Attached files
| file | filename |
|---|---|
| EX-32.1 - CERTIFICATION - ARX Gold Corp | daulton_10ka-ex3102.htm |
| EX-32.0 - CERTIFICATION - ARX Gold Corp | daulton_10ka-ex3200.htm |
| EX-31.1 - CERTIFICATION - ARX Gold Corp | daulton_10ka-ex3101.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
Amendment No. 2
(Mark One)
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x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the Fiscal Year Ended April 30, 2010
OR
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Commission File No. – 333-152002
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DAULTON CAPITAL CORP.
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(Name of Small Business Issuer in its charter)
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Nevada
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30-0459858
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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3960 Howard Hughes Parkway, Suite 500, Las Vegas, Nevada 89169
(Address of principal executive offices)
(888) 387-1403
(Issuer’s telephone number)
Securities registered pursuant to Section 12(b) or 12(g) of the Exchange Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes o No o
Indicate by checkmark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 x No o
Indicate by checkmark if disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K or any amendment to this Form 10-K. o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 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 checkmark if registrant is a large accelerated filer, an accelerated filer, a non-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.
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Large accelerated filer o
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Accelerated filer o
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||
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Non-accelerated filer o
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Smaller reporting company x
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
The aggregate market value of the voting and non-voting common stock held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of October 31, 201 (the Registrant’s most recently completed second fiscal quarter) was approximately $0.33.
As of July 14, 2010, the Company had 57,600,000 issued and outstanding shares of common stock.
DOCUMENTS INCORPORATED BY REFERENCE
If the following documents are incorporated by reference, briefly describe them and identify the part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) any annual report to security holders; (2) any proxy or information statement; and (3) any prospectus filed pursuant to Rule 424(b) of the Securities Act of 1933 ("Securities Act"). Not Applicable.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This Annual Report on Form 10-K (the “Annual Report”) includes "forward-looking statements." All statements other than statements of historical facts included in this Annual Report , regarding Daulton Capital Corp.'s financial position, reserve quantities and net present values, business strategy, plans and objectives of management of the Company for future operations and capital expenditures, are forward-looking statements. Although the Company believes that the expectations reflected in the forward-looking statements and the assumptions upon which such forward-looking statements are based are reasonable, it can give no assurance that such expectations and assumptions will prove to have been correct.
References in this Annual Report to “we”, “us,” “our,” “Registrant,” Issuer”, “the Company,” and “Daulton Capital” mean Daulton Capital Corp., a Nevada corporation, unless the context otherwise requires.
EXPLANATORY NOTE
This Amendment No. 2 on Form 10-K/A (“Amendment No. 2”) amends the Form 10-K/A Amendment No. 1 of Daulton Capital Corp. (the “Company”, “we” or “us”), for the fiscal year ended December 31, 2010, as filed with the Securities and Exchange Commission (the “SEC”) on May 17, 2011(Amendment No. 1). This Amendment No. 2 is being filed to include revised financial statements additional disclosure information.
In accordance with Rule 12b-12 under the Securities Exchange Act of 1934, as amended, updated certifications by our chief executive officer and chief financial officer are filed as exhibits to this Amendment No. 2.
3
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Item 7.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations.
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This Annual Report includes "forward-looking statements." All statements other than statements of historical facts included in this report, regarding our financial position, reserve quantities and net present values, business strategy, plans and objectives of management of the Company for future operations and capital expenditures, are forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements and the assumptions upon which such forward-looking statements are based are reasonable, we can give no assurance that such expectations and assumptions will prove to have been correct.
The following discussion of financial condition and results of operations should be read in conjunction with the consolidated financial statements and the notes to the consolidated financial statements, which are included elsewhere in this Annual Report.
Organizational History
We were incorporated in Nevada on January 8, 2008 and planned to be involved in the exploration of oil and gas.
On February 15, 2008, we filed a Certificate of Amendment to increase our authorized stock into 50,000,000 shares of common stock, $0.001 par value and 5,000,000 shares of preferred stock, $0.001 par value.
On October 17, 2008, we filed a Certificate of Change with the Nevada Secretary of State effecting a four-for-one forward stock split of our common stock and increasing the our authorized capitalization to 200,000,000 shares of common stock.
4
On August 7, 2009, we filed a Certificate of Amendment to affect a four-for-one forward split of our common stock.
Operational History
We have a 20% working interest (16% net revenue interest) in an oil well located in Creek County, Oklahoma. As of April 30, 2010, the well was shut in and not producing.
On July 30, 2008, we acquired a 5% working interest (4% net revenue interest) in six wells located in Pawnee County, Oklahoma. In consideration for assignment of the working interest in these wells, we issued 300,000 shares of its restricted common stock to the former owner of the working interest. As of April 30, 2010, the wells were shut in and not producing.
In June 2008, Semcrude, Inc., the purchaser of the oil produced by our wells, filed for bankruptcy under Chapter 11 of the Federal Bankruptcy Code. As a result, payments to us for oil sold have been suspended.
On April 25, 2009 we signed an agreement to acquire approximately 90% of the outstanding shares of Energy Solutions People Inc. in exchange for 7,234,034 shares of our common stock. Energy Solutions was incorporated in Nevada in September 2007. Shortly after its formation, Energy Solutions acquired the rights to various renewable energy products, the most significant of which are wind turbines and solar powered electrical generators. This agreement was subsequently terminated.
On February 22, 2010, we entered into an option agreement with Shawn Ryan to purchase an undivided interest of mining claims of a property described as “Ballarat Property.” In addition, on February 25, 2010, we entered into an option agreement with Shawn Ryan to purchase an undivided interest of mining claims of a property described as “Hunker Project.” Our exploration activities on the Ballarat Property and the Hunker Project have been limited only to soil sampling.
We will need to raise the funds required for excavation from third parties to continue with our exploration activies. We may also attempt to raise needed capital through the private sale of our securities or by borrowing from third parties. If we are able to raise such capital, we intend to spend such capital over the next 12 months with soil sampling (25 meters), initiating a ground magnetic survey, geological mapping and excavator trenching followed by an evaluation of a possible drill program However, we may not be successful in raising the capital needed for the aforementioned exploration activities.
Our future plans will be dependent upon the amount of capital we are able to raise. We do not have any commitments or arrangements from any person to provide us with any additional capital.
Results of Operations
During fiscal year ended April 30, 2010, we incurred general and administrative expenses in the aggregate amount of $12,914 compared to $20,045 incurred during fiscal year ended April 30, 2009 (a decrease of $7,131). The operating expenses incurred during fiscal year ended April 30, 2010 consisted of: (i) salary and wages of $45,000 (2009: $-0-); (ii) consulting fees of $-0- (2009: $-0-); (iii) professional fees of $26,517 (2009: $31,889); (iv) occupancy expense of $1,494 (2009: $7,500); (v) stock transfer fees of $1,000 (2009: $5,678); and (vi) impairment of oil and gas leases $190,000 (2009: $-0-).
Our net income (loss) for the fiscal year ended April 30, 2010 was approximately ($276,925) compared to our net income (loss) of ($51,710) for the fiscal year ended April 30, 2009. During the fiscal years ended April 30, 2010 we generated $-0- in revenue compared to our revenue of $13,402 for the fiscal year ended April 30, 2009.
5
The basic weighted average number of shares outstanding was 57,600,000 at April 30, 2010 and April 30, 2009 respectively.
Liquidity and Capital Resources
Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation.
As at April 30, 2010, our total assets were $60,764 and our total current liabilities were $45,492, resulting in a working capital deficit of ($34,728). As at April 30, 2010, our total assets were $60,764 compared to total assets of $190,750 as at April 30, 2009. As at April 30, 2010, our current liabilities were $45,942 compared to current liabilities of $-0- at April 30, 2009.
Stockholders' equity decreased to ($15,272) as at April 30, 2010 from $190,750 at April 30, 2009.
Off-Balance Sheet Arrangements
As of the date of this Annual Report, we did not have any 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 investors.
Material Commitments
As of April 30, 2010, we did not have any material capital commitments, other than funding our operating losses. It is anticipated that any capital commitments that may occur will be financed principally through the sale of shares of our common stock or other equity securities. However, there can be no assurance that additional capital resources and financings will be available to us on a timely basis, or if available, on acceptable terms.
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Item 8.
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Financial Statements and Supplementary Data.
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See financial statements at the end of this Annual Report .
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Item 9A.
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Controls and Procedures.
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6
Disclosure Controls and Procedures
Our management, with the participation of the Company’s Principal Executive Officer and Principal Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objectives and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on such evaluation, the Company’s Principal Executive Officer and Principal Financial Officer have concluded that as of April 30, 2010, the Company’s disclosure controls and procedures were not effective, at the reasonable assurance level, in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act and in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including the Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely discussions regarding required disclosure; due to the material weaknesses described below.
In light of the material weaknesses described below, we performed additional analysis and other post-closing procedures to ensure that our financial statements were prepared in accordance with generally accepted accounting principles. Accordingly, we believe that the financial statements included in this report fairly present, in all material respects, our financial condition, results of operations, changes in stockholders’ equity and cash flows for the periods presented.
Management Report on Internal Control Over Financial Reporting
The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that:
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1.
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Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
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2.
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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
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3.
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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 our financial statements.
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7
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 reporting. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
A material weakness is a control deficiency (within the meaning of Public Company Accounting Oversight Board (“PCAOB”) Auditing Standard No. 5) or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.
Under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of the period covered by this report based on the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on the results of management’s assessment and evaluation, our Principal Executive Officer and Principal Accounting Officer concluded that our internal control over financial reporting was not effective due to the material weaknesses described below.
Material Weaknesses
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1.
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The Company’s management assessed the effectiveness of the Company’s internal control over financial reporting as of April 30, 2010. In making this assessment, the Company’s management used the framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission in “Internal Control – Integrated Framework.” Based on this assessment, management concluded that, as of April 30, 2010, the Company’s internal control over financial reporting was not effective based on this framework.
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Management evaluated the impact of ineffective control over financial reporting and concluded that the control deficiency represented a material weakness.
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2.
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In connection with the audit of our consolidated financial statements for the year ended April 30, 2010 , our independent registered accounting firm, reported to the Company’s Board of Directors that they observed inadequate review and approval of certain aspects of the accounting process that they considered to be a material weakness in internal control. In particular, subscriptions received have been re-classified as an equity account on the balance sheet and statement of changes in equity.
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After a review of the Company’s current review and approval of certain aspects of the accounting process, management concluded that the inadequate review and approval process represented a material weakness.
8
Remediation of Material Weaknesses
To remediate the material weaknesses identified above, we have done the following subsequent to October 30 , 2010, which correspond to the material weaknesses identified above.
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1.
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In connection with the ineffective assessment of the Company’s internal control over financial reporting, management plans to implement additional controls to improve the effectiveness of the Company’s disclosure controls and procedures.
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Management believes this remediation will remediate the corresponding material weakness described in Item 1, immediately above.
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2.
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In connection with the reported inadequate review and approval of certain aspects of the accounting process, management has reiterated the Company’s current review and approval processes, to insure that all accounting reconciliations, journal entries and complex transactions are reviewed and approved on a timely basis.
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Management believes this remediation has remediated the corresponding material weakness described in Item 2, immediately above.
Attestation Report of the Independent Registered Public Accounting Firm
This annual report does not include an attestation report by the Company’s registered public accounting firm regarding internal control over financial reporting, because Management’s report in the annual report was not subject to attestation by the Company’s independent registered public accounting firm, pursuant to temporary rules of the SEC that permit the Company to provide only management’s report in this annual report.
Inherent Limitations on the Effectiveness of Controls
Management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control systems are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in a cost-effective control system, no evaluation of internal control over financial reporting can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been or will be detected.
9
These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of a simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.
Changes in Internal Control over Financial Reporting
There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13-15(f) and 15d-15(f) under the Exchange Act) during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART IV
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Item 15.
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Exhibits, Financial Statement Schedules.
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EXHIBIT NO.
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DESCRIPTION
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31.1
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Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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31.2
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Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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32
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Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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10
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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DAULTON CAPITAL CORP.
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Date: June 30, 2011
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By:
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/s/ Terry Fields
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Terry Fields, Chief Executive and Financial Officer
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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
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Date: June 30, 2011
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By:
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/s/ Terry Fields | |
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Terry Fields, Chief Executive and Financial Officer and
Member of the Board of Directors |
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Date: June 30, 2011
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By:
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/s/ Peter Stecher | |
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Peter Stecher, Member of the Board of Directors
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11
DAULTON CAPITAL CORP.
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009
Table of Contents
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Report of Independent Registered Public Accounting Firm
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F-2
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Consolidated Balance Sheet as of April 30, 2010 and 2009
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F-3
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Consolidated Statements of Operations
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F-4
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Consolidated Statement of Stockholders’ Equity (Deficit) for the period from inception, January 8, 2008, to April 30, 2010
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F-5
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Consolidated Statements of Cash Flows
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F-6
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Notes to Consolidated Financial Statements
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F-7
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F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To: The Board of Directors and Shareholders
Daulton Capital Corporation
Las Vegas, Nevada
I have audited the accompanying balance sheet of Daulton Capital Corporation as of April 30, 2010 and 2009 and the related statements of operations, stockholders’ equity and cash flows for the years then ended including the three month periods ended April 30, 2010 and 2009, and for the period from inception (January 8, 2008) to April 30, 2010 These financial statements are the responsibility of the Company’s management. My responsibility is to express an opinion on these financial statements based on my audit.
I conducted my audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audit provides a reasonable basis for my opinion.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered losses and is not yet able to cover its operating expenses. This raises substantive doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
In my opinion, based on my audit, the financial statements referred to above present fairly, in all material respects, the financial position of Daulton Capital Corporation as of April 30, 2010 and 2009 and the results of its operations, its stockholders’ equity and its cash flows for the years then ended, including the three month periods ended April 30, 2010 and 2009, and for the period from inception (January 8, 2008) to April 30, 2010, in conformity with United States generally accepted accounting principles.
The Company has determined that it is not required to have, nor was I engaged to perform, an audit of the effectiveness of its documented internal controls over financial reporting.
/s/ John Kinross-Kennedy
Certified Public Accountant
Irvine, California
June 24, 2010
F-2
DAULTON CAPITAL CORPORATION
(An Exploration Stage Company)
Balance Sheet
as at April 30,
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ASSETS
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2010
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2009
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Current Assets
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Cash and Cash Equivalents
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$ | 10,764 | $ | - | ||||
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Prepaid Rent
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- | 750 | ||||||
| 10,764 | 750 | |||||||
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Other Assets
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Oil and Gas Working Interest: Mayberry No. 1
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- | 100,000 | ||||||
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Oil and Gas Working Interest: Glencoe Wells
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- | 90,000 | ||||||
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Mining Property Interest: Ballarat
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25,000 | - | ||||||
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Mining Property Interest: Hunker
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25,000 | - | ||||||
| 50,000 | 190,000 | |||||||
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TOTAL ASSETS
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$ | 60,764 | $ | 190,750 | ||||
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LIABILITIES & STOCKHOLDERS' EQUITY
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Current Liabilities
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Loans from Officers
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45,492 | - | ||||||
| 45,492 | - | |||||||
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Commitments and contingencies (Note 5)
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Stockholders' Equity
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Preferred Stock, $0.001 par value, 5,000,000 shares authorized;
none outstanding as at January 31, 2009 and April 30, 2008. |
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Common Stock, $0.001 par value, 200,000,000 shares authorized,
57,600,000 shares issued and outstanding as at April 30, 2010 57,600,000 shares issued and outstanding as at April 30, 2009 |
57,600 | 57,600 | ||||||
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Subscriptions Received
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89,000 | - | ||||||
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Additional paid-in capital
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208,901 | 196,454 | ||||||
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Deficit accumulated in the exploration stage
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(340,229 | ) | (63,304 | ) | ||||
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Total Stockholders' Equity
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15,272 | 190,750 | ||||||
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
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$ | 60,764 | $ | 190,750 | ||||
F-3
DAULTON CAPITAL CORPORATION
(An Exploration Stage Company)
Statement of Operations
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For the period
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of Inception,
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from Jan. 8,
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For the 3 months ended
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For the year ended
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2008 through
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April 30,
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April 30,
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April 30,
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2010
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2009
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2010
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2009
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2010
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Revenues
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Crude Oil Production
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$ | - | $ | 450 | $ | - | $ | 13,402 | $ | 17,189 | ||||||||||
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Costs and Expenses
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Salary & Wages
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- | - | 45,000 | - | 45,000 | |||||||||||||||
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Consulting
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- | - | - | - | 9,164 | |||||||||||||||
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Professional Fees
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9,370 | - | 26,517 | 31,889 | 69,986 | |||||||||||||||
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Occupancy Expense
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498 | - | 1,494 | 7,500 | 11,244 | |||||||||||||||
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Stock Transfer Fees
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1,000 | 275 | 1,000 | 5,678 | 6,954 | |||||||||||||||
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Impairment of oil and gas leases
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190,000 | - | 190,000 | - | 190,000 | |||||||||||||||
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Other General & Administrative
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8,347 | 444 | 12,914 | 20,045 | 25,070 | |||||||||||||||
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Total Expenses
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209,215 | 719 | 276,925 | 65,112 | 357,418 | |||||||||||||||
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Operating Loss
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(209,215 | ) | (269 | ) | (276,925 | ) | (51,710 | ) | (340,229 | ) | ||||||||||
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Net Income (Loss)
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$ | (209,215 | ) | $ | (269 | ) | $ | (276,925 | ) | $ | (51,710 | ) | $ | (340,229 | ) | |||||
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Net Income (Loss) per share,
basic and diluted |
$ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | ||||||||
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Weighted average number of shares
outstanding, basic and diluted |
57,600,000 | 57,600,000 | 57,600,000 | 57,600,000 | ||||||||||||||||
F-4
DAULTON CAPITAL CORPORATION
(An Exploration Stage Company)
Statement of Stockholders' Equity (Deficit)
For the period from Inception, January 8, 2008, to April 30, 2010
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Accumulated
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Additional
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Deficit During
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Common Stock
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Subscriptions |
Paid-in
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Exploration
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Shares
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Amount
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Received |
Capital
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Stage
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Total
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Balances at Inception, Jan. 8, 2008
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- | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||||
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Common stock issued for cash on January 14, 2008 at $0.098 per share
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28,800,000 | 28,800 | (11,223 | ) | 17,577 | |||||||||||||||||||
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Common stock issued for cash on February 21, 2008 at $0.0977 per share
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24,000,000 | 24,000 | 122,477 | 146,477 | ||||||||||||||||||||
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Net loss, period ended April 30, 2008
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(11,594 | ) | (11,594 | ) | ||||||||||||||||||||
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Balances at April 30, 2008
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52,800,000 | $ | 52,800 | $ | - | $ | 111,254 | $ | (11,594 | ) | $ | 152,460 | ||||||||||||
|
Common stock issued for purchase of a working interest in wells at $0.30 per share October 16, 2008
|
4,800,000 | 4,800 | 85,200 | 90,000 | ||||||||||||||||||||
|
Net loss, year ended April 30, 2009
|
(51,710 | ) | (51,710 | ) | ||||||||||||||||||||
|
Balances at April 30, 2009
|
57,600,000 | $ | 57,600 | $ | - | $ | 196,454 | $ | (63,304 | ) | $ | 190,750 | ||||||||||||
|
Capital contributed
|
12,447 | 12,447 | ||||||||||||||||||||||
|
Subscriptions received
|
89,000 | 89,000 | ||||||||||||||||||||||
|
Net loss, year ended April 30, 2010
|
(276,925 | ) | (276,925 | ) | ||||||||||||||||||||
|
Balances at April 30, 2010
|
57,600,000 | $ | 57,600 | $ | 89,000 | $ | 297,901 | $ | (340,229 | ) | $ | 15,272 | ||||||||||||
F-5
DAULTON CAPITAL CORPORATION
(An Exploration Stage Company)
Statement of Cash Flows
|
For the period
|
||||||||||||||||||||
|
of Inception,
|
||||||||||||||||||||
|
from Jan. 8,
|
||||||||||||||||||||
|
For the 3 months ended
|
For the year ended
|
2008 through
|
||||||||||||||||||
|
April 30,
|
April 30,
|
April 30,
|
||||||||||||||||||
|
2010
|
2009
|
2010
|
2009
|
2010
|
||||||||||||||||
|
Cash Flows From Operating Activities
|
||||||||||||||||||||
|
Net Income (Loss)
|
$ | (209,215 | ) | $ | (269 | ) | $ | (276,925 | ) | $ | (51,710 | ) | $ | (340,229 | ) | |||||
|
Adjustments to reconcile net loss to net cash used by operating activities:
|
||||||||||||||||||||
|
Non-cash issue of stock for services
|
||||||||||||||||||||
|
Change in operating assets and liabilities:
|
||||||||||||||||||||
|
Accounts receivable
|
5,387 | |||||||||||||||||||
|
Prepaids
|
750 | |||||||||||||||||||
|
Abandonment of oil and gas leases
|
190,000 | 190,000 | 190,000 | |||||||||||||||||
|
Net Cash provided by (used by) operating activities
|
(19,215 | ) | (269 | ) | (86,175 | ) | (46,323 | ) | (150,229 | ) | ||||||||||
|
Cash Flows From Investing activities
|
||||||||||||||||||||
|
Purchase of mining leases
|
(50,000 | ) | (50,000 | ) | (90,000 | ) | (240,000 | ) | ||||||||||||
|
Net Cash (used by) Investing Activities
|
(50,000 | ) | - | (50,000 | ) | (90,000 | ) | (240,000 | ) | |||||||||||
|
Cash Flows From Financing Activities
|
||||||||||||||||||||
|
Proceeds from the sale of Stock
|
254,054 | |||||||||||||||||||
|
Subscriptions Received
|
78,836 | 89,000 | 89,000 | |||||||||||||||||
|
Proceeds of loans from officers
|
200 | 45,492 | 45,492 | |||||||||||||||||
|
Contribution of capital
|
12,447 | 12,447 | ||||||||||||||||||
|
Common stock for oil and gas interest
|
90,000 | |||||||||||||||||||
|
Net Cash provided by Financing Activities
|
79,036 | - | 146,939 | 90,000 | 400,993 | |||||||||||||||
|
Net Increase (Decrease) in Cash
|
9,821 | (269 | ) | 10,764 | (46,323 | ) | 10,764 | |||||||||||||
|
Cash at beginning of period
|
943 | 269 | - | 46,323 | - | |||||||||||||||
|
Cash at end of period
|
$ | 10,764 | $ | - | $ | 10,764 | $ | - | $ | 10,764 | ||||||||||
|
Cash Paid For:
|
||||||||||||||||||||
|
Interest
|
$ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
|
Income Taxes
|
$ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
F-6
Daulton Capital Corporation
(An Exploration Stage Company)
Notes to Financial Statements
April 30, 2010
1. Basis of Presentation and Nature of Operations
These audited financial statements as of and for the year ended April 30, 2010 reflect all adjustments which, in the opinion of management, are necessary to present fairly the financial position, results of operations and cash flows for the period presented in accordance with the accounting principles generally accepted in the United States of America. All adjustments are of a normal recurring nature.
Organization
Daulton Capital Corporation (the “Company”) was incorporated under the laws of the State of Nevada January 8, 2008. The Company was organized for the purpose of engaging in any activity or business not in conflict with the laws of the State of Nevada or of the United States of America. The company became engaged in the oil and gas industry.
Current Business of the Company
In February, 2008 the Company purchased a 20% working interest /16% Net Revenue Interest in a producing oil well known at Mayberry No. 1, located in an oil and gas leasehold estate in Creek County, Oklahoma. In June, 2008 Semcrude, Inc., the collector of the oil produced by the well, reported bankruptcy under Chapter 11 of the Bankruptcy Code. Payments to the Company for oil sold were suspended. The wells were shut in pending the resolution of issues that arose during bankruptcy proceedings.
On July 30, 2008 the Company purchased a 5% working interest / 4% net revenue interest in six oil wells known as the Glencoe Wells located in an oil and gas leasehold estate in Pawnee County, Oklahoma. The purchase was paid in restricted common stock.
Volumetric calculations of the wells were not performed.
|
Property Acquisition Costs:
|
||||
|
Unproved
|
||||
|
Mayberry No. 1 well
|
$ | 100,000 | ||
|
Glencoe Wells
|
90,000 | |||
| $ | 190,000 | |||
Impairment of these long lived assets was considered under FASB ASC Topic 360. Future cash flows from and beyond probable reserves was considered to be zero. The wells were considered 100% impaired in April, 2010 and written down accordingly.
F-7
Options on Mineral Claims
In February 2010 the Company entered into two option agreements with an individual, Shawn Ryan of Dawson City, Yukon Territory, Canada for the purchase of two groups of mineral claims in the Yukon Territory known as the Ballarat Property and the Hunker Project. The Ballarat Property consists of 38 mineral claims covering 1900 acres and the Hunker Project consists of 121 mineral claims covering 6,000 acres in known gold producing areas. The options require certain payments on or before February 15, 2014:
- staged cash payments to Mr. Ryan totaling $400,000
- staged issue of 1,250,000 common shares to Mr. Ryan
- staged expenditures for work on the properties totaling $1,260,000
The first payments of $25,000 due for each option were paid.
2. Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates. Significant estimates made by management are, among others, realizability of long-lived assets, deferred taxes and stock option valuation.
Cash and equivalents
Cash and equivalents include investments with initial maturities of three months or less.
Fair Value of Financial Instruments
The Financial Accounting Standards Board issued ASC (Accounting Standards Codification) 820-10 (SFAS No. 157), “Fair Value Measurements and Disclosures" for financial assets and liabilities. ASC 820-10 provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. FASB ASC 820-10 defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. FASB ASC 820-10 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The following summarizes the three levels of inputs required by the standard that the Company uses to measure fair value:
- Level 1: Quoted prices in active markets for identical assets or liabilities
- Level 2: Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.
F-8
- Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The carrying amounts of the Company’s financial instruments as of April 30, 2010, reflect
- Cash: Level One measurement based on bank reporting.
- Subscriptions Received: Level 2 based on contract.
- Loans from Officers: Level 3 based on promissory notes.
Income Taxes
The Company utilizes FASB ACS 740, “Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The Company generated a deferred tax credit through net operating loss carryforward. A valuation allowance of 100% has been established, since it is more-likely-than not that the deferred tax asset will be realized, based on considerations under “Going Concern”, following.”
Interest and penalties on tax deficiencies recognized in accordance with ACS accounting standards are classified as income taxes in accordance with ASC Topic 740-10-50-19.
Recent Accounting Pronouncements
In May, 2009, the FASB issued ASC 855, Subsequent Events, which established
general standards of accounting and disclosure for events that occur after the balance sheet date, but before financial statements are issued or available to be issued. In accordance with ASC 855, the Company has evaluated subsequent events through the date the financial statements were filed.
In June, 2009, the FASB issued their final SFAS, No. 168, “FASB Accounting Standards Codification ( “ASC”) and the Hierarchy of Generally Accepted Accounting Principles”. This was reflected in the codification as FASB ASC 105, Generally Accepted Accounting Principles. “ACS” is the single source of authoritative US generally accepted accounting principles recognized by the FASB to be applied to nongovernmental entities. It is effective for financial statements issued for interim and annual periods ending after September 15, 2009. It will not have an impact on the Company’s financial position, results of operations or cash flows.
Going Concern
The Company’s financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern. There was limited activity the current fiscal year. The company experienced a loss of $276,925 in the year ended April 30, 2010 and $340,229 since inception January 8, 2008. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease development of operations.
F-9
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish its plans to generate revenue from its mining leases. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amount and classifications or liabilities or other adjustments that might be necessary should the Company be unable to continue as a going concern.
Exploration-Stage Company
The Company is considered an exploration-stage company, with limited operating revenues during the periods presented, as defined by FASB Accounting Standards Codification ASC 915. ACS 915 requires companies to report their operations, shareholders deficit and cash flows since inception through the date that revenues are generated from management’s intended operations, among other things. Management has defined inception as January 8, 2008. Since inception, the Company has incurred an operating loss of $276,925. The Company’s working capital has been generated through the sales of common stock and limited revenue from crude oil production. Management has provided financial data since January 8, 2008 in the financial statements, as a means to provide readers of the Company’s financial information to make informed investment decisions.
Basic and Diluted Net Loss Per Share
Net loss per share is calculated in accordance with FASB ASC 260, Earnings Per Share, for the period presented. Basic net loss per share is based upon the weighted average number of common shares outstanding. Diluted net loss per share is based on the assumption that all dilative convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.
The Company has no potentially dilutive securities outstanding as of April 30, 2010.
The following is a reconciliation of the numerator and denominator of the basic and diluted earnings per share computations for the years ended April 30, 2010 and 2009, respectively. The weighted average number of shares outstanding as at April 30, 2009 has been restated to reflect the 4-to-1 forward stock splits of August 6, 2009.
|
Numerator:
|
||||||||
|
Basic and diluted net loss per share:
|
2010
|
2009
|
||||||
|
Net Loss
|
$ | ( 276,925 | ) | $ | ( 51,710 | ) | ||
|
Denominator
|
||||||||
|
Basic and diluted weighted average number of shares outstanding
|
57,600,000 | 57,600,000 | ||||||
|
Basic and Diluted Net Loss Per Share
|
$ | (0.00 | ) | (0.00 | ) | |||
F-10
Accounting for Oil and Gas and Mining Producing Activities
The Company utilizes the full-cost method of accounting for extractive properties, per FASB ACS 939. Under this method, the Company capitalizes all costs associated with acquisition and exploration of mineral reserves, including leasehold acquisition costs, geological and geophysical expenditures, lease rentals on undeveloped properties and costs of mining of productive and non-productive mines into the full cost pool on a country by country basis.
All capitalized costs of proven reserves, including estimated future costs to develop the reserves proved and estimated abandonment costs, net of salvage, will be depleted on the units-of-production method using estimates of proved reserves. The costs of unproved properties are not amortized until it is determined whether or not proved reserves can be assigned to the properties. Until such determination is made the Company assesses annually whether impairment has occurred, and impairment is expensed in the year of determination.
The Costs of unproved properties are generally combined and impaired over a period that is based on the average holding period for such properties and the company’s experience of successful operations. Write-downs will be recorded when the carrying value is not supportable.
3. Capital Structure
On October 17, 2008 the Company effected a four-to-one forward stock split of common stock. There was no effect on stockholders’ equity. Par value of $001 per share remained unchanged.
On August 6, 2009 the stockholders by a majority vote approved a 4-for-1 forward split of the Company’s common stock. There was no effect on stockholders’ equity and par value of $0.001 per share remained unchanged.
As at April 30, 2010, the Company was authorized to issue 200,000,000 shares of $0.001 par value common stock, of which 57,600,000 shares were issued and outstanding.
The Company was also authorized to issue 5,000,000 shares of preferred stock, of which none was issued and outstanding.
4. Change in Management
On August 6, 2009 Terry Fields and Michael R. Mulberry were appointed directors. On September 11, 2009, Ryan Beamin resigned as President, Secretary and Treasurer of the Company. He was succeeded by Terry R. Fields, who assumed the offices of President, Chief Executive Officer, Secretary and Treasurer. Michael R. Mulberry was appointed Vice President and General Manager of Operations. On June 3, 2010 Peter Streicher was appointed a director.
5. Related Party Transactions
On April 19, 2010, the Board of Directors authorized 600,000 common shares to be issued to the President, Terry Fields and 250,000 common shares to Michael Mulberry, Vice President for services. The shares were not issued as of April 30, 2010.
F-11
6. Commitments and Contingencies
There were no commitments or contingencies in the year ended April 30, 2010.
7. Restatements
The issued and outstanding shares and weighted average shares outstanding in the financial statements of April 30, 2009 were restated to reflect retroactively the four-for-one forward stock split of August 6, 2009.
8. Legal Proceedings
A complaint was filed for attorney’s fees in Superior Court, and judgment obtained on February 2, 2010 for $12,737.43, including costs of $292. The judgment was pledged by certain stockholders, subsequently paid, and the judgment satisfied.
There were no other legal proceedings against the Company with respect to matters arising in the ordinary course of business. Neither the Company nor any of its officers or directors is involved in any other litigation other than as creditors in the Syncrude bankruptcy proceeding, or is involved either as plaintiffs or defendants, and have no knowledge of any threatened or pending litigation against them or any of the officers or directors
9. Subsequent Events
Events subsequent to April 30, 2010 have been evaluated through June 23, 2011, the date these statements were available to be issued, to determine whether they should be disclosed to keep the financial statements from being misleading. Management found no subsequent events to be disclosed.
F-12