CONSOLIDATED GEMS, INC. - FORM 10-Q

Attached files

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EXCEL - IDEA: XBRL DOCUMENT - CONSOLIDATED GEMS, INC.	Financial_Report.xls
EX-31.1 - EXHIBIT 31.1 - CONSOLIDATED GEMS, INC.	a50981216ex31_1.htm
EX-32.1 - EXHIBIT 32.1 - CONSOLIDATED GEMS, INC.	a50981216ex32_1.htm
EX-32.2 - EXHIBIT 32.2 - CONSOLIDATED GEMS, INC.	a50981216ex32_2.htm
EX-31.2 - EXHIBIT 31.2 - CONSOLIDATED GEMS, INC.	a50981216ex31_2.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10- Q

(Mark one)
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
	ACT OF 1934
	For the Quarterly Period Ended September 30, 2014
or
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: 000-53735

CONSOLIDATED GEMS, INC.

(Exact name of registrant as specified in its charter)

	Delaware	26-0267587
	(State or Other Jurisdiction	(I.R.S. Employer
	of Incorporation)	Identification No.)

	Level 8, 580 St Kilda Road
	Melbourne, Victoria, Australia	3004
	(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: 001 (613) 8532 2800

(Former Name or Former Address, if changed since Last Report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes o No

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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12-b2 of the Exchange Act.

(Check one):

Accelerated filer o

Large accelerated filer o

Non-accelerated filer ¨

Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12-b2 of the Exchange Act). o Yes x No

There were 175,315,350 shares of common stock outstanding on November 13, 2014.

Table Of Contents

		PAGE NO

PART I.	FINANCIAL INFORMATION

Item 1	Financial Statements	2
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
Item 3	Quantitative and Qualitative Disclosure about Market Risk	13
Item 4	Controls and Procedures	13

PART II	OTHER INFORMATION

Item 1	Legal Proceedings	14
Item 1A	Risk Factors	14
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	14
Item 3	Defaults Upon Senior Securities	14
Item 4	Mining Safety Disclosures	14
Item 5	Other Information	14
Item 6	Exhibits	14


SIGNATURES		15

EXHIBIT INDEX		16

Exh. 31.1	Certification	17
Exh. 31.2	Certification	18
Exh. 32.1	Certification	19
Exh. 32.2	Certification	20

PART I – FINANCIAL INFORMATION

Item 1 FINANCIAL STATEMENTS

Introduction to Interim Financial Statements.

The interim financial statements included herein have been prepared by Consolidated Gems, Inc. (“Consolidated Gems” or the “Company”), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (The “Commission”). Certain information and footnote disclosure normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.

The interim financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.

In the opinion of management, all adjustments, consisting of normal recurring adjustments necessary to present fairly the financial position of the Company as of September 30, 2014, the results of its operations for the three and nine month periods ended September 30, 2014 and 2013 and the changes in its cash flows for the nine month periods ended September 30, 2014 and 2013 have been included. The results of operations for the interim periods are not necessarily indicative of the results for the full year.

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

Foreign Currency Translation

Prior to April 1, 2013, the Company’s functional and reporting currency was the US dollar. However, as a result of Australian based activities in the June 2013 quarter relating to potential gem projects, the Company’s revenue and expenses will be primarily denominated in Australian dollars (A$). ASC 830 Foreign Currency Translation, states that the functional currency of an entity is the currency of the primary economic environment in which the entity operates. Accordingly, the Company determined that from April 1, 2013 the functional and reporting currency of the Company is the Australian dollar. Assets, liabilities and equity were translated at the rate of exchange at April 1, 2013. Revenue and expenses were translated at rates at date of transaction. Translation gains and losses, if material, are included as part of accumulated other comprehensive income. The resulting translations at April 1, 2013 were not material.

Restatement of comparative numbers was made for the change in functional and reporting currency.

UNLESS OTHERWISE INDICATED, ALL FINANCIAL INFORMATION PRESENTED IS IN AUSTRALIAN DOLLARS.

CONSOLIDATED GEMS, INC.

Balance Sheets

	September		December
	30, 2014		31,
	(Unaudited)		2013

	A$		A$

ASSETS

Current Assets:
Cash	2,352		2,270
Receivables	3		5,422
Prepayments	-		5,052
Total Current Assets	2,355		12,744

Non-Current Assets:
Deposits	10,000		10,000
Total Non-Current Assets	10,000		10,000

Total Assets	12,355		22,744

LIABILITIES AND STOCKHOLDERS’ (DEFICIT)

Current Liabilities:
Accounts payable and accrued expenses	56,933		54,658
Total Current Liabilities	56,933		54,658

Non-Current Liabilities:
Advances from affiliate	1,027,446		972,838
Total Non-Current Liabilities	1,027,446		972,838

Total Liabilities	1,084,379		1,027,496

Stockholders’ (Deficit):
Common stock: US$.0001 par value 500,000,000 shares authorised, and 175,315,350 shares issued and outstanding	16,825		16,825
Additional paid-in capital	1,574,323		1,574,323
Accumulated (deficit)	(2,663,172	)	(2,595,900	)
Total Stockholders’ (deficit)	(1,072,024	)	(1,004,752	)

Total Liabilities and Stockholders’ (Deficit)	12,355		22,744

See notes to financial statements

CONSOLIDATED GEMS, INC.

Statements of Operations

(Unaudited)

	For the three months ended						For the nine months ended
	September 30						September 30
	2014			2013			2014			2013
Revenues		A$-			A$-			A$-			A$-

Cost and expenses
Legal, accounting and professional		10,171			8,230			29,004			32,295
Administration expense		3,460			3,894			26,320			33,276
Exploration expenditure		-			-			10,633			544,389
		13,631			12,124			65,957			609,960

(Loss) from operations		(13,631	)		(12,124	)		(65,957	)		(609,960	)
Foreign currency exchange gain/(loss)		(1	)		4,158			(1,315	)		(4,403	)
(Loss) before income tax		(13,632	)		(7,966	)		(67,272	)		(614,363	)
Provision for income tax		-			-			-			-

Net (loss)		(13,632	)		(7,966	)		(67,272	)		(614,363	)

Basic net (loss) per Common Equivalent Shares		(0.00	)		(0.00	)		(0.00	)		(0.00	)

Weighted number of common equivalent shares (000’s)		175,315			175,315			175,315			175,315

See notes to financial statements

CONSOLIDATED GEMS, INC.

Statements of Stockholders’ (Deficit)

For the 9 months ended September 30, 2014

(Unaudited)

	Shares		Common Stock Amount		Additional Paid-in Capital		Accumulated (Deficit)			Total
				A$		A$		A$			A$

Balance, December 31, 2013		175,315,350		16,825		1,574,323		(2,595,900	)		(1,004,752	)

Net (loss)		-		-		-		(67,272	)		(67,272	)

Balance, September 30, 2014		175,315,350		16,825		1,574,323		(2,663,172	)		(1,072,024	)

See notes to financial statements

CONSOLIDATED GEMS, INC.

Statements of Cash Flows

(Unaudited)

	For the nine months ended
	September 30
		2014		2013
		A$		A$

CASH FLOWS FROM OPERATING ACTIVITIES
Net (Loss)		(67,272	)	(614,363	)

Adjustments to reconcile net (loss) to net cash (used) in operating activities
Foreign currency exchange (gain)/loss		1,315		4,403
Net change in prepayments		5,052		8,711
Net change in receivables		5,419		(65,951	)
Net change in accounts payable and accrued expenses		2,275		(27,905	)

Net Cash (used) in Operating Activities		(53,211	)	(695,105	)

CASH FLOWS FROM FINANCING ACTIVITIES

Advances from affiliate		54,608		700,142

Net Cash provided by Financing Activities		54,608		700,142

Effects of Exchange rate on cash		(1,315	)	(4,403	)

Net increase in Cash		82		634

Cash at Beginning of Period		2,270		241

Cash at End of Period		2,352		875

See notes to financial statements

CONSOLIDATED GEMS, INC.

Notes to Financial Statements

September 30, 2014

(unaudited)

(1) ORGANIZATION AND BUSINESS

Consolidated Gems, Inc. ("Consolidated Gems” or the “Company"), formerly Electrum International, Inc. is a Delaware corporation originally incorporated in Florida as We Sell for U Corp. (“We Sell for U”). The principal stockholder of Consolidated Gems is Power Developments Pty Ltd., an Australian corporation (“Power”), an entity majority owned by the Company’s President, which owned 94.46% of Consolidated Gems as of September 30, 2014.

In order to take advantage of management’s substantial experience in the location and development of mineral exploration properties, the Company plans to look for opportunities in the resources industry and has identified silver and base metal exploration in Central America and gem opportunities in Australia for its potential business opportunities.

The Company has decided to expand its focus to include precious gems in order to generate value for shareholders and is currently assessing several gem opportunities.

(2) RECENT ACCOUNTING PRONOUNCEMENTS

In August 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entities Ability to Continue as a Going Concern (ASU 2014-15). ). The guidance in ASU 2014-15 sets forth management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern as well as required disclosures. ASU 2014-15 indicates that, when preparing financial statements for interim and annual financial statements, management should evaluate whether conditions or events, in the aggregate, raise substantial doubt about the entity's ability to continue as a going concern for one year from the date the financial statements are issued or are available to be issued. This evaluation should include consideration of conditions and events that are either known or are reasonably knowable at the date the financial statements are issued or are available to be issued, as well as whether it is probable that management's plans to address the substantial doubt will be implemented and, if so, whether it is probable that the plans will alleviate the substantial doubt. ASU 2014-15 is effective for annual periods ending after December 15, 2016, and interim periods and annual periods thereafter. Early application is permitted. The Company will evaluate the going concern considerations in this ASU however at the current period management does not believe that it has met conditions which would subject these financial statements for additional disclosure other than disclosed in Note 4.

Other Recently Issued, but not Yet Effective Accounting Pronouncements

Management does not believe that any recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements.

(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of the significant accounting policies followed in connection with the preparation of the financial statements.

Basis of Presentation and 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 the reported amounts of assets and liabilities and disclosure on contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

The functional and reporting currency is the Australian dollar.

Mineral Property Acquisition, Exploration Costs and Amortization of Mineral Rights

Mineral property acquisition, exploration and development costs are expensed as incurred until such time as economic reserves are quantified. To date, the Company has not established any proven or probable reserves on its mineral properties. When it is determined that a mining deposit can be economically and legally extracted or produced based on established proven and probable reserves, further exploration costs and development costs incurred after such determination will be capitalized. The establishment of proven and probable reserves is based on results of final feasibility studies which indicate whether a property is economically feasible. Upon commencement of commercial production, capitalized costs will be transferred to the appropriate asset category and amortized over their estimated useful lives. Capitalized costs, net of salvage values, relating to a deposit which is abandoned or considered uneconomic for the foreseeable future, will be written off. Mineral rights are amortized over their estimated useful lives being the Company’s estimated rights to tenure.

Foreign Currency Translation

Effective April 1, 2013, the Company’s functional and reporting currency is the Australian dollar. Revenue and expenses incurred in a currency other than Australian dollars are translated at the date incurred or invoiced. Assets and liabilities are re-valued at the period end exchange rate where appropriate. Gains or losses from foreign currency transactions are included in the results of operations.

Prior to April 1, 2013, the Company’s functional currency was the US dollar. However, as a result of Australian based activities in the second quarter of 2013 relating to potential gem projects, the Company’s revenue and expenses are now primarily denominated in Australian dollars (A$). ASC 830 Foreign Currency Translation states that the functional currency of an entity is the currency of the primary economic environment in which the entity operates. Accordingly, the Company determined that from April 1, 2013, the functional currency of the Company is the Australian dollar. Assets, liabilities and equity were translated at the rate of exchange at April 1, 2013. Revenue and expenses were translated at rates at date of transaction. Translation gains and losses, if material, are included as part of accumulated other comprehensive income. The resulting translation at April 1, 2013 was not material.

Restatement of comparative September 30, 2013 numbers was made for the change in functional and reporting currency.

Goods and Services Tax (“GST”)

Revenues, expenses and assets generated in Australia are subject to Australian GST which requires the supplier to add a 10% GST to predominately all expenses and the cost of assets and for the Company to include a 10% GST to the selling price of a product. Revenues, expenses and assets are recognized net of the amount of GST except where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognized as part of the cost of acquisition of the assets or as part of the expense item as applicable, and receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet. Cash flows are included in the cash flow statement on a gross basis and the GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to, the taxation authority are classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority

Comparative Figures

Where necessary, comparative figures have been reclassified to be consistent with current year presentation with no effect on operations.

(4) GOING CONCERN

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. At September 30, 2014, the Company had not yet commenced revenue producing operations and had a retained deficit of A$2,663,172. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company will require additional funding for operations and this additional funding may be raised through debt or equity offerings. The Company has a debt due to AXIS Consultants Pty Ltd (AXIS). AXIS provides management services to the Company and the cost of these services increases the amount of the debt. In addition, the Company has historically relied on loans and advances from corporations affiliated with the President of Consolidated Gems and fund raising through the sale of equity instruments. Based on discussions with these affiliate companies, the Company believes this source of funding will continue to be available. Other than the arrangements noted above, the Company has not confirmed any other arrangement for ongoing funding. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

(5) AFFILIATE TRANSACTIONS

The Company entered into an agreement with AXIS Consultants Pty Ltd (“AXIS”) to provide management and administration services to the Company. AXIS is affiliated through common management. The Company is one of nine affiliated companies to which AXIS provides services. Each of the companies has some common Directors, officers and shareholders. Currently, there are no material arrangements or planned transactions between the Company and any of the affiliated companies other than AXIS.

During the nine months ended September 30, 2014, AXIS provided services in accordance with the service agreement, incurred direct costs on behalf of the Company and provided funding of A$54,608. The amounts owed to the affiliate as of September 30, 2014 and December 31, 2013 is A$1,027,446 and A$972,838, respectively, and are reflected in non-current liabilities - advances from affiliate. During the nine months ended September 30, 2014 and 2013, the affiliate has agreed not to charge interest.

The Company intends to repay these amounts with funds raised either via additional debt or equity offerings. The affiliate has agreed not to call the advance within the next twelve months and accordingly the Company has classified the amounts payable as non-current in the accompanying balance sheet.

(6) INCOME TAXES

Consolidated Gems files its income tax returns on an accrual basis.

The Company files tax returns in the United States. Consolidated Gems has carry-forward losses of approximately A$2,402,000 as of December 31, 2013 which expire in years 2028 through 2033. Due to the uncertainty of the availability and future utilization of those operating loss carry-forwards, management has provided a full valuation against the related tax benefit. The Company’s tax returns for all years since December 31, 2010 remain open to examination by the respective tax authorities. There are currently no tax examinations in progress.

The Company will be required to file a tax return in Australia for 2014. Net operation loss carry-forwards in Australia do not have a definite expiration date and amounted to approximately A$771,000 as of September 30, 2014.

(7) FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company’s financial instruments consist of cash, receivables, accounts payable and accrued expenses, and advances from affiliate. The carrying amounts of cash, receivables, accounts payable and accrued expenses approximate their respective fair values because of the short term nature of those instruments. The fair value of the advances from affiliate is not determinable as it is due to an affiliated entity, no market exists for similar instruments and settlement date is uncertain.

(8) COMMITMENTS

Exploration

The Company has to perform minimum exploration work and expend minimum amounts of money on its tenements. The overall expenditure requirement tends to be limited in the normal course of the Company’s tenement portfolio management through expenditure exemption approvals, and expenditure reductions through relinquishment of parts or the whole of tenements deemed non prospective. Should the Company wish to preserve interests in its current tenements the amount which may be required to be expended is as follows:

	2014
		A$
Not later than one year		35,583
Later than one year but not later than five years		-
Later than five years		-
		35,583

(9) SUBSEQUENT EVENTS

The Company has evaluated events and transactions after the balance sheet date and through the date the financial statements were issued, and believes that all relevant disclosures have been included herein and there are no other events which require recognition or disclosure in the accompanying interim financial statements.

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

General

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the Financial Statements and accompanying notes and the other financial information appearing elsewhere in this report. This report contains numerous forward-looking statements relating to our business. Such forward-looking statements are identified by the use of words such as believes, intends, expects, hopes, may, should, plan, projected, contemplates, anticipates or similar words. Actual operating schedules, results of operations, ore grades and mineral deposit estimates and other projections and estimates could differ materially from those projected in the forward-looking statements. The functional and reporting currency of the Company is the Australian Dollar.

Overview

Consolidated Gems, Inc. (“Consolidated Gems” or the “Company”), formerly Electrum International, Inc. is a Delaware corporation originally incorporated in Florida as We Sell For U Corp. (“We Sell For U”). In December 2008, Power Developments Pty Ltd, an Australian corporation ("Power") acquired approximately a 96% interest in Consolidated Gems from Edward T. Farmer and certain other stockholders. Mr. Farmer resigned as Sole Director and Officer of Consolidated Gems, Joseph Gutnick was appointed President, Chief Executive Officer and a Director and Peter Lee was appointed Chief Financial Officer and Secretary.

On August 12, 2009, the Company re-incorporated in the state of Delaware (the “Reincorporation”) through a merger involving We Sell for U and Consolidated Gems, a Delaware Corporation that was a wholly owned subsidiary of We Sell for U. The Reincorporation was effected by merging We Sell for U with Consolidated Gems, with Consolidated Gems being the surviving entity. For purposes of the Company’s reporting status with the Securities and Exchange Commission, Consolidated Gems is deemed a successor to We Sell for U.

We have incurred net losses since our inception and may continue to incur substantial and increasing losses for the next several years. Since inception we have incurred accumulated losses of A$2,663,172 which was funded primarily by the sale of equity securities and loans from affiliates.

Description of Current Business Plans and Activities

The following is a description of the Company’s current business plans and activities.

The Company has decided to expand its focus to include precious gems in order to generate value for shareholders and is currently assessing several gem opportunities.

RESULTS OF OPERATIONS

Three Months Ended September 30, 2014 vs. Three Months Ended September 30, 2013.

Costs and expenses increased from A$12,124 in the three months ended September 30, 2013 to A$13,631 in the three months ended September 30, 2014.

The increase in costs and expenses is a net result of:

a)	an increase in legal, accounting and professional expense from A$8,230 for the three months ended September 30, 2013 to A$10,171 for the three months ended September 30, 2014. Included within legal, accounting and professional expense for the three months ended September 30, 2014 is A$2,226 (2013: A$500) for costs associated with the Company’s SEC compliance obligations; professional fees for the three months ended September 30, 2014 is A$7,945 (2013: A$6,000); and stock agent transfer fees A$0 (2013: A$1,730).

b)	a decrease in administrative expense from A$3,894 in the three months ended September 30, 2013 to A$3,460 in the three months ended September 30, 2014, primarily as a result of a decrease in wages and salaries expenditure.

As a result of the foregoing, the loss from operations increased from A$12,124 for the three months ended September 30, 2013 to A$13,631 for the three months ended September 30, 2014.

A foreign currency exchange gain of A$4,158 for the three months ended September 30, 2013 compared to a foreign currency exchange loss of A$1 for the three months ended September 30, 2014 was incurred as a result of the movement in the US dollar versus the Australian dollar.

The net loss was A$13,632 for the three months ended September 30, 2014 compared to a net loss of A$7,966 for the three months ended September 30, 2013.

Nine Months Ended September 30, 2014 vs. Nine Months Ended September 30, 2013.

Costs and expenses decreased from A$609,960 in the nine months ended September 30, 2013 to A$65,957 in the nine months ended September 30, 2014.

The decrease in costs and expenses is a net result of:

a)	a decrease in legal, accounting and professional expense from A$32,295 for the nine months ended September 30, 2013 to A$29,004 for the nine months ended September 30, 2014. Included within legal, accounting and professional expense for the nine months ended September 30, 2014 is A$6,332 (2013: A$8,282) for costs associated with the Company’s SEC compliance; professional fees for the nine months ended September 30, 2014 is A$21,371 (2013: A$20,627); and A$784 (2013: A$3,385) which relates to stock agent transfer fees.

b)	a decrease in administrative expense from A$33,276 in the nine months ended September 30, 2013 to A$26,320 in the nine months ended September 30, 2014. Included within administrative expenses for the nine months ended September 30, 2014 are A$16 (2013: A$1,218) for accounting support fees; A$15,868 (2013: A$11,686) for XBRL conversion costs; A$626 (2013: A$601) for bank charges; insurance costs of A$5,669 (2013: A$1,578); A$421 (2013: A$735) for storage costs; A$4,213 (2013: A$14,911) for wages and salaries expenditure and A$nil (2013: A$821) for travel costs.

c)	a decrease in exploration expenditure expense from A$544,389 for the nine months ended September 30, 2013 to A$10,633 for the nine months ended September 30, 2014. The decrease is primarily due the Company commencing exploration activities during the nine months ended September 30, 2013. The Company is currently assessing the results of those activities resulting in reduced exploration activities in comparison to the prior period.

As a result of the foregoing, the loss from operations decreased from A$609,960 for the nine months ended September 30, 2013 to a loss from operations of A$65,957 for the nine months ended September 30, 2014.

A foreign currency exchange loss of A$4,403 for the nine months ended September 30, 2013 compared to a foreign currency exchange loss of A$1,315 for the nine months ended September 30, 2014 was recorded as a result of the movement in the US dollar versus the Australian dollar.

The net loss was A$67,272 for the nine months ended September 30, 2014 compared to a net loss of A$614,363 for the nine months ended September 30, 2013.

Liquidity and Capital Resources

For the nine months ended September 30, 2014, net cash used in operating activities was A$53,211 consisting of the net loss of A$67,272 offset by a non-cash charge for foreign currency exchange loss of A$1,315, an increase in accounts payable and accrued expenses of A$2,275, a decrease in prepayments of A$5,052 and a decrease in receivables of A$5,419. For the nine months ended September 30, 2014, net cash provided by financing activities was A$54,608 consisting of an increase in payable to affiliate.

As of September 30, 2014, the Company had short-term obligations of A$56,933 comprising accounts payable and accrued expenses and had long-term obligations of A$1,027,446 comprising advances payable to an affiliate.

Our budget for general and administration and for professional expenses for fiscal 2014 is A$0.05 million and A$0.05 million for exploration expenses. We are currently investigating capital raising opportunities which may be in the form of either equity or debt, to provide funding for working capital purposes. There can be no assurance that such a capital raising will be successful, or that even if an offer of financing is received by the Company, it is on terms acceptable to the Company. The Company has to perform minimum exploration work and expend minimum amounts of money on its tenements. The overall expenditure requirement tends to be limited in the normal course of the Company’s tenement portfolio management through expenditure exemption approvals, and expenditure reductions through relinquishment of parts or the whole of tenements deemed non prospective. Should the Company wish to preserve interests in its current tenements the amount which may be required to be expended not later than one year is A$35,583.

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplates continuation of Consolidated Gems as a going concern. However, Consolidated Gems has limited assets, has not yet commenced revenue producing operations and has sustained recurring losses since inception.

Information Concerning Forward Looking Statements

This report and other reports, as well as other written and oral statements made or released by us, may contain forward-looking statements. Forward-looking statements are statements that describe, or that are based on, our current expectations, estimates, projections and beliefs. Forward-looking statements are based on assumptions made by us, and on information currently available to us. Forward-looking statements describe our expectations today of what we believe is most likely to occur or may be reasonably achievable in the future, but such statements do not predict or assure any future occurrence and may turn out to be wrong. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. The words "believe", "anticipate", "intend", "expect", "estimate", "project", "predict", "hope", "should", "may", and "will", other words and expressions that have similar meanings, and variations of such words and expressions, among others, usually are intended to help identify forward-looking statements.

Forward-looking statements are subject to both known and unknown risks and uncertainties and can be affected by inaccurate assumptions we might make. Risks, uncertainties and inaccurate assumptions could cause actual results to differ materially from historical results or those currently anticipated. Consequently, no forward-looking statement can be guaranteed. The potential risks and uncertainties that could affect forward looking statements include, but are not limited to:

●	The risk factors set forth in Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013,

●	The possibility that we do not find gems or other minerals or that the gems or other minerals we find are not commercially economical to mine,

●	The risks and hazards inherent in the mineral exploration and development business (including environmental hazards, industrial accidents, weather or geologically related conditions),

●	Changes in the market price of minerals or gems,

●	The effects of environmental and other governmental regulations,

●	The uncertainties inherent in our exploratory activities, including risks relating to permitting and regulatory delays,

●	Estimates of proven and probable reserves are subject to considerable uncertainty,

●	Movements in foreign exchange rates,

●	Increased competition, governmental regulation,

●	Performance of information systems,

●	Ability of the Company to hire, train and retain qualified employees,

In addition, other risks, uncertainties, assumptions, and factors that could affect the Company's results and prospects are described in this Quarterly Report on Form 10-Q and in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013, including under the heading “Risk Factors” and elsewhere herein and therein and may further be described in the Company's prior and future filings with the Securities and Exchange Commission and other written and oral statements made or released by the Company.

We caution you not to place undue reliance on any forward-looking statements, which speak only as of the date of this document. The information contained in this report is current only as of its date, and we assume no obligation to update any forward-looking statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

At September 30, 2014, the Company had no outstanding loan facilities.

Item 4. Controls and Procedures.

(a)	Disclosure Controls and Procedures

Our principal executive officer and our principal financial officer evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 as amended) as of the end of the period covered by this report. Based on that evaluation, such principal executive officer and principal financial officer concluded that, the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report at the reasonable level of assurance.

(b)	Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the third quarter of 2014 that materially affected, or are reasonably likely to materially affect, internal control over financial reporting.

(c)

Other

We believe that a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Therefore, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Our disclosure controls and procedures are designed to provide such reasonable assurance of achieving our desired control objectives, and our principal executive officer and principal financial officer have concluded, as of September 30, 2014, that our disclosure controls and procedures were effective in achieving that level of reasonable assurance.

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings.

	Not Applicable

Item 1A.	Risk Factors.

	Not Applicable

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

	Not Applicable

Item 3.	Defaults Upon Senior Securities.

	Not Applicable

Item 4.	Mining Safety Disclosures.

	Not Applicable

Item 5.	Other Information.

	Not Applicable

Item 6.	Exhibits.

(a)	Exhibit No.	Description

	31.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Joseph Isaac Gutnick

	31.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Peter James Lee

	32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley act of 2002 by Joseph Isaac Gutnick

	32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley act of 2002 by Peter James Lee

	101	The following materials from the Consolidated Gems, Inc. Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2014 formatted in Extensible Business Reporting Language (XBRL): (i) the Balance Sheets, (ii) the Statements of Operations, (iii) Statement of Stockholders’ (Deficit), (iv) the Statements of Cash Flows and (v) related notes.

		#101.INS	XBRL Instance Document.
		#101.SCH	XBRL Taxonomy Extension Schema Document.
		#101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
		#101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
		#101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.
		#101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.
		# Filed herewith. In accordance with Rule 406T of Regulation S-T, these interactive data files are deemed “not filed” for purposes of section 18 of the Exchange Act, and otherwise are not subject to liability under that section.

FORM 10-Q

SIGNATURES

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

	Consolidated Gems, Inc.





	By:	/s/ Joseph I Gutnick
		Joseph I. Gutnick
		Chairman of the Board, President and Chief Executive Officer
		(Principal Executive Officer)

	By:	/s/ Peter Lee
		Peter Lee
		Secretary and Chief Financial Officer
		(Principal Financial Officer)

Date: November 14, 2014

EXHIBIT INDEX

Exhibit No.	Description

31.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Joseph Isaac Gutnick

31.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Peter James Lee

32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley act of 2002 by Joseph Isaac Gutnick

32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley act of 2002 by Peter James Lee

101	The following materials from the Consolidated Gems, Inc. Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2014 formatted in Extensible Business Reporting Language (XBRL): (i) the Balance Sheets, (ii) the Statements of Operations, (iii) Statement of Stockholders’ (Deficit), (iv) the Statements of Cash Flows and (v) related notes.

	#101.INS	XBRL Instance Document.
	#101.SCH	XBRL Taxonomy Extension Schema Document.
	#101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
	#101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
	#101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.
	#101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.
	# Filed herewith. In accordance with Rule 406T of Regulation S-T, these interactive data files are deemed “not filed” for purposes of section 18 of the Exchange Act, and otherwise are not subject to liability under that section.

CONSOLIDATED GEMS, INC. - FORM 10-Q - November 14, 2014

Attached files

CONSOLIDATED GEMS, INC. Reports