Item 1. Business
This annual report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors”, that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.
In this annual report, unless otherwise specified, all dollar amounts are expressed in United States Dollars and all references to “common shares” refer to the common shares of our capital stock.
As used in this annual report, the terms “we”, “us”, “our company”, mean General Metals Corporation a Delaware corporation and our subsidiary, General Gold Corporation, a Nevada corporation, unless otherwise indicated.
Corporate History
We were organized in the State of New Jersey on March 4, 1995 under the name Interactive Multimedia Network, Inc. We were reincorporated in the State of Delaware on September 13, 1995. We changed our name to RECOV Energy Corp. effective March 29, 2005. On or about January 12, 2006 we changed our name to General Metals Corporation.
On January 20, 2006, we entered into a Share Purchase Agreement with General Gold Corporation, a Nevada company incorporated on July 17, 1998, and the former shareholders of General Gold set out in the Agreement. The closing of the transactions contemplated in the Agreement and the acquisition by our company of all of the issued and outstanding and convertible securities of General Gold occurred on March 15, 2006.
Our business office is located at 1155 West Fourth Street, Suite 210, Reno, NV 89503. This is our mailing address as well. Our telephone number is 775-583-4636.
Our Current Business
We are a junior mineral resource company engaged in the acquisition, exploration, development and mining of gold, silver and other precious and base metal properties.
In April 2005, we acquired through the assignment of a lease certain unpatented mining claims located in the Battle Mountain District, Lander County, State of Nevada, as more particularly described in the lease, known also as the “Independence Mine”. In August 2007 we expanded the Independence Mine by adding four mining claims and 2 additional easements. These claims cover the area where the existing cyanide decantation mill and operating facilities are currently sited and the area where the Pioneer haul road to and from the Sunshine pit crosses the Independence claims; specifically, Independence #1, #2, DC#83 and An Old Glory. Since acquiring the lease, and additional mining claims and easements, our exploration and development activities have been focused on getting the Independence Mine into production. See Item 2 Properties for a more detailed discussion.
Competition
The mining industry is intensely competitive. We compete with numerous individuals and companies, including many major mining companies, which have substantially greater technical, financial and operational resources and staffs. Accordingly, there is a high degree of competition for access to funds. There are other competitors that have operations in the area and the presence of these competitors could adversely affect our ability to compete for financing and obtain the service providers, staff or equipment necessary for the exploration and exploitation of our properties.
Compliance with Government Regulation
Mining operations and exploration activities are subject to various national, state, provincial and local laws and regulations in the United States, as well as other jurisdictions, 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.
We believe that we are and will continue to be in compliance in all material respects with applicable statutes and the regulations passed in the United States. There are no current orders or directions relating to our company with respect to the foregoing laws and regulations.
Employees
Currently our only employee is our president. We do not expect any material changes in the number of employees over the next 12 month period. We do and will continue to outsource contract employment as needed.
Going Concern
We anticipate that additional funding will be required in the form of equity financing from the sale of our common stock. At this time, we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock or through a loan from our directors to meet our obligations over the next twelve months. We do not have any arrangements in place for any future equity financing.
Subsidiaries
General Gold Corporation, a Nevada corporation is our wholly owned subsidiary.
REPORTS TO SECURITY HOLDERS
We are not required to deliver an annual report to our stockholders but will voluntarily send this form 10-K report which includes our annual audited financial statements upon request. We are required to file annual, quarterly and current reports, proxy statements, and other information with the Securities and Exchange Commission. Our Securities and Exchange Commission filings are available to the public over the Internet at the SEC's website at http://www.sec.gov.
The public may read and copy any materials filed by us with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. We are an electronic filer. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The Internet address of the site is http://www.sec.gov.
Item 1A.
Item 1A. Risk Factors
Much of the information included in this annual report includes or is based upon estimates, projections or other “forward looking statements”. Such forward looking statements include any projections and estimates made by us and our management in connection with our business operations. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results may vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein.
Such estimates, projections or other “forward looking statements” involve various risks and uncertainties as outlined below. We caution the reader that important factors in some cases have affected and, in the future, could materially affect actual results and cause actual results to differ materially from the results expressed in any such estimates, projections or other “forward looking statements”.
Risks Related To Our Business:
We do not expect positive cash flow from operations in the near term. If we are unable to obtain financing in the amounts and on terms deemed acceptable to us, we may be unable to continue our business and as a result may be required to scale back or cease operations for our business.
We do not expect positive cash flow from operations in the near term. There is no assurance that actual cash requirements will not exceed our estimates. In particular, additional capital may be required in the event that:
- drilling, exploration and completion costs for our Independence mine project increase beyond our expectations; or
- we encounter greater costs associated with general and administrative expenses or offering costs.
The occurrence of any of the aforementioned events could adversely affect our ability to meet our business plans.
We will depend almost exclusively on outside capital to pay for the continued exploration and development of our properties. Such outside capital may include the sale of additional stock and/or commercial borrowing. We can provide no assurances that any financing will be successfully completed.
Capital may not continue to be available if necessary to meet these continuing development costs or, if the capital is available, that it will be on terms acceptable to us. The issuance of additional equity securities by us would result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.
If we are unable to obtain financing in the amounts and on terms deemed acceptable to us, we may be unable to continue our business and as a result may be required to scale back or cease operations for our business, the result of which would be that our stockholders would lose some or all of their investment.
We have a limited operating history and if we are not successful in continuing to grow our business, then we may have to scale back or even cease our ongoing business operations.
We have no history of revenues from operations and limited tangible assets. We have yet to generate positive earnings and there can be no assurance that we will ever operate profitably. Our company has a limited operating history and must be considered in the development stage. The success of our company is significantly dependent on a successful acquisition, drilling, completion and production program. Our company’s operations will be subject to all the risks inherent in the establishment of a developing enterprise and the uncertainties arising from the absence of a significant operating history. We may be unable to locate recoverable reserves or operate on a profitable basis. We are in the development stage and potential investors should be aware of the difficulties normally encountered by enterprises in the development stage. If our business plan is not successful, and we are not able to operate profitably, investors may lose some or all of their investment in our company.
Because of the early stage of development and the nature of our business, our securities are considered highly speculative.
Our securities must be considered highly speculative, generally because of the nature of our business and the early stage of its development. We are engaged in the business of exploring and, if warranted, developing commercial reserves of gold and silver. Our properties are in the exploration stage only and are without known reserves of gold and silver. Accordingly, we have not generated any revenues nor have we realized a profit from our operations to date and there is little likelihood that we will generate any revenues or realize any profits in the short term. Any profitability in the future from our business will be dependent upon locating and developing economic reserves of gold, silver or other minerals, which itself is subject to numerous risk factors as set forth herein. Since we have not generated any revenues, we will have to raise additional monies through the sale of our equity securities or debt in order to continue our business operations.
As our properties are in the exploration and development stage there can be no assurance that we will establish commercial discoveries on our properties.
Exploration for mineral reserves is subject to a number of risk factors. Few properties that are explored are ultimately developed into producing mines. Our properties are in the exploration and development stage only and are without proven reserves. We may not establish commercial discoveries on any of our properties.
Because of the unique difficulties and uncertainties inherent in mineral exploration ventures, we face a high risk of business failure.
Potential investors should be aware of the difficulties normally encountered by new mineral exploration companies and the high rate of failure of such enterprises. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the exploration of the mineral properties that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems relating to exploration, and additional costs and expenses that may exceed current estimates. The expenditures to be made by us in the exploration of the mineral claim may not result in the discovery of mineral deposits. Problems such as unusual or unexpected formations and other conditions are involved in mineral exploration and often result in unsuccessful exploration efforts. If the results of our exploration programs do not reveal viable commercial mineralization, we may decide to abandon our claim and acquire new claims for new exploration. The acquisition of additional claims will be dependent upon us possessing capital resources at the time in order to purchase such claims. If no funding is available, we may be forced to abandon our operations.
Because of the speculative nature of exploration of mineral properties, there is no assurance that our exploration activities will result in the discovery of new commercially exploitable quantities of minerals.
We plan to continue exploration on our mineral properties. The search for valuable minerals as a business is extremely risky. We can provide investors with no assurance that additional exploration on our properties will establish that additional commercially exploitable reserves of precious metals on our properties. Problems such as unusual or unexpected geological formations or other variable conditions are involved in exploration and often result in exploration efforts being unsuccessful. The additional potential problems include, but are not limited to, unanticipated problems relating to exploration and attendant additional costs and expenses that may exceed current estimates. These risks may result in us being unable to establish the presence of additional commercial quantities of ore on our mineral claims with the result that our ability to fund future exploration activities may be impeded.
Because we anticipate our operating expenses will increase prior to our earning revenues, we may never achieve profitability.
Prior to completion of our exploration stage, we anticipate that we will incur increased operating expenses without realizing any revenues. We therefore expect to incur significant losses into the foreseeable future. We recognize that if we are unable to generate significant revenues from the exploration of our mineral claims, we will not be able to earn profits or continue operations. There is no history upon which to base any assumption as to the likelihood that we will prove successful, and we can provide no assurance that we will generate any revenues or ever achieve profitability. If we are unsuccessful in addressing these risks, our business will most likely fail.
Because of the inherent dangers involved in mineral exploration, there is a risk that we may incur liability or damages as we conduct our business.
The search for valuable minerals involves numerous hazards. As a result, we may become subject to liability for such hazards, including pollution, cave-ins and other hazards against which we cannot insure or against which we may elect not to insure. At the present time we have no coverage to insure against these hazards. The payment of such liabilities may have a material adverse effect on our financial position.
If our exploration costs are higher than anticipated, then our profitability will be adversely affected.
We are currently proceeding with exploration of our mineral properties on the basis of estimated exploration costs. If our exploration costs are greater than anticipated, then we will not be able to carry out all the exploration of the properties that we intend to carry out. Factors that could cause exploration costs to increase are: adverse weather conditions, difficult terrain and shortages of qualified personnel.
As we face intense competition in the mining industry, we will have to compete with our competitors for financing and for qualified managerial and technical employees.
The mining industry is intensely competitive in all of its phases. Competition includes large established mining companies with substantial capabilities and with greater financial and technical resources than we have. As a result of this competition, we may be unable to acquire additional attractive mining claims or financing on terms we consider acceptable. We also compete with other mining companies in the recruitment and retention of qualified managerial and technical employees. If we are unable to successfully compete for financing or for qualified employees, our exploration and development programs may be slowed down or suspended.
As we undertake exploration of our mineral claim, we will be subject to compliance with government regulation that may increase the anticipated cost of our exploration program.
There are several Federal and State governmental regulations that materially restrict mineral exploration. We will be subject to the laws of the State of Nevada and the regulations of the Bureau of Land Management as we carry out our exploration programs. We may be required to obtain work permits, post bonds and perform remediation work for any physical disturbance to the land in order to comply with these laws. While our planned exploration program budgets for regulatory compliance, there is a risk that new regulations could increase our costs of doing business and prevent us from carrying out our exploration program.
Any change to government regulation/administrative practices may have a negative impact on our ability to operate and our profitability.
The laws, regulations, policies or current administrative practices of any government body, organization or regulatory agency in the United States or any other jurisdiction, may be changed, applied or interpreted in a manner which will fundamentally alter the ability of our company to carry on our business.
The actions, policies or regulations, or changes thereto, of any government body or regulatory agency, or other special interest groups, may have a detrimental effect on us. Any or all of these situations may have a negative impact on our ability to operate and/or our profitably.
Our By-laws contain provisions indemnifying our officers and directors against all costs, charges and expenses incurred by them.
Our By-laws contain provisions with respect to the indemnification of our officers and directors against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, actually and reasonably incurred by him, including an amount paid to settle an action or satisfy a judgment in a civil, criminal or administrative action or proceeding to which he is made a party by reason of his being or having been one of our directors or officers.
Investors' interests in our company will be diluted and investors may suffer dilution in their net book value per share if we issue additional shares for significant amount of services or raise funds through the sale of equity securities.
Our constating documents authorize the issuance of 500,000,000 shares of common stock with a par value of $0.001 and 50,000,000 preferred shares with a par value of $0.001. In the event that we are required to issue any additional shares or enter into private placements to raise financing through the sale of equity securities, investors' interests in our company will be diluted and investors may suffer dilution in their net book value per share depending on the price at which such securities are sold. If we issue any such additional shares, such issuances also will cause a reduction in the proportionate ownership and voting power of all other shareholders. Further, any such issuance may result in a change in our control.
Some of our directors and officers are residents of countries other than the United States and investors may have difficulty enforcing any judgments against such persons within the United States.
Some of our directors and officers are nationals and/or residents of countries other than the United States, and all or a substantial portion of such persons’ assets are located outside the United States. As a result, it may be difficult for investors to enforce within the United States any judgments obtained against our company or our officers or directors, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof.
Risks Associated With Our Common Stock:
Our stock is a penny stock. Trading of our stock may be restricted by the Securities and Exchange Commission’s penny stock regulations and the Financial Industry Regulatory Authority’s sales practice requirements, which may limit a stockholder's ability to buy and sell our stock.
Our stock is a penny stock. The Securities and Exchange Commission has adopted Rule 15g-9 which generally defines "penny stock" to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and "accredited investors". The term "accredited investor" refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the Securities and Exchange Commission which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.
In addition to the "penny stock" rules promulgated by the Securities and Exchange Commission, the Financial Industry Regulatory Authority has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, the Financial Industry Regulatory Authority believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The Financial Industry Regulatory Authority requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock.
Item 1B.
Item 1B. Unresolved Staff Comments
As a “smaller reporting company”, we are not required to provide the information required by this Item.
Item 2.
Item 2. Properties
On April 28, 2009, we purchased a 480 acre of private land which will be used for mineral processing, equipment storage and maintenance. The full purchase price was $67,767 with 30% down and the balance by way of seller financing carries an interest rate of 10% per annum for a period of 10 years with quarterly payments of $1,874 amortized over 10 years with no pre-payment penalty. Legal Description: Township 30 North, Range 43 East, M.D.M., Section 17 N/2, SW/4 comprising 480 acres.
Our principal business offices are located 1155 West Fourth Street, Suite 210, Reno, NV 89503. We currently lease our space at an annual cost of $1. We believe that our current lease arrangements provide adequate space for our foreseeable future needs.
The Independence Mine Property
We currently control a 100% undivided leasehold interest in the Wilson-Independence Gold - Silver Mine, situated in the Battle Mountain Mining District, Lander County, Nevada. The property consists of 14 whole and fractional mining claims encompassing 240 acres. Due diligence completed by our company shows that all claims are valid and in good standing through and for the assessment year ending August 31, 2013.
The Wilson-Independence project is wholly owned by General Metals through its subsidiary company General Gold Corporation under a mining lease/option agreement with Independence Gold Silver Mines, Inc. of Seattle, Washington.
The term of the lease is for a period of 20 years commencing October 1, 2005. There is a production royalty payable for the sale of all gold, silver or platinum based upon the average daily price of gold on the London Metal Exchange. With the current market price for gold, the royalty rate payable is 5%. There is also a production royalty of 3% payable on the sale of all substances other than gold, silver and platinum. In addition, any future production is subject to a 1% net smelter royalty obligation payable to Gold Range, LLC. The advance minimum royalty payment are $65,000 each April 1st and October 1st through April 1, 2014.
We have the option to purchase from Independence Gold Silver Mines, Inc. the production royalty down to 1.875% for $3.0 million within 10 years of the date the lease commenced provided all obligations have been met.
Location and Access
All infrastructure necessary for the exploration, development and operation of a mine is readily available. The property is accessed via federal, state and county maintained all weather paved and gravel roads from the nearby town of Battle Mountain. A well-trained work force is available in the town of Battle Mountain, situated 30 miles north of the property along Interstate highway 80. Adequate ground water is available for diversion for future mining operations which enjoy special treatment as temporary or interim uses under Nevada water laws. Electrical power has recently been extended to within one mile of the project to service the Phoenix project, and the transcontinental natural gas line passes within 1.5 miles of the property.
The property has been the site of intermittent historic exploration and mining activities since the late 1920s. Past mining operations extracted 65,000 tons of high grade gold and silver ores from the property. The bulk of this activity occurred during two periods, the first from high grade ores shipped for direct smelting during the late 1940s and early 1950s, and a second from 1975 to 1983 when a significant amount of underground development took place, and a mill erected on the property.
The Independence Mines property consists of 14 whole and fractional unpatented lode mining claims, which cover approximately 240 acres.
Core and reverse circulation drilling to date indicate two targets. These two targets are referred to as the Independence Deep (A Target), and the Independence Surface (B Target). Historic mining operations have generated in excess of 70,000 tons of waste dumps, mill tailings, and other waste rock products on the property. Samples of this material contain gold and silver values which suggest potential to recover gold and silver values.
The Wilson-Independence Property covers a mineralized zone on strike with the World Class, Fortitude / Phoenix Gold Skarn Deposit. The property has potential to develop a high grade underground resource in the Antler Sequence, together with a shallow, near surface resource in the overlying Pumpernickel Formation. Situated at the intersection of the Battle Mountain-Eureka Gold Trend and the Northern Nevada Rift (Twin Creeks-McCoy lineament), the Independence Project, like Fortitude and Cove/McCoy, is one of a number of Gold Skarns which occur along the Battle Mountain - Eureka and Northern Nevada Rift Zone mineral lineaments.
Mineralized outcrops are common on the property. Many on the southern part of the property have been prospected by shallow prospect shafts, pits and trenches. In addition, over 100 Reverse Circulation and Core holes, and extensive shallow underground mine workings in the Independence Mine indicate wide spread, shallow, near surface mineralization which we feel represents a valid exploration target for potential future surface, bulk mining operations
Historic drilling and underground mine workings indicate wide spread mineralization, both in shallow, near surface, and deep targets. There are presently no identified reserves on the property. We have conducted a phased exploration programs to evaluate the mineral potential of this property, with the objective of identifying and developing mineral resources and reserves reportable under SEC Industry Guide 7.
Independence Deep Target
A large body of mineralized material is clearly indicated by previous drilling in the Deep Target. We completed interpretation of the logs and geologic modeling in the fall of 2009 which identified mineralized material in the deep target. We retained all of the core samples, approximately 25,000 feet, and stored it on site.
Mineralization identified in the deep target to date is contained in the lower plate of the Golconda Thrust in rocks of the Battle Mountain and Edna Formations of the Antler Sequence.
Independence Shallow Target
Promising shallow and near surface mineralization has been identified. The Shallow Target contains an oxide target hosted entirely in the Pumpernickel Formation. To date over 130 drill holes and roughly eight (8) miles of underground workings have penetrated portions of this target, all of which have encountered highly anomalous to high grade mineralization. The principle limiting factor for surface/ shallow resources has been the lack of drilling information. In addition, review of the work done by those which held interests in the property previously has identified a total of 8 shallow near surface mineralized targets on the property with 4 of those being north of the Canyon Fault and 3 others where no mining has been performed and minimal geologic sampling and drilling work completed. To date, we have spent over $3.1 million drilling, sampling and evaluating these targets. A report on the detailed review of these targets and the results of the exploration and development program follows in Item 7 Management's Discussion and Analysis or Plan of Operation.
Independence Hill Zone
The Hill Zone, discovered in 2008, is a large, highly mineralized area north of the Canyon Fault and the Independence Shallow Target. Unlike the Independence Shallow Target, there is no historic mining in the high grade areas of the Hill zone, so all the mineral is still in place. This discovery significantly enhances the mineral potential of the 60% of the property which lies north of the Canyon Fault. Drilling in the Hill Zone indicates three parallel zones of mineralization, each of which is comparable in width and grade to the single mineralized zone found in the Independence Shallow Target to the south.
Mill & Building On Site
We determined that the equipment is of no real value to the future operations of the Company and had the mill building removed in July 2011. There are a couple of block buildings and two sheds on the property currently being used for our exploration and development program. These buildings will be removed during the initiation of production activities.
Mineral Ownership
The Wilson-Independence claims are 100% controlled by our Company.
Item 3.
Item 3. Legal Proceedings
We know of no material, existing or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our Company.
Item 4.
Item 4. Submissions of Matters to a Vote of Security Holders
There were no matters submitted to a vote of our security holders either through solicitation of proxies or otherwise in the fourth quarter of the fiscal year ended April 30, 2013.
PART II
Item 5.
Item 5. Market for Common Equity and Related Stockholder Matters
The high and low bid prices of our common stock for the periods indicated below are as follows:
National Association of Securities Dealers OTC Bulletin Board(1)
(1) Over-the-counter market quotations reflect inter-dealer prices without retail mark-up, mark-down or commission, and may not represent actual transactions.
Our shares of common stock are issued in registered form. The registrar and transfer agent for our shares of common stock is Nevada Agency and Transfer Company, 50 West Liberty Street, Suite 880, Reno, NV 89501 (Telephone: 1-775-322 0626; Facsimile: 1-775-322 5623). On July 25, 2013, the list of stockholders for our shares of common stock showed 350 registered stockholders and 348,796,328 shares of common stock outstanding.
Dividends
We have not declared any dividends on our common stock since the inception of our company on March 4, 1995. There is no restriction in our Articles of Incorporation and Bylaws that will limit our ability to pay dividends on our common stock. However, we do not anticipate declaring and paying dividends to our shareholders in the near future.
Equity Compensation Plan Information
We have no formal authorized Equity Compensation Plans. The Board grants warrants and/or stock when it deems appropriate. There were no options, warrants, or rights granted to our Officers and Directors during the last two fiscal years and no securities remaining for future issuance under equity compensation plans.
Outstanding Equity Awards at Fiscal Year-End
There are no outstanding equity awards, vested options, or stock awards outstanding as of April 30, 2013.
Purchase of Equity Securities by the Issuer and Affiliated Purchasers
We did not purchase any of our shares of common stock or other securities during the year ended April 30, 2013.
Recent Sales of Unregistered Securities
The table below summarized the issuance of shares during the year ended April 30, 2013
We issued the securities to accredited investor pursuant to exemptions from registration as set out in Rule 506 of Regulation D and/or Section 4(2) of the Securities Act of 1933, as amended.
Item 6.
Item 6. Selected Financial Data
As a “smaller reporting company”, we are not required to provide the information required by this Item.
Item 7.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our audited financial statements and the related notes for the years ended April 30, 2013 and April 30, 2012 that appear elsewhere in this annual report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to those discussed below and elsewhere in this registration statement, particularly in the section entitled "Risk Factors" beginning on page 7 of this annual report.
Our audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.
Successes and Accomplishments Fiscal Year 2013
During fiscal year 2013, we
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identified and reviewed several funding options and proposals including discussions with a number of different companies investment banks about transactions to provide the funds to bring the Independence Project to the brink of production.
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negotiated and agreed to a Letter of Intent with Open Gold Corp. on a transaction to bring $2.0 million in funding to advance the Independence Project. See Form 8-K filed February 1, 2013
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completed the definitive agreement with Open Gold Corp. envisioned in the LOI identified above. See Form 8-K filed May 23, 2013. On August 12, 2013, the closing date per the agreement, we agreed to negotiate an extension to the agreement.
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completed a small extractive metallurgical study to determine a method to increase the recovery of silver from the ore.
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received $427,429 in funding during the year from private placements of our stock. Since year end we have obtained an additional $57,250 in funding and funding commitments.
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reviewed a draft Preliminary Economic Assessment for the Independence Project (PEA) which evaluates the current economic parameters of the property within a plus or minus 50% variability determining that additional data needed to be acquired before the PEA could be properly completed.
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resubmitted the updated Technical report in the Canadian National Instrument 43-101 format from the qualified person to the Toronto Ventures Exchange (TSX-V) responding to a second letter of requested clarifications from TSX-V. Approval has been delayed because the Company did not file the listing application due to the discussions described above.
Plan of Operation
Fiscal Year 2014 -Permitting and Development Program
During fiscal year 2014, the Company is aggressively pursuing funding of $3.0 million or more to progress the Independence project to the brink of production. Recently, we updated the Independent Technical Report in the Canadian National Instrument 43-101 format including answers to the review points previously received to Canadian authorities for submission and approval as part of the Open Gold Transaction. This report does not meet SEC Industry Guide 7 guidelines but will provide information in a familiar format for our Canadian and European investors.
Dyer Engineering of Reno, Nevada continues the permitting process necessary to place the Independence Mine into commercial production. Assuming adequate funding can be obtained, the process will take from 8 to 16 months from submission of our Plan of Operations to the BLM depending on whether the BLM determines whether an Environmental Assessment or an Environmental Impact Statement is required.
We anticipate being able to secure necessary permits to allow us to proceed to production. We anticipate initially mining the Hill Zone and are completing all necessary work to be able to finalize permits to allow us to begin there. Additional drilling and assaying planned to further delineate the Hill Zone mineralization will allow us to maximize our cash flows early in the production cycle.
Independence Shallow Target Area
Our drilling program during calendar years 2007 through 2010 confirmed a large body of near surface oxide mineralization over a strike length of more than 4,100 feet and discovered the new Hill Zone. Mineralization is open to depth and along strike to the north. We completed 38,950 feet in 128 drill holes. Holes range from vertical to 45 degrees easterly and vary from 25 to 580 feet deep averaging 304 feet in depth. Drilling in the northern part of the target in drill hole GM 128 intercepted Drilling encountered a 15 foot (4.6 meter) zone estimated to represent the approximate true thickness of high grade gold -- silver mineralization which averaged 1.033 ounces per ton (opt) or 39.04 grams per metric tonne (g/T) gold equivalent (Au Equiv) from 310 to 325 feet (94.5 -- 99.1 meters). This bonanza grade intercept is contained within a much larger 230 foot (70.1 meter) intercept which averages 0.083 opt (3.14 g/T) Au Equiv from 295 to 525 feet (89.9 -- 160.1 meters). This intercept is believed to represent a high grade fluid conduit or a potential high grade mineralized zone similar to those mined historically from the Independence Mine. Mineralization in the Independence Target is open down dip to the west and to the north as well as up slope to the east.
Mineralized drill intercepts correlated well up and down dip and along strike from section to section. The interpretation is supported by accessible mine workings. Potentially surface bulk mineable mineralization in the Company’s drill intercepts is consistently wider than anticipated from underground mapping and sampling results.
The mineralized zone intersected in drilling typically consists of a higher grade core surrounded be a broad halo of low grade which is often 100 to 200 feet wide. All mineralization encountered is thoroughly oxidized throughout the zones being tested. Exposures in historic mine workings suggest the mineralization is oxidized to depths of more than 400 feet below the present surface and has a high degree of continuity along strike and down dip.
Results including grade, width, and oxide nature of mineralization, indicate excellent potential for a low cost, open pit heap leach operation with near term production potential for which planning permitting studies are underway.
The orientation of the mineralized zone at the Independence allows the Company to drill holes which are roughly perpendicular to mineralization, resulting in drill intercepts which are believed to represent approximate true thickness.
Geochemical and structural modeling of the property indicates that mineralization may extend northerly on the Company’s property for more than 5,000 feet in the direction of the Sunshine Open Pit Mine formerly operated by Battle Mountain Gold Corp., now Newmont Mining.
Hill Zone
The Hill Zone was discovered as a part of the ongoing integration of current drill and analytical data with the historic geologic, geochemical and mining data. Historically, mineralization at the Independence mine was believed to be terminated to the north by the Canyon fault. Interpretation of General Metals drilling in the Independence target and historic gold-silver surface sampling data indicated the offset of the Canyon fault to be minimal and projected the favorable hosts and the mineralized zone to continue north of the Canyon Fault. Drilling has extended the gold-silver mineralization an additional 1,000 feet to the north. Although the indicated width and thickness of the Hill Zone mineralization is similar to the Independence target, mineralization remains open to the west, north east and at depth. Drilling results from previous operators suggest the Hill Zone mineralization may be significantly wider than that in the Independence target.
The following budget outline is anticipated to be necessary to move the Independence Project forward to the brink of production in the coming twelve months by either the Company or Open Gold when the transaction closes.
North Target
Located at the north end of the Independence claim block, the North target is a shallow low grade occurrence situated approximately 1,200 ft SE of Newmont’s Sunshine mine. The North target is based on 11 drill holes with a nominal spacing of 380 ft defining a mineralized area approximately 1000 ft by 470 ft. Gold mineralization occurs in a granitic host rock and extends from the surface to 250 ft. Average gold intercept values range from 0.01 opt to 0.026 opt and mineralization is open to the north, east, south and at depth.
Independence Deep Target:
The Company has received 275 assays for the majority of all mineralized intercepts with samples above and below these intercepts from American Assay Laboratories of Sparks, Nevada for extensive check assays of the mineralized zones. The results are in excellent agreement with the original results and are now 43-101 compliant.
These are original pulps from Noranda Minerals’ 1985 - 1989 diamond drill programs which have been maintained by the underlying property owners together with the entire original Noranda core library. Our consultants verified the location and chain of custody of the samples from the Great Basin Gold drilling program and submitted these samples for similar check assay. The results of these check assays were incorporated in the independent technical report General Metals completed and filed with Canadian Regulatory Authorities. The entire core from the Great Basin Drilling is also stored in the property’s core library.
When taken together, the Noranda and Great Basin Gold drilling in the Independence Gold Skarn system identify a target more than half a mile wide and three quarters of a mile long which contains three highly prospective structural/stratigraphic zones, all of which have been demonstrated to host significant levels of gold mineralization.
To date more than 25,000 feet of core in eight holes have been drilled to test mineralization in the Independence Gold Skarn. Virtually every hole which has targeted the gold skarn to date has intersected significant gold mineralization over an area which is more than three quarters of a mile long and half a mile wide, with most holes containing multiple mineralized horizons.
The highest grade portion of the Independence Gold Skarn occurs in favorable carbonate rich rocks below the Golconda Thrust, and directly beneath the Surface Oxide Mineralization. It is highly likely that the sub-vertical structural system which controls the surface oxide mineralization acted as a conduit, permitting mineralizing fluids circulating in the gold skarn to migrate to the near surface, depositing the gold and silver that form the Surface Oxide portion of the Independence System as the "fingerprint" of the deeper gold skarn. Surface "leakage" halos or fingerprints related to deeper mineralization form the basis for modern geochemical prospecting, and many such features related to deeper high grade mineralization are known along the Battle Mountain gold trend, including the Cove - McCoy system to the south and the Ivanhoe - Hollister system to the north where high grade underground ore bodies exhibited surface geochemical halos that were in themselves economically viable mines.
We believe the combined Independence Surface Oxide and Gold Skarn represents a world class target in the world class Battle Mountain Mining District along an indisputable world class gold trend.
Corporate Development Strategy
We are moving the Independence project toward production. We obtained necessary studies to allow us to continue with the permitting to proceed to production as soon as financing and regulatory authorities will allow. We anticipate initially mining the Hill Zone and are completing all necessary work to be able to finalize permits to allow us to begin there. Additional drilling and assaying are required to bring the Hill Zone into production and the permitting required to allow for that program is underway. We believe the Hill Zone is amenable to open pit mining and heap leaching.
We require additional funds of approximately $3 million to proceed with our plan of operation over the next twelve months. As we do not have the funds necessary to cover our projected operating expenses for the next twelve month period, we will be required to raise additional funds through the issuance of equity securities, through loans or through debt financing. There can be no assurance that we will be successful in raising the required capital or that actual cash requirements will not exceed our estimates. We intend to fulfill any additional cash requirement through the sale of our equity securities.
If we are not able to obtain the additional financing on a timely basis, if and when it is needed, we will be forced to scale down or perhaps even cease the operation of our business.
Capital Expenditures
We do not intend to invest in capital expenditures during the twelve-month period ending April 30, 2014.
General and Administrative Expenses
We expect to spend approximately $500,000 during the twelve-month period ending April 30, 2014 on general and administrative expenses including legal and auditing fees, rent, office equipment, investor awareness and other administrative related expenses.
Exploration and Development
We expect to spend approximately $2,500,000 on exploration and development, including engineering and permitting over the twelve months ending April 30, 2014, assuming we are successful in our capital raising efforts. Refer to our budget of direct exploration and development activities in the table above.
Personnel Plan
We do not expect any material changes in the number of employees over the next 12 month period (although we may enter into employment or consulting agreements with our officers or directors). We do and will continue to outsource contract employment as needed. As at April 30, 2013, our only employees were our directors and officers.
Results of Operations for the Years Ended April 30, 2013 and 2012
The following summary of our results of operations should be read in conjunction with our audited financial statements for the years ended April 30, 2013 and 2012.
Our operating results for the years ended April 30, 2013 and 2012 are summarized as follows:
Revenues
We have not earned any revenues since our inception and we do not anticipate earning revenues in the near future.
Operating Expenses
Our operating expenses for the year ended April 30, 2013 and April 30, 2012 are outlined in the table below:
The expenditures on the Independence project during the year were $8,649 more than the prior year as identified in the exploration and development category. The increased costs were due to an contractual increase in the semi annual advanced minimum royalty payments. We increased our business development efforts as well as our investor awareness campaigns causing the significant increase of $83,596 in the management and consulting costs of the Company in the current year. We anticipate that the management and consulting costs should reduce in future years as many of the contracted efforts undertaken were unfruitful in development of significant funding opportunities for the Company. Cost increases were incurred in fiscal year 2013 in Professional fees as the result of a increased legal and accounting work in relation to the Open Gold definitive agreement.
Liquidity and Financial Condition
Our total current assets at April 30, 2013 were $18,272 and our total current liabilities were $684,355 and we had a working capital deficit of $666,083 as compared to $703,106 as of April 30, 2012. Our financial statements report a net loss of $867,038 for the year ended April 30, 2013, and a net loss of $12,152,179 for the period from March 15, 2006 (date of inception) to April 30, 2013. We had cash in the amount of $4,717 as of April 30, 2013.
The Company received $57,250 in funding and funding commitments from private placements since April 30, 2013 and $6,150 in short-term note payable from its officers and/or directors.
Our cash balance will increase or remain constant based on the success of our fund raising activities. At present our operations only consume cash getting the project into production as quickly as funding and regulatory authorities will allow. The cash used in operating activities decreased $21,541 from 2012 to 2013 due to the decreased production and drilling activities occurring on the property. Additionally, we had less employees and consulting contracts in place during 2013 and significant amounts of contracted services were paid by common stock of the Company.
During 2013 and 2012, we had no cash use by or provided by investing activities.
Cash provided by financing activities decreased by $12,575 primarily from the decreased price per share received from shares placed in private placement due to the trading price of our stock.
Our principal sources of funds have been from sales of our common stock.
Contractual Obligations
As a “smaller reporting company”, we are not required to provide tabular disclosure obligations.
Going Concern
The audited financial statements included with this annual report have been prepared on the going concern basis which assumes that adequate sources of financing will be obtained as required and that our assets will be realized and liabilities settled in the ordinary course of business. Accordingly, the consolidated audited financial statements do not include any adjustments related to the recoverability of assets and classification of assets and liabilities that might be necessary should we be unable to continue as a going concern.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.
APPLICATION OF CRITICAL ACCOUNTING POLICIES
Our audited financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles used in the United States. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management's application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our consolidated financial statements is critical to an understanding of our financials.
Stock Issued For Services
The Company on occasion issues equity and equity linked instruments to non-employees in lieu of cash for the receipt of goods and services.. The applicable GAAP establishes that share-based payment transactions with nonemployees shall be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable.
In these transactions, we issue unregistered and restricted equity instruments along with equity-linked instruments (warrants) that are convertible into unregistered and restricted shares of our common stock.
While we have shares of freely-traded stock with a quoted market price (a Level 1 input within the GAAP hierarchy), the fair value of the unregistered and restricted shares by the Company as valued by the quoted market price does not reflect the economic substance of the transactions, correspondingly, the quoted market price is not the most reliably measurable fair value. We made this determination based upon the review of the liquidity restrictions in our stock based upon average trading volume and the circumstances surrounding the issuance of private placements to accredited investors for cash in which each placement consists of one unit. Each unit is defined as one common share and one common share purchase warrant and the unit price is readily ascertainable.
In situations in which we issue unregistered restricted common shares and equity-linked instruments in exchange for goods and services, and the value of the goods and services are not the most reliably measurable, we recognize the fair value of the unregistered restricted equity instruments based on the value of similar instruments issued in private placements in exchange for cash in the most recent transactions (a Level 2 input within the GAAP hierarchy) based upon the contractual date of the agreement. We have determined this methodology reflects the risk adjusted fair value of our unregistered restricted equity instruments using a commercially reasonable valuation technique.
Taxes
The Company records valuation allowances against our deferred tax assets, when necessary. Realization of deferred tax assets (such as net operating loss carry-forwards) is dependent on future taxable earnings and is therefore uncertain. To the extent we believe that recovery is not likely or uncertain, we establish a valuation allowance against our deferred tax asset, which increases our income tax expense in the period when such determination is made.
On an annual basis, we reevaluate the probability that a tax position will be effectively sustained and the appropriateness of the amount recognized for uncertain tax positions based on factors including changes in facts or circumstances, changes in tax law, settled audit issues and new audit activity. Changes in our assessment may result in the recognition of a tax benefit or an additional charge to the tax provision in the period our assessment changes. We recognize interest and penalties related to income tax matters in income tax expense.
NEW ACCOUNTING PRONOUNCEMENTS
Recent accounting pronouncements that the Company has adopted or will be required to adopt in the future are summarized in Footnote 2 in our financial statements.
Item 7A.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
As a “smaller reporting company”, we are not required to provide the information required by this Item.
Item 8.
Item 8. Financial Statements and Supplementary Data
Our audited financial statements are stated in United States dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.
The following audited financial statements are filed as part of this annual report:
Independent Auditor's Report, dated August 13, 2013.
Consolidated Balance Sheets as at April 30, 2013 and 2012.
Consolidated Statements of Operations for the year ended April 30, 2013 and for the year ended April 30, 2012 and since inception.
Consolidated Statements of Changes in Stockholders' Equity for the year ended April 30, 2013 and for the year ended April 30, 2012 and since inception.
Consolidated Statements of Cash Flows for the year ended April 30, 2013 and for the year ended April 30, 2012 and since inception.
Notes to the Financial Statements.
General Metals Corporation and Subsidiaries
(An Exploration Stage Company)
Consolidated Balance Sheets
The accompanying notes are an integral part of these statements
General Metals Corporation and Subsidiaries
(An Exploration Stage Company)
Consolidated Statements of Operations
The accompanying notes are an integral part of these statements
General Metals Corporation and Subsidiaries
(An Exploration Stage Company)
Consolidated Statements of Stockholders' Equity
Inception March 15, 2006 to April 30, 2013
General Metals Corporation and Subsidiaries
(An Exploration Stage Company)
Consolidated Statements of Cash Flows
The accompanying notes are an integral part of these statements
General Metals Corporation
and Subsidiaries
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
(For the periods ended April 30, 2013 and 2012)
NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS
Nature of Business
Since March 2006, the Company’s principal business is the acquisition, exploration, and development of mineral properties, specifically the development of the Independence gold and silver mine located in north central Nevada. The Company has not presently determined whether its properties contain mineral reserves that are economically recoverable.
The Company is considered a development (exploration) stage entity for financial reporting purposes by United States generally accepted accounting principles (US GAAP) since it has not generated material revenue from its principal business activities.
Basis of Presentation and Consolidation
The accompanying consolidated financial statements have been prepared in accordance with US GAAP. The Company operates on an April 30 fiscal year end.
The accompanying consolidated financial statements include the accounts of General Metals Corporation and its wholly owned subsidiary, General Gold Corporation. Collectively, they are referred herein as the Company. All inter-company balances and transactions have been eliminated on consolidation.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. At April 30, 2013, the Company had an accumulated loss of $12,152,179, a cash balance of $4,717, no revenue, $684,355 in current liabilities and negative cash flows from operations. This raises substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from this uncertainty.
Management continues to seek funding from its shareholders and other qualified investors to pursue its exploration and development programs. These funds may be raised through equity financing, debt financing, or other sources, which may result in further dilution in the equity ownership of our shares. There is still no assurance that the Company will be able to maintain operations at a level sufficient for an investor to obtain a return on investment. Further, the Company may continue to be unprofitable. The Company needs to raise additional funds in the immediate future in order to proceed with its exploration program.
Reclassifications
The Company has revised the presentation of certain prior period amounts reported within the Consolidated Balance Sheet for payables to related parties. The revision had no impact on the total current liabilities, financial position, results of operations, or cash flows in the periods presented.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash and short term deposits with original maturities of three months or less when purchased. As of April 30, 2013 the Company had no cash equivalents.
Property and Equipment
Property and equipment is stated at cost and depreciated on a straight-line basis over the estimated economic useful lives of the assets, which range from three to seven years.
Following is a summary of property and equipment at April 30, 2013 and April 30, 2012:
Loss per Share
The Company computes net loss per share in accordance US GAAP. This requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net loss by the weighted average number of shares outstanding during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period under the treasury stock method using the if-converted method. All periods presented reflect net losses, therefore, all instruments convertible to common shares are considered anti-dilutive.
Financial Instruments
The Company’s financial instruments consist of cash; cash in trust, short term investments, accounts payable, accrued liabilities and amounts due to related parties. The Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. The fair value of cash, cash in trust, accounts payable and accrued liabilities and amounts due to related parties approximates their carrying values due to the immediate or short term maturity of these financial instruments.
Mineral Property Costs
Mineral property acquisition costs are capitalized. Exploration and development costs are expensed as incurred. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs incurred to develop such property, are capitalized. Such costs will be amortized using the units-of-production method over the estimated life of the probable reserve. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to operations.
Long-Lived Assets
The carrying value of long-lived assets is reviewed on a regular basis for the existence of facts or circumstances that may suggest impairment. The Company recognizes impairment when the sum of the expected undiscounted future cash flows is less than the carrying amount of the asset. Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value.
Reclamation Liabilities and Asset Retirement Obligations
Minimum standards for site reclamation and closure have been established by various government agencies that affect certain of our operations. The Company calculates estimates of reclamation liabilities based on current laws and regulations and the expected undiscounted future cash flows to be incurred in reclaiming, restoring, and closing of operating mine sites. US GAAP requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred. It further requires us to record a liability for the present value of our estimated environmental remediation costs and the related asset created with it when a recoverable asset (long-lived asset) can be realized.
Income Taxes
The Company recognizes deferred tax liabilities and assets using the liability method. Under this method, deferred tax liabilities and assets are determined based on the temporary differences between the financial statements carrying values and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. In determining the future tax consequences of events that have been recognized in the financial statements or tax returns, judgment and interpretation of statutes is required. Judgments and interpretation of statutes are inherent in this process. Future income tax assets are recorded in the financial statements if realization is considered more likely than not.
For previously taken tax positions considered to be uncertain, the Company prescribes a recognition threshold and measurement attribute. In the event certain tax positions do not meet the appropriate recognition threshold, de-recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, and accounting for interest and penalties associated with tax positions is required.
The Company files income tax returns in the U.S. federal jurisdiction and various states. With limited exception, the Company is no longer subject to U.S. federal, state and local tax audits by taxing authorities for years before 2005.
Stock Issued For Services
The Company on occasion issues equity and equity linked instruments to non-employees in lieu of cash for the receipt of goods and services.. The applicable GAAP establishes that share-based payment transactions with nonemployees shall be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable.
In these transactions, we issue unregistered and restricted equity instruments along with equity-linked instruments (warrants) that are convertible into unregistered and restricted shares of our common stock.
While we have shares of freely-traded stock with a quoted market price (a Level 1 input within the GAAP hierarchy), the fair value of the unregistered and restricted shares by the Company as valued by the quoted market price does not reflect the economic substance of the transactions, correspondingly, the quoted market price is not the most reliably measurable fair value. We made this determination based upon the review of the liquidity restrictions in our stock based upon average trading volume and the circumstances surrounding the issuance of private placements to accredited investors for cash in which each placement consists of one unit. Each unit is defined as one common share and one common share purchase warrant and the unit price is readily ascertainable.
In situations in which we issue unregistered restricted common shares and equity-linked instruments in exchange for goods and services, and the value of the goods and services are not the most reliably measurable, we recognize the fair value of the unregistered restricted equity instruments based on the value of similar instruments issued in private placements in exchange for cash in the most recent transactions (a Level 2 input within the GAAP hierarchy) based upon the contractual date of the agreement. We have determined this methodology reflects the risk adjusted fair value of our unregistered restricted equity instruments using a commercially reasonable valuation technique.
Recently Issued Accounting Pronouncements
There have been no recently issued accounting pronouncements that are expected to have a material impact on our consolidated financial position, results of operations, or cash flows.
NOTE 3. RELATED PARTY TRANSACTIONS
Forbush and Associates, of which Dan Forbush, CEO, President, and CFO, is the Principal, provides accounting support and bookkeeping services to the Company on a billed by hour incurred basis. Forbush and Associates is owed $23,522 and $13,225 relating to hours incurred and reimbursable expenses paid by Forbush and Associates on behalf of the Company at April 30, 2013 and April 30, 2012, respectively which is reflect as accounts payable to related parties. In fiscal year 2013, Forbush and Associates charged $26,912 for services provided in preparation of the form 10-K for the period ended April 30, 2012 and the 10-Qs for the periods ended July 31, 2012, October 31, 2012, and January 31, 2013 and $289 for reimbursable expenses included in General and administrative expenses.
In fiscal year 2012, Forbush and Associates received $289 for reimbursable expenses included in General and administrative expenses; and $33,725 in professional fees included in Management and consulting.
Mr. Forbush also receives wages from the Company in accordance with his employment as an officer of the Company. On May 30, 2012, Mr. Forbush received a 2,000,000 share grant award from the Board of Directors for his services to the Company. Mr. Forbush is owed $130,000 and $100,000 in unpaid gross wages as of April 30, 2013 and April 30, 2012 respectively which is included in accrued liabilities. In addition, Mr. Forbush incurs certain reimbursable expenses related to travel and other expenses for his position as CEO and President. Mr. Forbush was owed $8,491 and $9,056 for expenses incurred during the years ended April 30, 2013 and 2012, respectively. Reimbursable expenses are recorded as part of the trade accounts payable as of the year ends.
As of April 30, 2013 and April 30, 2012, $0 and $48,744 respectively is due to Larry Bigler, P.K. Rana Medhi, Shane Dyer, and Walter A. “Del” Marting, for reimbursable expenses incurred in their position as members of the Board of Directors and fees related thereto. Any amounts owing are included in trade accounts payable at the end of the respective year.
On December 17, 2010, Dan Dyer was appointed as a member of the Board of Directors and is also a principal in Dyer Engineering Consultants. On June 1, 2011, Dan Dyer resigned as a director. In September 2011, Shane K Dyer, also a principal in Dyer Engineering Consultants, was nominated for election to the Board of Directors and was elected during the Annual Shareholders meeting. Dyer Engineering Consultants provides mine permitting, engineering and leach pad design services at the Independence project. As of April 30, 2013 and April 30, 2012, Dyer Engineering Consultants is owed $34,663 and $44,281 for services rendered respectively. During fiscal 2013 and 2012, we incurred $1,820 and $9,618 respectively, related to exploration expenses with Dyer Engineering. Any amounts owing Dyer Engineering are included in accounts payable to related parties at the end of the fiscal year.
The interim President, CFO, former and current members of the Board of Directors, and members of the Advisory Board have provided short-term financing to the Company in the form of demand notes with no fixed or determinable repayment dates. Mr. Forbush received 674,286 shares to relieve debt in the amount of $11,800, during the fiscal year ending April 30, 2012.
During fiscal 2013, Walter “Del” Marting provided certain advisory services to the company in assistance to the CEO with a potential listing on the Toronto stock exchange and later in completion and diligence related to the Open Gold Asset Purchase and Assignment definitive agreement. Mr. Marting is a principle of M&M Advisors. The Company contracted with M&M Advisors to work described aboved. M&M Advisors is owed $0 as of April 30, 2013. M&M Advisors incurred $31,000 of fees recorded as part of management and consulting.
NOTE 4. STOCKHOLDERS' EQUITY
Preferred Stock
The Company is authorized to issue 50,000,000 preferred shares with a par value of $0.001 per share. As of April 30, 2013 and 2012, no preferred stock has been issued and is outstanding.
Common Stock
The Company is authorized to issue 500,000,000 common shares with a par value of $0.001 per share at April 30, 2013.
The following detail of the Company’s common stock transactions includes only the two years ended April 30, 2013 and 2012. For previous transactions please refer to the appropriate period Form 10-K on file with the Securities and Exchange Commission. All statements and footnotes have been adjusted to reflect post-split values.
During the three months ended July 31, 2011, we issued a total of 6,444,444 shares; 2,000,000 shares were issued for services valued at $76,000; and 4,444,444 shares were issued to an investor in a private placement at $0.0225 per share for receipt of cash totaling $100,000.
During the three months ended October 31, 2011, we issued a total of 10,788,339 shares; 2,160,562 shares were issued for services valued at $60,503; 6,327,777 shares were issued to investors in private placements at $0.0225 per share for receipt of cash totaling $142,375; and 2,300,000 shares were issued to investors in private placements at $0.025 per share for receipt of cash totaling $57,500.
During the three months ended January 31, 2012, we issued a total of 7,291,180 shares; 2,485,625 shares were issued for services valued at $63,862; 2,405,555 shares were issued to investors in private placements at $0.0225 per share for receipt of cash totaling $54,125; and 2,400,000 shares were issued to investors in private placements at $0.025 per share for receipt of cash totaling $60,000.
During the three months ended April 30, 2012, we issued 1,967,286; 500,000 shares were issued to investors in private placements at $0.02 per share for receipt of cash totaling $10,000; 793,000 shares were issued to investors in private placements at $0.0225 per share for receipt of cash totaling $17,000; 674,286 shares were issued to reduce related party notes payable totaling $11,800.
During the three months ended July 31, 2012, we issued a total of 8,610,648 shares; 4,668,353 shares were issued for services valued at $96,818 to vendors; and 3,942,295 shares were issued for cash to investors in private placement at $0.015 per share for receipt of cash totaling $59,134.
During the three months ended October 31, 2012, we issued a total of 25,593,325 shares; 6,567,612 shares were issued for services valued at $137,034; 8,000,000 shares were issued to the Board of Directors and Officers as a stock grant award valued at $105,600; 11,000,000 shares were issued for cash to investors in private placement at $0.015 per share for receipt of cash totaling $165,000; 25,714 shares were issued for cash to an officer of the company in private placement at $0.0175 per share for receipt of cash totaling $450.
During the three months ended January 31, 2013, we issued a total of 6,340,952 shares; 2,340,952 shares were issued for services valued at $49,000 to vendors; and 4,000,000 shares were issued for cash to investors in private placement at $0.015 per share for receipt of cash totaling $60,000.
During the period ended January 31, 2013, the Board of Directors authorized options to be issued to its officers and directors but as of the date of this filing, the options have not been issued. The exercise price of the options shall be set at the close price on the date of issuance of the options. The options will vest ratably over 3 years with 25% of the options vested immediately and 25% on each annual anniversary therefeafter till all options are fully vested. Expiration date of the option award will be determined at the date of issuance of the options. Option awards will terminate under certain circumstances such as: termination for cause; within 12 months of the date of death of the optionee; 90 days after separation of service from the company; or 30 days after separation of service from the company if directly related to investor relations services provided to the company.
During the three months ended April 30, 2013, we issued 14,056,171; 4,543,971 shares were issued for services valued at $83,386 to vendors; and 9,512,200 shares were issued for cash to investors in private placement at $0.015 per share for receipt of cash totaling $133,333.
Warrants (Non-employee)
As part of certain equity private placement transactions, the Company issues warrants. The following table illustrates the warrant activity for the periods ending April 30, 2013 and 2012.
NOTE 5. PROVISION FOR INCOME TAXES
Provision for Income Taxes
The Company performs reviews of its material tax positions in accordance with applicable recognition and measurement standards. Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
At April 30, the income tax expense (benefit) consisted of the following:
At April 30, gross deferred tax assets and liabilities consisted of the following:
At April 30, the income tax expense (benefit) differs from the amount obtained by applying the U.S. federal statutory rate to income before income taxes as follows:
As of April 30, 2013, the Company had a federal net operating loss carry forward of approximately $10.5 million. The federal net operating loss carry forward expires beginning in fiscal 2026. Utilization of net operating losses may be subject to limitations due to ownership changes and other limitations provided by the Internal Revenue Code and similar state provisions. If such a limitation applies, the net operating loss and tax credit carry forward may expire before full utilization.
The Company reviews its tax positions to determine whether it is more likely than not that they will be sustained upon examination based upon the technical merits of the position. If the more-likely-than- not threshold is met, the Company measures the tax position to determine the amount to recognize in the financial statements.
As of April 30, 2013 and 2012 there were no positions that did not meet the more-likely-than-not threshold.
NOTE 6. MINERAL PROPERTY
Independence Mine
At April 30, 2013, the Company’s Mineral property valued at $613,941 consists of the acquisition cost of the Independence Mining Claims located in Lander County, Nevada. The Company continues to explore and develop the mining claims.
For the years ended April 30, 2013 and 2012, the Company incurred costs of $152,256 and $143,607, respectively, for the on-going exploration and development. Since obtaining the rights, the Company has expensed $3,169,705 associated with these activities.
If the Company successfully establishes proven and probable reserves, additional development costs will be capitalized and depleted using the units of production method. With the current market price for gold, silver and platinum, the Company is obligated to pay a royalty of 5% of all future production of these precious metals, if any. There is also a production royalty of 3% payable on the sale of all substances other than gold, silver and platinum. In addition, any future production is subject to a 1% net smelter royalty obligation payable to Gold Range, LLC.
As of April 30, 2013, there were no proven or probable reserves associated with the Independence Mining Claim.
NOTE 7. NOTES PAYABLE
On April 28, 2009, the Company purchased 480 acres of private land which will be used for mineral processing, equipment storage and maintenance. The full purchase price was $67,742 with 30% down and the balance by way of seller financing at 10% per annum for a period of 10 years with quarterly payments of $1,874 amortized over 10 years with no pre-payment penalty. The note is secured by the land.
Future principal repayments at April 30, 2013 are as follows:
NOTE 8. COMMITMENTS & CONTINGENCIES
The Company sublets office space under a cancelable operating lease at $1 per year. Additionally, the Company rents a storage facility to store unused furniture and equipment and samples from the mineral property which is leased on a month-to-month basis. Rent expense was approximately $1,080 in fiscal 2013, and $31,450 in fiscal 2012.
NOTE 9. SUBSEQUENT EVENTS
The Company received $57,250 in funding and funding commitments from private placements since April 30, 2013 and $6,150 in short-term note payable from its officers and/or directors. On August 12, 2013, the original closing date of the Open Gold definitive agreement, the Company agreed to negotiate an extension to the closing date for the Open Gold transaction.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None
Item 9A
Item 9A (T). Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our president and chief executive officer (who is acting as our principal executive officer) and our chief financial officer (who is acting as our principal financial officer and principle accounting officer) to allow for timely decisions regarding required disclosure.
As of April 30, 2013, the year-end covered by this report, we carried out an evaluation, under the supervision and with the participation of our president and chief executive officer (who is acting as our principal executive officer) and our chief financial officer (who is acting as our principal financial officer and principle accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our president and chief executive officer (who is acting as our principal executive officer) and our chief financial officer (who is acting as our principal financial officer and principle accounting officer) concluded that our disclosure controls and procedures were effective as of the end of the period covered by this annual report.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, for the company.
Internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of its management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
Management recognizes that there are inherent limitations in the effectiveness of any system of internal control, and accordingly, even effective internal control can provide only reasonable assurance with respect to financial statement preparation and may not prevent or detect material misstatements. In addition, effective internal control at a point in time may become ineffective in future periods because of changes in conditions or due to deterioration in the degree of compliance with our established policies and procedures.
A material weakness is a significant deficiency, or combination of significant deficiencies, that results in there being a more than remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.
Under the supervision and with the participation of our president, management conducted an evaluation of the effectiveness of our internal control over financial reporting, as of April 30, 2013, based on the framework set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our evaluation under this framework, management concluded that our internal control over financial reporting was effective as of the evaluation date due to the factors stated below.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal controls over financial reporting that occurred during our year ended April 30, 2013 that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.
Item 9B.
Item 9B. Other Information
None
PART III
Item 10.
Item 10. Directors, Executive Officers and Corporate Governance
All of the directors of our company hold office until the next annual meeting of the stockholders or until their successors have been elected and qualified. Our officers are appointed by our board of directors and hold office until their death, resignation or removal from office. Our directors and executive officers, their ages, positions held, and duration as such, are as follows:
(1) Mr. Forbush was appointed Chief Executive Officer on December 17, 2010 and President December 30, 2010.
(2) Mr. Bigler resigned as an Independent Director May 2010 and was reappointed an Independent Director December 17, 2010.
(3) Mr. Medhi was appointed as an Independent Director on December 30, 2010.
(4) Mr. Marting was appointed as an Independent Director on July 1, 2011.
(5) Mr. Dyer was elected as a member of the Board of Directors on September 16, 2011.
Business Experience
The following is a brief account of the education and business experience of each director and executive officer during at least the past five years, indicating each person's principal occupation during the period, and the name and principal business of the organization by which he was employed.
Daniel J. Forbush, CPA, MBA - President, Chief Executive Officer, Chief Financial Officer and Director
Daniel J. Forbush, a Certified Public Accountant brings over 25 year of mining industry experience. Mr. Forbush’s diverse background in financial management includes positions at such Fortune 500 firms as Glamis Gold, Ltd., AMOCO, TENNECO and Arthur Andersen & Company. Beginning in 1999, Mr. Forbush focused on start-up opportunities including the building of a public accounting firm (Forbush and Associates) since November 2000 and business consulting firm (Core Business Builders Inc.) since January of 2004, and has functioned as Chief Financial Officer and Treasurer for a $25 million residential development and building contractor and a number of other smaller enterprises. He was initially recruited as Controller for Glamis Gold, Inc., the U.S. operating entity of Glamis Gold, Ltd. serving therein from 1988 to 1997 and Chief Financial Officer and Treasurer from 1997 to 1999, for Glamis Gold, Ltd., directing all aspects of financial, administrative and operations management for this $200MM NYSE-listed, multi-national corporation. Prior experience includes Corporate Director of Managerial Accounting, Echo Bay Mines, Ltd., 1986-1987. Nevada Operations Controller for Tenneco Minerals prior to its acquisition by Echo Bay Mines; General Accounting Supervisor for AMOCO; Assistant Controller for Cyprus Industrial Minerals Company; and, Senior Auditor for Arthur Andersen & Company.
P.K. “Rana” Medhi - Independent Director
P.K. “Rana” Medhi of Casa Grande, Arizona has over 40 years of experience in the mining industry; including 28 years with Cyprus Amax Minerals. Mr. Medhi holds a Master of Science degree from the University of Arizona and is a Registered Mining and Engineering Geologist working as an Independent Consultant. In addition, Mr. Medhi is a Certified Professional Geologist with the American Institute of Professional Geologists, a Member of Society for Mining, Metallurgy and Exploration (SME) and a certified adjunct professor of mineral technology and geology with the community colleges of Arizona. Mr. Medhi has also authored and published several technical papers and an occasional speaker to mining and public forums. Mr. Mehdi is currently the Chairman of the Board of Sunergy, Inc., a junior mining company with activities in West Africa. He was the Chairman of the Board of Governors of the Arizona Department of Mines and Mineral Resources.
Walter A. Marting, Jr. - Independent Director
Mr. Marting has spent a large part of his career both as a senior executive for a Fortune 500 mining company and starting and running his own junior gold mining company. After graduating from Harvard Business School in 1975 and following three years in the US Navy with SEAL Team Two, Mr. Marting joined Amax Inc. as an underground mine Production Supervisor at Amax’s Climax Molybdenum property in Leadville, Colorado. Mr. Marting spent two years working underground and in Climax’s open pit operation before moving to the Company’s headquarters in Greenwich, CT. In 1982 Mr. Marting was named Vice President - Finance for Amax Europe in Paris, France. Mr. Marting helped build Amax’s global mining presence from its Paris headquarters and had financial oversight of the company’s European and African exploration and development and ore processing activities. He left Amax in 1984 to start his own mining company that undertook the re-opening and operation of the famed 16-1 Mine in Allegheny, CA.
Larry M. Bigler, CPA - Independent Director
Larry Bigler has over 30 years of mining experience. Mr. Bigler is a practicing Certified Public Accountant with many mining clients. Mr. Bigler formerly was CFO, Vice President, and Director for Oro Nevada Resources and was instrumental in raising C$ 40 million from an initial public offering. From 1987 until 1992 he was Treasurer and Controller for Getchell Gold where he completed an initial public offering and a gold loan. He has degrees in economics and accounting and has published many articles on mining financial issues.
Shane K Dyer - Independent Director
Shane K. Dyer of Reno, NV is a Registered Professional Engineer and a Registered Water Rights Sureveyor, with over 10 years experience in the Engineering Consulting Industry specifically in the design and permitting of mining operations including leach pad and waste dump designs, water resource engineering and business management. Currently Vice President at Dyer Engineering Consultants, Inc. with a track record of producing excellent design, and project management results for clients in the United States and internationally, Mr. Dyer holds a Masters Degree in Civil engineering with a minor in Business Management from Brigham Young University. Serves as the Director of Permitting and Finance at Key Medical, Inc. a National Medicare Accredited DMPOS. Mr. Dyer has a strong technical background and is innovative in problem solving and design.
Family Relationships
There are no family relationships among our directors or officers.
Involvement in Certain Legal Proceedings
Our directors, executive officers and control persons have not been involved in any of the following events during the past ten years:
1. any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
2. any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offences);
3. being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or
4. being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.
Section 16(a) Beneficial Ownership Compliance
Section 16(a) of the Securities Exchange Act requires our executive officers and directors, and persons who own more than 10% of our common stock, to file reports regarding ownership of, and transactions in, our securities with the Securities and Exchange Commission and to provide us with copies of those filings. Based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that during the year ended April 30, 2013, all filing requirements applicable to its officers, directors and greater than 10% percent beneficial owners were complied with, with the exception of the following:
Board and Committee Meetings
Our board of directors held 8 formal meetings during the year ended April 30, 2013. All other proceedings of the board of directors were conducted by resolutions consented to in writing by all the directors and filed with the minutes of the proceedings of the directors. Such resolutions consented to in writing by the directors entitled to vote on that resolution at a meeting of the directors are, according to the Delaware Corporate Law and our By-laws, as valid and effective as if they had been passed at a meeting of the directors duly called and held.
For the year ended April 30, 2013, there are three standing committees of the board of directors, the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee.
Nominating and Corporate Governance Committee, Director Nomination and Independence
Nominating and Corporate Governance Committee
Currently our Nominating and Corporate Governance Committee consists of P.K. “Rana” Medhi, Chairman and Larry Max Bigler, Shane K. Dyer. The Nominating and Corporate Governance Committee (the “Nominating Committee”) is established by the Board to assist in:
●
identifying individuals qualified to become members of the Board and recommend individuals to the Board for nomination as members of the Board;
●
identifying individuals qualified to become members of the various committees of the Board and to recommend such individuals for nomination as committee members to the Board;
●
determining the composition of the Board and its committees;
●
developing and recommending to the Board a set of corporate governance principles applicable to the Company; and
●
overseeing an evaluation process of the Board and management.
During fiscal 2013, there was one meeting held by the nominating and corporate governance committee. Since May 1, 2012, the committee has held one meeting.
Director Selection Process and Review of Director Nominees
We have established a process for identifying and nominating director candidates which we expect will result in the election of a highly-qualified and dedicated Board of Directors. The following is an outline of the process for the nomination of candidates for election to the Board of Directors: (a) the Chief Executive Office, the Nominating and Corporate Governance Committee or other members of the Board of Directors identify the need to add new Board members either to fill vacancies or to enhance the mix of qualifications, skills and experience represented on the Board of Directors (b) the Committee coordinates the search for qualified candidates with input from management and other Board members, (c) the Committee may engage a third party consultant to help identify and evaluate candidates for membership to the Board of Directors, if it deems such engagement is necessary and appropriate, (d) selected member of management and the Board of Directors interview prospective candidates; and (e) The Committee recommends a nominee, which it believes will serve the best interests of General Metals Stockholders.
The Board of Directors has determined that directors should possess the following minimum qualifications: (a) the highest personal and professional ethics, integrity, and values; (b) commitment to representing the long-term best interests of the stockholders and (c) sufficient time to effectively fulfill the duties of a Board member. Candidates suggested by shareholders will be considered on the same basis as any other candidate. Any stockholder proposing a nomination should submit such candidate’s name, along with curriculum vitae or other summary of qualifications experience and skills to the Secretary, General Metals Corporation, 1155 West Fourth Street Suite 210, Reno, NV 89503, USA
General Metals Corporation considers diversity, age and skills in deciding on nominees. The Nominating and Corporate Governance Committee reviews these matters through discussion at meetings of the committee. In evaluating a director candidate, the committee considers factors that are in the best interests of the Company and its stockholders.
Director Independence
We currently act with five (5) directors, consisting of Shane K. Dyer, Walter A. Marting, Jr., P.K. “Rana” Medhi, Larry Max Bigler and Daniel J. Forbush. We have determined that Walter A. Marting, Jr., P.K. “Rana” Medhi, Shane K. Dyer and Larry Max Bigler qualify as "independent" as the term is used in Item 7(d)(3)(iv)(B) of Schedule 14A under the Securities Exchange Act of 1934, as amended, and as defined by Rule 4200(a)(15) of the NASDAQ Marketplace Rules.
Audit Committee and Audit Committee Financial Expert
Audit Committee
Currently our audit committee consists of Larry Max Bigler, Chairman, P.K. “Rana” Medhi and Walter A. Marting, Jr. The function of the audit committee is to meet with our independent auditors at least annually to review, upon completion of the annual audit, financial results for the year, as reported in our financial statements; recommend to the Board the independent auditors to be retained; review the engagement of the independent auditors, including the scope, extent and procedures of the audit and the compensation to be paid therefore; assist and interact with the independent auditors in order that they may carry out their duties in the most efficient and cost effective manner; and review and approve all professional services provided to us by the independent auditors and considers the possible effect of such services on the independence of the auditors.
During fiscal 2013, there were 4 meetings held by the audit committee. The minutes of the proceedings of the audit committee are filed with the corporate records.
Audit Committee Financial Expert
Our board of directors has determined that Larry Max Bigler of its audit committee qualifies as an "audit committee financial expert" as defined in Item 401(e) of Regulation S, and is "independent" as the term is used in Item 7(d)(3)(iv) of Schedule 14A under the Securities Exchange Act of 1934, as amended.
Compensation Committee
Our compensation committee consists of Shane K. Dyer, Chairman, and P.K. “Rana” Medhi. Members of the compensation committee are independent within the meaning of GNMT directors' independence standards and also are non-employee directors within the meaning of Rule 16b-3 of the Exchange Act. The compensation committee will be composed of minimum of 2 (two) independent directors and will not exceed more than 5 (five) independent directors. The committee will meet at least 2 (two) times annually to review various responsibilities as outlined below and periodically revise committee's charters. To assist in carrying out its responsibilities, the compensation Committee will receive reports and recommendations from the CEO and the management, from an outside independent compensation consultant, if retained and its own legal or other advisors. The committee will report to the full board its recommendations during regular Board of Directors meetings.
The Compensation Committee's principal responsibilities include, but not limited to:
●
Establish remuneration levels of corporation's officers and company's independent directors
●
Reviewing management organization and development; Reviewing significant employee benefit programs; and
●
Establish and administering executive compensation program including independent directors. This will encompass bonus plans, stock option and other equity-based programs, deferred compensation plans, and any other cash or stock incentive program.
During fiscal 2013, there were 2 meetings held by the compensation committee. The minutes of the proceedings of the audit committee are filed with the corporate records.
Code of Ethics
Effective August 10, 2006, our company's board of directors adopted a Code of Business Conduct and Ethics that applies to, among other persons, our company's President, Secretary, Treasurer, Chief Executive Officer, Chief Financial Officer and Chief Operating Officer (being our principal executive officers and principal accounting officers), as well as our independent directors and other persons performing similar functions. As adopted, our Code of Business Conduct and Ethics sets forth written standards that are designed to deter wrongdoing and to promote:
1.
honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
2.
full, fair, accurate, timely, and understandable disclosure in reports and documents that we file with, or submit to, the Securities and Exchange Commission and in other public communications made by us;
3.
compliance with applicable governmental laws, rules and regulations;
4.
the prompt internal reporting of violations of the Code of Business Conduct and Ethics to an appropriate person or persons identified in the Code of Business Conduct and Ethics; and
5.
accountability for adherence to the Code of Business Conduct and Ethics.
Our Code of Business Conduct and Ethics requires, among other things, that all of our company's senior officers commit to timely, accurate and consistent disclosure of information; that they maintain confidential information; and that they act with honesty and integrity.
In addition, our Code of Business Conduct and Ethics emphasizes that all employees, and particularly senior officers, have a responsibility for maintaining financial integrity within our company, consistent with generally accepted accounting principles, and federal and state securities laws. Any senior officer, who becomes aware of any incidents, involving financial or accounting manipulation or other irregularities, whether by witnessing the incident or being told of it, must report it to our company. Any failure to report such inappropriate or irregular conduct of others is to be treated as a severe disciplinary matter. It is against our company policy to retaliate against any individual who reports in good faith the violation or potential violation of our company's Code of Business Conduct and Ethics by another.
Procedure for Submitting Shareholder Proposals
We encourage shareholders to submit proposals, questions or concerns to us by writing to our President or any member of our Board of Directors. All written communications with Board members are treated as confidential. Instructions and contact our President and/or our Board of Directors at our executive offices. Once a proposal, question or concern is received by our President or a Board member, the communication is reviewed and addressed accordingly.
Procedure for Submitting Shareholder Proposals Related to Nominee as Director
See “Procedures for Submitting Shareholder Proposals” above.
Our Code of Business Conduct and Ethics as filed with the Securities and Exchange Commission is incorporated by reference as Exhibit 14.1 to this annual report. We will provide a copy of the Code of Business Conduct and Ethics to any person without charge, upon request. Requests can be sent to: General Metals Corporation, 1155 West Fourth Street, Suite 210, Reno, NV 89503.
Item 11.
Item 11. Executive Compensation
The particulars of the compensation paid to the following persons:
-
our principal executive officer;
-
our one most highly compensated executive officer who were serving as executive officer at the end of the years ended April 30, 2013 and 2012; and
-
up to two additional individuals for whom disclosure would have been provided under (b) but for the fact that the individual was not serving as our executive officer at the end of the years ended April 30, 2013 and 2012,
who we will collectively refer to as the named executive officers of our company, are set out in the following summary compensation table, except that no disclosure is provided for any named executive officer, other than our principal executive officers, whose total compensation did not exceed $100,000 for the respective fiscal year:
(1)
The value of perquisites and other personal benefits, securities and property for the officers that do not exceed the lesser of $10,000 or 10% of the total of the annual salary and bonus and is not reported herein.
Compensation Plans
As of April 30, 2013, we did not have any compensation plans in place. However, we may issue stock and equity linked instruments to our directors, officers and employees in the future, upon adoption of a stock option plan.
Stock Options/SAR Grants
During the periods presented in this report, we did not grant any stock options to our executive officers.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Values
There were no options exercised during our fiscal year ended April 30, 2013 or April 30, 2012 by any officer or director of our company.
Outstanding Equity Awards at Fiscal Year End
No equity awards were outstanding as of the year ended April 30, 2013.
Compensation of Directors
We reimburse our directors for expenses incurred in connection with attending board meetings. Beginning June 1, 2007, the non-employee directors receive $1,000 per month for their service on the Board of Directors. On September 2, 2010 the Board of Directors suspended all fees for their services until further notice. Effective May 1, 2011, the compensation of Directors was reinstated at $1,000 per month for their services and $1,000 per month for fulfilling their committee assignments. The Directors also receive Stock Incentive Grants from time to time as authorized by the Board. Our board of directors may award special remuneration to any director undertaking any special services on our behalf other than services ordinarily required of a director.
The following table sets forth a summary of the compensation paid to our non-employee directors in the year ended April 30, 2013:
Employment Contracts and Termination of Employment and Change in Control Arrangements
We have not entered into any employment agreement or consulting agreement with our directors and executive officers.
There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. Our directors and executive officers may receive stock options and stock grants at the discretion of our board of directors in the future. We do not have any bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options or stock grants may be granted at the discretion of our board of directors.
We have no plans or arrangements with respect to remuneration received or that may be received by our executive officers to compensate such officers in the event of termination of employment (as a result of resignation, retirement, change of control) or a change of responsibilities following a change of control, where the value of such compensation exceeds $60,000 per executive officer.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth, as of July 23, 2013, certain information with respect to the beneficial ownership of our common stock by each stockholder known by us to be the beneficial owner of more than 5% of our common stock and by each of our current directors and executive officers. Each person has sole voting and investment power with respect to the shares of common stock, except as otherwise indicated. Beneficial ownership consists of a direct interest in the shares of common stock, except as otherwise indicated.
(1) Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding on July 23, 2012. As of July 23, 2012, there were 301,156,927 shares of our company’s common stock issued and outstanding.
Changes in Control
We are unaware of any contract or other arrangement or provisions of our Articles or Bylaws the operation of which may at a subsequent date result in a change of control of our company. There are not any provisions in our Articles or Bylaws, the operation of which would delay, defer, or prevent a change in control of our company.
Item 13.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Except as disclosed herein, there have been no transactions or proposed transactions in which the amount involved exceeds the lesser of $120,000 or one percent of the average of our total assets at year-end for the last three completed fiscal years in which any of our directors, executive officers or beneficial holders of more than 5% of the outstanding shares of our common stock, or any of their respective relatives, spouses, associates or affiliates, has had or will have any direct or material indirect interest.
The promoters of our company are our directors and officers.
Director Independence
We currently act with five directors, consisting of Walter A. Marting, Jr., Shane Dyer, Larry Max Bigler, P.K. “Rana” Medhi, and Daniel Forbush. We have determined that Walter A. Marting, Jr., Larry Max Bigler, and P. K. “Rana” Medhi are “independent directors” as defined in NASDAQ Marketplace Rule 4200(a)(15).
Item 14.
Item 14. Principal Accountants Fees and Services
The aggregate fees billed for the most recently completed fiscal year ended April 30, 2013 and for fiscal year ended April 30, 2012 for professional services rendered by the principal accountant for the audit of our annual financial statements and review of the financial statements included in our quarterly reports on Form 10-Q and services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for these fiscal periods were as follows:
Our audit committee pre-approves all services provided by our independent auditors. All of the above services and fees were reviewed and approved by the board of directors either before or after the respective services were rendered.
Our audit committee has considered the nature and amount of fees billed by our independent auditors and believes that the provision of services for activities unrelated to the audit is compatible with maintaining our independent auditors’ independence.
PART IV
Item 15.
Item 15. Exhibits, Financial Statement Schedules
Exhibits required by Item 601 of Regulation S-K
*Filed herewith.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
GENERAL METALS CORPORATION
/s/ Daniel J. Forbush
Daniel J. Forbush
President, Chief Executive Officer and Director
(Principal Executive Officer)
Date: August 13, 2013
/s/ Daniel J. Forbush
Daniel J. Forbush
Chief Financial Officer and Director
(Principal Financial Officer and Principal Accounting Officer)
Date: August 13, 2013
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
President, Chief Executive Officer, Chief
/s/ Daniel J. Forbush
Financial Officer and Director
August 13, 2013
Daniel J. Forbush
/s/ Walter A. Marting, Jr.
Director
August 13, 2013
Walter A. Marting, Jr.
/s/ Shane K. Dyer
Director
August 13, 2013
Shane K. Dyer
/s/ Larry Max Bigler
Director
August 13, 2013
Larry Max Bigler
/s/ P. K. Medhi
Director
August 13, 2013
P. K. Medhi