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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form 10-K
 
(Mark One)
 
x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the fiscal year ended  December 31, 2011
 
o
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from _____to_____
 
Commission file number  333-152991
 
AYERS EXPLORATION INC.
(Name of small business issuer in its charter)

Nevada
 
98-0608229
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)

#6 Harston Avenue, Mosman, Sydney Australia
 
2088
(Address of principal executive offices)
 
(Zip Code)
 
Issuer's telephone number (411) 199-319
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
 
Name of each exchange on which registered
None   N/A
 
Securities registered pursuant to Section 12(g) of the Act:
 
Common Shares, par value $0.001
(Title of class)
 
Check whether the issuer (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 whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer o Accelerated filer o
Non-accelerated filer o   (Do not check if a smaller reporting company)  Smaller reporting company x
                                                                                                                               
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No  o
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of 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.x
 
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked prices of such common equity, as of a specified date within 60 days.  (See definition of affiliate in Rule 12b-2 of the Exchange Act.)
 
There is no public trading market for our common shares in the United States or elsewhere. Based on the last sale price of our shares of $0.20, our aggregate market value is $1,287,000.
 
State the number of shares outstanding of each of the issuer's classes of equity stock, as of the latest practicable date.
 
6,435,000 common shares issued and outstanding as of April 16, 2012.
 
Transitional Small Business Disclosure Format (Check one)  Yes  o   No x.
 
Check whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  x No  o
 


 
 

 
PART I
 
Item 1.
Description of Business.
 
This annual report contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995.  These statements relate to future events or our future financial performance.  In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology.  These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors", that may cause our company's or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
 
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.  Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
 
Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.
 
In this annual report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to "common shares" refer to the common shares in our capital stock.

As used in this annual report, the terms "we", "us", "our", and "Ayers" mean Ayers Exploration Inc., unless otherwise indicated.

Corporate History

We were incorporated in the State of Nevada on February 10, 2006. Our administrative office is located at 6 Harston Avenue, Mosmon, Sydney Australia 2088 and our registered statutory office is located at Suite 304 – 2470 Saint Rose Pkwy, Henderson, Nevada 89074. Our telephone number is 61 411-199-319.  Our fiscal year end is December 31.
 
Other than as set out herein, we have not been involved in any bankruptcy, receivership or similar proceedings, nor have we been a party to any material reclassification, merger, consolidation or purchase or sale of a significant amount of assets not in the ordinary course of our business.

Our Current Business

We intend to be in the business of mineral clay exploration.  We have an option to acquire a 100% interest in the Mt. Cotton mining claim, (hereinafter referred to as the "Mt. Cotton Property"). The option was granted for an initial issuance of 200,000 common shares of our Company to Redpath Clay Corp.  Title to the Mt. Cotton Property is held by Redpath. We have not taken any actions to further our business plan since July 2006.
 
On October 27, 2009, we entered into a Property Option Agreement with Wilpena Resources Ltd. Pty. During the year ended December 31, 2011, the Company completed the acquisition of the property. We have recently commenced exploration on the property but we estimate we will need to raise an additional $100,000 to complete exploration. Our objective is to conduct mineral exploration activities on the mineral claims in order to assess whether it possesses economic reserves of mineral clay.  We have not yet identified any economic mineralization on the property.  We have a mineral report which indicates that further exploration is warranted.  Our proposed exploration program is designed to search for an economic mineral deposit. We are still in the process of transferring title as the Queensland Mining Department (“Department”) requires that the transferee be an Australian company. As a result, we are in the process of forming a subsidiary in Queensland to effect the transfer and until then the status of the property and our ability to obtain the necessary permits remains uncertain.

 
2

 
 
Mt. Cotton Property Option Agreement
 
In July 2006, we entered into an option agreement (the “Option”) with Redpath Clay Corp. to acquire up to a 100% interest in the Mt. Cotton Property, a mineral claim comprising 5.4 acres located 25 miles west of Sheldon, Queensland, Australia.  Under the term of the Option we can earn a 100% interest by issuing  Redpath  200,000 shares on signing (completed) and issuing an additional 200,000 shares upon commencement of commercial production on the Mt. Cotton Property.

Title to the Mt. Cotton Property
  
The Mt. Cotton Property consists of one parcel of land totalling 5.4 acres.  A "mineral claim" refers to a specific section of land over which a title holder owns rights to exploration to ground.  In July 2006, we entered into the Option with Redpath Clay Corp. to acquire up to a 100% interest in the Property.  Such rights may be transferred or held in trust.  The claim comprising the Mt. Cotton property is registered 100% in the name of Redpath Clay Corp.  The registration of the claims in the name of a trustee does not impact a third party's ability to commence an action against us respecting the Mt. Cotton property or to seize the claims after obtaining judgment.  Redpath Clay Corp. holds the exploration permit with the government of the State of Queensland.
 
Location and Access and Property Description
 
(1)
The Mt. Cotton Property consists of 5.4 acres located 25 miles west of Sheldon, Queensland, Australia.
   
(2)
The site lies to the east of Mt. Cotton Road, and is bounded by industrial properties to the south, north and east.  The site encloses an area of 5.4 acres.  The finished surface of the property consists predominately of bare earth.  The property contains several metres of fill of unknown origin. 
 
Glossary of Terms
  
The following are the definitions of some of the highly technical and geological terms  which follow below.
  
Acid sulfate soils: are naturally occurring soils, sediments or organic substrates (e.g. peat) that are formed under waterlogged conditions. These soils contain iron sulfide minerals (predominantly as the mineral pyrite) or their oxidation products.
 
Argillite: is a fine-grained sedimentary rock composed predominantly of indurated clay particle
  
Greywacke: a grey, earthy rock which is a variety of sandstone generally characterized by its hardness, dark color, and poorly-sorted, angular grains of quartz, feldspar, and small rock fragments set in a compact, clay-fine matrix.
 
Quartzite: is a hard, metamorphic rock which was originally sandstone. Sandstone is converted into quartzite through heating and pressure usually related to tectonic compression within orogenic belts.
 
Sandstone: is a sedimentary rock composed mainly of sand-size mineral or rock grains.
 
 
3

 
 
Previous Work
 
The Mt. Cotton property was discovered in 2001 by Environmental & Licensing Professionals.  In 2001 Environmental & Licensing Professionals retained Earthtech Consultants (QLD) Pty Ltd to undertake geotechnical investigations on the Mt. Cotton Property.  The scope of the investigation was to identify the presence of mineral clay deposits and to provide assessment of the following:
 
ground and subsurface conditions;
plasticity and extent of any clay encountered;
possible extraction difficulties (including groundwater and shallow rock);
sampling of shallow soils for screening for the presence of acid sulphate soils; and
limited sampling and testing of shallow soils from two locations, to screen for a range of common soil contaminants, and general inspection of the site for signs of recent surface contamination.
 
Geotechnical: Mt. Cotton Property
 
We have a geotechnical report on the Mt. Cotton Property. The report by Earthtech Consultants, professional geotechnical and environmental consultants, provides an assessment of the property and sets out recommendations. The geotechnical report makes a recommendation for further exploration work and concludes the clay resource is suitable for the use in manufacture of clay bricks.  The Mt. Cotton Property is subject to an Exploration Permit for Minerals (EPM), specifically mineral clay deposits.
  
In the report, Earthtech sets out to assess the extent of presence of clay soils on the property in order  to qualify the then existing EPM to mine mineralized clay for use in the manufacture of bricks.  The work-scope of the report included assessment of the depth, lateral extent and composition of clay soils on the property.  The detection of any Acid Sulphate Soils and or contaminated surface soils was used to highlight and define any constraints that may be placed on the proposed mining activities because of their presence.
  
Fieldwork for the investigation was carried out in June 2001.  Four boreholes were drilled at evenly spaced locations within the area of the site proposed for mining.  The work was undertaken using a mounted drilling rig equipped with 100mm diameter solid flight augers, equipped with a Tungsten Carbide bit.  Undisturbed soil samples were recovered from each borehole for visual classification and laboratory testing, to assess clay content.
  
Soils that were visually assessed as likely to contain Acid Sulphate Soils were sampled and screened.  Soils were also sampled from shallow depths at two locations where contaminants were understood possibly have been stored.  The samples were analyzed for a range of common contaminants including: heavy metals and arsenic.
  
The samples were tested by the Australian Government Analytical Laboratories.  The methods used were those published by United States Protection Agency SW-846 Methods. Analytical results indicated that there were no significant levels of any of the contaminants screened for in any of the samples tested.
 
 
4

 
 
Reports Conclusions
  
The natural clay soils encountered over much of the Mt. Cotton Property to depths ranging from 8 to 43 feet, consist of medium plasticity sandy and silty clays.  Conditions encountered in the boreholes indicate that the excavation of materials ranging from 13 feet to deeper than 43 feet will be possible using conventional excavation and earthmoving equipment such as dozers, backhoes and medium sized excavators.  Based on the four boreholes drilled in an area of about 262 feet by 427 feet, the report estimates that about 91,557 cubic yards of extractable clay is present.
 
The report anticipates that the natural material derived from the site would be a mixture of low and medium plasticity sandy and silty clays containing some clayey sands bands of gravel.
  
Results of limited laboratory testing and inspection of samples and local geology indicate that the clay is residual.  The report concludes that clay/silt/sand mixes such as the ones found on the Mt. Cotton Property would be suitable for the manufacture of clay bricks.
  
Earthech makes specific recommendations based on their conclusions to determine the potential of the property to host economic quantities of clay. They recommend that an X-Ray diffraction assessment is completed to confirm the clay mineralogy. 
  
We intend to formulate an exploration program based on the recommendations in Earthtech’s report for an initial phase of exploration. We anticipate the program to be as follows:
  
We will commence an initial program of data acquisition, review and compilation of historic geological information to further assess the property. We also believe geological mapping and further rock geochemical sampling are warranted to further assess the Property.
  
We intend to implement an exploration program and intend to proceed in the following two phases all of which it is intended will be performed or supervised by a geologist with significant exploration experience, and by independent contractors hired by us.
 
Phase 1, will include data acquisition, compilation, review and confirmation sampling, budgeted as follows:
 
Data Acquisition, review and compilation:
 
$
10,000
 
X-Ray diffraction assessment:
 
$
6,000
 
Geochemical analyses-100 samples:
 
$
2,500
 
Travel expenses-accommodation, board:
 
$
1,000
 
Vehicle Rental-14 days:
 
$
1,400
 
Airfare-Sydney to Sheldon, return:
 
$
750
 
Field Supplies, communications:
 
$
1,250
 
Report preparation, result compilation:
 
$
2,000
 
Miscellaneous:
 
$
400
 
Total:
 
$
25,300
 

 
5

 
 
Data acquisition will begin with research of the available geologic literature, personal interviews with geologists, mining engineers and others familiar with the prospect sites. We have recently begun this phase of the exploration process on the properties. We anticipate that this activity will take approximately one month.
  
As set out above, we may also conduct an X-Ray diffraction assessment to confirm the clay mineralogy. 
 
Phase 1 will take about 3 months and cost approximately $25,300. We currently do not have adequate capital to complete the various stages of Phase 1 and will be required to raise additional funds as we expend cash on general and administrative expenses.
 
Phase 2 involves the extraction of the mineralized clay.  We will formulate a detailed program for Phase II once we have determined the extent, if any, of mineralized clay on the Mt. Cotton Property.
 
Following completion of Phase 1, our board of directors will make the assessment whether to continue exploration based on an analysis of results of our initial exploration efforts and based on advice from our contracted geologist. Criteria we will consider in making this assessment include the results of the X-Ray diffraction assessment to confirm the clay mineralogy. 
 
We do not have any agreement with Earthtech to provide geological services for planned exploration work on the mineral claims.

We have not taken any actions to further our business plan since July 2006.
 
Mineral claims Geology and Soil Landscape
  
The Mt. Cotton Property is in an area of the Neranleigh Fernvale Beds, comprising greywacke, argillite, quartzite, chert, shale, sandstone and greenstone. The source of the above description of the rock formation and mineralization of the mineral claims was the 1:100,000 scale Geological Map of Beenleigh.
 
Reference to “The Soil Landscapes of Brisbane and South-eastern Environs-CSIRO 1987”, indicates that the Property is located in the area of ‘Soils with Markedly Differentiated Profiles’.  The dominant soil group consists of red-yellow podzolic soils with lithosols and some gleyed podzols, within a landscape of ‘Low hills of greywacke, phyllite and shale’.
 
Product Research and Development
 
We do not anticipate that we will expend any significant funds on research and development over the next twelve months ending December 31, 2012.
 
Employees
 
Currently there are no full time or part-time employees of our company (other than our directors and officer who, at present, have not signed employment or consulting agreements with us). We do not expect any material changes in the number of employees over the next 12 month period (although we may enter into employment or consulting agreements with our officer or directors). We do and will continue to outsource contract employment as needed. However, if we are successful in our initial and any subsequent drilling programs we may retain additional employees.
 
Purchase or Sale of Equipment

We do not intend to purchase any significant equipment over the next twelve months ending December 31, 2012.
 
 
6

 
 
Competition
 
The clay industry is fragmented. We compete with other exploration companies looking for clay. We are one of the smallest exploration companies in existence. We are an infinitely small participant in the clay extraction market. While we compete with other exploration companies, there is no competition for the exploration or removal of minerals from our mineral claims.
  
We may not have access to all of the supplies and materials we need to begin exploration that could cause us to delay or suspend operations. Competition and unforeseen limited sources of supplies in the industry could result in occasional spot shortages of supplies and certain equipment such as bulldozers and excavators that we might need to conduct exploration. We have not attempted to locate or negotiate with any suppliers of products, equipment or materials. We will attempt to locate products, equipment and materials after this offering is complete. If we cannot find the products and equipment we need, we will have to suspend our exploration plans until we do find the products and equipment we need.

Government Regulations and Supervision

Our mineral exploration program is subject to Australian mining law and regulation.   Specifically, the laws and regulations of the State of Queensland.
 
All landholdings (tenements) in Australia are subject to regulation.  In Queensland, tenements are granted as either exploration permits, mineral development licenses or mining leases.

Exploration permits can only be applied for over available ground.  Applications consist of a prescribed application form, proposed exploration program with estimated expenditure and the prescribed application fee.  An exploration permit number is assigned when the application is received.  The Department then assesses the application to determine whether a company is a suitable candidate and proposes to spend sufficient funds on exploration on the license.  If the Department considers a company to be a suitable candidate, the Department then assesses the environmental impact of the proposed exploration program and also commences the native title process.  The native title process involves advertising the application for the purpose of determining whether there are any objections to the licence being granted. If there are no objections, the permit is granted.

The exploration permit is granted for five years provided the company continues to comply with the licenses conditions.  There is a statutory requirement to reduce the area of the exploration licence by fifty percent before the end of years three, four and five.

Rent is required to be paid each year in advance.  Rent will be paid by Redpath Clay Corp.

An annual expenditure report is due each year, as a statement of the amount that has been spent on the ground.  A annual technical report is also due each year, as a statement of the exploration work that has been undertaken on the ground and what work is proposed to be undertaken for the coming year.

The exploration permit expires at the end of year five but a renewal application can be lodged prior to the expiry to, if granted, extend the permit for up to another five years.  A summary of work completed on the ground together with a detailed explanation of the work proposed for the ground is required to accompany the renewal application.

If we propose to mine a measured resource we will need to notify Redpath Clay Corp. who will then apply for a Mining Lease.  As the Exploration Permit holder Redpath Clay Corp.  has automatic priority to the ground to be the subject of the Mining Lease.  Applications consist of a prescribed application form, details of the proposed development, the financial resources to fund the proposal and the prescribed application fee.  A mining lease number is assigned when the application is received.  The Department then assesses the application to determine the suitability of the proposal.  The application will then pass through the environmental and native title process.  An agreement will need to be negotiated with the native title holders/claimants as part of the native title process. A mineral lease may be granted for such term as the Department thinks fit.  Redpath Clay Corp. is required to state the term of the lease required at the time of application.  The term required is stated on the application form.

An annual expenditure report is due each year, as a statement of what has been spent on the ground.  An annual technical report is also due each year, as a statement of what work has been done on the ground and what work is proposed for the coming year. 
 
 
7

 
 
Item 1A.
RISK FACTORS
 
Much of the information included in this current report includes or is based upon estimates, projections or other "forward looking statements".  Such forward looking statements include any projections or estimates made by us and our management in connection with our business operations.  While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein.
 
Such estimates, projections or other "forward looking statements" involve various risks and uncertainties as outlined below.  We caution the reader that important factors in some cases have affected and, in the future, could materially affect actual results and cause actual results to differ materially from the results expressed in any such estimates, projections or other "forward looking statements".
 
Our common shares are considered speculative during the development of our new business operations.  Prospective investors should consider carefully the risk factors set out below.
 
We need to continue as a going concern if our business is to succeed, if we do not we will go out of business.
 
Our independent registered public accounting firm’s report to our audited financial statements for the period ended December 31, 2011 indicates that there are a number of factors that raise substantial doubt about our ability to continue as a going concern.  Such factors identified in the report are our accumulated deficit since inception, our failure to attain profitable operations and our dependence upon adequate financing to pay our liabilities.  If we are not able to continue as a going concern, it is likely investors will lose their investments.
 
If we do not obtain additional financing, our business will fail.
 
Our current operating funds are less than necessary to complete all intended exploration of the property, and therefore we will need to obtain additional financing in order to complete our business plan.  As of December 31, 2011 we had cash in the amount of $20,456. We currently have minimal operations and we have no income.  
 
Our business plan calls for significant expenses in connection with the exploration of the property.  We do not currently have sufficient funds to conduct initial exploration on the property and require additional financing in order to determine whether the property contains economic mineralization.  We will also require additional financing if the costs of the exploration of the property are greater than anticipated.
 
We will require additional financing to sustain our business operations if we are not successful in earning revenues once exploration is complete.  We do not currently have any arrangements for financing and we can provide no assurance to investors that we will be able to find such financing if required. Obtaining additional financing would be subject to a number of factors, including the market prices for copper, silver and gold, investor acceptance of our property and general market conditions.  These factors may make the timing, amount, terms or conditions of additional financing unavailable to us.
 
The most likely source of future funds presently available to us is through the sale of equity capital. Any sale of share capital will result in dilution to existing shareholders.  The only other anticipated alternative for the financing of further exploration would be our sale of a partial interest in the property to a third party in exchange for cash or exploration expenditures, which is not presently contemplated.
 
 
8

 
 
If we are unable to transfer title of our properties into the Company, we will not be able to execute on our current business plan and will have to expend additional resources searching for a suitable property.
 
We are still in the process of transferring title to our Wilpena property. The Department requires all transferees to be Australian companies. The Company is currently forming a Queensland subsidiary but at this time the status of the transfer and the ability of the Company to obtain the necessary permits to commence operations remains uncertain. In the event the Company is unable to effect the transfer or is denied the necessary permits by the Department, we will not be able to execute on our current business plan and will have to expend additional resources identifying and exploring other mineral properties, the results of which may be unsuccessful.
 
Because we have commenced limited business operations, we face a high risk of business failure.
 
We were incorporated on February 10, 2006 and have been involved primarily in organizational activities and the acquisition of our mineral properties.  We have not earned any revenues as of the date of this prospectus.
 
Prior to completion of our exploration stage, we anticipate that we will incur increased operating expenses without realizing any revenues.  We therefore expect to incur significant losses into the foreseeable future. We recognize that if we are unable to generate significant revenues from development of the mineral claims and the production of minerals from the claims, we will not be able to earn profits or continue operations.
 
There is no history upon which to base any assumption as to the likelihood that we will prove successful, and we can provide investors with no assurance that we will generate any operating revenues or ever achieve profitable operations. If we are unsuccessful in addressing these risks, our business will most likely fail.
 
We lack an operating history and we expect to have losses in the future.
 
We have not started our proposed business operations or realized any revenues. We have no operating history upon which an evaluation of our future success or failure can be made. Our ability to achieve and maintain profitability and positive cash flow is dependent upon the following:
 
·
Our ability to locate a profitable mineral property;
·
Our ability to generate revenues; and
·
Our ability to reduce exploration costs.
 
Based upon current plans, we expect to incur operating losses in future periods. This will happen because there are expenses associated with the research and exploration of our mineral properties. We cannot guarantee that we will be successful in generating revenues in the future. Failure to generate revenues will cause us to go out of business.
 
Because of the unique difficulties and uncertainties inherent in mineral exploration ventures, we face a high risk of business failure.
 
Potential investors should be aware of the difficulties normally encountered by new mineral exploration companies and the high rate of failure of such enterprises. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the exploration of the mineral properties that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems relating to exploration, and additional costs and expenses that may exceed current estimates. The expenditures to be made by us in the exploration of the mineral claim may not result in the discovery of mineral deposits. Problems such as unusual or unexpected formations and other conditions are involved in mineral exploration and often result in unsuccessful exploration efforts. If the results of our exploration do not reveal viable commercial mineralization, we may decide to abandon our claim and acquire new claims for new exploration. The acquisition of additional claims will be dependent upon us possessing capital resources at the time in order to purchase such claims. If no funding is available, we may be forced to abandon our operations.
 
 
9

 
 
We have no known ore reserves and we cannot guarantee we will find any significant clay soils or if we find clay soil, that production will be profitable. Even if we are successful in discovering clay soil or other mineralized material we may not be able to realize a profit from its sale. If we cannot make a profit, we may have to cease operations.
 
We have no known mineral clay soil reserves. We have not identified any significant clay soil on the mineral claims and we cannot guarantee that we will ever find any clay soil. The report we reviewed in selecting the mineral claims for exploration are old and may be out of date. Even if we find that there is clay soil on our mineral claims, we cannot guarantee that we will be able to recover the clay soil. If we cannot find clay soil or it is not economical to recover the clay soil, we will have to cease operations.
 
Because of the inherent dangers involved in mineral exploration, there is a risk that we may incur liability or damages as we conduct our business.
 
The search for valuable minerals involves numerous hazards.  As a result, we may become subject to liability for such hazards, including pollution, cave-ins and other hazards against which we cannot insure or against which we may elect not to insure.  The payment of such liabilities may have a material adverse effect on our financial position.
 
Because we are small and do not have much capital, we must limit our exploration and consequently may not find mineralized material. If we do not find mineralized material, we will cease operations.
 
Because we are small and do not have much capital, we must limit our exploration. Because we may have to limit our exploration, we may not find mineralized material, although our mineral claims may contain mineralized material. If we do not find mineralized material, we will cease operations.
 
If we become subject to onerous government regulation or other legal uncertainties, our business will be negatively affected.
 
There are several governmental regulations that materially restrict mineral property exploration and development. Under Australian mining law, to engage in certain types of exploration will require work permits, the posting of bonds, and the performance of remediation work for any physical disturbance to the land. While these current laws do not affect our current exploration plans, if we proceed to commence drilling operations on the mineral claims, we will incur modest regulatory compliance costs.
 
In addition, the legal and regulatory environment that pertains to the exploration of ore is uncertain and may change. Uncertainty and new regulations could increase our costs of doing business and prevent us from exploring for ore deposits. The growth of demand for ore may also be significantly slowed. This could delay growth in potential demand for and limit our ability to generate revenues.  In addition to new laws and regulations being adopted, existing laws may be applied to mining that have not as yet been applied.  These new laws may increase our cost of doing business with the result that our financial condition and operating results may be harmed.
 
We may not have access to all of the supplies and materials we need to begin exploration that could cause us to delay or suspend operations.
 
Competition and unforeseen limited sources of supplies in the industry could result in occasional spot shortages of supplies, such as explosives, and certain equipment such as bulldozers and excavators that we might need to conduct exploration. We have not attempted to locate or negotiate with any suppliers of products, equipment or materials. We will attempt to locate products, equipment and materials after this offering is complete. If we cannot find the products and equipment we need, we will have to suspend our exploration plans until we do find the products and equipment we need.
 
 
10

 
 
Because of the speculative nature of exploration of mineral properties, there is no assurance that our exploration activities will result in the discovery of new commercially exploitable quantities of minerals.
 
We plan to continue to source exploration mineral claims. The search for valuable minerals as a business is extremely risky. We can provide investors with no assurance that additional exploration on our properties will establish that additional commercially exploitable reserves of clay soil exist on our properties Problems such as unusual or unexpected geological formations or other variable conditions are involved in exploration and often result in exploration efforts being unsuccessful. The additional potential problems include, but are not limited to, unanticipated problems relating to exploration and attendant additional costs and expenses that may exceed current estimates. These risks may result in us being unable to establish the presence of additional commercial quantities of ore on our mineral claims with the result that our ability to fund future exploration activities may be impeded.
 
Because the SEC imposes additional sales practice requirements on brokers who deal in our shares that are penny stocks, some brokers may be unwilling to trade them. This means that you may have difficulty in reselling your shares and may cause the price of the shares to decline.
 
Our shares qualify as penny stocks and are covered by Section 15(g) of the Securities Exchange Act of 1934, which imposes additional sales practice requirements on broker/dealers who sell our securities in this offering or in the aftermarket. In particular, prior to selling a penny stock, broker/dealers must give the prospective customer a risk disclosure document that: contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; contains a description of the broker/dealers' duties to the customer and of the rights and remedies available to the customer with respect to violations of such duties or other requirements of Federal securities laws; contains a brief, clear, narrative description of a dealer market, including "bid" and "ask" prices for penny stocks and the significance of the spread between the bid and ask prices; contains the toll free telephone number for inquiries on disciplinary actions established pursuant to section 15(A)(i); defines significant terms used in the disclosure document or in the conduct of trading in penny stocks; and contains such other information, and is in such form (including language, type size, and format), as the SEC requires by rule or regulation. Further, for sales of our securities, the broker/dealer must make a special suitability determination and receive from you a written agreement before making a sale to you. Because of the imposition of the foregoing additional sales practices, it is possible that brokers will not want to make a market in our shares. This could prevent you from reselling your shares and may cause the price of the shares to decline.
 
We have no known ore reserves and we cannot guarantee we will find any clay soil or if we find clay soil, that production will be profitable.
 
We have no known ore reserves.  We have not identified any clay soil on the property and we cannot guarantee that we will ever find any clay soil.  We did not rely upon any expert advice in selecting the property for the exploration.  Even if we find that there is clay soil on our property, we cannot guarantee that we will be able to recover the clay soil.  Even if we recover the clay soil, we cannot guarantee that we will make a profit.  If we cannot find clay soil or it is not economical to recover the clay soil, we will have to cease operations.
 
Because we are small and do not have much capital, we must limit our exploration and consequently may not find mineralized material.  If we do not find mineralized material, we will cease operations.
 
Because we are small and do not have much capital, we must limit our exploration.  Because we may have to limit our exploration, we may not find mineralized material, although our property may contain mineralized material.  If we do not find mineralized material, we will cease operations.
 
 
11

 
 
As we face intense competition in the mining industry, we will have to compete with our competitors for financing and for qualified managerial and technical employees.
 
The mining industry is intensely competitive in all of its phases. Competition includes large established mining companies with substantial capabilities and with greater financial and technical resources than we have. As a result of this competition, we may be unable to acquire additional attractive mining claims or financing on terms we consider acceptable. We also compete with other mining companies in the recruitment and retention of qualified managerial and technical employees. If we are unable to successfully compete for financing or for qualified employees, our exploration and development programs may be slowed down or suspended.
 
Trading of our stock may be restricted by the SEC's Penny Stock Regulations which may limit a stockholder's ability to buy and sell our stock.
 
The U.S. Securities and Exchange Commission has adopted regulations which generally define "penny stock" to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions.  Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and "accredited investors".  The term "accredited investor" refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse.  The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market.  The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer's account.  The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation.  In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction.  These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules.  Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities.  We believe that the penny stock rules discourage investor interest in and limit the marketability of, our common stock.
 
We do not expect to declare or pay any dividends.
 
We have not declared or paid any dividends on our common stock since our inception, and we do not anticipate paying any such dividends for the foreseeable future.

Anti-Takeover Provisions

We do not currently have a shareholder rights plan or any anti-takeover provisions in our By-laws.  Without any anti-takeover provisions, there is no deterrent for a take-over of our company, which may result in a change in our management and directors.
 
Our By-laws contain provisions indemnifying our officer and directors against all costs, charges and expenses incurred by them.
 
Our By-laws contain provisions with respect to the indemnification of our officer and directors against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgement, actually and reasonably incurred by him, including an amount paid to settle an action or satisfy a judgement in a civil, criminal or administrative action or proceeding to which he is made a party by reason of his being or having been one of our directors or officer.
 
 
12

 
 
Volatility of Stock Price.
 
Our common shares are not currently publicly traded.  In the future, the trading price of our common shares may be subject to wide fluctuations.  Trading prices of the common shares may fluctuate in response to a number of factors, many of which will be beyond our control.  In addition, the stock market in general, and the market for software technology companies in particular, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of such companies.  Market and industry factors may adversely affect the market price of the common shares, regardless of our operating performance.
 
In the past, following periods of volatility in the market price of a company's securities, securities class-action litigation has often been instituted.  Such litigation, if instituted, could result in substantial costs and a diversion of management's attention and resources.
 
Item 2.
Description of Property.

Our administrative office is located at 6 Harston Avenue, Mosmon, Sydney Australia 2088. Our telephone number is 61 411-199-319.  

We have an option to acquire a 100% interest in the Mt. Cotton mining claim, (hereinafter referred to as the "Mt. Cotton Property"). The option was granted for an initial issuance of 200,000 common shares of our Company to Redpath Clay Corp.  Title to the Mt. Cotton Property is held by Redpath.  We have not taken any actions to further our business plan since July 2006.
 
On October 27, 2009, we entered into a Property Option Agreement with Wilpena Resources Ltd. Pty. We have recently commenced exploration on the property.  Under the terms of the agreement, we have received an exclusive option to acquire an undivided 100% interest in the mining claim known as the Wilpena Property situated in central Queensland, Australia. In consideration of the option, we have issued 45,000 common shares to Wilpena Resources Ltd. Pty. We were required to incur expenditures or make cash payments to Wilpena Resources for any shortfall in the amounts of $25,000 by April 27, 2010 and an additional $50,000 before October 27, 2010. Wilpena Resources Ltd. Pty. agreed to accept the April 27, 2010 and the October 27, 2010 payment in common stock of the Company. During the year ended December 31, 2011, the Company completed the acquisition of the property.
 
Our objective is to conduct mineral exploration activities on the mineral claims in order to assess whether it possesses economic reserves of mineral clay.  We have not yet identified any economic mineralization on the property.  We have a mineral report which indicates that further exploration is warranted.  Our proposed exploration program is designed to search for an economic mineral deposit.
 
Item 3.
Legal Proceedings.
 
We know of no material, active or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceedings or pending litigation.  There are no proceedings in which any of our directors, officer or affiliates, or any registered beneficial shareholder are an adverse party or has a material interest adverse to us.
 
Item 4.
Submissions of Matters to a Vote of Security Holders.
 
There were no matters submitted to a vote of our security holders either through solicitation of proxies or otherwise in the fourth quarter of the fiscal year ended December 31, 2011.
 
PART II
 
Item 5.
Market for Common Equity and Related Stockholder Matters.
 
There is currently no market for our common stock.
 
As of April 16, 2012 there were 47 shareholders and 6,435,000 shares outstanding.
 
 
13

 
 
There are no outstanding options or warrants to purchase, or securities convertible into, our common shares.  All of our issued and outstanding shares can be sold pursuant to Rule 144 of the Securities Act of 1933.
 
We have not declared any dividends since incorporation and does not anticipate that we will do so in the foreseeable future.  Although there are no restrictions that limit the ability to pay dividends on our common shares, our intention is to retain future earnings for use in our operations and the expansion of our business.
 
Recent Sales of Unregistered Securities
 
250,000 shares of common stock were issued on May 20, 2011 to Wilpena Resources Ltd. Pty. In lieu of payment under the terms of the Property Option Agreement.

We issued the securities detailed above to non-U.S. persons (as that term is defined in Regulation S of the Securities Act of 1933, as amended) in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933, as amended
 
Equity Compensation Plan Information
 
We currently do not have any stock option or equity plans.
 
Item 6.
Selected Financial Data
 
Not applicable.
 
Item 7.
Management's Discussion and Analysis or Plan of Operation.
 
Overview
 
You should read the following discussion of our financial condition and results of operations together with the audited financial statements and the notes to audited financial statements included elsewhere in this filing prepared in accordance with accounting principles generally accepted in the United States.  This discussion contains forward-looking statements that reflect our plans, estimates and beliefs.  Our actual results could differ materially from those anticipated in these forward-looking statements.
 
Plan of Operations
 
Cash Requirements
 
For the next 12 months we plan to expend a total of approximately $145,000 in respect of our mineral properties and administrative expenses.  We currently do not have enough cash to complete our 12 month plan.
 
We estimate that we will expend approximately $10,000 on general and administrative expenses over the next 12 months generated from our allotted working capital of approximately $10,000.
 
Based on our current plan of operations, we do have sufficient funds for the next 6 months and need to raise or borrow additional funds to continue our operations. In the event that we are unable to raise additional financing in the next 6 months, and fail to generate any cash flow, we may modify our operations plan accordingly. These funds may be raised through equity financing, debt financing, or other sources, which may result in further dilution in the equity ownership of our shares. There is still no assurance that we will be able to maintain operations at a level sufficient for an investor to obtain a return on his investment in our common stock. Further, we may continue to be unprofitable.
 
Over the next twelve months we intend to use all available funds to expand on the exploration and development of our mineral properties, as follows:
 
 
14

 

Estimated Funding Required During the Next Twelve Months
 
Operations
     
Working Capital
  $ 10,000  
Wilpena Exploration costs
    100,000  
Mt. Cotton Phase 1 exploration
    25,300  
General and Administrative
    10,000  
Total
  $ 145,300  
 
Financial Condition, Liquidity and Capital Resources
 
Since inception on February 10, 2006, we have been engaged in exploration and acquisition of mineral properties. Our principal capital resources have been acquired through the issuance of common stock.
 
At December 31, 2011, we had a working capital of $9,373.
 
At December 31, 2011, we had total assets of $24,956 which consists of cash of $20,456 and mineral property interest of $4,500. This compares with our assets at December 31, 2010, of $43,930 which consisted of cash of $39,430 and mineral property interest of $4,500.
 
At December 31, 2011, our total liabilities were $11,083, compared to our liabilities of $6,950 as at December 31, 2010.

We have had no revenues from inception. At present, we do not have sufficient funding to complete Phase 1 of our program and we will need additional capital.

We have no external sources of liquidity in the form of credit lines from banks. Based on the plan of operation described above, management believes that our available cash will not be sufficient to fund our immediate working capital requirements for the next 12 months.
 
Results of Operations.
 
We posted losses of $73,107 for the year ending December 31, 2011, losses of $118,724 for the year ended December 31, 2010, and losses of $236,627 since inception to December 31, 2011. The component of the loss for 2011 was for general and administrative expenses of $23,107 and exploration costs of $50,000. During 2010, the losses resulted from general and administrative expense of $41,724 and mineral exploration expenses of $77,000. Our general and administrative expenses were higher in 2010 largely due to the consulting fees of $14,000 we paid to market maker and consulting fees of $4,390 for our operation in Australia in 2010 which were absent in 2011.
 
Product Research and Development
 
Our business plan is focused on the long-term exploration and development of our mineral properties.
 
Purchase of Significant Equipment
 
We do not intend to purchase any significant equipment over the twelve months ending December 31, 2012.
 
Employees
 
Currently there are no full time or part-time employees of our company (other than our directors and officer who, at present, have not signed employment or consulting agreements with us). We do not expect any material changes in the number of employees over the next 12 month period (although we may enter into employment or consulting agreements with our officer or directors). We do and will continue to outsource contract employment as needed. However, if we are successful in our initial and any subsequent drilling programs we may retain additional employees.
 
 
15

 
 
Going Concern
 
Due to our being a exploration stage company and not having generated revenues, in the  financial statements for the year ended December 31, 2011, our independent registered public accountant included an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern.  Our  financial statements contain additional note disclosures describing the circumstances that lead to this disclosure.
 
The continuation of our business is dependent upon us raising additional financial support.  The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders.  Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.
 
Recently Issued Accounting Standards

The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on its results of operations, financial position or cash flow.
 
APPLICATION OF CRITICAL ACCOUNTING POLICIES
 
Our financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States.  Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management's application of accounting policies.  We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our financial statements is critical to an understanding of our financials.
 
We have historically incurred losses, and through December 31, 2011 have incurred losses of $236,627 from our inception.   We will require additional working capital to develop our business operations.
 
We intend to raise additional working capital through a private placement.
 
There are no assurances that we will be able to either (1) achieve a level of revenues adequate to generate sufficient cash flow from operations; or (2) obtain additional financing  and/or bank financing necessary to support our working capital requirements. To the extent that funds generated from operations, our S-1 public offerings and/or bank financing are insufficient, we will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to us. If adequate working capital is not available we may not increase or sustain our operations.
 
These conditions raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might be necessary should we be unable to continue as a going concern.
 
 
16

 
 
Item 8.
Financial Statements.
 
Our financial statements are stated in United States dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.
 
The following  financial statements are filed as part of this annual report:
 
Report of Independent Registered Public Accounting Firm, dated April 11, 2012.
 
Balance Sheets as at December 31, 2011 and 2010.
 
Statements of Operations for each of the years ended December 31, 2011 and 2010 and for the period from February 10, 2006 (inception) through December 31, 2011.
 
Statements of Cash Flows for each of the years ended December 31, 2011 and 2010 and for the period from February 10,  2006 (inception) through December 31, 2011.
 
Statements of Stockholders' Equity for the period from February 10, 2006 (inception) through December 31, 2011.
 
Notes to the Financial Statements
 
 
17

 
 
LBB & ASSOCIATES LTD., LLP
10260 Westheimer Road, Suite 310
Houston, TX 77042
Phone: (713) 800-4343 Fax: (713) 456-2408

Report of Independent Registered Public Accounting Firm
 
To the Board of Directors of
Ayers Exploration Inc.
(An Exploration Stage Company)
Mosman, Sydney, Australia

We have audited the accompanying balance sheet of Ayers Exploration Inc. (the “Company”) as of December 31, 2011 and 2010, and the related statements of operations, stockholders' equity, and cash flows for each of the years then ended and for the period from February 10, 2006 (inception) through December 31, 2011. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Ayers Exploration Inc. as of December 31, 2011 and 2010, and the results of its operations and its cash flows for each of the years then ended and for the period from February 10, 2006 (inception) through December 31, 2011 in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 1 to the financial statements, the Company's absence of revenues, recurring losses from operations, and its need for additional financing in order to fund its projected loss in 2012 raise substantial doubt about its ability to continue as a going concern. The 2011 financial statements do not include any adjustments that might result from the outcome of this uncertainty.


/s/ LBB & Associates Ltd., LLP
LBB & Associates Ltd., LLP

Houston, Texas
April 11, 2012

 
 
18

 

AYERS EXPLORATION INC.
(An Exploration Stage Company)
BALANCE SHEETS
 
   
December 31,
2011
$
   
December 31,
2010
$
 
             
ASSETS
             
CURRENT ASSETS
           
             
Cash
    20,456       39,430  
                 
Total Current Assets
    20,456       39,430  
                 
Mineral property interest
    4,500       4,500  
                 
Total Assets
    24,956       43,930  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
                 
LIABILITIES
               
                 
CURRENT LIABILITIES
               
                 
Accounts payable and accrued liabilities
    11,083       1,850  
Due to related party
    -       5,100  
                 
Total Current Liabilities
    11,083       6,950  
                 
Total Liabilities
    11,083       6,950  
                 
Commitment
               
                 
STOCKHOLDERS’ EQUITY
               
                 
Common stock, $.001 par value, 30,000,000 shares authorized, 6,435,000 and 6,185,000 shares issued and outstanding at December 31, 2011 and December 31, 2010 respectively
    6,435       6,185  
Additional paid in capital
    244,065       194,315  
    Deficit accumulated during the exploration stage
    (236,627 )     (163,520 )
                 
Total Stockholders’ Equity
    13,873       36,980  
                 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
    24,956       43,930  
 
The accompanying notes are an integral part of these financial statements
 
 
19

 
 
AYERS EXPLORATION INC.
 (An Exploration Stage Company)
STATEMENTS OF OPERATIONS
Years Ended December 31, 2011 and 2010
and Period from February 10, 2006 (Inception) through December 31, 2011
 
   
Year Ended
December 31, 2011
$
   
Year Ended
December 31, 2010
$
   
February 10, 2006
(Inception) to
December 31, 2011
$
 
                   
EXPENSES
                 
                   
General and administrative
    23,107       41,724       111,121  
Mineral exploration
    50,000       77,000       127,000  
                         
Total Expenses
    73,107       118,724       238,121  
                         
OTHER INCOME
                       
                         
  Interest income
    -       -       1,494  
                         
Total Other Income
    -       -       1,494  
                         
NET LOSS
    (73,107 )     (118,724 )     (236,627 )
                         
                         
NET LOSS PER SHARE :
BASIC AND DILUTED
    (0.01 )     (0.02 )        
                         
WEIGHTED AVERAGE SHARES OUTSTANDING:
BASIC AND DILUTED
    6,339,110       5,959,452          
                         
 
The accompanying notes are an integral part of these financial statements

 
20

 
 
AYERS EXPLORATION INC.
(AN EXPLORATION STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY
Period from February 10, 2006 (Inception) through December 31, 2011
 
   
Common stock
   
Additional
paid in
   
Accumulated
deficit
during the
exploration
       
   
 
Shares
   
Amount
$
   
capital
$
   
 stage
$
   
Total
$
 
Issuance of common stock for cash
    5,490,000       5,490       48,510             54,000  
Issuance of common stock for mineral property interest acquisition
    200,000       200       1,800             2,000  
Net loss
                      (114 )     (114 )
Balance, December 31, 2006
    5,690,000       5,690       50,310       (114 )     55,886  
Net loss
                      (2,121 )     (2,121 )
Balance, December 31, 2007
    5,690,000       5,690       50,310       (2,235 )     53,765  
Net loss
                      (23,711 )     (23,711 )
Balance, December 31, 2008
    5,690,000       5,690       50,310       (25,946 )     30,054  
Issuance of common stock for mineral property interest acquisition
    45,000       45       4,455             4,500  
Net loss
                      (18,850 )     (18,850 )
Balance, December 31, 2009
    5,735,000       5,735       54,765       (44,796 )     15,704  
Issuance of common stock for cash
    325,000       325       64,675             65,000  
Common stock issued for mineral exploration
    125,000       125       74,875             75,000  
Net loss
                      (118,724 )     (118,724 )
Balance, December 31, 2010
    6,185,000       6,185       194,315       (163,520 )     36,980  
Common stock issued for mineral exploration
    250,000       250       49,750             50,000  
Net loss
                      (73,107 )     (73,107 )
Balance, December 31, 2011
    6,435,000       6,435       244,065       (236,627 )     13,873  
 
The accompanying notes are an integral part of these financial statements
 
 
21

 

AYERS EXPLORATION INC.
 (An Exploration Stage Company)
STATEMENTS OF CASH FLOWS
Years Ended December 31, 2011 and 2010
and Period from February 10, 2006 (Inception) through December 31, 2011

   
Year Ended
December 31, 2011
$
   
Year Ended
December 31, 2010
$
   
February 10, 2006 (Inception) to
December 31, 2011
$
 
                   
CASH FLOWS FROM OPERATING ACTIVITIES
                 
                   
Net loss
    (73,107 )     (118,724 )     (236,627 )
                         
   Common shares issued for mineral exploration
    50,000       75,000       125,000  
                         
Impairment of mineral property interest
          2,000       2,000  
                         
Changes in operating assets and liabilities:
                       
                         
 Accounts payable and accrued liabilities
    9,233       (175 )     11,083  
                         
Net Cash Used in Operating Activities
    (13,874 )     (41,899 )     (98,544 )
                         
CASH FLOWS FROM FINANCING ACTIVITIES                        
Net cash proceeds (repayment) to related parties
    (5,100 )     3,100        
                         
Cash received from sale of common stock
          65,000       119,000  
                         
Net Cash Provided by (Used in) Financing Activities
    (5,100 )     68,100       119,000  
                         
NET CHANGE IN CASH
    (18,974 )     26,201       20,456  
                         
CASH – BEGINNING
    39,430       13,229        
                         
CASH – ENDING
    20,456       39,430       20,456  
                         
Supplemental Cash Flow Information:
                       
                         
Cash paid for:
                       
Interest
                 
Income taxes
                 
                         
Non-cash transactions:
                       
Stock issued for mineral property interest
                6,500  
                         
 
The accompanying notes are an integral part of these financial statements
 
 
22

 

AYERS EXPLORATION INC.
 (An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
 
NOTE 1 – NATURE OF BUSINESS
 
Nature of Business
 
Ayers Exploration Inc. ("the Company") was incorporated in Nevada on February 10, 2006, to engage in acquisition and exploration of mineral properties.
 
Going concern

These financial statements have been prepared in accordance with United States generally accepted accounting principles, on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company has not started income generating operations. Losses are anticipated in the development of its business and there can be no assurance that the Company will be able to achieve or maintain profitability.  These factors raise substantial doubt concerning the Company’s ability to continue as a going concern.
 
The continuing operations of the Company and the recoverability of the carrying value of assets is dependent upon the ability of the Company to obtain necessary financing to fund its working capital requirements, and upon future profitable operations. The accompanying financial statements do not include any adjustments relative to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty.
 
There can be no assurance that capital will be available as necessary to meet the Company's working capital requirements or, if the capital is available, that it will be on terms acceptable to the Company. The issuances of additional equity securities by the Company may result in dilution in the equity interests of its current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase the Company's liabilities and future cash commitments. If the Company is unable to obtain financing in the amounts and on terms deemed acceptable, the business and future success may be adversely affected.
 
NOTE 2 - SUMMARY OF ACCOUNTING POLICIES
 
Exploration Stage Company
 
The Company complies with Accounting Standard Codification (“ASC”) 915 for its characterization of the Company as an Exploration Stage Company.

Cash and Cash Equivalents
 
The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

Foreign Currency Translation
 
The financial statements are presented in United States dollars. In accordance with ASC 830, ‘‘Foreign Currency Matters’’, foreign denominated monetary assets and liabilities are translated into their United States dollar equivalents using foreign exchange rates which prevailed at the balance sheet date. Non-monetary assets and liabilities are translated at the exchange rates prevailing at the transaction date. Revenue and expenses are translated at average rates of exchange during the year. Gains or losses resulting from foreign currency transactions are included in results of operations.
 
 
23

 
 
Mineral Interest
 
Mineral property acquisition costs are capitalized in accordance with ASC 930. Mineral property exploration costs are expensed as incurred. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs incurred to develop such property are capitalized. To date the Company has not established any reserves on its mineral properties.

Impairment of Long-Lived Assets
 
The Company reviews long-lived assets for indicators of impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. If the review indicates that the carrying amount of the asset may not be recoverable, the potential impairment is measured based on a projected discounted cash flow method using a discount rate that is considered to be commensurate with the risk inherent in the Company’s current business model. For purposes of recognition and measurement of an impairment loss, a long-lived asset is grouped with other assets at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets.

Use of Estimates
 
The preparation of financial statements in conformity generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenue and expenses during the period. Actual results may differ from those estimates.
 
Basic Loss per Share
 
Basic loss per share has been calculated based on the weighted average number of shares of common stock outstanding during the period.

Income Taxes
 
The asset and liability approach is used to account for income taxes by recognizing deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities. The Company records a valuation allowance to reduce the deferred tax assets to the amount that is more likely than not to be realized.

Financial Instruments
 
As of December 31, 2011, the Company's financial instruments consist of cash and accounts payable. Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. Because of the short maturity of such assets and liabilities the fair value of the financial instrument approximates its carrying value, unless otherwise noted.
 
Newly Adopted Accounting Pronouncements
 
Management does not expect the future adoption of any recently issued accounting pronouncement to have a significant impact on its financial position, results of operations, or cash flows.
 
 
24

 
 
NOTE 3 – MINING PROPERTY INTEREST
 
Mt. Cotton Property

On July 9, 2006 the Company entered into a mining option agreement with Redpath Clay Corp. (”Redpath”), a company incorporated under the laws of Australia, which grants the Company the exclusive right and option (the “Mt. Cotton Option”) to acquire, subject to the reservation of a royalty by Redpath and the covenant by the Company to pay a production bonus, 100% of Redpath’s 100% owned interest in a mining property known as the Mt. Cotton Property (the “Property”) located in the State of Queensland, Australia.
 
In order to exercise the Option, the Company will issue the following shares of the Company’s common stock to Redpath:

(i)       200,000 shares upon signing of this option agreement (issued); and
(ii)      200,000 shares upon commencement of commercial production (not issued).

If and when the Option has been exercised, a 100% undivided right, title and interest in and to the Property will vest in the Company. The Company impaired the $2,000 carry value due to uncertainty about the Company’s ability to pursue the claim in 2010. Title to the Mt. Cotton property is held by Redpath. We have not taken any action to further our business plan since July 2006.
 
Wilpena Property
 
On October 27, 2009 Company entered into a Property Option Agreement with Wilpena Resources Ltd. Pty., which grants the Company exclusive option (the “Wilpena Option”) to acquire an undivided 100% interest in the mining claim known as the Wilpena Property situated in central Queensland, Australia. During the year ended December 31, 2011 the Company completed the acquisition of the property.

We are still in the process of transferring title as the Queensland Mining Department requires the transferee to be an Australian company. As a result, we are in the process of forming a subsidiary in Queensland to effect the transfer and until then the status of the property and our ability to obtain the necessary permits remains uncertain.
 
NOTE 4 – DUE TO RELATED PARTY
 
As at December 31, 2010 the Company had a balance of $5,100 owed to the sole director and officer of the Company. During the year ended December 31, 2011 this related party made payments of $8,675 on behalf of the Company and was repaid $13,775.

NOTE 5 – COMMON STOCK
 
On March 5, 2010 the Company received subscription proceeds of $15,000 from the President of the Company for 75,000 common shares of the Company at $0.20 per share.
 
On March 8, 2010 the Company  entered into a Share Issuance Agreement (the "Agreement") with SK Capital Corp., ("SK"), whereby the Company has the right to request that SK purchase up to $250,000 of the Company's securities  until  March 8, 2012. 

Under the terms of the Agreement, the Company may from time to time request a purchase from SK up to $50,000 (each, an "Advance") per request for operating expenses, acquisitions, working capital and general corporate activities. Following receipt of any Advance the Company shall sell and issue SK common shares at a price of $0.20 per share.
 
In March 2010, the Company requested and received an Advance from SK in the amount of $50,000 in exchange for 250,000 common shares of the Company. There was no other Advance from SK before the expiration of the Agreement on March 8, 2012.

In April 2010, the Company issued 125,000 common shares of the Company valued at $75,000 as payment for shortfall of exploration work on the Wilpena Property.

On May 20, 2011 the Company issued 250,000 common shares of the Company valued at $50,000 as payment for shortfall of exploration work on the Wilpena Property. This exploration work program was the final step in acquiring the property.

 
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NOTE 6 – INCOME TAXES

The Company follows Statement of ASC 740 "Income Taxes." Deferred income taxes reflect the net effect of (a) temporary difference between carrying amounts of assets and liabilities for financial purposes and the amounts used for income tax reporting purposes, and (b) net operating loss carryforwards. No net provision for refundable Federal income tax has been made in the accompanying statement of loss because no recoverable taxes were paid previously. Similarly, no deferred tax asset attributable to the net operating loss carryforward has been recognized, as it is not deemed likely to be realized.
 
The provision for refundable Federal income tax consists of the following:

   
December 31,
   
December 31,
 
   
2011
   
2010
 
Refundable Federal income tax attributable to:
           
Current operations
  $ 24,800     $ 40,300  
Less, change in valuation allowance
    (24,800 )     (40,300 )
Net refundable amount
  $ -     $ -  

The cumulative tax effect at the expected rate of 34% of significant items comprising the Company’s net deferred tax amount is as follows:
 
   
December 31,
   
December 31,
 
   
2010
   
2010
 
Deferred tax asset attributable to:
           
Net operating loss carryover
  $ 80,300     $ 55,500  
Less, valuation allowance
    (80,300 )     (55,500 )
Net deferred tax asset
  $ -     $ -  
 
At December 31, 2011, the Company had an unused net operating loss carryover approximating $236,600 that is available to offset future taxable income, which expires beginning in 2026.

NOTE 7 – SUBSEQUENT EVENT

On March 29, 2012 the Company issued a promissory note to a director of the Company for cash proceeds of $8,500 at simple annual interest rate of 7%. The promissory note is unsecured and matures on March 29, 2014, after which date interest is increased to 12% per annum on the total outstanding balance including the principal amount and interest accrued up to March 29, 2014.
 
Item 9.
Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.
 
None.
 
 
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Item 9A.
Controls and Procedures
 
Management's Report on Disclosure Controls and Procedures
 
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management to allow for timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
 
Our management does not expect that our disclosure controls or our internal controls over financial reporting will prevent all error and fraud. A control system, no matter how well conceived and operated, can provide only reasonable, but not absolute, assurance that the objectives of a control system are met. Further, any control system reflects limitations on resources and the benefits of a control system must be considered relative to its costs. These limitations also include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of a control. A design of a control system is also based upon certain assumptions about potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and may not be detected.
 
As of December 31, 2011, the year end period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our President/Treasurer concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this annual report due to lack of segregation of duties. There have been no changes in our internal controls over financial reporting that occurred during the fiscal year ended December 31, 2011, that have materially or are reasonably likely to materially affect, our internal controls over financial reporting.
 
The management concludes that the impact of inadequate segregation of duties is immaterial due to the fact that we have a small operation with limited transactions, and all transactions are approved and carried out by the management.
 
The Company is taking steps to enhance and improve the design of its internal controls over financial reporting. To remediate such weaknesses, the Company is currently in search of additional qualified personnel to join the Company.
 
Management's Report 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) and 15d-15(f) under the Exchange Act. Management has employed a framework consistent with Exchange Act Rule 13a-15(c), to evaluate internal control over financial reporting described below. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation and fair presentation of financial statements for external purposes in accordance with generally accepted accounting principals.
 
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
 
 
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Management conducted an evaluation of the design and operation of our internal control over financial reporting as of and for the year ended December 31, 2011. As a result of this assessment, our President/Treasurer concluded that, as of and for the year ended December 31, 2011, our internal control over financial reporting was not effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles as of the year and quarter ended December 31, 2011. The ineffective internal control was due to lack of segregation of duties.
 
This annual report does not include an attestation report of the company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management's report in this annual report.
 
Item 9B.
Other Information
 
None.

 
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PART III
 
Item 10.
Directors, Executive Officer, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act.
 
DIRECTORS AND EXECUTIVE OFFICER, PROMOTERS AND CONTROL PERSONS
 
As at April 16, 2012, our directors and executive officers and control persons, their ages, positions held, and duration of such, are as follows:
 
Name
Position Held with our Company
Age
Date First Elected or Appointed
Greg Curson
Director, President , Secretary, Treasurer
53
February 10, 2006
Bruce Drury
Director, Vice President Exploration
44
January 15, 2010
 
Business Experience
 
The following is a brief account of the education and business experience during at least the past five years of each director, executive officer and key employee, indicating the principal occupation during that period, and the name and principal business of the organization in which such occupation and employment were carried out.

Greg Curson. Since 2000, Mr. Curson has been the President of World Brands Management Pty. Ltd., the sole Australian and New Zealand distributor for Diesel, Nautica and Pony. In 1973, Mr. Curson graduated from the Advanced College of Business Technology Ultimo Sydney with a Diploma in Real Estate.

Bruce Drury.  From 2004 to 2012, Mr Drury has been as a mining consultant for mine exploration and development companies in Australia and Papua New Guinea including New Holland Mining, Peel Explorations and Royal Resources Mining. Mr. Drury is a graduate of The School of Geosciences at Monash University in Melbourne Australia.
 
Committees of the Board
 
Currently our company has the following committees:
 
·
Audit Committee;
 
·
Nominating and Corporate Governance Committee; and
 
·
Compensation Committee.
 
Our Audit Committee is currently made up of Greg Curson and Bruce Drury.  The Audit Committee is governed by the Audit Committee Charter adopted by the board of directors on November 22, 2006.
 
Our Nominating and Corporate Governance Committee is currently made up of Greg Curson and Bruce Drury.  The Nominating and Corporate Governance Committee is governed by the Nominating and Corporate Governance Committee Charter adopted by the board of directors on November 22, 2006.
 
Our Compensation Committee is currently made up of Greg Curson and Bruce Drury.  The Compensation Committee is governed by the Compensation Committee Charter adopted by the board of directors on November 22, 2006.
 
 
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Family Relationships
 
There are no family relationships between any of our directors or executive officer.
 
Involvement in Certain Legal Proceedings
 
Other than as discussed below, none of our directors, executive officer, promoters or control persons have been involved in any of the following events during the past five years:
 
1.  any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
 
2.  any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offences);
 
3.  being subject to any order, judgement, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or
 
4.  being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgement has not been reversed, suspended, or vacated.
 
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
 
None of our directors, executive officer, future directors, 5% shareholders, or any members of the immediate families of the foregoing persons have been indebted to us during the last fiscal year or the current fiscal year in an amount exceeding $60,000.

None of the current directors or officers of our company are related by blood or marriage.

On February 10, 2006, we issued a total of 2,000,000 shares of restricted common stock to Mr. Curson an officer and director of our company for cash of $2,000.

In addition, on March 5, 2010 the Company received subscription proceeds of $15,000 from Greg Curson, the President of the Company.  Mr. Curson was issued 75,000 common shares of the Company.
 
Section 16(a) Beneficial Ownership Compliance
 
Section 16(a) of the Securities Exchange Act requires our executive officer and directors, and persons who own more than 10% of our common stock, to file reports regarding ownership of, and transactions in, our securities with the Securities and Exchange Commission and to provide us with copies of those filings.  Based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that during fiscal year ended December 31, 2010 , all filing requirements applicable to its officer, directors and greater than ten percent beneficial owners were complied with.
 
 
30

 
 
Code of Ethics
 
Effective November 22, 2006, our company's board of directors adopted a Code of Business Conduct and Ethics that applies to, among other persons, our company's president (being our principal executive officer) and our company's secretary (being our principal financial and accounting officer and controller), as well as persons performing similar functions.  As adopted, our Code of Business Conduct and Ethics sets forth written standards that are designed to deter wrongdoing and to promote:
 
(1) honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
 
(2) full, fair, accurate, timely, and understandable disclosure in reports and documents that we file with, or submit to, the Securities and Exchange Commission and in other public communications made by us;
 
(3) compliance with applicable governmental laws, rules and regulations;
 
(4) the prompt internal reporting of violations of the Code of Business Conduct and Ethics to an appropriate person or persons identified in the Code of Business Conduct and Ethics; and
 
(5) accountability for adherence to the Code of Business Conduct and Ethics.
 
Our Code of Business Conduct and Ethics requires, among other things, that all of our company's personnel shall be accorded full access to our president and secretary with respect to any matter which may arise relating to the Code of Business Conduct and Ethics.  Further, all of our company's personnel are to be accorded full access to our company's board of directors if any such matter involves an alleged breach of the Code of Business Conduct and Ethics by our president or secretary.
 
In addition, our Code of Business Conduct and Ethics emphasizes that all employees, and particularly managers and/or supervisors, have a responsibility for maintaining financial integrity within our company, consistent with generally accepted accounting principles, and federal, provincial and state securities laws. Any employee who becomes aware of any incidents involving financial or accounting manipulation or other irregularities, whether by witnessing the incident or being told of it, must report it to his or her immediate supervisor or to our company's president or secretary.  If the incident involves an alleged breach of the Code of Business Conduct and Ethics by the president or secretary, the incident must be reported to any member of our board of directors.  Any failure to report such inappropriate or irregular conduct of others is to be treated as a severe disciplinary matter.  It is against our company policy to retaliate against any individual who reports in good faith the violation or potential violation of our company's Code of Business Conduct and Ethics by another.
 
Our Code of Business Conduct and Ethics is filed with the Securities and Exchange Commission as Exhibit 14.1 to this annual report.  We will provide a copy of the Code of Business Conduct and Ethics to any person without charge, upon request.  Requests can be sent to: Ayers Exploration Inc. 6 Harston Avenue, Mosman, Sydney Australia 2088.
 
Audit Committee Financial Expert
 
Our Board of Directors has determined that it does not have a member of its audit committee that qualifies as an "audit committee financial expert" as defined in Item 401(e) of Regulation S-B, and is "independent" as the term is used in Term 7(d)(3)(iv) of Schedule 14A under the Securities Exchange Act of 1934, as amended.
 
We believe that the members of our Board of Directors are collectively capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting.  In addition, we believe that retaining an independent director who would qualify as an "audit committee financial expert" would be overly costly and burdensome and is not warranted in our circumstances given the early stages of our development and the fact that we have not generated revenues to date.
 
 
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Item 11. 
Executive Compensation.
 
There has not been any compensation awarded to, earned by, or paid to our directors and executive officer for the last three completed financial years.
 
Employment/Consulting Agreements
 
There are no written employment or consulting agreements between us and any of our directors and executive officer.
 
Long-Term Incentive Plans
 
There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officer, except that our directors and executive officer may receive stock options at the discretion of our board of directors. We do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officer, except that stock options may be granted at the discretion of our board of directors.
 
We have no plans or arrangements in respect of remuneration received or that may be received by our executive officer to compensate such officer in the event of termination of employment (as a result of resignation, retirement, change of control) or a change of responsibilities following a change of control, where the value of such compensation exceeds $60,000 per executive officer.
 
Stock Option Plan
 
Currently, there are no stock option plans in favour of any officer, directors, consultants or employees of ours.
 
Stock Options/SAR Grants
 
There were no grants of stock options or stock appreciation rights to any officer, directors, consultants or employees of ours during the fiscal year ended December 31, 2011.
 
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Values
 
There were no stock options outstanding as at December 31, 2011.
 
Directors Compensation
 
We reimburse our directors for expenses incurred in connection with attending board meetings but did not pay director's fees or other cash compensation for services rendered as a director in the year ended December 31, 2011.
 
We have no present formal plan for compensating our directors for their service in their capacity as directors, although in the future, such directors are expected to receive compensation and options to purchase shares of common stock as awarded by our board of directors or (as to future options) a compensation committee which may be established in the future.  Directors are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of our board of directors.  The board of directors may award special remuneration to any director undertaking any special services on behalf of our company other than services ordinarily required of a director.  Other than indicated in this annual report, no director received and/or accrued any compensation for his or her services as a director, including committee participation and/or special assignments.
 
Report on Executive Compensation
 
Our compensation program for our executive officer is administered and reviewed by our board of directors.  Historically, executive compensation consists of a combination of base salary and bonuses.  Individual compensation levels are designed to reflect individual responsibilities, performance and experience, as well as the performance of our company.  The determination of discretionary bonuses is based on various factors, including implementation of our business plan, acquisition of assets, development of corporate opportunities and completion of financing.
 
 
32

 
 
Item 12. 
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
 
The following table sets forth, as at April 16, 2012, certain information with respect to the beneficial ownership of our common stock by each shareholder known by us to be the beneficial owner of more than five percent (5%) of our common stock, and by each of our current directors and executive officer.  Each person has sole voting and investment power with respect to the shares of common stock, except as otherwise indicated.  Beneficial ownership consists of a direct interest in the shares of common stock, except as otherwise indicated.
 
Name and Address of Beneficial Owner
Amount and Nature of
Beneficial Ownership(1)
Percentage
of Class(1)
Greg Curson
6 Harston Ave
Sydney, NSW
Australia 2088
2,075,000
32%
Bruce Drury
127 Kent Street
Sydney, NS
Australia, B1S 2X7
 
0
0%
Martin Chimes
26 Cowan Drive
Cottage Point
Sydney 2084 Australia
450,000
7%
Teresa Curson
6 Harston Avenue
Mosmon, Sydney 2088
Australia
420,000
6.5%
Brian Hamilton
6/22 Central Ave
Manly, Sydney 2095
Australia
480,000
7.4%
Lisa Aloe
20 Campbell Ave
Leichhardt, Sydney 2040
Australia
450,000
7%
Wilpena Resources Ltd. Pty. 2404 Logan
Rd 8 Mile Plains Old
OLD, Australia
375,000
5.8%
Directors and Executive Officer as a Group
2,075,000
32%
 
(1)
Based on 6,435,000 shares of common stock issued and outstanding as of April 16, 2012.  Except as otherwise indicated, we believe that the beneficial owners of the common stock listed above, based on information furnished by such owners, have sole investment and voting power with respect to such shares, subject to community property laws where applicable.  Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities.  Shares of common stock subject to options or warrants currently exercisable, or exercisable within 60 days, are deemed outstanding for purposes of computing the percentage ownership of the person holding such option or warrants, but are not deemed outstanding for purposes of computing the percentage ownership of any other person.
 
 
33

 
 
Future Changes in Control
 
We are unaware of any contract or other arrangement, the operation of which may, at a subsequent date, result in a change in control of our company.
 
Item 13.
Certain Relationships and Related Transactions.
 
Other than as described under the heading "Executive Compensation", or as set forth below, there are no material transactions with any of our directors, officer or control person that have occurred during the last fiscal year.
 
Item 14. 
Principal Accountant Fees and Services
 
Audit Fees
 
The aggregate fees billed by LBB & Associates Ltd., LLP for professional services rendered for the audit of our annual financial statements included in our Annual Report on Form 10-K for each of the fiscal years ended December 31, 2011 and 2010 were $7,500 and $6,000 respectively.
 
Audit Related Fees
 
For the fiscal years ended December 31, 2011 and 2010, the aggregate fees billed for assurance and related services LBB & Associates Ltd., LLP relating to the performance of the audit of our financial statements which are not by reported under the caption "Audit Fees" above, were $6,265 and $4,950, respectively.
 
Tax Fees
 
For the fiscal year ended December 31, 2011, the aggregate fees billed by LBB & Associates Ltd., LLP for other non-audit professional services, other than those services listed above, totalled $0.
 
We do not use LBB & Associates Ltd., LLP for financial information system design and implementation.  These services, which include designing or implementing a system that aggregates source data underlying the financial statements or generates information that is significant to our financial statements, are provided internally or by other service providers.  We do not engage LBB & Associates Ltd., LLP to provide compliance outsourcing services.
 
Effective May 6, 2003, the Securities and Exchange Commission adopted rules that require that before LBB & Associates Ltd., LLP is engaged by us to render any auditing or permitted non-audit related service, the engagement be:
 
· 
approved by our audit committee (which consists of entire Board of Directors); or
 
·
entered into pursuant to pre-approval policies and procedures established by the audit committee, provided the policies and procedures are detailed as to the particular service, the audit committee is informed of each service, and such policies and procedures do not include delegation of the audit committee's responsibilities to management.
 
The audit committee pre-approves all services provided by our independent auditors.  The pre-approval process has just been implemented in response to the new rules, and therefore, the audit committee does not have records of what percentage of the above fees were pre-approved.  However, all of the above services and fees were reviewed and approved by the audit committee either before or after the respective services were rendered.
 
The audit committee has considered the nature and amount of fees billed by LBB & Associates Ltd., LLP and believes that the provision of services for activities unrelated to the audit is compatible with maintaining LBB & Associates Ltd., LLP's independence.
 
 
34

 
 
Item 15.
Exhibits.
 
Exhibit Number and Exhibit Title
 
(3)    Charter and By-laws
     
3.1    Articles of Incorporation (incorporated by reference from our  S-1 Registration Statement filed August 13, 2008).
     
3.2    Bylaws (incorporated by reference from our SB-2 Registration Statement filed August 13, 2008).
     
(14)    Code of Ethics
     
14.1    Code of Business Conduct and Ethics
     
(31)    Section 302 Certification
     
31.1    Certification of Greg Curson
     
(32)    Section 906 Certification
     
32.1   Certification of Greg Curson
     
(101)   XBRL List
     
101.INS **
 
XBRL Instance Document
     
101.SCH **
 
XBRL Taxonomy Extension Schema Document
     
101.CAL **
 
XBRL Taxonomy Extension Calculation Linkbase Document
     
101.DEF **
 
XBRL Taxonomy Extension Definition Linkbase Document
     
101.LAB **
 
XBRL Taxonomy Extension Label Linkbase Document
     
101.PRE **
 
XBRL Taxonomy Extension Presentation Linkbase Document

** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
 
 
35

 
 
 
SIGNATURES
 
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 

 
 
Ayers Exploration, Inc.
 
       
Date:  April 16, 2012
By:
/s/ Greg Curson
 
    Greg Curson,  
    President, Secretary and Treasurer  
    (Principal Executive Officer, Principal Financial Officer and  
    Principal  Accounting Officer)  

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
 
Signature
 
Title
 
Date
         
/s/ Greg Curson
       
Greg Curson
 
President, Secretary and Treasurer
 
April 16, 2012
         
 
 
 36