Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended May 31, 2010
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from __________ to __________
Commission File Number: 333-138148
AMERICAN PARAMOUNT GOLD CORP
(Exact name of registrant as specified in its charter)
Nevada 20-5243308
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
50 West Liberty Street, Suite 880, Reno, NV 89501
(Address of principal executive offices) (Zip Code)
949.481.5396
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
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 preceding 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
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a small reporting company. See
the definitions of "large accelerated filer", "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant has filed all documents and reports required to be
filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. [ ] YES [ ] NO
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 (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). [ ] YES [ ] NO
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
64,000,000 common shares issued and outstanding as of July 13, 2010
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Our unaudited interim financial statements for the three and nine month periods
ended May 31, 2010 form part of this quarterly report. They are stated in United
States Dollars (US$) and are prepared in accordance with United States generally
accepted accounting principles. These interim unaudited financial statements
should be read in conjunction with our audited financial statements and the 10-K
for the year ended August 31, 2009.
2
AMERICAN PARAMOUNT GOLD CORP
(fka ZEBRA RESOURCES INC.)
(An Exploration Stage Company)
Balance Sheets
(Stated in U.S. Dollars)
May 31, August 31,
2010 2009
-------- --------
(Unaudited) (Audited)
$ $
ASSETS
CURRENT
Cash 123,322 7,419
Prepaids and deposits 26,408 1,676
-------- --------
TOTAL CURRENT ASSETS 149,730 9,095
WEBSITE (NET) 25,582 --
-------- --------
TOTAL ASSETS 175,312 9,095
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
LIABILITIES
CURRENT
Accounts payable and accrued liabilities 2,594 150
Accounts payable - related party 3,000 500
Convertible loans payable - related party,
net of unamortized discount of $15,034 205,898 --
-------- --------
TOTAL CURRENT LIABILITIES 211,492 650
-------- --------
TOTAL LIABILITIES 211,492 650
-------- --------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock
150,000,000 authorized shares, par value $0.001
64,000,000 shares issued and outstanding 64,000 64,000
Additional paid-in-capital 558,033 36,000
Deficit accumulated during exploration stage (658,213) (91,555)
-------- --------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (36,180) 8,445
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) 175,312 9,095
======== ========
See accompanying notes to financial statements.
3
AMERICAN PARAMOUNT GOLD CORP
(fka ZEBRA RESOURCES INC.)
(An Exploration Stage Company)
Statements of Operations
(Stated in U.S. Dollars)
Three Months Three Months Nine Months Nine Months From Inception
Ended Ended Ended Ended (July 20, 2006) to
May 31, May 31, May 31, May 31, May 31,
2010 2009 2010 2009 2010
---------- ---------- ---------- ---------- ----------
$ $ $ $ $
REVENUES
Revenues -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total revenues -- -- -- -- --
---------- ---------- ---------- ---------- ----------
EXPENSES
Operating expenses
Consulting fees 507,603 -- 507,603 -- 507,603
Exploration expense -- -- -- -- 17,500
General and adminstrative 3,064 560 4,524 1,460 19,385
Rent expense - related party 1,000 1,500 4,000 4,000 9,500
Professional fees 33,432 2,474 46,311 7,855 80,005
---------- ---------- ---------- ---------- ----------
Total operating expenses 545,099 4,534 562,438 13,315 633,993
---------- ---------- ---------- ---------- ----------
NET LOSS FROM OPERATIONS (545,099) (4,534) (562,438) (13,315) (633,993)
OTHER EXPENSES
Amortization of debt discount (1,799) -- (1,799) -- (1,799)
Interest expense (2,421) -- (2,421) -- (2,421)
---------- ---------- ---------- ---------- ----------
Total other expenses (4,220) -- (4,220) -- (4,220)
---------- ---------- ---------- ---------- ----------
Net loss (549,319) (4,534) (566,658) (13,315) (638,213)
========== ========== ========== ========== ==========
BASIC EARNINGS PER COMMON SHARE (0.01) (0.00) (0.01) (0.00)
========== ========== ========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 64,000,000 64,000,000 64,000,000 64,000,000
========== ========== ========== ==========
See accompanying notes to financial statements.
4
AMERICAN PARAMOUNT GOLD CORP
(fka ZEBRA RESOURCES INC.)
(An Exploration Stage Company)
Statement of Stockholders' Equity (Deficit)
(Stated in U.S. Dollars)
Deficit
Accumulated
Additional During the
Common Shares Paid In Development
Number Amount Capital Stage Total
------ ------ ------- ----- -----
Balance, July 20, 2006 -- $ -- $ -- $ -- $ --
Issued for cash at $0.001 per share 40,000,000 40,000 -- (20,000) 20,000
on July 25, 2006
Net loss -- -- -- (18,575) (18,575)
---------- ------- -------- --------- ---------
Balance, August 31, 2006 40,000,000 40,000 -- (38,575) 1,425
Issued for cash at $0.005 per share 24,000,000 24,000 36,000 -- 60,000
on December 20, 2006
Net loss -- -- -- (15,058) (15,058)
---------- ------- -------- --------- ---------
Balance, August 31, 2007 64,000,000 64,000 36,000 (53,633) 46,367
Net loss -- -- -- (20,102) (20,102)
---------- ------- -------- --------- ---------
Balance, August 31, 2008 64,000,000 64,000 36,000 (73,735) 26,265
Net loss -- -- -- (17,820) (17,820)
---------- ------- -------- --------- ---------
Balance, August 31, 2009 64,000,000 64,000 36,000 (91,555) 8,445
Beneficial conversion feature -- -- 16,833 -- 16,833
Stock options granted -- -- 505,200 -- 505,200
Net loss -- -- -- (566,658) (566,658)
---------- ------- -------- --------- ---------
Balance, May 31, 2010 64,000,000 $64,000 $558,033 $(658,213) $ (36,180)
========== ======= ======== ========= =========
See accompanying notes to financial statements.
5
AMERICAN PARAMOUNT GOLD CORP
(fka ZEBRA RESOURCES INC.)
(An Exploration Stage Company)
Statements of Cash Flows
(Stated in U.S. Dollars)
Nine Months Nine Months From Inception
Ended Ended (July 20, 2006) to
May 31, May 31, May 31,
2010 2009 2010
-------- -------- --------
$ $ $
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss (566,658) (13,315) (638,213)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Amortization 731 -- 731
Stock-based compensation 505,200 -- 505,200
Amortized debt discount 1,799 -- 1,799
Change in operating assets and liabilities:
Increase (decrease) in accounts payable and accrued liabilities 2,444 (1,976) 2,594
Increase in accounts payable-related party 2,500 500 3,000
(Increase) in prepaids (24,732) (1,676) (26,408)
-------- -------- --------
NET CASH FLOWS USED IN OPERATING ACTIVITIES (78,716) (16,467) (151,297)
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Website (26,313) -- (26,313)
-------- -------- --------
NET CASH FLOWS USED IN INVESTING ACTIVITIES (26,313) -- (26,313)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Convertible loan proceeds - related party 220,932 -- 220,932
Proceeds on sale of common stock -- -- 80,000
-------- -------- --------
NET CASH FLOWS FROM FINANCING ACTIVITIES 220,932 -- 300,932
-------- -------- --------
NET INCREASE (DECREASE) IN CASH 115,903 (16,467) 123,322
CASH, BEGINNING OF THE PERIOD 7,419 28,241 --
-------- -------- --------
CASH, END OF THE PERIOD 123,322 11,774 123,322
======== ======== ========
See accompanying notes to financial statements.
6
AMERICAN PARAMOUNT GOLD CORP
(fka ZEBRA RESOURCES INC.)
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited, expressed in U.S. dollars)
1. BASIS OF PRESENTATION
The accompanying financial statements of American Paramount Gold Corp.(formally
known as Zebra Resources, Inc.)(the "Company") should be read in conjunction
with the Company's most recent filing of the Form 10-K which included the
financial statements as of August 31, 2009. Significant accounting policies
disclosed therein have not changed except as noted below.
In the opinion of management, all adjustments necessary to present fairly the
financial position as of May 31, 2010 and the results of operation,
stockholders' equity (deficit) and cash flows presented herein have been
included in the financial statements. All adjustments are of normal recurring
nature.
2. DESCRIPTION OF THE BUSINESS AND HISTORY
American Paramount Gold Corp., a Nevada corporation, (hereinafter referred to as
the "Company" or "APGC") was incorporated in the State of Nevada on July 20,
2006. The Company was formed to engage in the acquisition, exploration and
development of natural resource properties of merit. The Company acquired a
mineral claims option located in the Province of British Columbia, Canada during
the period ending August 31, 2006 for $15,000. The Company entered into a
Mineral Property Options Agreement (the "MPOA") with a private British Columbia
company, whereby the Company obtained an option to acquire mineral claims known
as "Astro 2006" located in British Columbia. During the period ending August 31,
2009, the Company terminated the MPOA and relieved itself from any further
obligations there under.
On September 12, 2008, Karl Kottmeier resigned as our President, Chief Executive
Officer, Treasurer, and Chief Financial Officer. As a result, on September 12,
2008, we appointed Dan Gravelle as President, Chief Executive Officer,
Treasurer, and Chief Financial Officer of the Company. Additionally, Mr.
Gravelle was appointed a director of the Company.
On December 1, 2008, Karl Kotmeier resigned as a director of the Company.
On November 30, 2009, we appointed Mr. Peter Jenks as a member of our board of
directors.
On February 26, 2010, Monaco Capital Inc. acquired a controlling interest in our
Company by purchasing 20,000,000 shares of our common stock in a private
transaction.
On March 17, 2010, the Company filed a Plan of Merger, Merger Agreement and
Certificate of Change with the Nevada Secretary of State to affect a forward
stock split of its common shares on a 2 new for 1 old basis and to change its
name to American Paramount Gold Corp. These changes were approved by FINRA
effective April 12, 2010. As a result, our authorized capital increased from
75,000,000 to 150,000,000 shares of common stock and our issued and outstanding
increased from 32,000,000 shares of common stock to 64,000,000 shares of common
stock, all with a par value of $0.001.
On April 14, 2010, we appointed Wayne Parsons as a member of the board of
directors and as our President, Chief Executive Officer, Treasurer, Secretary
and Chief Financial Officer.
7
AMERICAN PARAMOUNT GOLD CORP
(fka ZEBRA RESOURCES INC.)
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited, expressed in U.S. dollars)
2. DESCRIPTION OF THE BUSINESS AND HISTORY - cont'd
On April 14, 2010, Dan Gravelle resigned as our President, Chief Executive
Officer, Treasurer, Secretary and Chief Financial Officer.
On April 14, 2010, we entered into a consulting agreement with Wayne Parsons
whereby the Company agreed to make monthly payments of Cdn $1,500 and to grant
1,000,000 options to acquire 1,000,000 shares of our common stock at a purchase
price of US$1.00 per share.
On April 16, 2010, the Company entered into an agreement with Royce L. Hackworth
and Belva L. Tomany in respect of 189 unpatented mining claims situated in the
Walker Lane Structural Belt in Nye County, Nevada (the "Cap Gold Project"). In
order to complete the transactions contemplated by the Agreement, the Company
paid $25,000 as a deposit upon closing of the Agreement. Upon the completion of
the Company's due diligence APGC will be required to pay an additional $100,000.
On April 22, 2010, we entered into a convertible loan agreement with Monaco
Capital Inc., wherein Monaco Capital Inc. has agreed to loan our Company up to
$500,000. The loan is convertible into common shares of our Company at a
conversion price of $1.05.
On April 28, 2010, we appointed Mr. John Goodwin to the board of directors.
Our board of directors now consists of Wayne Parsons, Peter Jenks and John
Goodwin.
THE COMPANY TODAY -The Company is an exploration stage enterprise, as defined in
FASB ASC 915-10 "Development Stage Entities".
Since September 12, 2008, our purpose has been to serve as a vehicle to acquire
an operating business and we are currently considered a "shell" company inasmuch
as we are not generating revenues, do not own an operating business, and have no
specific plan other than to engage in a merger or acquisition transaction with a
yet-to-be identified operating company or business. We have no employees and no
material assets.
3. GOING CONCERN UNCERTAINTY
The Company has incurred a net loss $549,319 and $566,658 for the three and six
months period ended May 31, 2010, respectively and at May 31, 2010 had a deficit
accumulated during the development stage of $638,213. Since Inception (July 20,
2006) to May 31, 2010, the Company has commenced limited operations, raising
substantial doubt about the Company's ability to continue as a going concern.
The Company will seek additional sources of capital through the issuance of debt
or equity financing, but there can be no assurance the Company will be
successful in accomplishing its objectives.
The ability of the Company to continue as a going concern is dependent on
additional sources of capital and the success of the Company's plan. The
financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts, or amounts and
classification of liabilities that might result from the outcome of this
uncertainty.
8
AMERICAN PARAMOUNT GOLD CORP
(fka ZEBRA RESOURCES INC.)
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited, expressed in U.S. dollars)
4. SIGNIFICANT ACCOUNTING POLICIES
YEAR END - The Company's year end is August 31.
USE OF ESTIMATES - The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amount of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS - For purposes of the statement of cash flows, the
Company considers highly liquid financial instruments purchased with a maturity
of three months or less to be cash equivalents.
INCOME TAXES - The Company accounts for its income taxes in accordance with FASB
ASC 740 "Income Taxes", which requires recognition of deferred tax assets and
liabilities for future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax basis and tax credit carry-forwards. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in operations in the period that includes the
enactment date.
The Company has a net operating loss carry-forward to be used in future years.
The Company has established a valuation allowance for the full tax benefit of
the operating loss carry-forwards due to the uncertainty regarding realization.
FAIR VALUE OF FINANCIAL INSTRUMENTS - FASB ASC 825 "Financial Instruments",
requires the Company to disclose, when reasonably attainable, the fair market
value of its assets and liabilities which are deemed to be financial
instruments. The carrying amount and estimated fair values of the Company's
financial instruments approximated their fair value due to their short-term
nature.
NET LOSS PER COMMON SHARE - The Company computes net loss per share in
accordance with FASB ASC 205 "Earnings per Share". Under the provisions of FASB
ASC 205 "Earnings per Share", basic net loss per share is computed by dividing
the net loss available to common stockholders for the period by the weighted
average number of shares of common stock outstanding during the period. The
calculation of diluted net loss per share gives effect to common stock
equivalents; however, potential common shares are excluded if their effect is
anti-dilutive. For the period from Inception (July 20, 2006) through May 31,
2010 the Company had no potentially dilutive securities.
STOCK-BASED COMPENSATION - On August 1, 2009, the Company adopted the fair value
recognition provisions of FASB ASC 718-10. The Company accounts for equity
instruments issued in exchange for the receipt of goods or services from other
than employees in accordance with FASB ASC 718-10 and the conclusions reached in
FASB ASC 505-10. Costs are measured at the estimated fair market value of the
consideration received or the estimated fair value of the equity instruments
issued, whichever is more reliably measurable. The value of equity instruments
issued for consideration other than employee services is determined on the
earliest of a performance commitment or completion of performance by the
provider of goods or services as defined by FASB ASC 505-10.
9
AMERICAN PARAMOUNT GOLD CORP
(fka ZEBRA RESOURCES INC.)
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited, expressed in U.S. dollars)
4. SIGNIFICANT ACCOUNTING POLICIES - cont'd
NEW ACCOUNTING PRONOUNCEMENTS -In April 2010, the FASB (Financial Accounting
Standards Board) issued Accounting Standard Updated (ASC) 2010-13 related to
Stock Compensation, Topic 718. ASC 2010-13 addresses the classification of an
employee share-based payment award with an exercise price denominated in the
currency of a market in which the underlying equity security trades. Awards of
equity share options granted to an employee of an entity's foreign operation
that provide a fixed exercise price denominated in (1) the foreign operation's
functional currency or (2) the currency in which the employee's pay is
denominated should not be considered to contain a condition that is not a
market, performance, or service condition. However, U.S. generally accepted
accounting principles (GAAP) do not specify whether a share-based payment award
with an exercise price denominated in the currency of a market in which the
underlying equity security trades has a market, performance, or service
condition. Diversity in practice has developed on the interpretation of whether
such an award should be classified as a liability when the exercise price is not
denominated in either the foreign operation's functional currency or the
currency in which the employee's pay is denominated. The amendments in this
Update are effective for fiscal years, and interim periods within those fiscal
years, beginning on or after December 15, 2010. The amendments in this Update
should be applied by recording a cumulative-effect adjustment to the opening
balance of retained earnings. The cumulative-effect adjustment should be
calculated for all awards outstanding as of the beginning of the fiscal year in
which the amendments are initially applied, as if the amendments had been
applied consistently since the inception of the award. The cumulative-effect
adjustment should be presented separately. Earlier application is permitted. The
Company does not expect the provisions of ASU 2010-03 to have a material effect
on the financial position, results of operations or cash flows of the Company.
In January 2010, the FASB issued ASU 2010-03, Extractive Activities--Oil and Gas
(Topic 932): Oil and Gas Reserve Estimation and Disclosures. This amendment to
Topic 932 has improved the reserve estimation and disclosure requirements by (1)
updating the reserve estimation requirements for changes in practice and
technology that have occurred over the last several decades and (2) expanding
the disclosure requirements for equity method investments. This is effective for
annual reporting periods ending on or after December 31, 2009. However, an
entity that becomes subject to the disclosures because of the change to the
definition oil- and gas- producing activities may elect to provide those
disclosures in annual periods beginning after December 31, 2009. Early adoption
is not permitted. The Company does not expect the provisions of ASU 2010-03 to
have a material effect on the financial position, results of operations or cash
flows of the Company.
In January 2010, the FASB issued Accounting Standards Update 2010-02,
Consolidation (Topic 810): Accounting and Reporting for Decreases in Ownership
of a Subsidiary. This amendment to Topic 810 clarifies, but does not change, the
scope of current US GAAP. It clarifies the decrease in ownership provisions of
Subtopic 810-10 and removes the potential conflict between guidance in that
Subtopic and asset derecognition and gain or loss recognition guidance that may
exist in other US GAAP. An entity will be required to follow the amended
guidance beginning in the period that it first adopts FAS 160 (now included in
Subtopic 810-10). For those entities that have already adopted FAS 160, the
amendments are effective at the beginning of the first interim or annual
reporting period ending on or after December 15, 2009. The amendments should be
applied retrospectively to the first period that an entity adopted FAS 160. The
Company does not expect the provisions of ASU 2010-02 to have a material effect
on the financial position, results of operations or cash flows of the Company.
In January 2010, the FASB issued Accounting Standards Update 2010-01, Equity
(Topic 505): Accounting for Distributions to Shareholders with Components of
Stock and Cash (A Consensus of the FASB Emerging Issues Task Force). This
amendment to Topic 505 clarifies the stock portion of a distribution to
shareholders that allows them to elect to receive cash or stock with a limit on
the amount of cash that all shareholders can elect to receive in the aggregate
is considered a share issuance that is reflected in EPS prospectively and is not
10
AMERICAN PARAMOUNT GOLD CORP
(fka ZEBRA RESOURCES INC.)
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited, expressed in U.S. dollars)
4. SIGNIFICANT ACCOUNTING POLICIES - cont'd
a stock dividend for purposes of applying Topics 505 and 260. Effective for
interim and annual periods ending on or after December 15, 2009, and would be
applied on a retrospective basis. The Company does not expect the provisions of
ASU 2010-01 to have a material effect on the financial position, results of
operations or cash flows of the Company.
5. CONVERTIBLE LOAN - RELATED PARTY
On April 22, 2010, the Company entered into a convertible loan agreement with
Monaco Capital Inc., majority shareholder, for a principal amount of up to
$500,000 for a term of one year from any applicable advancement date. The loan
is unsecured and shall bear interest at the rate of 10% per annum payable on the
due date. The Company may at any time during the term of the loan prepay any sum
up to the full amount of the loan and accrued interest then outstanding at any
time for an additional 10% of such amount.
The loan is convertible into securities of the Company at a conversion price of
$1.05 per share. At any time after the advancement date, if the Company has not
paid the loan and accrued interest in full, the Lender may, by providing written
notice to the Company, exercise its rights of conversion in respect of either a
portion of the total outstanding amount of the loan as of that date into shares
of the Company.
At May 31, 2010, Monaco Capital Inc has advanced $220,932. The balance sheet at
May 31, 2010 records the loan value at $205,898 due to the valuation of the
beneficial conversion feature on the convertible debt totaling $16,833 and
$1,799 was amortized. The beneficial conversion feature amount has been
accounted for as a debt discount which is being amortized and treated as
interest expense over the term of the convertible debentures. Accrued interest
relating to the loan totaling $2,421 was recorded in accounts payable and
accrued liabilities.
6. STOCKHOLDERS' EQUITY (DEFICIT)
The Company has 150,000,000 shares authorized with a par value of $0.001 per
share.
Effective July 25, 2006, the Company issued 40,000,000 to the founding and sole
director of the Company pursuant to a stock subscription agreement at $0.0005
per share for total proceeds of $20,000, the shares were issued below par thus
$20,000 was applied to accumulated deficit.
Effective December 20, 2006, the Company issued 24,000,000 shares of the
Company's common stock pursuant to the Company's SB-2 prospectus offering at
$0.0025 per share for total proceeds of $60,000.
On February 26, 2010 Monaco Capital Inc. acquired a controlling interest in the
Company by purchasing 20,000,000 shares of our common stock in a private
transaction.
On March 17, 2010, the Company filed a Plan of Merger, Merger Agreement and
Certificate of Change with the Nevada Secretary of State to affect a forward
stock split of its common shares on a 2 new for 1 old basis. The change was
approved by FINRA effective April 12, 2010. As a result, our authorized capital
increased from 75,000,000 to 150,000,000 shares of common stock and our issued
and outstanding increased from 32,000,000 shares of common stock to 64,000,000
shares of common stock, all with a par value of $0.001. All references in these
financial statements and notes to the financial statements to the number of
shares, price per share and weighted average number of shares outstanding of
common stock prior to this stock split have been adjusted to reflect the stock
split on a retroactive basis unless otherwise noted.
The effect of the stock split caused the beginning equity transaction to result
in a negative additional paid in capital. Based on general practice, there
should not be a negative APIC, therefore the retained earnings and additional
paid in capital was adjusted accordingly.
11
AMERICAN PARAMOUNT GOLD CORP
(fka ZEBRA RESOURCES INC.)
(An Exploration Stage Company)
NOTES TO FINANCIAL STATEMENTS
(Unaudited, expressed in U.S. dollars)
7. STOCK OPTIONS
The Company entered into a consulting agreement with Wayne Parsons, to act as
President, CEO, CFO, Secretary and Treasurer of the Company. As part of the
compensation package he was granted 1,000,000 fully vested, non-transferable
stock options with an exercise price of $1.00.
The fair value of the options using the Black-Scholes option pricing model with
the following weighted-average assumptions was recorded in the statement of
operations as consulting expenses at a value of $505,200:
Risk Free Interest Rate 1.07%
Expected life 913 days
Expected volatility 72%
Dividend per share $Nil
8. RELATED PARTY TRANSACTIONS
The Company paid Dan Gravelle a rent payment of $500 per month for the period up
to and including April 14, 2010 at which time Mr. Gravelle resigned as the
director and officer of the Company. As of May 31, 2010, the Company recorded
$3,000 [2009 - $500] in rent expense as an account payable to Mr. Gravelle.
9. SUBSEQUENT EVENTS
On June 15, 2010, the Company made its 2nd payment of $100,000 closing on the
transaction in respect of 189 unpatented mining claims situated in the Walker
Lane Structural Belt in Nye County, Nevada known as the Cap Gold Project. As per
the agreement, we have paid an aggregate of $125,000 to Royce L. Hackworth and
Belva L. Tomany.
Our management has determined that, as of the closing of the property
acquisitions above, our Company has ceased to be a shell company as defined in
Rule 12b-2 of the United States Securities Exchange Act of 1934, as amended.
12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This quarterly report contains forward-looking statements. These statements
relate to future events or our future financial performance. In some cases, you
can identify forward-looking statements by terminology such as "may", "should",
"expects", "plans", "anticipates", "believes", "estimates", "predicts",
"potential" or "continue" or the negative of these terms or other comparable
terminology. These statements are only predictions and involve known and unknown
risks, uncertainties and other factors, including the risks in the section
entitled "Risk Factors" that may cause our or our industry's actual results,
levels of activity, performance or achievements to be materially different from
any future results, levels of activity, performance or achievements expressed or
implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Except as required by applicable law,
including the securities laws of the United States, we do not intend to update
any of the forward-looking statements to conform these statements to actual
results.
Our unaudited interim financial statements are stated in United States dollars
and are prepared in accordance with United States generally accepted accounting
principles. The following discussion should be read in conjunction with our
Company's audited financial statements and 10-K for the year ended August 31,
2009 and unaudited interim financial statements and the related notes that
appear elsewhere in this quarterly report.
In this quarterly report, unless otherwise specified, all references to "common
stock" refer to common shares in the capital of our company and the terms "we",
"us" and "our" mean American Paramount Gold Corp.
GENERAL OVERVIEW
We were incorporated under the laws of the State of Nevada on July 20, 2006
under the name "Zebra Resources, Inc." At inception, we were an exploration
stage company engaged in the acquisition, exploration and development of mineral
properties. On July 26, 2006, we entered into a mineral property option
agreement to earn an interest in a mineral claim known as the Astro 2006 claim.
Based on the information available to us, we determined that the Astro 2006
claim did not, in all likelihood, contain a commercially viable mineral deposit,
and we therefore abandoned any further exploration on the property.
As a result, we investigated several other business opportunities to enhance
shareholder value.
On September 12, 2008, Karl Kottmeier resigned as our President, Chief Executive
Officer, Treasurer, and Chief Financial Officer. As a result, on September 12,
2008, we appointed Dan Gravelle as our President, Chief Executive Officer,
Treasurer, and Chief Financial Officer. Additionally, Mr. Gravelle was appointed
as a director of our company.
On December 1, 2008, Karl Kotmeier resigned as a director of our company.
On November 30, 2009, we appointed Mr. Peter Jenks as a member of our board of
directors.
On February 26, 2010, Monaco Capital Inc. acquired a controlling interest in our
Company by purchasing 20,000,000 shares of our common stock in a private
transaction.
Effective March 17, 2010, we effected a one (1) old for two (2) new forward
stock split of our issued and outstanding common stock. As a result, our
authorized capital increased from 75,000,000 to 150,000,000 shares of common
stock and our issued and outstanding increased from 32,000,000 shares of common
stock to 64,000,000 shares of common stock, all with a par value of $0.001.
13
Also effective March 17, 2010, we changed our name from "Zebra Resources, Inc."
to "American Paramount Gold Corp.", by way of a merger with our wholly owned
subsidiary American Paramount Gold Corp., which was formed solely for the change
of name.
The name change and forward stock split became effective with the
Over-the-Counter Bulletin Board at the opening for trading on April 12, 2010
under the new stock symbol "APGA". Our CUSIP number is 02882T 105.
Effective April 14, 2010, we appointed Wayne Parsons as a member of our board of
directors and as our President, Chief Executive Officer, Treasurer, Secretary
and Chief Financial Officer. Also effective April 14, 2010, Dan Gravelle
resigned as our President, Chief Executive Officer, Treasurer, Secretary and
Chief Financial Officer.
On April 16, 2010, we entered into an agreement with Royce L. Hackworth and
Belva L. Tomany in respect of an option to acquire 189 unpatented mining claims
situated in the Walker Lane Structural Belt in Nye County, Nevada (the "Cap Gold
Project"). In order to complete the transactions contemplated by the agreement,
we are required to pay $25,000 upon the closing of the agreement and pay an
additional $100,000 upon satisfaction of our due diligence. The agreement gives
our Company the option to acquire a 100% long-term lease interest in the Cap
Gold Project by (i) making ongoing yearly advance production royalty cash
payments during the term of the agreement of $125,000 in years two (2) through
five (5), $150,000 in years six (6) through twelve (12), $200,000 in years 13
through 20 and $300,000 in years 21 through 30; (ii) incurring expenditures on
exploration of the Cap Gold Project of not less than an aggregate of $1,250,000
over five (5) years; and (iii) making production royalty payments from
production from the property after the advance production royalty cash payments
described above have been repaid to our Company from production from the
property. The production royalty is based on, at our Company's election, a
sliding scale or fixed production royalty basis, which in either case ranges
from 1% to a maximum of 3%.
We have closed the transaction in respect of 189 unpatented mining claims
situated in the Walker Lane Structural Belt in Nye County, Nevada known as the
Cap Gold Project. As per the agreement, we have paid an aggregate of $125,000 to
Royce L. Hackworth and Belva L. Tomany.
On April 14, 2010, we entered into a consulting agreement with Wayne Parsons
whereby Mr. Parsons has agreed to provide our Company with various consulting
services as the president, chief executive officer, chief financial officer,
secretary and treasurer. In consideration for agreeing to provide such
consulting services, we have agreed to provide Mr. Parsons with a monthly
payment of CDN$1,500 and to grant 1,000,000 options to acquire 1,000,000 shares
of our common stock at a purchase price of US$1.00 per share. These options are
non-transferrable, vest immediately and expire April 14, 2015. We have also
agreed to pay a bonus of CDN$15,000 to Mr. Parsons, within ten (10) days of our
Company receiving, collectively since January 1, 2010, private placement funds
equal to US$500,000.
On April 22, 2010, we entered into a convertible loan agreement with Monaco
Capital Inc., wherein Monaco Capital Inc. has agreed to loan our Company up to
$500,000. The loan is convertible into common shares of our Company in at a
conversion price of $1.05. $220,932 has been advanced under the loan agreement
to date. The loan is unsecured and will bear interest at 10% per annum. The
principal amount of the loan and accrued interest is due and payable one year
from the advancement date.
Effective April 28, 2010, we appointed John Goodwin as a member of our board of
directors.
Our board of directors now consists of Wayne Parsons, Peter Jenks and John
Goodwin.
OUR CURRENT BUSINESS
We are an exploration stage mining company engaged in the identification,
acquisition, and exploration of metals and minerals with a focus on gold
mineralization on our property located in Nevada.
Since we are an exploration stage company, there is no assurance that a
commercially viable mineral reserve exists on any of our current or future
properties, To date, we do not know if an economically viable mineral reserve
exists on our property and there is no assurance that we will discover one. Even
if we do eventually discover a mineral reserve on our property, there can be no
14
assurance that we will be able to develop our property into a producing mine and
extract those resources. Both mineral exploration and development involve a high
degree of risk and few properties which are explored are ultimately developed
into producing mines.
Our current operational focus is to conduct exploration activities on the Cap
Gold Project and to complete the terms of the Cap Gold option agreement.
CASH REQUIREMENTS
We intend to conduct exploration activities on our newly optioned property over
the next twelve months. We estimate our operating expenses and working capital
requirements for the next twelve month period to be as follows:
ESTIMATED EXPENSES FOR THE NEXT TWELVE MONTH PERIOD
General, administrative, and corporate expenses $ 200,000
Operating expenses $ 200,000
Exploration $1,500,000
----------
TOTAL $1,900,000
==========
At present, our cash requirements for the next 12 months outweigh the funds
available to maintain or develop our properties. Of the $1,900,000 that we
require for the next 12 months, we had $123,322 in cash as of May 31, 2010. In
order to improve our liquidity, we intend to pursue additional equity financing
from private investors or possibly a registered public offering. Other than as
set out below, we currently do not have any arrangements in place for the
completion of any further private placement financings and there is no assurance
that we will be successful in completing any further private placement
financings. If we are unable to achieve the necessary additional financing, then
we plan to reduce the amounts that we spend on our business activities and
administrative expenses in order to be within the amount of capital resources
that are available to us.
On April 22, 2010, we entered into a convertible loan agreement with Monaco
Capital Inc., wherein Monaco Capital Inc. has agreed to loan our Company up to
$500,000. The loan is convertible into common shares of our Company at a
conversion price of $1.05. To date, $220,932 has been advanced under the loan
agreement. The loan will bear interest at 10% per annum. The principal amount of
the loan and accrued interest is due and payable one year from the advancement
date.
RESULTS OF OPERATIONS - THREE MONTHS ENDED MAY 31, 2010 AND 2009
The following summary of our results of operations should be read in conjunction
with our financial statements for the three month period ended May 31, 2010
which are included herein.
Our operating results for the three months ended May 31, 2010, for the three
months ended May 31, 2009 and the changes between those periods for the
respective items are summarized as follows:
Change Between
Three Month
Three months Three months Period Ended
Ended Ended May 31, 2010 and
May 31, May 31, May 31,
2010 2009 2009
-------- -------- --------
$ $ $
Revenue Nil Nil Nil
Consulting expense (507,603) Nil (507,603)
General and administrative (3,064) (560) (2,504)
Rent expenses - related party (1,000) (1,500) 500
Professional fees (33,432) (2,474) (30,958)
-------- ------ --------
Net loss from operations (545,099) (4,534) (540,565)
======== ====== ========
15
REVENUES
We have not generated revenues since inception and we do not anticipate earning
revenues in the near future.
CONSULTING EXPENSES
The $507,603 increase in consulting expenses for the three months ended May 31,
2010 was due to the valuation of the stock options granted to our President and
CEO.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses increased by $2,504 during the three months
ended May 31, 2010 as compared to the three months ended May 31, 2009 due to an
increase in expenses for website amortization of $2,019 and the amortization of
the Beneficial Conversion Feature for $731 with a minor decrease in
administrative expenses.
RENT EXPENSES
Rent expenses decreased by $500 during the three months ended May 31, 2010 as
compared to the three months ended May 31, 2009 as a result of the cancellation
of the rental fees in April 2010.
PROFESSIONAL FEES
Professional fees increased by $30,958 during the three months ended May 31,
2010 compared to the three months ended May 31, 2009 as a result of an increase
in legal fees.
RESULTS OF OPERATIONS - NINE MONTHS ENDED MAY 31, 2010 AND 2009
The following summary of our results of operations should be read in conjunction
with our financial statements for the nine month period ended May 31, 2010 which
are included herein.
Our operating results for the nine months ended May 31, 2010, for the nine
months ended May 31, 2009 and the changes between those periods for the
respective items are summarized as follows:
Change Between
Nine Month
Nine months Nine months Period Ended
Ended Ended May 31, 2010 and
May 31, May 31, May 31,
2010 2009 2009
-------- -------- --------
$ $ $
Revenue Nil Nil Nil
Consulting expense (507,603) Nil (507,603)
General and administrative (4,524) (1,460) (3,064)
Rent expenses - related party (4,000) (4,000) Nil
Professional fees (46,311) (7,855) (38,456)
-------- ------- --------
Net loss from operations (562,438) (13,315) (549,123)
======== ======= ========
REVENUES
We have not generated revenues since inception and we do not anticipate earning
revenues in the near future.
16
CONSULTING EXPENSES
The $507,603 increase in consulting expenses for the nine months ended May 31,
2010 was due to the valuation of the stock options granted to our President and
CEO.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses increased by $3,064 during the nine months
ended May 31, 2010 as compared to the nine months ended May 31, 2009 due to an
increase in expenses for website amortization of $2,019 and the amortization of
the Beneficial Conversion Feature for $731 with a minor increase in
administrative expenses.
RENT EXPENSES
Rent expenses remained the same during the nine months ended May 31, 2010 as
compared to the nine months ended May 31, 2009 as a result of rental fees
unchanged.
PROFESSIONAL FEES
Professional fees increased by $38,456 during the nine months ended May 31, 2010
compared to the nine months ended May 31, 2009. The increase was for the most
part due to an increase in legal fees.
LIQUIDITY AND FINANCIAL CONDITION
WORKING CAPITAL
At At
May 31, August 31,
2010 2009
-------- --------
Current assets $149,730 $ 9,095
Current liabilities 211,492 650
-------- --------
Working capital (deficit) $(61,762) $ 8,455
======== ========
CASH FLOWS
Nine months Ended
May 31,
2010 2009
-------- --------
Cash flows provided by (used in) operating activities $(78,716) $(16,467)
Cash flows provided by (used in) investing activities (26,313) Nil
Cash flows provided by (used in) financing activities 220,932 Nil
-------- --------
Increase (decrease) in cash and cash equivalents $115,903 $(16,467)
======== ========
OPERATING ACTIVITIES
Net cash used by operating activities was $78,816 for the nine months ended May
31, 2010 compared with cash used by operating activities of $16,467 in the same
period in 2009. The difference was largely due to an overall increase in cash
expenditures and an increase in prepaids.
INVESTING ACTIVITIES
Net cash used in investing activities was $26,313 for the nine months ended May
31, 2010 compared to net cash used in investing activities of $Nil in the same
period in 2009. The difference was attributable to Website design.
17
FINANCING ACTIVITIES
Net cash from financing activities for the nine months ended May 31, 2010 was
$220,932 and for the nine months ended May 31, 2009 was $Nil. During the nine
months ended May 31, 2010, Monaco Capital Inc. advanced our Company $220,932
pursuant to a convertible loan agreement dated April 22, 2010.
CONTRACTUAL OBLIGATIONS
As a "smaller reporting company", we are not required to provide tabular
disclosure obligations.
OFF-BALANCE SHEET ARRANGEMENTS
We have no significant off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that are material to
stockholders.
CRITICAL ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amount of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, our Company considers highly liquid
financial instruments purchased with a maturity of three months or less to be
cash equivalents.
INCOME TAXES
Our Company accounts for its income taxes in accordance with Accounting Standard
Codification (ASC) 740, which requires recognition of deferred tax assets and
liabilities for future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and our
respective tax basis and tax credit carry-forwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in operations in the period that includes the
enactment date.
Our Company has a net operating loss carry-forward to be used in future years.
Our Company has established a valuation allowance for the full tax benefit of
the operating loss carry-forwards due to the uncertainty regarding realization.
FAIR VALUE OF FINANCIAL INSTRUMENTS
ASC 825 "Financial Instruments", requires our Company to disclose, when
reasonably attainable, the fair market value of its assets and liabilities which
are deemed to be financial instruments. The carrying amount and estimated fair
values of our Company's financial instruments approximated their fair value due
to their short-term nature.
NET LOSS PER COMMON SHARE
Our Company computes net loss per share in accordance with ASC 260, "Earnings
per Share" and SEC Staff Accounting Bulletin No. 98 (SAB 98). Under the
provisions of ASC 260 and SAB 98, basic net loss per share is computed by
dividing the net loss available to common stockholders for the period by the
18
weighted average number of shares of common stock outstanding during the period.
The calculation of diluted net loss per share gives effect to common stock
equivalents; however, potential common shares are excluded if their effect is
anti-dilutive. For the period from Inception (July 20, 2006) through May 31,
2010, our Company had no potentially dilutive securities.
STOCK-BASED COMPENSATION
ON AUGUST 1, 2009, the Company adopted the fair value recognition provisions of
FASB ASC 718-10. The Company accounts for equity instruments issued in exchange
for the receipt of goods or services from other than employees in accordance
with FASB ASC 718-10 and the conclusions reached in FASB ASC 505-10. Costs are
measured at the estimated fair market value of the consideration received or the
estimated fair value of the equity instruments issued, whichever is more
reliably measurable. The value of equity instruments issued for consideration
other than employee services is determined on the earliest of a performance
commitment or completion of performance by the provider of goods or services as
defined by FASB ASC 505-10.
RECENT ACCOUNTING PRONOUNCEMENTS
In April 2010, the FASB (Financial Accounting Standards Board) issued Accounting
Standard Updated (ASC) 2010-13 related to Stock Compensation, Topic 718. ASC
2010-13 addresses the classification of an employee share-based payment award
with an exercise price denominated in the currency of a market in which the
underlying equity security trades. Awards of equity share options granted to an
employee of an entity's foreign operation that provide a fixed exercise price
denominated in (1) the foreign operation's functional currency or (2) the
currency in which the employee's pay is denominated should not be considered to
contain a condition that is not a market, performance, or service condition.
However, U.S. generally accepted accounting principles (GAAP) do not specify
whether a share-based payment award with an exercise price denominated in the
currency of a market in which the underlying equity security trades has a
market, performance, or service condition. Diversity in practice has developed
on the interpretation of whether such an award should be classified as a
liability when the exercise price is not denominated in either the foreign
operation's functional currency or the currency in which the employee's pay is
denominated. The amendments in this Update are effective for fiscal years, and
interim periods within those fiscal years, beginning on or after December 15,
2010. The amendments in this Update should be applied by recording a
cumulative-effect adjustment to the opening balance of retained earnings. The
cumulative-effect adjustment should be calculated for all awards outstanding as
of the beginning of the fiscal year in which the amendments are initially
applied, as if the amendments had been applied consistently since the inception
of the award. The cumulative-effect adjustment should be presented separately.
Earlier application is permitted. The Company does not expect the provisions of
ASU 2010-03 to have a material effect on the financial position, results of
operations or cash flows of the Company.
In January 2010, the FASB issued ASU 2010-03, Extractive Activities--Oil and Gas
(Topic 932): Oil and Gas Reserve Estimation and Disclosures. This amendment to
Topic 932 has improved the reserve estimation and disclosure requirements by (1)
updating the reserve estimation requirements for changes in practice and
technology that have occurred over the last several decades and (2) expanding
the disclosure requirements for equity method investments. This is effective for
annual reporting periods ending on or after December 31, 2009. However, an
entity that becomes subject to the disclosures because of the change to the
definition oil- and gas- producing activities may elect to provide those
disclosures in annual periods beginning after December 31, 2009. Early adoption
is not permitted. The Company does not expect the provisions of ASU 2010-03 to
have a material effect on the financial position, results of operations or cash
flows of the Company.
In January 2010, the FASB issued Accounting Standards Update 2010-02,
Consolidation (Topic 810): Accounting and Reporting for Decreases in Ownership
of a Subsidiary. This amendment to Topic 810 clarifies, but does not change, the
scope of current US GAAP. It clarifies the decrease in ownership provisions of
Subtopic 810-10 and removes the potential conflict between guidance in that
Subtopic and asset derecognition and gain or loss recognition guidance that may
exist in other US GAAP. An entity will be required to follow the amended
guidance beginning in the period that it first adopts FAS 160 (now included in
Subtopic 810-10). For those entities that have already adopted FAS 160, the
amendments are effective at the beginning of the first interim or annual
reporting period ending on or after December 15, 2009. The amendments should be
applied retrospectively to the first period that an entity adopted FAS 160. The
Company does not expect the provisions of ASU 2010-02 to have a material effect
on the financial position, results of operations or cash flows of the Company.
19
In January 2010, the FASB issued Accounting Standards Update 2010-01, Equity
(Topic 505): Accounting for Distributions to Shareholders with Components of
Stock and Cash (A Consensus of the FASB Emerging Issues Task Force). This
amendment to Topic 505 clarifies the stock portion of a distribution to
shareholders that allows them to elect to receive cash or stock with a limit on
the amount of cash that all shareholders can elect to receive in the aggregate
is considered a share issuance that is reflected in EPS prospectively and is not
a stock dividend for purposes of applying Topics 505 and 260. Effective for
interim and annual periods ending on or after December 15, 2009, and would be
applied on a retrospective basis. The Company does not expect the provisions of
ASU 2010-01 to have a material effect on the financial position, results of
operations or cash flows of the Company.
GOING CONCERN
Our Company has incurred a net loss $549,319 for the three month period ended
May 31, 2010 [2009 - $4,534] and at May 31, 2010 had a deficit accumulated
during the development stage of $638,213. Since Inception (July 20, 2006) to May
31, 2010, our Company has commenced limited operations, raising substantial
doubt about our Company's ability to continue as a going concern. Our Company
will seek additional sources of capital through the issuance of debt or equity
financing, but there can be no assurance our Company will be successful in
accomplishing its objectives.
The ability of our Company to continue as a going concern is dependent on
additional sources of capital and the success of our Company's plan. The
financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts, or amounts and
classification of liabilities that might result from the outcome of this
uncertainty.
At this time, we cannot provide investors with any assurance that we will be
able to raise sufficient funding from the sale of our common stock or through a
loan from our directors, shareholders or investors to meet our obligations over
the next twelve months. Other than a convertible loan agreement with Monaco
Capital Inc., we do not have any further arrangements in place for any future
debt or equity financing.
ITEM 4T. CONTROLS AND PROCEDURES
MANAGEMENT'S REPORT ON DISCLOSURE CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our reports filed under the SECURITIES
EXCHANGE ACT OF 1934, as amended, is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission's rules and forms, and that such information is accumulated and
communicated to our management, including our president (also our principal
executive officer and our principal financial officer and principal accounting
officer) to allow for timely decisions regarding required disclosure.
As of May 31, 2010, the end of our third quarter covered by this report, we
carried out an evaluation, under the supervision and with the participation of
our president (also our principal executive officer and our principal financial
officer and principal accounting officer), of the effectiveness of the design
and operation of our disclosure controls and procedures. Based on the foregoing,
our president (also our principal executive officer and our principal financial
officer and principal accounting officer) concluded that our disclosure controls
and procedures were effective in providing reasonable assurance in the
reliability of our financial reports as of the end of the period covered by this
quarterly report.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There have been no changes in our internal controls over financial reporting
that occurred during the quarter ended May 31, 2010 that have materially or are
reasonably likely to materially affect, our internal controls over financial
reporting.
20
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We know of no material, existing or pending legal proceedings against our
Company, nor are we involved as a plaintiff in any material proceeding or
pending litigation. There are no proceedings in which any of our directors,
executive officers or affiliates, or any registered or beneficial stockholder,
is an adverse party or has a material interest adverse to our interest.
ITEM 1A. RISK FACTORS
Much of the information included in this quarterly report includes or is based
upon estimates, projections or other "forward-looking statements". Such
forward-looking statements include any projections or estimates made by us and
our management in connection with our business operations. While these
forward-looking statements, and any assumptions upon which they are based, are
made in good faith and reflect our current judgment regarding the direction of
our business, actual results will almost always vary, sometimes materially, from
any estimates, predictions, projections, assumptions, or other future
performance suggested herein. We undertake no obligation to update
forward-looking statements to reflect events or circumstances occurring after
the date of such statements.
Such estimates, projections or other "forward-looking statements" involve
various risks and uncertainties as outlined below. We caution readers of this
quarterly report that important factors in some cases have affected and, in the
future, could materially affect actual results and cause actual results to
differ materially from the results expressed in any such estimates, projections
or other "forward-looking statements". In evaluating us, our business and any
investment in our business, readers should carefully consider the following
factors.
RISKS ASSOCIATED WITH MINING
OUR PROPERTY IS IN THE EXPLORATION STAGE. THERE IS NO ASSURANCE THAT WE CAN
ESTABLISH THE EXISTENCE OF ANY MINERAL RESOURCE ON OUR PROPERTY IN COMMERCIALLY
EXPLOITABLE QUANTITIES. UNTIL WE CAN DO SO, WE CANNOT EARN ANY REVENUES FROM
OPERATIONS AND IF WE DO NOT DO SO WE WILL LOSE ALL OF THE FUNDS THAT WE EXPEND
ON EXPLORATION. IF WE DO NOT DISCOVER ANY MINERAL RESOURCE IN A COMMERCIALLY
EXPLOITABLE QUANTITY, OUR BUSINESS COULD FAIL.
Despite exploration work on our mineral property, we have not established that
it contains any mineral reserve, nor can there be any assurance that we will be
able to do so. If we do not, our business could fail.
A mineral reserve is defined by the Securities and Exchange Commission in its
Industry Guide 7 (which can be viewed over the Internet at
http://www.sec.gov/divisions/corpfin/forms/industry.htm#secguide7) as that part
of a mineral deposit which could be economically and legally extracted or
produced at the time of the reserve determination. The probability of an
individual prospect ever having a "reserve" that meets the requirements of the
Securities and Exchange Commission's Industry Guide 7 is extremely remote; in
all probability our mineral resource property does not contain any 'reserve' and
any funds that we spend on exploration will probably be lost.
Even if we do eventually discover a mineral reserve on our property, there can
be no assurance that we will be able to develop our property into a producing
mine and extract those resources. Both mineral exploration and development
involve a high degree of risk and few properties which are explored are
ultimately developed into producing mines.
The commercial viability of an established mineral deposit will depend on a
number of factors including, by way of example, the size, grade and other
attributes of the mineral deposit, the proximity of the resource to
infrastructure such as a smelter, roads and a point for shipping, government
regulation and market prices. Most of these factors will be beyond our control,
and any of them could increase costs and make extraction of any identified
mineral resource unprofitable.
21
MINERAL OPERATIONS ARE SUBJECT TO APPLICABLE LAW AND GOVERNMENT REGULATION. EVEN
IF WE DISCOVER A MINERAL RESOURCE IN A COMMERCIALLY EXPLOITABLE QUANTITY, THESE
LAWS AND REGULATIONS COULD RESTRICT OR PROHIBIT THE EXPLOITATION OF THAT MINERAL
RESOURCE. IF WE CANNOT EXPLOIT ANY MINERAL RESOURCE THAT WE MIGHT DISCOVER ON
OUR PROPERTY, OUR BUSINESS MAY FAIL.
Both mineral exploration and extraction require permits from various foreign,
federal, state, provincial and local governmental authorities and are governed
by laws and regulations, including those with respect to prospecting, mine
development, mineral production, transport, export, taxation, labor standards,
occupational health, waste disposal, toxic substances, land use, environmental
protection, mine safety and other matters. There can be no assurance that we
will be able to obtain or maintain any of the permits required for the continued
exploration of our mineral properties or for the construction and operation of a
mine on our properties at economically viable costs. If we cannot accomplish
these objectives, our business could fail.
We believe that we are in compliance with all material laws and regulations that
currently apply to our activities but there can be no assurance that we can
continue to remain in compliance. Current laws and regulations could be amended
and we might not be able to comply with them, as amended. Further, there can be
no assurance that we will be able to obtain or maintain all permits necessary
for our future operations, or that we will be able to obtain them on reasonable
terms. To the extent such approvals are required and are not obtained, we may be
delayed or prohibited from proceeding with planned exploration or development of
our mineral properties.
IF WE ESTABLISH THE EXISTENCE OF A MINERAL RESOURCE ON OUR PROPERTY IN A
COMMERCIALLY EXPLOITABLE QUANTITY, WE WILL REQUIRE ADDITIONAL CAPITAL IN ORDER
TO DEVELOP THE PROPERTY INTO A PRODUCING MINE. IF WE CANNOT RAISE THIS
ADDITIONAL CAPITAL, WE WILL NOT BE ABLE TO EXPLOIT THE RESOURCE, AND OUR
BUSINESS COULD FAIL.
If we do discover mineral resources in commercially exploitable quantities on
our property, we will be required to expend substantial sums of money to
establish the extent of the resource, develop processes to extract it and
develop extraction and processing facilities and infrastructure. Although we may
derive substantial benefits from the discovery of a major deposit, there can be
no assurance that such a resource will be large enough to justify commercial
operations, nor can there be any assurance that we will be able to raise the
funds required for development on a timely basis. If we cannot raise the
necessary capital or complete the necessary facilities and infrastructure, our
business may fail.
MINERAL EXPLORATION AND DEVELOPMENT IS SUBJECT TO EXTRAORDINARY OPERATING RISKS.
WE DO NOT CURRENTLY INSURE AGAINST THESE RISKS. IN THE EVENT OF A CAVE-IN OR
SIMILAR OCCURRENCE, OUR LIABILITY MAY EXCEED OUR RESOURCES, WHICH WOULD HAVE AN
ADVERSE IMPACT ON OUR COMPANY.
Mineral exploration, development and production involve many risks which even a
combination of experience, knowledge and careful evaluation may not be able to
overcome. Our operations will be subject to all the hazards and risks inherent
in the exploration for mineral resources and, if we discover a mineral resource
in commercially exploitable quantity, our operations could be subject to all of
the hazards and risks inherent in the development and production of resources,
including liability for pollution, cave-ins or similar hazards against which we
cannot insure or against which we may elect not to insure. Any such event could
result in work stoppages and damage to property, including damage to the
environment. We do not currently maintain any insurance coverage against these
operating hazards. The payment of any liabilities that arise from any such
occurrence would have a material adverse impact on our Company.
MINERAL PRICES ARE SUBJECT TO DRAMATIC AND UNPREDICTABLE FLUCTUATIONS.
We expect to derive revenues, if any, either from the sale of our mineral
resource property or from the extraction and sale of ore. The price of those
commodities has fluctuated widely in recent years, and is affected by numerous
factors beyond our control, including international, economic and political
trends, expectations of inflation, currency exchange fluctuations, interest
rates, global or regional consumptive patterns, speculative activities and
increased production due to new extraction developments and improved extraction
and production methods. The effect of these factors on the price of base and
precious metals, and therefore the economic viability of any of our exploration
properties and projects, cannot accurately be predicted.
22
THE MINING INDUSTRY IS HIGHLY COMPETITIVE AND THERE IS NO ASSURANCE THAT WE WILL
CONTINUE TO BE SUCCESSFUL IN ACQUIRING MINERAL CLAIMS. IF WE CANNOT CONTINUE TO
ACQUIRE PROPERTIES TO EXPLORE FOR MINERAL RESOURCES, WE MAY BE REQUIRED TO
REDUCE OR CEASE OPERATIONS.
The mineral exploration, development, and production industry is largely
un-integrated. We compete with other exploration companies looking for mineral
resource properties. While we compete with other exploration companies in the
effort to locate and acquire mineral resource properties, we will not compete
with them for the removal or sales of mineral products from our properties if we
should eventually discover the presence of them in quantities sufficient to make
production economically feasible. Readily available markets exist worldwide for
the sale of mineral products. Therefore, we will likely be able to sell any
mineral products that we identify and produce.
In identifying and acquiring mineral resource properties, we compete with many
companies possessing greater financial resources and technical facilities. This
competition could adversely affect our ability to acquire suitable prospects for
exploration in the future. Accordingly, there can be no assurance that we will
acquire any interest in additional mineral resource properties that might yield
reserves or result in commercial mining operations.
RISKS RELATED TO OUR COMPANY
THE FACT THAT WE HAVE NOT EARNED ANY OPERATING REVENUES SINCE OUR INCORPORATION
RAISES SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE TO EXPLORE OUR MINERAL
PROPERTIES AS A GOING CONCERN.
We have not generated any revenue from operations since our incorporation and we
anticipate that we will continue to incur operating expenses without revenues
unless and until we are able to identify a mineral resource in a commercially
exploitable quantity on our mineral property and we build and operate a mine. We
had cash in the amount of $123,322 as of May 31, 2010. At May 31, 2010, we had
working capital deficit of $61,762. We incurred a net loss of $566,658 for the
nine month period ended May 31, 2010 and $638,213 since inception. We estimate
our average monthly operating expenses to be approximately $150,000, including
mineral property costs, management services and administrative costs. Should the
results of our planned exploration require us to increase our current operating
budget, we may have to raise additional funds to meet our currently budgeted
operating requirements for the next 12 months. As we cannot assure a lender that
we will be able to successfully explore and develop our mineral property, we
will probably find it difficult to raise debt financing from traditional lending
sources. We have traditionally raised our operating capital from sales of equity
securities, but there can be no assurance that we will continue to be able to do
so. If we cannot raise the money that we need to continue exploration of our
mineral property, we may be forced to delay, scale back, or eliminate our
exploration activities. If any of these were to occur, there is a substantial
risk that our business would fail.
These circumstances lead our independent registered public accounting firm, in
their report dated November 2, 2009, to comment about our Company's ability to
continue as a going concern. Management has plans to seek additional capital
through a private placement of its capital stock. These conditions raise
substantial doubt about our company's ability to continue as a going concern.
Although there are no assurances that management's plans will be realized,
management believes that our Company will be able to continue operations in the
future. The financial statements do not include any adjustments relating to the
recoverability and classification of recorded assets, or the amounts of and
classification of liabilities that might be necessary in the event our Company
cannot continue in existence." We continue to experience net operating losses.
RISKS ASSOCIATED WITH OUR COMMON STOCK
TRADING ON THE OTC BULLETIN BOARD MAY BE VOLATILE AND SPORADIC, WHICH COULD
DEPRESS THE MARKET PRICE OF OUR COMMON STOCK AND MAKE IT DIFFICULT FOR OUR
STOCKHOLDERS TO RESELL THEIR SHARES.
Our common stock is quoted on the OTC Bulletin Board service of the Financial
Industry Regulatory Authority. Trading in stock quoted on the OTC Bulletin Board
is often thin and characterized by wide fluctuations in trading prices, due to
many factors that may have little to do with our operations or business
prospects. This volatility could depress the market price of our common stock
for reasons unrelated to operating performance. Moreover, the OTC Bulletin Board
23
is not a stock exchange, and trading of securities on the OTC Bulletin Board is
often more sporadic than the trading of securities listed on a quotation system
like NASDAQ or a stock exchange like NYSE Amex. Accordingly, shareholders may
have difficulty reselling any of their shares.
OUR STOCK IS A PENNY STOCK. TRADING OF OUR STOCK MAY BE RESTRICTED BY THE SEC'S
PENNY STOCK REGULATIONS AND FINRA'S SALES PRACTICE REQUIREMENTS, WHICH MAY LIMIT
A STOCKHOLDER'S ABILITY TO BUY AND SELL OUR STOCK.
Our stock is a penny stock. The Securities and Exchange Commission has adopted
Rule 15g-9 which generally defines "penny stock" to be any equity security that
has a market price (as defined) less than $5.00 per share or an exercise price
of less than $5.00 per share, subject to certain exceptions. Our securities are
covered by the penny stock rules, which impose additional sales practice
requirements on broker-dealers who sell to persons other than established
customers and "accredited investors". The term "accredited investor" refers
generally to institutions with assets in excess of $5,000,000 or individuals
with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or
$300,000 jointly with their spouse. The penny stock rules require a
broker-dealer, prior to a transaction in a penny stock not otherwise exempt from
the rules, to deliver a standardized risk disclosure document in a form prepared
by the SEC which provides information about penny stocks and the nature and
level of risks in the penny stock market. The broker-dealer also must provide
the customer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction and
monthly account statements showing the market value of each penny stock held in
the customer's account. The bid and offer quotations, and the broker-dealer and
salesperson compensation information, must be given to the customer orally or in
writing prior to effecting the transaction and must be given to the customer in
writing before or with the customer's confirmation. In addition, the penny stock
rules require that prior to a transaction in a penny stock not otherwise exempt
from these rules, the broker-dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor interest
in, and limit the marketability of, our common stock.
In addition to the "penny stock" rules promulgated by the Securities and
Exchange Commission, the Financial Industry Regulatory Authority has adopted
rules that require that in recommending an investment to a customer, a
broker-dealer must have reasonable grounds for believing that the investment is
suitable for that customer. Prior to recommending speculative low priced
securities to their non-institutional customers, broker-dealers must make
reasonable efforts to obtain information about the customer's financial status,
tax status, investment objectives and other information. Under interpretations
of these rules, the Financial Industry Regulatory Authority believes that there
is a high probability that speculative low-priced securities will not be
suitable for at least some customers. The Financial Industry Regulatory
Authority' requirements make it more difficult for broker-dealers to recommend
that their customers buy our common stock, which may limit your ability to buy
and sell our stock.
OTHER RISKS
TRENDS, RISKS AND UNCERTAINTIES
We have sought to identify what we believe to be the most significant risks to
our business, but we cannot predict whether, or to what extent, any of such
risks may be realized nor can we guarantee that we have identified all possible
risks that might arise. Investors should carefully consider all of such risk
factors before making an investment decision with respect to our common stock.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULT UPON SENIOR SECURITIES
None.
24
ITEM 4. [REMOVED AND RESERVED]
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
Exhibit
Number Description
------ -----------
(3) ARTICLES OF INCORPORATION AND BYLAWS
3.1 Articles of Incorporation (incorporated by reference from our
Registration Statement on Form SB-2 filed on October 23, 2006).
3.2 By-laws (incorporated by reference from our Registration Statement on
Form SB-2 filed on October 23, 2006).
3.3 Articles of Merger (incorporated by reference from our Current Report
on Form 8-K filed on April 12, 2010).
3.4 Certificate of Change (incorporated by reference from our Current
Report on Form 8-K filed on April 12, 2010).
(10) MATERIAL CONTRACTS
10.1 Mineral Lease Agreement between Royce L. Hackworth and Belva L. Tomany
and Zebra Resources (now know as American Paramount Gold Corp.) dated
April 16, 2010. (incorporated by reference from our Current Report on
Form 8-K filed on April 19, 2010).
10.2 Consulting Agreement between our company and Wayne Parsons, dated
April 14, 2010. (incorporated by reference from our Current Report on
Form 8-K filed on April 27, 2010).
10.3 Convertible Loan Agreement between our company and Monaco Capital Inc.
dated April 22, 2010. (incorporated by reference from our Current
Report on Form 8-K filed on April 27, 2010).
(31) RULE 13A-14(A)/15D-14(A) CERTIFICATIONS
31.1* Section 302 Certification under Sarbanes-Oxley Act of 2002
(32) SECTION 1350 CERTIFICATIONS
32.1* Section 906 Certification under Sarbanes-Oxley Act of 2002
----------
* Filed herewith.
25
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
American Paramount Gold Corp.
(Registrant)
Dated: July 15, 2010 /s/ Wayne Parsons
-------------------------------------------------
Wayne Parsons
President, Chief Executive Officer, Treasurer,
Secretary, Chief Financial Officer and Director
(Principal Executive Officer, Principal Financial
Officer and Principal Accounting Officer)
2