ITEM 1. DESCRIPTION OF BUSINESS.
History
Apolo Gold & Energy Inc., (the Company) was incorporated in March 1997 under the laws of the State of Nevada as Apolo Gold Inc., for the purpose of financing and operating precious metals concessions. In May 2005, the Company amended its articles of incorporation to change the name of the Company to Apolo Gold & Energy Inc.
After incorporation in 1997 the Company focused on precious metals opportunities in Latin and South America. Shortly thereafter the Company formed a subsidiary, Compania Minera Apologold, C.A. a corporation, and on May 18, 1999 the Venezuela subsidiary entered into an agreement with Empresa Proyectos Mineros Goldma, C.A. in Caracas Venezuela, to acquire the diamond and gold mining concession in Southern Venezuela known as Codsa 13, located in the Gran Sabana Autonomous Municipality, State of Bolivar, Venezuela. This project was subsequently cancelled in August 2001 because of poor testing results. The subsidiary company in Venezuela has been dormant since 2001 and will not be reactivated.
On April 16, 2002, the Company executed an agreement with Pt. Metro Astatama, of Jakarta, Indonesia, for the mining rights to a property known as Nepal Umbar Picung (“NUP”), which is located west of Bandar Lampung, on the island of Sumatra, Indonesia. NUP has a KP, Number KW. 098PP325, which is a mineral tenement license for both Exploration and Exploitation. All KP’s must be held by an Indonesian entity.
The “NUP” is 733.9 hectares in size and Apolo had an 80% interest. These claims are owned privately by citizens of Indonesia and are not crown granted claims. Apolo was entitled to recover all of its development costs on the “NUP” including property payments before the partner with 20% can participate.
The total purchase price for “NUP” was $375,000, of which payments amounting to $250,000 had been made. After various exploration programs including different drilling programs failed to yield sufficient positive results, the Company discussed various options with the property owner and decided to terminate its agreement with the NUP property and return all exploration rights to the property owners.
On December 11, 2013, the Company acquired a 70% interest in three gold exploration claims located in China’s Xinjiang Province. The Company issued six million shares for the claims.
On December 23, 2013, the Company acquired a 24% interest in Jiangxi Everenergy New Material Co., Ltd. (“Everenergy”). The consideration was settled with the Company by the issuance of eight-million restricted common stocks at a deemed price of $0.375 per share, plus $1-million in cash. Additionally, on February 19, 2014, the Company acquired an additional 29% interest in Everenergy. The consideration will be settled with the issue of 11-million restricted common stock at a deemed price of $0.45 per share. As at the date of this report, the ownership for both acquisitions have not been completed. Consequently, the acquisitions are treated as investment and no consolidation of the financial statements were adopted.
On September 17, 2014, the Company cancelled the Everenergy transaction.
Government Regulation
The Company was aware of environmental requirements in the operation of a concession. The Company is comfortable with the requirements and regulations and will abide by them.
ITEM 1A.
ITEM 1A. Risk Factors
1. The Company has no record of earnings. It is also subject to all the risks inherent in a developing business enterprise including lack of cash flow, and no assurance of recovery of precious metals.
2. The Company’s success and possible growth will depend on its ability to develop or acquire new business operations. It continues to explore opportunities but has yet to secure an opportunity that is acceptable.
3. Liquidity and need for additional financing is a concern for the Company. At the present time, the Company does not have sufficient cash to finance its operations. The Company is dependent on the ability of its management team to obtain the necessary working capital to operate successfully. There is no assurance that the Company will be able to obtain additional capital as required or if the capital is available, to obtain it on terms favorable to the Company. The Company may suffer from a lack of liquidity in the future that could impair its production efforts and adversely affect its results of operations.
4. Competition is more in the area of ability to sell at world prices that the Company cannot control, and the Company competes for access to the world markets with its products.
5. The Company is wholly dependent at the present upon the personal efforts and abilities of its Officers and Directors, who exercise control over the day-to-day affairs of the Company.
6. There are currently 39,432,118 common shares outstanding at August 11, 2014 out of a total authorized capital of 300,000,000 shares. This is the result of a shareholder resolution passed on October 29, 2010 whereby the shares outstanding were consolidated on a 20:1 basis and the authorized capital was increased to 300,000,000 shares. In addition to this, 1,620,589 shares were issued in settlement of debt and there was a rounding out of 20 shares, thus increasing shares issued to 6,503,295. The Board of Directors has the power to issue such shares, subject to Shareholder approval, in some instances.
7. There are no dividends anticipated by the Company.
Company’s Office
The Company’s office is at 9th Floor, Kam Chung Commercial Building, 19-21 Hennessy Road, Wanchai, Hong Kong. Its telephone number is 852-3111-7718.
ITEM 2
ITEM 2 - Description of Property
Location and Title
On December 11, 2013, the Company acquired a 70% interest in three gold exploration claims in China’s Xinjiang Province. The Company issued 6-million shares for the following claims:
● Gold Mine Reconnaissance in the West of Daqing Gerry River, Qinghe County, comprising of 7.91 sq km, the claims are valid until March 27, 2014.
● Gold Mine Detailed Survey in the Northwest of Sensha Water Mountain, Heshuo, comprising of 15.8 sq km, the claims are valid until July 3, 2015.
● Keler Nebrack Gold Mine Detailed Survey in Habar County, comprising of 10.28 sq km, the claims are valid until February 20, 2015.
The claims are automatically extended for twelve months upon payment of US$10,000 per claim. The Company has not done any exploration on the properties.
ITEM 3
ITEM 3 - Legal Proceedings
The Company is not a party to any pending or threatened litigation and to its knowledge, no action, suit or proceedings has been threatened against its officers and its directors.
ITEM 4
ITEM 4 - Mine Safety Disclosures: None
PART II
ITEM 5
ITEM 5 - Market for Common Equity and Related Stockholder Matters
The Company’s common stock has been quoted on the National Association of Securities Dealers’ Over-the-Counter market since May 17, 2000. There is no other public trading market for the Company’s equity securities.
The following table summarizes trading in the Company’s common stock, as provided by quotations published by the OTC Bulletin Board for the periods as indicated. The quotations reflect inter-dealer prices without retail mark-up, markdown or commission, and may not represent actual transactions.
The common shares were consolidated 20:1 as a result of shareholder approval on October 29, 2010. The consolidation was effective November 29, 2010. Quotations for September 30, 2010 are based on pricing prior to consolidation of shares.
As of August 3, 2014, there were 206 holders of record of the Company’s common stock. That does not include the number of beneficial holders whose stock is held in the name of broker-dealers or banks.
The Company has not paid, and, in the foreseeable future, the Company does not intend to pay any dividends.
Equity Compensation Plan Information
The Company has no existing Equity Compensation Plan and all options granted under previous plans have been exercised, expired or cancelled.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
As a smaller business issuer, the Company is not required to include this Item.
ITEM 7.
ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations/Plan of Operation
General Overview
Apolo Gold & Energy Inc. (“Company”) was incorporated in March 1997 under the laws of the State of Nevada. Its objective was to pursue mineral properties in South America, Central America, North America and Asia. The Company incorporated a subsidiary - Compania Minera Apologold, C.A in Venezuela to develop a gold/diamond mining concession in Southeastern Venezuela. Project was terminated in August 2001, due to poor testing results and the property abandoned. This subsidiary company has been inactive since 2001 and will not be reactivated.
On April 16, 2002, the Company announced the acquisition of the mining rights to a property known as the Napal Gold Property, (“NUP”). This property is located 48 km south-west of Bandar Lampung, Sumatra, Indonesia. The property consisted of 733.9 hectares and possessed a Production Permit (a KP) # KW. 098PP325.
The terms of the Napal Gold Property called for a total payment of $375,000 US over a six-year period of which a total of $250,000 have been made to date. Company paid $250,000 over the past 5 years and subsequent to the year ending June 30, 2008 the Company terminated its agreement on the NUP property and returned all exploration rights to the owner.
On December 11, 2013, the Company acquired a 70% interest in three gold exploration claims located in China’s Xinjiang Province. The Company issued six million shares for the claims.
On December 23, 2013, the Company acquired a 24% interest in Jiangxi Everenergy New Material Co., Ltd. (“Everenergy”). The consideration was settled with the Company by the issuance of eight-million restricted common stocks at a deemed price of $0.375 per share, plus $1-million in cash. Additionally, on February 19, 2014, the Company acquired an additional 29% interest in Everenergy. The consideration will be settled with the issue of 11-million restricted common stock at a deemed price of $0.45 per share. As at the date of this report, the ownership for both acquisitions have not been completed. Consequently, the acquisitions are treated as investment and no consolidation of the financial statements were adopted. On September 17, 2014 the Company cancelled the Everenergy transaction.
The Company continues to pursue opportunities in the natural resource industry and will consider the acquisition of any other business opportunity in order to enhance its value.
Results of Operations - Period July 01, 2013 to June 30, 2014
REVENUES: The Company had no revenues in the past fiscal year.
EXPENSES:
During the fiscal year ending June 30, 2014 and June 30, 2013, the Company had no exploration costs. Total expenses for the year amounted to $210,554 compared to $30,620 in the year ending June 30, 2013. Consulting and professional fees amounted to $179,724 compared to $16,021 in the year ending June 30, 2013.
General and administrative expenses for the year amounted to $30,830 compared to $14,599 in the year ending June 30, 2013.
There were no additional or extraordinary expenses incurred in the current year ending June 30, 2014 as the Company focused its efforts in seeking out a resource project that would be beneficial to shareholders. The end result is that expenses for the year were increased to $210,554 compared to $30,620 in the year ending June 30, 2013.
There were no stock compensation charges in either 2014 or 2013.
Expenses for the year related primarily to evaluation of options available are the seeking out of other business opportunities in the resource Industry and related businesses within the resource sector.
The Company continues to carefully control its expenses, and intends to seek additional financing both for potential business opportunities it may develop. There is no assurance that the Company will be successful in its attempts to raise additional capital.
The Company has no employees in its head office at the present time other than its Officers and Directors, and engages personnel through consulting agreements where necessary as well as outside attorneys, accountants and technical consultants.
Cash on hand at June 30, 2014 was $7,439 compared to $417 in 2013 and the Company recognizes it may not have sufficient funds to conduct its affairs. It fully intends to seek financing by way of loans, private placements or a combination of both in the coming months. The Company is dependent on its directors to provide necessary funding when required.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its development to date by way of sale of common stock and with loans from directors/shareholders of the Company. At August 11, 2014, the Company had 39,432,118 shares of common stock outstanding, and has raised total capital since inception in excess of $7,500,000.
During the year, the Company arranged for loans from a director in the amount of $28,883 ($26,770 for 2013) and did not raise funds from any other source. These loans allowed the Company to continue its operations, pay its professional fees, and seek out business opportunities.
Accounts payable at June 30, 2014 amounted to $10,079 compared to $24,922 at June 30, 2013. The accounts payable at June 30, 2014 include amounts owing for professional fees, and sundry amounts owing to former suppliers.
Amounts due to Related Parties is nil as at June 30, 2014 vs. $86,399 at June 30, 2013 are due to a current officer and director of the Company regarding advances to the company. There is no terms for repayment and no interest is payable.
INFLATION
Inflation has not been a factor during the fiscal year ending June 30, 2014. While inflationary forces are showing some signs of increasing in the next year, it is not considered a factor in capital expenditures or production activities.
REPORT OF MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the company. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting for external purposes in accordance with accounting principles generally accepted in the United States of America. Internal control over financial reporting includes maintaining records that in reasonable detail accurately and fairly reflect our transactions; providing reasonable assurance that transactions are recorded as necessary for preparation of our financial statements; providing reasonable assurance that receipts and expenditures of company assets are made in accordance with management authorization; and providing reasonable assurance that unauthorized acquisition, use or disposition of company assets that could have a material effect on our financial statements would be prevented or detected on a timely basis. Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected.
In connection with the preparation of this Annual Report on Form 10-K for the year ended June 30, 2014, Management on Internal Control over Financial Reporting is under the supervision of the principal executive officer who is the chief executive officer of the Company. Under his direction, the Company has evaluated the effectiveness of its disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of June 30, 2014. Based on that evaluation, the Principal Executive Officer concluded that Disclosures Controls and Procedures were not effective as of June 30, 2014. Due to limited financial resources available, there is a lack of segregation of duties in financial reporting although the Principal Executive Officer, who also serves as Principal Financial Officer, is an experienced financial executive and professional with professional accreditation.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK .
The Company does not have any market risk sensitive financial instruments for trading or other purposes. All Company cash is held in insured deposit accounts.
Item 8.
Item 8. Financial Statements and Supplementary Data.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders,
Apolo Gold & Energy Inc.
We have audited the accompanying consolidated balance sheets of Apolo Gold & Energy Inc. (an Exploration Stage Company) as of June 30, 2014 and the related consolidated statements of operations and comprehensive loss, stockholders’ deficit and cash flows for the years ended June 30, 2014. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform an audit to obtain reasonable assurance whether the consolidated financial statements are free of material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for my opinion.
In my opinion, these consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of June 30, 2014 and the results of its operations and its consolidated cash flows for the years ended June 30, 2014 in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared using accounting principles generally accepted in the Unites States of America assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company is an exploration stage company and has incurred substantial losses, which raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to their planned financing and other matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ WELD ASIA ASSOCIATES
WELD ASIA ASSOCIATES
Date: September 18, 2014
Kuala Lumpur, Malaysia
APOLO GOLD & ENERGY INC.
(An Exploration Stage Company)
CONSOLIDATED BALANCE SHEETS
The accompanying notes are an integral part of these consolidated financial statements.
APOLO GOLD & ENERGY INC.
(An Exploration Stage Company)
CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE LOSS
The accompanying notes are an integral part of these consolidated financial statements.
APOLO GOLD & ENERGY INC.
(An Exploration Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
The accompanying notes are an integral part of these consolidated financial statements.
APOLO GOLD & ENERGY INC.
(An Exploration Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
The accompanying notes are an integral part of these consolidated financial statements.
APOLO GOLD & ENERGY INC.
(An Exploration Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
The accompanying notes are an integral part of these consolidated financial statements.
APOLO GOLD & ENERGY INC.
(An Exploration Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
The accompanying notes are an integral part of these consolidated financial statements.
APOLO GOLD & ENERGY INC.
(An Exploration Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
The accompanying notes are an integral part of these consolidated financial statements.
APOLO GOLD & ENERGY, INC.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2014 and 2013
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Apolo Gold & Energy, Inc., formerly known as Apolo Gold Inc., (hereinafter “the Company”) was incorporated in March of 1997 under the laws of the State of Nevada primarily for the purpose of acquiring and developing mineral properties. The Company conducts operations primarily from its administrative offices in Vancouver, British Columbia, Canada. In 1997, the Company formed a subsidiary corporation, Compania Minera Apologold C.A., in Venezuela, which was originally used to acquire a Venezuelan mining property. The subsidiary has had no financial transactions since 2001 and is no longer active.
On April 16, 2002, the Company signed an agreement to enter into a joint venture to explore a mineral property (the “Napal Gold Property”) in Indonesia. Upon signing this agreement, the Company entered a new exploration stage and commenced exploration of the Napal Gold Property, which was not yet under production. In the year ended June 30, 2008, the Company abandoned the Napal Gold Property and its exploration efforts in Indonesia.
In December 2013, the Company acquired a 70% interest in three gold exploration properties in China.
On December 5, 2013, the Company acquired a 24% interest in Jiangxi Everenergy New Material Co., Ltd. (“Everenergy”). The Company issued eight million restricted common shares as consideration.
On February 19, 2014, the Company issued an additional 11-million restricted common shares and paid $1-million to acquire a further 29% interest in Everenergy. Subsequent to the year-end, on September 17, 2014, the Company cancelled both transactions with Everenergy and has requested return of the $1-million payment and all the shares.
The Company will continue to investigate new mineral property exploration and other energy related investments.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies is presented to assist in understanding the Company’s financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements.
Consolidation
The financial statements include the accounts of Apolo Gold & Energy Asia Limited, a 100% owned subsidiary of the Company.
Accounting Method
The Company uses the accrual basis of accounting, in accordance with accounting principles generally accepted in the United States of America.
Basic and Diluted Loss Per Share
Loss per share was computed by dividing the net loss by the weighted average number of shares outstanding during the period. The weighted average number of shares was calculated by taking the number of shares outstanding and weighing them by the amount of time that they were outstanding. Basic and diluted loss per share is the same, as inclusion of common stock equivalents would be anti-dilutive.
Cash and Cash Equivalents
The Company considers all short-term debt securities purchased with maturity of three months or less to be cash equivalents. As at June 30, 2014 and 2013, the Company does not have any cash equivalents.
Comprehensive Income
In accordance with FASB ASC Topic 220 Comprehensive Income, comprehensive income consists of net income and other gains and losses affecting stockholder’s equity that are excluded from net income, such as unrealized gains and losses on investments available for sale, foreign currency translation gains and losses when the Company has a functional currency other than U.S. dollars, and minimum pension liability. For the year ended June 30, 2014 and 2013 the Company’s financial statements include none of the additional elements that affect comprehensive income. Accordingly, net income and comprehensive income are identical.
APOLO GOLD & ENERGY, INC.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2014 and 2013
Concentration of Risk
The Company maintains its cash account in one commercial bank in Vancouver, British Columbia, Canada. The account is insured up to a maximum of $100,000.
The Company is not exposed to significant interest, credit or currency risk due to the short term nature of its financial instruments.
Derivative Instruments
The Company as adopted FASB ASC Topic 815 Derivates and Hedging, which establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. They require that an entity recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value.
If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (i) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (ii) the earnings effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change.
Historically, the Company has not entered into derivatives contracts to hedge existing risks or for speculative purposes. At June 30, 2014 and 2013, the Company has not engaged in any transactions that would be considered derivative instruments or hedging activities.
Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Exit or Disposal Activities
The Company has adopted FASB ASC Topic 420 Exit or Disposal Cost Obligations , which addresses significant issues regarding the recognition, measurement, and reporting of costs associated with exit and disposal activities, including restructuring activities, as well as addresses recognition of certain costs related to terminating a contract that is not a capital lease, costs to consolidate facilities or relocate employees, and termination benefits provided to employees that are involuntarily terminated under the terms of a one-time benefit arrangement that is not an ongoing benefit arrangement or an individual deferred-compensation contract. There have been no exit or disposal activities during the years ended June 30, 2014 and 2013.
Exploration Stage
The Company began a new exploration stage on April 16, 2002 at which time it commenced the exploration of the Napal Gold Property, including a drilling program. In the year ended June 30, 2008, the Company abandoned the Napal Gold Property and its exploration efforts in Indonesia. In December 2013, the Company acquired a 70% interest in three gold exploration properties in China. The Company is presently investigating new mineral property exploration and development investments.
APOLO GOLD & ENERGY, INC.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2014 and 2013
Fair Value of Financial Instruments
A fair value hierarchy was established that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
Level 1: classification is applied to any asset or liability that has a readily available quoted market price from an active market where there is significant transparency in the executed/quoted price. As at June 30, 2014 and 2013 the Company has classified cash as being a Level 1 fair value financial instrument.
Level 2: classification is applied to assets and liabilities that have evaluated prices where the data inputs to these valuations are observable either directly or indirectly, but do not represent quoted market prices from an active market. As at June 30, 2014 and 2013 the Company did not have any Level 2 fair value financial instruments.
Level 3: classification is applied to assets and liabilities when prices are not derived from existing market data and requires us to develop our own assumptions about how market participants would price the asset or liability. As at June 30, 2014 and 2013 the Company classified its loans payable, related parties as being a Level 3 fair value financial instrument.
The carrying amounts for cash, accounts payable and accrued liabilities and loans payable to related parties approximate their fair value due to their short term nature.
Foreign Currency Translation
The Company’s functional currency is the U.S. dollar. Assets and liabilities of the Company’s foreign operations are translated into U.S. dollars at the period-end exchange rates, and revenue and expenses are translated at the average exchange rates during the period. Realized gains and losses from foreign currency transactions are reflected in the results of operations.
Going Concern
As shown in the financial statements, the Company incurred a net loss of $210,554 for the year ended June 30, 2014 (2013 - $30,620) and has an accumulated deficit of $7,886,845 (2013 - $7,676,291), no revenues, and limited cash resources as at June 30, 2014 and 2013.
These factors raise substantial doubt that the Company may be able to continue as a going concern. The financial statements do not include any adjustments related to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the Company cannot continue as a going concern. The Company’s management is actively seeking additional capital and management believes that new properties can ultimately be developed to enable the Company to continue its operations. However, there are inherent uncertainties in mining operations and management cannot provide assurances that it will be successful in its endeavors. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Impaired Asset Policy
The Company applies the provisions of FASB ASC Topic 360, Property, Plant, and Equipment, and FASB ASC Topic 205 Presentation of Financial Statements, which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to the future net cash flows estimated by the Company to be generated by such assets. If such assets are considered to be impaired, the impairment to be recognized is the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of by sale are recorded as held for sale at the lower of carrying value or estimated net realizable value. As of June 30, 2014 and 2013 no impairment was considered necessary. During the year ended June 30, 2008, the Company had abandoned its mining equipment resulting from discontinued exploration operations in Indonesia.
Mineral Exploration and Development Costs
All exploration expenditures are expensed as incurred. Significant property acquisition payments for active exploration properties are capitalized. If no ore body able to be mined is discovered, previously capitalized costs are expensed in the period the property is abandoned.
Expenditures to develop new mines, to define further mineralization in existing ore bodies, and to expand the capacity of operating mines are capitalized and amortized on a units-of-production basis over proven and probable reserves. Should a property be abandoned, its capitalized costs are charged to operations. The Company charges to operations the allocable portion of capitalized costs attributable to properties sold. Capitalized costs are allocated to properties sold based on the proportion of claims sold to the claims remaining within the project area.
APOLO GOLD & ENERGY, INC.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2014 and 2013
Provision for Taxes
Income taxes are provided based upon the liability method of accounting pursuant to FASB ASC Topic 740 Income Taxes (“ASC 740”). Under this approach, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end. A valuation allowance is recorded against deferred tax assets if management does not believe the Company has met the “more likely than not” standard imposed by ASC 740 to allow recognition of such an asset.
Investments
Affiliated companies, in which the Company has significant influence, but no control, are accounted for investment. Investment adjustments include the Company’s proportionate share of investee income or loss, gains or losses resulting from investee capital transactions, adjustments to recognize certain differences between the Company’s carrying value and the Company’s equity in net assets of the investee at the date of investment, impairments, and other adjustments required by the equity method. Gain or losses are realized when such investments are sold.
At June 30, 2014, the Company had net deferred tax assets calculated at an expected rate of 25.00% (2013 - 25%) of approximately $1,971,711 (2013 - $1,919,073) principally arising from approximate net operating loss carry forward for income tax purposes, which expire in the years 2017 through 2034. As management of the Company cannot determine that it is more likely than not that the Company will realize the benefit of the net deferred tax asset, a valuation allowance equal to the net deferred tax asset has been recorded. The significant components of the deferred tax asset at June 30, 2014 and June 30, 2013 were as follows:
The change in the allowance account from June 30, 2013 to June 30, 2014 was approximately $53,000 (2013 - $10,000).
Reclamation Costs
Reclamation costs that related to current operations are charged to operations or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations, and which do not contribute to current or future revenue generation, are charged to operations. Liabilities are recorded when environmental assessments and/or remedial efforts are probable, and the cost can be reasonably estimated. Generally, the timing of these accruals coincides with the earlier of completion of a feasibility study or the Company’s commitments to plan of action based on the then known facts. The Company has determined that it does not have any reclamation costs as at June 30, 2014 and 2013.
Recent Accounting Pronouncements
Recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC did not, or are not believed by management to, have a material impact on our present or future financial statements.
APOLO GOLD & ENERGY, INC.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2014 and 2013
Revenue Recognition
Sales are recorded when minerals are delivered to the purchaser.
The Company records revenue arising from the leasing or optioning of its mineral properties when it has a written contract with the lessee/optionee and reasonable assurance exists regarding measurement and collectability. The revenue is recognized as it accrues in accordance with the terms of the relevant agreement, and is first allocated against the carrying amount of mineral exploration and development costs retained, with any excess included in profit and loss.
Stock-Based Compensation
The Company has adopted FASB ASC Topic 505, Equity, and FASB ASC Topic 718, Compensation - Stock Compensation to account for its stock options and similar equity instruments issued. Accordingly, compensation costs attributable to stock options or similar equity instruments granted are measured at the fair value at the grant date, and expensed over the expected vesting period. Transactions in which goods or services are received from non-employees in exchange for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable.
NOTE 3 - RELATED PARTY TRANSACTIONS
As at June 30, 2014, the loans payable to related parties of $nil (2013 - $86,399) are due to a director of the Company.
In the fiscal 2014 year, consulting fees of $66,676 to an officer were recognized in operations for services rendered (2013- $6,000 to an officer).
NOTE 4 - PREFERRED STOCK
The Company’s directors authorized 25,000,000 preferred shares with a par value of $0.001. The preferred shares will have rights and preferences set from time to time by the Board of Directors. As of June 30, 2014 and 2013, the Company has no preferred shares issued and outstanding.
NOTE 5 - MINERAL PROPERTY INTERESTS
On December 11, 2013, the Company acquired a 70% interest in three gold exploration claims in China’s Xinjiang Province. The Company issued 6 million shares for the following claims:
● Gold Mine Reconnaissance in the West of Daqing Gerry River, Qinghe County, comprising of 7.91 sq km, the claims are valid until March 27, 2014.
● Gold Mine Detailed Survey in the Northwest of Sensha Water Mountain, Heshuo, comprising of 15.8 sq km, the claims are valid until July 3, 2015.
● Keler Nebrack Gold Mine Detailed Survey in Habar County, comprising of 10.28 sq km, the claims are valid until February 20, 2015.
The claims are automatically extended for twelve months upon payment of US$10,000 per claim.
NOTE 6 - INVESTMENTS
On December 23, 2013, the Company acquired a 24% interest in Jiangxi Everenergy New Material Co., Ltd. (“Everenergy”) The consideration was settled with the Company of 8-million restricted common stocks at a deemed price of $0.375 per share, plus $1-million in cash. Additionally, on February 19, 2014, the Company acquired an additional 29% interest in Everenergy. The consideration will be settled with the issue of 11-million restricted common stock at a deemed price of $0.45 per share. As at the date of this report, the ownership for both acquisitions have not been completed. Consequently, the acquisitions are treated as investment and no consolidation of the financial statements were adopted.
APOLO GOLD & ENERGY, INC.
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
June 30, 2014 and 2013
Everenergy produces and sells high-quality lithium batteries, cathode materials and relevant precursor materials.
The acquisition of shares in Everenergy is for investment purposes. Apolo from time to time may dispose of, or acquire, additional shares of Everenergy.
NOTE 7 - COMMON STOCK
At a shareholder meeting held October 29, 2010, shareholders authorized an increase in authorized capital from 200,000,000 to 300,000,000 common shares with a par value of $0.001. In addition, shareholders also authorized a share consolidation of 20:1. These financial statements have been restated retroactively to reflect this share consolidation.
There were 1,875,000 shares of common stock issued for a cash consideration of $0.08 per share during the period ending September 30, 2013. The shares were issued to a director of the Company.
On December 1, 2013, the Company issued 100,000 common shares to a consultant pursuant to an administrative consulting services agreement dated November 16, 2013.
Also on December 1, 2013, the Company issued 200,000 common shares to a consultant pursuant to an additional administrative consulting services agreement dated November 16, 2013.
On December 6, 2013, the Company issued 5,000,000 common shares at a price of $0.20 per share for proceeds of $1 million.
On December 16, 2013, the Company issued 6,000,000 common shares for three mineral properties.
On December 23, 2013, the Company issued 8,000,000 common shares to acquire a 24% interest in Everenergy.
On February 11, 2014, the Company issued 100,000 common shares to a senior officer for administrative consulting services agreement dated November 16, 2013.
On February 19, 2014, the Company issued 11,000,000 common shares to acquire a 29% in Everenergy.
On June 15, 2014, the Company issued 653,823 common shares to a director as repayment of debt.
There were no stock options, warrants or other potentially dilutive securities outstanding as at March 31, 2014 and June 30, 2014.
At June 30, 2014 there are 39,432,118 common shares issued and outstanding.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
Compliance with Environmental Regulations
The Company’s mining activities are subject to laws and regulations controlling not only the exploration and mining of mineral properties, but also the effect of such activities on the environment. Compliance with such laws and regulations may necessitate additional capital outlays, affect the economics of a project, and cause changes or delays in the Company’s activities.
Foreign Operations
The Company’s balance sheet at June 30, 2014 includes $41 of cash in Canada (2013 - $417). Although Canada is considered economically stable, it is always possible that unanticipated events in foreign countries could disrupt the Company’s operations.
NOTE 9 - SUBSEQUENT EVENTS
On September 17, 2014, the Company cancelled both shares acquisitions with Everenergy.
The Company will cancel the 19 million shares originally issued and seek repayment of the 1 million paid for the acquisition.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None
ITEM 9A.
ITEM 9A. CONTROLS AND PROCEDURES.
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer / Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of “disclosure controls and procedures” in Rule 13a-15(f). In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purpose in accordance with generally accepted accounting principles.
Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Based on this evaluation, management concluded that the Company’s internal control over financial reporting was not effective as of June 30, 2014. The material weakness identified is the lack of segregation of duties due to limited staff.
This change in financial reporting was the result of the former Chairman and CEO, who resigned because of illness during the fiscal year of 2011. The duties of Chairman and CEO were assumed by the CFO who continued with his duties as CFO in addition to new duties as Chairman and. This change created a lack of segregation of duties.
This weakness may result in a more than remote likelihood that a material misstatement would not be prevented or detected. The Company currently has no active business being conducted.
ITEM 9A(T). CONTROLS AND PROCEDURES.
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management’s report in this annual report.
PART III
ITEM 10.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
(a) Directors and Executive Officers
NAME
POSITION
Date of Position and Term of Office
Kelvin Chak
Director, President, Chief Executive Officer
-
Edward Low
Chief Financial Officer
-
Fan Xiaojun
Director
Resigned on July 2, 2014
Zheng Heping
Director
Resigned on July 2, 2014
Business Experience
Kelvin Chak
Mr. Kelvin Chak has been appointed President and Chief Executive Officer and Mr. Edward Low has been appointed Chief Financial Officer of the Corporation. They replace Mr. Robert Dinning who submitted his resignation as Director, President and CEO, CFO, and Secretary effective November 15, 2013.
Mr. Chak, based in Hong Kong, is a Solutions Engineer in Hong Kong with a 10 year career as an IT Engineer. He has a Master of Business Administration from the University of Surrey, United Kingdom, a Master of Information Technology from the University of Nottingham, United Kingdom and a BA Degree in Chinese Language from Hong Kong Baptist University.
Edward Low
Mr. Low, based in Vancouver, Canada, has provided accounting services to public companies for the past 18 years. Currently, Mr. Low is CFO of Alternative Earth Resources Inc. (AER:TSXV), June 2013 to present and QMC Quantum Minerals (QMC:TSXV), September 2014 to present. Mr. Low had been the Controller for Nevada Geothermal Power Inc., an alternative energy company with an operating Faulkner I geothermal power plant in northern Nevada, from February 2003 to June 2012. The plant was built with funding from EIG Global Energy Partners and John Hancock Life Insurance Company, along with cash grants from the US Department of Treasury.
Committees: Meetings of the Board
The Company does not have a separate Compensation Committee, Audit Committee or Nominating Committee. These functions are done by the Board of Directors meeting as a whole. The Company’s Board of Directors held both in person meetings during the fiscal year ended June 30, 2014 and meetings by were conducted by telephone. All corporate actions by the Board of Directors were either consented to in writing by all Directors or were agreed to unanimously at a meeting where proper notice had been given and a quorum was present.
Audit Committee
The board of directors has not established an audit committee. The functions of the audit committee are currently performed by the entire board of directors. The Company is under no legal obligation to establish an audit committee and has elected not to do so at this time so as to avoid the time and expense of identifying independent directors willing to serve on the audit committee. The Company may establish an audit committee in the future if the board determines it to be advisable or we are otherwise required to do so by applicable law, rule or regulation.
As the board of directors does not have an audit committee, it therefore has no “audit committee financial expert” within the meaning of Item 401(e) of Regulation S-B. except its chief financial officer. In general, an “audit committee financial expert” is an individual member of the audit committee who:
● understands generally accepted accounting principles and financial statements,
● is able to assess the general application of such principles in connection with accounting for estimates, accruals and reserves,
● has experience preparing, auditing, analyzing or evaluating financial statements comparable to the breadth and complexity to our financial statements,
● understands internal controls over financial reporting, and
● understands audit committee functions.
Board of Directors Independence
One of the Company’s directors is “independent” within the meaning of definitions established by the Securities and Exchange Commission or any self-regulatory organization. This director is Kelvin Chak. The Company is not currently subject to any law, rule or regulation requiring that all or any portion of its board of directors include “independent” directors.
Director Nominees
The Company does not have a nominating committee. The board of directors, sitting as a board, selects those individuals to stand for election as members of our board. Since the board of directors does not include a majority of independent directors, the decision of the board as to director nominees is made by persons who have an interest in the outcome of the determination. The board will consider candidates for directors proposed by security holders, although no formal procedures for submitting candidates have been adopted. Until otherwise determined, not less than 90 days prior to the next annual board of directors’ meeting at which the slate of board nominees is adopted, the board accepts written submissions that include the name, address and telephone number of the proposed nominee, along with a brief statement of the candidate’s qualifications to serve as a director and a statement of why the shareholder submitting the name of the proposed nominee believes that the nomination would be in the best interests of shareholders. If the proposed nominee is not the security holder submitting the name of the candidate, a letter from the candidate agreeing to the submission of his or her name for consideration should be provided at the time of submission. The letter should be accompanied by a resume supporting the nominee’s qualifications to serve on the board of directors, as well as a list of references.
The board identifies director nominees through a combination of referrals, including by management, existing board members and security holders, where warranted. Once a candidate has been identified the board reviews the individual’s experience and background, and may discuss the proposed nominee with the source of the recommendation. If the board believes it to be appropriate, board members may meet with the proposed nominee before making a final determination whether to include the proposed nominee as a member of management’s slate of director nominees submitted for shareholders for election to the board.
Among the factors that the board considers when evaluating proposed nominees are their experience in the information technology industry, knowledge of and experience with and knowledge of and experience in business matters, finance, capital markets and mergers and acquisitions. The board may request additional information from the candidate prior to reaching a determination. The board is under no obligation to formally respond to all recommendations, although as a matter of practice, it will endeavor to do so.
Security Holder Communications with our Board of Directors
The Company provides an informal process for security holders to send communications to our board of directors. Security holders who wish to contact the board of directors or any of its members may do so by writing to Apolo Gold & Energy Inc., #210 - 905 West Pender Street, Vancouver BC, Canada V6C 1L6.
Correspondence directed to an individual board member is referred, unopened, to that member. Correspondence not directed to a particular board member is referred, unopened, to the President and CEO.
Code of Ethics
Under the Sarbanes-Oxley Act of 2002 and the Securities and Exchange Commission’s related rules, the Company is required to disclose whether it has adopted a code of ethics that applies to the Company’s principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions. The Company has adopted a code of ethics that applies to its chief executive officer, chief financial officer and other officers, legal counsel and to any person performing similar functions. The Company has made the code of ethics available and intends to provide disclosure of any amendments or waivers of the code within five business days after an amendment or waiver on the Company’s website wwww.apologold.com.
Compliance with Section 16(a) of Securities Exchange Act of 1934
During the fiscal year ended June 30, 2014 our Directors and Officers have complied with all applicable Section 16(a) filing requirements.
Family Relationships
There is no family relationship between any Director, executive or person nominated or chosen by the Company to become a Director or executive officer.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION.
Furnish the information required by Item 402 of Regulation S-K (§ 229.402 of this chapter) and paragraph (e)(4) and (e)(5) of Item 407 of Regulation S-K
The following table shows for the fiscal years ending June 30, 2014, and 2013, the compensation awarded or paid by the Company to its Chief Executive Officer. No executive officers of the Company had total salary and bonus exceeding $100,000 during such year.
Summary Compensation Table
Option Grants in Last Fiscal Year and June 30, 2013 was - Nil
Compensation of Directors
Standard Arrangements: The members of the Company’s Board of Directors are reimbursed for actual expenses incurred in attending Board meetings.
Other Arrangements: There are no other arrangements.
Employment Contracts and Termination of Employment, And Change-in-control Arrangements
The Company’s CEO and CFO do not have employment agreements.
Termination of Employment and Change of Control Arrangement
There is no compensatory plan or arrangement in excess of $100,000 with respect to any individual named above which results or will result from the resignation, retirement or any other termination of employment with the Company, or from a change in the control of the Company.
Compensation Discussion and Analysis
The following Compensation Discussion and Analysis (CD&A) provides information on the compensation programs established for our “Named Executive Officers” during our fiscal year ended June 30, 2014. All information provided herein should be read in conjunction with the tables provided below.
Our Board of Directors is responsible for establishing, implementing and monitoring the policies governing compensation for our executives. Currently our Board does not have a compensation committee. Our officers are members of our Board of Directors and are able to vote on matters of compensation. We are not currently under any legal obligation to establish a compensation committee and have elected not to do so at this time. In the future, we may establish a compensation committee if the Board determines it to be advisable or we are otherwise required to do so by applicable law, rule or regulation. During the year ended June 30, 2014 our Board did not employ any outside consultants to assist in carrying out its responsibilities with respect to executive compensation, although we have access to general executive compensation information regarding both local and national industry compensation practices. In future periods we may participate in regional and national surveys that benchmark executive compensation by peer group factors such as company size, annual revenues, market capitalization and geographical location.
The executive employment market in general is very competitive due to the number of companies with whom we compete to attract and retain executive and other staff with the requisite skills and experience to carry out our strategy and to maintain compliance with multiple Federal and State regulatory agencies. Many of these companies have significantly greater economic resources than our own. Our Board has recognized that our compensation packages must be able to attract and retain highly talented individuals that are committed to our goals and objectives, without at this time paying cash salaries that are competitive with some of our peers with greater economic resources. Our compensation structure is weighted towards equity compensation in the form of options to acquire common stock, which the Board believes motivates and encourages executives to pursue strategic opportunities while managing the risks involved in our current business stage, and aligns compensation incentives with value creation for our shareholders.
Components of Our Executive Compensation Program
Our executive compensation program incorporates components we believe are necessary in order for the Company to provide a competitive compensation package relative to our peers and to provide an appropriate mix between short-term and long-term cash and non-cash compensation. Elements of our executive compensation are listed below:
● Base Salary
● Stock Awards
● Other benefits available to all employees
● Items specific to our President and Chief Executive Officer per an employment agreement
Base Salary: At present we do not have a salary structure for employees and executives is based on skill set, knowledge and responsibilities. Base salaries may be established as necessary. During the year ended June 30, 2014 none of our Named Executive Officers received a salary increase.
Stock Awards: A portion of compensation paid to our executives is equity based. We believe equity compensation helps align the interests of our executives with the interests of our shareholders. In that regard, our executives’ compensation is subject to downside risk in the event that our common stock price decreases. In addition, we believe stock awards provide incentives to aid in the retention of key executives.
Other Benefits: Our Executive Officers and employees receive no other benefits.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Item 13.
Item 13. Certain Relationships and Related Transactions: None
Item 14.
Item 14. Principal Accountant Fees And Services
Weld Asia Associates is the Company’s independent auditor to examine the financial statements of the Company for the fiscal year ending June 30, 2014.
Audit Fees
Weld Asia Associates was paid aggregate fees of approximately $ 10,000 for 2014 for professional services rendered for the audit of the Company’s annual financial statements and for the reviews of the financial statements included in Company’s quarterly reports on Form 10QSB during these fiscal years.
Audit -Related Fees
Weld Asia Associates was not paid any additional fees for the fiscal year ended June 30, 2014 for assurance and related services reasonably related to the performance of the audit or review of the Company’s financial statements.
Tax Fees
Weld Asia Associates was not paid any aggregate fees for the fiscal years ended June 30, 2014 for professional services rendered for tax compliance, tax advice and tax planning. This service was not provided.
Other Fees
Weld Asia Associates was paid no other fees for professional services during the fiscal years ended June 30, 2014.
Item 15.
Item 15. Exhibits and Financial Statement Schedules
A. Exhibits
3.1 Articles of Incorporation (Incorporated by reference from Form 10SB)
3.2 By-Laws effective May 20, 2005 (Incorporated by reference from Current Report on Form 8-K filed on May 31, 2005)
3.3 Certificate of Amendment (Incorporated by reference from Annual Report on Form 10KSB filed on August 29, 2005)
Code of Ethics (Incorporated by reference from Annual Report on Form 10KSB filed on August 27, 2004)
16.1 Letter of Williams & Webster, P.S., dated September 16, 2008, regarding change in certifying accountant of Apolo Gold & Energy, Inc. (Incorporated by reference from Current Report on Form 8-K filed on September 16, 2008)
31.1 Sarbanes Oxley Section 302 Certification from C.E.O.
31.2 Sarbanes Oxley Section 302 Certification from C.F.O.
32.1 Sarbanes Oxley Section 906 Certification from C.E.O.
32.2 Sarbanes Oxley Section 906 Certification from C.F.O.
Interactive Data Files
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.
Date: September 29, 2014
/s/ Kelvin Chak
Kelvin Chak, President/CEO
In accordance with the Exchange Act, 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
Date
/s/ Kelvin Chak
Kelvin Chak
Chairman, President, CEO, Director
September 29,
/s/ Edward Low
Edward Low
Chief Financial Officer
September 29,