In preparing financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheet and revenues and expenses in the statement of operations. Actual results could differ from those estimates.

The costs of acquiring mineral properties are capitalized and amortized over the estimated units of production following the commencement of production or expensed if it is determined that the mineral property has no future economic value or the properties are sold or abandoned. Cost includes cash consideration and the fair market value of shares issued on the acquisition of mineral properties. Properties acquired under option agreements, whereby payments are made at the discretion of the Company, are recorded at such time as the payments are made.

The recoverable amounts for mineral properties is dependent upon the existence of economically recoverable reserves; the acquisition and maintenance of appropriate permits, licenses and rights; the ability of the Company to obtain financing to complete the exploration and development of the properties; and upon future profitable production or alternatively upon the Company’s ability to recover its spent costs from the sale of its interests. The amounts recorded as mineral properties reflect actual costs incurred and are not intended to express present or future values.

 

The capitalized amounts may be written down if potential future cash flows, including potential sales proceeds, related to property are estimated to be less than the carrying value of the property. Management of the Company reviews the carrying value of each mineral property interest quarterly, and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Reductions in the carrying value of each property would be recorded to mark the carrying value to fair value.

 

Exploration costs are expensed as incurred. When it is determined that a mining deposit can be economically and legally extracted or produced based on established proven and probable reserves, further exploration costs and development costs incurred after such determination will be capitalized. The establishment of proven and probable reserves is based on results of final feasibility studies which indicate whether a property is economically feasible. Upon commencement of commercial production, capitalized costs will be transferred to the appropriate asset category and amortized over the estimated units of production.

 

The carrying amounts of current liabilities approximate fair value due to the short maturity of these items. These fair value estimates are subjective in nature and involve uncertainties and matters of significant judgment, and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect these estimates. The Company does not hold or issue financial instruments for trading purposes, nor does it utilize derivative instruments in the management of foreign exchange, commodity price, or interest rate market risks.

The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The charge for taxation is based on the results for the year as adjusted for items that are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

The Company has evaluated recent accounting pronouncements and their adoption has not had, or is not expected to have, a material impact on the Company’s financial position or results from operations.

 

NOTE 4 – RELATED PARTY TRANSACTIONS

The Company has a payable due to a shareholder for $962 for incorporation costs.  The payable is non-interest bearing and due upon demand.

On December 10, 2010, the Company exchanged 5,900,000 shares of common stock with its principal shareholders for mining claims.  The claims were valued at the principal shareholders’ historical cost in the properties, totaling $18,315.

 

The Company’s provision for income taxes was $0 for the period from inception on December 10, 2010 through December 14, 2010 since the Company incurred net operating losses which have a full valuation allowance. ASC 740 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. In the Company’s opinion, it is uncertain whether they will generate sufficient taxable income in the future to fully utilize the net deferred tax asset. Accordingly, a full valuation allowance equal to the deferred tax asset has been recorded. The total deferred tax asset is calculated by multiplying a 15% marginal tax rate by the cumulative Net Operating Loss (“NOL”) of $962. The total valuation allowance is equal to the total deferred tax asset.  The valuation allowance increased by $144 from $-0- to $144 for the period from inception on December 10, 2010 through December 14, 2010.

The tax effects of significant items comprising the Company's net deferred taxes as of December 14, 2010 were as follows: 

 

		2010
Cumulative NOL		$	962
Deferred Tax assets:
Net operating loss carry forwards			144
Valuation allowance			(144	)
		$	-

The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate of 15% to pretax income from continuing operations the period from inception on December 10, 2010 through December 14, 2010 due to the following:

		2010
Income tax benefit at U. S. federal statutory rates:			(144	)
Change in valuation allowance			144
		$	-

The Company applies the provisions of ASC 740-10 to deferred tax assets or liabilities.  The Company did not identify any material uncertain tax positions on returns that have been filed or that will be filed.  The Company did not recognize any interest or penalties for unrecognized tax benefits during the period from inception on December 10, 2010 through December 14, 2010, nor was any interest or penalties accrued.

The Company has had transactions in its common stock.  Such transactions may have resulted in a change in the Company's ownership, as defined in the Internal Revenue Code Section 382.  Such change may result in an annual limitation on the amount of the Company's taxable income that may be offset with its net operating loss carry forwards. The Company has not evaluated the impact of Section 382, if any, on its ability to utilize its net operating loss carry forwards in future years.

 

The Company may be involved from time to time in ordinary litigation that will not have a material effect on its operations or finances. The Company is not aware of any pending or threatened litigation against the Company or the Company's officers and directors in their capacity as such that could have a material impact on the Company's operations or finances.

In accordance with ASC 855-10, Company management reviewed all material events through the date these financial statements were issued and there are no material subsequent events to report, except as disclosed in Note 1 - Nature of Operations.

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