Attached files
| file | filename |
|---|---|
| EX-32 - Pioneer Exploration Inc. | exhibit32.htm |
| EX-31 - Pioneer Exploration Inc. | exhibit31.htm |
| EX-10.9 - Pioneer Exploration Inc. | exhibit10-9.htm |
| EX-10.10 - Pioneer Exploration Inc. | exhibit10-10.htm |
| EX-10.11 - Pioneer Exploration Inc. | exhibit10-11.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
|
[
X ]
|
ANNUAL
REPORT PURSUANT TO SECTION 13 0R 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
fiscal year ended August
31, 2009
|
[ ]
|
TRANSITION
REPORT PURSUANT TO SECTION 13 0R 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
transition period from ______________
to ______________
Commission
file
number 000-53784
|
PIONEER
EXPLORATION INC.
|
|
(Exact
name of registrant as specified in its
charter)
|
|
Incorporated in the State of
Nevada
|
98-0491551
|
|
(State
or other jurisdiction of incorporation or
organization)
|
(I.R.S. Employer Identification No.) |
|
750
West Pender Street, Suite 202
Vancouver, British Columbia,
Canada
|
V6C
2T7
|
| (Address of principal executive offices) | (Zip Code) |
Registrant’s
telephone number, including area code: (604)
618-0948
Securities
registered pursuant to Section 12(b) of the Act:
|
Title
of each class
|
Name
of each exchange on which registered
|
|
None
|
N/A
|
Securities
registered pursuant to Section 12(g) of the Act:
|
common
stock - $0.001 par value
|
|
(Title
of Class)
|
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.
[ ]
Yes [ X
] No
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.
[ ]
Yes [ X
] No
Note - Checking the box above
will not relieve any registrant required to file reports pursuant to Section 13
or Section 15(d) of the Exchange Act from their obligations under those
sections.
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
last 12 months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements for the
past 90 days. [ X ]
Yes [ ] No
Page
- 1
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this
chapter) during the preceeding 12 months (or for such shorter period that the
registrant was required to submit and post such files).
[ ]
Yes [ ] No
Indicate
by check mark if disclosure of delinquent filers in response to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer”,
“accelerated filer” and “smaller reporting company in Rule 12b-2 of the Exchange
Act.
Larger
accelerated
filer [ ]
Accelerated
filer
[ ]
Non-accelerated
filer
[ ] (Do not check if a smaller reporting
company) Smaller
reporting
company
[ X ]
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act).
[
X ]
Yes [ ] No
State the
aggregate market value of the voting and non-voting common equity held by non-affiliates computed by
reference to the price at which the common equity was sold, or the average bid
and asked price of such common equity, as of the last business day of the
registrant’s most recently completed second fiscal quarter: $9,917,400 ($1.20 X 8,264,500) as of
February 28, 2009
State the
number of shares outstanding of each of the issuer’s classes of common equity,
as of the latest practicable date.
|
Class
|
Outstanding at November 30,
2009
|
|
common
stock - $0.001 par value
|
11,264,500
|
Documents
incorporated by reference: Exhibit 3.1 (Articles of Incorporation)
and Exhibit 3.2 (By-laws) both filed as exhibits to Pioneer’s registration
statement on Form SB-2 filed on July 13, 2006; Exhibit 10.4 (Letter Agreement
(Macleod)) filed as an exhibit to Pioneer’s Form 8-K (Current Report) filed on
November 13, 2008; Exhibit 10.5 (Letter Agreement(McGavney)) filed as an exhibit
to Pioneer’s Form 8-K (Current Report) filed on November 13, 2008; Exhibit 10.6
(Share Purchase Agreement (Macleod)) filed as an exhibit to Pioneer’s Form 8-K
(Current Report) filed on November 26, 2008; Exhibit 10.7 (Share Purchase
Agreement (McGavney)) filed as an exhibit to Pioneer’s Form 8-K (Current Report)
filed on November 26, 2008; Exhibit 10.8 (Promissory Note) filed as an exhibit
to Pioneer’s Form 10-K (Annual Report) filed on December 2, 2008; Exhibit 14
(Code of Ethics) filed as an exhibit to Pioneer’s Form 10-Q (Quarterly Report)
filed on April 16, 2008; and Exhibit 99.1 (Disclosure Committee Charter) filed
as an exhibit to Pioneer’s Form 10-Q (Quarterly Report) filed on April 20,
2009.
Page
- 2
Forward
Looking Statements
The
information in this annual report contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These forward-looking statements
involve risks and uncertainties, including statements regarding Pioneer’s
capital needs, business strategy and expectations. Any statements
contained herein that are not statements of historical facts may be deemed to be
forward-looking statements. In some cases, you can identify
forward-looking statements by terminology such as “may”, “will”, “should”,
“expect”, “plan”, “intend”, “anticipate”, “believe”, “estimate”, “predict”,
“potential” or “continue”, the negative of such terms or other comparable
terminology. Actual events or results may differ materially. In
evaluating these statements, you should consider various factors, including the
risks outlined from time to time, in other reports Pioneer’s files with the
Securities and Exchange Commission.
The
information constitutes forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. The forward-looking
statements in this Form 10-K for the fiscal year ended August 31, 2009, are
subject to risks and uncertainties that could cause actual results to differ
materially from the results expressed in or implied by the statements contained
in this report. As a result, the identification and interpretation of
data and other information and their use in developing and selecting assumptions
from and among reasonable alternatives requires the exercise of
judgment. To the extent that the assumed events do not occur, the
outcome may vary substantially from anticipated or projected results, and
accordingly, no opinion is expressed on the achievability of those
forward-looking statements. No assurance can be given that any of the
assumptions relating to the forward-looking statements specified in the
following information are accurate.
All
forward-looking statements are made as of the date of filing of this Form 10-K
and Pioneer disclaims any obligation to publicly update these statements, or
disclose any difference between its actual results and those reflected in these
statements. Pioneer may, from time to time, make oral forward-looking
statements. Pioneer strongly advises that the above paragraphs and
the risk factors described in this Annual Report and in Pioneer’s other
documents filed with the United States Securities and Exchange Commission should
be read for a description of certain factors that could cause the actual results
of Pioneer to materially differ from those in the oral forward-looking
statements. Pioneer disclaims any intention or obligation to update or revise
any oral or written forward-looking statements whether as a result of new
information, future events or otherwise.
PART
I
Item
1. Description
of Business.
|
(a)
|
Business
Development
|
Pioneer
Exploration Inc. (“Pioneer”) is a Nevada
corporation that was incorporated on June 9, 2005.
Pioneer
maintains its statutory resident agent’s office at 1859 Whitney Mesa Drive, Henderson,
Nevada, 89014 and its business office is located at 750 West Pender
Street, Suite 202, Vancouver, British Columbia, V6C 2T7,
Canada. Pioneer’s office telephone number is (604)
618-0948.
Page
- 3
Pioneer
has an authorized capital of 75,000,000 shares, consisting of (a) 65,000,000
shares of Common Stock with a par value of $0.001 per share, of which 11,264,500
shares of Common Stock are currently issued and outstanding, and (b) 10,000,000
shares of Preferred Stock with a par value of $0.001 per share, of which no
shares of Preferred Stock are issued or outstanding.
Pioneer
has not been involved in any bankruptcy, receivership or similar proceedings.
There has been no material reclassification, merger consolidation or purchase or
sale of a significant amount of assets not in the ordinary course of Pioneer’s
business.
|
(b)
|
Business
of Pioneer
|
Pioneer
is engaged in the acquisition and exploration of mineral exploration
properties.
Pioneer
is presently seeking to acquire a new mineral or oil and gas exploration
property. Pioneer has minimal finances and accordingly there is no
assurance that it will be able to acquire an interest in a new
property. Pioneer anticipates that it will have to complete
additional financings in connection with the acquisition of any new
property. To date, Pioneer has not entered into any agreement for the
acquisition of any interest in a new property. Further, Pioneer has
no arrangements for any financing required to fund its continued operations or
the acquisition of any interest in a new property. Based on Pioneer’s
financial position, there is no assurance that it will be able to continue its
business operations.
Pioneer
has not generated any revenue or conducted any development operations since
inception.
In
January 2008, Pioneer abandoned its interest in three mineral exploration claims
named Pipe 1, Queen 1 and Queen 2, which were collectively known as the “Pipe Property” and which are
situated along Sawmill Creek, a tributary of the Fraser River, approximately 6.3
km (3.9 miles) northwest of Yale, British Columbia in the New Westminster mining
division of British Columbia, Canada. Pioneer conducted the first
phase of an initial preliminary exploration program for nickel and molybdenum on
the Pipe Property. Pioneer obtained a geological report in November
2007 that summarized the results and conclusions of this initial phase, which
concluded that further exploration of the Pipe Property was not
warranted. Accordingly, Pioneer has abandoned its interest in the
Pipe Property.
During
Pioneer’s fiscal year end, Pioneer entered in two share purchase agreements to
acquire an aggregate 125,000 shares in the capital of Macallan Oil & Gas
Inc., which represented 2.1% of all of the issued and outstanding shares of
Macallan Oil & Gas Inc. Macallan Oil & Gas Inc. is a private
Barbados company and had a 39% revenue interest in an oil discovery in Trinidad
Tobago.
On
November 20, 2008, Pioneer entered into a share purchase agreement with Scott
Macleod for the acquisition of 75,000 shares in the capital of Macallan Oil
& Gas Inc. for the purchase price of CDN$56,250. Pioneer agreed
to pay Mr. Macleod CDN$11,700 as an initial payment, which was paid by Pioneer
to Mr. Macleod on the day of signing the share purchase
agreement. Pioneer made three more payments of CDN$14,850 each on
January 14, 2009, February 20, 2009 and May 21, 2009 respectively.
Page
- 4
Also, on
November 20, 2008, Pioneer entered into a share purchase agreement with Ian
McGavney for the acquisition of 50,000 shares in the capital of Macallan Oil
& Gas Inc. for the purchase price of CDN$37,500. Pioneer agreed
to pay Mr. McGavney CDN$7,800 as an initial payment, which was paid by Pioneer
to Mr. McGavney on the day of signing the share purchase
agreement. Pioneer made three more payments of CDN$9,900 each on
January 20, 2009, March 11, 2009 and May 21, 2009 respectively.
The
effective date of sale and purchase of the 125,000 shares was May 21,
2009.
See
Exhibit 10.6 – Share Purchase Agreement (Macleod) and Exhibit 10.7 – Share
Purchase Agreement (McGavney) for more details.
On
November 20, 2008, the Company received a $50,000 loan by issue of a promissory
note. The note is convertible to 200,000 common shares of the Company at the
lender’s sole option. The note is non-interest bearing, unsecured and is payable
on demand. See Exhibit 10.8 – Promissory Note for more
details.
On
February 19, 2009, the Company received a $50,000 loan by issue of a promissory
note. The note is convertible to 41,667 common shares of the Company at the
lender’s sole option. The note is non-interest bearing, unsecured and is payable
on demand. See Exhibit 10.9 – Promissory Note for more
details.
On May
15, 2009, the Company received a $36,000 loan by issue of a promissory note. The
note is convertible to 20,000 common shares of the Company at the lender’s sole
option. The note is non-interest bearing, unsecured and is payable on
demand. See Exhibit 10.10 – Promissory Note for more
details.
On
November 26, 2009, subsequent to Pioneer’s fiscal year end, it came to the
attention of management that Macallan Oil & Gas Inc. no longer had its
revenue interest in the oil discovery in Trinidad Tobago. Management
cannot confirm when exactly or how Macallan Oil & Gas Inc. lost its revenue
interest as Macallan Oil & Gas Inc. is a private company and management does
not have access to those records. As a result of the loss of revenue
interest, management immediately contacted the previous sellers of the shares
and demanded that the sellers repurchase from Pioneer the 125,000 shares in
Macallan Oil & Gas Inc. As a result, the sellers arranged for
Skye Capital Corporation to purchase the 125,000 shares from Pioneer at a
purchase price of CDN$100,000 payable on or before May 31, 2010 pursuant to the
terms and conditions of a share purchase agreement and promissory
note. To date, Pioneer has not received any of the purchase
proceeds. See Exhibit 10.11 – Share Purchase Agreement and Promissory
Note for more details.
Competition
The
mineral exploration business is an extremely competitive
industry. Pioneer is competing with many other exploration companies
looking for minerals. Pioneer is one of the smallest exploration
companies and a very small participant in the mineral exploration
business. Being a junior mineral exploration company, Pioneer
competes with other similar companies for financing and joint venture
partners. Additionally, Pioneer competes for resources such as
professional geologists, camp staff, rental equipment, and mineral exploration
supplies.
Raw
Materials
The raw
materials for any of Pioneer’s exploration program will include camp equipment,
hand exploration tools, sample bags, first aid supplies, groceries and
propane. All of these types of materials are readily available from a
variety of suppliers. If heavy machinery and qualified operators are
required, Pioneer intends to contract the services of professional mining
contractors, drillers and geologist.
Dependence
on Major Customers
Pioneer
has no customers.
Patents/Trade
Marks/Licences/Franchises/Concessions/Royalty Agreements or Labour
Contracts
Pioneer
has no intellectual property such as patents or trademarks. Additionally,
Pioneer has no royalty agreements or labor contracts.
Government
Controls and Regulations
Pioneer’s
business is subject to various levels of government controls and regulations,
which are supplemented and revised from time to time. However,
Pioneer is unable to predict what additional legislation or revisions may be
proposed that might affect its business or when any such proposals, if enacted,
might become effective. Such changes, however, could require
increased capital and operating expenditures and could prevent or delay certain
operations by Pioneer.
The
various levels of government controls and regulations address, among other
things, the environmental impact of mining and mineral processing
operations. With respect to the regulation of mining and processing,
legislation and regulations in various jurisdictions establish performance
standards, air and water quality emission standards and other design or
operational requirements for various components of operations, including health
and safety standards. Legislation and regulations also establish
requirements for decommissioning, reclamation and rehabilitation of mining
properties following the cessation of operations, and may require that some
former mining properties be managed for long periods of time.
Costs
and Effects of Compliance with Environmental Laws
Pioneer
currently has no costs to comply with environmental laws.
Expenditures
on Research and Development During the Last Two Fiscal Years
Pioneer
has not incurred any research or development expenditures since its inception on
June 9, 2005.
Number
of Total Employees and Number of Full Time Employees
Pioneer
does not have any employees other than the directors and officers of
Pioneer. Pioneer intends to retain the services of independent
geologists, prospectors and consultants on a contract basis to conduct the
exploration programs on as required throughout the course of its mineral
exploration program.
Item
1A. Risk Factors.
Pioneer
is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and
is not required to provide the information required under this
item.
Page
- 5
Item
1B. Unresolved Staff Comments.
Pioneer
is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and
is not required to provide the information required under this
item.
Item
2. Description
of Property.
Pioneer’s
executive offices are located at 750 West Pender Street, Suite 202, Vancouver,
British Columbia, V6C 2T7, Canada.
Pioneer
currently has no interest in any property.
Item
3. Legal
Proceedings.
Pioneer
is not a party to any pending legal proceedings and, to the best of Pioneer’s
knowledge, none of Pioneer’s property or assets are the subject of any pending
legal proceedings.
Item
4. Submission
of Matters to a Vote of Security Holders.
No matter
was submitted to a vote of security holders, through the solicitation of proxies
or otherwise, during the fourth quarter of the fiscal year covered by this
report.
PART
II
|
Item
5.
|
Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities.
|
(a) Market
Information
Pioneer’s
common stock has been quoted on the NASD OTC Bulletin Board under the symbol
“PIEX” since October 9, 2007. The table below gives the high and low
bid information for each fiscal quarter of trading and for the interim period
ended November 24, 2009. The bid information was obtained from Pink
OTC Markets Inc. and reflects inter-dealer prices, without retail mark-up,
mark-down or commission, and may not represent actual transactions.
|
High
& Low Bids
|
|||
|
Period
ended
|
High
|
Low
|
Source
|
|
24
November 2009
|
$2.50
|
$2.50
|
Pink
OTC Markets Inc.
|
|
31
August 2009
|
$2.85
|
$2.15
|
Pink
OTC Markets Inc.
|
|
31
May 2009
|
$2.35
|
$1.70
|
Pink
OTC Markets Inc.
|
|
29
February 2009
|
$1.70
|
$0.95
|
Pink
OTC Markets Inc.
|
|
30
November 2008
|
$0.95
|
$0.10
|
Pink
OTC Markets Inc.
|
|
31
August 2008
|
$0.10
|
$0.10
|
Pink
OTC Markets Inc.
|
|
31
May 2008
|
$0.10
|
$0.10
|
Pink
OTC Markets Inc.
|
|
29
February 2008
|
$0.10
|
$0.10
|
Pink
OTC Markets Inc.
|
|
30
November 2007
|
$0.10
|
$0.10
|
Pink
OTC Markets Inc.
|
(b) Holders
of Record
Pioneer
has approximately 40 holders of record of Pioneer’s common stock as of August
31, 2009 according to a shareholders’ list provided by Pioneer’s transfer agent
as of that date. The number of registered shareholders does not
include any estimate by Pioneer of the number of beneficial owners of common
stock held in street name. The transfer agent for Pioneer’s common
stock is Empire Stock Transfer Inc., 1859 Whitney Mesa Drive, Henderson, Nevada,
89014 and their telephone number is 702-818-5898.
(c) Dividends
Pioneer
has declared no dividends on its common stock, and is not subject to any
restrictions that limit its ability to pay dividends on its shares of common
stock. Dividends are declared at the sole discretion of Pioneer’s
Board of Directors.
Page
- 6
(d) Recent
Sales of Unregistered Securities
There
have been no sales of unregistered securities within the last three years that
would be required to be disclosed pursuant to Item 701 of Regulation
S-K.
There are
no outstanding options or warrants to purchase, or securities convertible into,
shares of Pioneer’s common stock.
|
(e)
|
Penny
Stock Rules
|
Trading
in Pioneer’s common stock is subject to the “penny stock” rules. The
SEC has adopted regulations that generally define a penny stock to be any equity
security that has a market price of less than $5.00 per share, subject to
certain exceptions. These rules require that any broker-dealer who
recommends Pioneer’s common stock to persons other than prior customers and
accredited investors, must, prior to the sale, make a special written
suitability determination for the purchaser and receive the purchaser’s written
agreement to execute the transaction. Unless an exception is
available, the regulations require the delivery, prior to any transaction
involving a penny stock, of a disclosure schedule explaining the penny stock
market and the risks associated with trading in the penny stock
market. In addition, broker-dealers must disclose commissions payable
to both the broker-dealer and the registered representative and current
quotations for the securities they offer. The additional burdens
imposed upon broker-dealers by such requirements may discourage broker-dealers
from effecting transactions in Pioneer’s securities, which could severely limit
their market price and liquidity of Pioneer’s securities. The
application of the “penny stock” rules may affect your ability to resell
Pioneer’s securities.
Item
6. Selected Financial Data.
Pioneer
is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and
is not required to provide the information required under this
item.
Item
7. Management’s
Discussion and Analysis of Financial Condition and Results of
Operations.
THE
FOLLOWING PRESENTATION OF THE PLAN OF OPERATION OF PIONEER EXPLORATION INC.
SHOULD BE READ IN CONJUNCTION WITH THE AUDITED FINANCIAL STATEMENTS AND OTHER
FINANCIAL INFORMATION INCLUDED HEREIN.
Overview
Pioneer
was incorporated in the State of Nevada on June 9, 2005.
Pioneer
is an exploration stage company. Pioneer’s principal business is the
acquisition and exploration of mineral resources. Pioneer does not
currently have any interest in any mineral exploration properties and is
presently seeking to acquire a new mineral or oil and gas exploration
property.
Management
has decided to expand Pioneer’s focus and identify and assess new projects for
acquisition purposes that are more global in nature. Management will
continue to focus on exploring and adding value to the project interests already
acquired but will also now focus on new projects on an international
level.
Plan
of Operation
During
the next 12 months management plans on acquiring an interest in a new mineral or
oil and gas exploration property. Pioneer has minimal finances and
accordingly there is no assurance that it will be able to acquire an interest in
any new property. Management anticipates that Pioneer will have to
complete additional financings in connection with the acquisition of any
interest in a new property. To date, Pioneer has not entered into any
agreements for the acquisition of any interest in a new
property. Further, Pioneer has no arrangements for any financing
required to funds our continued operations or the acquisition of any interest in
a new property. Further, even if Pioneer is able to acquire an
interest in a new property, there is no assurance that it will be able to raise
the financing necessary to complete exploration of the new
property. Based on Pioneer’s financial position, there is no
assurance that Pioneer will be able to continue its business
operations.
Page
- 7
In
addition, management anticipates incurring the following expenses during the
next 12 month period:
|
·
|
Management
anticipates spending approximately $3,000 in ongoing general and
administrative expenses per month for the next 12 months, for a total
anticipated expenditure of $36,000 over the next 12 months. The
general and administrative expenses for the year will consist primarily of
professional fees for the audit and legal work relating to Pioneer’s
regulatory filings throughout the year, as well as transfer agent fees,
annual mineral claim fees and general office
expenses.
|
|
·
|
Management
anticipates spending approximately $12,000 in complying with Pioneer’s
obligations as a reporting company under the Securities Exchange Act of
1934. These expenses will consist primarily of
professional fees relating to the preparation of Pioneer’s financial
statements and completing its annual report, quarterly report, and current
report filings with the SEC.
|
As at
August 31, 2009, Pioneer had cash of $5,299 and a working capital deficit of
$210,559. Accordingly, Pioneer will require additional financing in
the amount of $258,559 in order to fund its obligations as a reporting company
under the Securities Act of
1934 and its general and
administrative expenses for the next 12 months.
During
the 12 month period following the date of this annual report, management
anticipates that Pioneer will not generate any revenue. Accordingly,
Pioneer will be required to obtain additional financing in order to continue its
plan of operations. Management believes that debt financing will not
be an alternative for funding Pioneer’s plan of operations as it does not have
tangible assets to secure any debt financing. Rather management
anticipates that additional funding will be in the form of equity financing from
the sale of Pioneer’s common stock. However, Pioneer does not have
any financing arranged and cannot provide investors with any assurance that it
will be able to raise sufficient funding from the sale of its common stock to
fund its plan of operations. In the absence of such financing,
Pioneer will not be able to acquire any interest in a new property and its
business plan will fail. Even if Pioneer is successful in obtaining
equity financing and acquire an interest in a new property, additional
exploration property will be required before a determination as to whether
commercially exploitable mineralization or quantities of oil or gas
present. If Pioneer does not continue to obtain additional financing,
it will be forced to abandon its business and plan of operations.
Risk
Factors
An
investment in Pioneer’s common stock involves a number of very significant
risks. Prospective investors should refer to all the risk factors
disclosed in Pioneer’s Form SB-2/A filed on February 20, 2007 and Pioneer’s Form
10-KSB filed on December 11, 2007.
Financial
Condition
As at
August 31, 2009, Pioneer had a cash balance of $5,299. Management
does not anticipate generating any revenue for the foreseeable
future. When additional funds become required, the additional funding
will come from equity financing from the sale of Pioneer’s common stock or sale
of part of its interest in Macallan Oil & Gas Inc. If Pioneer is
successful in completing an equity financing, existing shareholders will
experience dilution of their interest in Pioneer. Pioneer does not
have any financing arranged and Pioneer cannot provide investors with any
assurance that Pioneer will be able to raise sufficient funding from the sale of
its common stock. In the absence of such financing, Pioneer’s
business will fail.
Based on
the nature of Pioneer’s business, management anticipates incurring operating
losses in the foreseeable future. Management bases this expectation,
in part, on the fact that very few mineral claims in the exploration stage
ultimately develop into producing, profitable mines. Pioneer’s future
financial results are also uncertain due to a number of factors, some of which
are outside its control. These factors include, but are not limited
to:
|
·
|
Pioneer’s
ability to raise additional
funding;
|
|
·
|
the
market price for minerals;
|
|
·
|
the
results of Pioneer’s proposed exploration programs on its exploration
mineral properties; and
|
|
·
|
Pioneer’s
ability to find joint venture partners for the development of its
exploration mineral properties.
|
Due to
Pioneer’s lack of operating history and present inability to generate revenues,
Pioneer’s auditors have stated their opinion that there currently exists a
substantial doubt about Pioneer’s ability to continue as a going
concern. Even if Pioneer acquires a mineral or oil and gas property
and raises the necessary capital to conduct an exploration program, and it is
successful in identifying a mineral deposit, Pioneer will have to spend
substantial funds on further drilling and engineering studies before it will
know if it has a commercially viable mineral deposit or reserve.
Page
- 8
Functional
Currency
Pioneer’s
functional currency is the United States dollar. Pioneer has
determined that its functional currency is the United States dollar for the
following reasons:
● Pioneer’s current and future
financings are and will be in United States dollars;
● Pioneer maintains a majority
of its cash holdings in United States dollars;
● a
majority of Pioneer’s administrative expenses are undertaken in United States
dollars; and
● all cash flows are generated
in United States dollars.
Exploration
Expenses – Canadian GAAP vs. US GAAP
Under
Canadian GAAP, mineral properties including exploration, development and
acquisition costs, may be carried at cost and charged to operations if the
properties are abandoned or impaired. Under US GAAP, all expenditures
relating to mineral interests prior to the completion of a definitive
feasibility study, which establishes proven and probable reserves, must be
expensed as incurred. Once a final feasibility study has been
completed, additional costs incurred to bring a mine into production are
capitalized as development costs. Pioneer’s audited financial
statements use US GAAP.
Liquidity
and Capital Resources
As of
August 31, 2009, Pioneer had total assets of $81,688, and a working capital
deficit of $210,559, compared with a working capital deficit of $78,807 as of
August 31, 2008. The increase in the working capital deficit was
primarily due to an increase in convertible notes payable, and the amount due to
a related party, and a decrease in accounts payable. The assets
consisted of $5,299 in cash and $76,389 in the investment of the Macallan Oil
& Gas Inc. shares and the liabilities consisted of $1,909 in accounts
payable, $29,300 in accrued liabilities, 136,000 in convertible notes payable,
and $48,649 due to a related party.
There are
no assurances that Pioneer will be able to achieve further sales of its common
stock or any other form of additional financing. If Pioneer is unable
to achieve the financing necessary to continue its plan of operations, then
Pioneer will not be able to continue its exploration programs and its business
will fail.
Net Cash
Used in Operating Activities
For the
fiscal year ended August 31, 2009, net cash used in operating activities
increased to $59,506 compared with $31,417 for the same period in the previous
fiscal year.
At August
31, 2009, Pioneer had cash of $5,299. During the fiscal year ended
August 31, 2009, Pioneer used $59,506 in cash for operating
activities.
Net Cash
Provided by Investing Activities
Net cash
provided by investing activities was $76,389 for the fiscal year ended August
31, 2009 as compared with cash flow from investing activities of $nil for the
same period in the previous fiscal year. The increase in net cash
provided by investing activities was due to the purchase of the Macallan Oil
& Gas Inc. shares.
Net Cash
Provided by Financing Activities
Net cash
flows provided by financing activities increased to $140,977 for the fiscal year
ended August 31, 2009 as compared with financing activities of $31,472 for the
same period in the previous fiscal year. The increase in net cash
provided by financing activities was due to the proceeds from convertible notes
payable and advances from a related party.
Page
- 9
Results
of Operation for the Period Ended August 31, 2009
Pioneer
has had no operating revenues since its inception on June 9, 2005, through to
August 31, 2009. Pioneer’s activities have been financed from the
proceeds of share subscriptions. From its inception, on June 9, 2005,
to August 31, 2009 Pioneer has raised a total of $64,901 from private offerings
of its common stock.
References
to the discussion below to fiscal 2009 are to Pioneer’s fiscal year ended on
August 31, 2009. References to fiscal 2008 are to Pioneer’s fiscal
year ended August 31, 2008.
|
Accumulated
from June 9, 2005 (Date of Inception) to August 31, 2009
$
|
For
the Year Ended
August
31, 2009
$
|
For
the Year Ended August 31, 2008
$
|
|
|
(Audited)
|
(Audited)
|
(Audited)
|
|
|
Revenue
|
–
|
–
|
–
|
|
Expenses
|
|||
|
Donated
rent
|
11,250
|
1,500
|
3,000
|
|
Donated
services
|
25,500
|
6,000
|
6,000
|
|
Foreign
exchange
|
(3,757)
|
(1,692)
|
(1,930)
|
|
General
and administrative
|
20,960
|
9,700
|
3,124
|
|
Impairment
loss on mineral properties
|
7,500
|
-
|
-
|
|
Accretion
of beneficial conversion feature
|
81,834
|
81,834
|
-
|
|
Mineral
property costs
|
5,887
|
-
|
141
|
|
Professional
fees
|
174,481
|
47,355
|
59,921
|
|
Total
Expenses
|
323,655
|
144,697
|
70,256
|
|
Net
Loss
|
(323,655)
|
(144,697)
|
(70,256)
|
Donated
Rent
Donated
rent is attributable to a rent expense of $250 per month attributable to the
provision of Pioneer’s business premises without cost by Thomas Brady, Pioneer’s
Treasurer and Corporate Secretary.
Donated
Services
Donated
services are attributable to an expense of $250 per month in respect of services
without compensation provided by Warren Robb, Pioneer’s President and CEO, and
an expense of $250 per month in respect of services without compensation
provided by Thomas Brady, Pioneer’s Treasurer and Corporate
Secretary.
Foreign
Exchange
Foreign exchange consists of foreign exchange gains and losses
that arise from settling transactions undertaken by Pioneer in currencies other
than the US dollar.
General
and Administrative
General and administrative expenses are the general office and
operational expenses of Pioneer. They include bank charges, filing
and transfer agent fees, website costs, and rent.
Page
- 10
Impairment
Loss on Mineral Properties
Impairment
losses on mineral properties are mineral property acquisition costs that do not
meet the accounting standard’s criteria for capitalization. As a result of
not meeting the criteria for capitalization the acquisition costs cannot be
included on the balance sheet as an asset and a loss equal to the amount of the
acquisition costs is recorded.
Accretion
of beneficial conversion feature
Accretion of beneficial conversion feature is non-cash interest
expense relating to Pioneer’s convertible notes. Pioneer records the value
of the conversion feature included in the notes as an additional interest cost
of the financing.
Mineral
Property Costs
Mineral
property costs incurred during fiscal 2008 were attributable to the payments
made to maintain title to Pioneer’s mineral claims. A total of
$5,887 was spent on the completion of Phase I of Pioneer’s exploration program
on the Pipe Property.
Professional
Fees
Professional
expenses included legal, accounting and auditing expenses associated with
Pioneer’s corporate organization, the preparation of Pioneer’s financial
statements and Pioneer’s continuous disclosure filings with the Securities and
Exchange Commission.
Off-Balance
Sheet Arrangements
Pioneer
has no off-balance sheet arrangements including arrangements that would affect
its liquidity, capital resources, market risk support and credit risk support or
other benefits.
Material
Commitments for Capital Expenditures
Pioneer
had no contingencies or long-term commitments at August 31, 2009.
Tabular
Disclosure of Contractual Obligations
Pioneer
is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and
is not required to provide the information required under this
item.
Critical
Accounting Policies
Pioneer’s
financial statements and accompanying notes are prepared in accordance with
generally accepted accounting principles 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. Management believes that understanding the basis and nature
of the estimates and assumptions involved with the following aspects of
Pioneer’s financial statements is critical to an understanding of Pioneer’s
financial statements.
Use
of Estimates
The
preparation of financial statements in accordance with United States generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenue and
expenses in the reporting period. Pioneer regularly evaluates
estimates and assumptions related to deferred income tax asset valuation
allowances. Pioneer bases its estimates and assumptions on current
facts, historical experience and various other factors that it believes to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities and the
accrual of costs and expenses that are not readily apparent from other
sources. The actual results experienced by Pioneer may differ
materially and adversely from Pioneer’s estimates. To the extent
there are material differences between the estimates and the actual results,
future results of operations will be affected.
Page
- 11
Mineral
Property Costs
Pioneer
has been in the exploration stage since its inception on June 9, 2005 and has
not yet realized any revenues from its planned operations. It is
primarily engaged in the acquisition and exploration of mining
properties. Mineral property exploration costs are expensed as
incurred. Mineral property acquisition costs are initially
capitalized when incurred using the guidance in EITF 04-02, “Whether Mineral Rights Are Tangible
or Intangible Assets”. Pioneer assesses the carrying costs for
impairment under SFAS No. 144, “Accounting for Impairment or
Disposal of Long Lived Assets” at each fiscal quarter
end. When it has been determined that a mineral property can be
economically developed as a result of establishing proven and probable reserves,
the costs then 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.
Item
7A. Quantitative and Qualitative Disclosures About Market
Risk.
Pioneer
is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and
is not required to provide the information required under this
item.
Page
- 12
Item
8. Financial
Statements and Supplementary Data.
PIONEER
EXPLORATION INC.
(An
Exploration Stage Company)
FINANCIAL
STATEMENTS
August
31, 2009
Index
Page
- 13
To the
Directors and Stockholders of
Pioneer
Exploration Inc. (An Exploration Stage Company)
We have
audited the accompanying balance sheets of Pioneer Exploration
Inc. (An Exploration Stage Company) as of August 31, 2009 and 2008
and the related statements of operations, cash flows and stockholders’ deficit
for the years then ended, and accumulated from June 9, 2005 (Date of Inception)
to August 31, 2009. 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 standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. The Company is not required to have, nor were we
engaged to perform, an audit of its internal control over financial reporting.
An audit includes consideration of internal control over financial reporting as
a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of internal control over financial reporting. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Pioneer Exploration
Inc. (An Exploration Stage Company) as of August 31, 2009 and 2008,
and the results of its operations and its cash flows for the years then ended
and accumulated from June 9, 2005 (Date of Inception) to August 31, 2009, in
conformity with accounting principles generally accepted in the United
States.
The
accompanying financial statements have been prepared assuming the Company will
continue as a going concern. As discussed in Note 1 to the financial statements,
the Company has working capital deficiency and accumulated losses from
operations since inception. These factors raise substantial doubt about the
Company’s ability to continue as a going concern. Management’s plans in regard
to these matters are also discussed in Note 1. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
/s/ Manning Elliott
LLP
CHARTERED
ACCOUNTANTS
Vancouver,
Canada
F
- 1
December
1, 2009
Pioneer
Exploration Inc.
(An
Exploration Stage Company)
(Expressed
in U.S. dollars)
|
August
31,
2009
$
|
August
31,
2008
$
|
||||||
|
ASSETS
|
|||||||
|
Current
Assets
|
|||||||
|
Cash
|
5,299 | 217 | |||||
|
Total
Current Assets
|
5,299 | 217 | |||||
|
Investment
(Note 3)
|
76,389 | – | |||||
|
Total
Assets
|
81,688 | 217 | |||||
|
LIABILITIES
AND STOCKHOLDERS’ DEFICIT
|
|||||||
|
Current
Liabilities
|
|||||||
|
Accounts
payable
|
1,909 | 5,215 | |||||
|
Accrued
liabilities
|
29,300 | 29,351 | |||||
|
Convertible
notes payable (Note 6)
|
136,000 | – | |||||
|
Due
to related party (Note 5(a))
|
48,649 | 44,458 | |||||
|
Total
Liabilities
|
215,858 | 79,024 | |||||
|
Going
Concern (Note 1)
|
|||||||
|
Subsequent
Event (Note 8)
|
|||||||
|
Stockholders’
Deficit
|
|||||||
|
Preferred
Stock, 10,000,000 shares authorized, $0.001 par value
No
shares issued and outstanding
|
– | – | |||||
|
Common
Stock, 65,000,000 shares authorized, $0.001 par value
11,264,500
shares issued and outstanding
|
11,265 | 11,265 | |||||
|
Additional
Paid-In Capital
|
141,470 | 59,636 | |||||
|
Donated
Capital (Note 5(b))
|
36,750 | 29,250 | |||||
|
Deficit
Accumulated During the Exploration Stage
|
(323,655 | ) | (178,958 | ) | |||
|
Total
Stockholders’ Deficit
|
(134,170 | ) | (78,807 | ) | |||
|
Total
Liabilities and Stockholders’ Deficit
|
81,688 | 217 | |||||
(The
accompanying notes are an integral part of these financial
statements)
F
- 2
Pioneer
Exploration Inc.
(An
Exploration Stage Company)
(Expressed
in U.S. dollars)
|
Accumulated
from
|
For
the
|
For
the
|
|||||||||
|
June
9, 2005
|
Year
|
Year
|
|||||||||
|
(Date
of Inception)
|
Ended
|
Ended
|
|||||||||
|
to
August 31,
|
August
31,
|
August
31,
|
|||||||||
|
2009
|
2009
|
2008
|
|||||||||
| $ | $ | $ | |||||||||
|
Revenue
|
– | – | – | ||||||||
|
Expenses
|
|||||||||||
|
Donated
rent (Note 5(b))
|
11,250 | 1,500 | 3,000 | ||||||||
|
Donated
services (Note 5(b))
|
25,500 | 6,000 | 6,000 | ||||||||
|
Foreign
exchange gain
|
(3,757 | ) | (1,692 | ) | (1,930 | ) | |||||
|
General
and administrative
|
20,960 | 9,700 | 3,124 | ||||||||
|
Impairment
loss on mineral properties
|
7,500 | – | – | ||||||||
|
Accretion
of beneficial conversion feature (Note
6)
|
81,834 | 81,834 | – | ||||||||
|
Mineral
property costs
|
5,887 | – | 141 | ||||||||
|
Professional
fees
|
174,481 | 47,355 | 59,921 | ||||||||
|
Total
Expenses
|
323,655 | 144,697 | 70,256 | ||||||||
|
Net
Loss
|
(323,655 | ) | (144,697 | ) | (70,256 | ) | |||||
|
Net
Loss Per Share – Basic and Diluted
|
(0.01 | ) | (0.01 | ) | |||||||
|
Weighted
Average Shares Outstanding
|
11,264,500 | 11,264,500 | |||||||||
(The
accompanying notes are an integral part of these financial
statements)
F
- 3
Pioneer
Exploration Inc.
(An
Exploration Stage Company)
(Expressed
in U.S. dollars)
|
Accumulated
|
|||||||||||
|
From
|
For
the
|
For
the
|
|||||||||
|
June 9, 2005
|
Year
|
Year
|
|||||||||
|
(Date
of Inception)
|
Ended
|
Ended
|
|||||||||
|
To August 31,
|
August
31,
|
August
31,
|
|||||||||
|
2009
|
2009
|
2008
|
|||||||||
| $ | $ | $ | |||||||||
|
Operating
Activities
|
|||||||||||
|
Net
loss
|
(323,655 | ) | (144,697 | ) | (70,256 | ) | |||||
|
Adjustment
to reconcile net loss to net cash used in operating
activities
|
|||||||||||
|
Accretion
of beneficial conversion feature
|
81,834 | 81,834 | – | ||||||||
|
Donated
services and rent
|
36,750 | 7,500 | 9,000 | ||||||||
|
Changes
in operating assets and liabilities
|
|||||||||||
|
Accounts
payable
|
1,909 | (3,306 | ) | (486 | ) | ||||||
|
Accrued
liabilities
|
29,300 | (51 | ) | 28,602 | |||||||
|
Due
from related party
|
1,700 | (786 | ) | 1,723 | |||||||
|
Net
Cash Used In Operating Activities
|
(172,162 | ) | (59,506 | ) | (31,417 | ) | |||||
|
Investing
Activities
|
|||||||||||
|
Purchase
of investment
|
(76,389 | ) | (76,389 | ) | – | ||||||
|
Net
Cash Provided by Investing Activities
|
(76,389 | ) | (76,389 | ) | – | ||||||
|
Financing
Activities
|
|||||||||||
|
Advances
from related party
|
46,949 | 4,977 | 31,472 | ||||||||
|
Proceeds
from convertible notes payable
|
142,000 | 136,000 | – | ||||||||
|
Proceeds
from issuance of common stock
|
64,901 | – | – | ||||||||
|
Net
Cash Provided by Financing Activities
|
253,850 | 140,977 | 31,472 | ||||||||
|
Increase
in Cash
|
5,299 | 5,082 | 55 | ||||||||
|
Cash
- Beginning of Period
|
– | 217 | 162 | ||||||||
|
Cash
- End of Period
|
5,299 | 5,299 | 217 | ||||||||
|
Non-cash
Investing and Financing Activities
|
|||||||||||
|
Common
shares issued to settle debt
|
6,000 | – | – | ||||||||
|
Supplemental
Disclosures
|
|||||||||||
|
Interest
paid
|
– | – | – | ||||||||
|
Income
taxes paid
|
– | – | – | ||||||||
(The
accompanying notes are an integral part of these financial
statements)
F
- 4
Pioneer
Exploration Inc.
(An
Exploration Stage Company)
For the
Period from June 9, 2005 (Date of Inception) to August 31, 2009
(Expressed
in U.S. dollars)
|
Deficit
|
|||||||||||
|
Accumulated
|
|||||||||||
|
Additional
|
During
the
|
||||||||||
|
Common
Stock
|
Paid-In
|
Donated
|
Exploration
|
||||||||
|
Shares
|
Par
Value
|
Capital
|
Capital
|
Stage
|
Total
|
||||||
|
#
|
$
|
$
|
$
|
$
|
$
|
||||||
|
Balance
– June 9, 2005 (Date of Inception)
|
–
|
–
|
–
|
–
|
–
|
–
|
|||||
|
Common
stock issued for cash
at $0.001 per
share
|
11,025,000
|
11,025
|
–
|
–
|
–
|
11,025
|
|||||
|
Donated
services and rent
|
–
|
–
|
–
|
2,250
|
–
|
2,250
|
|||||
|
Net
loss for the period
|
–
|
–
|
–
|
–
|
(6,681)
|
(6,681)
|
|||||
|
Balance
– August 31, 2005
|
11,025,000
|
11,025
|
–
|
2,250
|
(6,681)
|
6,594
|
|||||
|
Common
stock issued for cash
at $0.25 per
share
|
215,500
|
216
|
53,660
|
–
|
–
|
53,876
|
|||||
|
Common
stock issued for cash for stock subscriptions received recorded as loans
payable
|
24,000
|
24
|
5,976
|
–
|
–
|
6,000
|
|||||
|
Donated
services and rent
|
–
|
–
|
–
|
9,000
|
–
|
9,000
|
|||||
|
Net
loss for the year
|
–
|
–
|
–
|
–
|
(54,679)
|
(54,679)
|
|||||
|
Balance
– August 31, 2006
|
11,264,500
|
11,265
|
59,636
|
11,250
|
(61,360)
|
20,791
|
|||||
|
Donated
services and rent
|
–
|
–
|
–
|
9,000
|
–
|
9,000
|
|||||
|
Net
loss for the year
|
–
|
–
|
–
|
–
|
(47,342)
|
(47,342)
|
|||||
|
Balance
– August 31, 2007
|
11,264,500
|
11,265
|
59,636
|
20,250
|
(108,702)
|
(17,551)
|
|||||
|
Donated
services and rent
|
–
|
–
|
–
|
9,000
|
–
|
9,000
|
|||||
|
Net
loss for the year
|
–
|
–
|
–
|
–
|
(70,256)
|
(70,256)
|
|||||
|
Balance
– August 31, 2008
|
11,264,500
|
11,265
|
59,636
|
29,250
|
(178,958)
|
(78,807)
|
|||||
|
Beneficial
conversion feature
|
–
|
–
|
81,834
|
–
|
–
|
81,834
|
|||||
|
Donated
services and rent
|
–
|
–
|
–
|
7,500
|
–
|
7,500
|
|||||
|
Net
loss for the year
|
–
|
–
|
–
|
–
|
(144,697)
|
(144,697)
|
|||||
|
Balance
– August 31, 2009
|
11,264,500
|
11,265
|
141,470
|
36,750
|
(323,655)
|
(134,170)
|
|||||
(The
accompanying notes are an integral part of these financial
statements)
F
- 5
Pioneer
Exploration Inc.
(An
Exploration Stage Company)
August
31, 2009
(Expressed
in U.S. Dollars)
|
1.
|
Nature
of Operations and Going Concern
|
The
Company was incorporated in the State of Nevada on June 9, 2005. The Company is
an Exploration Stage Company, as defined by Statement of Financial Accounting
Standard (“SFAS”) No.7 “Accounting and Reporting by
Development Stage Enterprises”. The Company’s principal business is the
acquisition and exploration of mineral properties. The Company has not presently
determined whether its properties contain mineral reserves that are economically
recoverable.
These
financial statements have been prepared on a going concern basis, which implies
the Company will continue to realize its assets and discharge its liabilities in
the normal course of business. The Company has never generated revenues since
inception and has never paid any dividends and is unlikely to pay dividends or
generate earnings in the immediate or foreseeable future. The continuation of
the Company as a going concern is dependent upon the continued financial support
from its secretary and convertible note holder, the ability of the Company to
obtain necessary equity financing to continue operations, confirmation of the
Company’s interests in the underlying properties, and the attainment of
profitable operations. As at August 31, 2009, the Company has a working capital
deficiency of $210,559 and has accumulated losses of $323,655 since inception.
These factors raise substantial doubt regarding the Company’s ability to
continue as a going concern. These financial statements do not include any
adjustments to the recoverability and classification of recorded asset amounts
and classification of liabilities that might be necessary should the Company be
unable to continue as a going concern.
|
2.
|
Summary
of Significant Accounting Policies
|
|
a)
|
Basis
of Presentation
|
These
financial statements and related notes are presented in accordance with
accounting principles generally accepted in the United States, and are expressed
in U.S. dollars. The Company’s fiscal year-end is August 31. The
Company evaluated all events or transactions that occurred after August 31, 2009
up through December 10, 2009, the date the Company issued these financial
statements. During this period, the Company did not have any material
recognizable subsequent events other than those disclosed in Note
8.
|
b)
|
Use
of Estimates
|
The
preparation of financial statements in accordance with United States generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenue and
expenses in the reporting period. The Company regularly evaluates estimates and
assumptions related to the recovery of long-lived assets, donated expenses and
deferred income tax asset valuation allowances. The Company bases its estimates
and assumptions on current facts, historical experience and various other
factors that it believes to be reasonable under the circumstances, the results
of which form the basis for making judgments about the carrying values of assets
and liabilities and the accrual of costs and expenses that are not readily
apparent from other sources. The actual results experienced by the Company may
differ materially and adversely from the Company’s estimates. To the extent
there are material differences between the estimates and the actual results,
future results of operations will be affected.
|
c)
|
Cash
and Cash Equivalents
|
The
Company considers all highly liquid instruments with maturity of three months or
less at the time of issuance to be cash equivalents.
|
d)
|
Investment
|
The
Company accounts for the investment described in Note 3 pursuant to Financial
Accounting Standards Board Staff Position 115 – “A Guide to Implementation of
Statement 115 on Accounting for Certain Investments in Debt and Equity
Securities” and APB 18, “The Equity Method of Accounting for
Investments in Common Stock”. As the fair value of the
investment is not readily determinable, and the estimation of fair value is not
practicable, the Company has recorded the fair value at cost and evaluated it
for impairment at August 31, 2009. As there were no events or
circumstances that indicate impairment at August 31, 2009, the investment is
recorded at its cost of $76,389 at August 31, 2009.
F
- 6
Pioneer
Exploration Inc.
(An
Exploration Stage Company)
Notes to
Financial Statements
August
31, 2009
(Expressed
in U.S. Dollars)
|
2.
|
Summary
of Significant Accounting Policies
(continued)
|
|
e)
|
Mineral
Property Costs
|
The
Company has been in the exploration stage since its inception on June 9, 2005
and has not yet realized any revenues from its planned operations. It is
primarily engaged in the acquisition and exploration of mining properties.
Mineral property exploration costs are expensed as incurred. Mineral property
acquisition costs are initially capitalized when incurred using the guidance in
EITF 04-02, “Whether Mineral
Rights Are Tangible or Intangible Assets”. The Company assesses the
carrying costs for impairment under SFAS No. 144, “Accounting for Impairment or
Disposal of Long Lived Assets” at each fiscal quarter end. When it has
been determined that a mineral property can be economically developed as a
result of establishing proven and probable reserves, the costs then 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.
|
f)
|
Long-lived
Assets
|
In
accordance with SFAS No. 144, “Accounting for the Impairment or
Disposal of Long-Lived Assets”, the Company tests long-lived assets or
asset groups for recoverability when events or changes in circumstances indicate
that their carrying amount may not be recoverable. Circumstances which could
trigger a review include, but are not limited to: significant decreases in the
market price of the asset; significant adverse changes in the business climate
or legal factors; accumulation of costs significantly in excess of the amount
originally expected for the acquisition or construction of the asset; current
period cash flow or operating losses combined with a history of losses or a
forecast of continuing losses associated with the use of the asset; and current
expectation that the asset will more likely than not be sold or disposed
significantly before the end of its estimated useful life. Recoverability is
assessed based on the carrying amount of the asset and its fair value which is
generally determined based on the sum of the undiscounted cash flows expected to
result from the use and the eventual disposal of the asset, as well as specific
appraisal in certain instances. An impairment loss is recognized when the
carrying amount is not recoverable and exceeds fair value.
g) Asset
Retirement Obligations
The
Company follows the provisions of SFAS No. 143, “Accounting for Asset Retirement
Obligations,” which establishes standards for the initial measurement and
subsequent accounting for obligations associated with the sale, abandonment or
other disposal of long-lived tangible assets arising from the acquisition,
construction or development and for normal operations of such
assets. As at August 31, 2009 and 2008, the Company does not have any
asset retirement obligations.
|
h)
|
Financial
Instruments and Fair Value
Measurements
|
SFAS No.
157, “Fair Value Measurements” requires an entity to maximize the use of
observable inputs and minimize the use of unobservable inputs when measuring
fair value. SFAS No. 157 establishes a fair value hierarchy based on the level
of independent, objective evidence surrounding the inputs used to measure fair
value. A financial instrument’s categorization within the fair value hierarchy
is based upon the lowest level of input that is significant to the fair value
measurement. SFAS No. 157 prioritizes the inputs into three levels that may be
used to measure fair value:
Level
1
Level 1
applies to assets or liabilities for which there are quoted prices in active
markets for identical assets or liabilities.
Level
2
Level 2
applies to assets or liabilities for which there are inputs other than quoted
prices that are observable for the asset or liability such as quoted prices for
similar assets or liabilities in active markets; quoted prices for identical
assets or liabilities in markets with insufficient volume or infrequent
transactions (less active markets); or model-derived valuations in which
significant inputs are observable or can be derived principally from, or
corroborated by, observable market data.
Level
3
Level 3
applies to assets or liabilities for which there are unobservable inputs to the
valuation methodology that are significant to the measurement of the fair value
of the assets or liabilities.
F
- 7
Pioneer
Exploration Inc.
(An
Exploration Stage Company)
Notes to
Financial Statements
August
31, 2009
(Expressed
in U.S. Dollars)
2. Summary
of Significant Accounting Policies (continued)
h) Financial
Instruments and Fair Value Measurements (continued)
The
Company’s financial instruments consist principally of cash, investment,
accounts payable, amounts due to a related party and convertible notes
payable.
Pursuant
to SFAS No. 157, the fair value of cash is determined based on “Level 1” inputs,
which consist of quoted prices in active markets for identical assets.
Convertible notes payable are valued based on “Level 2” inputs, consisting of
model-derived valuations in which significant inputs are observable or can be
derived principally from, or corroborated by, observable market data. The
Company’s investment is carried at cost as there are no quoted market prices,
and a reasonable estimate of fair value could not be made without incurring
excessive costs. The Company believes that the recorded values of
accounts payable and amounts due to a related party approximate their current
fair values because of their nature and respective relatively short maturity
dates or durations.
Assets
and liabilities measured at fair value on a recurring basis were presented on
the Company’s balance sheet as of August 31, 2009 as follows:
|
Fair Value Measurements Using
|
||||
|
Quoted
Prices in
|
Significant
|
|||
|
Active
Markets
|
Other
|
Significant
|
||
|
For
Identical
|
Observable
|
Unobservable
|
Balance
|
|
|
Instruments
|
Inputs
|
Inputs
|
August
31,
|
|
|
(Level
1)
$
|
(Level
2)
$
|
(Level
3)
$
|
2009
$
|
|
|
Assets:
|
||||
|
Cash
|
5,299
|
–
|
–
|
5,299
|
|
Liabilities:
|
||||
|
Convertible
notes payable
|
–
|
136,000
|
–
|
136,000
|
Foreign
currency transactions are primarily undertaken in Canadian dollars. The
financial risk is the risk to the Company’s operations that arise from
fluctuations in foreign exchange rates and the degree of volatility of these
rates. Currently, the Company does not use derivative instruments to reduce its
exposure to foreign currency risk.
|
i)
|
Income
Taxes
|
The
Company accounts for income taxes using the asset and liability method in
accordance with SFAS No. 109, “Accounting for Income Taxes”.
The asset and liability method provides that deferred tax assets and liabilities
are recognized for the expected future tax consequences of temporary differences
between the financial reporting and tax bases of assets and liabilities, and for
operating loss and tax credit carryforwards. Deferred tax assets and liabilities
are measured using the currently enacted tax rates and laws that will be in
effect when the differences are expected to reverse. The Company records a
valuation allowance to reduce deferred tax assets to the amount that is believed
more likely than not to be realized.
|
j)
|
Foreign
Currency Translation
|
The
Company’s functional and reporting currency is the United States dollar.
Occasional transactions may occur in Canadian dollars and management has adopted
SFAS No. 52 “Foreign Currency
Translation”. Monetary assets and liabilities denominated in foreign
currencies are translated using the exchange rate prevailing at the balance
sheet date. Non-monetary assets and liabilities denominated in foreign
currencies are translated at rates of exchange in effect at the date of the
transaction. Average rates are used to translate revenues and expenses. Gains
and losses arising on translation or settlement of foreign currency denominated
transactions or balances are included in the determination of
income.
F
- 8
Pioneer
Exploration Inc.
(An
Exploration Stage Company)
Notes to
Financial Statements
August
31, 2009
(Expressed
in U.S. Dollars)
2. Summary
of Significant Accounting Policies (continued)
|
k)
|
Comprehensive
Loss
|
SFAS No.
130, “Reporting Comprehensive
Income,” establishes standards for the reporting and display of
comprehensive loss and its components in the financial statements. As at August
31, 2009 and 2008, the Company has no items that represent a comprehensive loss
and, therefore, has not included a schedule of comprehensive loss in the
financial statements.
|
l)
|
Basic
and Diluted Net Earnings (Loss) Per
Share
|
The
Company computes net earnings (loss) per share in accordance with SFAS No. 128,
"Earnings per Share".
SFAS No. 128 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 earnings (loss) available to common shareholders (numerator) by the weighted
average number of shares outstanding (denominator) during the period. Diluted
EPS gives effect to all dilutive potential common shares outstanding during the
period using the treasury stock method and convertible preferred stock using the
if-converted method. In computing diluted EPS, the average stock price for the
period is used in determining the number of shares assumed to be purchased from
the exercise of stock options or warrants. Diluted EPS excludes all dilutive
potential shares if their effect is anti dilutive. At August 31,
2009, the Company had 261,667 (2008 - Nil) dilutive securities outstanding
relating to shares issuable upon the conversion of convertible notes
payable.
|
m)
|
Stock-based
Compensation
|
In
accordance with SFAS 123R, “Share Based Payments”, the Company accounts for
share-based payments using the fair value method. Common shares issued to third
parties for non-cash consideration are valued based on the fair market value of
the services provided or the fair market value of the common stock on the
measurement date, whichever is more readily determinable.
|
n)
|
Recently
Issued Accounting Pronouncements
|
In June
2009, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 168,
“The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles – a
replacement of FASB Statement No. 162”. The FASB Accounting Standards
Codification (“Codification”) will become the source of authoritative U.S.
generally accepted accounting principles (“GAAP”) recognized by FASB to be
applied by nongovernmental entities. Rules and interpretive releases of the
Securities and Exchange Commission “SEC” under authority of federal securities
laws are also sources of authoritative GAAP for SEC registrants. On the
effective date of this statement, the Codification will supersede all
then-existing non-SEC accounting and reporting standards. All other
non-grandfathered non-SEC accounting literature not included in the Codification
will become non-authoritative. This statement is effective for financial
statements issued for interim and annual periods ending after September 30,
2009. The adoption of this statement is not expected to have a material effect
on the Company’s financial statements.
In June
2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation
No. 46(R)”. The objective of this statement is to improve financial
reporting by enterprises involved with variable interest entities. This
statement addresses (1) the effects on certain provisions of FASB Interpretation
No. 46 (revised December 2003), “Consolidation of Variable Interest Entities”,
as a result of the elimination of the qualifying special-purpose entity concept
in SFAS No. 166, “Accounting for Transfers of Financial Assets”, and (2) concern
about the application of certain key provisions of FASB Interpretation No.
46(R), including those in which the accounting and disclosures under the
Interpretation do not always provide timely and useful information about an
enterprise’s involvement in a variable interest entity. This statement is
effective as of the beginning of each reporting entity’s first annual reporting
period that begins after November 15, 2009, for interim periods within that
first annual reporting period, and for interim and annual reporting periods
thereafter. Earlier application is prohibited. The adoption of this statement is
not expected to have a material effect on the Company’s financial
statements.
F
- 9
Pioneer
Exploration Inc.
(An
Exploration Stage Company)
Notes to
Financial Statements
August
31, 2009
(Expressed
in U.S. Dollars)
2. Summary
of Significant Accounting Policies (continued)
n) Recently Issued Accounting
Pronouncements (continued)
In June
2009, the FASB issued SFAS No. 166, “Accounting for Transfers of
Financial Assets – an amendment of FASB No. 140”. The object of this
statement is to improve the relevance, representational faithfulness, and
comparability of the information that a reporting entity provides in its
financial statements about a transfer of financial assets; the effects of a
transfer on its financial position, financial performance, and cash flows; and a
transferor’s continuing involvement, if any, in transferred financial assets.
This statement addresses (1) practices that have developed since the issuance of
SFAS No. 140, “Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities”, that are not consistent with the original intent and key
requirements of that statement and (2) concerns of financial statement users
that many of the financial assets (and related obligations) that have been
derecognized should continue to be reported in the financial statements of
transferors. SFAS No. 166 must be applied as of the beginning of each reporting
entity’s first annual reporting period that begins after November 15, 2009, for
interim periods within that first annual reporting period and for interim and
annual reporting periods thereafter. Earlier application is prohibited. This
statement must be applied to transfers occurring on or after the effective date.
Additionally, on and after the effective date, the concept of a qualifying
special-purpose entity is no longer relevant for accounting purposes. The
disclosure provisions of this statement should be applied to transfers that
occurred both before and after the effective date of this statement. The
adoption of this statement is not expected to have a material effect on the
Company’s financial statements.
In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities – an amendment to FASB Statement No.
133”. SFAS No. 161 is intended to improve financial standards for
derivative instruments and hedging activities by requiring enhanced disclosures
to enable investors to better understand their effects on an entity's financial
position, financial performance, and cash flows. Entities are required to
provide enhanced disclosures about: (a) how and why an entity uses derivative
instruments; (b) how derivative instruments and related hedged items are
accounted for under Statement 133 and its related interpretations; and (c) how
derivative instruments and related hedged items affect an entity’s financial
position, financial performance, and cash flows. It is effective for financial
statements issued for fiscal years beginning after November 15, 2008, with early
adoption encouraged. The adoption of this statement is not expected
to have a material effect on the Company’s financial statements.
In
December 2007, the FASB issued SFAS No. 141 (R) “Business Combinations”. SFAS
No. 141 (R) establishes principles and requirements for how the acquirer of a
business recognizes and measures in its financial statements the identifiable
assets acquired, the liabilities assumed, and any non-controlling interest in
the acquiree. SFAS No. 141 (R) also provides guidance for recognizing and
measuring the goodwill acquired in the business combination and determines what
information to disclose to enable users of the financial statements to evaluate
the nature and financial effects of the business combination. SFAS No. 141 (R)
will become effective for the fiscal year beginning after December 15, 2008. The
adoption of this statement is not expected to have a material effect on the
Company’s financial statements.
In
December 2007, the FASB issued SFAS No. 160 “Non-controlling Interests in
Consolidated Financial Statements-an amendment of ARB No. 51”. SFAS 160
establishes accounting and reporting standards for the non-controlling interest
in a subsidiary and for the deconsolidation of a subsidiary. SFAS No. 160 will
become effective for the fiscal year beginning after December 15, 2008. The
adoption of this statement is not expected to have a material effect on the
Company’s financial statements.
|
o)
|
Recently
Adopted Accounting Pronouncements
|
On April
13, 2009, the Securities and Exchange Commission’s (“SEC”) Office of the Chief
Accountant and Division of Corporation Finance issued SEC Staff Accounting
Bulletin 111 (“SAB 111”). SAB 111 amends and replaces SAB Topic 5M,
“Miscellaneous Accounting—Other Than Temporary Impairment of Certain Investments
in Equity Securities” to reflect FSP FAS 115-2 and FAS 124-2. This FSP provides
guidance for assessing whether an impairment of a debt security is other than
temporary, as well as how such impairments are presented and disclosed in the
financial statements. The amended SAB Topic 5M maintains the prior staff views
related to equity securities but has been amended to exclude debt securities
from its scope. SAB 111 is effective upon the adoption of FSP FAS 115-2 and FAS
124-2. The adoption of SAB 111 did not have a material effect on the Company’s
financial statements.
On April
9, 2009, the FASB issued three FSPs intended to provide additional application
guidance and enhanced disclosures regarding fair value measurements and
other-than-temporary impairments of securities.
F
- 10
Pioneer
Exploration Inc.
(An
Exploration Stage Company)
Notes to
Financial Statements
August
31, 2009
(Expressed
in U.S. Dollars)
2. Summary
of Significant Accounting Policies (continued)
o) Recently Adopted Accounting
Pronouncements (Continued)
FSP FAS
157-4, “Determining Fair Value When the Volume and Level of Activity for the
Asset or Liability Have Significantly Decreased and Identifying Transactions
That Are Not Orderly,” provides guidelines for making fair value measurements
more consistent with the principles presented in FASB Statement No. 157, “Fair
Value Measurements.” FSP FAS 157-4 must be applied prospectively and
retrospective application is not permitted. FSP FAS 157-4 is effective for
interim and annual periods ending after June 15, 2009, with early adoption
permitted for periods ending after March 15, 2009. An entity early adopting FSP
FAS 157-4 must also early adopt FSP FAS 115-2 and FAS 124-2.
FSP FAS
115-2 and FAS 124-2, “Recognition and Presentation of Other-Than-Temporary
Impairments,” provides additional guidance designed to create greater clarity
and consistency in accounting for and presenting impairment losses on debt
securities. FSP FAS 115-2 and FAS 124-2 is effective for interim and annual
periods ending after June 15, 2009, with early adoption permitted for periods
ending after March 15, 2009. An entity may early adopt this FSP only if it also
elects to early adopt FSP FAS 157-4.
FSP FAS
107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial
Instruments,” enhances consistency in financial reporting by increasing the
frequency of fair value disclosures. FSP 107-1 and APB 28-1 is effective
for interim periods ending after June 15, 2009, with early adoption permitted
for periods ending after March 15, 2009. However, an entity may early adopt
these interim fair value disclosure requirements only if it also elects to early
adopt FSP FAS 157-4 and FSP FAS 115-2 and FAS 124-2.
The
adoption of these FSPs did not have a material effect on the Company’s financial
statements.
In May
2009, the FASB issued SFAS No. 165, “Subsequent Events”. SFAS No.
165 establishes general standards of accounting for and disclosure of events
that occur after the balance sheet date but before financial statements are
issued or are available to be issued. SFAS No. 165 is to be applied to interim
and annual financial periods ending after June 15, 2009. The disclosures
required by this statement are presented in Note 2(a).
In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles”. SFAS 162 identifies the sources of accounting
principles and the framework for selecting the principles to be used in the
preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles in the
United States. SFAS No. 162 became effective on November 13, 2008
following the SEC’s approval of the Public Company Accounting Oversight Board
amendments to AU Section 411, “The Meaning of Present Fairly in
Conformity With Generally Accepted Accounting Principles”. The adoption
of this statement did not have a material effect on the Company’s financial
statements.
In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial
Assets and Financial Liabilities – Including an Amendment of FASB Statement No.
115”. This statement permits entities to choose to measure many financial
instruments and certain other items at fair value. Most of the provisions of
SFAS No. 159 apply only to entities that elect the fair value option. However,
the amendment to SFAS No. 115 “Accounting for Certain Investments
in Debt and Equity Securities” applies to all entities with
available-for-sale and trading securities. SFAS No. 159 is effective as of the
beginning of an entity’s first fiscal year that begins after November 15, 2007.
Early adoption is permitted as of the beginning of a fiscal year that begins on
or before November 15, 2007, provided the entity also elects to apply the
provision of SFAS No. 157, “Fair Value Measurements”. The
adoption of this statement did not have a material effect on the Company's
financial statements.
In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. The
objective of SFAS No. 157 is to increase consistency and comparability in fair
value measurements and to expand disclosures about fair value
measurements. SFAS No. 157 defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles,
and expands disclosures about fair value measurements. SFAS No. 157 applies
under other accounting pronouncements that require or permit fair value
measurements and does not require any new fair value measurements. The
provisions of SFAS No. 157 are effective for fair value measurements made in
fiscal years beginning after November 15, 2007. The adoption of this statement
did not have a material effect on the Company's financial
statements.
F
- 11
Pioneer
Exploration Inc.
(An
Exploration Stage Company)
Notes to
Financial Statements
August
31, 2009
(Expressed
in U.S. Dollars)
|
3.
|
Investment
|
The
Company entered into two separate share purchase agreements to acquire an
aggregate of 125,000 common shares of Macallan Oil & Gas Inc. (“Macallan”),
a private company domiciled in Barbados, for an aggregate acquisition cost of
CDN$93,750 as follows:
|
a)
|
On
November 20, 2008, the Company entered into a share purchase agreement for
the acquisition of 75,000 shares of Macallan for the purchase price of
CDN$56,250 payable in instalments. On May 21, 2009, the Company paid the
full amount of the purchase price of $46,050
(CDN$56,250).
|
|
b)
|
On
November 20, 2008, the Company entered into a share purchase agreement for
the acquisition of 50,000 shares of Macallan for the purchase price of
CDN$37,500 payable in instalments. On May 21, 2009 the Company paid the
full amount of the purchase price of $30,339
(CDN$37,500).
|
The
investment is recorded at cost as there are no quoted market prices for this
investment and pursuant to SFAS 107, “Disclosures about Fair Value of
Financial Instruments” a reasonable estimate of the fair value was not
practicable. At August 31, 2009, the carrying value of the shares was $76,389
(2008 - $Nil). Subsequent to August 31, 2009, the Company sold the
125,000 shares of Macallan for CDN$100,000. Refer to Note
8.
|
4.
|
Mineral
Properties
|
The
Company entered into an agreement dated August 25, 2005 to acquire a 100%
interest in three mineral claims located near Yale, British Columbia, Canada,
for consideration of $7,500. The claims were registered in the name of the
Secretary of the Company, who has executed a trust agreement whereby the
Secretary agreed to hold the claims in trust on behalf of the Company. The
Vendor retains a 2% net smelter royalty. The cost of the mineral property was
initially capitalized. As at August 31, 2006, the Company recognized an
impairment loss of $7,500, as it had not yet been determined whether there are
proven or probable reserves on the property. On January 16, 2008, the three
mineral claims were allowed to lapse due to poor results from the first phase of
the exploration program.
|
5.
|
Related
Party Transactions
|
|
a)
|
As
at August 31, 2009, the Company is indebted to the Secretary of the
Company for $48,649 (August 31, 2008 - $44,458), representing expenditures
paid on behalf of the Company. This amount is unsecured, bears no
interest, and is due on demand.
|
|
b)
|
The
Company recognizes donated services provided by the Secretary of the
Company at $250 per month and donated services provided by the President
of the Company at $250 per month. In addition, the Company previously
recognized donated rent at $250 per month up until February 28, 2009,
after which the Company began renting office space from an unrelated third
party. During the year ended August 31, 2009, the Company recognized
$1,500 (2008 – $3,000) in donated rent and $6,000 (2008 – $6,000) in
donated services.
|
|
6.
|
Convertible
Notes Payable
|
|
a)
|
On
November 20, 2008, the Company received a $50,000 loan and issued a
promissory note. The note is convertible into 200,000 common shares of the
Company at $0.25 per share at the holder’s option. The note is
non-interest bearing, unsecured and is payable on
demand.
|
In
accordance with Emerging Issues Task Force (“EITF”) 98-5 “Accounting for Convertible
Securities with Beneficial Conversion Features or Contingently Adjustable
Conversion Ratios”, the Company recognized the value of the embedded
beneficial conversion feature of $50,000 as additional paid-in capital and an
equivalent discount which was charged to operations as the note is due on
demand.
|
b)
|
On
February 19, 2009, the Company received a $50,000 loan and issued a
promissory note. The note is convertible into 41,667 common shares of the
Company at $1.20 per share at the holder’s option. The note is
non-interest bearing, unsecured and is payable on
demand.
|
In
accordance with Emerging Issues Task Force (“EITF”) 98-5 “Accounting for Convertible
Securities with Beneficial Conversion Features or Contingently Adjustable
Conversion Ratios”, the Company recognized the value of the embedded
beneficial conversion feature of $20,833 as additional paid-in capital and an
equivalent discount which was charged to operations as the note is due on
demand.
F
- 12
Pioneer
Exploration Inc.
(An
Exploration Stage Company)
Notes to
Financial Statements
August
31, 2009
(Expressed
in U.S. Dollars)
6. Convertible
Notes Payable (continued)
|
c)
|
On
May 15, 2009, the Company received a $36,000 loan and issued a promissory
note. The note is convertible into 20,000 common shares of the Company at
$1.80 per share at the holder’s option. The note is non-interest bearing,
unsecured and is payable on demand.
|
|
|
In
accordance with Emerging Issues Task Force (“EITF”) 98-5 “Accounting for Convertible
Securities with Beneficial Conversion Features or Contingently Adjustable
Conversion Ratios”, the Company recognized the value of the
embedded beneficial conversion feature of $11,000 as additional paid-in
capital and an equivalent discount which was charged to operations as the
note is due on demand.
|
7. Income
Taxes
As at
August 31, 2009, the Company has net operating losses carried forward of
$197,571 available to offset taxable income in future years which commence
expiring in fiscal 2025.
The
income tax benefit differs from the amount computed by applying the federal and
state income tax rate of 35% to net loss before income taxes for the period
ended August 31, 2009 as a result of the following:
|
Year
Ended
August
31,
2009
$
|
Year
Ended
August
31,
2008
$
|
|||
|
Income
tax recovery
|
(50,644)
|
(24,590)
|
||
|
Non-deductible
expenses
|
31,267
|
3,150
|
||
|
Valuation
allowance change
|
19,377
|
21,440
|
||
|
Provision
for income taxes
|
–
|
–
|
The
significant components of deferred income tax assets and liabilities as at
August 31, 2009 and 2008, after applying enacted corporate income tax rates, are
as follows:
|
August
31,
2009
$
|
August
31,
2008
$
|
|||
|
Deferred
income tax assets
|
||||
|
Mineral
property costs
|
2,625
|
2,625
|
||
|
Net
operating losses carried forward
|
69,150
|
49,773
|
||
|
Total
deferred income tax assets
|
71,775
|
52,398
|
||
|
Valuation
allowance
|
(71,775)
|
(52,398)
|
||
|
Net
deferred income tax asset
|
–
|
–
|
The
Company has recognized a valuation allowance for the deferred income tax asset
since the Company cannot be assured that it is more likely than not that such
benefit will be utilized in future years. The valuation allowance is reviewed
annually. When circumstances change and which cause a change in management's
judgment about the realizability of deferred income tax assets, the impact of
the change on the valuation allowance is generally reflected in current
income.
|
8.
|
Subsequent
Event
|
On
November 30, 2009, the Company sold its investment of 125,000 common shares of
Macallan Oil & Gas Inc. (refer to Note 3) in exchange for a CDN$100,000
non-interest bearing promissory note due May 31, 2010.
F
- 13
Item
9. Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure.
There are
no changes in and disagreements with Pioneer’s accountants on accounting and
financial disclosure. Pioneer’s Independent Registered Public
Accounting Firm from inception to the current date is Manning Elliott LLP,
Chartered Accountants, 1100 - 1050 West Pender Street, Vancouver, British
Columbia, V6E 3S7, Canada.
Item 9A. Controls and
Procedures.
Disclosure Controls and
Procedures
In
connection with the preparation of this annual report on Form 10-K, an
evaluation was carried out by Pioneer’s management, with the participation of
the Chief Executive Officer and the Chief Financial Officer, of the
effectiveness of Pioneer’s disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934
(“Exchange Act”)) as of August 31, 2009. Disclosure controls and
procedures are designed to ensure that information required to be disclosed in
reports filed or submitted under the Exchange Act is recorded, processed,
summarized, and reported within the time periods specified in the SEC rules and
forms and that such information is accumulated and communicated to management,
including the Chief Executive Officer and the Chief Financial Officer, to allow
timely decisions regarding required disclosures.
Based on
that evaluation, Pioneer’s management concluded, as of the end of the period
covered by this report, that Pioneer’s disclosure controls and procedures were
not effective in recording, processing, summarizing, and reporting information
required to be disclosed, within the time periods specified in the SEC rules and
forms and that such information was accumulated or communicated to management to
allow timely decisions regarding required disclosure. In particular,
Pioneer has identified material weaknesses in internal control over financial
reporting, as discussed below.
In March
2009, management implemented the following remediation procedures, which are
intended to remediate the causes of Pioneer’s disclosure procedures and controls
ineffectiveness:
|
·
|
adopted
a Disclosure Committee Charter (see Exhibit 99.1 for more
details)
|
|
·
|
appointed
Pioneer’s officers and directors to the Disclosure
Committee
|
|
·
|
adopted
policy to utilize external service providers to review and provide comment
on disclosure reports and
statements
|
Management’s Report on
Internal Controls over Financial Reporting
Management
is responsible for establishing and maintaining adequate internal control over
financial reporting, as required by Sarbanes-Oxley (SOX) Section 404
A. Pioneer’s internal control over financial reporting is a process
designed under the supervision of Pioneer’s Chief Executive Officer and Chief
Financial Officer to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of Pioneer’s financial statements for
external purposes in accordance with U.S. generally accepted accounting
principles. Internal control over financial reporting includes those
policies and procedures that:
|
·
|
pertain
to the maintenance of records that in reasonable detail accurately and
fairly reflect the transactions and dispositions of Pioneer’s
assets;
|
|
·
|
provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of the financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures are
being made only in accordance with authorizations of management and the
Board of Directors; and
|
Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions or that the degree of compliance
with the policies or procedures may deteriorate.
Management
conducted an assessment of the effectiveness of the Company’s internal control
over financial reporting as of August 31, 2009, based on criteria established in
Internal Control –Integrated
Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (“COSO”). As a result
of this assessment, management identified material weaknesses in internal
control over financial reporting.
Page
- 27
A
material weakness is a control deficiency, or a combination of deficiencies, in
internal control over financial reporting such that there is a reasonable
possibility that a material misstatement of Pioneer’s annual or interim
financial statements will not be prevented or detected on a timely
basis.
The
matters involving internal controls and procedures that management considered to
be material weaknesses under the standards of the Public Company Accounting
Oversight Board were: (1) lack of a functioning audit committee and lack of a
majority of outside directors on Pioneer’s board of directors, resulting in
ineffective oversight in the establishment and monitoring of required internal
controls and procedures; (2) inadequate segregation of duties consistent with
control objectives; (3) insufficient written policies and procedures for
accounting and financial reporting with respect to the requirements and
application of US GAAP and SEC disclosure requirements; and (4) ineffective
controls over period end financial disclosure and reporting
processes. The aforementioned material weaknesses were identified by
Pioneer’s Chief Financial Officer in connection with the audit of its financial
statements as of August 31, 2009 and communicated the matters to
management.
As a
result of the material weakness in internal control over financial reporting
described above, management has concluded that, as of August 31, 2009, Pioneer’s
internal control over financial reporting was not effective based on the
criteria in Internal Control –
Integrated Framework issued by COSO.
Management
believes that the material weaknesses set forth in items (2), (3) and (4) above
did not have an effect on Pioneer’s financial results. However,
management believes that the lack of a functioning audit committee and lack of a
majority of outside directors on Pioneer’s board of directors caused and
continues to cause an ineffective oversight in the establishment and monitoring
of the required internal controls over financial reporting.
Pioneer
is committed to improving its financial organization. As part of this
commitment and when funds are available, Pioneer will create a position to
Pioneer to segregate duties consistent with control objectives and will increase
its personnel resources and technical accounting expertise within the accounting
function by: (i) appointing one or more outside directors to its
board of directors who will also be appointed to the audit committee of Pioneer
resulting in a fully functioning audit committee who will undertake the
oversight in the establishment and monitoring of required internal controls over
financial reporting; and (ii) preparing and implementing sufficient written
policies and checklists that will set forth procedures for accounting and
financial reporting with respect to the requirements and application of US GAAP
and SEC disclosure requirements.
Management
believes that the appointment of one or more outside directors, who will also be
appointed to a fully functioning audit committee, will remedy the lack of a
functioning audit committee and a lack of a majority of outside directors on
Pioneer’s Board. In addition, management believes that preparing and
implementing sufficient written policies and checklists will remedy the
following material weaknesses: (i) insufficient written policies and
procedures for accounting and financial reporting with respect to the
requirements and application of US GAAP and SEC disclosure requirements; and
(ii) ineffective controls over period end financial close and reporting
processes. Further, management believes that the hiring of additional
personnel who have the technical expertise and knowledge will result proper
segregation of duties and provide more checks and balances within the
department. Additional personnel will also provide the cross training
needed to support Pioneer if personnel turn-over issues within the department
occur. This coupled with the appointment of additional outside
directors will greatly decrease any control and procedure issues Pioneer may
encounter in the future.
Management
will continue to monitor and evaluate the effectiveness of Pioneer’s internal
controls over financial reporting on an ongoing basis and are committed to
taking further action and implementing additional enhancements or improvements,
as necessary and as funds allow.
Pioneer’s
independent auditors have not issued an attestation report on management’s
assessment of Pioneer’s internal control over financial reporting. As
a result, this annual report does not include an attestation report of Pioneer’s
independent registered public accounting firm regarding internal control over
financial reporting. Pioneer was not required to have, nor has
Pioneer, engaged its independent registered public accounting firm to perform an
audit of internal control over financial reporting pursuant to the rules of the
Securities and Exchange Commission that permit Pioneer to provide only
management’s report in this annual report.
Page
- 28
Changes in Internal
Controls
There
were no changes in Pioneer’s internal controls over financial reporting (as
defined in Rule 13a-15(f) of the Exchange Act) during the quarter ended August
31, 2009, that materially affected, or are reasonably likely to materially
affect, Pioneer’s internal control over financial reporting, with the exception
of the following:
In March
2009, management completed its assessment of Pioneer’s internal controls over
financial reporting and found the internal controls to be
ineffective. As a result of such assessment, management decided that
certain changes to Pioneer’s internal controls over financial reporting were
required, and those changes should materially affect Pioneer’s internal control
over financial reporting in the future when implemented.
When
funds are available to Pioneer, management will create a position in Pioneer
that will be responsible for segregating duties consistent with control
objectives and Pioneer will increase its personnel resources and technical
accounting expertise within the accounting function by (i) appointing one or
more outside directors to its board of directors who will also be appointed to
the audit committee of Pioneer resulting in a fully functioning audit committee
who will undertake the oversight in the establishment and monitoring of required
internal controls over financial reporting, and (ii) preparing and implementing
sufficient written policies and checklists that will set forth procedures for
accounting and financial reporting.
Also, in
March 2009 management made certain changes to Pioneer’s disclosure controls and
procedures and implemented certain remediation procedures, as listed
above.
Item
9B. Other Information
During
the fourth quarter of the fiscal year covered by this Form 10-K, Pioneer
reported all information that was required to be disclosed in a report on Form
8-K.
PART
III
Item
10. Directors, Executive Officers, and Corporate
Governance.
(a) Identify
Directors and Executive Officers
Each
director of Pioneer holds office until (i) the next annual meeting of the
stockholders, (ii) his successor has been elected and qualified, or (iii) the
director resigns.
Pioneer’s
management team is listed below.
|
Officer’s
Name
|
Pioneer
Exploration Inc.
|
|
Warren
Robb
|
Director
President,
CEO, and CFO
|
|
Thomas
Brady
|
Director,
Treasurer
and Corporate Secretary
|
Warren
Robb ● Mr. Robb (49 years old) has been a director and
the president, CEO, and CFO of Pioneer since June 2005. From January
to December 2005, Mr, Robb was the senior consulting geologist for Majestic Gold
Corp. Mr Robb has served as Chief Operating Officer and Vice
President Explorations Inc for TTM Resources Inc. since October
2007. From April 2004 to June 2004 Mr. Robb provided investor
relations services for BM Diamond Gold Corp. Mr. Robb is a
professional geoscientist and has been a member of the Association of
Professional Engineers and Geoscientists of British Columbia since
1992. Mr. Robb holds a Bachelor of Science degree from the University
of British Columbia
Thomas Brady ● Mr.
Brady (57) has been a director and the treasurer and corporate secretary of
Pioneer since June 2005. Mr. Brady was the vice-president,
communications for TTM Resources Inc. from May 2004 to November 2006 and has
served as a consultant from November 2006 to present. From May 2001
to May 2004 he was the manager of information systems for Starfield Resources
Inc. Mr. Brady was a director of GTO Resources Inc. from July 2003 to
December 2003. Mr. Brady has been a consultant to Wyn Developments
Inc., United Resource Group Inc. and Metalquest Minerals Inc. (formerly Sonora
Gold Corp) from May 2004 to present. From May 2003 to May 2005 he was
a director and the secretary-treasurer of Chilco River Holdings
Inc. Mr. Brady has served as president of BBX Marketing Corp.
(formerly Momentum Marketing Corporation) from 1992 to present. He
has been Vice President-Communications of Red Tusk Resources Inc. from May 2004
to May 2005. Mr. Brady has been the president of the Vancouver
Petroleum Club since July 2006. Mr. Brady holds a Bachelor of
Commerce degree from the University of Manitoba.
Page
- 29
(b) Identify
Significant Employees
Pioneer
has no significant employees other than the directors and officers of
Pioneer.
(c) Family
Relationships
There are
no family relationships among the directors, executive officers or persons
nominated or chosen by Pioneer to become directors or executive
officers.
(d) Involvement
in Certain Legal Proceedings
|
|
(1)
|
No
bankruptcy petition has been filed by or against any business of which any
director was a general partner or executive officer either at the time of
the bankruptcy or within two years prior to that
time.
|
|
|
(2)
|
No
director has been convicted in a criminal proceeding and is not subject to
a pending criminal proceeding (excluding traffic violations and other
minor offences).
|
|
|
(3)
|
No
director has been subject to any order, judgement, 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.
|
|
|
(4)
|
No
director has been found by a court of competent jurisdiction (in a civil
action), the Securities Exchange Commission or the Commodity Futures
Trading Commission to have violated a federal or state securities or
commodities law, that has not been reversed, suspended, or
vacated.
|
(e) Compliance
with Section 16(a) of the Exchange Act.
All
reports were filed with the SEC on a timely basis and Pioneer is not aware of
any failures to file a required report during the period covered by this annual
report.
(f) Nomination
Procedure for Directors
Pioneer
does not have a standing nominating committee; recommendations for candidates to
stand for election as directors are made by the board of
directors. Pioneer has not adopted a policy that permits shareholders
to recommend candidates for election as directors or a process for shareholders
to send communications to the board of directors.
(g) Audit
Committee Financial Expert
Pioneer
has no financial expert. Management believes the cost related to
retaining a financial expert at this time is prohibitive. Pioneer’s
Board of Directors has determined that it does not presently need an audit
committee financial expert on the Board of Directors to carry out the duties of
the Audit Committee. Pioneer’s Board of Directors has determined that
the cost of hiring a financial expert to act as a director of Pioneer and to be
a member of the Audit Committee or otherwise perform Audit Committee functions
outweighs the benefits of having a financial expert on the Audit
Committee.
(h) Identification
of Audit Committee
Pioneer
does not have a separately-designated standing audit
committee. Rather, Pioneer’s entire board of directors perform the
required functions of an audit committee. Currently, Warren Robb and
Thomas Brady are the only members of Pioneer’s audit committee, but they do not
meet Pioneer’s independent requirements for an audit committee
member. See “Item 12. (c) Director independence” below for more
information on independence.
Page
- 30
Pioneer’s
audit committee is responsible for: (1) selection and oversight of Pioneer’s
independent accountant; (2) establishing procedures for the receipt, retention
and treatment of complaints regarding accounting, internal controls and auditing
matters; (3) establishing procedures for the confidential, anonymous submission
by Pioneer’s employees of concerns regarding accounting and auditing matters;
(4) engaging outside advisors; and, (5) funding for the outside auditor and any
outside advisors engaged by the audit committee.
As of
August 31, 2009, Pioneer did not have a written audit committee charter or
similar document.
(i) Code
of Ethics
Pioneer
has adopted a financial code of ethics that applies to all its executive
officers and employees, including its CEO and CFO. See Exhibit 14 –
Code of Ethics for more information. Pioneer undertakes to provide
any person with a copy of its financial code of ethics free of
charge. Please contact Pioneer at 604-618-0948 to request a copy of
Pioneer’s financial code of ethics. Management believes Pioneer’s
financial code of ethics is reasonably designed to deter wrongdoing and promote
honest and ethical conduct; provide full, fair, accurate, timely and
understandable disclosure in public reports; comply with applicable laws; ensure
prompt internal reporting of code violations; and provide accountability for
adherence to the code.
Item
11. Executive Compensation.
Pioneer
has paid no compensation to its named executive officers during its fiscal year
ended August 31, 2009.
SUMMARY
COMPENSATION TABLE
|
Name
and principal position
(a)
|
Year
(b)
|
Salary
($)
(c)
|
Bonus
($)
(d)
|
Stock
Awards
($)
(e)
|
Option
Awards
($)
(f)
|
Non-Equity
Incentive Plan
($)
(g)
|
Non-qualified
Deferred Compen-
sation
Earnings ($)
(h)
|
All
other compen-sation
($)
(i)
|
Total
($)
(j)
|
|
Warren
Rob
CEO
and CFO
June
2005 - present
|
2007
2008
2009
|
nil
nil
nil
|
nil
nil
nil
|
nil
nil
nil
|
nil
nil
nil
|
nil
nil
nil
|
nil
nil
nil
|
nil
nil
nil
|
nil
nil
nil
|
|
Thomas
Brady
Secretary/Treasurer
June
2005 – present
|
2007
2008
2009
|
nil
nil
nil
|
nil
nil
nil
|
nil
nil
nil
|
nil
nil
nil
|
nil
nil
nil
|
nil
nil
nil
|
nil
nil
nil
|
nil
nil
nil
|
Since
Pioneer’s inception, no stock options, stock appreciation rights, or long-term
incentive plans have been granted, exercised or repriced.
Currently,
there are no arrangements between Pioneer and any of its directors whereby such
directors are compensated for any services provided as directors.
There are
no employment agreements between Pioneer and any named executive officer, and
there are no employment agreements or other compensating plans or arrangements
with regard to any named executive officer which provide for specific
compensation in the event of resignation, retirement, other termination of
employment or from a change of control of Pioneer or from a change in a named
executive officer’s responsibilities following a change in control.
Page
- 31
Item
12. Security Ownership of Certain Beneficial Holders and
Management.
(a) Security Ownership of Certain
Beneficial Owners (more than 5%)
|
(1)
Title
of Class
|
(2)
Name
and Address of Beneficial Owner
|
(3)
Amount
and Nature of
Beneficial
Owner [1]
|
(4)
Percent
of Class [2]
|
|
common
stock
|
Thomas
Brady
202
- 750 W. Pender St
Vancouver,
British Columbia
V6C
2T7 Canada
|
2,500,000
|
22.2%
|
|
|
[1] The
listed beneficial owner has no right to acquire any shares within 60 days
of the date of this Form 10-KSB from options, warrants, rights, conversion
privileges or similar obligations excepted as otherwise
noted.
|
|
|
[2]
Based on 11,264,500 shares of common stock issued and outstanding
as of November 30, 2009.
|
(b) Security
Ownership of Management
|
(1)
Title
of Class
|
(2)
Name
and Address of Beneficial Owner
|
(3)
Amount
and Nature of Beneficial Owner
|
(4)
Percent
of Class [1]
|
|
common
stock
|
Warren
Robb
202
- 750 W. Pender St
Vancouver,
British Columbia
V6C
2T7 Canada
|
500,000
|
4.4%
|
|
common
stock
|
Thomas
Brady
202
- 750 W. Pender St
Vancouver,
British Columbia
V6C
2T7 Canada
|
2,500,000
|
22.2%
|
|
common
stock
|
Directors
and Executive Officers (as a group)
|
3,000,000
|
26.6%
|
|
|
[1] Based
on 11,264,500 shares of common stock issued and outstanding as of November
30, 2009.
|
(c) Changes
in Control
Management
is not aware of any arrangement that may result in a change in control of
Pioneer.
Item
13. Certain Relationships and Related Transactions.
(a) Transactions
with Related Persons
Since the
beginning of Pioneer’s last fiscal year, no director, executive officer,
security holder, or any immediate family of such director, executive officer, or
security holder has had any direct or indirect material interest in any
transaction or currently proposed transaction, which Pioneer was or is to be a
participant, that exceeded the lesser of (1) $120,000 or (2) one percent of the
average of Pioneer’s total assets at year-end for the last three completed
fiscal years, except for the following:
|
1.
|
Donated Services and
Rent
|
Warren
Robb, Pioneer’s President, CEO, CFO and director, donated services to Pioneer
that are recognized on its financial statements. Also, Thomas Brady,
Pioneer’s Corporate Secretary, Treasurer, and director, donated services and
rent to Pioneer that are recognized on its financial statements. From
inception on June 9, 2005 to August 31, 2009, Pioneer recognized a total of
$25,500 for donated services at a rate of $250 per month and $11,250 for donated
rent at a rate of $250 per month.
(b) Promoters
and control persons
During
the past five fiscal years, Warren Robb and Thomas Brady have been promoters of
Pioneer’s business, but none of these promoters have received anything of value
from Pioneer nor is any person entitled to receive anything of value from
Pioneer for services provided as a promoter of the business of
Pioneer.
Page
- 32
(c) Director
independence
Pioneer’s
board of directors currently consists of Warren Robb and Thomas
Brady. Pursuant to Item 407(a)(1)(ii) of Regulation S-K of the
Securities Act, Pioneer’s board of directors has adopted the definition of
“independent director” as set forth in Rule 4200(a)(15) of the NASDAQ
Manual. In summary, an “independent director” means a person other
than an executive officer or employee of Pioneer or any other individual having
a relationship which, in the opinion of Pioneer’s board of directors, would
interfere with the exercise of independent judgement in carrying out the
responsibilities of a director, and includes any director who accepted any
compensation from Pioneer in excess of $200,000 during any period of 12
consecutive months with the three past fiscal years. Also, the
ownership of Pioneer’s stock will not preclude a director from being
independent.
In
applying this definition, Pioneer’s board of directors has determined that
neither Mr. Robb nor Mr. Brady qualify as an “independent director” pursuant to
Rule 4200(a)(15) of the NASDAQ Manual.
As of the
date of the report, Pioneer did not maintain a separately designated
compensation or nominating committee.
Pioneer
has also adopted this definition for the independence of the members of its
audit committee. Warren Robb and Thomas Brady serve on Pioneer’s
audit committee. Pioneer’s board of directors has determined that
neither Mr. Robb nor Mr. Brady is “independent” for purposes of Rule 4200(a)(15)
of the NASDAQ Manual, applicable to audit, compensation and nominating committee
members, and is “independent” for purposes of Section 10A(m)(3) of the
Securities Exchange Act.
Item
14. Principal Accounting Fees and Services
(1) Audit
Fees
The
aggregate fees billed for each of the last two fiscal years for professional
services rendered by the principal accountant for Pioneer’s audit of annual
financial statements and for review of financial statements included in
Pioneer’s Form 10-Q’s or services that are normally provided by the accountant
in connection with statutory and regulatory filings or engagements for those
fiscal years was:
2009 -
$14,500 – Manning Elliott LLP – Chartered Accountants
2008 -
$16,200 – Manning Elliott LLP – Chartered Accountants
(2) Audit-Related
Fees
The
aggregate fees billed in each of the last two fiscal years for assurance and
related services by the principal accountants that are reasonably related to the
performance of the audit or review of Pioneer’s financial statements and are not
reported in the preceding paragraph:
2009 -
$nil – Manning Elliott LLP – Chartered Accountants
2008 -
$nil – Manning Elliott LLP – Chartered Accountants
(3) Tax
Fees
The
aggregate fees billed in each of the last two fiscal years for professional
services rendered by the principal accountant for tax compliance, tax advice,
and tax planning was:
2009 -
$nil – Manning Elliott LLP – Chartered Accountants
2008 -
$nil – Manning Elliott LLP – Chartered Accountants
(4) All
Other Fees
The
aggregate fees billed in each of the last two fiscal years for the products and
services provided by the principal accountant, other than the services reported
in paragraphs (1), (2), and (3) was:
2009 -
$nil – Manning Elliott LLP – Chartered Accountants
2008 -
$nil – Manning Elliott LLP – Chartered Accountants
Page
- 33
(6) The percentage
of hours expended on the principal accountant’s engagement to audit Pioneer’s
financial statements for the most recent fiscal year that were attributed to
work performed by persons other than the principal accountant’s full time,
permanent employees was nil %.
Item
15. Exhibits, Financial Statements Schedules.
(a) Index
to and Description of Exhibits.
All
Exhibits required to be filed with the Form 10-K are included in this annual
report or incorporated by reference to Pioneer’s previous filings with the SEC,
which can be found in their entirety at the SEC website at www.sec.gov under SEC
File Number 333-135743 and SEC File Number 000-53784.
|
Exhibit
|
Description
|
Status
|
|
3.1
|
Articles
of Incorporation, filed as an exhibit to Pioneer’s registration statement
on Form SB-2 filed on July 13, 2006, and incorporated herein by
reference.
|
Filed
|
|
3.2
|
By-Laws,
filed as an exhibit to Pioneer’s registration statement on Form SB-2 filed
on July 13, 2006, and incorporated herein by reference.
|
Filed
|
|
10.1
|
Property
Purchase Agreement dated August 25, 2005, filed as an exhibit to Pioneer’s
registration statement on Form SB-2 filed on July 13, 2006, and
incorporated herein by reference.
|
Filed
|
|
10.2
|
Declaration
of Trust, filed as an exhibit to Pioneer’s registration statement on Form
SB-2 filed on July 13, 2006, and incorporated herein by
reference.
|
Filed
|
|
10.3
|
Geological
Report on the Pipe Claims, filed as an exhibit to Pioneer’s registration
statement on Form SB-2 filed on July 13, 2006, and incorporated herein by
reference.
|
Filed
|
|
10.4
|
Letter
Agreement dated November 5, 2008 between Pioneer Exploration Inc. and
Scott Macleod, filed as an exhibit to Pioneer’s Form 8-K (Current Report)
filed on November 13, 2008, and incorporated herein by
reference.
|
Filed
|
|
10.5
|
Letter
Agreement dated November 5, 2008 between Pioneer Exploration Inc. and Ian
McGavney, filed as an exhibit to Pioneer’s Form 8-K (Current Report) filed
on November 13, 2008, and incorporated herein by
reference.
|
Filed
|
|
10.6
|
Share
Purchase Agreement dated November 20, 2008 between Pioneer Exploration
Inc. and Scott Macleod, filed as an exhibit to Pioneer’s Form 8-K (Current
Report) filed on November 26, 2008, and incorporated herein by
reference.
|
Filed
|
|
10.7
|
Share
Purchase Agreement dated November 20, 2008 between Pioneer Exploration
Inc. and Ian McGavney, filed as an exhibit to Pioneer’s Form 8-K (Current
Report) filed on November 26, 2008, and incorporated herein by
reference.
|
Filed
|
|
10.8
|
Promissory
Note dated November 20, 2008 given to Tiger Ventures Group Ltd. by Pioneer
Exploration Inc., filed as an exhibit to Pioneer’s Form 10-K (Annual
Report) filed on December 2, 2008, and incorporated herein by
reference.
|
Filed
|
|
10.9
|
Promissory
Note dated February 19, 2009 given to Blue Cove Holdings Inc. by Pioneer
Exploration Inc.
|
Included
|
|
10.10
|
Promissory
Note dated May 15, 2009 given to Blue Cove Holdings Inc. by Pioneer
Exploration Inc.
|
Included
|
|
10.11
|
Share
Purchase Agreement and Promissory Note dated November 30, 2009 between
Pioneer Exploration Inc. and Skye Capital Corporation.
|
Included
|
|
14
|
Code
of Ethics filed as an exhibit to Pioneer’s Form 10-Q (Quarterly Report)
filed on April 16, 2008, and incorporated herein by
reference.
|
Filed
|
|
31
|
Certifications
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
Included
|
|
32
|
Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
|
Included
|
|
99.1
|
Disclosure
Committee Charter filed as an exhibit to Pioneer’s Form 10-Q (Quarterly
Report) filed on April 20, 2009, and incorporated herein by
reference.
|
Filed
|
Page
- 34
SIGNATURES
In
accordance with the requirements of the Securities Exchange Act of 1934, Pioneer
Exploration Inc. has caused this report to be signed on its behalf by the
undersigned duly authorized person.
PIONEER
EXPLORATION INC.
By: /s/ Warren
Robb
Name: Warren Robb
Title:
Director and
CEO
Dated: December 10, 2009
Pursuant
to the requirements of the Securities Exchange Act of 1934, the following
persons on behalf of Pioneer Exploration Inc. and in the capacities and on the
dates indicated have signed this report below.
|
Signature
|
Title
|
Date
|
|
/s/
Warren Robb
|
President,
Chief Executive Officer,
Principal
Executive Officer,
Chief
Financial Officer, Principal Financial Officer, Principal Accounting
Officer
Member
of the Board of Directors
|
December
10, 2009
|
|
/s/
Thomas Brady
|
Treasurer,
and Corporate Secretary
Member
of the Board of Directors
|
December
10, 2009
|
Page
- 35
Exhibit
10.9
Page
- 36
PROMISSORY
NOTE
DATED as of February 19,
2009.
TO: Blue
Cove Holdings Inc., # 4
Beaufort Road Nassau Bahamas
|
|
(the
“Creditor")
|
WHEARAS, we, Pioneer
Exploration Inc, are indebted to the Creditor in the amount of $50,000.00 for
funds that the Creditor advanced to us:
WE, Pioneer Exploration Inc,
Inc, of 750 West Pender Street, Suite 202, Vancouver, British Columbia, V6C 2T7
(the "Company"), promise to pay to the Creditor, at the address specified above,
the principal amount specified below ("Principal").
The
following are the terms and conditions of the Note:
|
|
1.
|
Principal
amount:
|
$50,000.00
due and payable from the Company to the
Creditor
|
|
|
2.
|
Maturity
date:
|
This
Note shall be payable on demand.
|
|
|
3.
|
Interest:
|
No
interest shall accrue on the outstanding
amount.
|
|
|
4.
|
Conversion:
|
At
any time prior to the date that the Principal is repaid, the Creditor, at
his sole option, may convert a portion or all of the Principal amount
outstanding into shares of common stock (the “Shares”) in the capital
stock of the Company. Each $1.20 of Principal outstanding may be converted
in to one Share.
|
|
|
5.
|
Currency:
|
All
funds and dollar amounts referred to in this Note are in the lawful
currency of the United States of
America.
|
|
|
6.
|
Jurisdiction:
|
This
Note shall be interpreted in accordance with the laws in effect from time
to time in the Province of British
Columbia.
|
|
|
7.
|
Resale
Restrictions:
|
If
the Creditor chooses to convert the Principal into Shares of the Company
pursuant to paragraph 4, the Creditor agrees and acknowledges that he will
comply with all securities laws relating to resale
restrictions.
|
IN WITNESS WHEREOF this
Promissory Note has been executed as of the day and year first above
written.
Pioneer
Exploration Inc.
Per: /s/ Tom Brady
_______________________________
Tom
Brady, Director
Page
- 37
Exhibit
10.10
Page
- 38
PROMISSORY
NOTE
DATED as of May 15,
2009.
TO: Blue
Cove Holdings Inc., # 4
Beaufort Road Nassau Bahamas
|
|
(the
“Creditor")
|
WHEARAS, we, Pioneer
Exploration Inc, are indebted to the Creditor in the amount of $36,000.00 for
funds that the Creditor advanced to us:
WE, Pioneer Exploration Inc,
Inc, of 750 West Pender Street, Suite 202, Vancouver, British Columbia, V6C 2T7
(the "Company"), promise to pay to the Creditor, at the address specified above,
the principal amount specified below ("Principal").
The
following are the terms and conditions of the Note:
|
|
1.
|
Principal
amount:
|
$36,000.00
due and payable from the Company to the
Creditor
|
|
|
2.
|
Maturity
date:
|
This
Note shall be payable on demand.
|
|
|
3.
|
Interest:
|
No
interest shall accrue on the outstanding
amount.
|
|
|
4.
|
Conversion:
|
At
any time prior to the date that the Principal is repaid, the Creditor, at
his sole option, may convert a portion or all of the Principal amount
outstanding into shares of common stock (the “Shares”) in the capital
stock of the Company. Each $1.80 of Principal outstanding may be converted
in to one Share.
|
|
|
5.
|
Currency:
|
All
funds and dollar amounts referred to in this Note are in the lawful
currency of the United States of
America.
|
|
|
6.
|
Jurisdiction:
|
This
Note shall be interpreted in accordance with the laws in effect from time
to time in the Province of British
Columbia.
|
|
|
7.
|
Resale
Restrictions:
|
If
the Creditor chooses to convert the Principal into Shares of the Company
pursuant to paragraph 4, the Creditor agrees and acknowledges that he will
comply with all securities laws relating to resale
restrictions.
|
IN WITNESS WHEREOF this
Promissory Note has been executed as of the day and year first above
written.
Pioneer
Exploration Inc.
Per: /s/ Tom Brady
_______________________________
Tom
Brady, Director
Page
- 39
Exhibit
10.11
Page
- 40
SHARE
PURCHASE AGREEMENT
November
30, 2009
Pioneer Exploration Inc., a
Nevada company, of 750 West Pender Street, Suite 2020, Vancouver, British
Columbia, V6C 2T7 (the “Seller”), will sell its
125,000 shares in the capital of Macallan Oil & Gas Inc. (the “Shares”) to Skye Capital Corporation (the
“Purchaser”), of 102
Aberdeen Road, Bridgewater, Nova Scotia, B4V 2S8 for the purchase price of CDN$100,000 (the “Purchase Price”) effective
November 30,2009 (“Closing
Date”).
The
Purchaser will pay the Purchase Price on or before May 31, 2010. The
Purchaser is liable for payment of the Purchase Price and any costs that the
Seller incurs in trying to collect the Purchase Price.
The
Purchaser will secure its payment of the Purchase Price with a promissory note
and the Seller will retain physical possession of the Shares and be the
registered owner of the Shares until the Purchase Price is paid in
full.
If the
Purchaser sells its beneficial ownership of the Shares, the Purchaser will pay
to the Seller all of the proceeds of sale of the Shares up to the sum of the
Purchase Price.
Pioneer
Exploration Inc.
Per:
/s/ Authorized
Signatory
Authorized
signatory
Page
- 41
Exhibit
31
Page
- 42
PIONEER
EXPLORATION INC.
CERTIFICATIONS
PURSUANT TO
SECTION
302 OF THE SARBANES-OXLEY ACT OF 2002
CERTIFICATION
I, Warren
Robb, certify that:
1. I
have reviewed this annual report on Form 10-K for the fiscal year ending August
31, 2009 of Pioneer Exploration Inc.;
2. Based
on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
3. Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
4. The
registrant’s other certifying officer(s) and I are responsible for establishing
and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent fiscal
quarter (the registrant’s fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
5. The
registrant’s other certifying officer(s) and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
(a) All
significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to
adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
(b) Any
fraud, whether or not material, that involves management or other employees who
have a significant role in the registrant’s internal control over financial
reporting.
Date: December
10, 2009
/s/
Warren Robb
Warren
Robb
Chief
Executive Officer
Page
- 43
PIONEER
EXPLORATION INC.
CERTIFICATIONS
PURSUANT TO
SECTION
302 OF THE SARBANES-OXLEY ACT OF 2002
CERTIFICATION
I, Warren
Robb, certify that:
1. I
have reviewed this annual report on Form 10-K for the fiscal year ending August
31, 2009 of Pioneer Exploration Inc.;
2. Based
on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
3. Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
4. The
registrant’s other certifying officer(s) and I are responsible for establishing
and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant’s disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent fiscal
quarter (the registrant’s fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
5. The
registrant’s other certifying officer(s) and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
(a) All
significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to
adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
(b) Any
fraud, whether or not material, that involves management or other employees who
have a significant role in the registrant’s internal control over financial
reporting.
Date: December
10, 2009
/s/
Warren Robb
Warren
Robb
Chief
Financial Officer
Page
- 44
Exhibit
32
Page
- 45
CERTIFICATION
PURSUANT TO
18
U.S.C. SECTION 1350,
AS
ADOPTED PURSUANT TO
SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
In
connection with the Annual Report of Pioneer Exploration Inc. (the “Company”) on
Form 10-K for the period ending August 31, 2009 as filed with the Securities and
Exchange Commission on the date hereof (the “Report”), I, Warren Robb, Chief
Executive Officer of the Company and a member of the Board of Directors,
certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:
|
|
(1) The
Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934;
and
|
|
|
(2) The
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
|
/s/
Warren Robb
Warren
Robb
Chief
Executive Officer
December
10, 2009
Page
- 46
CERTIFICATION
PURSUANT TO
18
U.S.C. SECTION 1350,
AS
ADOPTED PURSUANT TO
SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
In
connection with the Annual Report of Pioneer Exploration Inc. (the “Company”) on
Form 10-K for the period ending August 31, 2009 as filed with the Securities and
Exchange Commission on the date hereof (the “Report”), I, Warren Robb, Chief
Financial Officer of the Company and a member of the Board of Directors,
certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:
|
|
(1) The
Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934;
and
|
|
|
(2) The
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
|
/s/
Warren Robb
Warren
Robb
Chief
Financial Officer
December
10, 2009
Page
- 47