ITEM 1. BUSINESS
DESCRIPTION OF BUSINESS
Overview
We are a precious metal mineral acquisition, exploration and development company, formed in Nevada on January 30, 2007. At the time of our incorporation, we were incorporated under the name “C.E. Entertainment, Inc.,” and our original business plan was to engage in the sales and marketing of Ukrainian classical music. On May 19, 2009, we changed our name to American Sierra Gold Corp. by way of a merger with our wholly-owned subsidiary, American Sierra Gold Corp., which was formed solely for the purpose of changing our name. In addition to the name change, we changed our intended business purpose to that of precious metal mineral exploration, development and production.
Further, effective May 19, 2009, we conducted a 40:1 forward stock split of our issued and outstanding common stock. As a result, our authorized capital stock increased from 50,000,000 shares of common stock, $0.001 par value per share, to 2,000,000,000 shares of common stock, $0.001 par value per share. Effective May 30, 2012, we conducted a 1:15 reverse stock split of our issued and outstanding stock. As a result our authorized capital stock decreased from 2,000,000,000 shares of common stock, $0.001 par value per share, to 133,333,334 shares of common stock, $0.001 par value per share. Unless specifically stated otherwise, all share amounts referenced herein, refer to post-reverse stock split share amounts. As of October 24, 2013, we had 29 shareholders of record.
Mining Properties and Projects
Our primary business focus is to evaluate, acquire, explore and develop gold properties in North America. In November 2010, we acquired and began work on one project that consists of six mineral claims in the Adams Ridge area of British Columbia, Canada (the “Adams Ridge Claims”). We are in the exploration stage with respect to the Adams Ridge Claims. Despite exploration work on the Adams Ridge Claims, we have not established that there are any mineral reserves, nor can there be any assurance that we will be able to do so.
A “mineral reserve” is defined by the Securities and Exchange Commission in its Industry Guide 7 (which can be viewed over the Internet at http://www.sec.gov/divisions/corpfin/forms/industry.htm#secguide7) as that part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination. The probability of an individual prospect ever having a “reserve” that meets the requirements of the Securities and Exchange Commission's Industry Guide 7 is extremely remote; in all probability our mineral resource property does not contain any 'reserve' and any funds that we spend on exploration will probably be lost.
To obtain a Free Miner's Certificate, which is required to hold a mining claim in British Columbia, Section 8(1) of the B.C. Mineral Tenure Act (MTA) stipulates that a corporation must be registered under the British Columbia Business Corporations Act. Section 8(2) of the MTA stipulates that an individual applicant must either be a resident of Canada or be authorized to work in Canada. As the Company is not registered in British Columbia, our Adams Ridge Claims are held in trust for the Company by Carl Von Einsiedel, trustee of the BC Land Trust. The mineral title claims have been registered with the Government of British Columbia. A copy of the trust agreement is incorporated herein by reference as Exhibit 10.10.
Sources of Available Mineral Resource Properties
There are at least five sources of mineral resource properties available for exploration, development and mining: (i) those on public lands; (ii) those on private fee lands; (iii) unpatented mining claims; (iv) patented mining claims; and (v) those on tribal lands. The primary sources for acquisition of these claims are the United States government, through the Bureau of Land Management and the United States Forest Service, state and Canadian Provincial governments, tribal governments, and individuals or entities that currently hold title to or lease government and private lands.
Private fee lands are properties that are controlled by fee-simple title by private individuals or corporations. These properties can be controlled for mining and exploration activities by either leasing or purchasing the surface and subsurface rights from the private owner. Unpatented mining claims located on public land owned by another entity can be controlled by leasing or purchasing the claims outright from the owners.
Patented mining claims are claims that were staked under the General Mining Law, and through application and approval the owners were granted full private ownership of the surface and subsurface estate by the Federal government. These properties can be acquired for exploration and mining through lease or purchase from the owners.
Tribal lands are those lands that are under control by sovereign Native American tribes. Areas that show promise for exploration and mining can be leased or joint ventured with the tribe controlling the land. The Company currently has no mining claims on private fee lands or public land controlled by another entity.
Government Regulation and Mining Claims
Mining operations and exploration activities are subject to various federal, state, provincial and local laws and regulations in the United States and in Canada, which govern prospecting, development, mining, production, exports, taxes, labor standards, occupational health, waste disposal, protection of the environment, mine safety, hazardous substances and other matters.
In the United States, the Federal government owns public lands that are administered by the Bureau of Land Management or the United States Forest Service. Ownership of the subsurface mineral estate can be acquired by staking a twenty (20) acre mining claim granted under the General Mining Law of 1872, as amended (the “General Mining Law”). The Federal government still owns the surface estate even though the subsurface can be controlled with a right to extract through claim staking. As we do not currently own mineral rights on U.S. public lands, our operations are not presently subject to administration by the Bureau of Land Management or the United States Forest Service. If we acquire mineral rights located on U.S. public lands in the future, we would then become subject to such administration since the Bureau of Land Management owns and controls the surface estate on U.S. public lands.
As discussed above, in order to obtain a Free Miner's Certificate, as required British Columbia, Canada under Section 8(1) of the B.C. Mineral Tenure Act (MTA), our Adams Ridge Claims are held in trust for the Company by Carl Von Einsiedel, trustee of the BC Land Trust and registered with the Government of British Columbia.
We are committed to complying with and are, to our knowledge, in compliance with, all governmental and environmental regulations applicable to us and our mineral rights. Permits from a variety of regulatory authorities are required for many aspects of mine operation and reclamation both in the United States and Canada. We cannot predict the extent to which these requirements will affect us or our properties if we identify the existence of minerals in commercially exploitable quantities. In addition, future legislation and regulation could cause additional operating and capital expenditures due to restrictions and delays in our exploration of our resource properties. Since we are still in the exploratory stage, we do not have enough information to know which permits will be required, the specific timeframe for obtaining them, or the cost of the permitting and bonding process.
Competition and Mineral Prices
We compete with other mineral resource exploration companies for financing and for the acquisition of new mineral properties. As the price of gold has increased during recent years, the business of acquiring, developing and/or exploring gold properties is more competitive than ever before. Our competitors include companies with larger staffs, greater resources and equipment and, as such, those companies may be in a better position to compete for mineral properties. This competition could result in competitors having mineral properties of greater quality and interest to prospective investors who may finance additional exploration. This competition could adversely impact on our ability to finance further exploration and, if we find mineral reserves, to achieve the financing necessary for us to extract the minerals. In order to effectively compete with such companies, we need to raise a significant amount of additional capital. The competitive nature of the operational and industry risks we face are discussed further in the item entitled “Risk Factors,” below.
R&D Expenditures and Intellectual Property
We are not currently conducting any research and development activities. We do not currently own any patents or trademarks. Also, we are not a party to any license or franchise agreements, concessions, royalty agreements or labor contracts arising from any patents or trademarks.
Employees
As of October 24, 2013, we had no full or part time employees other than our directors and officers. We engage contractors from time to time to consult with us on specific corporate affairs or to perform specific tasks in connection with our acquisition and exploration activities.
Government Compliance
ASGC does need government approval for its precious metal mineral exploration, development and production activities.
Governing Legislation and Required Permitting
The Ministry of Energy and Mines is responsible for approving mineral exploration and mine project proposals in British Columbia. In order to obtain a Mines Act (Mines Act RSBC 1996 Chapter 293) (the “Act”) permit for a mine or exploration project, proponents must submit an application to the appropriate Regional Office.
The Environmental Assessment Act (“EAA”) was proclaimed in 1995 and replaces the Mine Development Review Process. The EAA applies to new mine developments (or modifications to existing mines) meeting threshold criteria established under the EAA. Proposed mining developments which meet or exceed the threshold criteria of the EAA require a Project Approval Certificate under the Act prior to issuance of a Mines Act Permit (see Table 1.1 below). The first step involves the proponent’s submission of an Application for a Project Approval Certificate to the Executive Director of the Environmental Assessment Office. The Executive Director screens the Application to ensure that it is complete and acceptable for review. If the Application is accepted, the Executive Director establishes a Project Committee. The Project Committee reviews the application and considers comments from the public and other interested agencies. Based on this review, the Project Committee then recommends to the Ministers of Energy, Mines and Petroleum Resources and the Minister of Environment that the project be approved or rejected, or requests a detailed Project Report from the proponent
Permit applications for projects under the EAA may be submitted concurrently with the Project Report; however, a Project Approval Certificate must be obtained prior to Mines Act permit issuance. No work is permitted on a mine site without a valid Mines Act Permit. Before starting any work in, on or about a mine, the owner, agent, manager or any other person must hold a permit issued by the chief inspector and, as part of the application for the permit, there must be filed with an inspector a plan outlining the details of the proposed work and a program for the conservation of cultural heritage resources and for the protection and reclamation of the land, watercourses and cultural heritage resources affected by the mine, including the information, particulars and maps established by the regulations or the code.
In general, the information requirements under the Code for a Major Mine Mines Act permit application include:
1. a map or air photo showing the location and extent of the mine;
2. particulars of the design, construction, operation and closure of mine components, taking into consideration the safety of the public, mine workers, and the protection of the environment;
3. particulars of the nature and present uses of the land to be used for the mine;
4. particulars of the nature of the mine and the extent of the area to be occupied by the mine;
5. a program for the protection and reclamation of the land and watercourses during the construction and operational phases of the mining operation;
6. a conceptual final reclamation plan for the closure or abandonment of the mining operation;
7. an estimate of the annual cost of outstanding reclamation obligations over the planned life of the mine including the cost of long-term monitoring and abatement; and
8. any other relevant information that may be required by an Inspector.
If the chief inspector considers the application for a permit is satisfactory, the chief inspector may issue the permit and the permit may contain conditions that the chief inspector considers necessary.
ASGC has not begun the process for obtaining the necessary permits to explore their properties and, therefore, have not spent any money on the permitting process. Funds received, to date, have been used to accumulate properties.
Associated Risks
In the ordinary course of business, mining companies are required to seek governmental and lessor approvals and permits for expansion of existing operations or for the commencement of new operations. Obtaining the necessary governmental permits is a complex and time-consuming process involving numerous jurisdictions and often involving public hearings and costly undertakings on our part. The duration and success of our efforts to obtain permits are contingent upon many variables not within our control. Obtaining environmental protection permits, including the approval of reclamation plans, may increase costs and cause delays depending on the nature of the activity to be permitted and the interpretation of applicable requirements implemented by the permitting authority. There can be no assurance that all necessary approvals and permits will be obtained and, if obtained, that the costs involved will not exceed those that we previously estimated.
Our business is subject to extensive Canadian federal, provincial, and local laws and regulations governing development, production, labor standards, occupational health, waste disposal, use of toxic substances, environmental regulations, mine safety and other matters. New legislation and regulations may be adopted at any time that result in additional operating expense, capital expenditures or restrictions and delays in the mining, production or development of our properties.
Table 1.1
Project Category
New Facility Threshold
Facility Modification Threshold
Coal Mines
Any new mine with 250,000 tonnes of clean and/or raw coal production/year.
Existing reviewable-scale mine with either 50% or more increase in area of mining disturbance, or 750 ha or more new disturbance.
Mineral Mines
Any new mine with 75,000 tonnes of mineral ore production/year.
Existing reviewable-scale mine with either 50% or more increase in area of mining disturbance, or 750 ha or more new disturbance.
Sand and Gravel Pits
Any new pit with 500,000 tonnes of sand and/or gravel production/year or 1,000,000 tonnes over 4 years.
Existing reviewable-scale pit with 35% or more increase in area of mining disturbance.
Placer Gold Mines
Any new placer operation with production of 500,000 tonnes of pay-dirt/year.
Existing reviewable-scale operation with 35% or more increase in area of mining disturbance.
Construction Stone & Industrial Mineral Quarries
Any new quarry with production of 250,000 tonnes of quarried product/year.
Existing reviewable-scale operation with either 50% or more increase in area of mining disturbance, or 750 ha or more new disturbance.
Off-shore Mining Activity
Any mineral exploration or production which disturbs the foreshore or sea floor in salt water.
Any modification of an existing operation.
ITEM 1A.
ITEM 1A. RISK FACTORS
We have sought to identify what we believe to be the most significant risks to our business, but we cannot predict whether, or to what extent, any of the risks presented below may be realized nor can we guarantee that we have identified all possible risks that might arise. Investors should carefully consider all such risk factors before investing in the Company. If events anticipated by any of the following risks actually occur, our business, operating results or financial condition could suffer and the price of our common stock could decline.
RISKS ASSOCIATED WITH OUR BUSINESS
We Have a Limited Operating History with Significant Losses and Expect Losses to Continue for the Foreseeable Future.
We have yet generated any revenues and have incurred material net losses for the past three fiscal years. We do not expect to generate revenues that will sustain our operations for the foreseeable future. Our profitability depends upon finding mineral reserves and our successful commercialization of those reserves. For further discussion regarding our financial operating results, see Item 7 below entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.
There Are Doubts About Our Ability to Continue as a Going Concern.
Due to recurring losses and no revenues from operations, accumulated debt and insufficient cash reserves and limited alternative sources of capital to implement our business, we may not be able to continue operating. We have generated net losses since inception, and our cash resources are insufficient to meet our planned business objectives, which together raises doubt about our ability to continue as a going concern.
We May Not Be Able to Secure Additional Financing When and as Needed.
We need significant capital to conduct exploration activities at our Adams Ridge Claims. If we obtain sufficient funding to conduct such exploration activities and if mineral reserves are found, we may not have sufficient capital available to extract the mineral reserves. Production of mineral reserves will require skilled geologists, mappers, drillers, engineers and other technical personnel, which will require adequate funding.
Any sustained weakness in the general economic conditions and/or financial markets in the United States or globally could adversely affect our ability to raise capital on favorable terms or at all. From time to time we have relied, and may also rely in the future, on access to financial markets as a source of liquidity to satisfy working capital requirements and for general corporate purposes. We may be unable to secure debt or equity financing on terms acceptable to us, or at all, at the time when we need such funding. If we do raise funds by issuing additional equity or convertible debt securities, the ownership percentages of existing shareholders would be reduced, and the securities that we issue may have rights, preferences or privileges senior to those of the holders of our common stock or may be issued at a discount to the market price of our common stock which would result in dilution to our existing shareholders. If we raise additional funds by issuing debt, we may be subject to debt covenants, which could place limitations on our operations including our ability to declare and pay dividends. Our inability to raise additional funds on a timely basis would make it difficult for us to achieve our business objectives and would have a negative impact on our business, financial condition and results of operations.
Our Lack of Diversification Will Increase the Risk of an Investment in the Company, and Our Financial Condition and Results of Operations May Deteriorate If We Fail to Diversify.
Our business focus is on the mining of precious minerals industry in a limited number of claims in British Columbia, Canada. Larger companies have the ability to manage their risk by diversification. However, we lack diversification, in terms of both the nature and geographic scope of our business. As a result, we will likely be impacted more acutely by factors affecting our industry or the regions in which we operate than we would if our business were more diversified, enhancing our risk profile. If we do not diversify our operations, our financial condition and results of operations could deteriorate.
We May Not Have Access to the Supplies and Materials Needed for Exploration, Which Could Cause Delays or Suspension of Our Operations.
If we are able to commence exploration activities, competitive demands for contractors and unforeseen shortages of supplies and/or equipment could result in the disruption of such activities. Current demand for exploration drilling services, equipment and supplies is robust and could result in suitable equipment and skilled manpower being unavailable at scheduled times in our exploration programs. If we cannot find the equipment and supplies needed for our various exploration programs, we may have to suspend some or all of them until equipment, supplies, funds and/or skilled manpower can be obtained.
An Unsuccessful Material Strategic Transaction or Relationship Could Result in Operating Difficulties and Other Harmful Consequences to Our Business.
We have evaluated, and expect to continue to evaluate, a wide array of potential strategic transactions and relationships with third parties. From time to time, we may engage in discussions regarding potential acquisitions or joint ventures. Any of these transactions could be material to our financial condition and results of operations, and the failure of any of these material relationships and transactions may have a material negative financial impact on our business and our results of operations.
Subsequent to year ended July 31, 2010, the Company abandoned its mineral property interests and joint venture project with Trinity Alps Resources, Inc.
RISKS ASSOCIATED WITH OUR INDUSTRY
Environmental Controls Could Curtail or Delay Exploration and, If Mineral Reserves are Found, Development of Our Mines and Impose Significant Costs on Us.
We are required to comply with numerous environmental laws and regulations imposed and enforced by foreign, federal, provincial, state and local authorities. At the federal level, legislation such as the Clean Water Act, the Clean Air Act, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response Compensation Liability Act and the National Environmental Policy Act impose effluent and waste standards, performance standards, air quality and emissions standards and other design or operational requirements for various components of mining and mineral processing, including gold and silver mining and processing. In addition, insurance companies are now requiring additional cash collateral from mining companies in order for the insurance companies to issue a surety bond. This addition of cash collateral for a bond could have a significant impact on our ability to bring properties into production.
Many states have also adopted regulations that establish design, operation, monitoring, and closing requirements for mining operations. Under these regulations, mining companies are required to provide a reclamation plan and financial assurance to ensure that the reclamation plan is implemented upon completion of mining operations. Additionally, Nevada and other states require mining operations to obtain and comply with environmental permits, including permits regarding air emissions and the protection of surface water and groundwater. Although we believe that the mining properties we currently have an interest in are in compliance with applicable federal and state environmental laws, changes in those laws and regulations may necessitate significant capital outlays or delays, may materially and adversely affect the economics of a given property, or may cause material changes or delays in our intended exploration, and if we find mineral reserves, development and production activities. Any of these results could force us to curtail or cease our business operations.
Development and Operation of Mining Projects Involve Numerous Uncertainties.
Mine development projects typically require a number of years and significant expenditures during the development phase before production is possible.
Mining development projects are subject to the completion of successful feasibility studies, issuance of necessary governmental permits and receipt of adequate financing. The economic feasibility of development projects is based on many factors such as:
•
estimation of reserves;
•
anticipated metallurgical recoveries;
•
future gold and silver prices; and
•
anticipated capital and operating costs of such projects.
If mineral reserves are found, our mine development projects may have limited relevant operating history upon which to base estimates of future operating costs and capital requirements. Estimates of proven and probable reserves and operating costs determined in feasibility studies are based on geologic and engineering analyses.
Any of the following events, among others, could affect the profitability or economic feasibility of a project:
•
unanticipated changes in grade and tonnage of material to be mined and processed;
•
unanticipated adverse geotechnical conditions;
•
incorrect data on which engineering assumptions are made;
•
costs of constructing and operating a mine in a specific environment;
•
availability and cost of processing and refining facilities;
•
availability of economic sources of power;
•
adequacy of water supply;
•
adequate access to the site;
•
unanticipated transportation costs;
•
government regulations (including regulations relating to prices, royalties, duties, taxes, restrictions on production, quotas on exportation of minerals, as well as the costs of protection of the environment and agricultural lands);
•
fluctuations in metal prices; and
•
accidents, labor actions and force majeure events.
Any of the above referenced events may necessitate significant capital outlays or delays, may materially and adversely affect the economics of a given property, or may cause material changes or delays in our intended exploration, development and production activities. Any of these results could force us to curtail or cease our business operations.
Mineral Exploration is Highly Speculative, Involves Substantial Expenditures, and is Frequently Non-Productive.
Mineral exploration involves a high degree of risk and exploration projects are frequently unsuccessful. Few prospects that are explored end up being ultimately developed into producing mines. To the extent that we continue to be involved in mineral exploration, the long-term success of our operations will be related to the cost and success of our exploration programs. We cannot assure you that our mineral exploration efforts will be successful. The risks associated with mineral exploration include:
•
the identification of potential economic mineralization based on superficial analysis;
•
the quality of our management and our geological and technical expertise; and
•
the capital available for exploration and development.
Substantial expenditures are required to determine if a project has economically mineable mineralization. It may take several years to establish proven and probable reserves and to develop and construct mining and processing facilities. Because of these uncertainties, our current and future exploration programs may not result in the discovery of reserves, the expansion of our existing reserves or the further development of our mines.
The Prices of Gold and Silver are Highly Volatile And A Decrease in the Price of Gold or Silver Would Have A Material Adverse Effect on Our Business.
The profitability of mining operations is directly related to the market prices of metals. The market prices of metals fluctuate significantly and are affected by a number of factors beyond our control, including, but not limited to, the rate of inflation, the exchange rate of the dollar to other currencies, interest rates, and global economic and political conditions. Price fluctuations of metals from the time development of a mine is undertaken to the time production can commence can significantly affect the profitability of a mine. Accordingly, we may begin to develop one or more of our mining properties at a time when the price of metals makes such exploration economically feasible and, subsequently, incur losses because the price of metals decreases. Adverse fluctuations of the market prices of metals may force us to curtail or cease our business operations.
Insurance Costs Could Have an Adverse Effect on Our Profitability.
Our operations are subject to all of the operating hazards and risks normally incident to exploring for and developing mineral properties, such as unusual or unexpected geological formations, environmental pollution, personal injuries, flooding, cave-ins, changes in technology or mining techniques, periodic interruptions because of inclement weather and industrial accidents. Although maintenance of insurance to ameliorate some of these risks is part of our proposed exploration program associated with those mining properties we have an interest in, such insurance may not be available at economically feasible rates or in the future be adequate to cover the risks and potential liabilities associated with exploring, owning and operating our properties. Either of these events could cause us to curtail or cease our business operations.
Due to the Uncertain Nature of Exploration, There is a Substantial Risk That We May Not Find Economically Exploitable Reserves of Gold and/or Silver.
The search for valuable minerals is an extremely risky business. We do not know whether the claims and properties that we have optioned contain commercially exploitable reserves of gold and/or silver. The likelihood of success must be considered in light of the costs, difficulties, complications, problems and delays encountered in connection with the exploration of mineral properties. These potential problems include, but are not limited to, additional costs and unanticipated delays and expenses that may exceed current estimates.
Even if we do eventually discover a mineral reserve on one or more of our properties, there can be no assurance that we will be able to develop the property into a producing mine and extract those resources. Both mineral exploration and development involve a high degree of risk and few properties which are explored are ultimately developed into producing mines.
The commercial viability of an established mineral deposit will depend on a number of factors including, by way of example, the size, grade and other attributes of the mineral deposit, the proximity of the resource to infrastructure such as a smelter, roads and a point for shipping, government regulation and market prices. Most of these factors will be beyond our control, and any of them could increase costs and make extraction of any identified mineral resource unprofitable.
We Face Significant Competition in the Mineral Exploration Industry.
We compete with other mining and exploration companies possessing greater financial resources and technical facilities than we do in connection with the acquisition of exploration properties and leases on prospects and properties and in connection with the recruitment and retention of qualified personnel. Such competition may result in our being unable to acquire interests in economically viable gold and silver exploration properties or qualified personnel.
Our Applications for Exploration Permits May Be Delayed or May Be Denied in the Future.
Exploration activities usually require the granting of permits from various governmental agencies. For exploration drilling on unpatented mineral claims, a drilling plan must be filed with the Bureau of Land Management or the United States Forest Service, which may then take several months or more to grant the requested permit. Similar permits are required in Canada. Depending on the size, location and scope of the exploration program, additional permits may also be required before exploration activities can be undertaken. Prehistoric or Indian grave yards, threatened or endangered species, archeological sites or the possibility thereof, difficult access, excessive dust and important nearby water resources may all result in the need for additional permits before exploration activities can commence. With all permitting processes, there is the risk that unexpected delays and excessive costs may be experienced in obtaining required permits or the refusal to grant required permits may not be granted at all, all of which may cause delays and unanticipated costs in conducting planned exploration activities. Any such delays or unexpected costs in the permitting process could result in serious adverse consequences to the price of our stock and to the value of your investment.
RISKS ASSOCIATED WITH OUR COMMON STOCK
Our Common Stock Is Quoted on the OTCBB, Which May Have an Unfavorable Impact on Our Stock Price and Liquidity.
Our common stock is quoted on the Over-the-Counter Bulletin Board (“OTCBB”). The OTCBB is a significantly more limited market than the New York Stock Exchange or NASDAQ system. The OTCBB market is an inter-dealer market much less regulated than the major exchanges and, therefore, our traded shares of common stock are subject to abuses, volatility and shorting. Thus, there is currently no broadly followed and established trading market for our common stock. An established trading market may never develop or be maintained. Active trading markets generally result in lower price volatility and more efficient execution of buy and sell orders. Absence of an active trading market reduces the liquidity of the shares traded there, which may make it difficult to sell your shares of our common stock within any particular time period, for an acceptable price, or at all. Our common stock is considered highly speculative and there is no certainty that our common stock will continue to be listed for trading on the OTCBB or on any other form of quotation system or stock exchange.
The Market Price of Our Common Stock is Highly Volatile, Which Could Hinder Our Ability to Raise Additional Capital.
The market price of our common stock has been and is expected to continue to be highly volatile. Factors, including regulatory matters, concerns about our financial condition, operating results, litigation, government regulation, developments or disputes relating to agreements, title to our properties or proprietary rights, may have a significant impact on the market price of our stock. In addition, potential dilutive effects of future sales of shares of common stock by shareholders and by us, and subsequent sale of common stock by the holders of warrants and options could have an adverse effect on the price of our securities, which could hinder our ability to raise additional capital to fully implement our business, operating and development plans.
Penny Stock Regulations Affect Our Stock Price, Which May Make It More Difficult For Investors to Sell Their Stock.
Broker-dealer practices in connection with transactions in “penny stocks” are regulated by certain penny stock rules adopted by the SEC. Penny stocks generally are equity securities with a price per share of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ Stock Market, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system). The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, the penny stock rules generally require that prior to a transaction in a penny stock the broker-dealer make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the penny stock rules. Our securities are subject to the penny stock rules, and investors may find it more difficult to sell their securities.
The Existence of Indemnification Rights to Our Directors and Officers May Result in Substantial Expenditures by the Company and May Discourage Lawsuits Against Our Directors and Officers.
Our organizational documents contain provisions that limit the liability of our Directors for monetary damages and provide for indemnification of our executive officers and Directors. These provisions may discourage shareholders from bringing a lawsuit against our Directors and officers for breaches of fiduciary duty and may also reduce the likelihood of derivative litigation against our Directors and officers even though such action, if successful, might otherwise have benefited the shareholders. In addition, a shareholder’s investment in the Company may be adversely affected to the extent that costs of settlement and damage awards against our officers or Directors are paid by the Company pursuant to the indemnification provisions in the Company’s governing documents. The impact on a shareholder’s investment in terms of the cost of defending a lawsuit may deter the shareholder from bringing suit against one of our officers or directors. We have been advised that the United States Securities and Exchange Commission (“SEC”) takes the position that these provisions do not affect the liability of any officer or director under applicable federal and state securities laws.
ITEM 1B.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2.
ITEM 2. PROPERTIES
In 2010, ASGC made arrangements to use space occupied by Mr. James Vandeberg, a former Director and officer and current advisor of ASGC. ASGC paid $500 per month for use of this space as its principal corporate offices from April 1, 2011 to July 31, 2011. Mr. Vandeberg donated his office space for use by ASGC until April of 2013 when Mr. Larry Regis was appointed as Director and officer of ASGC. Mr. Regis also serves as Director and officer as Medinah Gold, Inc.
We currently have a 100% interest in six mineral claims in the Adams Ridge area of British Columbia. For more information about these claims, see the section of above entitled “Overview” above.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
We are not aware of any pending or threatened legal proceedings against us or our officers and directors in their capacity as such.
ITEM 4.
ITEM 4. MINE SAFETY DISCLOSURES
ASCG has no mine safety violations or other regulatory matters requiring disclosure under Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
PART II
ITEM 5.
ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock has traded on the Over-the-Counter Bulletin Board (“OTCBB”) since October 12, 2009, initially under the symbol “CENI.OB”. Our common stock currently trades under the symbol “AMNP.OB.” The following table represents the range of the high and the low closing prices, as quoted on the OTC Bulletin Board for each fiscal quarter during the fiscal years ended July 31, 2013 and July 31, 2012, respectively. These quotations represent prices between dealers, and may not include retail mark-ups, markdowns or commissions, and may not necessarily represent actual transactions.
Dividends
We have neither declared nor paid any cash dividends on our capital stock and do not anticipate paying cash dividends in the foreseeable future. Our current policy is to retain any earnings in order to finance our operations. Our Board of Directors will determine future declaration and payment of dividends, if any, in light of our then-current financial condition.
Securities Authorized for Issuance under Equity Compensation Plans
As of July 31, 2013, we have not granted any stock options or authorized securities for issuance under an equity compensation plan.
Holders
As of October 24, 2013, we had approximately 29 holders of record of common stock and 51,231,685 shares of our common stock were issued and outstanding, with no additional shares reserved for issuance.
Recent Sales of Unregistered Securities
In April 2013, our Board of Directors approved the appointment of three directors and executive officers, who were directors and executive officers of Medinah Gold, Inc., and ASGC’s former sole officer and director resigned. We have also changed our primary business address from Seattle, Washington to that of Medinah Gold, Inc. in Beaverton, Oregon. In connection with services to be provided as directors, in April 2013, we agreed to issue 2,000,000 shares of our common stock to each of the three new directors, which shares were issued in May 2013. Additionally, commencing in December 2012 through April 2013, in exchange for cash of approximately $185,000, including previously loaned, we issued 3,300,000 shares of our common stock to the majority owner of Medinah Gold, Inc.and one of the Company’s Advisors. As a result, owners of our common stock as of July 31, 2013, that previously did not own shares, now own a majority of the Company’s common stock.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
This information is not required because we are a smaller reporting company.
ITEM 7.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
We are a precious metal mineral acquisition, exploration and development company, formed in Nevada on January 30, 2007. Our primary business focus is to acquire, explore and develop gold properties in North America. As discussed previously in this Annual Report, we recently acquired six mineral claims in the Adams Ridge area of British Columbia. The Adams Ridge Claims are the only claims we own. We are in the exploration stage with limited operating history and no revenues from our business activities.
On May 19, 2009, we conducted a 40:1 forward stock split of our issued and outstanding common stock. As a result, our authorized capital increased from 50,000,000 shares of common stock, $0.001 par value per share, to 2,000,000,000 shares of common stock, $0.001 par value per share.
On May 30, 2012, we conducted a one (1) new for fifteen (15) old reverse stock split of our issued and outstanding shares of common stock on the Over-the-Counter Bulletin Board. As a result, our authorized capital decreased from 2,000,000,000 shares of common stock to 133,333,334 shares of common stock and the issued and outstanding decreased from 91,253,626 shares of common stock to 6,391,730 shares of common stock, all with a par value of $0.001. Unless specifically stated otherwise, all share amounts referenced in this Item 7 will refer to post-forward stock split share amounts.
For additional information on our business, please see Part 1, Item 1 “Business Overview” of this Annual Report.
The following is a discussion and analysis of our plan of operation for the year ended July 31, 2012, and the factors that could affect our future financial condition and plan of operation.
Going Concern Consideration
The Company’s financial statements in this Annual Report have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As shown in the accompanying financial statements, the Company has no revenues and has accumulated losses since inception. These factors raise substantial doubt regarding the Company's ability to continue as a going concern.
The continuation of the Company as a going concern is dependent upon the continued financial support from its stockholders, the ability of the Company to obtain necessary equity and/or debt financing, and the attainment of profitable operations. The financial statements contained in this Annual Report do not include any adjustments related to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue as a going concern.
Due to the doubt about our ability to continue as a going concern, we may in the future explore new business opportunities that we believe would be beneficial to our stockholders. Historically, we have been able to raise a limited amount of capital through private placements of our equity stock, but we are uncertain about our continued ability to raise funds privately. If we are unable to secure adequate capital to continue our acquisition and exploration activities, our business may fail and our stockholders may lose some or all of their investment.
Impact of Inflation
Since our inception in 2007, inflation has not had a material effect on our revenues.
Recent Accounting Pronouncements
Disclosure regarding any recent accounting pronouncements are contained in our Notes to Financial Statements contained in this Annual Report, which disclosure is incorporated herein by reference.
CRITICAL ACCOUNTING POLICIES
Mineral property acquisition, exploration and related costs are expensed as incurred unless proven and probable reserves exist and the property may commercially be mined. When it has been determined that a mineral property can be economically developed, the costs incurred to develop such property, including costs to further delineate the ore body and develop the property for production, may be capitalized. Interest costs, if any, allocable to the cost of developing mining properties and to constructing new facilities are capitalized until operations commence. Mine development costs incurred either to develop new ore deposits, expand the capacity of operating mines, or to develop mine areas substantially in advance of current production are also capitalized. All such capitalized costs, and estimated future development costs, are then amortized using the units-of-production method over the estimated life of the ore body. Costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations.
Costs of abandoned projects are charged to operations upon abandonment. The Company evaluates, at least quarterly, the carrying value of capitalized mining costs and related property, plant and equipment costs, if any, to determine if these costs are in excess of their net realizable value and if a permanent impairment needs to be recorded. The periodic evaluation of carrying value of capitalized costs and any related property, plant and equipment costs are based upon expected future cash flows and/or estimated salvage value. The Company currently does not have any capitalized mining costs and therefore no adjustments are needed.
See also Note 1 to the Notes to the Financial Statements included in this Annual Report, which disclosure is incorporated herein by reference.
RESULTS OF OPERATIONS
For ease of presentation in the following discussions of “Results of Operations” and “Liquidity and Capital Resources,” we round amounts less than one million dollars to the nearest thousand dollars and amounts greater than one million dollars to the nearest hundred thousand dollars.
Fiscal Year Ended July 31, 2013 Compared to Fiscal Year Ended July 31, 2012
Revenues
We generated no revenues during the years ended July 31, 2013 and July 31, 2012, respectively, and do not anticipate generating any revenues unless we are successful at locating commercial quantities of minerals on one or more of our Adams Ridge Claims sites, and are able to successfully extract and sell such minerals.
Net Loss
We had a net loss of $970,000 for the fiscal year ended July 31, 2013, as compared to a net loss of $78,000, for the fiscal year ended July 31, 2012. The net loss in the fiscal year ended July 31, 2013, was due to lack of revenue. The net loss in 2012 resulted was due to lack of revenue.
Operating Expenses
We experienced an overall increase in our year-to-year operating expenses, which was attributable to the transactional costs related to the change in our business to a mineral exploration and development company that occurred in the fiscal year ended July 31, 2010, with no such material change to our business operations occurring during the fiscal year ended July 31, 2012.
Our operating expenses totaled $969,000 in the year ended July 31, 2013, as compared to $60,000 in the year ended July 31, 2012. The difference is attributable to reduced activities.
Our rent expenditures for the year ended July 31, 2013 totaled $0 and for July 31, 2012, totaled $0. Mr. Regis is currently donating use of his offices to us due to our limited cash reserves.
Interest Expense
We had total interest expense of $1,400 in the year ended July 31, 2013, compared to $8,000 in the year ended July 31, 2012.
LIQUIDITY AND CAPITAL RESOURCES
As of July 31, 2013, we had current assets totaling $199.00 ($199.00 in cash) and total liabilities of $57,000 (all of current liabilities). Our current liabilities at July 31, 2013, consisted of accounts payable and accrued expenses of $53,000 and $4,000 of related party loans. With very low cash reserves, and a working capital deficit of $6.2 million, we do not have sufficient sources of funding to enable us to carry out our stated plan of operations over the next twelve months.
In order to continue operating, we are taking steps to raise additional financing through the issuance of debt and/or equity securities, as well as exploring other options, including the possibility of entering into a strategic arrangement with a third party.
The following table shows our cash flow for the fiscal years ended July 31, 2013 and 2012, respectively.
Cash from Operating Activities
The increase in negative net cash flows of $113,692 was primarily due to a net loss in 2013. In 2012, the increase in negative net cash flow by $12,648 was also primarily due to a net loss.
Investing Activities
We did not make any investments in mineral properties in the fiscal year ended July 31, 2013.
Cash from Financing Activities
Our net cash flow from financing activities during the fiscal year ended July 31, 2013 was $175,750, as compared to $51,000 in the fiscal year ended July 31, 2012. We need to source additional funding from outside of the Company in order to continue operating. If equity financing is used, our stockholders will experience dilution of their ownership interests in the Company.
On October 12, 2009, we entered into a Share Issuance Agreement with Tobermory Holding Ltd. (“Tobermory”) wherein Tobermory has agreed to advance up to $6,000,000 to us until December 31, 2011. While we have arranged for advances of up to $6,000,000 from Tobermory, and while we have received advances for $300,000 from the date of the Share Issuance Agreement to November 10, 2009, there can be no assurances that we will receive any further funds from Tobermory. For further discussion regarding the Tobermory financing arrangement see Note 5 to our Notes to Financial Statements contained in this Annual Report, which disclosure is incorporated herein by reference.
Pursuant to terms of a December 5, 2012 Loan and Stock Purchase Agreement, in December 2012, we issued 2,600,000 shares of our common stock upon conversion of the convertible note and other prior loans totaling approximately $145,000, and during the three months ended April 30, 2013, we issued 800,000 shares of our common stock in exchange for cash of $40,000. Terms of the agreement the investor agrees to make future loans to us with interest at 6% per annum with the investor having the right to purchase shares of our common stock at $0.05 per share in the amount of future loans. For further discussion regarding the Loan and Stock Purchase Agreement see Note 5 to our Notes to Financial Statements contained in this Annual Report, which disclosure is incorporated herein by reference.
Moving forward, we plan to seek out additional debt and/or equity financing to pay costs and expenses associated with our filing requirements with the Securities and Exchange Commission and conduct our exploration activities. We anticipate that we will need at least approximately $25,000 in financing within the next six months. The sale or exchange of additional equity securities, if undertaken by the Company and if accomplished, may result in dilution to our stockholders. We cannot assure you, however, that future financing will be available in amounts or on terms acceptable to us, or at all. If we are unable to secure adequate capital to resume our exploration efforts, it will have a material adverse affect on our financial position, our business may fail and our stockholders may lose some or all of their investment.
Mineral Properties
Adams Ridge Project
In November 2010, we acquired a 100% undivided interest in six mineral claims in the Adams Ridge area of British Columbia, Canada totaling approximately 2,479 hectares. The Adams Ridge Claims are held in trust for us by Carl Von Einsiedel, trustee of the BC Land Trust, as required by the B.C. Mineral Tenure Act. These claims have been registered with the Government of British Columbia. For additional disclosure pertaining to the Adams Ridge Claims, see above under Item 1 (Description of Business) and Note 3 to our Notes to Financial Statements contained in this Annual Report, which disclosure is incorporated herein by reference.
Purchase or Sale of Equipment
We do not expect to purchase or sell any plant or significant equipment.
OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements.
ITEM 7(A). QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
We are not required to provide disclosure under this item because we are a smaller reporting company.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS
Our financial statements for the fiscal years ended July 31, 2013 and July 31, 2012 appear beginning at page of this Annual Report.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND DISCLOSURE
None.
ITEM 9A.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our executive officer evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Annual Report. Based on this evaluation, he concluded that our disclosure controls and procedures are effective to ensure that information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934, as amended, (i) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and (ii) is accumulated and communicated to our management, as appropriate, to allow timely decisions regarding required disclosure. Our disclosure controls and procedures include components of our internal control over financial reporting and, as such, are designed to provide reasonable assurance that such information is accumulated and communicated to our management. Our executive officer’s assessment of the effectiveness of our internal control over financial reporting is expressed at the level of reasonable assurance that the control system, no matter how well designed and operated, can provide only reasonable, but not absolute, assurance that the control system’s objectives will be met (see the section below in this Item 9A entitled Limitations on the Effectiveness of Internal Controls).
Changes in Internal Controls Over Financial Reporting
There have been no changes in our internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934, as amended) that occurred during the three months ended July 31, 2012, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on the Effectiveness of Internal Controls
Our executive officer does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving our objectives and our executive officer concluded that our disclosure controls and procedures are effective at that reasonable assurance level. 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 controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the internal control. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.
This report of our executive officer shall not be deemed to be filed for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section.
ITEM 9B.
ITEM 9B. OTHER INFORMATION
None.
PART III
ITEM 10.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
Executive Officers and Directors
The following table sets forth the names and ages of our current director and executive officer and any directors or executive officers that served with us in the period covered by this Annual Report, and the positions held by each person. There are no family relationships among our directors and executive officers. To our knowledge, our Director and executive officer has not been involved in any legal proceeding listed in Item 401(f) of Regulation S-K in the past ten (10) years.
Larry Regis, Jr. joined ASGC as president and director in April 2013. He became President of Medinah Gold, Inc. in May 1999. Prior to joining Medinah, Mr. Regis owned and operated several mines and managed business territories for companies such as ITT, Bell & Howell and McGraw Hill. He was previously nominated for the Utah Chamber of Commerce “Man of the Year” award. In 1967, Mr. Regis was elected to the Utah State Legislature where he served as Minority Leader of the House of Representatives. He is the past Chairman of the Lake Elsinore Development Agency and was the recipient of the Lake Elsinore Packman Award for service to his community. Mr. Regis earned a Bachelor’s of Education degree from Brigham Young University in 1960.
Gary Goodin joined ASGC in April 2013 as vice president and director. Mr. Goodin joined Medinah Gold, Inc. in May 1999. Mr. Goodin graduated from the Indiana University School of Law in Bloomington, Indiana with a Juris Doctorate in 1989. He practiced with the firm of Johnson, Smith, Pence, Densborn, Wright & Heath in Indianapolis from 1992 to 1996 and has been a Principal with the firm of Goodin Orzeske & Blackwell, P.C. in Indianapolis since 2000. His areas of expertise include employment law and effective management of human resources.
Vittal Karra joined ASGC in April 2013. He joined Medinah Gold, Inc. in August 2012. Mr. Karra has served as a strategic advisor to various technology companies since May 2010. From 2008-2010, Mr. Karra was a Senior Manager at Coca-Cola, Inc. and a consultant at Accenture from 2005-2008. Mr. Karra has worked and consulted with companies like AT&T, American Express, Microsoft and the Port Authority of NY & NJ in the areas of telecom, infrastructure, information technology, software and management services. Mr. Karra earned a Bachelor’s of Commerce degree in 1983 from Osmania University in Hyderabad, India.
James Vandeberg. Mr. Vandeberg was appointed to serve as a Director ASGC on September 16, 2010, and was elected by the Board of Directors to serve as the sole executive officer of ASGC on October 20, 2010 and he continued to serve until April 2013. He has been an attorney practicing in Seattle, Washington since 1996. He specializes in corporate finance with an emphasis on securities and acquisitions. Prior to practicing in Seattle, he was corporate counsel and secretary to Denny’s Inc. and Carter Hawley Hale Stores, Inc., each listed on the NYSE. He graduated from NYU Law School in 1969 where he was a Root-Tilden Scholar and holds a BA degree in accounting from the University of Washington. Mr. Vandeberg is a director of REGI US, Inc., IAS Energy, Inc., Legend Oil and Gas, Ltd. and ASAP Holdings, Inc., all of which are publicly reporting companies with capital stock traded on the OTCQB.
Director Independence
ASGC’s current directors are also executive officers, and they are therefore not deemed to be independent under Rule 4200 of the National Association of Securities Dealers’ (NASD) listing standards for determining director independence. We may seek out independent directors in the future if we are able to develop our business as planned, including generating revenue from our operations.
Terms of Office of Directors and Officers
ASGC does not have an established and defined term for the services being provided by its executive officers or its directors. If one or more of ASGC’s executive officers or directors remain associated in some capacity with ASGC following the business combination, it is unlikely that any of them will devote their full efforts to ASGC’s affairs subsequent to the business combination.
Nominations to the Board of Directors
There were no material changes to the procedures by which security holders may recommend nominees to our Board of Directors.
Board Committees
We do not have any Board committees. As such, we have no separate audit committee within the meaning of Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Instead, our Director acts as the audit committee within the meaning of Section 3(a)(58)(B) of the Exchange Act. In addition, our Director does not currently meet the definition of an “audit committee financial expert” within the meaning of Item 407(d)(5) of Regulation S-K. Due to our small size, limited resources and capital constraints, we have not been in a position to recruit additional persons to serve on our Board of Directors and we will not be in a position to do so until we begin to generate revenue.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities and Exchange Act of 1934, as amended, requires our officers and directors and persons who own more than 10% of a registered class of our securities to file reports of change of ownership with the SEC and furnish us with copies of all such Section 16(a) forms that are filed. SEC regulations also require us to identify in this Report any Reporting Person who failed to file any such report on a timely basis.
As of our fiscal year end and except as set forth below, we believe that all Reporting Persons complied with all applicable Section 16(a) filing requirements for the most recent fiscal year, based solely on our review of the copies of such reports received or written communications from certain Reporting Persons: None.
Code of Ethics
Due to our small size and limited resources,, we have not yet adopted a code of ethics that applies to our principal executive officer and principal accounting officer.
Limitations on Liability and Indemnification of Directors and Officers
ASGC’s directors and officers are entitled to continuing indemnification against certain liabilities by virtue of provisions contained in their articles of incorporation and bylaws. ASGC have agreed that, upon consummation of the expected business combination resulting from the exchange offer, ASGC’s directors and officers will be entitled to indemnification to the fullest extent provided in their respective articles of incorporation and bylaws as in effect as of the close of the business combination. This right to continuing indemnification may be limited by applicable state or federal laws or applicable regulatory authorities. ASGC currently does not have any separate indemnification agreements with its officers or directors.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation
We have not established a separate compensation committee, nor therefore do we have a compensation committee charter. Instead, our Director approves executive compensation policies and practices for himself as sole executive officer of the Company. The primary goal of our executive compensation policy is to closely align the interests of the shareholders with that of our executive officers. As such, our Director considers the important link between the Company’s financial condition, which impacts our shareholders, and the level of his compensation.
The following table sets forth information regarding all forms of compensation received by the named executive officers during the fiscal years ended July 31, 2013, and July 31, 2012, respectively:
Compensation of Directors
Our Directors receive reimbursement for reasonable out-of-pocket expenses for their activities as Directors of the Company and for promoting our business. From time to time we may engage them to perform services on our behalf. In such cases, we will compensate him for his services at rates no more favorable than could be obtained from unaffiliated parties. Messrs.’ Regis, Goodin and Karra each received a restricted stock grant of 2,000,000 shares of ASGC common stock on May 23, 2013.
Option Grants and Exercises
We have no equity incentive plan and have not granted stock options or stock awards to any person.
Employment Agreements
We do not have any employment, consulting, change-of-control or severance agreements with our executive officer.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth information with respect to the beneficial ownership of our common stock as of October 24, 2013, by our directors and executive officers, as well as each person (or group of affiliated persons) who is known by us to beneficially own 5% or more of our common stock. On October 24, 2013, we had 51,231,685 issued and outstanding shares of common stock.
The percentages of common stock beneficially owned are reported on the basis of regulations of the United States Securities and Exchange Commission governing the determination of beneficial ownership of securities. Under these regulations, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or to direct the voting of the security, or investment power, which includes the power to dispose of or to direct the disposition of the security. Except as indicated in the footnotes to this table, each beneficial owner named in the table below has sole voting and sole investment power with respect to all shares beneficially owned.
(1)
The information for such 5% shareholder is based on the list of record holders maintained by our stock transfer agent. Such shareholder has not filed a Schedule 13D with the SEC disclosing its greater than five percent ownership.
Changes in Control
There are no understandings or agreements known by management at this time that would result in a change in control of ASGC other than as a result of the exchange offer.
On April 5, 2013, the ASGC’s board of directors voted to approve the appointment of Larry Regis, Gary Goodin and Vittal Karra as directors and officers of ASGC. These appointments were deemed effective on April 5, 2013. Simultaneously with these appointments, James Vandeberg, ASGC’s sole officer and director resigned. A current report on Form 8-K regarding these events was filed on April 10, 2013.
Note that Larry Regis currently serves as President and Director of Medinah, Gary Goodin serves as Secretary, Treasurer and Director of Medinah and Vittal Karra serves as Director of Medinah.
Securities Authorized for Issuance Under Equity Compensation Plans
We have no equity incentive plan.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Related Party Transactions
We have not entered into any reportable transaction nor are there any proposed reportable transactions in which our director and executive officer, shareholders or any member of the immediate family of any of the foregoing had or is to have a direct or indirect material interest. The Company has, however, received funds in exchange for shares of its common stock from the majority owners of Medinah Gold, Ind. And one of the Company Advisors, as disclosed further in Notes 1, 4 and 6 of the Notes to Financial Statements attached hereto, which disclosure is incorporated herein by reference.
ITEM 14.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The firm of Thomas J. Harris, CPA currently serves as our independent registered public accounting firm. Our Board of Directors, 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 shareholders. Our Board of Directors considered the audit fees, audit-related fees, tax fees and other fees paid to our accountants, as disclosed below, and had determined that the payment of such fees is compatible with maintaining the independence of the accountants.
We do not currently have an audit committee, so our full Board of Directors serves the functions of an audit committee.
Our financial statements for the fiscal years ended July 31, 2013 and July 31, 2012, respectively, were audited by Thomas J. Harris, CPA.
Audit Fees
The aggregate fees paid to Thomas J. Harris, CPA for the audit of our annual financial statements included in our annual reports for the years ended July 31, 2013 and July 31, 2012 and the review of our quarterly reports for such years amounted to $10,000 for fiscal 2013 and $15,000 for fiscal 2012.
Audit Related Fees
For the fiscal year ended July 31, 2013, we paid no audit related fees to Thomas J. Harris, CPA.
Tax Fees
For the fiscal years ended July 31, 2013, and July 31, 2012, there were no fees billed to us for tax services by Thomas J. Harris, CPA.
All Other Fees
For the fiscal years ended July 31, 2013, and July 31, 2012, there were no fees billed to us by Thomas J. Harris, CPA for accounting services other those described above. There have been no non-audit services provided by our independent registered accountants for the fiscal year ended July 31, 2013.
PART IV
ITEM 15.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Financial Statements
See the index to the financial statements at the end of this Annual Report.
Exhibits
The Exhibit Index attached to this Annual Report is incorporated by reference under this Item 15.
Certain of the agreements filed as exhibits to this Annual Report contain representations and warranties by the parties to the agreements that have been made solely for the benefit of the parties to the agreement. These representations and warranties:
●
may have been qualified by disclosures that were made to the other parties in connection with the negotiation of the agreements, which disclosures are not necessarily reflected in the agreements;
●
may apply standards of materiality that differ from those of a reasonable investor; and
●
were made only as of specified dates contained in the agreements and are subject to subsequent developments and changed circumstances.
Accordingly, these representations and warranties may not describe the actual state of affairs as of the date that these representations and warranties were made or at any other time. Investors should not rely on them as statements of fact.
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereto duly authorized.
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 the capacities and on the dates indicated.
SIGNATURE
TITLE
DATE
/s/ Larry Regis
11/12/13
Larry Regis
Principal Executive Officer and Director
/s/ Gary Goodin
Gary Goodin
Principal Accounting and Financial Officer and Director
11/12/13
/s/ Vittal Karra
Vittal Karra
Secretary and Director
11/12/13
AMERICAN SIERRA GOLD CORP.
(FORMERLY C.E. ENTERTAINMENT, INC.)
(An Exploration Stage Enterprise)
JULY 31, 2013, AND 2012
Report of Independent Registered Public Accounting Firm
Balance Sheets:
As of July 31, 2013, and 2012
Statements of Operations:
For the fiscal years ended July 31, 2013 and 2012
Statement of Stockholders' Deficit:
As of July 31, 2013 and 2012
Statements of Cash Flows:
For the fiscal years ended July 31, 2013 and 2012
Notes to Financial Statements
July 31, 2013
THOMAS J. HARRIS
CERTIFIED PUBLIC ACCOUNTANT
3901 STONE WAY N., SUITE 202
SEATTLE, WA 98103
206.547.6050
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
American Sierra Gold Corp.
We have audited the accompanying balance sheets of American Sierra Gold, Inc. (A Development Stage Company) as of July 31, 2013 and July 31, 2012, and the related statements of operations, stockholders’ deficit and cash flows for the periods then ended, and the period January 30, 2007 (inception) to July 31, 2013. 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 audit.
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 is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit 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 also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 financial statements referred to above present fairly, in all material respects, the financial position of American Sierra Gold Corp. (A Development Stage Company) as of July 31, 2013 and July 31, 2012 and the results of its operations and cash flows for the periods then ended and the period January 30, 2007 (inception) to July 31, 2013 in conformity with generally accepted accounting principles in the United States of America.
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note #2 to the financial statements, although the Company has limited operations it has yet to attain profitability. This raises substantial doubt about its ability to continue as a going concern. Management’s plan in regard to these matters is also described in Note # 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Seattle, Washington
October 31, 2013
AMERICAN SIERRA GOLD CORP. (FORMERLY C.E. ENTERTAINMENT, INC.) (An Exploration Stage Enterprise) Balance Sheets
The accompanying notes are an integral part of these statements.
AMERICAN SIERRA GOLD CORP. (FORMERLY C.E. ENTERTAINMENT, INC.) (An Exploration Stage Enterprise) Statements of Operations
Audited
The accompanying notes are an integral part of these statements.
AMERICAN SIERRA GOLD CORP. (FORMERLY C.E. ENTERTAINMENT, INC.) (An Exploration Stage Enterprise) Statement of Stockholders' Deficit
Audited
The accompanying notes are an integral part of these statements.
AMERICAN SIERRA GOLD CORP. (FORMERLY C.E. ENTERTAINMENT, INC.) (An Exploration Stage Enterprise) Statements of Cash Flows Audited
AMERICAN SIERRA GOLD CORP.
(FORMERLY C.E. ENTERTAINMENT, INC.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
July 31, 2013
Note 1 - Summary of Significant Accounting Policies
General Organization and Business- American Sierra Gold Corp. (“American Sierra” or the “Company”) is a Nevada corporation. Our Company was incorporated under the laws of the State of Nevada on January 30, 2007, and effective May 19, 2009, we changed our name from C.E. Entertainment, Inc. to American Sierra Gold Corp. by way of a merger with a wholly owned subsidiary, and we also changed our business plan to involve the acquisition, exploration, development, mining, and production of precious metals, with emphasis on gold and silver.
Proposed Exchange Offer - We are a publicly-owned precious metal mineral acquisition, exploration and development company. Medinah Gold Inc. (“MGI”) is a privately-owned property holding and mining company with mineral property mining claims in the country of Chile, formed in Nevada in 1999. We are proposing to exchange 63,914,540 shares of our common stock to holders of all of the outstanding common stock of MGI (the “Exchange”). Following the exchange, MGI’s operations will become the core business of the combined entity. As of May 31, 2013, there are 16,041,740 shares of ASGC common stock outstanding owned by existing ASGC shareholders. Giving effect to the Exchange, shareholders previously owning shares of MGI would own approximately 80% of total shares outstanding, and MGI would become a wholly-owned subsidiary of ASCG. These relative security holdings and the composition of our Board of Directors and Executive Officers, the proposed structure, the size of the combining entities and the terms of the exchange of equity interests were considered in determining the accounting acquirer. Based on the weight of these factors, it was concluded that MGI is the accounting acquirer and its historical financial statements will become those of the registrant after the exchange.
Recent Events - In April 2013, our Board of Directors approved the appointment of three directors and executive officers, who were directors and executive officers of MGI, and ASGC’s former sole officer and director resigned. We have also changed our primary business address from Seattle, Washington to that of MGI in Beaverton, Oregon. In connection with services to be provided as directors, in April 2013, we agreed to issue 2,000,000 shares of our common stock to each of the three new directors, which shares were issued in May 2013. Additionally, commencing in December 2012 through April 2013, in exchange for cash of approximately $185,000, including previously loaned, we issued 3,300,000 shares of our common stock to the majority owner of MGI and one of the Company’s Advisors. As a result, owners of our common stock as of July 31, 2013, that previously did not own shares, now own a majority of the Company’s common stock. There have been no adjustments recognized in these consolidated financial statements relating to this change of control.
Basis of presentation and interim financial statements- Our accounting and reporting policies conform to U.S. generally accepted accounting principles applicable to exploration stage enterprises pursuant to the provisions of Topic 26, “Accounting for Development Stage Enterprises,” as it devotes substantially all of its efforts to acquiring and exploring mining interests that will eventually provide sufficient net profits to sustain the Company’s existence. Until such interests are engaged in major commercial production, the Company will continue to prepare its financial statements and related disclosures in accordance with entities in the development stage. Mining companies subject to Topic 26 are required to label their financial statements as an “Exploratory Stage Company,” pursuant to guidance provided by SEC Guide 7 for Mining Companies.
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 amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and cash equivalents - For purposes of the statement of cash flows, we consider all cash in banks, money market funds, and certificates of deposit with a maturity of less than three months to be cash equivalents.
Fair value of financial instruments and derivative financial instruments - We have adopted Accounting Standards Codification regarding Disclosure about Derivative Financial Instruments and Fair Value of Financial Instruments. The carrying amounts of cash, accounts payable, accrued expenses, and other current liabilities approximate fair value because of the short maturity of these items. These fair value estimates are subjective in nature and involve uncertainties and matters of significant judgment, and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect these estimates. We do not hold or issue financial instruments for trading purposes, nor do we utilize derivative instruments in the management of foreign exchange, commodity price or interest rate market risks.
Federal income taxes - Deferred income taxes are reported for timing differences between items of income or expense reported in the financial statements and those reported for income tax purposes in accordance with Accounting Standards Codification regarding Accounting for Income Taxes, which requires the use of the asset/liability method of accounting for income taxes. Deferred income taxes and tax benefits are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for tax loss and credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred taxes are provided for the estimated future tax effects attributable to temporary differences and carryforwards when realization is more likely than not. We record a valuation allowance in the full amount of deferred tax assets since realization of such tax benefits has not been determined by our management to be more likely than not
Net income (loss) per share - Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted loss per share excludes the effect of common stock equivalents, warrants to purchase 33,333 shares of common stock, since inclusion in the computation would be anti-dilutive.
Mineral Properties - The Company is engaged in the business of acquiring and exploring properties that may contain precious metals, with an emphasis on gold and silver. If precious metals are found, the Company’s intention is to develop, mine and produce the precious metals. Mineral claim and other property acquisition costs are capitalized as incurred. Such costs are carried as an asset of the Company until it becomes apparent through exploration activities that the cost of such properties will not be realized through mining operations. Mineral exploration costs are expensed as incurred, and when it becomes apparent that a mineral property can be economically developed as a result of establishing proven or probable reserve, the exploration costs, along with mine development cost, would be capitalized. If mineral properties, exploration, or mine development activities are subsequently abandoned or impaired, any capitalized costs are charged to operations.
Impairment of Long-Lived Assets - The Company evaluates the recoverability of long-lived assets and the related estimated remaining lives at each balance sheet date. The Company records an impairment or change in useful life whenever events or changes in circumstances indicate that the carrying amount may not be recoverable or the useful life has changed.
Common Stock Registration Expenses - The Company considers incremental costs and expenses related to the registration of equity securities, whether by contractual arrangement as of a certain date or by demand, to be unrelated to original issuance transactions. As such, subsequent registration costs and expenses are reflected in the accompanying financial statements as general and administrative expenses, and are expensed as incurred.
Recently Issued Accounting Pronouncements - As of and for the periods ended July 31, 2013 and July 31, 2012, the Company does not expect any of the recently issued accounting pronouncements to have a material impact on its financial condition or results of operations.
Note 2 - Going concern
The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. We have reported net losses and our operating activities have used cash since inception. We expect losses to continue in the near future, specifically, with respect to continued funding of exchange related costs prior to consummation of the proposed exchange offer, and after the exchange as we grow and further develop our operations. We had an accumulated deficit of approximately $5.3 million at July 31, 2012 and $6.2 million at July 31, 2013. We have funded our operations through sales of common stock and short-term borrowings, recently from related parties, and require additional funds for future operating expenses. While we have an agreement with a company affiliated with its majority shareholders to continue to fund costs associated with the proposed exchange offer, our management is currently attempting to identify future business opportunities and is seeking additional sources of equity or debt financing. However, there is no assurance that such financing will be available on a timely basis, on terms favorable to us or obtained in sufficient amounts necessary to meet our needs. In the event that we cannot obtain additional funds on a timely basis, we may be forced to curtail or cease our activities, which would likely result in the loss to investors of all or a substantial portion of their investment. These factors raise substantial doubt about the ability of the Company to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the outcome of this uncertainty.
Note 3 - Mineral Properties
In November 2010, the Company acquired an undivided interest in six mineral claims in the Adams Ridge area of British Columbia, Canada, which claims are held in trust for the Company by a trustee of the BC Land Trust, as required by the B.C. Mineral Tenure Act, and registered with the Government of British Columbia. While the Company’s plan was to conduct mineral exploration activities on the claims in order to assess whether the sites possess mineral deposits of gold or other precious metals in commercial quantities, capable of commercial extraction, during 2011, the Company ceased exploration activities due to budgetary constraints and, therefore, has not established whether there are mineral reserves at the claim sites, nor can there be any assurance that the Company will be able to commence exploration activities.
In 2009, the Company entered into a property option agreement with a Canadian public company that owned ten mining concessions in southwest Chihuahua State, Mexico, and rights to acquire an additional six mining concessions in the same area (together, the “Property”), to acquire the Property. The Company could have acquired a 90% in the Property for payments aggregating approximately $300,000 prior to April 30, 2010, and $250,000 in each of the next three years and funding capital expenditures of approximately $2.5 million during the next three years, and could later acquire the remaining 10% dependent upon future events. During the year-ended July 31, 2010, the Company abandoned the property option and costs were written off.
In December 2009, the Company entered into a joint venture agreement with an unrelated company pursuant to which the Company could make payments to the joint venture of $2 million over two years and in exchange would have acquired a 75% ownership interest in entities owning and operating certain mineral claims and property for the production of gold in Northern California. The Company initially paid $125,000, in part, as a signing fee and, in part, for the exclusivity period to negotiate a definitive agreement pursuant to the parties’ non-binding letter of intent. During the year-ended July 31, 2010, the parties mutually ended the joint venture and related costs were written off.
Note 4 - Notes and Loans Payable
During 2011, pursuant to terms of convertible notes payable, the Company received approximately $54,000 for working capital purposes. Convertible notes bear interest at 8% and, with $45,000 due in February 2012 and $9,000 due in September 2012, and are convertible at the holder’s election into shares of Company common stock. The exercise price for conversion is determined based on a discount from market, the related beneficial conversion value of which was immaterial. During the year ended July 31, 2012, we issued 1,536,786 shares of our common stock upon conversion of approximately $36,000 of convertible notes. Convertible notes outstanding at July 31, 2012, approximated $9,000 and were repaid in full in September 2012.
During the fiscal year ended July 31, 2012, we received $35,000 from an investor, who is the majority stockholder of MGI, in exchange for a $10,000 convertible note payable, and loans payable, which bear interest at 6%, are due on demand with no specific repayment terms. Pursuant to terms of a December 5, 2012 Loan and Stock Purchase Agreement, in December 2012, we issued 2,600,000 shares of our common stock upon conversion of the convertible note and other prior loans totaling approximately $145,000, and during the three months ended April 30, 2013, we issued 800,000 shares of our common stock in exchange for cash of $40,000. Terms of the agreement the investor agrees to make future loans to us with interest at 6% per annum with the investor having the right to purchase shares of our common stock at $0.05 per share in the amount of future loans.
Note 5 - Common Stock
Effective in May 2012, we affected a one (1) new for fifteen (15) old reverse stock-split for our issued and outstanding shares of common stock. All references to share amounts have been adjusted to give effect to this and prior stock-splits.
Pursuant to private placement offerings exempt from registration, on January 30, 2007, we issued 3,466,667 shares of our common stock to Directors and officers for cash of $13,000, and in February 2007, we issued 2,026,667 shares of our common stock to 38 foreign, non-affiliated investors for cash of $38,000.
Pursuant to private placement offerings exempt from registration, in July 2009 we issued 12,222 shares of our common stock to new investors for cash of approximately $137,000, and in September 2009, we issued 16,667 shares of our common stock to investors for cash of $100,000.
Pursuant to private placement offerings exempt from registration, in November 2009 we issued 23,256 units for gross proceeds of $300,000, with each unit consisting of one share of our common stock and a two-year warrant to purchase one share of our common stock at a price of $22.65 per share, and in December 2009, we issued 54,645 units for gross proceeds of $500,000, with each unit consisting of one share of our common stock and a two-year warrant to purchase one share of our common stock at a price of $16.05 per share.
In connection with a former joint venture, during December 2009 through March 2010, we issued a total of 26,667 shares of our common stock to the other joint venture party.
Pursuant to a private placement offering exempt from registration, in May 2010 we issued 53,333 units for gross proceeds of $200,000, with each unit consisting of one share of our common stock and a five-year warrant to purchase one share of our common stock at a price of $6.60 per share.
Pursuant to terms of a December 5, 2012 Loan and Stock Purchase Agreement, in December 2012, we issued 2,600,000 shares of our common stock upon conversion of the convertible note and other prior loans totaling approximately $145,000, and during the three months ended April 30, 2013, we issued 800,000 shares of our common stock in exchange for cash of $40,000. Terms of the agreement the investor agrees to make future loans to us with interest at 6% per annum with the investor having the right to purchase shares of our common stock at $0.05 per share in the amount of future loans.
In connection with appointment of three new directors and officers of the Company in April 2013, for services to be provided we issued to each director 2,000,000 shares of our common stock. We have recorded the estimated fair value of shares, based on closing market prices at the date approved by our Board of Directors, of $720,000, which is included in general and administrative expense for the three months ended April 30, 2013.
Share Issuance Agreement - In October 2009, we entered into a Share Issuance Agreement (the “Share Agreement”) with a investment relations firm, whereby the firm would advance up to $6 million to the Company, with an option for an additional $6 million, for the purchase of units comprised of one share of Company common stock and a warrant to purchase one share of Company common stock. The agreement period expired December 31, 2011, and could be extended for an additional 12 months at the discretion of either party. The price of each unit is equal to 75 percent of the weighted average closing price of common stock of the Company, as quoted by NASDAQ, or other source agreed to by the parties, for the preceding ten days prior to each subscription advance to purchase units. The purchase price under each Purchase Warrant to acquire one additional share of common stock shall be 175 percent of the unit price at which the unit containing the Purchase Warrant being exercised was issued.
Warrants - As of July 31, 2012 and July 31, 2013, there are warrants outstanding to purchase 33,333 shares of our common stock at a per share price of $18.75, which expire in January 2015. In May 2010, we issued warrants for the purchase of 53,333 shares at a per share price of $6.60; these warrants expired unexercised in May 2012.
During the fourth fiscal quarter ending July 31, 2013, the Company received cash of $35,000 for 700,000 unissued shares of stock. The Company has recorded this deposit as a stock subscription.
Note 6 - Related Party Transactions
During 2009 and 2010, the Company received working capital advances, substantially all of which was cash, from its then directors, officers and majority shareholders pursuant to terms of loans totaling $310,000. As of July 31, 2010, amounts were due on demand, and consisted of $75,000, $45,000 and $110,000 from the three individuals. In May 2011, Company management determined through discussions with the parties that there was mutual agreement amounts previously reported as loans payable, were considered to have been satisfied in full, and thus cancelled or forgiven, in connection with, among other things, departure of service of the individuals with the Company.
During the fiscal year ended July 31, 2012, the Company received a loan from an officer in the amount of $3,771. The loan was provided for working capital purposes, is unsecured, non-interest bearing, has no specific terms of prepayment, and remains due at April 30, 2013.
Pursuant to the terms of a September 2009 Consulting Agreement with an individual to serve as one of our directors and officers, we issued 66,667 restricted shares of our common stock, and agreed to pay $5,000 per month thereafter. In connection with this agreement one of our other former directors and officers agreed to return for cancellation 1,266,667 shares of our common stock previously issued, and in November 2009, we entered into a consulting agreement with this former director and officer pursuant to which we agreed to pay $40,000 upon entering into the agreement and $5,000 per month thereafter.
In connection with appointment of three new directors and officers of the Company in April 2013, for services to be provided we issued to each director 2,000,000 shares of our common stock. We have recorded the estimated fair value of shares, based on closing market prices at the date approved by our Board of Directors, of $720,000, which is included in general and administrative expense for the three months ended April 30, 2013. We have also agreed to pay one of the directors $5,000 per month for services to be provided. Additionally, in April 2013, we agreed to pay $5,000 to each of two individuals appointed as a Board Advisor. One of the Board Advisors was our sole director and executive officer prior to April 2013. The other Board Advisor is representative for our majority shareholder.
Note 7 - Income Taxes
The provision (benefit) for income taxes for the years ended July 31, 2013, and 2012, were as follows:
The Company had deferred income tax assets as of July 31, 2012, and 2011, as follows:
The Company provided a valuation allowance equal to the deferred income tax assets for the years ended July 31, 2013 and 2012, because it is not presently known whether future taxable income will be sufficient to utilize the loss carryforwards.
As of July 31, 2013 and 2012, the Company had approximately $6,230,353, and $5,260,188, respectively, in tax loss carryforwards that can be utilized in future periods to reduce taxable income, and will begin to expire in the year 2027.
Note 8 - Subsequent Events
Management has reviewed events between 7-31-13 and 10-31-13 and no significant events were identified.
EXHIBIT INDEX
Exhibit No. on EDGAR
Description of Exhibit
Location
2.1
Agreement and Plan of Merger by and among American Sierra Gold Corp., American Sierra Gold Merger Corp., and Medinah Gold, Inc., dated August 13, 2012.
Incorporated herein by reference from the Company’s report on Form 8-K filed with the SEC on August 14, 2012.
3.1
Articles of Incorporation
Incorporated herein by reference from the Company’s registration statement on Form S-4/A filed with the SEC on June 3, 2013.
3.2
Bylaws
Incorporated herein by reference from the Company’s registration statement on Form S-4/A filed with the SEC on June 3, 2013.
3.3
Articles of Merger
Incorporated herein by reference from Exhibit 3.01 to the Company’s report on Form 8-K, filed with the SEC on May 27, 2009.
3.4
Certificate of Change Pursuant to Nevada Revised Statutes Section 78.209
Incorporated herein by reference from Exhibit 3.02 to the Company’s report on Form 8-K filed with the SEC on May 27, 2009.
3.5
Certificate of Change Pursuant to Nevada Revised Statutes Section 78.209
Incorporated herein by reference from the Company’s report on Form 8-K filed with the SEC on June 4, 2012.
4.1
Specimen Common Stock Certificate of American Sierra Gold Corp.
Incorporated by reference from the Company’s report Form 10-Q filed with the SEC on June 20, 2011.
5.1
Opinion re Legality
Incorporated herein by reference from the Company’s registration statement on Form S-4/A filed with the SEC on June 3, 2013.
8.1
Opinion re Tax Matters
Incorporated herein by reference from the Company’s registration statement on Form S-4/A filed with the SEC on June 3, 2013.
10.1
Property Option Agreement between the Company and Yale Resources Ltd. dated April 20, 2009
Incorporated herein by reference from the Company’s report on Form 8-K filed with the SEC on May 5, 2009.
10.2
Form of Subscription Agreement with Tobermory Holding Ltd. dated October 12, 2009
Incorporated herein by reference from Exhibit 10.1 to the Company’s report on Form 8-K filed with the SEC on September 9, 2009, and then updated on the Company’s report on Form 8-K filed with the SEC on January 4, 2010.
10.3
Consulting Agreement between the Company and Johannes Peterson dated September 29, 2009
Incorporated herein by reference from Exhibit 10.1 to the Company’s report on Form 8-K filed with the SEC on October 5, 2009.
10.4
Share Issuance Agreement between the Company and Tobermory Holding Ltd. dated October 12, 2009
Incorporated herein by reference from Exhibit 10.1 to the Company’s report on Form 8-K filed with the SEC on October 13, 2009.
10.5
Joint Venture Agreement between the Company and Trinity Alps Resources, Inc. dated October 19, 2009
Incorporated herein by reference from Exhibit 10.4 to Company’s report on Form 10-Q filed with the SEC on December 18, 2009.
10.6
Amendment No. 1 to Joint Venture Agreement between the Company and Trinity Alps Resources, Inc. dated October 23, 2009
Incorporated herein by reference from Exhibit 10.5 to the Company’s report on Form 10-Q filed with the SEC on March 23, 2010.
10.7
Specimen Warrant Certificate of American Sierra Gold Corp.
Incorporated herein by reference from Exhibit 10.6 to Company’s report on Form 10-Q filed with the SEC on March 23, 2010.
10.8
Limited Liability Company Agreement of Gold Run Enterprises, Inc.
Incorporated herein by reference from Exhibit 10.7 to Company’s report on Form 10-Q filed with the SEC on March 23, 2010.
10.9
Limited Liability Company Agreement of Bowerman Holdings, LLC
Incorporated herein by reference from Exhibit 10.8 to from the Company’s report on Form 10-Q filed with the SEC on March 23, 2010.
10.10
Land Trust Agreement between the Company and Carl von Einsiedel, Trustee of BC Land Trust, dated November 4, 2010
Incorporated herein by reference from Exhibit 10.7 to Company’s report on Form 10-Q filed with the SEC on March 17, 2011.
10.11
Securities Purchase Agreement between the Company and Asher Enterprises, Inc. dated May 18, 2011
Incorporated by reference from Exhibit 10.7 to Company’s report Form 10-Q filed with the SEC on June 20, 2011.
10.12
Convertible Promissory Note issued to Asher Enterprises, Inc. dated May 18, 2011
Incorporated by reference from Exhibit 10.8 to Company’s report Form 10-Q filed with the SEC on June 20, 2011.
10.13
Securities Purchase Agreement between the Company and Asher Enterprises Inc. dated December 12, 2011
Incorporated by reference from Exhibit 10.9 to Company’s report Form 10-Q filed with the SEC on March 16, 2012.
10.14
Convertible Promissory Note issued to Asher Enterprises, Inc. dated December 12, 2011
Incorporated by reference from Exhibit 10.10 to Company’s report Form 10-Q filed with the SEC on March 16, 2012.
10.15
Promissory Note issued to MMC Mines, Inc. dated March 9, 2012
Incorporated by reference from Exhibit 10.11 to Company’s report Form 10-Q filed with the SEC on March 16, 2012.
23.1
Consent of Independent Accounting Firm
Filed herewith.
31.1
Certification of Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934.
Filed herewith.
31.2
Certification of Principal Accounting and Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934.
Filed herewith.
32.1
Certification of Principal Executive Officer and Principal Accounting and Financial Officer pursuant to Rule 13a-14(b) or 15d-14(b) under the Securities Exchange Act of 1934 and to 18 U.S.C. Section 1350.
Filed herewith.