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EX-31 - EXHIBIT 31 MONTANA - PARK VIDA GROUP, INC. | exhibit31.htm |
EX-32 - EXHIBIT 32 MONTANA - PARK VIDA GROUP, INC. | exhibit32.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2011.
o 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: 000-29321
MONTANA MINING CORP.
(Exact name of registrant as specified in its charter)
Nevada (State or other jurisdiction of incorporation or organization) |
87-0643635 (I.R.S. Employer Identification No.) |
1403 East 900 South, Salt Lake City, Utah 84105
(Address of principal executive offices) (Zip Code)
(801) 582-9609
(Registrants 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. Yes þ No o
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 (§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 o No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company þ
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes þ No o
Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date. The number of shares outstanding of the issuers common stock, $0.001 par value (the only class of voting stock), at May 13, 2011 was 23,676,843.
1
TABLE OF CONTENTS PART 1- FINANCIAL INFORMATION | ||
Item1. |
3 | |
|
4 | |
|
Unaudited Consolidated Statements of Operations for the three Months ended March 31, 2011 and 2010, and the period since inception |
5 |
|
Unaudited Consolidated Statements of Cash Flows for the three Months Ended March 31, 2011 and 2010, and the period since inception |
6 |
|
7 | |
Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations |
10 |
Item 3. |
14 | |
Item 4. |
14 | |
|
PART II-OTHER INFORMATION
|
|
Item 1. |
15 | |
Item 1A. |
15 | |
Item 2. |
18 | |
Item 3. |
18 | |
Item 4. |
18 | |
Item 5. |
18 | |
Item 6. |
18 | |
|
19 | |
|
20 |
2
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
As used herein, the terms Company, we, our, us, it, and its refer to Montana Mining Corp., a Nevada corporation, unless otherwise indicated. In the opinion of management, the accompanying unaudited financial statements included in this Form 10-Q reflect all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the results of operations for the periods presented. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year.
3
MONTANA MINING CORP. | ||||
(A Development Stage Company) | ||||
CONSOLIDATED BALANCE SHEETS | ||||
March 31, |
December 31, | |||
2011 |
2010 | |||
ASSETS |
(Unaudited) |
(Audited) | ||
Current assets: |
||||
Cash |
$ |
250,202 |
334,592 | |
Total current assets |
250,000 |
334,592 | ||
Interest receivable |
11,221 |
4,870 | ||
Note receivable |
452,462 |
378,963 | ||
Total assets |
$ |
713,885 |
718,425 | |
LIABILITIES AND STOCKHOLDERS' EQUITY |
||||
Current liabilities: |
||||
Accounts payable |
$ |
5,442 |
- | |
Related party payable |
2,544 |
1,830 | ||
Total current liabilities |
7,986 |
1,830 | ||
Commitments |
||||
Stockholders' equity: |
||||
Preferred stock, $0.001 par value, 5,000,000 shares |
||||
authorized, no shares issued and outstanding |
- |
- | ||
Common stock, $0.001 par value, 500,000,000 shares |
||||
authorized, 23,676,843 shares issued and outstanding |
23,677 |
23,677 | ||
Additional paid-in capital |
1,074,973 |
1,074,973 | ||
Deficit accumulated during the development stage |
(392,751) |
(382,055) | ||
Total stockholders' equity |
705,899 |
716,595 | ||
Total liabilities and stockholders' equity |
$ |
713,885 |
718,425 |
The accompanying notes are an integral part of these financial statements
4
MONTANA MINING CORP. | ||||||
(A Development Stage Company) | ||||||
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||
Three Months Ended |
||||||
March 31, |
Cumulative | |||||
2011 |
2010 |
Amounts | ||||
Revenue |
$ |
- |
- |
- | ||
Operating expenses: |
||||||
General and administrative costs |
17,284 |
1,813 |
312,885 | |||
Impairment of franchise agreement |
- |
- |
25,000 | |||
Loss from operations |
(17,284) |
(1,813) |
(337,885) | |||
Other income (expense): |
||||||
Interest income |
6,588 |
2,790 |
28,523 | |||
Interest expense |
- |
(12,843) |
(107,276) | |||
Gain on sale of PWS rights |
- |
- |
23,887 | |||
Loss before income taxes |
(10,696) |
(11,866) |
(392,751) | |||
Provision for income taxes |
- |
- |
- | |||
Net loss |
$ |
(10,696) |
(11,866) |
(392,751) | ||
Loss per common share - basic and diluted |
$ |
- |
- |
|||
Weighted average common shares - |
||||||
basic and diluted |
23,676,843 |
7,146,318 |
The accompanying notes are an integral part of these financial statements
|
5
MONTANA MINING CORP. | ||||||
(A Development Stage Company) | ||||||
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
Three Months Ended |
||||||
March 31, |
Cumulative | |||||
2011 |
2010 |
Amounts | ||||
Cash flows from operating activities: |
||||||
Net loss |
$ |
(10,696) |
(11,866) |
(392,751) | ||
Adjustments to reconcile net loss to net cash |
||||||
used in operating activities: |
||||||
Stock compensation expense |
- |
- |
5,007 | |||
Impairment of franchise agreement |
- |
- |
25,000 | |||
Gain on foreign currency transaction |
- |
(3,253) |
(13,152) | |||
Amortization of beneficial conversion feature |
- |
10,000 |
80,000 | |||
Gain on sale of PWS rights |
- |
- |
(23,887) | |||
(Increase) decrease in: |
||||||
Interest receivable |
(6,351) |
(2,791) |
(11,221) | |||
Increase (decrease) in: |
||||||
Accounts payable |
5,442 |
(3,292) |
5,442 | |||
Related party payable |
714 |
3,344 |
61,451 | |||
Related party interest payable |
- |
2,843 |
- | |||
Net cash used in operating activities |
(10,891) |
(5,015) |
(264,111) | |||
Cash flows from investing activities: |
||||||
Purchase of franchise agreement |
- |
- |
(25,000) | |||
Collection of note receivable |
- |
- |
95,227 | |||
Increase in note receivable |
(73,499) |
- |
(534,537) | |||
Gain on sale of PWS rights |
- |
- |
23,887 | |||
Net cash used in investing activities |
(73,499) |
- |
(440,423) | |||
Cash flows from financing activities: |
||||||
Proceeds from related party notes payable |
- |
5,000 |
193,812 | |||
Payments on related party notes payable |
- |
- |
(110,470) | |||
Decrease in stock subscription receivable |
- |
- |
465 | |||
Issuance of common stock |
- |
- |
870,929 | |||
Net cash provided by financing activities |
- |
5,000 |
954,736 | |||
Net increase (decrease) in cash |
(84,390) |
(15) |
250,202 | |||
Cash, beginning of period |
334,592 |
101 |
- | |||
Cash, end of period |
$ |
250,202 |
86 |
250,202 |
The accompanying notes are an integral part of these financial statements
6
MONTANA MINING CORP.
(A Development Stage Company)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Note 1 Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared by management in accordance with the instructions in Form 10-Q and, therefore, do not include all information and footnotes required by generally accepted accounting principles and should, therefore, be read in conjunction with the Companys Form 10-K for the year ended December 31, 2010, filed with the Securities and Exchange Commission. These statements do include all normal recurring adjustments which the Company believes necessary for a fair presentation of the statements. The interim operations are not necessarily indicative of the results to be expected for the full year ended December 31, 2011.
Note 2 Additional Footnotes Included By Reference
Except as indicated in the following Notes, there have been no other material changes in the information disclosed in the notes to the financial statements included in the Companys Form 10-K for the year ended December 31, 2010, filed with the Securities and Exchange Commission. Therefore, those footnotes are included herein by reference.
Note 3 Going Concern
As of March 31, 2011, the Companys revenue generating activities are not in place, and the Company has incurred losses since inception. These factors raise substantial doubt about the Companys ability to continue as a going concern. The Company intends to seek additional equity or debt financing in the event it completes the acquisition of JBP, S.R.L. (JBP) (see Note 6). There can be no assurance that such funds will be available to the Company or that it will complete its acquisition of JBP.
Note 4 Note Receivable
The Company has made cash advances to JBP (see Note 6) under a secured note receivable. The note is secured by all assets of JBP, bears interest at 6%, and is due December 31, 2012.
Note 5 Related Party Payables
March 31, |
December 31, | ||||
Related party accounts payable consist of the following: |
2011 |
2010 | |||
(Unaudited) |
(Audited) | ||||
Payable to a company owned by an officer and shareholder of the Company. The payable is non-interest bearing, due on demand and unsecured |
$ |
2,544 |
1,830 |
7
MONTANA MINING CORP.
(A Development Stage Company)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Note 6 Purchase Agreement
On August 20, 2010, the Company entered into a Purchase Agreement (the Agreement) with Park Capital (Park) to acquire JBP, S.R.L. (JBP) as a wholly-owned subsidiary. Pursuant to the Agreement, the Company will acquire all of the issued and outstanding shares of JBP from Park in exchange for fifteen million two hundred and eighty-two thousand one hundred and twenty (15,282,120) shares of common stock and six million eight hundred and twenty-four thousand and three hundred (6,824,300) share purchase warrants to be exercised within ten years of the grant date at an exercise price of $0.005 a share.
The Agreement further requires that the Company pay a finders fee comprised of one million five hundred and twenty-eight thousand two hundred and twelve (1,528,212) shares of common stock and six hundred and eighty-two thousand four hundred and thirty (682,430) share purchase warrants to be exercised within three years of the grant date at an exercise price of $0.06 a share.
The Company has satisfied the financing precondition and is now in the process of working with JBP to conclude its due diligence inquiry into JBP, its assets, business, and prospects.
Note 7 Subsequent Events
The Company evaluated its March 31, 2011 financial statements for subsequent events through the date the financial statements were issued. The Company is not aware of any subsequent events which would require recognition or disclosure in the financial statements.
Note 8 Recent Accounting Pronouncements
In January 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2011-01 (ASU 2011-01) Receivables (Topic 310): Deferral of the Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20. ASU 2011-01 temporarily delays the effective date of the disclosures about troubled debt restructurings. The effective date of the new disclosures about troubled debt restructurings for public entities and the guidance for determining what constitutes a troubled debt restructuring will then be coordinated. Currently, the guidance is anticipated to be effective for interim and annual periods ending after June 15, 2011. The Company does not expect the provisions of ASU 2011-01 to have a material effect on its financial position, results of operations or cash flows.
8
MONTANA MINING CORP.
(A Development Stage Company)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2011
Note 8 Recent Accounting Pronouncements (continued)
In October 2009, the FASB issued Accounting Standards Update (ASU) No. 2009-13, Multiple-Deliverable Revenue Arrangements, or ASU 2009-13. ASU 2009-13 establishes the accounting and reporting guidance for arrangements that include multiple revenue-generating activities, and provides amendments to the criteria for separating deliverables, and measuring and allocating arrangement consideration to one or more units of accounting. The amendments in ASU 2009-13 also establish a hierarchy for determining the selling price of a deliverable. Enhanced disclosures are also required to provide information about a vendors multiple-deliverable revenue arrangements, including information about the nature and terms of the arrangement, significant deliverables, and the vendors performance within arrangements. The amendments also require providing information about the significant judgments made and changes to those judgments and about how the application of the relative selling-price method affects the timing or amount of revenue recognition. The amendments in ASU 2009-13 are effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, or January 1, 2011 for us. The adoption of ASU 2009-13 did not have a material impact on our financial position or results of operations.
In July 2010, the FASB issued ASU No. 2010-20 Disclosures about the credit quality of financing receivables and the allowance for credit losses, which requires expanded disclosures about the credit quality of an entitys financing receivables and its allowance for credit loss on a disaggregated basis. This ASU is effective for annual reporting periods ending on or after December 15, 2011. The adoption of this ASU did not have a material impact on the Companys consolidated financial statements.
In April 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2010-13, Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades (ASU 2010-13). ASU 2010-13 addresses the classification of a share-based payment award with an exercise price denominated in the currency of a market in which the underlying equity security trades. FASB Accounting Standards Codification (ASC) Topic 718 was amended to clarify that a share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entitys equity securities trade shall not be considered to contain a market, performance, or service condition. Therefore, such an award is not to be classified as a liability if it otherwise qualifies for equity classification. The amendments in ASU 2010-13 are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. The adoption of this guidance will not have a material impact on our financial position and results of operations.
Other pronouncements issued by the FASB or other authoritative accounting standards groups with future effective dates are either not applicable or are not expected to be significant to the financial statements of the Company.
9
Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This Managements Discussion and Analysis of Financial Condition and Results of Operations and other parts of this quarterly report contain forward-looking statements that involve risks and uncertainties. Forward-looking statements can also be identified by words such as anticipates, expects, believes, plans, predicts, and similar terms. Forward-looking statements are not guarantees of future performance and our actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include but are not limited to those discussed in the subsection entitled Forward-Looking Statements and Factors That May Affect Future Results and Financial Condition below. The following discussion should be read in conjunction with our financial statements and notes thereto included in this report. Information presented herein is based on the three month period ended March 31, 2011 and the period since inception to March 31, 2011. Our fiscal year end is December 31.
Discussion and Analysis
Our plan of operation over the next twelve to twenty four months is to design, construct and operate a premiere destination resort in the Dominican Republic to be known as ParkVida that will be focused on mountain biking of all disciplines (i.e. downhill, cross-country, free ride, dirt jump, trials/street, and cyclocross) in addition to a host of other exciting activities.
On August 20, 2010, we entered into an agreement, as amended, with Park Capital Management, Inc. (Park) to acquire JBP S.R.L (JBP) as a wholly-owned subsidiary. The agreement requires that we issue fifteen million two hundred and eighty-two thousand one hundred and twenty (15,282,120) shares of common stock and six million eight hundred and twenty-four thousand and three hundred (6,824,300) share purchase warrants to be exercised within ten years of the date of grant at an exercise price of $0.005 a share to the shareholders of Park. The agreement further requires that we pay a finders fee of one million five hundred and twenty-eight thousand two hundred and twelve (1,528,212) shares and six hundred and eighty-two thousand four hundred and thirty (682,430) share purchase warrants to be exercised within three years of the date of grant at an exercise price of $0.06 a share. The transaction is conditioned on the realization of certain milestones on or before closing the transaction, including a private placement. We have since completed the private placement of and are now in the process of completing our due diligence inquiry. Proceeds of the private placement are being used primarily for the development of the project through a series of secured loans to JBP. We have not closed the transaction with JBP though we do anticipate closing during the third quarter of 2011.
Should we close the acquisition of JBP, as anticipated, the Company will require a minimum of $10 million dollars in additional debt or equity funding in 2011. Such financing is not currently committed and there can be no assurance that such financing will be available within the next twelve months. In the event we do not close our anticipated transaction to acquire JBP, the Company will have sufficient funding over the next 12 months to maintain operations and seek out an alternative business opportunity.
Results of Operations
During the three month period ended March 31, 2011, the Company (i) satisfied continuous public disclosure requirements; (ii) expanded its due diligence with respect to ParkVida; and (iii) worked with JBP to continue the development of ParkVida with Company loans.
10
Net Loss
For the period from December 7, 1999, to March 31, 2011, the Company recorded a net loss of $392,751. Net losses for the three month period ended March 31, 2011 were $10,696 as compared to $11,866 for the three month period ended March 31, 2010. The decrease in the Companys net losses over the comparative three month periods can be attributed primarily to the elimination of interest expense and the increase in interest income in the current three month period. The Companys cumulative operating loss is mostly due to costs associated with a forfeited option agreement, an impaired franchise fee, interest expenses and general and administrative expenses. General and administrative expenses include accounting costs, consulting fees, mining exploration expenses, due diligence costs and the preparation of disclosure documentation.
We did not generate revenue during this period and expect to continue to incur losses.
Capital Expenditures
The Company expended no amounts on capital expenditures for the period from December 7, 1999, to March 31, 2011.
Income Tax Expense (Benefit)
The Company has a prospective income tax benefit resulting from a net operating loss carry-forward and start up costs that will offset any future operating profit.
Impact of Inflation
The Company believes that inflation has had a negligible effect on operations over the past three years.
Liquidity and Capital Resources
The Company is in the development stage and, since inception, has experienced significant changes in liquidity, capital resources, and stockholders deficit.
The Company had total assets of $713,885 as of March 31, 2011, consisting of cash of $250,202, interest receivable from JBP of $11,221 and a note receivable of $452,462 from JBP. The Company had current and total liabilities of $7,986 as of March 31, 2011, consisting of $5,442 in accounts payable, $2,544 in related party payables. Net stockholders' equity in the Company was $705,899 at March 31, 2011.
Cash flow used in operating activities was $264,111 for the period from December 7, 1999, to March 31, 2011. Cash flow used in operating activities for the three month period ended March 31, 2011 increased to $10,891 as compared to $5,015 for the three month period ended March 31, 2010. The change in cash flows used in operating activities over the comparative three month periods can be attributed primarily to the elimination of the amortization of beneficial conversion feature and an increase in interest receivable in the current period. The Companys cumulative cash flow used in operating activities was used on accounting, administration, consulting, exploration expenses and a franchise fee. We expect to continue to use cash flow in operating activities over the next twelve months in developing ParkVida.
11
Cash flow provided from financing activities was $954,736 for the period from December 7, 1999, to March 31, 2011. Cash flow provided by financing activities for the three months ended March 31, 2011 was $0 as compared to $5,000 for the three months ended March 31, 2010. The Companys cumulative financing activities have consisted of sales of the Companys common stock as well as related and non-related party loans. We expect to continue to use cash flow provided by financing activities to raise additional funds to follow our plan of operation.
Cash flow used in investing activities was $440,423 for the period from December 7, 1999, to March 31, 2011. Cash flow used in investing activities for the three month period ended March 31, 2011 was $73,499 as compared to $0 for the three month period ended March 31, 2010. The increase in cash flows used in investing activities over the comparative three month periods can be attributed to a series of secured loans made to JBP in connection with the development of ParkVida. Cash flow used in investing activities over the cumulative period can be partially attributed to those amounts loaned to JBP, a franchise fee and the loan to PWS. We do expect to use cash flow in investing activities going forward into future periods.
The Companys current assets are insufficient to conduct its plan of operation over the next twelve (12) months. We will have to seek at least $10,000,000 in debt or equity financing over the next twelve months to fund our anticipated development of ParkVida. The Company has no current commitments or arrangements with respect to, or immediate sources of this funding. Further, no assurances can be given that funding is available. The Companys shareholders are the most likely source of new funding in the form of loans or equity placements though none have made any commitment for future investment and the Company has no agreement formal or otherwise. The Companys inability to obtain sufficient funding for ParkVida will have a material adverse affect on its ability to fulfill its current plan of operation or to search for alternative business opportunities.
The Company does not intend to pay cash dividends in the foreseeable future.
The Company had no lines of credit or other bank financing arrangements as of March 31, 2011.
The Company had no commitments for future capital expenditures that were material at March 31, 2011.
The Company has no defined benefit plan or contractual commitment with any of its officers or directors.
The Company has no current plans for the purchase or sale of any plant or equipment.
The Company has no current plans to make any changes in the number of employees.
Off-Balance Sheet Arrangements
As of March 31, 2011, 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.
12
Critical Accounting Policies
In Note 1 to the audited financial statements for the years ended December 31, 2010 and 2009, included in our Form 10-K, the Company discusses those accounting policies that are considered to be significant in determining the results of operations and its financial position. The Company believes that the accounting principles utilized by it conform to accounting principles generally accepted in the United States.
The preparation of financial statements requires Company management to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. By their nature, these judgments are subject to an inherent degree of uncertainty. On an on-going basis, the Company evaluates estimates. The Company bases its estimates on historical experience and other facts and circumstances that are believed to be reasonable, and the results form the basis for making judgments about the carrying value of assets and liabilities. The actual results may differ from these estimates under different assumptions or conditions.
Going Concern
The Companys auditors have expressed an opinion as to the Companys ability to continue as a going concern as a result of an accumulated deficit of $382,055 as of December 31, 2010, which deficit increased to $392,751 as of March 31, 2011. The Companys ability to continue as a going concern is subject to the ability of the Company to realize a profit and /or obtain funding from outside sources. Managements plan to address the Companys ability to continue as a going concern includes: (i) obtaining funding from the private placement of debt or equity; (ii) realizing revenues from its prospective development of JBP or alternative business opportunities; and (iii) obtaining loans and grants from financial or government institutions. Management believes that it will be able to obtain funding to allow the Company to remain a going concern through the methods discussed above, though there can be no assurances that such methods will prove successful.
Forward-Looking Statements and Factors That May Affect Future Results and Financial Condition
The statements contained in the section titled Managements Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this current report, with the exception of historical facts, are forward-looking statements. Forward-looking statements reflect our current expectations and beliefs regarding our future results of operations, performance, and achievements. These statements are subject to risks and uncertainties and are based upon assumptions and beliefs that may or may not materialize. These statements include, but are not limited to, statements concerning:
· our anticipated financial performance and business plan;
· the sufficiency of existing capital resources;
· our ability to raise additional capital to fund cash requirements for future operations;
· uncertainties related to the Companys future business prospects;
· our ability to generate revenues from future operations;
· the volatility of the stock market and;
· general economic conditions.
13
We wish to caution readers that our operating results are subject to various risks and uncertainties that could cause our actual results to differ materially from those discussed or anticipated including the factors set forth in the section entitled Risk Factors included elsewhere in this report. We also wish to advise readers not to place any undue reliance on the forward looking statements contained in this report, which reflect our beliefs and expectations only as of the date of this report. We assume no obligation to update or revise these forward looking statements to reflect new events or circumstances or any changes in our beliefs or expectations, other than as required by law.
Stock-Based Compensation
We have adopted Accounting Standards Codification Topic (ASC) 718, which addresses the accounting for stock-based payment transactions in which an enterprise receives employee services in exchange for (a) equity instruments of the enterprise or (b) liabilities that are based on the fair value of the enterprises equity instruments or that may be settled by the issuance of such equity instruments. We account for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with ASC 505. 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.
Recent Accounting Pronouncements
Please see Note 8 to our consolidated financial statements for recent accounting pronouncements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
In connection with the preparation of this report on Form 10-Q, an evaluation was carried out by the Companys management, with the participation of the chief executive officer and the chief financial officer, of the effectiveness of the Companys disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (Exchange Act)). Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Commissions rules and forms and that such information is accumulated and communicated to management, including the chief executive officer and the chief financial officer, to allow timely decisions regarding required disclosures.
Based on that evaluation, the Companys management concluded, as of the end of the period covered by this report, that the Companys disclosure controls and procedures were effective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the Commissions rules and forms.
14
Changes in Internal Control over Financial Reporting
There have been no changes in internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the period ended March 31, 2011, that materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 1A. RISK FACTORS
The Companys operations and securities are subject to a number of risks. Below we have identified and discussed the material risks that we are likely to face. Should any of the following risks occur, they will adversely affect our operations, business, financial condition and/or operating results as well as the future trading price and/or the value of our securities.
Risks Related to the Companys Business
We have a history of significant operating losses and such losses may continue in the future.
Since our inception in 1999, our expenses have substantially exceeded our income, resulting in continuing losses and an accumulated deficit of $382,055 at December 31, 2010, which increased to $392,751 at March 31, 2011. During the initial three months of this year we recorded a net loss of $10,696. The Company has never realized revenue from operations. Our only expectation of future profitability is dependent on the successful development of ParkVida as a resort, or in the event that our transaction with ParkVida does not close, some other revenue producing business opportunity.
The Companys limited financial resources cast severe doubt on our ability to pursue our business plan or to acquire a profitable business opportunity.
The Companys future operation is dependent upon the successful development of ParkVida as a resort or the acquisition of a profitable business opportunity. We found it impossible to realize the financing needed for our share exchange agreement with PWS and may encounter the same difficulty in realizing the requisite funding to see the development of ParkVida through to completion. The Companys inability to finance its operations sufficiently may prevent it from developing ParkVida or any business and may act as a deterrent in any future negotiations with potential acquisition candidates. Should the Company be unable to acquire or develop a profitable business opportunity, it will, in all likelihood, be forced to cease operations.
We are dependent upon a key person, who would be difficult to replace.
Our continued operation will be largely dependent upon the efforts of Ruairidh Campbell, our sole officer and director. We do not maintain key-person insurance on Mr. Campbell. Our future success also will depend in large part upon the Companys ability to identify, attract and retain other highly qualified managerial, technical and sales and marketing personnel. Competition for these individuals is intense. The loss of the services of Mr. Campbell, the inability to identify, attract or retain qualified personnel in the future or delays in hiring qualified personnel could make it more difficult for us to maintain our operations and meet key objectives such as the acquisition of a suitable business opportunity.
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Risks Related to the Companys Stock
The market for our stock is limited and our stock price may be volatile.
The market for our common stock has been limited due to low trading volume and the small number of brokerage firms acting as market makers. Because of the limitations of our market and volatility of the market price of our stock, investors may face difficulties in selling shares at attractive prices when they want to. The average daily trading volume for our stock has varied significantly from week to week and from month to month, and the trading volume often varies widely from day to day.
We incur significant expenses as a result of the Sarbanes-Oxley Act of 2002, which expenses may continue to negatively impact our financial performance.
We incur significant legal, accounting and other expenses as a result of the Sarbanes-Oxley Act of 2002, as well as related rules implemented by the Commission, which control the corporate governance practices of public companies. Compliance with these laws, rules and regulations, including compliance with Section 404 of the Sarbanes-Oxley Act of 2002, as discussed in the following risk factor, has substantially increased our expenses, including legal and accounting costs, and made some activities more time-consuming and costly.
Our internal controls over financial reporting may not be considered effective in the future, which could result in a loss of investor confidence in our financial reports and in turn have an adverse effect on our stock price.
Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 we are required to furnish a report by our management on our internal controls over financial reporting. Such report must contain, among other matters, an assessment of the effectiveness of our internal controls over financial reporting as of the end of the year, including a statement as to whether or not our internal controls over financial reporting are effective. This assessment must include disclosure of any material weaknesses in our internal controls over financial reporting identified by management. If we are unable to continue to assert that our internal controls are effective, our investors could lose confidence in the accuracy and completeness of our financial reports, which in turn could cause our stock price to decline.
The Company requires immediate capital funding to meet working capital requirements which it may not be able to satisfy.
The Company requires immediate financing through equity offerings or debt placements to meet current working capital requirements. Despite the immediacy of necessary financing and ongoing efforts to secure financing, the Company has no commitment to raise any of the requisite capital, without which it will not be able to meet its current financial obligations.
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If the market price of our common stock declines as the selling security holders sell their stock, selling security holders or others may be encouraged to engage in short selling, depressing the market price.
The significant downward pressure on the price of the common stock as the selling security holders sell material amounts of common stock could encourage short sales by the selling security holders or others. Short selling is the selling of a security that the seller does not own, or any sale that is completed by the delivery of a security borrowed by the seller. Short sellers assume that they will be able to buy the stock at a lower amount than the price at which they sold it short. Significant short selling of a companys stock creates an incentive for market participants to reduce the value of that companys common stock. If a significant market for short selling our common stock develops, the market price of our common stock could be significantly depressed.
The Companys shareholders may face significant restrictions on their stock.
The Companys stock differs from many stocks in that it is a penny stock. The Commission has adopted a number of rules to regulate penny stocks including, but not limited to, those rules from the Securities Act as follows:
3a51-1 which defines penny stock as, generally speaking, those securities which are not listed on either NASDAQ or a national securities exchange and are priced under $5, excluding securities of issuers that have net tangible assets greater than $2 million if they have been in operation at least three years, greater than $5 million if in operation less than three years, or average revenue of at least $6 million for the last three years;
15g-1 which outlines transactions by broker/dealers which are exempt from 15g-2 through 15g-6 as those whose commissions from traders are lower than 5% total commissions;
15g-2 which details that brokers must disclose risks of penny stock on Schedule 15G;
15g-3 which details that broker/dealers must disclose quotes and other information relating to the penny stock market;
15g-4 which explains that compensation of broker/dealers must be disclosed;
15g-5 which explains that compensation of persons associated in connection with penny stock sales must be disclosed;
15g-6 which outlines that broker/dealers must send out monthly account statements; and
15g-9 which defines sales practice requirements.
Since the Companys securities constitute a penny stock within the meaning of the rules, the rules would apply to us and our securities. Because these rules provide regulatory burdens upon broker-dealers, they may affect the ability of shareholders to sell their securities in any market that may develop; the rules themselves may limit the market for penny stocks. Additionally, the market among dealers may not be active. Investors in penny stock often are unable to sell stock back to the dealer that sold them the stock. The mark-ups or commissions charged by the broker-dealers may be greater than any profit a seller may make. Because of large dealer spreads, investors may be unable to sell the stock immediately back to the dealer at the same price the dealer sold the stock to the investor. In some cases, the stock may fall quickly in value. Investors may be unable to reap any profit from any sale of the stock, if they can sell it at all. Shareholders should be aware that, according to Commission Release No. 34-29093 dated April 17, 1991, the market for penny stocks has suffered from patterns of fraud and abuse. These patterns include:
- control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer;
- manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;
- boiler room practices involving high pressure sales tactics and unrealistic price projections;
- excessive and undisclosed bid-ask differentials and markups by selling broker-dealers; and
- the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the inevitable collapse of those prices with consequent investor losses.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS ON SENIOR SECURITIES
None.
ITEM 4. (REMOVED AND RESERVED)
Removed and reserved.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
Exhibits required to be attached by Item 601 of Regulation S-K are listed in the Index to Exhibits on page 20 of this Form 10‑Q, and are incorporated herein by this reference.
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SIGNATURES
Pursuant to the requirements 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.
Montana Mining Corp. Date
/s/ Ruairidh Campbell May 13, 2011
Ruairidh Campbell
Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, and Director
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EXHIBITS
Exhibit Description
3(i)(a)* Articles of Incorporation of the Company, formerly known as Aswan Investments, Inc. (incorporated herein by reference from Exhibit No. 3(i) of the Companys Form 10-SB as filed with the Commission on February 3, 2000).
3(i)(b)* Amendment to Articles of Incorporation filed with the State of Nevada on August 5, 2002 (incorporated herein by reference from Exhibit No. 3(i)(b) of the Companys Form 8-K as filed with the Commission on August 15, 2002).
3(i)(c)* Amendment to Articles of Incorporation filed with the State of Nevada on October 12, 2004 (incorporated herein by reference from Exhibit No. 3(i)(c) of the Companys Form 10-QSB as filed with the Commission on November 8, 2004).
3(ii)* By-laws of the Company adopted on December 10, 1999 formerly known as Aswan Investments, Inc. (incorporated herein by reference from Exhibit No. 3(i) of the Company's Form 10-SB as filed with the Commission on February 3, 2000).
10(i)* LA Boxing Franchise Agreement dated March 7, 2008 (incorporated herein by reference from Exhibit No. 10 of the Company's Form 8-K as filed with the Commission on March 21, 2008).
10(ii)* PWS Share Exchange Agreement dated November 20, 2008 (incorporated herein by reference from Exhibit 10 of the Companys Form 8-K as filed with the Commission on December 3, 2008).
10(iii)* Amendment to PWS Share Exchange Agreement dated February 2, 2009 (incorporated herein by reference from Exhibit 10 of the Companys Form 8-K as filed with the Commission on March 3, 2009).
10(iv)* Amendment to PWS Share Exchange Agreement dated July 9, 2009 (incorporated herein by reference from Exhibit 10 of the Companys Form 8-K as filed with the Commission on July 14, 2009).
10(v)* Amendment to PWS Share Exchange Agreement dated July 22, 2009 (incorporated herein by reference from Exhibit 10 of the Companys Form 10-Q as filed with the Commission on August 5, 2009).
10(vi)* Assignment Agreement dated August 26, 2009 (incorporated herein by reference from Exhibit 10 of the Companys Form 8-K as filed with the Commission on August 31, 2009).
10(vii)* Extension to Assignment Agreement dated November 29, 2009 (incorporated herein by reference from Exhibit 10 of the Companys Form 10-K as filed with the Commission on April 13, 2010).
10(viii)* Amendment to PWS Share Exchange Agreement dated December 10, 2009 (incorporated herein by reference from Exhibit 10 of the Companys Form 10-K as filed with the Commission on April 13, 2010).
10(ix)* Amendment to PWS Share Exchange Agreement dated March 31, 2010 (incorporated herein by reference from Exhibit 10 of the Companys Form 10-K as filed with the Commission on April 13, 2010).
10(x)* Extension to Assignment Agreement dated March 31, 2010 (incorporated herein by reference from Exhibit 10 of the Companys Form 10-K as filed with the Commission on April 13, 2010).
10(xi)* Asset Purchase Agreement with Park Capital Management, Inc. dated August 30. 2010 (incorporated herein by reference from Exhibit 10 of the Companys Form 8-K filed with the Commission on August 31, 2010).
10(xii)* Amendment to the Asset Purchase Agreement with Park Capital Management, Inc. dated November 12, 2010 (incorporated herein by reference from Exhibit 10 of the Form 10-K filed with the Commission on March 31, 2011).
14* Code of Ethics adopted April 14, 2004 (incorporated herein by reference from Exhibit No. 14 of the Companys Form 10-KSB/A filed with the Commission on April 16, 2004).
21* Subsidiaries of the Company (incorporated herein by reference from Exhibit No. 21 of the Companys Form 10-K filed with the Commission on April 11, 2008).
* Incorporated by reference from previous filings of the Company.
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