UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

For the Transition Period From                        to                       

Commission File Number 000-53434

STRATEGIC MINING CORP.

(Name of small business issuer specified in its charter)

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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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   T    No   £

Indicate by check mark whether the registrant is a large accelerated filer, a non –accelerated filer, or a smaller reporting company.  See definitions of large accelerated filer, accelerated filer and smaller reporting company in Section 12b-2 of the Exchange Act.

As of July 21, 2011, the issuer had 164,343,294 shares of common stock and 20,634,741 shares of preferred stock outstanding.

Transitional Small Business Disclosure Format:   Yes   £     No   T

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes   £     No   T

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STRATEGIC MINING CORP.

FORM 10-Q

THREE MONTHS ENDED JUNE 30, 2011 AND 2010

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TABLE OF CONTENTS

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PART I – FINANCIAL INFORMATION

Item 1.  Financial Statements

 STRATEGIC MINING CORP.

(An Exploration Stage Company)

CONSOLIDATED BALANCE SHEETS

AS OF

(Expressed in United States Dollars)

The accompanying notes are an integral part of these financial statements.

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STRATEGIC MINING CORP.

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(Expressed in United States Dollars)

The accompanying notes are an integral part of these financial statements.

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STRATEGIC MINING CORP.

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(Expressed in United States Dollars)

The accompanying notes are an integral part of these financial statements.

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STRATEGIC MINING CORP.

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Expressed in United States Dollars)

The accompanying notes are an integral part of these financial statements.

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STRATEGIC MINING CORP.

(An Exploration Stage Company)

  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD FROM THE DATE OF INCEPTION (17 JANUARY 2007) TO 30 JUNE 2011

(UNAUDITED)

1.  NATURE OF BUSINESS, ORGANIZATION AND BASIS OF PRESENTATION

Nature of Business and Organization

Strategic Mining Corp. is engaged in the business of exploration and development of mineral properties.  

Strategic Mining Corp., formerly known as Gold Coast Mining Corporation (the “Company”) was originally incorporated in Delaware on August 24, 1995 as Infocenter Inc. On February 28, 2000, the company changed its name to Green Dolphin Systems Corporation and new corporate officers were appointed.  On January 10, 2006, the Board of Directors adopted a resolution authorizing the assignment of all the assets of Green Dolphin Systems Corporation to Penta Deltex, Ltd., a Canadian corp., in exchange for the forgiveness of $263,717 in debt owing to Nicholas Plessas and an additional $153,683 owing to Penta Deltex, and assumption by Penta Deltex of all obligations owed by Green Dolphin Systems Corporation to suppliers and on other accounts payable.  As the result of the above settlements of debts, Green Dolphin Systems Corporation effectively ceased operations on January 10, 2006 with the discontinued operations of its U.S. subsidiary.  On December 1, 2006, the Company changed its name to Gold Coast Mining Corporation and new corporate officers were appointed shortly after.  On January 17, 2007 Gold Coast Mining Corporation issued 97,100,000 shares of its common stock to unrelated parties in exchange for various mining rights.  The issuance of the 97,100,000 represented approximately 97.5% of the then outstanding shares.  The transaction resulted in a change in control of the entity.  The issuance of shares and change in control has been accounted for as a reverse acquisition followed by a recapitalization of the Company’s equity structure.  The stockholders obtaining control in the transaction is considered the accounting acquirer for financial reporting purposes.  Accordingly, the equity section of the financial statements have been presented displaying the recapitalization of shares held by the individuals obtaining control followed by the issuance of shares to the minority stockholders.

On November 13, 2009, the Company was reincorporated in the State of Wyoming. On November 23, 2009, the Company changed its name to Strategic Mining Corp. in the State of Wyoming.

The Company has secured a renewable exploration and mining permit in the Republic of Guinea. The permit issued pertains to a 103 square kilometer zone of gold anomalies located in the Siguiri District of North East Guinea.  The Company has an option on a second property that covers a 50 square kilometer claim located in the Dinguiraye district of north east Guinea in the valley of the Bafing River.

Strategic Mining has also entered into a binding agreement with Ba Dinh Mineral Company, a Vietnamese mineral exploration company based in Ho Chi Minh City, to purchase a 51% interest in the Nat Son property that covers 102 hectares. The Company also secured an exploration and mining permit for the property located in northern Vietnam approximately 50 kilometers southwest of Hanoi. Exploration interest in the property is based on the presence of gold-silver bearing quartz-arsenopyrite veins which are exposed at surface and within rudimentary underground mine workings.  The veins are now known to extend well beyond the current property boundaries and have been examined and sampled over a strike length of 4.0 km.

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 Basis of Presentation

The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  The Company is in the exploration stage in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic No. 915  “Development Stage Entities”).

Operating results for the three and six month periods ended June 30, 2011 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011.  For further information, refer to the financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2010.

2.  EXPLORATION PROPERTIES

Costs of exploration, carrying and retaining unproven mineral lease properties are expensed as incurred. Mineral property acquisition costs are capitalized including licenses and lease payments. Although the Company has taken steps to verify title to mineral properties in which it has an interest, these procedures do not guarantee the Company's title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects. Impairment losses are recorded on mineral properties used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amount.

3.  GOING CONCERN

The Company's financial statements are presented on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.  The Company has experienced losses from operations since inception and has working capital deficiencies that raise substantial doubt as to its ability to continue as a going concern.

The Company's existence is dependent upon management's ability to raise capital and/or to successfully market and sell its products. Management anticipates the Company will attain profitable status and improve its liquidity through continued business development and additional equity investment in the Company.

The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

4.  RECENT ACCOUNTING PRONOUNCEMENTS

There were various updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries and are not expected to a have a material impact on the Company's consolidated financial position, results of operations or cash flows.

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5.  PLANNED EXPLORATION

Guinea, West Africa

The Company holds a 100% interest in a two year exploration permit issued by the Republic of Guinea #2009/1031 dated May 2009 to Gold River of Africa Corporation (“GRAC,” a Guinea Corporation). The Company acquired the interest from GRAC in exchange for shares of the Company’s common stock. The Republic of Guinea is entitled to a 15% royalty on all extracted minerals covering 103 square kilometers in the Siguiri region of Guinea.

A refundable $30,000 fee was paid to the Republic of Guinea in May 2011 to renew and extend the permit for a two year period ending in May, 2013.  The Company is currently waiting on approval of the extension from the Republic of Guinea.  The Company expects the approval to be granted.

The geologist’s report on the Siguiri exploration permit recommended a two stage program of further exploration. The proposed plan for the first stage entails completion of a three month program of termite mound sampling, geological mapping, and geophysical and geochemical surveys, budgeted at a cost of $630,000. The second stage is a twelve month program of reverse circulation drilling and soil sampling in areas returning economic results in the first stage. The second stage has a budgeted cost of $1.2 million. It is anticipated that the first stage will commence after renewal of the permit. The Company anticipates completion of the first stage by the end of 2011. The second stage is estimated to take 15 to 18 months, and is planned to start in 2012.  During the annual three month rainy season from July through September, no exploration work can be performed in the Siguiri region of Guinea.

 Nat Son, Vietnam

The Company, in a 51% joint venture with Ba Dinh Minerals Joint Stock Company, retains the right to mine for profit per license # 39/QD-UBND (dated June 9th, 2009) issued by the Peoples Committee of Hoa Binh Province, Vietnam. This license is valid for five years from the issue date and is renewable for an additional five years. The permitted area covers 40 square hectares in Nat Son Commune, Hoa Binh Province, Vietnam.

The geologist’s report on the Nat Son property recommended a detailed drill program to test the subsurface potential of the property. The recommended work program will include geological mapping, geochemical and geophysical surveys and a drilling program spanning twelve months budgeted at $1.6 million. The drill program  commenced during the current quarter. Given positive test results, further drilling is planned. No drilling can take place until the end of the rainy season which ends in September.

In 2009, the Company became licensed and permitted to engage in mining exploration and development of high-yield, precious mineral property in northern Vietnam. The Company has the unique opportunity to take advantage of a mining area that has been dormant for over 50 years. The Company anticipates that it will be provided with the ability to enter into numerous development and exploration opportunities within the relatively under-explored northern regions. Mineral production in Vietnam has taken place since the Bronze Ages. Systematic mineral exploration and exploitation began with the French in 1884. Most exploitation, especially construction materials, was on a small scale with mainly manual labor and without mechanization. The French were forced to leave the country and cease their mining activity in the mid 1950’s.

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6.   PROPERTY AND EQUIPMENT

At June 30, 2011 and December 31, 2010, respectively, property and equipment is as follows:

Depreciation expense for the six months ended June 30, 2011 and June 30, 2010 was $18,374 and $Nil, respectively. 

7.   LOANS PAYABLE TO RELATED PARTIES

At June 30, 2011 and December 31, 2010, respectively, the Company has loans payable as follows.

The above loans are due to stockholders or companies controlled by stockholders of the Company.  Beginning January 1, 2011, all loans payable bear interest at 4% per annum and have no definite repayment terms. Prior to January 1, 2011, the loans payable beared interest at 15% per annum.  All loans payable are unsecured.

8.  RELATED PARTY TRANSACTIONS

Included in accounts payable is $166,657 due to stockholders of the Company, subject to normal trade terms.

9.   STOCK OPTIONS

The Company has established the “2007 Stock Option Plan” that permits the granting of share options and shares to employees, directors and consultants.  The Company believes that such awards better align the interests of the employees and consultants with those of the Company’s shareholders.  The 2007 Stock Option Plan provides for the issuance of up to 9,000,000 shares of common stock available for grant as incentive stock options. The exercise price for options awarded is $0.015.

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Management has valued the options at their date of grant utilizing the Black-Scholes Option Pricing Model. Since there is not a public market for the Company’s shares, the fair value of the underlying options were determined based on recent transactions by the Company to sell shares to third parties.  Further, the excepted volatility was calculated using the historical volatility of a similar public entity in the gold mining industry in accordance with ASC 718-10-S99.  In making this determination and finding another similar company, the Company considered the industry, stage of life cycle, size and financial leverage of such other entities.  Based on the exploration stage of the Company, similar companies with enough historical data are not available.   The Company was able to find an entity that met the industry criterion and as a result has based its expected volatility off this Company’s historical stock prices for a period similar to the expected term of the option.  The risk-free interest rate is based on the implied yield available on U.S. Treasury issues with an equivalent term approximating the expected life of the options depending on the date of the grant and expected life of the options.  The expected life of options used was based on the contractual life of the option granted.  The Company determined the expected dividend rate based on the assumption and expectation that earnings generated from operations are not expected to be adequate to allow for the payment of dividends in the near future.  

The following weighted-average assumptions were utilized in the fair value calculations for options granted:

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The following table summarizes the status of the Company’s aggregate stock options granted:

The weighted average fair value of options granted during the year ended December 31, 2010 was approximately $0.02.

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The following table summarizes the status of the Company’s aggregate non-vested shares granted under the 2007 Stock Option Plan:

As of June 30, 2011 the unrecognized compensation cost related to non-vested share based compensation arrangements granted under the plan was approximately $6,667. These costs are expected to be recognized on a straight line basis over the relative vesting term of the corresponding award.  

10.   GENERAL BUSINESS RISKS

A significant portion of the Company's assets are located in the Republic of Guinea and Vietnam and changes in the political and economic policies of these governments could have a significant impact upon what business we may be able to conduct in these countries and accordingly on the results of our operations and financial condition. Our business operations may be negatively affected by the current and future political environment in these countries. The governments of the Republic of Guinea and Vietnam exert substantial influence and control over the manner in which we must conduct our business activities. Our ability to operate in these countries may be affected by changes in laws and regulations, including those relating to taxation, import and export tariffs, raw materials, environmental regulations, land use rights, property and other matters.

 11.   SUBSEQUENT EVENTS

In July 2011 the Company executed a six month agreement with a communication firm to provide public relations and corporate communication services. The Company issued two million restricted common shares to this firm upon execution of this agreement.

On August 4, 2011, the Company approved a resolution to convert 4,000,000 restricted Class A Convertible Preferred Shares into 4,000,000 shares of the Company’s Common stock. The conversion price was $0.015 per share, in accordance with the Convertible Preferred Share original subscription.

On August 4, 2011, by mutual consent, the Company terminated a $6,000 per month consulting services contract with Atlantic Gold Mining Corp.

On July 1, 2011, a $5,000 per month management consulting services contract with a former president expired.

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Item 2:  Management’s Discussion and Analysis of Financial Condition and Results of Operations

Certain statements contained in this quarterly filing, including, without limitation, statements containing the words “believes”, “anticipates”, “expects” and words of similar import, constitute forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.

Such factors include, among others, the following: international, national and local general economic and market conditions: demographic changes; the ability of the Company to sustain, manage or forecast its growth; the ability of the Company to successfully make and integrate acquisitions; raw material costs and availability; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other factors referenced in this and previous filings.

Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The following discussion and analysis should be read in conjunction with our Financial Statements and notes appearing elsewhere in this report.

Results of Operations

The Company is an exploration stage mining company with no revenues since entering the exploration stage.   

Three months ended June 30, 2011 Compared to the Three months ended June 30, 2010

Revenues

There were no revenues in either three month period ended June 30, 2011 and June 30, 2010.

Operating Expenses

Interest expense for the three months ended June 30, 2011 was a recorded credit of $3,200 compared to an expense of $9,458 for the three months ended June 30, 2010.  The credit for the three months ended June 30, 2011, was an adjustment, reflecting a renegotiation of the interest rate charged on loans payable from 15% to 4%, effective January 1, 2011. This adjustment resulted in a reduction of accrued interest payable.

Professional fees for the three months ended June 30, 2011 were $32,097 compared to $10,750 for the three months ended June 30, 2010.  The increase during the three months ended June 30, 2011, was primarily due to the Company’s additional disclosure and reporting requirements for completion of its Form 10K. 

Salaries and wages expenses for the three months ended June 30, 2011 were $4,968 and $27,471 for the three months ended June 30, 2010. The decrease during the three months ended June 30, 2011, was primarily due to decreases in wages and the number of personnel employed in Guinea.

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Exploration costs for the three months ended June 30, 2011 were $81,501 and $44,204 for the three months ended June 30, 2010.  The increase during the three months ended June 30, 2011, was primarily due to the increased exploration activity in Nat Son, Vietnam.

Depreciation expense for the three months ended June 30, 2011 was $9,188 and $nil for the three months ended June 30, 2010. The increase during the three months ended June 30, 2011, was due to the commencement of expensing depreciation on a vehicle in Guinea.  The remaining property and equipment have not been placed in service as of June 30, 2011.

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Net Income (Loss)

The Company incurred a net loss of $164,522, for the three months ended June 30, 2011, as compared to a net loss of $132,426 for the three months ended June 30, 2010.  The increase in net loss is primarily attributed to the increase in exploration costs.

Six months ended June 30, 2011 Compared to the Six months ended June 30, 2010

Revenues

There were no revenues in either six month period ended June 30, 2011 and June 30, 2010.

Operating Expenses

Interest expense for the six months ended June 30, 2011 was $4,841, compared to$36,382 for the six months ended June 30, 2010.  The decrease during the six months ended June 30, 2011, was due to (i) a reduction of the interest rate on loans payable from 15% to 4% which became effective on January 1, 2011, and (ii) a reduction of loans payable by conversion to equity June 30^th, 2010, which reduced the loan amounts subject to interest.  The interest rate reductions and debt conversions resulted in the decrease of accrued interest payable.

Professional fees for the six months ended June 30, 2011 were $39,774 and $18,175 for the six months ended June 30, 2010.  The increase during the six months ended June 30, 2011, was reporting due to additional audit and accounting work required to reflect the Company’s additional disclosure and requirements and completion of its Form 10K.  

Salaries and wages expenses for the six months ended June 30, 2011 were $26,062 and $64,693 for the six months ended June 30, 2010. The decrease during the six months ended June 30, 2011, was primarily attributed to decreases in wages and personnel employed in the Republic of Guinea.

Exploration costs for the six months ended June 30, 2011 were $129,235 and $100,569 for the six months ended June 30, 2010.  The increase during the six months ended June 30, 2011, was primarily attributed to increased exploration activity in Vietnam, including the commencement of drilling related program training in Nat Son, Vietnam.

Depreciation for the six months ended June 30, 2011 was $18,374 and $nil for the six months ended June 30, 2010. The increase during the six months ended June 30, 2011, was the commencement of depreciation recognized on the vehicle during the year. The remaining property and equipment have not been placed in service as of June 30, 2011.

Consulting for the six months ended June 30, 2011 was $78,801 and $75,543 for the six months ended June 30, 2010.  The increase during the six months ended June 30, 2011, was primarily due to (i) a new consulting contract granted to a new president (Baird) commencing on May 23, 2011 for $6,000 per month, and stock option expenses of $5,000 on the amortization of 5,000 stock options vested during the quarter in association with certain consulting contracts and (ii) additional investor relations costs during the current period.

Net Income (Loss)

The Company incurred a net loss of $297,087, for the six months ended June 30, 2011, compared to a net loss of $304,861 for the six months ended June 30, 2010.  There was no single significant factor to explain the minimal change.

Plan of Operations

Our current plan of operations is to complete further exploration, drilling and mapping on our various properties, as follows:

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Guinea, West Africa

The geologist’s report on the Siguiri exploration permit recommended a two stage program of further exploration. The proposed plan for the first stage entails completion of a three month program of termite mound sampling, geological mapping, and geophysical and geochemical surveys, budgeted at a cost of $630,000. The second stage is a twelve month program of reverse circulation drilling and soil sampling in areas returning economic results in the first stage. The second stage has a budgeted cost of $1.2 million. It is anticipated that the first stage will commence after renewal of the permit. The Company anticipates completion of the first stage by the end of 2011. The second stage is estimated to take 15 to 18 months, and is planned to start in 2012.  During the annual three month rainy season from July through September, no exploration work can be performed in the Siguiri region of Guinea.

Nat Son, Vietnam

The geologist’s report on the Nat Son property recommended a detailed drill program to test the subsurface potential of the property. The recommended work program will include geological mapping, geochemical and geophysical surveys and a drilling program spanning twelve months budgeted at $1.6 million. The drill program  commenced during the current quarter. Given positive test results, further drilling is planned. No drilling can take place until the end of the rainy season which ends in September.

The Plan of Operation in terms of amount of work undertaken, and timing of the work, is dependent upon the successful raising of equity capital to fund the projects.  Should the capital be available, it is anticipated that the recommended work programs outlined will take between two to three years to accomplish.

During the next twelve months, the Company plans to satisfy its cash requirements by additional equity financing. The Company has no current material commitments. The Company intends to undertake private placements of its common stock in order to raise future development and operating capital. The Company depends upon capital to be derived from future financing activities such as subsequent offerings of its stock. There can be no assurance that the Company will be successful in raising the capital it requires through the sale of its common stock.

The Company does not contemplate additional product research and development, but it does anticipate additional exploration and development costs on its properties. The Company anticipates an increase in labor force to explore and develop its properties which will be sought from outside contract labor.

The Company has no off balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Dinguiraye Property

The Company is still in the process of due diligence on the Dinguiraye property, and must decide whether to exercise its option to acquire the property by September 30, 2011.

Liquidity and Capital Resources

As of June 30, 2011, we had an accumulated deficit of $1,960,270 and a working capital deficit of $399,133. For the six months ended June 30, 2011, net cash used in operating activities amounted to $153,077, as compared to $359,082 for the six months ended June 30, 2010.

As of June 30, 2011, we had no material commitments for capital expenditures other than for those expenditures incurred for the exploration operations.

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We will need to raise additional capital through equity or debt financing in the next twelve months in order to fund our planned operations and repay, restructure or refinance our debt obligations. Our current operating plans for the next fiscal year are to meet our existing customer commitments, expand our marketing and sales and engineering capabilities, and continue to develop innovative solutions for our customers. Although we will have to raise additional funds through the issuance of debt and/or equity during the next twelve months, there can be no assurance that financing will be available, or if available, that such financing will be upon terms acceptable to us.

Critical Accounting Estimates and Policies

The discussion and analysis of our financial condition and plan of operations is based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities.

On an on-going basis, we evaluate our estimates including, among others, those affecting revenue, the allowance for doubtful accounts, the salability of inventory and the useful lives of tangible and intangible assets. The discussion below is intended as a brief discussion of some of the judgments and uncertainties that can impact the application of these policies and the specific dollar amounts reported on our financial statements. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form our basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions, or if management made different judgments or utilized different estimates. Many of our estimates or judgments are based on anticipated future events or performance, and as such are forward-looking in nature, and are subject to many risks and uncertainties, including those discussed below and elsewhere in this Registration Statement. We do not undertake any obligation to update or revise this discussion to reflect any future events or circumstances.

Our significant accounting policies are summarized in our Form 10K dated April 15, 2011.  While all these significant accounting policies impact its financial condition and results of operations, the Company views certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on the Company’s consolidated financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates. Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause effect on our consolidated results of operations, financial position or liquidity for the periods presented in this report.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

The Company is not subject to certain market risks, including changes in interest rates and currency exchange rates.

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Item 4: Controls and Procedures

Evaluation of disclosure controls and procedures

Under the supervision and with the participation of our management, including our President, Chief Executive Officer/Chief Financial Officer (the “Certifying Officer”) we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”). Based upon that evaluation, the Certifying Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were not effective. We identified material weaknesses discussed below in the managements report on internal control over financial reporting.

Report of Management on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) under the Exchange Act. 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 U.S. generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:

(i)       Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

(ii)      Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

(iii)     Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. 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.

Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement to the Company’s annual or interim financial statements will not be prevented or detected.

In the course of management’s assessment, we have identified the following material weaknesses in internal control over financial reporting:

●        Segregation of Duties – As a result of limited resources, we did not maintain proper segregation of incompatible duties. Namely the lack of an audit committee, an understaffed financial and accounting function, and the need for additional personnel to prepare and analyze financial information in a timely manner and to allow review and on-going monitoring and enhancement of our controls. The effect of the lack of segregation of duties potentially affects multiple processes and procedures.

●        Maintenance of Current Accounting Records – This weakness specifically affects the payments and purchase cycle and therefore we failed to maintain effective internal controls over the completeness and cut off of accounts payable, expenses and other capital transactions.

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We are in the continuous process of improving our internal control over financial reporting in an effort to eliminate these material weaknesses through improved supervision and training of our staff, but additional effort is needed to fully remedy these deficiencies. Management has engaged a Certified Public Accountant as a consultant to assist with the financial reporting process in an effort to mitigate some of the identified weaknesses. The Company is still in its exploration stage and intends on hiring the necessary staff to address the weaknesses once full operations have commenced.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Changes in Internal Control over Financial Reporting

There have been no changes in internal control over financial reporting since the last fiscal quarter of calendar year 2011, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

In the normal course of business, the Company is, and in the future may be, subject to various disputes, claims, lawsuits, and administrative proceedings arising in the ordinary course of business with respect to commercial, employment and other matters, which could involve substantial amounts of damages. In the opinion of management, any liability related to any such known proceedings would have a material adverse effect on the business or financial condition of the Company.  Additionally, from time to time, we may pursue litigation against third parties to enforce or protect our rights under our contracts, trademarks, trade secrets and our intellectual property rights generally.  At the present time, the Company is not the subject of any lawsuits or claims.

Item 1A Risk Factors

There are no material changes to the risk factors disclosed in our Form 10K dated April 15, 2011, which are hereby incorporated herein by reference.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

In July 2011 the Company executed a six month agreement with a communication firm to provide investor relations and corporate communication services. The Company issued two million restricted common shares to this firm upon execution of this agreement.

On August 4, 2011, the Company approved a resolution to convert 4,000,000 restricted Class A Convertible Preferred Shares into 4,000,000 shares of the Company’s Common stock. The conversion price was $0.015 per share, in accordance with the Convertible Preferred Share original subscription.

Item 3. Defaults Upon Senior Securities

None.

Item 5. Other Information

None.

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Item 6. Exhibits.

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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