ITEM 1. BUSINESS.
Forward-Looking Statements
Except for the historical information presented in this document, the matters discussed in this Form 10-K for the fiscal year ending December 31, 2007 and specifically in the items entitled “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” or otherwise incorporated by reference into this document, this report contains forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). Such forward-looking statements include statements regarding, among other things, (a) our projected sales and profitability, (b) our growth strategies, (c) anticipated trends in our industry, (d) our future financing plans, and (e) our anticipated needs for working capital. Forward-looking statements, which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. This information may involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed or implied by any forward-looking statements. These statements may be found in this report under “Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations,” “Item 1. Business,” as well as in this report generally. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks outlined under “Item 1A.
ITEM 2. PROPERTIES.
Our corporate office is located at 1001 SW 5th Avenue, Suite 1100 Portland, Oregon 97204. The base monthly rent is $65 plus extra charges for board room, telephone, mail and any other incidental costs associated with maintaining an office. This service commenced February 1, 2008. This arrangement may be terminated by us upon one month’s prior notice.
We maintain an office located at 1990 Tolmie Street, Vancouver, British Columbia , Canada, V6R 4C2. This office is being supplied rent free by our President, CEO and majority shareholder. We pay approximately $140 per month for telephone and internet and we pay other related costs in maintaining an office such as office supplies and other expenses as they occur.
We believe that our facilities are adequate for our current operations.
A description of our resources properties is set forth above in “Item 1. Business.”
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS.
We are not party to any legal proceedings.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no matters submitted to a vote of the security holders in the fourth quarter of 2007.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
As of the date of this report, there is no public trading market for the shares of our common stock. Please refer to “Item 1A. Risk Factors- If a market for our common stock does not develop, shareholders may be unable to sell their shares.”
As of December 31, 2007, there were approximately 83 shareholders of record of the Company's Common Stock.
Dividend Policy
We have never paid cash dividends on our capital stock and do not anticipate paying any cash dividends in the foreseeable future, but intend to retain our capital resources for reinvestment in our business. Any future determination to pay cash dividends will be at the discretion of the board of directors and will be dependent upon our financial condition, results of operations, capital requirements and other factors as the board of directors deems relevant. Our board of directors has the right to authorize the issuance of preferred stock, without further shareholder approval, the holders of which may have preferences over the holders of the Common Stock as to payment of dividends.
Securities Authorized for Issuance Under Equity Compensation Plans
As of the date of this report, we do not have any equity compensation plans. No options or other securities to acquire shares of our common stock have been granted to our officers and directors.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
FIVE-YEAR STATEMENT OF OPERATIONS
ITEM 7.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Discussion and Analysis
The following discussion and analysis is based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, and should be read in conjunction with our financial statements and related notes. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. In addition, the following discussion and analysis contains forward-looking statements that involve risks and uncertainties, including, but not limited to, those discussed in “Item 1.A-Risk Factors,” “Forward Looking Statements,” and elsewhere in this prospectus.
Overview
We are an exploration stage company engaged in the acquisition and exploration of mineral properties. We own a 100% interest in three properties located in the Province of British Columbia, Canada, that we call the “Goldstar Property,” the “Rosewall Gold Property” and the “Waterloo Creek Property.” Currently there are no known mineral reserves on any of the Goldstar Property, the Rosewall Gold Property or the Waterloo Creek Property.
Although exploratory work in the area of our properties conducted by others has indicated some potential showings of mineralization, we are uncertain as to the reproducibility of these prior exploration results and thus we are uncertain as to the potential existence of a commercially viable mineral deposit existing on our mineral claims.
Our plan of operations is to carry out an initial exploration program on each of our properties in order to ascertain whether any of them posses a commercially exploitable mineral deposit. We will not be able to determine whether or not our mineral claim contains a commercially exploitable mineral deposit, or reserve, until appropriate exploratory work is done and an economic evaluation based on that work concludes economic viability. We have initiated our exploration program on all three of our properties and have completed Phase 1 on the Goldstar Property as described below.
We have not earned any revenues to date. We do not anticipate earning revenues until such time as we enter into commercial production of our mineral properties. A substantial portion of our activities in the fiscal year ended in December 31, 2007 related to capital raising, preliminary exploration and administrative matters. We initiated our exploration activities in the fourth quarter of 2007, following the completion of our public financing in which we raised an aggregate of $310,000.
We are presently in the exploration stage of our business and we can provide no assurance that any commercially viable mineral deposits exist on our mineral claims, that we will discover commercially exploitable levels of mineral resources on our properties, or, if such deposits are discovered, that we will enter into further substantial exploration programs.
The Goldstar Property
The initial phase of the recommended programs for the Goldstar Property cost approximately $18,000. This phase is scheduled to commence sometime in our second quarter ending June 30, 2008; we anticipate that it will take four to eight weeks to complete accordingly, depending on the date it is actually commenced, we anticipate completing this portion of the program in our second or third calendar quarter of 2008 The program will be overseen in the field by an independent geologist to be engaged by us, and reviewed by Mr. Gregory Thomson who is one of our directors.
The cost and scope of Phase 2 of exploration program is estimated at $75,000. If warranted, we would require additional financing to carry out a Phase 3 program on the Goldstar Property and, based on the results of the Phase 3 exploration activities, any follow-up exploration programs.
Phase 3 of the suggested exploration program consists of an anticipated 1000 meters of diamond drilling, geological supervision, camp and supplies, transportation, assays, and reports; the estimated costs are $150,000. We will not make a decision as to whether to commence phase 3 until we have had the opportunity to assess the results of phase 2.
The Rosewall Gold Property
The initial phase of the recommended programs for the Rosewall Gold Property will cost approximately $15,404; this work has not been started due to weather conditions. We anticipate completing this portion of the program in our second quarter ending June 30, 2008. The program will be overseen in the field by an independent geologist to be engaged by us, and reviewed by Mr. Gregory Thomson who is one of our directors
Once we receive the results of our initial exploration program, our board of directors, in consultation with our consulting geologist, will assess whether to proceed to any further exploration phases. In making this determination to proceed, we will make an assessment as to whether the results of the initial exploration phase are sufficiently positive to enable us to proceed. This determination will include an assessment of our cash reserves after completion of the initial phase, the price of minerals and the market for financing of mineral exploration projects at the time of our assessment.
Should the results of our initial exploration program on the Rosewall Gold Property prove not to be sufficiently positive to proceed with further exploration on such property, we intend to first proceed with the exploration programs on our other properties, if warranted, or seek out and acquire other North American mineral exploration properties which, in the opinion of our consulting geologist, offer attractive mineral exploration opportunities, or curtail or cease our operations if we cannot establish commercial resources on our existing properties or acquire additional properties on commercially viable terms.
The cost and scope of Phase 2 of exploration program is estimated at $75,000. If warranted, we would require additional financing to carry out the Phase 3 exploration activities on the Rosewall Gold Property and, based on the results of Phase 3 exploration results, any follow-up exploration programs.
Phase 3 of the suggested exploration program consists of an anticipated 1000 meters of diamond drilling, geological supervision, camp and supplies, transportation, assays, and reports; the estimated costs are $150,000.
The Waterloo Creek Property
Phase 1 of the exploration program for the Waterloo Creek Property will cost approximately
$25,000. This phase is scheduled to commence sometime in our second quarter ending June 30, 2008; we anticipate that it will take four to eight weeks to complete; accordingly, depending on the date it is actually commenced, we anticipate completing this portion of the program in our second or third calendar quarter of 2008 The program will be overseen in the field by an independent geologist to be engaged by us, and reviewed by Mr. Gregory Thomson who is one of our directors. The program will be overseen in
the field by an independent geologist to be engaged by us, and reviewed by Mr. Gregory Thomson who is one of our directors.
Once we receive the results of our initial exploration program, our board of directors, in consultation with our consulting geologist, will assess whether to proceed to any further exploration phases. In making this determination to proceed, we will make an assessment as to whether the results of the initial exploration phase are sufficiently positive to enable us to proceed. This determination will include an assessment of our cash reserves after completion of the initial phase, the price of minerals and the market for financing of mineral exploration projects at the time of our assessment.
Should the results of our initial exploration program on the Waterloo Creek Property prove not to be sufficiently positive to proceed with further exploration on such property, we intend to first proceed with the exploration programs on our other properties, if warranted, or seek out and acquire other North American mineral exploration properties which, in the opinion of our consulting geologist, offer attractive mineral exploration opportunities, or curtail or cease our operations if we cannot establish commercial resources on our existing properties or acquire additional properties on commercially viable terms.
Phase 2 of the proposed exploration program consists of detailed geological mapping and rock sampling, grid construction, soil and silt geochemical survey, IP survey, establish drill and trenching targets; the projected cost is approximately $100,000.
The cost and scope of the Phase 3 exploration activities is estimated at $175,000. If warranted, we would require additional financing to carry out a Phase 3 program on the Waterloo Creek Property and, based on the results of Phase 3 exploration activities, any follow-up exploration programs.
If and when the time comes to obtain additional funding in order to proceed with additional exploration of one or more of our properties, we anticipate that such funding will be in the form of equity financing from the sale of our common stock. However, we cannot provide investors with any assurance that we will be able to obtain sufficient funding from the sale of our common stock to fund Phase 3 of the exploration program should we decide to proceed. We believe that debt financing will not be an alternative for funding any further phases in our exploration program. 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. Failure to raise needed financing could result in our having to discontinue our mining exploration and development business.
Critical Accounting Policies
Our discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses and related disclosures. We review our estimates on an ongoing basis.
We consider an accounting estimate to be critical if it requires assumptions to be made that were uncertain at the time the estimate was made; and changes in the estimate or different estimates that could have been made could have a material impact on our results of operations or financial condition. While our significant accounting policies are described in more detail in the notes to our financial statements included in, we believe the following accounting policies to be critical to the judgments and estimates used in the preparation of our financial statements.
General and Administrative Expenses
Our general and administrative expenses consist primarily of legal costs, including exploration and mineral fees, accounting costs, and other professional and administrative costs.
Exploration and Development Costs
Exploration and development costs represent costs incurred to explore our three 100% owned mineral claims located in British Columbia, Canada. The cost of exploration include such items as wages, contract fees, lodging, 4X4 vehicle rentals, field supplies, assays and management fee to our exploration contractor. We charge all exploration and development expenses to operations as they are incurred. We do not track exploration and development expenses by project.
Results of Operations for Years Ended December 31, 2007 and 2006
We had no revenues in 2007 and 2006. Our general and administrative expenses increased 464 % to $80,276 in 2007, from $14,228 in the same period in 2006. This increase was primarily attributable to legal and accounting expenses that were incurred in 2007.
In 2007, we also incurred $6,178 in mineral tenure fee expenses, an increase of 789 %, compared to $695 mineral tenure costs that we incurred in 2006.
Interest income increased 604% to $10,729 in 2007, from $1,524 during the same period in 2006. This was the result of higher average cash balances maintained during 2007.
Our net loss in 2007 increased to $69,547, from $12,704 in 2006. This increase was primarily attributable to increased costs for legal, accounting, mineral tenure fees and general administrative expenses that incurred in 2007.
Liquidity and Capital Resources for Years Ended December 31, 2007 and 2006
At December 31, 2007, the Company had a cash balance of $409,749, compared to a cash balance of $169,482 at December 31, 2006. This amount should be sufficient for purposes of conducting our exploration program through Phase 2.
During 2007, the Company used $69,733 of net cash from operating activities, as compared to $12,518 of net cash in 2006.
The Company has financed its operations primarily from cash on hand, through private placements and proceeds from public offering. Net cash provided by financing activities was $310,000 for 2007 compared to $222,000 for 2006.
The Company does not have any arrangements, understandings or agreements with any person regarding any additional financings. Although there are 775,000 Warrant A’s and 775,000 Warrant B’s exercisable into one common share at $0.50 and $0.55, which if exercised in full could provide us with an aggregate of $849,750, there is no assurance that the Warrants will be exercised in full or in part.
Plan of Operations
Our plan of operation is to conduct mineral exploration activities on each of our properties in order to assess whether the property contains mineral reserves capable of commercial extraction. Our exploration program is designed to explore for commercially viable deposits of copper, silver and gold. We have not, nor has any predecessor, identified any commercially exploitable reserves of these minerals on any of our properties.
Since we are in the exploration stage of our business plan, we have not yet earned any revenues from our planned operations. As of December 31, 2007 we had $409,749 cash on hand and no liabilities. From our inception May 3, 2006 through December 31, 2007 we have incurred a net loss of $82,251.
We received a geological evaluation report as to each of our properties. The geological report summarizes the results of the history of the exploration of the mineral claims, the regional and local geology of the mineral claims and the mineralization and the geological formations identified as a result of the prior exploration. The geological report also gives conclusions regarding potential mineralization of the mineral claims and recommends a further geological exploration program on the mineral claims.
As of December 31, 2007, we conducted phase one of our exploration program on our Goldstar Property; we anticipate initiating phase one exploration activities on our Vancouver Island properties by end of June 2008, at this time we are uncertain of the number of the recommended mineral exploration phases we will conduct on each of our properties before concluding that there are, or are not, commercially viable minerals on the property. The decision to proceed to the next exploration phase will be dependent upon the results of the prior exploration phase and the recommendation of our consulting geologist at that time.
As of December 31, 2007, we had cash on hand of $409,749. We have sufficient cash on hand to pay the anticipated costs of the proposed phase 2 exploration activities on our properties. We anticipate that we have sufficient funds to carry out the initial two phases on each of our properties, or focus our activities on specific properties if warranted; in such a case, the decision to conduct additional recommended exploration program will be dependent upon a number of factors such as our consulting geologist’s recommendations based upon results of our exploration program and available financing at that time.
The actual cost of completing the exploration program may exceed our estimates of those costs. If the actual costs of the exploration program are substantially greater than we have estimated, we may be required to seek additional financing prior to the completion of Phase 2 of the proposed three phase program. In addition, if we decide to proceed with additional work beyond phase 3 of our proposed exploration activities, of which there is no assurance, we may also be required to seek additional financing. The Company does not have any arrangements, understandings or agreements with any person regarding any additional financings. Although there are 775,000 Warrant A’s and 775,000 Warrant B’s exercisable into one common share at $0.50 and $0.55, which if exercised in full could provide us with an aggregate of $849,750, there is no assurance that the Warrants will be exercised in full or in part.
During the exploration stage of our business, our President will be devoting approximately 75% of his time to our business. We do not foresee this limited involvement negatively impacting our company over the next twelve months as all exploratory work has been, and will continue to be, performed by outside consultants. Additionally, we will not have a need to hire any employees over the next twelve months, nor do we plan to make any purchases of equipment over the next twelve months. Outside consultants and geologists, will be expected to provide all tools needed for the exploratory work being conducted. There is no assurance that we will achieve all or any of our goals due to the "start up" nature of our business.
Related Party Transactions
Management Fees
During the year ended December 31, 2007, we did not pay any fees to our officers and directors. There is no employment, management or consulting agreement in effect nor is there an agreement in place to convert debt to equity between us and any of our officers and directors.
Rent
Our corporate office is located at 1001 SW 5th Avenue, Suite 1100, Portland, Oregon 97204. We pay a monthly charge of $65 plus fees for use of mail service, board room and any other expenses to maintain this office. We also maintain an office located at 1990 Tolmie Street, Vancouver, British Columbia, Canada, V6R 4C2. These premises are provided rent free on a month to month basis by Herdev S. Rayat, our director and majority shareholder.
Going Concern
We have not generated any revenues from operations; since inception, we have incurred a cumulative loss of $82,251 consisting of $12,704 and $69,547 respectively, during the past two fiscal years of operation. We face all the risks common to companies in their early stages of development, including under capitalization and uncertainty of funding sources, high initial expenditure levels, uncertain revenue streams, and difficulties in managing growth. Our recurring losses raise substantial doubt about our ability to continue as a going concern. Our consolidated financial statements do not reflect any adjustments that may result from the outcome of this uncertainty. We expect to incur losses from our business operations and will require additional funding during 2008-2009. The satisfaction of our cash hereafter will depend in large part on our ability to successfully raise capital from external sources to pay for planned expenditures and to fund operations.
In view of these conditions, our ability to continue as a going concern is in substantial doubt and dependent upon achieving a profitable level of operations and on our ability to obtain necessary financing to fund ongoing operations. Management believes that its current and future plans enable it to continue as a going concern.
The consolidated financial statements included in this report do not give effect to any adjustments which would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in the accompanying consolidated financial statements.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a Smaller Reporting Company this item is not required.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
PAGE
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2007 and 2006
Consolidated Statements of Operations for the periods ended December 31, 2007 and 2006
from Inception (May 3, 2006) to December 31, 2007
Consolidated Statements of Stockholders’ Deficiency from Inception (May 3, 2006)
to December 31, 2007
Consolidated Statements of Cash Flows for the periods ended December 31, 2007 and 2006
and Form Inception (May 3, 2006) to December 31, 2007
Notes to the Financial Statements
35-46
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Duke Mountain Resources, Inc.
Vancouver, British Columbia
CANADA
We have audited the accompanying consolidated balance sheets of Duke Mountain Resources, Inc. and Subsidiary (an exploration stage company) as of December 31, 2007, and 2006 and the related consolidated statements of operations, stockholders' deficiency, and cash flows for the periods ended December 31, 2007 and 2006, and for the period from May 3, 2006 (date of inception) to December 31, 2007. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company has determined that it is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Duke Mountain Resources, Inc. and Subsidiary (an exploration stage company) as of December 31, 2007 and 2006, and the results of their operations and their cash flows for the periods ended December 31, 2007 and 2006, and for the period from May 3, 2006 (date of inception) to December 31, 2007, in conformity with accounting principles generally accepted in the United States.
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has experienced losses from operations since inception and has a deficit accumulated during the exploration stage. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans regarding these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/S/ PETERSON SULLIVAN PLLC
March 19, 2008
Seattle, Washington
DUKE MOUNTAIN RESOURCES, INC.
(A Exploration Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2007 AND 2006
(Expressed in US Dollars)
NOTE 1 - BASIS OF PRESENTATION AND GOING CONCERN UNCERTAINITIES
Organization
Duke Mountain Resources, Inc. (the “Company"), a Nevada Corporation, was formed on May 3, 2006 with authorized capital of 76,000,000 shares of common stock, par value of $0.001 per share.
On September 21, 2007, the Company established a Canadian operating subsidiary Duke Mountain Resources Canada, Inc. The Canadian operating subsidiary will conduct all mineral explorations for Duke Mountain Resources, Inc. Duke Mountain Resources Canada, Inc. controls over 1,315 hectares of mineral claims. All mineral claims were transferred to our Canadian operating subsidiary Duke Mountain Resources Canada, Inc., on December 21, 2007 from our President and Chief Executive Officer SEE NOTE 3.
The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary Duke Mountain Resources Canada, Inc. The subsidiary holds title to our mineral claims and has no liabilities.
Duke Mountain Resources, Inc., together with its wholly owned subsidiary, is an exploration stage company focused on the acquisition, exploration, and development of gold, silver and base metal properties.
The Company has not generated any revenues and has incurred losses of $82,251 since inception. The Company has incurred a loss of $69,547 during the year ended December 31, 2007. The Company faces all the risks common to companies in their early stages of development including under capitalization and uncertainty of funding sources, high initial expenditure levels, uncertain revenue streams, and difficulties in managing growth. In view of these conditions, the ability of the Company to continue as a going concern is in substantial doubt and dependent upon achieving a profitable level of operations and on the ability of the Company to obtain necessary financing to fund ongoing operations. The Company’s financial statements do not reflect any adjustments that might result from the outcome of this uncertainty. The future of the Company hereafter will depend in large part on the Company’s ability to successfully raise capital from external sources to pay for planned expenditures and to fund operations.
To meet these objectives, the Company has completed a private placement for gross proceeds of $222,000 and a public financing of $310,000, and continues to seek other sources of financing in order to support existing operations and expand the range and scope of its business. See Note 6. However, there are no assurances that any such financing can be obtained on acceptable terms, if at all.
These consolidated financial statements do not give effect to any adjustments which would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in the accompanying consolidated financial statements.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
(a) Principles of Accounting
These financial statements are stated in U.S. Dollars and have been prepared by management on the accrual basis in accordance with the United States generally accepted accounting principles (US GAAP).
(b) Principles of Consolidation
These consolidated financial statements presented are those of the Company and its wholly-owned subsidiary, Duke Mountain Resources Canada, Inc. All significant intercompany balances and transactions have been eliminated.
(c) Accounting Estimates
The preparation of financial statements in conformity with US GAAP 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 during the reporting period. Areas where management uses subjective judgment include valuation of equity instruments and related party transactions. Actual results can differ from those estimates and assumptions.
(d) Comprehensive Income
The Company has adopted the Statement of Financial Accounting Standards No. 130 (SFAS130), Reporting Comprehensive Income, which establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income has not been reported for the year ended December 31, 2007 since the only activity was the transfer of mineral claims which did not elicit a translation adjustment.
(e) Foreign Operations and Currency Translation
The Company translates foreign assets and liabilities of its subsidiary, other than those denominated in United States Dollars, at the rate of exchange at the balance sheet date. Revenues and expenses are translated at the average rate of exchange throughout the year. Gains or losses from these translations are reported as a separate component of other comprehensive income (loss), until all of the investment in the subsidiaries is sold or liquidated. The translation adjustments do not recognize the effect of income tax because the Company expects to reinvest the amounts indefinitely in operations.
Transaction gains (losses) that arise from exchange rate fluctuations on transactions denominated in a currency other than the local functional currency are included in the statements of operations.
(f) Cash & Cash Equivalents
Cash and cash equivalents include bank deposits and a term deposit with an original maturity date of three months or less. Duke Mountain occasionally has cash with financial institutions in excess of insured limits.
(g) Mineral Rights
Mineral rights consist of direct costs to obtain the mineral claims. If mineral right costs are capitalized and Duke Mountain determines it is not economically feasible to develop the claim, the costs are immediately expensed. Also, mineral rights costs are not capitalized at an amount more than the anticipated recovery from the claim area. Mineral rights costs associated with specific areas will be amortized as minerals are received from the areas. As of December 31, 2007, phase one was completed on the Goldstar Property and there has been no amortization for this work. Amortization will not begin until mining operations commence. All other costs related to the exploration and the development of unproven properties are expensed as incurred.
(h) Impairment of Long-lived Assets
Long-lived assets of the Company are reviewed for impairment when changes in circumstances indicate their carrying value has become impaired, pursuant to guidance established in the SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. Management considers assets to be impaired if the carrying amount of an asset exceeds the future projected cash flows from related operations (undiscounted and without interest charges). If impairment is deemed to exist, the asset will be written down to fair value, and a loss is recorded as the difference between the carrying value and the fair value. Fair values are determined based on the quoted market values, discounted cash flows or internal and external appraisals, as applicable. Mineral right assets are tested annually for impairment and for the periods ended December 31, 2007 and 2006, no impairment exists.
(i) Earnings (Loss) Per Share
Basic earnings (loss) per share are based on the weighted average number of common shares outstanding. Diluted earnings (loss) per share are based on the weighted average number of common shares outstanding and dilutive common stock equivalents. Basic earnings (loss) per share are computed by dividing income/loss (numerator) applicable to common stockholders by the weighted average number of common shares outstanding (denominator) for the period. All earnings (loss) per share amounts in the financial statements are basic earnings or loss per share, as defined by SFAS No. 128, “Earnings per Share.” Diluted earnings (loss) per share do not differ materially from basic earnings (loss) per share for all periods presented. Convertible securities that could potentially dilute basic earnings per share in the future, such as options and warrants, are not included in the computation of diluted earnings or loss per share because to do so would be anti-dilutive. All per share information is adjusted retroactively to reflect stock splits and changes in par value.
(j) Income Taxes
The Company has adopted the 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 differences between the financial statement carry amounts and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. To the extent that it is not considered to be more likely than not that a deferred tax asset will be realized, a valuation allowance is provided.
(k) Fair Value of Financial Instruments
Fair value estimates of financial instruments are made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair value.
The carrying value of cash, accounts payable and accrued liabilities and accounts payable - related party approximate their fair value because of the short-term nature of these instruments. Management is of the opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments.
Company operates outside of the United States of America and is exposed to foreign currency risk due to the fluctuation between the currency in which the Company operates in and the U.S. dollar.
(l) Related Party Transactions
A related party is generally defined as (i) any person that holds 10% or more of the Company’s securities and their immediate families, (ii) the Company’s management, (iii) someone that directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. See Note 3.
(m) Recent Accounting Pronouncements
In December 2007, the FASB issued SFAS No. 141®, "Business Combinations" ("SFAS 141IR)"), which replaces SFAS No. 141 SFAS NO. 141® establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any non-controlling interest in the acquiree and the goodwill acquired. The Statement also establishes disclosure requirements which will enable users to evaluate the nature and financial effects of the business combination. SFAS 141® is effective for fiscal years beginning after December 15, 2008. The adoption of SFAS 141® will have impact on accounting for business combinations once adopted, but the effect is dependent upon acquisitions at that time.
In December 2007, the FASB issued SFAS No. 160, "Noncontrolling Interests in Consolidated Financial Statements - an amendment of Accounting Research Bulletin No. 51" ("SFAS 160"), which establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, the amount of consolidated net income attributable to the parent and to the non-controlling interest, changes in a parent's ownership interest, and the valuation of retained non-controlling equity investments when a subsidiary is deconsolidated. The Statement also establishes reporting requirements that provide sufficient disclosures that clearly identify and distinguish between the interests of the parent and the interests of the non-controlling owners. SFAS 160 is effective for fiscal years beginning after December 15, 2008. The Company has not determined the effect that the application of SFAS 160 will have on its consolidated financial statements.
NOTE 3. Related Party Transactions
On May 19, 2006 and June 16, 2006, Herdev S. Rayat, the Company’s President, Chief Executive Officer, Chief Financial Officer and director acquired three mineral claims on the Company's behalf. These mineral claims were held by Mr. Rayat, in trust for the Company. Under the British Columbia Mineral Tenure Act, the title to British Columbia mineral claims can only be held by individuals or British Columbia corporations.
On September 21, 2007 the Company organized a 100% wholly owned Canadian subsidiary incorporated in British Columbia. All mineral titles held in trust by Mr. Rayat were transferred to the Company’s Canadian subsidiary Duke Mountain Resources Canada, Inc., on December 21, 2007. There are a total of seven tenures which are 100% owned by the Company’s subsidiary. The tenures cover a total area of 1,315 hectares. The tenure numbers are 522570, 522607, 525453, 525454, 532950, 535928 and 560684.
On May 13, 2006, the Company completed a private placement with the President and Chief Executive Officer where by 10,000,000 shares were purchased for $10,000 at $0.001 per share.
NOTE 4. Income Taxes
The difference between the statutory federal tax rate and the tax provision of zero recorded by the Company is primarily due to the Company’s full valuation allowance against its deferred tax assets. As of December 31, 2007, Duke Mountain did not have any income for tax purposes and, therefore, no tax liability or expense has been recorded in these financial statements.
The Company has tax losses of approximately $70,000 for the year ended December 31, 2007 which are available to reduce future taxable income. The tax losses expire in 2027. Tax losses of approximately $12,000 were incurred for the period ended December 31, 2006. The tax losses for the period ended December 31, 2006 expire in 2026.
The deferred tax asset associated with the tax loss carry-forward is approximately $10,500 for the year ended December 31, 2007 and approximately $1,900 for the period ended December 31, 2006 for a total of $12,400. A full valuation allowance has been set up against the deferred tax asset and the allowance increased by the amount of the asset that was generated.
NOTE 5. Private Placement
On May 19, 2006, the Company completed a private placement for $50,000 where investors purchased 1,000,000 shares for $0.05 per share. On November 14, 2006 a second private placement was completed for $162,000 where investors purchased 405,000 shares for $0.40 per share.
NOTE 6. Public Offering
On October 31, 2007, the Company completed a public offering for $310,000 where investors purchased 775,000 units for $0.40 per unit (760,000 shares purchased on August 29, 2007 and 15,000 shares purchased on October 31, 2007). Each unit consisted of one common share, one class A warrant to purchase a common share at $0.50 per share for a period of 60 months from date of issuance and one class B warrant to purchase one common share at $0.55 per share for a period of 60 months from date of issuance. Since the Company is not currently trading and has not commenced operations, the warrants are deemed to have no value and are not detachable.
NOTE 7. Warrants
The movement of share purchase warrants can be summarized as follows:
-
-
775,000
$ 0.50
-
$ -
775,000
$ 0.50
-
-
775,000
$ 0.55
-
$ -
775,000
$ 0.55
As of December 31, 2007, the following warrants were outstanding:
(a)
775,000 Class A warrants which entitle the holder to purchase 775,000 common shares of the company at $0.50 each expiring on October 31, 2012
(b)
775,000 Class B warrants which entitle the holder to purchase 775,000 common shares of the company at $0.55 each expiring on October 31, 2012.
No warrants were exercised
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
As a Smaller Reporting Company this item is not required.
ITEM 9:
ITEM 9: CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
We have had no disagreements with our independent auditors with respect to accounting practices, procedures or financial disclosure.
ITEM 9A:
ITEM 9A: CONTROLS AND PROCEDURES.
Report of Management's Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, a company’s principal executive and principal financial officers and effected by a company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
•
Pertain to the maintenance of records that in reasonable detail accurately and
fairly reflect the transactions and dispositions of the assets of the company;
•
Provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with accounting principles generally accepted in the United States, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
•
Provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.
Inherent Limitations over Internal Controls
Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and disposition of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of assets that could have a material effect on the financial statements.
Management, including our Chief Executive Officer and Chief Accounting Officer, does not expect that our internal controls will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of internal controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Also, any evaluation of the effectiveness of controls in future periods are subject to the risk that those internal controls may become inadequate because of changes in business conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Evaluation of Disclosure Controls and Procedures
As required by Rule 13a-15(c) promulgated under the Exchange Act, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our internal control over financial reporting as of December 31, 2007. Management’s assessment was based on criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated Framework (“COSO”). Based upon management’s assessment using the criteria contained in COSO, and for the reasons discussed below, our management has concluded that, as of December 31, 2007, our internal control over financial reporting was not effective.
Under the rules promulgated by the US Securities and Exchange Commission (the “SEC”), the term “material weakness” means a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the registrant’s annual or interim financial statements will not be prevented or detected on a timely basis. A material weakness in internal control over financial reporting does not imply that a material misstatement of the financial statements has occurred, but rather, that there is a reasonable possibility that a material misstatement could occur. Controls for financial close and reporting were in place as of year-end and were found to be operating effectively based on management testing of key controls; however, management re-evaluated the results of testing due to certain findings discovered during the year-end audit by our independent registered public accounting firm. Due to these audit findings relating to financial close and reporting, controls in financial close and reporting were not operating effectively as of December 31, 2007.
ITEM 9B.
ITEM 9B. OTHER INFORMATION.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subjected to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this annual report.
PART III
ITEM 10:
ITEM 10: DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
Set forth below is certain information regarding each of the directors and officers of the Company:
Herdev S. Rayat - President, Director and Chief Executive Officer. Since 1994, Mr. Rayat has served as President of Thor-West Management Group, Inc., a privately held management and consulting Company. Since 2003, Mr. Rayat has served as President of First Avenue Venture Partners, Inc., a privately held Company specializing in investing in early stage ventures. Mr. Rayat is a former founder of E.Deal.net, Inc; a publicly traded Company now named International Energy, Inc. Mr. Rayat is neither an officer or director of International Energy, Inc.
Greg R. Thomson - Director. Mr. Thomson has been a professional geologist since 1992. Mr. Thomson graduated from the University of British Columbia in 1970 with a Bachelor of Science degree in Geology. From 1989 to 2000 Mr. Thomson worked for Teck Exploration Ltd., as a senior project geologist. From May 2000 to present Mr. Thomson has been a consultant to junior and senior mining exploration companies as a contract exploration geologist. Mr. Thomson is not a director or officer of any other public company.
We do not currently pay our officers or directors any salary or consulting fees. Mr. Thomson received $500 per report, or $1,500 in the aggregate (paid by Laird Exploration Ltd.), in connection with his work in the preparation of the Summary Reports on each of our properties; Mr. Thomson received these payments prior to his joining our board of directors on September 15, 2006.
Meetings of the Board of Directors
Our directors are expected to attend meetings of the Board. Our directors are expected to spend the time needed at each meeting and to meet as frequently as necessary to properly discharge their responsibilities. We encourage members of our Board of Directors to attend annual meetings of stockholders, but we do not have a formal policy requiring them to do so. Our Board of Directors met in person 5 times and acted by unanimous written Minutes 2 times during the year ended December 31, 2007. Through December 31, 2007, our Board of Directors consisted solely of Mr. Herdev S. Rayat, our President, Chief Executive Officer, Chief Financial Officer, and Mr. Greg R. Thomson.
Director Compensation
Directors did not receive any compensation for serving as such in 2007. We may establish an appropriate compensation plan for such directors commencing in the fiscal year ending on December 31, 2008.
Director Liability and Indemnification
Our officers and directors are indemnified as provided by the Nevada Revised Statutes and our bylaws.
Under the governing Nevada statutes, director immunity from liability to a company or its shareholders for monetary liabilities applies automatically unless it is specifically limited by a company’s articles of incorporation. Our Articles of Incorporation do not contain any limiting language regarding director immunity from liability. Excepted from this immunity are:
·
a willful failure to deal fairly with the company or its shareholders in connection with a matter in which the director has a material conflict of interest;
·
a violation of criminal law (unless the director had reasonable cause to believe that his or her conduct was lawful or no reasonable cause to believe that his or her conduct was unlawful);
·
a transaction from which the director derived an improper personal profit; and
·
willful misconduct.
Our bylaws provide that we will indemnify our directors and officers to the fullest extent not prohibited by Nevada law; provided, however, that we may modify the extent of such indemnification by individual contracts with our directors and officers; and, provided further, that we shall not be required to indemnify any director or officer in connection with any proceeding (or part thereof) initiated by such person unless:
·
such indemnification is expressly required to be made by law;
·
the proceeding was authorized by our board of directors;
·
such indemnification is provided by us, in our sole discretion, pursuant to the powers vested in us under Nevada law; or
·
such indemnification is required to be made pursuant to the bylaws.
Our bylaws provide that we will advance to any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director or officer of the company, or is or was serving at the request of the company as a director or executive officer of another company, partnership, joint venture, trust or other enterprise, prior to the final disposition of the proceeding, promptly following request therefore, all expenses incurred by any director or officer in connection with such proceeding upon receipt of an undertaking by or on behalf of such person to repay said amounts if it should be determined ultimately that such person is not entitled to be indemnified under our bylaws or otherwise.
Our bylaws provide that no advance shall be made by us to an officer of the company, except by reason of the fact that such officer is or was a director of the company in which event this paragraph shall not apply, in any action, suit or proceeding, whether civil, criminal, administrative or investigative, if a determination is reasonably and promptly made: (a) by the board of directors by a majority vote of a quorum consisting of directors who were not parties to the proceeding, or (b) if such quorum is not obtainable, or, even if obtainable, a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, that the facts known to the decision-making party at the time such determination is made demonstrate clearly and convincingly that such person acted in bad faith or in a manner that such person did not believe to be in or not opposed to the best interests of the company.
Board Committees
We do not have an audit committee of our board of directors, nor do we have an audit committee financial expert. Furthermore, our equity securities are not listed on an exchange or automated quotation system that requires its listed companies to appoint an audit committee.
Accordingly, our entire Board of Directors has direct responsibility of reviewing the financial information proposed to be provided to stockholders and others, the internal control systems and disclosure controls established by management, internal controls over financing reporting, and the audit process and the independent auditors’ qualifications, independence and performance.
Code of Ethics
We have adopted a Code of Conduct and Ethics that applies to our principal executive officer or principal financial officer, or persons performing similar functions, as well as to all our directors, officers and employees. Our Code of Conduct and Ethics is posted on our Internet website. Our Internet website is www.dukemountain.com. We intend to post on our website any amendment to, or waiver from, any provision of our Code of Conduct and Ethics that applies to our principal executive officer, principal financial officer, principal accounting or other persons performing similar functions that relates to any element of our Code regarding: (1) honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; (2) full, fair, accurate, timely and understandable disclosure in our reports and other filings with the SEC or our public communications; (3) compliance with applicable governmental laws, rules and regulations; (4) prompt internal reporting of the violations of our code to an appropriate person identified in our code; and (5) accountability for adherence to our code.
ITEM 11:
ITEM 11: EXECUTIVE COMPENSATION.
Remuneration and Executive Compensation
The following table shows, for the two-year period ended December 31, 2007, the cash compensation paid by the Company, as well as certain other compensation paid for such year, to the Company's Chief Executive Officer and the Company's other most highly compensated executive officers. Except as set forth on the following table, no executive officer of the Company had a total annual salary and bonus for 2007 that exceeded $100,000.
Summary Compensation Table
Securities
Underlying
Name and
Options
All Other
Principal Position Year Salary Bonus
Other(1)
Granted Compensation
Herdev S. Rayat
$0
$0
$0
$0
President, CEO
$0
$0
$0
$0
Secretary, Treasurer
And Director
Greg R. Thomson
$0
$0
$1,500 0
$0
Director
$0
$0
$0
$0
(1) Mr. Thomson received this fee prior to becoming a Director
Stock Option Grants in Last Fiscal Year
Shown below is further information regarding employee stock options awarded during 2007 to the named officers and directors:
Number of
% of Total
Securities
Options Granted
Underlying
to Employees
Exercise
Expiration
Name
Options
in 2007
Price ($/sh)
Date
Herdev S. Rayat
0%
n/a
n/a
Greg R. Thomson
n/a
n/a
Aggregated Option Exercises During Last Fiscal Year and Year End Option Values
The following table shows certain information about unexercised options at year-end with respect to the named officers and directors:
Common Shares Underlying Unexercised
Value of Unexercised In-the-money
Options on December 31, 2007
Options on December 31, 2007
Name
Exercisable
Unexercisable
Exercisable
Unexercisable
Herdev S. Rayat
Greg R. Thomson
Changes in Control
There are no understandings or agreements, aside from the transaction completed and described under “Certain Relationships and Related Transactions, and Director Independence” known by management at this time which would result in a change in control of the Company. If such transactions are consummated, of which there can be no assurance, the Company may issue a significant number of shares of capital stock which could result in a change in control and/or a change in the Company’s current management.
ITEM 12:
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
The following table sets forth, as of December 31, 2007, the beneficial ownership of the Company's Common Stock by each director and executive officer of the Company and each person known by the Company to beneficially own more than 5% of the Company's Common Stock outstanding as of such date and the executive officers and directors of the Company as a group.
Number of Shares
Person or Group
of Common Stock
Percentage
Herdev S. Rayat
10,000,000
82%
1990 Tolmie Street
Vancouver, BC V6R 4C2
Greg R. Thomson
0%
40-21928 - 48th Avenue
Langley, BC V3A 8H1
Directors and Executive Officers
10,000,000
82%
as a group ( 2 persons)
ITEM 13:
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
Related Transactions
On May 19, 2006 and June 16, 2006, Herdev S. Rayat, the Company’s President, Chief Executive Officer, Chief Financial Officer and director acquired three mineral claims on the Company's behalf. These mineral claims were held by Mr. Rayat, in trust for the Company. Under the British Columbia Mineral Tenure Act, the title to British Columbia mineral claims can only be held by individuals or British Columbia corporations.
On September 21, 2007 the Company organized a 100% wholly owned Canadian subsidiary incorporated in British Columbia. All mineral titles held in trust by Mr. Rayat were transferred to the Company’s Canadian subsidiary Duke Mountain Resources Canada, Inc., on December 21, 2007. There are a total of seven tenures which are 100% owned by the Company’s subsidiary. The tenures cover a total area of 1,315 hectares. The tenure numbers are 522570, 522607, 525453, 525454, 532950, 535928 and 560684.
On May 13, 2006, the Company completed a private placement with the President and Chief Executive Officer pursuant to which 10,000,000 shares were purchased for $10,000 at $0.001 per share.
Review, Approval or Ratification of Related Party Transactions
We do not maintain a formal written procedure for the review and approval of transactions with related persons. It is our policy for the disinterested members of our board to review all related party transactions on a case by case basis. To receive approval, a related-party transaction must have a business purpose for us and be on terms that are fair and reasonable to us and as favorable to us as would be available from non-related entities in comparable transactions.
Director Independence
Our equity securities are not listed on an exchange or automated quotation system that requires its listed companies to have independent directors.
Under the Nasdaq rules, a majority of the board of directors must be comprised of independent directors as defined in Nasdaq Rule 4200. Under Nasdaq Rule 4200(a)(15), an "Independent director" means a person other than an executive officer or employee of the company or any other individual having a relationship which, in the opinion of the issuer's board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The rule then sets forth a list of persons who are not considered independent under these rules. Audit committee members are subject to additional, more stringent requirements under Nasdaq Rule 4350(d). Audit committee members must: (i) be independent as defined under Rule 4200; (ii) meet the criteria for independence set forth in Rule 10A-3(b)(1) under the Securities Exchange Act of 1934 (subject to the exemptions provided in Exchange Act Rule 10A-3(c)); (iii) not have participated in the preparation of the financial statements of the company or any current subsidiary of the company at any time during the past three years; and (iv) be able to read and understand fundamental financial statements, including a company's balance sheet, income statement, and cash flow statement. None of our current directors can be deemed independent under the Nasdaq rules and our company does not have separately designated audit, compensation or nominating committees.
ITEM 14:
ITEM 14: PRINCIPAL ACCOUNTANT FEES AND SERVICES.
The firm of Peterson Sullivan, PLLC currently serves as the Company’s independent accountants. They have served as our independent auditors since inception. The Board of Directors of the Company, in its discretion, may direct the appointment of different public accountants at any time during the year, if the Board believes that a change would be in the best interests of the stockholders. The Board of Directors has considered the audit fees, audit-related fees, tax fees and other fees paid to the Company's accountants, as disclosed below, and had determined that the payment of such fees is compatible with maintaining the independence of the accountants.
Audit Fees: The aggregate fees, including expenses, billed by our principal accountant in connection with the audit of our consolidated financial statements for the most recent fiscal year and for the review of our financial information included in our Annual Report on Form 10-K and our quarterly reports on Form 10-Q during the fiscal years ending December 31, 2007 and December 31, 2006 were $5,708 and $8,291 respectively.
Tax fees: The aggregate fees billed to us for tax compliance, tax advice and tax planning by our principal accountant for fiscal 2007 and 2006 were $0.
We do not currently have an audit committee.
ITEM 15:
ITEM 15: EXHIBITS, FINANCIAL STATEMENT SCHEDULE
(a) The following exhibits are filed as part of this Annual Report:
31.1
Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)
31.2
Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)
32.1
Certification by the Chief Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2
Certification by the Chief Financial Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
SIGNATURES
Pursuant to the requirements of Sections 13 or 15 (d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this amendment to its report on Form 10-K for the fiscal year ended December 31, 2007, to be signed on its behalf by the undersigned, thereunto duly authorized on this 14th day of April, 2008.
Duke Mountain Resources, Inc.
/s/ Herdev S Rayat
Herdev S. Rayat
President and CEO
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in capacities and on the dates indicated.
Signature
Title
Date
/s/ Herdev S. Rayat
Director , President,
April 14, 2008
Herdev S. Rayat
Chief Executive Officer
/s/ Greg R. Thomson
Director
April 14, 2008
Greg R. Thomson