AXIOM OIL & GAS CORP. - FORM 10-Q

Attached files

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EXCEL - IDEA: XBRL DOCUMENT - AXIOM OIL & GAS CORP.	Financial_Report.xls
EX-32.1 - AXIOM OIL & GAS CORP.	exhibit32-1.htm
EX-31.1 - AXIOM OIL & GAS CORP.	exhibit31-1.htm
EX-32.2 - AXIOM OIL & GAS CORP.	exhibit32-2.htm
EX-31.2 - AXIOM OIL & GAS CORP.	exhibit31-2.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended May 31, 2012

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________________ to __________________

Commission File Number: 000-53232

Axiom Gold and Silver Corp.

(Exact name of small business issuer as specified in its charter)

Nevada	27-0686445
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1846 E. Innovation Park Dr. Oro Valley, AZ 85755

(Address of principal executive offices)

(303) 872-7814

(Issuer’s Telephone Number)

Indicate by check mark whether the issuer (1) has 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. x Yes oNo

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). x Yes oNo

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

Large accelerated filer	o		Accelerated filer	o
Non-accelerated filer	o	(Do not check if a smaller reporting company)	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). oYes x No

As of July 31, 2012, there were 32,601,016 shares of the issuer’s $.001 par value common stock issued and outstanding.

PART I – FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

The accompanying unaudited interim consolidated financial statements of Axiom Gold and Silver Corp. (“Axiom”) as of May 31, 2012, and for the three and nine months ended May 31, 2012 and May 31, 2011 have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statement presentation and in accordance with the instructions to Form 10-Q and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited consolidated financial statements and notes thereto contained in Axiom’s Form 10-K filing with the SEC for the year ended August 31, 2011. In the opinion of management, the consolidated financial statements contain all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the consolidated financial position and the consolidated results of operations for the interim periods. The consolidated results of operations for the nine months ended May 31, 2012 are not necessarily indicative of the results that may be expected for the full year.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

F-1	Consolidated Balance Sheets as of May 31, 2012 (unaudited) and August 31, 2011.

F-2	Consolidated Statements of Operations for the three and nine months ended May 31, 2012 and May 31, 2011 and the period from Inception of Exploration Stage (September 1, 2010) through May 31, 2012 (unaudited).

F-3	Consolidated Statement of Changes in Stockholders’ Deficiency for the period from Inception of Exploration Stage (September 1, 2010) through May 31, 2012 (unaudited).

F-4	Consolidated Statements of Cash Flows for the nine months ended May 31, 2012 and May 31, 2011 and the period from Inception of Exploration Stage (September 1, 2010) through May 31, 2012 (unaudited).

F-5	Notes to Consolidated Financial Statements (unaudited).

PART I – FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

AXIOM GOLD AND SILVER CORP.

(An Exploration Stage Company)

Consolidated Balance Sheets

	May 31,			August 31,
	2012			2011
	(Unaudited)

ASSETS

Current assets
Cash	$	329		$	246,233
Net VAT receivable		--			58,514
Other current assets		--			1,046

Total current assets		329			305,793
Property and equipment – net		--			12,878

Other		1,400			2,361

Total assets	$	1,729		$	321,032

LIABILITIES AND STOCKHOLDERS’ DEFICIENCY

Current liabilities
Accounts payable and accrued expenses	$	571,024		$	331,371
Notes payable		30,000			30,000
Related party payables		--			15,751

Total liabilities		601,024			377,122
Commitments and contingencies		--			--

Stockholders’ deficiency
Preferred stock, $0.001 par value, 10,000,000 shares
authorized, none issued		--			--
Common stock, $0.001 par value, 300,000,000
shares authorized, shares issued and outstanding -
32,601,016 at May 31, 2012 and 31,307,400 at
August 31, 2011		32,601			31,307
Additional paid-in capital		6,934,234			5,427,787
Accumulated other comprehensive income		--			17,945
Deficit accumulated from prior operations		(121,862	)		(121,862	)
Deficit accumulated during the exploration stage		(7,444,268	)		(5,411,267	)
Total stockholders’ deficiency		(599,295	)		(56,090	)

Total liabilities and stockholders’ deficiency	$	1,729		$	321,032

See accompanying notes to consolidated financial statements.

F-1

AXIOM GOLD AND SILVER CORP.

(An Exploration Stage Company)

Consolidated Statements of Operations

(Unaudited)

													Period From
													Inception of
													Exploration
													Stage
													(September 1,
	For the Three Months Ended						For the Nine Months Ended						2010) through
	May 31,						May 31,						May 31,
	2012			2011			2012			2011			2012

Expenses
Compensation	$	251,666		$	675,688		$	1,538,258		$	2,922,390		$	5,245,369
General and administrative		93,367			229,376			400,917			417,657			1,398,344
Exploration		10,764			--			192,088			--			351,683
Impairment of goodwill		--			--			--			525,477			525,477

Loss before other expenses		(355,797	)		(905,064	)		(2,131,263	)		(3,865,524	)	$	(7,520,873	)

Other income (expense)
Gain on sale of subsidiary		160,681			---			160,681			--			160,681
Interest expense		(605	)		(469	)		(1,801	)		(712	)		(3,118	)
Foreign currency gain (loss)		(56,410	)		3,387			(60,618	)		3,387			(80,958	)

Total other income (expense)		103,666			2,918			98,262			2,675			76,605

Net loss	$	(252,131	)	$	(902,146	)	$	(2,033,001	)	$	(3,862,849	)	$	(7,444,268	)

Basic and diluted loss per share	$	(0.01	)	$	(0.03	)	$	(0.06	)	$	(0.15	)

Weighted average number of common
shares outstanding – basic and diluted		32,601,016			27,764,487			32,053,971			26,046,843

See the accompanying notes to consolidated financial statements.

F-2

AXIOM GOLD AND SILVER CORP.

(An Exploration Stage Company)

Consolidated Statement of Changes in Stockholders’ Deficiency

Period from Inception of Exploration Stage (September 1, 2010) through May 31, 2012

(Unaudited)

													Deficit
								Accumulated		Deficit			Accumulated
					Additional			Other		Accumulated			During the			Total
	Common Stock				Paid-in			Comprehensive		From Prior			Exploration			Stockholders’
	Shares		Amount		Capital			Income		Operations			Stage			Deficiency

Balance from prior operations, August 31, 2010		24,483,400	$	24,483	$	91,506		$	--	$	(121,862	)	$	--		$	(5,873	)

Common stock issued for compensation at $0.25 per share		150,000		150		37,350			--		--			--			37,500

Forgiveness of related party loan payable		--		--		2,250			--		--			--			2,250

Stock based compensation for options issued to employees
and directors		--		--		3,253,705			--		--			--			3,253,705

Common stock issued for compensation at $0.75
per share		100,000		100		74,900			--		--			--			75,000

Common stock issued for the acquisition of Axiom
Mexico at $0.25 per share		2,000,000		2,000		498,000			--		--			--			500,000

Related party rent expense		--		--		3,000			--		--			--			3,000

Common stock issued for cash at $0.25 per share		4,324,000		4,324		1,076,676			--		--			--			1,081,000

Offering costs		--		--		(96,850	)		--		--			--			(96,850	)

Common stock issued for services at $1.95 per share		250,000		250		487,250			--		--			--			487,500

Components of comprehensive loss:
Foreign currency translation		--		--		--			17,945		--			--			17,945
Net loss for the year ended August 31, 2011		--		-		--			--		--			(5,411,267	)		(5,411,267	)
Total comprehensive loss		--		--		--			--		--			--			(5,393,322	)

Balance August 31, 2011 - Forward		31,307,400		31,307		5,427,787			17,945		(121,862	)		(5,411,267	)		(56,090	)

See accompanying notes to consolidated financial statements.

F-3

AXIOM GOLD AND SILVER CORP.

(An Exploration Stage Company)

Consolidated Statement of Changes in Stockholders’ Deficiency

Period from Inception of Exploration Stage (September 1, 2010) through May 31, 2012

(Unaudited)

													Deficit
							Accumulated			Deficit			Accumulated
					Additional		Other			Accumulated			During the			Total
	Common Stock				Paid-in		Comprehensive			From Prior			Exploration			Stockholders’
	Shares		Amount		Capital		Income			Operations			Stage			Deficiency

Balance August 31, 2011 - Forwarded		31,307,400		31,307		5,427,787		17,945			(121,862	)		(5,411,267	)		(56,090	)

Stock based compensation for options issued to employees
and directors		--		--		1,070,337		--			--			--			1,070,337

Common stock issued for compensation at $1.01 per share		150,000		150		151,350		--			--			--			151,500

Common stock issued for cash at $0.25 per share		1,143,616		1,144		284,760		--			--			--			285,904

Components of comprehensive loss:
Foreign currency translation		--		--		--		(17,945	)		--			--			(17,945	)
Net loss for the nine months ended May 31, 2012		--		--		--		--			--			(2,033,001	)		(2,033,001	)
Total comprehensive loss		--		--		--		--			--			--			(2,050,946	)

Balance – May 31, 2012		32,601,016	$	32,601	$	6,934,234	$	--		$	(121,862	)	$	(7,444,268	)	$	(599,295	)

See accompanying notes to consolidated financial statements.

F-4

AXIOM GOLD AND SILVER CORP.

(An Exploration Stage Company)

Consolidated Statements of Cash Flows

(Unaudited)

							Period from
							Inception of
							Exploration Stage
							(September 1,
	For the Nine Months Ended						2010) through
	May 31,						May 31,
	2012			2011			2012
Cash flows from operating activities
Net loss	$	(2,033,001	)	$	(3,862,849	)	$	(7,444,268	)
Adjustments to reconcile net loss to
net cash used in operating activities:
Stock-based compensation		1,221,837			2,689,955			5,075,542
Depreciation expense		2,009			783			3,937
Foreign currency (gain) loss		60,618			(3,387	)		80,958
Gain on sale of subsidiary		(160,681	)		--			(160,681	)
Impairment of goodwill		--			525,477			525,477
Related party rent expense		--			3,000			3,000
Changes in assets and liabilities:
Net VAT receivable		(38,974	)		(25,821	)		(87,751	)
Other current assets		858			752			981
Other		117			(1,443	)		(1,254	)
Accounts payable and accrued
expenses		396,899			218,233			723,799

Net cash used in operating activities		(550,318	)		(455,300	)		(1,280,260	)

Cash flows from investing activities
Acquisition of equipment		(124	)		(3,487	)		(7,454	)
Cash received in acquisition		--			3,435			3,435

Net cash used in investing activities		(124	)		(52	)		(4,019	)

Cash flows from financing activities
Proceeds (payments) related parties - net		13,158			(5,146	)		(18,680	)
Proceeds from notes payable		--			30,000			30,000
Proceeds from issuance of common stock		285,904			482,500			1,366,904
Offering costs		--			(2,500	)		(96,850	)
Net cash provided by financing activities		299,062			504,854			1,281,374

Net increase (decrease) in cash		(251,380	)		49,502			(2,905	)

Adjustment for change in exchange rate		5,476			(1,577	)		3,081

Cash balance, beginning of periods		246,233			153			153

Cash balance, end of periods	$	329		$	48,078		$	329

See accompanying notes to consolidated financial statements.

F-5

AXIOM GOLD AND SILVER CORP.

(An Exploration Stage Company)

Consolidated Statements of Cash Flows

(Unaudited)

							Period from
							Inception of
							Exploration Stage
							(September 1,
	For the Nine Months Ended						2010) through
	May 31,						May 31,
	2012			2011			2012

Supplementary information:
Cash paid for:
Interest	$	--		$	--		$	--
Income taxes	$	--		$	--		$	--

Supplemental disclosures of cash flow information:
Non-cash investing activities:
Issuance of common shares to acquire Axiom Mexico
Cash	$	--		$	3,435		$	3,435
Net VAT receivable		--			9,667			9,667
Prepaid expenses and other current assets		--			1,169			1,169
Security deposit		--			990			990
Furniture and equipment		--			7,476			7,476
Accounts payable and accrued expenses		--			(625	)		(625	)
Related party payables		--			(47,589	)		(47,589	)

Net liabilities acquired	$	--		$	(25,477	)	$	(25,477	)

Sale of investment in Axiom Mexico
Other current assets	$	188		$	--		$	188
Net VAT receivable		97,488			--			97,488
Property and equipment		9,548			--			9,548
Other		844			--			844
Accounts payable and accrued expenses		(157,246	)		--			(157,246	)
Related party payables		(28,909	)		--			(28,909	)
Accumulated other comprehensive income		(82,594	)		--			(82,594	)

Gain on sale of subsidiary	$	(160,681	)	$	--		$	(160,681	)

Non-cash financing activities:
Forgiveness related party payables	$	--		$	2,250		$	2,250

See accompanying notes to consolidated financial statements.

F-6

AXIOM GOLD AND SILVER CORP.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Unaudited)

Note 1

Nature of Business and Basis of Financial Statement Presentation

Axiom Gold and Silver Corp. (“Axiom” or the “Company”) was incorporated in Nevada on February 13, 2007 under the name TC Power Management Corp. and originally formed for the purpose of providing consulting services to private and public entities seeking assessment, development and implementation of energy generating solutions. Effective September 1, 2010, the Company changed its business strategy and is currently in the business of acquiring and exploring mineral properties. Accordingly, as of September 1, 2010, the Company is considered to be an exploration stage company. On May 10, 2011, the Company filed a Certificate of Amendment to its Articles of Incorporation changing its name to Axiom Gold and Silver Corporation. In addition, the Amendment increased the number of authorized shares of common stock from 100,000,000 to 300,000,000 and authorized the issuance of 10,000,000 preferred shares, the terms of which may be determined by the Board of Directors without the vote of shareholders. Effective November 1, 2010, the Company enacted a four-for-one (4:1) forward stock split. All share and per share data in these consolidated financial statements have been adjusted retroactively to reflect the stock split.

On January 13, 2011, the Company entered into a material definitive agreement with Axiom Minerals de Mexico S.A. de C.V (“Axiom Mexico”) whereby through its wholly owned Mexican subsidiary, Axiom Acquisition Corp, acquired all of the issued and outstanding shares of Axiom Mexico, by the issuance of two million (2,000,000) of its common shares. The shares were issued to the shareholders of Axiom Mexico on a pro rata basis as to their ownership of Axiom Mexico. Axiom Acquisition Corp. merged with and into Axiom Mexico and the separate corporate existence of Axiom Acquisition Corp. ceased. Axiom Mexico, as the surviving corporation in the merger and a wholly-owned subsidiary of the Company continues its existence under its current name and continues to be governed by the laws of the state of Chihuahua, Mexico. This acquisition was accounted for as a basic business combination with the Company as the acquirer of Axiom Mexico.

Effective May 31, 2012, the Company sold all the outstanding shares of Axiom Mexico to an unrelated entity for total consideration of $100. The Company recognized a gain of $160,681 on the sale. As a result of the sale, as of May 31, 2012, all the assets and liabilities of Axiom Mexico were no longer reported in the accompanying consolidated balance sheet.

F-7

AXIOM GOLD AND SILVER CORP.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Unaudited)

Note 1

Nature of Business and Basis of Financial Statement Presentation (Continued)

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statement presentation and in accordance with the instructions to Form 10-Q. Accordingly, they do not include all the information and notes necessary for complete financial statement presentation. In the opinion of management, the consolidated financial statements contain all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the consolidated financial position as of May 31, 2012 and the consolidated results of operations for the three and nine months ended May 31, 2012 and 2011 and the period from inception of exploration (September 1, 2010) through May 31, 2012 and the consolidated statements of cash flows for the nine months ended May 31, 2012 and 2011 and the period from inception of exploration stage (September 1, 2010) through May 31, 2012. Interim results are not necessarily indicative of the results to be expected for a full year. Reference is made to the financial statements of the Company contained in its Annual Report on Form 10-K for the year ended August 31, 2011.

Note 2

Going Concern

The accompanying consolidated financial statements have been prepared on a basis which assumes that the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has no established source of revenue, and has accumulated significant losses and an accumulated deficit during its exploration stage. These circumstances raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Management's plans with respect to alleviating the adverse financial conditions that caused substantial doubt about the Company’s ability to continue as a going concern are as follows:

In order to implement its business plan, the Company needs to raise additional capital through equity or debt financings or through loans from shareholders or others. The ability of the Company to continue as a going concern is dependent upon its ability to successfully raise additional capital and eventually attain profitable operations. There can be no assurance that the Company will be able to raise additional capital or execute its business strategy.

F-8

AXIOM GOLD AND SILVER CORP.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Unaudited)

Note 3

Summary of Significant Accounting Policies

Other significant accounting policies are set forth in Note 3 of the audited consolidated financial statements included in the Company’s 2011 annual report on Form 10-K

Principles of Consolidation – The consolidated financial statements include the accounts of the Company and its wholly-owned Mexican subsidiary, Axiom Minerals de Mexico, S.A. de C.V. effective as of the date of its acquisition January 13, 2011 through the date of its disposition, May 31, 2012. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Exploration Stage Company – As of September 1, 2010, the Company became an “exploration stage company” as defined in the Securities and Exchange Commission Industry Guide 7, and is subject to compliance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 915 “Development Stage Entities”. For the period from February 13, 2007 (Inception) to August 31, 2010, the Company was a “development stage company” in accordance with ASC Topic 915. Deficits accumulated prior to becoming an “exploration stage company” have been separately presented in the accompanying consolidated balance sheets and consolidated statement of changes in stockholders’ deficiency. To date, the Company’s planned principal operations have not fully commenced.

Mineral Property Costs - The Company is in the exploration stage and has not yet realized any significant revenues from its planned operations. It is primarily engaged in the acquisition and exploration of mining properties. Mineral property acquisition and exploration costs are currently 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 then incurred to develop such property are capitalized. Such costs will be amortized using the units-of-production method over the estimated life of the probable reserve. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to operations.

Foreign Currency Translation – Axiom Mexico considers the Mexican peso (“MXN”) to be its functional currency. Assets and liabilities were translated into US dollars (“US$”) as of May 31, 2012 at the period end exchange rate. Income and expense amounts for the three and nine months ended May 31, 2012 and 2011 were translated using the average rates during the period.

F-9

AXIOM GOLD AND SILVER CORP.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Unaudited)

Note 3

Summary of Significant Accounting Policies (Continued)

Equity-Based Compensation - The Company accounts for equity based compensation transactions with employees under the provisions of ASC Topic No. 718, “Compensation: Stock Compensation” (“Topic No. 718”). Topic No. 718 requires the recognition of the fair value of equity-based compensation in net income. The fair value of common stock issued for compensation is measured at the market price on the date of grant. The fair value of the Company’s equity instruments, other than common stock, is estimated using a Black-Scholes option valuation model. This model requires the input of highly subjective assumptions and elections including expected stock price volatility and the estimated life of each award. In addition, the calculation of equity-based compensation costs requires that the Company estimate the number of awards that will be forfeited during the vesting period. The fair value of equity-based awards granted to employees is amortized over the vesting period of the award and the Company elected to use the straight-line method for awards granted after the adoption of Topic No. 718.

The Company accounts for equity based transactions with non-employees under the provisions of ASC Topic No. 505-50, “Equity-Based Payments to Non-Employees” (“Topic No. 505-50”). Topic No. 505-50 establishes that equity-based payment transactions with non-employees shall be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The fair value of common stock issued for payments to non-employees is measured at the market price on the date of grant. The fair value of equity instruments, other than common stock, is estimated using the Black-Scholes option valuation model. In general, the Company recognizes an asset or expense in the same manner as if it was to pay cash for the goods or services instead of paying with or using the equity instrument.

Reclassification – Certain amounts in the period from inception of exploration stage (September 1, 2010) through May 31, 2012 have been reclassified to conform to the presentation used in the three and nine months ended May 31, 2012.

F-10

AXIOM GOLD AND SILVER CORP.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Unaudited)

Note 3

Summary of Significant Accounting Policies (Continued)

Earnings (Loss) Per Share – Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflects the amount of earnings for the period available to each share of common stock outstanding during the reporting period, while giving effect to all dilutive potential common shares that were outstanding during the period, such as common shares that could result from the potential exercise or conversion of securities into common stock.

Recently Issued Accounting Pronouncements – On May 12, 2011, the FASB issued Accounting Standards Update (“ASU”) 2011-04. The ASU is the result of joint efforts by the FASB and the International Accounting Standards Board (“IASB”) to develop a single, converged fair value framework. Thus, there are few differences between the ASU and its international counterpart, IFRS 13. This ASU is largely consistent with existing fair value measurement principles in U.S. GAAP; however it expands ASC 820’s existing disclosure requirements for fair value measurements and makes other amendments. The ASU is effective for interim and annual periods beginning after December 15, 2011. The Company does not expect the provisions of ASU 2011-04 to have a material effect on the financial position, results of operations or cash flows of the Company.

On June 16, 2011, the FASB issued ASU 2011-05, which revises the manner in which entities present comprehensive income in their financial statements. The new guidance removes the presentation options in ASC 220 and requires entities to report components of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. The ASU does not change the items that must be reported in other comprehensive income. The amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The Company does not expect the provisions of ASU 2011-05 to have a material effect on the financial position, results of operations or cash flows of the Company.

In December 2010, the FASB issued ASC Update No. 2010-28 “When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts”. ASU 2010-28 modifies Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, Step 2 of the goodwill impairment test is required if it is more likely than not that a goodwill impairment exists, after considering whether there are any adverse qualitative factors indicating that an impairment may exist. ASU 2010-28 is effective prospectively for fiscal years and interim periods beginning after December 15, 2011. The Company does not anticipate the adoption of ASU 2010-28 will have a material impact on its consolidated financial statements.

There are several other new accounting pronouncements issued or proposed by the FASB. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe any of these accounting pronouncements has had or will have a material impact on the Company’s consolidated financial position or operating results.

Subsequent Events – In accordance with ASC 855 “Subsequent Events” the Company evaluated subsequent events after the balance sheet date.

F-11

AXIOM GOLD AND SILVER CORP.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Unaudited)

Note 4.

Sale of Subsidiary

Effective May 31, 2012, we sold all of the outstanding shares of Axiom Mexico to an unrelated entity for total consideration of $100. We recognized a gain of $160,681 on the sale. As a result of the sale, as of May 31, 2012, all the assets and liabilities of Axiom Mexico were no longer reported in the accompanying consolidated balance sheet.

Axiom Mexico’s expenses included in the accompanying consolidated statements of operations are as follows:

													Period from
													Inception of
													Exploration
													Stage
													(September 1,
	For the Three Months Ended						For the Nine Months Ended						2010) through
	May 31,						May 31,						May 31,
	2012			2011			2012			2011			2012

Expenses
Compensation	$	20,849		$	70,123		$	121,421		$	104,935		$	267,327
General and administrative		7,247			66,861			56,967			90,842			140,676
Exploration		10,764			--			192,088			--			351,683
Impairment of goodwill		--			--			--			525,477			525,477

Loss before other expenses		(38,860	)		(136,984	)		(370,476	)		(721,254	)		(1,285,163	)

Foreign currency gain (loss)		(56,410	)		--			(60,618	)		3,387			(80,958	)

Net loss	$	(95,270	)	$	(136,984	)	$	(431,094	)	$	(717,867	)	$	(1,366,121	)

Note 5.

Furniture and Equipment

Furniture and equipment is as follows:

	May 31,		August 31,
	2012		2011
	(Unaudited)

Furniture and equipment	$	--	$	14,806
Accumulated depreciation		--		(1,928	)

	$	--	$	12,878

Depreciation expense is $701 and $2,009 in the three and nine months ended May 31, 2012 and $348 and $783 in the three and nine months ended May 31, 2011.

F-12

AXIOM GOLD AND SILVER CORP.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Unaudited)

Note 6

Related Party Transactions

Rent Expense – The Company, through February 2011, utilized minimal office space at the office of a former Director without charge (see Note 11). An amount of $500 per month, the estimated fair value, has been charged as rent expense with an offset to additional paid-in capital. Related party rent expense amounted to $-0- and $3,000 in the three and nine months ended May 31, 2011.

Professional Fees – Legal services are provided by a law firm in which a former Director serves as senior partner. Legal fees and related expenses amounted to approximately $17,000 and $52,000 in the three and nine months ended May 31, 2012 and $26,000 and $60,000 in the three and nine months ended May 31, 2011. There is approximately $34,000 and $1,000 included in accounts payable as of May 31, 2012 and August 31, 2011, respectively.

Accounting and tax services are provided by an accounting firm in which our former Chief Financial Officer (“CFO”) provides consulting services. Accounting and tax fees amounted to approximately $20,000 and $59,000 in the three and nine months ended May 31, 2012 and $38,000 and $67,000 in the three and nine months ended May 31, 2011. There is approximately $37,000 and $-0-included in accounts payable as of May 31, 2012 and August 31, 2011, respectively.

Consulting services were provided to Axiom Mexico by entities in which a former Director is an owner. There is approximately $-0- and $4,000 in related party payables as of May 31, 2012 and August 31, 2011, respectively. Expenses amounted to approximately $-0- and $41,000 in the three and nine months ended May 31, 2012 and approximately $28,000 and $30,000 in the three and nine months ended May 31, 2011.

Consulting services were provided to Axiom Mexico by an entity in which two of our stockholders are owners. There is approximately $-0- and $11,000 in related party payables as of May 31, 2012 and August 31, 2011, respectively. There were no expenses in the three and nine months ended May 31, 2012 and approximately $4,000 and $8,000 in the three and nine months ended May 31, 2011.

Other – The Company is obligated to its former Chief Executive Officer (“CEO”) for accrued and unpaid compensation and reimbursable expenses as of May 31, 2012 and August 31, 2011 in the amounts of approximately $158,000 and $25,000, respectively (See Note 11).

The Company is obligated to its current CEO/CFO, who is also a stockholder of the Company, for accrued and unpaid compensation and reimbursable expenses as of May 31, 2012 and August 31, 2011 in the amounts of approximately $199,000 and $100,000, respectively (See Note 11).

F-13

AXIOM GOLD AND SILVER CORP.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Unaudited)

Note 7

Mineral Properties

With the sale of Axiom Mexico, we currently have no mineral properties. We continue to try to raise capital with the intention of acquiring new properties.

The Company incurred exploration expenses as follows in the nine months ended May 31, 2012:


	Aurora		Gavilan		Total

Drilling and sampling	$	11,625	$	--	$	11,625
Geological, geochemical, geophysics		99,009		--		99,009
Land costs, taxes, permits		50,649		722		51,371
Travel		19,514		--		19,514
Other		10,569		--		10,569

	$	191,366	$	722	$	192,088

Note 8

Notes Payable

In April 2011, the Company borrowed $20,000 from an unrelated party for working capital purposes. The note is unsecured and payable on demand with 8% interest per annum.

On November 9, 2010, the Company borrowed $10,000 from an unrelated party for working capital purposes. The note is unsecured and was due November 9, 2011 with 8% interest per annum.

Interest expense in the three and nine months ended May 31, 2012 is $605 and $1,801 and in the three and nine months ended May 31, 2011 is $469 and $712, respectively.

F-14

AXIOM GOLD AND SILVER CORP.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Unaudited)

Note 9

Stockholders’ Equity

The Company is authorized to issue 300,000,000 shares of common stock with a par value of $0.001 and 10,000,000 shares of preferred stock with a par value of $0.001. Our Board of Directors has the authority to set the terms of any class of preferred shares through an issuance of a certificate of designation without receiving further shareholder approval. We have reserved 7,000,000 common shares for issuance under our 2010 Stock Option Plan. In the period ended August 31, 2007, the Company sold 20,000,000 shares of common stock for cash of $500. In the year ended August 31, 2008, the Company sold 4,483,400 shares of its common stock for cash of $112,085. There are no equity transactions in the years ended August 31, 2010 and 2009. Effective November 1, 2010, the Company enacted a four-for-one (4:1) forward stock split. All share and per share data in these financial statements have been adjusted retroactively to reflect the stock split.

Pursuant to a compensation agreement with a former Director, effective October 4, 2010, the Company granted a stock award in the amount of 150,000 shares of Company common stock to the Director (see Note 11). The 150,000 shares were valued at $37,500, the fair value at date of grant.

Pursuant to a compensation agreement with our former CFO, effective October 19, 2010, the Company granted a stock option award for the purchase of 50,000 shares of Company common stock at an exercise price of $0.25 per share, which represents the fair value at date of grant (see Note 11). The option is immediately exercisable for five years from the date of issuance. The fair value of the option, $10,174, was calculated using the Black-Scholes pricing model, and was charged to operations as share-based expense at date of grant.

Pursuant to the acquisition agreement with Axiom Mexico on January 13, 2011, the Company issued two million (2,000,000) of its common shares to the shareholders of Axiom Mexico. The shares were valued at $500,000 ($0.25 per share) which represents the fair value on that date.

F-15

AXIOM GOLD AND SILVER CORP.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Unaudited)

Note 9

Stockholders’ Equity (Continued)

Pursuant to a compensation agreement with our former Vice President - Exploration, effective January 13, 2011, the Company granted a stock option award for the purchase of 600,000 shares of Company common stock at an exercise price of $0.25 per share (see Note 11). The fair value of our common stock at date of grant was $0.67. The fair value of the option, $386,632, was calculated using the Black-Scholes pricing model. The option vests over a two year period as follows: 150,000 shares immediately and 150,000 shares semi-annually through July 13, 2012; and is exercisable for ten years from the date of issuance. The fair value of the option is charged to operations as share-based expense over the vesting period.

Pursuant to a compensation agreement with our Director – Business Development, effective January 20, 2011, the Company granted a stock option award for the purchase of 300,000 shares of Company common stock at an exercise price of $0.25 per share (see Note 11). The fair value of our common stock at date of grant was $0.70. The fair value of the option, $186,197, was calculated using the Black-Scholes pricing model. The option vests as follows: 150,000 shares immediately and 150,000 shares on January 20, 2012; and is exercisable for five years from the date of issuance. The fair value of the option was charged to operations as share-based expense over the vesting period.

Pursuant to a compensation agreement with our former CEO, effective January 24, 2011, the Company (i) issued 100,000 shares of common stock valued at $75,000 ($0.75 per share) and (ii) granted a stock option award for the purchase of 5,500,000 shares of Company common stock at an exercise price of $0.25 per share (see Note 11). The fair value of our common stock at date of grant was $0.75. The fair value of the option, $3,977,771, was calculated using the Black-Scholes pricing model. The option vests over a three year period as follows: 2,200,000 shares immediately, 1,400,000 shares, 1,300,000 shares and 600,000 shares on January 24, 2012, 2013 and 2014, respectively; and is exercisable for ten years from the date of issuance. The fair value of the option is charged to operations as share-based expense over the vesting period.

F-16

AXIOM GOLD AND SILVER CORP.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Unaudited)

Note 9

Stockholders’ Equity (Continued)

Pursuant to a compensation agreement with a former Director, effective January 26, 2011, the Company granted a stock option award for the purchase of 300,000 shares of Company common stock at an exercise price of $0.25 per share (see Note 11). The fair value of our common stock at date of grant was $0.67. The fair value of the option, $193,350, was calculated using the Black-Scholes pricing model. The option vests over a three year period as follows: 50,000 shares immediately, 50,000 shares, 100,000 shares and 100,000 shares on January 26, 2012, 2013 and 2014, respectively; and is exercisable for ten years from the date of issuance. The fair value of the option is charged to operations as share-based expense over the vesting period.

In January and February 2011, we sold 330,000 shares of common stock at $0.25 per share for gross proceeds of $82,500 to five non-US accredited investors pursuant to Regulation S. The Company incurred offering costs of $2,500 pursuant to an escrow agreement.

In April and May 2011, we sold 1,600,000 shares of common stock at $0.25 per share for gross proceeds of $400,000 to three non-US accredited investors pursuant to Regulations S and one US accredited investor pursuant to Regulation D.

In June and July 2011, we sold 2,394,000 shares of common stock at $0.25 per share for gross proceeds of $598,500 to six non-US accredited investors pursuant to Regulation S and three US accredited investors pursuant to Regulation D. In addition, we incurred offering costs of $94,350 (10% of gross proceeds) on all sales pursuant to Regulation S.

In July 2011, we issued 250,000 shares of common stock for investor relations services (see Note 11). The shares are valued at $487,500 the fair value at date of grant.

Effective June 17, 2011, we appointed Roman Friedrich III to our Board of Directors (see Note 11). Mr. Friedrich is to receive compensation of $1,000 per month and an option to purchase 100,000 shares of our common stock exercisable at $0.25 per share, the agreed upon fair value at date of grant. The option is fully vested and expires 10 years from date of grant. The fair value of the option, $114,464, was calculated using the Black-Scholes pricing model. The fair value of the option was charged to operations as share-based expense on the date of grant.

Effective June 17, 2011, we granted our former CFO an option to purchase 100,000 shares of common stock exercisable at $0.25 per share, the agreed upon fair value at date of grant (see Note 11). The option vests over a two year period and expires 10 years from date of grant. The fair value of the option, $114,464, was calculated using the Black-Scholes pricing model. The fair value of the option is charged to operations as share-based expense over the vesting period.

F-17

AXIOM GOLD AND SILVER CORP.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Unaudited)

Note 9

Stockholders’ Equity (Continued)

In December 2011, we issued 150,000 shares of common stock to one of our directors pursuant to his compensation agreement (see Note 11). Compensation of $151,500, the fair value of the shares, was recorded in October 2011 on the date such shares were earned.

In December 2011, we received gross proceeds of $285,904 from the sale of 1,143,616 shares of common stock at $0.25 per share to one non-U.S. investor pursuant to Regulation S.

The following table summarizes share based compensation for the periods:

	Three Months Ended				Nine Months Ended
	May 31,				May 31,
	2012		2011		2012		2011

Employees/Directors	$	170,817	$	538,065	$	1,221,837	$	2,689,955

The fair value of each option is estimated on the date of grant using the Black-Scholes pricing model. The following weighted-average assumptions were made in estimating fair value:

	Year Ended August 31,			Nine Months Ended May 31,
	2011			2012		2011

Dividend Yield		--	%		--		--	%
Risk-Free Interest Rate		3.34	%		--		3.35	%
Expected Life	9.75 Years				--	9.74 Years
Expected Volatility		111.55	%		--		111.61	%

2010 Stock Option Plan

The Plan, adopted by the Board of Directors on January 31, 2011, is intended to provide an incentive to our executive officers, directors, employees, independent contractors or agents who are responsible for or contribute to our management, growth and/or profitability. The purpose of granting options to such persons under the Plan is to attract them to consider employment with, or service to, us, to encourage their continued employment or service, and to give them incentive to provide their best efforts to us for purposes of enhancing shareholder value.

A total of up to 7,000,000 shares of our common stock have been reserved for the implementation of the Plan, either through the issuance of options to eligible persons in the form of incentive stock options or non-statutory options which are subject to restricted property treatment under Section 83 of the Internal Revenue Code. Whenever practical, the Plan is to be administered by a committee of not less than two members of the Board of Directors appointed by the full Board, and the Plan has a term of ten years, unless sooner terminated by the Board. As of May 31, 2012, 2,366,667 shares of common stock are available for issuance under the plan (see Note 11).

F-18

AXIOM GOLD AND SILVER CORP.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Unaudited)

Note 9

Stockholders’ Equity (Continued)

The following table summarizes options transactions under the 2010 Stock Option Plan for the period.

	For the Nine Months Ended
	May 31, 2012 (Unaudited)
	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value

Outstanding at beginning
of period		6,950,000		$	0.25
Granted/Sold		--			--
Expired/Cancelled		--			--
Forfeited		(2,316,667	)		--
Exercised		--			--
Outstanding at May 31, 2012		4,633,333		$	0.25	.44 Years	$	--

Exercisable at May 31, 2012		4,633,333		$	0.25	.44 Years	$	--

	For the Year Ended
	August 31, 2011
	Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value

Outstanding at beginning
of period		--	$	--
Granted/Sold		6,950,000		0.25
Expired/Cancelled		--		--
Forfeited		--		--
Exercised		--		--
Outstanding at August 31, 2011		6,950,000	$	0.25	9.16 Years	$	5,212,500

Exercisable at August 31, 2011		2,883,333	$	0.25	9.07 Years	$	2,162,500

F-19

AXIOM GOLD AND SILVER CORP.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Unaudited)

Note 9

Stockholders’ Equity (Continued)

The weighted-average grant-date fair value of options granted during the nine months ended May 31, 2011 was $0.73. No options were granted in the nine months ended May 31, 2012.

Summary of non-vested options as of and for the nine months ended May 31, 2012 is as follows:

				Weighted-
				Average
				Grant-Date
Non-vested Options	Shares			Fair Value

Non-vested at August 31, 2011		4,066,667		$	0.71
Granted		--		$	--
Vested		(1,750,000	)	$	0.70
Forfeited		(2,316,667	)	$	(0.72	)
Non-vested at May 31, 2012		--		$	--

Note 10

Income Taxes

Net deferred tax assets and liabilities consist of the following components:

	May 31,			August 31,
	2012			2011
	(Unaudited)
Deferred tax assets:
Pre-operating costs	$	201,169		$	289,994
Equity-based payments		1,566,599			1,487,530
Net operating loss carryforward		225,237			148,482
Valuation allowance		(1,993,005	)		(1,926,006	)

Net deferred tax assets	$	--		$	--

F-20

AXIOM GOLD AND SILVER CORP.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Unaudited)

Note 10

Income Taxes (Continued)

The income tax provision differs from the amount of income tax determined by applying the U.S. federal and state income tax rates of 39% to pretax income from continuing operations for the three and nine months May 31, 2012 and 2011 due to changes in the valuation allowance.

At May 31, 2012, the Company had approximately $521,000 of capitalized pre-operating costs net of costs related to Axiom Mexico. These costs are amortized in the 180 month period beginning June 1, 2011, the commencement of exploration operations. No tax benefit has been reported in the May 31, 2012 and 2011 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.

Based upon historical net losses and the Company being in the exploration stage, management believes that it is not more likely than not that the deferred tax assets will be realized and has provided a valuation allowance of 100% of the deferred tax asset. The valuation allowance increased by approximately $67,000 and $1,878,000 in the nine months ended May 31, 2012 and the year ended August 31, 2011, respectively.

Axiom Mexico is subject to the following Mexican taxes:

a.	Income tax is incurred at the rate of 30%.

b.	The IETU tax is incurred at the rate of 17.5%. The taxable base is determined by totaling the revenues collected, less certain deductions paid, including the deduction of investments.

The tax incurred is reduced by certain credits related to investment in fixed assets and inventories not deducted when the law was enacted, as well as the ISR effectively paid in the year, in such a way that the IETU will be paid only on the difference between the ISR and IETU incurred, when the latter is greater.

The Cash Deposit Tax Law (LIDE) tax is incurred at the rate of 3% on cash deposits that on an accumulated basis exceed $ 15,000 a month, bearing in mind that it must be applied by each institution in the Mexican financial system. The LIDE may be credited against ISR for the same year and, as the case be, against the ISR withheld from third parties.

F-21

AXIOM GOLD AND SILVER CORP.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Unaudited)

Note 11

Commitments

Compensation Agreements

On October 4, 2010, we appointed Steven A. Sanders to the Board of Directors and as Chief Executive Officer. Pursuant to the agreement, Mr. Sanders is to receive a stock award in the amount of 450,000 shares of Company common stock as compensation for serving as a director. 150,000 shares will be earned upon the start of each year for which he serves as a director. The initial term of the agreement is three years. With the appointment of Mr. Quiroz (see below), Mr. Sanders resigned as Chief Executive Officer.

On October 18, 2010, we appointed Frank Lamendola as Chief Financial Officer (see below). Pursuant to the agreement, Mr. Lamendola received a stock option to purchase 50,000 shares of Company common stock at an exercise price of $0.25 per share. The options were issued to Mr. Lamendola pursuant to a Stock Option Agreement, dated October 19, 2010, and are fully vested and exercisable for five years from the date of issuance.

Effective January 13, 2011, we appointed Francisco Quiroz as Chief Executive Officer and Director (see below). With the appointment of Dr. John Larson (see below), Mr. Quiroz resigned as Chief Executive Officer and assumed the title of Vice President – Exploration. Pursuant to his employment agreement, Mr. Quiroz will be compensated at the rate of $166,800 per annum effective as of January 13, 2011 for an initial term of three years and was granted stock options to purchase 600,000 shares of Company common stock at an exercise price of $0.25 per share. The options vest semi-annually over a 2 year period and expire 10 years from the date of grant. In addition to other customary benefits, Mr. Quiroz will be entitled to bonuses consisting of stock awards based on mineral discoveries, as defined in the agreement.

On January 14, 2011 we entered into an agreement with Robert Knight pursuant to which in return for serving as Director – Business Development (a non-executive position) (see below). Mr. Knight will receive $7,500 per month and options to purchase 300,000 shares of Company common stock exercisable at $0.25 per share. The options vest over a one year period and expire 5 years from the date of the grant. The initial term of the agreement is for a one year period. Currently, the agreement remains in effect with the same terms on a month to month basis.

F-22

AXIOM GOLD AND SILVER CORP.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Unaudited)

Note 11

Commitments (Continued)

On January 24, 2011, we appointed Dr. John Larson as Chief Executive Officer (“CEO”) and Director (see below). Pursuant to his employment agreement, Dr. Larson will be compensated at the rate of $180,000 per annum effective as of January 15, 2011. In addition to other customary benefits, he is also entitled to receive quarterly medical insurance reimbursements of $5,000. Dr. Larson was granted stock options to purchase 5,500,000 shares of Company common stock at an exercise price of $0.25 per share. The options vest over a 3 year period and expire 10 years from the date of grant. Dr. Larson also received a signing bonus of 100,000 shares of common stock of the Company. Dr. Larson will also be entitled to bonuses consisting of stock awards based on mineral discoveries, as defined in the agreement.

On January 26, 2011 we entered into an agreement with Nivaldo Rojas pursuant to which in return for serving as a Director, Mr. Rojas will receive $1,000 per month and options to purchase 300,000 shares of Company common stock exercisable at $0.25 per share (see below). The options vest over a three year period and expire 10 years from the date of the grant. Additionally, the Company entered into a Finder’s Fee Agreement with an entity in which Mr. Rojas is an owner whereby the Company will pay the entity fees, as defined in the agreement, for (i) finding suitable properties to acquire and (ii) gold discovered on such properties.

Effective June 17, 2011, we appointed Roman Friedrich III to our Board of Directors (see below). Mr. Friedrich is to receive compensation of $1,000 per month and an option to purchase 100,000 shares of Company common stock exercisable at $0.25 per share, the agreed upon fair value at date of grant. The option is fully vested and expires 10 years from date of grant.

Pursuant to the compensation agreements, subject to the exceptions and limitations provided therein, the Company has agreed to hold harmless and indemnify the officers and directors to the fullest extent permitted by law against any and all liabilities and expenses in connection with any proceeding to which such director or officer was, is or becomes a party, arising out of his services as an officer, director, employee, agent or fiduciary of the Company or its subsidiaries.

Effective May 18, 2012, the Company appointed Mr. Robert Knight CEO, CFO, Secretary and a Director and Dr. Larson resigned as CEO and Director of the Company, Mr. Lamendola resigned as CFO of the Company, Mr. Quiroz resigned as Vice President-Exploration and Director and Mr. Sanders, Mr. Rojas and Mr. Friedrich resigned as Directors of the Company. As a result of the resignations, non-vested options to purchase 2,316,667 shares of Company common stock were immediately forfeited and the exercise date of vested options to purchase 4,333,333 shares of Company common stock was accelerated to three months after the date of resignation (August 18, 2012) per the terms of the option agreements.

F-23

AXIOM GOLD AND SILVER CORP.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Unaudited)

Note 11

Commitments (Continued)

Pooling Agreement

Effective January 13, 2011, certain shareholders (the “Shareholders”) owning approximately 17,100,000 shares of Company common stock entered into a share pooling agreement. Terms of the agreement are summarized as follows:

1. Voting Rights During the term of the pooling agreement, each shareholder may exercise all voting rights attached to such shareholder’s shares, except that:

(a) Shareholder A and B hereby grant to Shareholders C, D, E and F the right and title to vote all of Shareholder A and B’s shares for the exclusive purpose to elect as many members of the board of directors, as necessary to have Shareholders C, D, E and F elect 51% of such Board of Directors; and

(b) Shareholders C, D, E and F hereby grant to Shareholder A and B the right and title to vote all of Shareholders C, D, E and F’s shares for the exclusive purpose to elect as many member of the board of directors, as necessary to have Shareholder A and B elect a maximum 49% of such Board of Directors.

Each of the Shareholders understand that the election of directors may be outside of the control of the other Shareholders hereto depending on the number of shares held by persons not party to this pooling agreement and how such persons vote those shares.

F-24

AXIOM GOLD AND SILVER CORP.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Unaudited)

Note 11

Commitments (Continued)

2. Release from Pooling Arrangement

While the shares are subject to the pooling arrangement, the Shareholders to the pooling agreement shall not assign, deal with, pledge, sell, trade or transfer in any manner whatsoever, or agree to do so in the future, any of the shares or any beneficial interest in them, except as set out in this Section. Except in respect of the following, the Company shall not effect or acknowledge any transfer, trade, pledge, mortgage, lien, assignment, declaration of trust or any other documents evidencing a change in the legal or beneficial ownership of or interest in the shares. Any shares sold shall be executed as agreed upon by the Shareholders but the release of shares from the pooling arrangement will be on a pro rata basis. A Shareholder may elect not to participate in the sale of shares. The sale of the shares is not cumulative and at the end of each period described below and shares not sold will not carry forward into the next period:

(a)	During the first twelve months from the date of this Agreement no shares will be released from the pooling agreement.

(b)	Following the initial 1 year hold period, the Shareholders will agree, from time to time, based on market conditions to liquidate part of the position held on the pooling arrangement; and

(c)	At the end of the 36 month of the pooling arrangement, all of the remaining shares shall be released from the pooling arrangement.

Notwithstanding the foregoing, the Shares shall be released from pooling arrangement and delivered to the Shareholders if a takeover bid has been accepted by the majority of the outstanding shares in a Shareholders Meeting of the Company such that the purchaser under the takeover bid is entitled to force a sale by all shareholders of the Company.

Lease Agreements

In February 2011, we entered into a one year lease for administrative office space in Oro Valley, Arizona. The lease became effective March 1, 2011 at a cost of $900 per month. Currently, we lease the facility on a month to month basis at a cost of $200 per month.

Axiom Mexico leased office facilities on an annual basis. The annual rent for the period August 2011 through July 2012 is 112,800 Mexican Pesos (US $8,400).

Rent expense for the three and nine months ended May 31, 2012 amounted to $3,000 and $13,000 and for the three and nine months ended May 31, 2011 amounted to $5,000 and $6,000.

F-25

AXIOM GOLD AND SILVER CORP.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Unaudited)

Note 11

Commitments (Continued)

Other

According to current fiscal provisions, Mexican tax authorities are entitled to review the last five fiscal years prior to the more recent income tax return filed.

In accordance with the Income Tax Law (LISR), when transactions are performed with related parties, they are subject to tax restrictions and obligations regarding the determination of the prices agreed, because these must be similar to those that would have been used with or between independent parties in comparable transactions.

In March 2012, we entered into a letter of intent to combine with Takara Resources, Inc. of Toronto, Ontario (“Takara”). No definitive agreement was signed and the letter of intent expired.

F-26

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following information specifies certain forward-looking statements of management of the Company. Forward-looking statements are statements that estimate the happening of future events and are not based on historical fact. Forward-looking statements may be identified by the use of forward-looking terminology, such as may, shall, could, expect, estimate, anticipate, predict, probable, possible, should, continue, or similar terms, variations of those terms or the negative of those terms. The forward-looking statements specified in the following information have been compiled by our management on the basis of assumptions made by management and considered by management to be reasonable. Our future operating results, however, are impossible to predict and no representation, guaranty, or warranty is to be inferred from those forward-looking statements.

The assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. We cannot guaranty that any of the assumptions relating to the forward-looking statements specified in the following information are accurate, and we assume no obligation to update any such forward-looking statements.

Critical Accounting Policies and Estimates. Our Management's Discussion and Analysis of Financial Condition and Results of Operations section discusses our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, including those related to revenue recognition, accrued expenses, financing operations, and contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The most significant accounting estimates inherent in the preparation of our financial statements include estimates as to the appropriate carrying value of certain assets and liabilities which are not readily apparent from other sources.

Mineral Property Costs - We are in the exploration stage and have not yet realized any significant revenues from our planned operations. We are primarily engaged in the acquisition and exploration of mining properties. Mineral property acquisition and exploration costs are currently 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 then incurred to develop such property are capitalized. Such costs will be amortized using the units-of-production method over the estimated life of the probable reserve. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to operations.

Equity-Based Compensation - We account for equity based compensation transactions with employees under the provisions of ASC Topic No. 718, “Compensation: Stock Compensation” (“Topic No. 718”). Topic No. 718 requires the recognition of the fair value of equity-based compensation in net income. The fair value of common stock issued for compensation is measured at the market price on the date of grant. The fair value of our equity instruments, other than common stock, is estimated using a Black-Scholes option valuation model. This model requires the input of highly subjective assumptions and elections including expected stock price volatility and the estimated life of each award. In addition, the calculation of equity-based compensation costs requires that we estimate the number of awards that will be forfeited during the vesting period. The fair value of equity-based awards granted to employees is amortized over the vesting period of the award, and we elected to use the straight-line method for awards granted after the adoption of Topic No. 718.

We account for equity based transactions with non-employees under the provisions of ASC Topic No. 505-50, “Equity-Based Payments to Non-Employees” (“Topic No. 505-50”). Topic No. 505-50 establishes that equity-based payment transactions with non-employees shall be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The fair value of common stock issued for payments to non-employees is measured at the market price on the date of grant. The fair value of equity instruments, other than common stock, is estimated using the Black-Scholes option valuation model. In general, we recognize an asset or expense in the same manner as if we were to pay cash for the goods or services instead of paying with or using the equity instrument.

Other accounting policies are described in the notes to the financial statements included in our Annual Report. The following discussion of our financial condition and results of operations should be read in conjunction with our audited financial statements for the year ended August 31, 2011.

Overview. We were incorporated in the State of Nevada on February 13, 2007, under the name TC Power Management Corp. We are in the exploration stage of our business and have not generated any revenues. We abandoned our previous business of providing consulting services to private and public entities seeking assessment, development, and implementation of energy generating solutions in fiscal 2011 and changed our planned business activities to the exploration and development of precious metals properties. On January 13, 2011, we entered into a material definitive agreement to acquire all of the shares of Axiom Minerals de Mexico S.A. de C.V (“Axiom Mexico”). At the time of the acquisition there were no material relationships between Axiom Gold and Silver Corp. (“Axiom Gold and Silver”), its officers and director or its affiliates and any of the shareholders of Axiom Mexico, other than in respect to the material definitive agreement and the pooling agreement described herein. The agreement called for Axiom Gold and Silver, through its wholly owned Mexican subsidiary, Axiom Acquisition Corp, to acquire all of the issued and outstanding shares of Axiom Mexico, by the issuance of two million (2,000,000) common shares of Axiom Gold and Silver.

The shares were issued to the shareholders of Axiom Mexico on a pro rata basis as to their ownership of Axiom Mexico. Axiom Acquisition Corp. merged with and into Axiom Mexico and the separate corporate existence of Axiom Acquisition Corp. ceased to exist. Axiom Mexico, as the surviving corporation in the merger and a wholly-owned subsidiary of Axiom Gold and Silver continues its existence under its current name and continues to be governed by the laws of the state of Chihuahua, Mexico. The Articles of Incorporation and By-laws of Axiom Mexico, as in effect immediately prior to the merger, are the articles of incorporation and by-laws of the surviving corporation in the merger until duly amended or repealed. The members of the Board of Directors of Axiom Mexico, immediately prior to the merger have been confirmed as members of the Board of Directors of Axiom Mexico as the surviving corporation in the merger until the earlier of their resignation or removal or until their respective successors are duly elected or appointed and qualified in the manner provided in the articles of incorporation and by-laws of the surviving corporation in the merger, or as otherwise provided by law. The officers of Axiom Mexico immediately prior to the merger have been confirmed as the initial officers of Axiom Mexico as the surviving corporation in the merger until the earlier of their resignation or removal or until their respective successors are duly elected or appointed and qualified.

No agent, broker, firm or other person acting on behalf of Axiom Mexico, Axiom Gold and Silver or Axiom Acquisition Corp. was entitled to any investment banking fee, commission, broker's or finder's fees in connection with this transaction.

On May 31, 2012 we sold all of our interest in Axiom Mexico to an unrelated third party for $100 releasing us from any liabilities in Axiom Mexico.

Plan of Operations

Since the sale of Axiom Mexico, our current business plan is to acquire mineral properties, focused mainly in Mexico. At this time we do not have any such prospects available to us, and we cannot ensure that such properties will ever be acquired.

Our proposed principal product is precious metals. Prior to production of precious metals, we must develop, mine, and smelt or further refine mineral resources, if any, located on properties that we have the right to develop. Prior to developing precious metals, we must explore for, and determine that they are in sufficient quantities to warrant mining and selling them. In order to commence the exploration and development of precious metals properties, we will need to accomplish the following milestones:

1. Acquire and Begin Exploration of Mineral Properties. We will need to raise additional funds or issue shares to pay for the cost of acquisition and exploration of any mineral properties and/or to acquire additional mineral properties.

2. Hire Qualified Staff. We will need to hire qualified people to execute our business plan to explore precious metals mineral properties. We will need to raise additional funds to attract qualified people to our Company. We do not currently have any employees and we do not intend to hire employees at this time. Our sole officer and director will handle our administrative duties and utilize outside consultants as necessary.

If we are not able to negotiate suitable terms to raise capital, then we may have to suspend or cease operations. As of the filing date of this report we have raised $1,366,904 from the sale of equity but have not secured any additional financing. If we cannot generate sufficient revenues to continue operations, we will suspend or cease operations. If we cease operations, we do not know what we will do and we do not have any plans to do anything else.

There is no historical financial information about us upon which to base an evaluation of our performance. We are currently in the exploration stage of our operations and have not generated any revenues. We may never be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible cost overruns.

To become profitable and competitive, we have to raise additional capital to operate. Future financing may not be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations. Equity financing could result in additional dilution to existing shareholders.

We will not be conducting any product research or development. We do not expect to purchase any significant equipment.

To date, we have experienced significant difficulties in generating revenues and raising additional capital. We believe our inability to raise significant additional capital through debt or equity financings is due to various factors, including, but not limited to, a tightening in the equity and credit markets as well as the general turmoil in the capital markets. If we are not able to raise additional capital or generate revenues that cover our estimated operating costs, our business will ultimately fail.

Competition

We compete with other mining and exploration companies in connection with the acquisition of mining claims and leases on gold and other precious metals prospects and in connection with the recruitment and retention of qualified employees. Many of these companies are much larger than us, have greater financial resources and have been in the mining business much longer than we have. As such, these competitors may be in a better position through size, finances and experience to acquire suitable exploration properties. We may not be able to compete against these companies in acquiring new properties and/or qualified people to work on any of our properties. There is significant competition for the limited number of gold and silver acquisition opportunities available and, as a result, we may be unable to continue to acquire attractive gold and silver mining properties on terms we consider acceptable.

Given the size of the world market for gold and silver relative to individual producers and consumers of gold and silver, we believe that no single company has sufficient market influence to significantly affect the price or supply of gold and silver in the world market.

Governmental Regulations

Our business is subject to various levels of government controls and regulations, which are supplemented and revised from time to time. Any mineral exploration activity conducted by us requires permits from governmental authorities. The various levels of government controls and regulations address, among other things, the environmental impact of mining and mineral processing operations and establish requirements for the decommissioning of mining properties after operations have ceased. With respect to the regulation of mining and processing, legislation and regulations in various jurisdictions establish performance standards, air and water quality emission standards and other design or operational requirements for various components of operations, including health and safety standards. Legislation and regulations also establish requirements for decommissioning, reclamation and rehabilitation of mining properties following the cessation of operations, and may require that some former mining properties be managed for long periods of time. In addition, in certain jurisdictions, we may be subject to foreign investment controls and regulations governing our ability to remit earnings abroad.

The focus of our planned acquisitions and operations in Mexico are subject to a variety of governmental regulations including, among others, regulations promulgated by SEMARNAT, Mexico’s environmental protection agency; the Mexican Mining Law; and the regulations of the Comisión Nacional del Agua with respect to water rights. Mexican regulators have broad authority to shut down and/or levy fines against facilities that do not comply with regulations or standards. If Axiom Mexico puts any of its properties into production, operations may also be affected in varying degrees by government regulations with respect to restrictions on production, price controls, export controls, income taxes, expropriation of property, environmental legislation and mine safety.

The need to comply with applicable laws, regulations and permits will increase the cost of operation and may delay exploration. All permits required for the conduct of mining operations, including the construction of mining facilities, may not be obtainable, which would have an adverse effect on any mining project we might undertake. Additionally, failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions, including orders issued by regulatory or judicial authorities causing exploration to cease or be curtailed. Parties engaged in mining operations may be required to compensate those suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations.

Amendments to current governmental laws and regulations affecting mining companies, or the more stringent application thereof, could adversely affect our operations. The extent of any future changes to governmental laws and regulations cannot be predicted or quantified. Generally, new laws and regulations result in increased compliance costs, including costs for obtaining permits, delays or fines resulting from loss of permits or failure to comply with the new requirements.

Compliance with Environmental Laws

Our current exploration plan and any future mining operations are subject to extensive laws and regulations governing the protection of the environment, waste disposal, worker safety, mine construction, and protection of endangered and protected species. We have made, and expect to make in the future, significant expenditures to comply with such laws and regulations. Future changes in applicable laws, regulations and permits or changes in their enforcement or regulatory interpretation could have an adverse impact on our financial condition or results of operations. In the event that we make a mineral discovery and decide to proceed to production, the costs and delays associated with compliance with these laws and regulations could stop us from proceeding with a project or the operation or further improvement of a mine or increase the costs of improvement or production.

In Mexico, we are required to submit, for government approval, a reclamation plan for each of its mining sites that establishes its obligation to reclaim property after minerals have been mined from the site. In some jurisdictions, bonds or other forms of financial assurances are required as security for these reclamation activities. We may incur significant costs in connection with these restoration activities. The unknown nature of possible future additional regulatory requirements and the potential for additional reclamation activities create uncertainties related to future reclamation costs.

Employees

Other than our President, we do not have any employees.

All mineral exploration and operations will be contracted out to third parties. In the event that our exploration projects are successful and warrant putting any of our properties into production, such operations may also be contracted out to third parties. We rely on our President to handle all matters related to business development and business operations.

For the three months and nine months ended May 31, 2012, as compared to the three months and nine months ended May 31, 2011.

Results of Operations

Revenues. Since inception, we have yet to generate any revenues from our business operations. Our ability to generate revenues has been significantly hindered by our lack of capital. We expect to generate revenues as we implement our business plan.

Operating Expenses. For the nine months ended May 31, 2012, our total operating expenses was $2,131,263, as compared to total operating expenses of $3,865,524 for the nine months ended May 31, 2011. For the three month period ended May 31, 2012 our total operating expense was $355,797, as compared to total operating expense of $905,064 for the three month period ended May 31, 2011. Our total operating expenses consist primarily of exploration expenses, operations in Mexico, legal expenses, accounting expenses and stock based compensation related to being a public company. We expect that we will continue to incur significant legal and accounting expenses related to being a public company.

Net Loss. For the nine months ended May 31, 2012, our net loss was $2,033,001, as compared to the nine months ended May 31, 2011, in which our net loss was $3,862,849. We expect to continue to incur net losses for the foreseeable future and until we generate significant revenues. For the three month period ended May 31, 2012 our net loss was $252,131, as compared to our net loss of $902,146 for the three month period ended May 31, 2011.

Liquidity and Capital Resources

We had cash of $329 as of May 31, 2012 and total assets of $1,729 as of that date. At August 31, 2011, we had cash of $246,233 and total assets of $321,032. The decrease is primarily due to the sale of Axiom Mexico. We are seeking to raise additional funds to meet our working capital needs principally through the sales of our securities. As of the date of this report, during fiscal 2012 we received $285,904 in financing from one investor. Additional funding has not been secured and no assurance may be given that we will be able to raise additional funds.

As of May 31, 2012, our current liabilities were $601,024 comprised of $571,024 in accounts payable and accrued expenses (including, $199,000 owed to our CEO/President for accrued compensation and expenses), and $30,000 in notes payable to non-affiliates. As of August 31, 2011, our current liabilities were $377,122, comprised of $331,371 in accounts payable and accrued expenses, $15,751 in payables to related parties, and $30,000 in notes payable to non-affiliates. In fiscal 2011 $2,250 owed to Mr. Johnson, our former president, was waived by him and credited to additional paid-in capital. As of May 31, 2011, our current liabilities were $295,147, of which $42,443 was owed to related parties.

As of May 31, 2012 and August 31, 2011, we had two outstanding promissory notes in the amount of $10,000 (due November 9, 2011) (past due) and $20,000 (on demand) accruing interest at 8%. We have not repaid either of the loans and no demand for payment has been made to date. The notes are from unrelated parties and are unsecured. As of May 31, 2011, we had $30,000 in notes payable to two unrelated parties.

At inception, we sold 20,000,000 shares of common stock to our officers and director for $500 in cash. In 2008, we sold an additional 4,483,400 shares of common stock through our public offering for proceeds of $112,085. We have used the proceeds from the cash raised in that offering to pay the legal and accounting costs of being a public company. For the year ended August 31, 2011, we sold 4,324,000 shares of common stock through our public offering for gross proceeds of $1,081,000. We recorded $96,850 of costs related to the offering. We used the proceeds from this offering for general working capital to pay the costs of operations. In December 2011, we raised $285,904 from an investor by issuing 1,143,616 shares of common stock of the Company at $0.25 per share.

During fiscal 2012, we expect that our business plan for exploration of mineral properties will be a significant cost to us and to complete that plan we will need to raise substantial funds. Furthermore, if we find additional properties for acquisitions that may also require significant capital, not only for the actual acquisition but also for any exploration work that may need to be completed. As well, the legal and accounting costs of being a public company will continue to impact our liquidity and we will need to obtain funds to pay those expenses. Other than the anticipated exploration costs, acquisition costs, increases in legal and accounting costs due to the reporting requirements of being a reporting company, we are not aware of any other known trends, events or uncertainties, which may affect our future liquidity.

In the opinion of management, available funds will not satisfy our working capital requirements to operate at our current level of activity for the next twelve months. Our forecast for the period for which our financial resources will be adequate to support our operations involves risks and uncertainties and actual results could fail as a result of a number of factors. In order to implement our business plan in the manner we envision, we will need to raise additional capital. We cannot guaranty that we will be able to raise additional funds. Moreover, in the event that we can raise additional funds, we cannot guaranty that additional funding will be available on favorable terms. In the event that we experience a shortfall in our capital, we hope that our officers, directors and principal shareholders will contribute funds to pay for our expenses to achieve our objectives over the next twelve months. At this time, though, we do not have any arrangement with any of our officers, directors or shareholders to provide any funding for the Company.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not applicable.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time period specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports filed under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. As of the end of the period covered by this report, in accordance with Exchange Act Rules 13a-15 and 15d-15, we carried out an evaluation, under the supervision and with the participation of Robert Knight, our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon and as of the date of that evaluation, Mr. Knight concluded that our disclosure controls and procedures are not effective to ensure that information required to be disclosed in our reports filed and submitted under the Exchange Act is recorded, processed, summarized and reported as and when required. The reason we believe our disclosure controls and procedures are not effective is because we have:

No independent directors;

No segregation of duties;

No audit committee; and

Ineffective controls over financial reporting.

Changes in internal controls. There were no changes in our internal control over financial reporting that occurred during the fiscal quarter covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II: OTHER INFORMATION

Item 1. Legal Proceedings.

None.

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

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Submission of Matters to Vote of Security Holders

None.

Item 5. Other Information

None.

Item 6. Exhibits

31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14 and 15d-14 of the Securities Exchange Act of 1934
31.2	Certification of Acting Principal Accounting Officer pursuant to Rule 13a-14 and 15d-14 of the Securities Exchange Act of 1934
32.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer and Acting Principal Accounting Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	Instance Document
101.SCH	Taxonomy Extension Schema Document
101.CAL	Taxonomy Extension Calculation Linkbase Document
101.DEF	Taxonomy Extension Definition Linkbase Document
101.LAB	Taxonomy Extension Label Linkbase Document
101.PRE	Taxonomy Extension Presentation Linkbase Document

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Axiom Gold and Silver Corp.

By: /s/ Robert Knight

Robert Knight

Its: President, Chief Executive Officer, Director (Principal Executive Officer).

Date: August 2, 2012

By: /s/ Robert Knight

Robert Knight

Its: Chief Financial Officer

Date: August 2, 2012

AXIOM OIL & GAS CORP. - FORM 10-Q - August 7, 2012

Attached files

AXIOM OIL & GAS CORP. Reports