Attached files
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