as of August 31, 2007. The decrease was due to the repayment of a convertible
debenture owing to a director. Current liabilities are comprised entirely of
accounts payable and accrued liabilities, which increased by $10,382 from August
31, 2007.
We have not generated revenue since the date of inception. We presently have
sufficient working capital to satisfy our cash requirements for the next 12
months of operations.
We do not intend to purchase or sell any significant equipment during the next
twelve months.
We do not anticipate hiring any employees over the next 12 months.
RESULTS OF OPERATIONS
We posted an operating loss of $19,335 for the period ended November 30, 2007,
due primarily to renewal of our mineral exploration license, accounting fees and
filing fees. This was an increase from the operating loss of $11,104 for the
period ended November 30, 2006.
ITEM 3. CONTROLS AND PROCEDURES
As required by Rule 13a-15 under the Exchange Act, we have carried out an
evaluation of the effectiveness of the design and operation of our company's
disclosure controls and procedures as of the end of the period covered by this
quarterly report, being November 30, 2007. This evaluation was carried out under
the supervision and with the participation of our management, including our
president and chief executive officer. Based upon that evaluation, our
president and chief executive officer concluded that our disclosure controls and
procedures are effective. There have been no significant changes in our
internal controls or in other factors, which could significantly affect internal
controls subsequent to the date we carried out our evaluation.
Disclosure controls and procedures are controls and other procedures that are
designed to ensure that information required to be disclosed in our reports
filed or submitted under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Securities and Exchange
Commission's rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed in our reports filed under the Exchange Act is
accumulated and communicated to management, including our president and chief
executive officer as appropriate, to allow timely decisions regarding required
disclosure.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not a party to any material legal proceedings and to its
knowledge, no such proceedings are threatened or contemplated.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
At present, our common stock is quoted on the NASD over-the-counter bulletin
board under the trading symbol KGMI.
As of November 30, 2007, there were 76 owners of record of our common stock.
DIVIDEND POLICY
Our Board of Directors may declare and pay dividends on outstanding shares of
common stock out of funds legally available therefor in our sole discretion;
however, to date no dividends have been paid on common stock and we do not
anticipate the payment of dividends in the foreseeable future.
USE OF PROCEEDS FROM REGISTERED SECURITIES
On September 12, 2006, the Securities and Exchange Commission declared our Form
SB-2 Registration Statement (Commission File No. 333-130922) effective. Our
offering commenced on the effective date and terminated on May 13, 2007. As of
May 31, 2007, we have sold 1,761,950 shares of our common stock for gross
proceeds of $176,195.
We budgeted $25,000 from the proceeds of our offering for offering expenses. Of
this amount, we paid a total of $9,665 for accounting fees. All other offering
expenses were paid from the proceeds of a non-interest bearing loan of $15,000
from a director advanced prior to the commencement of our offering. We used the
remainder of the amount budgeted for offering expenses ($15,335) to repay the
director's loan in full, with the surplus ($335) being used for working capital.
After paying offering expenses and repaying the director's loan, net proceeds
from our offering that were available for operations was $151,530. As of
November 30, 2007, we spent $3,487 on office expenses, $26,975 for professional
fees, $11,944 on filing and transfer agent fees, and $20,746 on claim
acquisition and maintenance. Professional fees significantly exceeded our
budgeted amount of $10,000 due to higher than expected accounting costs. Claim
maintenance fees also exceeded budgeted amounts due to fluctuations in currency
exchange rates.
We budgeted $6,323 from the proceeds of our offering for the repayment of a debt
owing to a director. This debt was repaid from the proceeds of the director's
loan. The proceeds that would otherwise have been allocated for debt repayment
have been used to pay for professional fees.
ITEM 3. DEFAULT UPON SENIOR NOTES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
EXHIBIT DESCRIPTION
31.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
32.1 Officers' Certification
SIGNATURES
In accordance with the requirements of the Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
KINGSTON MINES LTD.
By: /s/ Thomas Mills
Thomas Mills
President, Treasurer, Secretary and a director
(Chief Executive Officer)
(Principal Financial Officer and Principal Accounting Officer)
Date: January 9, 2008