Attached files

file filename
EX-31.1 - SECTION 302 CERTIFICATION - Century Cobalt Corp.ex31-1.txt
EX-32.1 - SECTION 302 CERTIFICATION - Century Cobalt Corp.ex32-1.txt

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-Q

[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

[ ] Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act
    of 1934

                     For the transition period to __________

                       Commission File Number: 333-157515


                           FIRST AMERICAN SILVER CORP.
        (Exact name of small business issuer as specified in its charter)

           Nevada                                         98-0579157
(State or other jurisdiction of                (IRS Employer Identification No.)
 incorporation or organization)

       10900 N.E. 4th Street, Suite 2300, Bellevue, Washington, USA, 98004
                    (Address of principal executive offices)

                                 (425) 698-2030
                           (Issuer's telephone number)

                                  Mayetok Inc.
              (Former name, former address and former fiscal year,
                         if changed since last report)

Check  whether the issuer (1) 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 issuer 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 shell company (as defined in
Rule 12b-2 of the Exchange Act). [X] Yes [ ] No

State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date: 77,000,000 common shares as of July
16, 2010

Transitional Small Business Disclosure Format (check one): [ ] Yes [X] No


TABLE OF CONTENTS Page ---- PART I - FINANCIAL INFORMATION Item 1. Financial Statements 3 Item 2. Management's Discussion and Analysis or Plan of Operation 11 Item 3. Quantitative and Qualitative Disclosures About Market Risk 15 Item 4. Controls and Procedures 16 PART II - OTHER INFORMATION Item 1. Legal Proceedings 18 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 18 Item 3. Defaults Upon Senior Securities 18 Item 4. [Removed and Reserved] 18 Item 5. Other Information 18 Item 6. Exhibits 18 2
PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended May 31, 2010 are not necessarily indicative of the results that can be expected for the full year. 3
FIRST AMERICAN SILVER CORP. (FORMERLY MAYETOK INC.) (A Development Stage Company) BALANCE SHEETS May 31, November 30, 2010 2009 -------- -------- (unaudited) (audited) ASSETS Current assets Cash and bank accounts $ 1,469 $ 10,516 Prepaid expenses 15,000 15,000 -------- -------- Total assets $ 16,469 $ 25,516 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 4,500 $ 5,400 Due to Stockholder 100 100 -------- -------- Total liabilities 4,600 5,500 -------- -------- Stockholders' equity Authorized 3,500,000,000 Common shares with a par value of $0.001 per share 20,000,000 Preferred shares with a par value of $0.001 per share Issued and outstanding - 77,000,000 Common Shares (Note 4) 77,000 77,000 Additional paid-in capital 27,000 27,000 Deficit accumulated during the development stage (38,131) (29,984) -------- -------- Total stockholders' equity 11,869 20,016 -------- -------- Total liabilities and stockholders' equity $ 16,469 $ 25,516 ======== ======== The accompanying notes are an integral part of these financial statements. 4
FIRST AMERICAN SILVER CORP. (FORMERLY MAYETOK INC.) (A Development Stage Company) STATEMENTS OF OPERATIONS (unaudited) FOR THE THREE AND SIX MONTHS ENDED MAY 31, 2010 AND 2009, AND THE PERIOD FROM APRIL 29, 2008 (INCEPTION) TO MAY 31, 2010 Three Months Three Months Six Months Six Months April 29, 2008 Ended Ended Ended Ended (Inception) to May 31, May 31, May 31, May 31, May 31, 2010 2009 2010 2010 2010 ---------- ---------- ---------- ---------- ---------- REVENUE $ -- $ -- $ -- $ -- $ -- ---------- ---------- ---------- ---------- ---------- OPERATING EXPENSES Accounting and legal 4,547 6,588 6,047 8,088 28,940 Miscellaneous fees 1,050 2,090 2,100 2,382 7,804 Incorporation costs -- -- -- -- 1,387 ---------- ---------- ---------- ---------- ---------- Loss before income taxes (5,597) (8,678) (8,147) (10,470) (38,131) Provision for income taxes -- -- -- -- -- ---------- ---------- ---------- ---------- ---------- Net loss $ (5,597) $ (8,678) $ (8,147) $ (10,470) $ (38,131) ========== ========== ========== ========== ========== Basic and Diluted loss per share (1) (1) (1) (1) (1) ========== ========== ========== ========== Weighted Average Number of Common Shares Outstanding 77,000,000 77,000,000 77,000,000 77,000,000 ========== ========== ========== ========== ---------- (1) less than $0.01 The accompanying notes are an integral part of these financial statements. 5
FIRST AMERICAN SILVER CORP. (FORMERLY MAYETOK INC.) (A Development Stage Company) STATEMENT OF STOCKHOLDERS' EQUITY (unaudited) AS OF MAY 31, 2010 Deficit Accumulated Common Stock Additional During the Total -------------------- Paid in Development Stockholders' Shares Amount Capital Stage Equity ------ ------ ------- ----- ------ Inception, April 29, 2008 -- $ -- $ -- $ -- $ -- Shares issued to founder on June 30, 2008 @ $0.01 per share 52,500,000 52,500 37,500 -- 15,000 Private placement on April 30, 2008 @ $0.05 per share 24,500,000 24,500 10,500 -- 35,000 Net loss for the period -- -- -- (13,639) (13,639) ---------- ------- ------- -------- -------- Balance, November 30, 2008 77,000,000 77,000 27,000 (13,639) 36,361 Net loss for the period -- -- -- (16,345) (16,345) ---------- ------- ------- -------- -------- Balance, November 30, 2009 77,000,000 77,000 27,000 (29,984) 20,016 Net loss for the period -- -- -- (8,147) (8,147) ---------- ------- ------- -------- -------- Balance, May 31, 2010 77,000,000 $77,000 $27,000 $(38,131) $ 11,869 ========== ======= ======= ======== ======== The accompanying notes are an integral part of these financial statements. 6
FIRST AMERICAN SILVER CORP. (FORMERLY MAYETOK INC.) (A Development Stage Company) STATEMENTS OF CASH FLOWS (unaudited) FOR THE SIX MONTHS ENDED MAY 31, 2010 AND THE PERIOD FROM APRIL 29, 2008 (INCEPTION) TO MAY 31, 2010 Six Months Six Months April 29, 2008 Ended Ended (Inception) to May 31, May 31, May 31, 2010 2010 2010 -------- -------- -------- CASH FLOWS USED IN OPERATING ACTIVITIES Net loss for the period $ (8,147) $(10,470) $(38,131) Adjustments to reconcile net (loss) to net cash (used in) operating activities: (Increase) Decrease in prepaid expenses -- (15,000) (15,000) Increase (Decrease) in accounts payable (900) (1,607) 4,500 Increase (Decrease) in due to stockholder -- -- 100 -------- -------- -------- Net cash used in operating activities (9,047) (27,077) (48,531) -------- -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Net cash used in investing activities -- -- -- -------- -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of common stock -- -- 50,000 -------- -------- -------- Cash from financing activities -- -- 50,000 -------- -------- -------- Change in cash during the period (9,047) (27,077) 1,469 Cash, beginning of the period 10,516 41,576 -- -------- -------- -------- Cash, end of the period $ 1,469 $ 14,499 $ 1,469 ======== ======== ======== Supplemental disclosure with respect to cash flows: Cash paid for income taxes $ -- $ -- $ -- Cash paid for interest $ -- $ -- $ -- The accompanying notes are an integral part of these financial statements. 7
FIRST AMERICAN SILVER CORP. (FORMERLY MAYETOK INC.) (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS MAY 31, 2010 NOTE 1 - NATURE OF OPERATIONS First American Silver Corp. (formerly Mayetok Inc.) ("the Company"), incorporated in the state of Nevada on April 29, 2008, is engaged in the marketing of Ukrainian vacation properties in the southern region of the country such as the Crimea. We plan to offer properties both for sale and for rental contracts to visitors and investors from around the world. The company has limited operations and is considered to be in the development stage. NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The accompanying unaudited interim financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC"), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company's annual report filed with the SEC on Form 10-K. In the opinion of management, all adjustments necessary in order to make the financial statements not misleading have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements as of and for the periods ended November 30, 2009 as reported in Form 10-K, have been omitted. ACCOUNTING BASIS These financial statements are prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America. FINANCIAL INSTRUMENT The Company's financial instrument consists of amount due to stockholder. The amount due to stockholder is non interest-bearing. It is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from its other financial instruments and that their fair values approximate their carrying values except where separately disclosed. See Note 3 below. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles of the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. The more significant areas requiring the use of estimates include asset impairment, stock-based compensation, and future income tax amounts. Management bases its estimates on historical experience and on other assumptions considered to be reasonable under the circumstances. However, actual results may differ from the estimates. 8
FIRST AMERICAN SILVER CORP. (FORMERLY MAYETOK INC.) (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS MAY 31, 2010 NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) LOSS PER SHARE Net income (loss) per common share is computed based on the weighted average number of common shares outstanding and common stock equivalents, if not anti-dilutive. The Company has not issued any potentially dilutive common shares. Basic loss per share is calculated using the weighted average number of common shares outstanding and the treasury stock method is used to calculate diluted earnings per share. For the years presented, this calculation proved to be anti-dilutive. DIVIDENDS The Company has not adopted any policy regarding payment of dividends. No dividends have been paid during the period shown. INCOME TAXES The Company provides for income taxes using an asset and liability approach. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. No provision for income taxes is included in the statement due to its immaterial amount, net of the allowance account, based on the likelihood of the Company to utilize the loss carry-forward. NOTE 3 - DUE TO STOCKHOLDER The amount owing to stockholder is unsecured, non-interest bearing and has no specific terms of repayment. NOTE 4 - STOCKHOLDERS' EQUITY Common Shares - Authorized The company has 100,000,000 common shares authorized at a par value of $0.001 per share. The company has 20,000,000 preferred shares authorized at a par value of $0.001 per share. Common Shares - Issued and Outstanding During the period ended November 30, 2008, the company issued 2,200,000 common shares for total proceeds of $50,000. As at May 31, 2010, the company has no warrants or options outstanding. 9
FIRST AMERICAN SILVER CORP. (FORMERLY MAYETOK INC.) (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS MAY 31, 2010 NOTE 5 - INCOME TAXES The Company provides for income taxes usingan asset and liability approach. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect currently. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. In the Company's opinion, it is uncertain whether they will generate sufficient taxable income in the future to fully utilize the net deferred tax asset. Accordingly, a valuation allowance equal to the deferred tax asset has been recorded. The total deferred tax asset is $8,389, which is calculated by multiplying a 22% estimated tax rate by the cumulative NOL of $38,131. NOTE 6 - RELATED PARTY TRANSACTION As at May 31, 2010, there is a balance owing to a stockholder of the Company in the amount of $100. The officers and directors of the Company are involved in other business activities and may, in the future, become involved in other business opportunities that become available. They may face a conflict in selecting between the Company and other business interests. The Company has not formulated a policy for the resolution of such conflicts. NOTE 7 - GOING CONCERN The accompanying financial statements have been prepared assuming that the company will continue as a going concern. The Company has no established source of revenue. This raises substantial doubt about the Company's ability to continue as a going concern. Without realization of additional capital, it would be unlikely for the Company to continue as a going concern. The financial statements do not include any adjustments that might result from this uncertainty. The Company's activities to date have been supported by equity financing. It has sustained losses in all previous reporting periods with an inception to date loss of $38,131 as of May 31, 2010. Management continues to seek funding from its shareholders and other qualified investors to pursue its business plan. NOTE 8 - RECENT ACCOUNTING PRONOUNCEMENTS Management does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company's results of operations, financial position or cash flow NOTE 9 - SUBSEQUENT EVENTS The Company has analyzed its operations subsequent to May 31, 2010 through the date these financial statements were submitted to the Securities and Exchange Commission and has determined that it does not have any material subsequent events to disclose in these financial statements. 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION FORWARD-LOOKING STATEMENTS Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words "believes," "project," "expects," "anticipates," "estimates," "intends," "strategy," "plan," "may," "will," "would," "will be," "will continue," "will likely result," and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC. OVERVIEW We were incorporated in the state of Nevada on April 29, 2008. Our offices are currently located at 10900 N.E. 4th Street, Suite 2300, Bellevue, Washington 98004. Our telephone number is (425) 698-2030. From inception to June 2010, we intended to be marketers of Ukrainian vacation properties which were to be for sale or rent through an internet website. In June 2010, due to our inability to successfully operate our business plan, management of our company decided to seek various alternatives available to our company to ensure our survival and to preserve our shareholder's investment in our common shares. On June 8, 2010, we effected a one (1) old for 35 new forward stock split of our issued and outstanding common stock. As a result, our authorized capital increased from 100,000,000 to 3,500,000,000 shares of common stock and the issued and outstanding increased from 2,200,000 shares of common stock to 77,000,000 shares of common stock, all with a par value of $0.001. Also effective June 8, 2010, we have changed our name from "Mayetok Inc." to "First American Silver Corp.", by way of a merger with our wholly owned subsidiary First American Silver Corp., which was formed solely for the change of name. We are a development stage company that has not generated any revenue and has had limited operations to date. From April 29, 2008 (inception) to May 31, 2010, we have incurred accumulated net losses of $38,131. As of May 31, 2010, we had total assets of $16,469 and total liabilities of $4,600. Based on our financial history since inception, our independent auditor has expressed doubt as to our ability to continue as a going concern. 11
PLAN OF OPERATION Our management has been analyzing the various alternatives available to our company to ensure our survival and to preserve our shareholder's investment in our common shares. This analysis has included sourcing additional forms of financing to continue our business as is, or mergers and/or acquisitions. At this stage in our operations, we believe either course is acceptable, as our operations have not been profitable and our future prospects for our business are not good without further financing. We are focusing our preliminary merger/acquisition activities on potential business opportunities with established business entities for the merger of a target business with our company. In certain instances, a target business may wish to become a subsidiary of our company or may wish to contribute assets to our company rather than merge. We anticipate that any new acquisition or business opportunities by our company will require additional financing. There can be no assurance, however, that we will be able to acquire the financing necessary to enable us to pursue our plan of operation. If our company requires additional financing and we are unable to acquire such funds, our business may fail. In implementing a structure for a particular business acquisition or opportunity, we may become a party to a merger, consolidation, reorganization, joint venture, or licensing agreement with another corporation or entity. We may also acquire stock or assets of an existing business. Upon the consummation of a transaction, it is likely that our present management will no longer be in control of our company and our existing business will close down. In addition, it is likely that our officers and directors will, as part of the terms of the acquisition transaction, resign and be replaced by one or more new officers and directors. We anticipate that the selection of a business opportunity in which to participate will be complex and without certainty of success. Management believes that there are numerous firms in various industries seeking the perceived benefits of being a publicly registered corporation. Business opportunities may be available in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex. We may seek a business opportunity with entities who have recently commenced operations, or entities who wish to utilize the public marketplace in order to raise additional capital in order to expand business development activities, to develop a new product or service, or for other corporate purposes. We may acquire assets and establish wholly-owned subsidiaries in various businesses or acquire existing businesses as subsidiaries. At this stage, we can provide no assurance that we will be able to locate compatible business opportunities, what additional financing we will require to complete a combination or merger with another business opportunity, or whether the opportunity's operations will be profitable. As of the date hereof, we have not been successful in our business operations. Historically, we have been able to raise a limited amount of capital through private placements of our equity stock, but we are uncertain about our continued ability to raise funds privately. Further, we believe that our company may have more difficulties raising capital for our existing operations than for a new business opportunity. We have not entered into any formal written agreements for a business combination or opportunity. If any such agreement is reached, we intend to disclose such an agreement by filing a current report on Form 8-K with the Securities and Exchange Commission. If we are unable to secure adequate capital to continue our business or alternatively, complete a merger or acquisition, our shareholders will lose some or all of their investment and our business will likely fail. RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED MAY 31, 2010 AND 2009 AND THE PERIOD FROM INCEPTION (APRIL 30, 2008) TO MAY 31, 2010 We did not earn any revenues from inception through the period ending May 31, 2010. We incurred a net loss in the amount of $5,597 for the three months ended May 31, 2010 compared to $8,678 for the three months ended May 31, 2009. We incurred a net loss in the amount of $8,678 for the six months ended May 31, 2010 compared to $10,470 for the six months ended May 31, 2009. We incurred a net loss of $38,131 for the period from our inception on April 29, 2008 to May 31, 2010. 12
Our operating expenses incurred for the three months ended May 31, 2010 included $4,547 for accounting and legal fees, $1,050 in miscellaneous expenses compared the three months ended May 31, 2009 of $6,588 for accounting and legal fees and $2,090 in miscellaneous expenses. Our operating expenses incurred for the six months ended May 31, 2010 included $6,047 for accounting and legal fees, $2,100 in miscellaneous expenses compared the six months ended May 31, 2009 of $8,088 for accounting and legal fees and $2,382 in miscellaneous expenses. Our operating expenses incurred for the period from our inception on April 29, 2008 to May 31, 2010 included $28,940 for accounting and legal fees, $7,804 in miscellaneous fees and $1,387 in incorporation costs. We anticipate our operating expenses will increase as we undertake our plan of operations. The increase will be attributable to undertaking operations and the professional fees that we will incur in connection with becoming a reporting company under the Securities Exchange Act of 1934. LIQUIDITY AND CAPITAL RESOURCES As of May 31, 2010, we had current assets in the amount of $16,469, consisting of cash and prepaid expenses. Our current liabilities as of May 31, 2010 were $4,600. Thus our working capital on May 31, 2010 was $11,869. Our cash used in operating activities was $9,047 for the six months ended May 31, 2010 and $48,531 for the period from inception on April 29, 2008 to May 31, 2010. We have not attained profitable operations and are dependent upon obtaining financing to pursue our business plan over the next twelve months. If we do not generate revenue sufficient to sustain operations, we may not be able to continue as a going concern. OFF BALANCE SHEET ARRANGEMENTS As of May 31, 2010, there were no off balance sheet arrangements. GOING CONCERN The accompanying financial statements have been prepared assuming that the company will continue as a going concern. As discussed in the notes to the financial statements, we have no established source of revenue. Our auditors have expressed substantial doubt about our ability to continue as a going concern. Without realization of additional capital, it would be unlikely for us to continue as a going concern. The financial statements do not include any adjustments that might result from this uncertainty. Our activities to date have been supported by equity financing. We have sustained losses in all previous reporting periods with an inception to date loss of $38,131 as of May 31, 2010. Management continues to seek funding from its shareholders and other qualified investors to pursue our business plan. In the alternative, we may be amenable to a sale, merger or other acquisition in the event such transaction is deemed by management to be in the best interests of the shareholders. CRITICAL ACCOUNTING POLICIES In December 2001, the SEC requested that all registrants list their most "critical accounting polices" in the Management Discussion and Analysis. The SEC indicated that a "critical accounting policy" is one which is both important to the portrayal of a company's financial condition and results, and requires management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. We believe that the following accounting policies fit this definition. 13
BASIS OF PRESENTATION The accompanying unaudited interim financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC"), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company's annual report filed with the SEC on Form 10-K. In the opinion of management, all adjustments necessary in order to make the financial statements not misleading have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements as of and for the periods ended November 30, 2009 as reported in Form 10-K, have been omitted. ACCOUNTING BASIS These financial statements are prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America. FINANCIAL INSTRUMENT The Company's financial instrument consists of amount due to stockholder. The amount due to stockholder is non interest-bearing. It is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from its other financial instruments and that their fair values approximate their carrying values except where separately disclosed. See Note 3 below. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles of the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. The more significant areas requiring the use of estimates include asset impairment, stock-based compensation, and future income tax amounts. Management bases its estimates on historical experience and on other assumptions considered to be reasonable under the circumstances. However, actual results may differ from the estimates. LOSS PER SHARE Net income (loss) per common share is computed based on the weighted average number of common shares outstanding and common stock equivalents, if not anti-dilutive. The Company has not issued any potentially dilutive common shares. Basic loss per share is calculated using the weighted average number of common shares outstanding and the treasury stock method is used to calculate diluted earnings per share. For the years presented, this calculation proved to be anti-dilutive. DIVIDENDS The Company has not adopted any policy regarding payment of dividends. No dividends have been paid during the period shown. 14
INCOME TAXES The Company provides for income taxes using an asset and liability approach. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. No provision for income taxes is included in the statement due to its immaterial amount, net of the allowance account, based on the likelihood of the Company to utilize the loss carry-forward. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS Below is a listing of the most recent accounting standards SFAS 150-154 and their effect on our Company. In May 2009, the FASB issued SFAS 165 (ASC 855-10) entitled "Subsequent Events". Companies are now required to disclose the date through which subsequent events have been evaluated by management. Public entities (as defined) must conduct the evaluation as of the date the financial statements are issued, and provide disclosure that such date was used for this evaluation. SFAS 165 (ASC 855-10) provides that financial statements are considered "issued" when they are widely distributed for general use and reliance in a form and format that complies with GAAP. SFAS 165 (ASC 855-10) is effective for interim and annual periods ending after June 15, 2009 and must be applied prospectively. The adoption of SFAS 165 (ASC 855-10) during the year ended November 30, 2009 did not have a significant effect on our Company's financial statements as of that date. In connection with the preparation of the accompanying financial statements as of November 30, 2009, management evaluated subsequent events through the date that such financial statements were issued (filed with the SEC). In June 2009, the FASB issued SFAS 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles. ("SFAS 168" or ASC 105-10) SFAS 168 (ASC 105-10) establishes the Codification as the sole source of authoritative accounting principles recognized by the FASB to be applied by all nongovernmental entities in the preparation of financial statements in conformity with GAAP. SFAS 168 (ASC 105-10) was prospectively effective for financial statements issued for fiscal years ending on or after September 15, 2009 and interim periods within those fiscal years. The adoption of SFAS 168 (ASC 105-10) on July 1, 2009 did not impact our Company's results of operations or financial condition. The Codification did not change GAAP, however, it did change the way GAAP is organized and presented. As a result, these changes impact how companies reference GAAP in their financial statements and in their significant accounting policies. The Company implemented the Codification in this Report by providing references to the Codification topics alongside references to the corresponding standards. With the exception of the pronouncements noted above, no other accounting standards or interpretations issued or recently adopted are expected to have a material impact on our Company's financial position, operations or cash flows. The adoption of these and other new Statements is not expected to have a material effect on our current financial position, results or operations, or cash flows. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK None. 15
ITEM 4. CONTROLS AND PROCEDURES Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the company's principal executive and principal financial officers and effected by the company's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and 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 the assets of the company; * Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and * Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. 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. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk. As of May 31, 2010 management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") and SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules as more fully described below. This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses. The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our 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; and (3) ineffective controls over period end financial disclosure and reporting processes. The aforementioned material weaknesses were identified by our Chief Executive Officer in connection with the review of our financial statements as of May 31, 2010. 16
Management believes that the material weaknesses set forth in items (2) and (3) above did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods. MANAGEMENT'S REMEDIATION INITIATIVES In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we have initiated, or plan to initiate, the following series of measures: We will create a position to segregate duties consistent with control objectives and will increase our personnel resources and technical accounting expertise within the accounting function when funds are available to us. And, we plan to appoint one or more outside directors to our board of directors who shall be appointed to an audit committee resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures such as reviewing and approving estimates and assumptions made by management when funds are available to us. Management believes that the appointment of one or more outside directors, who shall 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 our Board. We anticipate that these initiatives will be at least partially, if not fully, implemented by May 31, 2010. Additionally, we plan to test our updated controls and remediate our deficiencies by December 31, 2010. CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING There was no change in our internal controls over financial reporting that occurred during the period covered by this report, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting. 17
PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS We are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS None ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. [REMOVED AND RESERVED] No matters have been submitted to our security holders for a vote, through the solicitation of proxies or otherwise, during the quarterly period ended May 31, 2010. ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS Exhibit Number Description of Exhibit ------ ---------------------- 31.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 18
SIGNATURES In accordance with the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. First American Silver Corp. Date: July 16, 2010 By: /s/ Robert Suda ----------------------------------------- Robert Suda Title: President, Secretary, Chief Financial Officer, Treasurer and Director 1