Quarterly Report — Small Business — Form 10-QSB Filing Table of Contents
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(Former
name, former address and former fiscal year, if changed since last
report)
Check
whether the issuer (1) filed all reports required to be filed by Section 13
or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. YES x NO o
Number
of
shares of common stock outstanding as of May 15, 2007: 81,108,200 shares of
common stock.
Transitional
Small Business Format Yes
o
No x
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
YES
x
NO o
TABLE
OF CONTENTS
Page
PART
I
Item
1. Financial Statements
3
Item
2. Management’s Discussion and Analysis or Plan of
Operation
4
Item
3 Controls and Procedures
6
PART
II
Item
1. Legal Proceedings
7
Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds
7
Item
3. Defaults Upon Senior Securities
8
Item
4. Submission of Matters to a Vote of Security Holders
Report
of Independent Registered Public Accounting Firm
1
Report
of Independent Registered Public Accounting Firm - 2006
2
Balance
Sheet
3
Statements
of Operations
4
Statements
of Stockholders' Equity
5
Statements
of Cash Flows
6
Notes
to Financial Statements
7
- 14
3
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the
Board of Directors and Stockholders of
Stargold
Mines, Inc.
We
have
reviewed the accompanying balance sheet of Stargold
Mines, Inc.
(a
development stage company) (the "Company") as of March 31, 2007 and the related
statements of operations, stockholders' equity and cash flows for the three
month period ended March 31, 2007. These interim financial statements are the
responsibility of the Company's management.
We
conducted our review in accordance with standards of the Public Company
Accounting Oversight Board (United States). A review of interim financial
information consists principally of applying analytical procedures and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with standards
of the Public Company Accounting Oversight Board (United States), the objective
of which is the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an opinion.
Based
on
our review, we are not aware of any material modifications that should be made
to such interim financial statements referred to above for them to be in
conformity with accounting principles generally accepted in the United States
of
America.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 1 to the financial
statements, the Company has incurred losses since inception which raises
substantial doubt about the Company's ability to continue as a going concern.
Management's plan regarding this matter is also described in Note 1 to the
financial statements. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the
Board of Directors of
Sockeye
Seafood Group, Inc. (A Development Stage Company)
We
have
reviewed the accompanying balance sheet of Sockeye Seafodd Group, Inc. (a
development stage company) (the "Company") as of March 31, 2006 and the related
statements of operations, stockholders' equity and cash flows for the three
month period ended March 31, 2006. These interim financial statements are the
responsibility of the Company's management.
We
conducted our review in accordance with standards of the Public Company
Accounting Oversight Board (United States). A review of interim financial
information consists principally of applying analytical procedures and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with standards
of the Public Company Accounting Oversight Board (United States), the objective
of which is the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an opinion.
Based
on
our review, we are not aware of any material modifications that should be made
to such interim financial statements referred to above for them to be in
conformity with accounting principles generally accepted in the United States
of
America.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 1 to the financial
statements, the Company has incurred losses since inception which raises
substantial doubt about the Company's ability to continue as a going concern.
Management's plan regarding this matter is also described in Note 1 to the
financial statements. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
Stargold
Mines, Inc. (the "Company"), formerly Sockeye Seafood Group Inc., (Sockeye
Seafood Group Inc. merged with its wholly-owned subsidiary Stargold Mines,
Inc.
on November 23, 2006 and changed its name to Stargold Mines, Inc.) was
incorporated under the laws of the State of Nevada on May 21, 2003. The Company
was formed to engage in the business of procuring and marketing seafood products
direct from Pacific Northwest First Nations organizations to North American
and
international wholesalers, distributors, and retailers.
The
Company's operations have been limited to general administrative operations,
purchasing a limited amount of sample inventory, minimal sales and establishing
its website. The Company is considered a development stage company in accordance
with Statement of Financial Accounting Standards ("SFAS") No. 7 "Accounting
and
Reporting by Development Stage Enterprises". The Company is currently working
on
acquiring licenses to develop and extract natural resources in the Siberian
and
Far Eastern Districts of Russia.
b)
Going
Concern
The
Company's financial statements are presented on a going concern basis, which
contemplates the realization of assets and satisfaction of liabilities in the
normal course of business. The Company has experienced recurring losses since
inception and has negative cash flows from operations that raise substantial
doubt as to its ability to continue as a going concern. For the period ended
March 31, 2007, the Company experienced a net loss of $23,262 (2006 -
$1,437).
The
Company's ability to continue as a going concern is contingent upon its ability
to secure additional financing, achieving additional sale of its product and
attaining profitable operations.
Management
is pursuing various sources of equity financing. Although the Company plans
to
pursue additional financing, there can be no assurance that the Company will
be
able to secure financing when needed or obtain such on terms satisfactory to
the
Company, if at all.
The
financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the possible inability
of
the Company to continue as a going concern.
The
accounting policies of the Company are in accordance with U.S. generally
accepted accounting principles, and their basis of application is consistent
with that of the previous period. Outlined below are those policies considered
particularly significant:
a)
Basis
of Financial Statement Presentation
The
accompanying unaudited financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
for interim financial information and the requirement of item 310(b) of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by accounting principles generally accepted in the United
States of America for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Interim results are not
necessarily indicative of the results that may be expected for a full year.
These unaudited financial statements should be read in conjunction with the
audited financial statements and notes thereto included in the Company's Annual
Report on Form 10-KSB for the fiscal year ended December 31, 2006, as filed
with
the Securities and Exchange Commission ("SEC").
b)
Reporting
Currency
The
U.S.
dollar has been used as the unit of measurement in these financial
statements.
c)
Revenue
Recognition
The
Company recognizes revenues when there is a definitive sales agreement, and
upon
shipment of products, when title is passed and the amount collectible can
reasonably be determined.
d)
Financial
Instruments
Unless
otherwise noted, it is management's opinion that the Company is not exposed
to
significant interest, currency or credit risks arising from the financial
instruments. The fair value of the financial instruments approximates their
carrying values, unless otherwise noted.
Summary
of Significant Accounting Policies (cont'd)
e)
Comprehensive
Income (Loss)
The
Company adopted SFAS No. 130, "Reporting Comprehensive Income" ("SFAS No. 130").
SFAS No. 130 establishes standards for reporting and presentation of
comprehensive income (loss) and its components in a full set of financial
statements. Comprehensive income is presented in the statements of operations,
and consists of net income and unrealised gains (losses) on available for sale
marketable securities; foreign currency translation adjustments and changes
in
market value of future contracts that qualify as a hedge; and negative equity
adjustments recognized in accordance with SFAS No. 87. SFAS No. 130 requires
only additional disclosures in the financial statements and does not affect
the
Company's financial position or results of operations.
f)
Income
Tax
The
Company accounts for income taxes pursuant to SFAS No. 109, "Accounting for
Income Taxes" ("SFAS No. 109"). Deferred taxes are provided on a liability
method whereby deferred tax assets are recognized for deductible temporary
differences, and deferred tax liabilities are recognized for taxable temporary
differences. Temporary differences are the differences between the reported
amounts of assets and liabilities and their tax bases. Deferred tax assets
are
reduced by a valuation allowance when, in the opinion of management, it is
more
likely than not that some portion or all of the deferred tax assets will not
be
realized. Deferred tax assets and liabilities are adjusted for the effects
of
changes in tax laws and rates on the date of enactment.
g)
Earnings
(Loss) per Share
The
Company adopted SFAS No.128, "Earnings per Share" which requires disclosure
on
the financial statements of "basic" and "diluted" 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 for the year. Diluted
earnings (loss) per share is computed by dividing net income (loss) by the
weighted average number of common shares outstanding plus common stock
equivalents (if dilutive) related to convertible bonds, stock options and
warrants for each year. As the warrants were anti-dilutive, there was no
adjustment to the basic loss per share.
Summary
of Significant Accounting Policies (cont'd)
h)
Concentration
of Credit Risk
SFAS
No. 105, "Disclosure of Information About Financial Instruments with
Off-Balance-Sheet Risk and Financial Instruments with Concentration
of
Credit Risk", requires disclosure of any significant off-balance-sheet
risk and credit risk concentration. The Company does not have significant
off-balance-sheet risk or credit concentration.
The
Company provides credit to its clients in the normal course of its
operations. It carries out, on a continuing basis, credit checks
on its
clients and maintains provisions for contingent credit losses that,
once
they materialize, are consistent with management's
forecasts.
For
other
receivables, the Company determines, on a continuing basis, the probable losses
and sets up a provision for losses based on the estimated realizable
value.
Concentration
of credit risk arises when a group of clients having a similar characteristic
such that their ability to meet their obligations is expected to be affected
similarly by changes in economic of other conditions. The Company does not
have
any significant risk with respect to a single client.
i)
Use
of Estimates
Preparation
of financial statements in conformity with U.S. generally accepted accounting
principles requires management to make estimates and assumptions that affect
the
amounts reported in the financial statements and related notes to financial
statements. These estimates are based on management's best knowledge of current
events and actions the Company may undertake in the future. Actual results
may
ultimately differ from those estimates, although management does not believe
such changes will materially affect the financial statements in any individual
year.
Summary
of Significant Accounting Policies (cont'd)
j)
Recent
Accounting Pronouncements
In
February 2007, Financial Accounting Standards Board ("FASB") issued SFAS No.
159, "The Fair Value Option for Financial Assets and Liabilities" ("SFAS No.
159"), which permits entities to measure many financial instruments and certain
other items at fair value that are not currently required to be measured at
fair
value. An entity would report unrealized gains and losses on items for which
the
fair value option has been elected in earnings at each subsequent reporting
date. The objective is to improve financial reporting by providing entities
with
the opportunity to mitigate volatility in reported earnings caused by measuring
related assets and liabilities differently without having to apply complex
hedge
accounting provisions. The decision about whether to elect the fair value option
is applied instrument by instrument, with a few exceptions; the decision is
irrevocable; and it is applied only to entire instruments and not to portions
of
instruments.
The
statement requires disclosures that facilitate comparisons (a) between entities
that choose different measurement attributes for similar assets and liabilities
and (b) between assets and liabilities in the financial statements of an entity
that selects different measurement attributes for similar assets and
liabilities.
SFAS
No.
159 is effective for for fiscal years beginning after November 15, 2007. Early
adoption is permitted as of the beginning of a fiscal year provided the entity
also elects to apply the provisions of SFAS No. 157 "Fair Value Measurements".
Upon implementation, an entity shall report the effect of the first
remeasurement to fair value as a cumulative-effect adjustment to the opening
balance of retained earnings. Since the provisions of SFAS No. 159 are applied
prospectively, any potential impact will depend on the instruments selected
for
fair value measurement at the time of implementation.
3.
Loan
Receivable
The
loan
receivable from UniverCompany Limited Liability Company, a Russian limited
liability society ("UniverCompany"), is non-interest bearing, unsecured and
has
no specified terms for repayment. See note 7.
The
loan
payable to Blue Water Partners is non-interest bearing, unsecured and has no
specified terms of repayment.
5.
Capital
Stock
Authorized
1,000,000,000
common stock, par value $0.0001 per share
(Restated
Note
8)
2007
2006
Issued
81,108,200
common stock (2006 - 80,000,000)
$
8,111
$
8,000
On
November 23, 2006, the Company implemented a one for forty (1:40) forward stock
split and increased its authorized shares of common stock on a corresponding
basis. The 2006 comparative number of shares have been retroactively adjusted
to
give effect to the stock split.
On
December 19, 2006the Company issued 1,000,000 units of the Company's
securities, each unit consisting of one share of common stock and one share
purchase warrant for total proceeds of $1,000,000. Each warrant is exercisable
for one share of common stock at an exercise price of $2.50 for two years from
the date of issuance. Due to the substantial difference between market value
and
exercise price no value has been attributed to the warrants.
In
March
2007, the Company issued 25,000 shares for services valued at
$2,500.
In
March
2007, the Company issued 83,200 shares for cash of $8,320.
The
Company accounts for income taxes pursuant to SFAS No. 109. This standard
prescribes the use of the liability method whereby deferred tax asset and
liability account balances are determined based on differences between financial
reporting and tax bases of assets and liabilities and are measured using the
enacted tax rates. The effects of future changes in tax laws or rates are not
anticipated.
Under
SFAS No. 109 income taxes are recognized for the following: a) amount of tax
payable for the current year, and b) deferred tax liabilities and assets for
future tax consequences of events that have been recognized differently in
the
financial statements than for tax purposes.
The
provision for income taxes has been computed as follows:
2007
2006
Expected
income tax recovery at the statutory rate - 31% (2006 -
31%)
$
(7,304
)
$
(451
)
Valuation
allowance
7,304
451
Provision
for income taxes
$
-
$
-
The
Company has tax losses available to be applied against future years income.
Due
to the losses incurred in the current period and expected future operating
results, management determined that it is more likely than not that the deferred
tax asset resulting from the tax losses available for carryforward and stock
option compensation expense will not be realized through the reduction of future
income tax payments, accordingly a 100% valuation allowance has been recorded
for deferred income tax assets.
As
of
March 31, 2007 and 2006, the Company had approximately $19,600 and $3,700
respectively, of federal and state net operating loss carryforwards available
to
offset future taxable income. The losses expire in 20 years from the date the
loss was incurred.
On
November 30, 2006, the Company entered into a stock purchase agreement with
UniverCompany, and the two shareholders of UniverCompany. Pursuant to the stock
purchase agreement, the Company agreed to purchase from the shareholders of
UniverCompany 100% of the issued and outstanding shares of common stock of
UniverCompany. In consideration thereon, the Company will issue to the
shareholders of UniverCompany 41,000,000 shares of the Company's common
stock.
The
consummation of above transactions will take place at a closing to be held
at a
later date. Such closing will not take place until certain conditions have
occurred.
8.
Comparative
Figures and Restatement
Certain
figures for the prior period have been reclassified to conform with the current
period's financial statement presentation.
The
stockholders' equity has been retroactively restated to give effect to the
1 for
40 stock split as described in note 5.
F-14
Item
2. Management’s
Discussion and Analysis or Plan of Operations.
As
used
in this Form 10-QSB, references to the "Company,""we,"“our” or "us" refer to
Stargold Mines, Inc. unless the context otherwise indicates.
Forward-Looking
Statements
The
following discussion should be read in conjunction with our financial
statements, which are included elsewhere in this Form 10-QSB. This Form 10-QSB
contains forward-looking statements which relate to future events or our future
financial performance. In some cases, you can identify forward-looking
statements by terminology such as “may”, “should”, “expects”, “plans”,
“anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or
the negative of these terms or other comparable terminology. These statements
are only predictions and involve known and unknown risks, uncertainties, and
other factors that may cause our or our industry’s actual results, levels of
activity, performance or achievements to be materially different from any future
results, levels of activity, performance or achievements expressed or implied
by
these forward-looking statements.
While
these forward-looking statements, and any assumptions upon which they are based,
are made in good faith and reflect our current judgment regarding the direction
of our business, actual results will almost always vary, sometimes materially,
from any estimates, predictions, projections, assumptions or other future
performance suggested herein. Except as required by applicable law, including
the securities laws of the United States, we do not intend to update any of
the
forward-looking statements to conform these statements to actual results.
Overview
We
were
incorporated under the laws of the State of Nevada on May 21, 2003 under the
name Sockeye Seafood Group, Inc. On November 13, 2006, we entered into a Plan
and Agreement of Merger with our wholly-owned subsidiary, Stargold Mines, Inc.,
a Nevada corporation (the "Subsidiary"). The Subsidiary had no assets or
liabilities and no previous operating history; it was formed by us on November8, 2006 for the sole purpose of entering into the merger.
4
The
merger was consummated on November 23, 2006. On that date, we filed with the
Secretary
of State of Nevada Articles of Merger, pursuant to which the Subsidiary merged
with and into us in accordance with the Plan of Merger. Pursuant to the Articles
of Merger, we also changed our name from "Sockeye Seafood Group, Inc." to
"Stargold Mines, Inc."
Simultaneously
with its merger with Stargold Mines, Inc., we filed with the Secretary of State
of Nevada a Certificate of Change, effective as of November 23, 2006, pursuant
to which we implemented a one for forty (1:40) forward stock split and increased
our authorized shares of common stock on a corresponding basis. The number
of
shares of common stock issued and outstanding prior to the forward split was
2,000,000 shares. After the forward split, the number of shares of common stock
issued and outstanding was 81,000,000 shares. The Certificate of Change also
increased the number of authorized shares of common stock on a one for forty
(1:40) basis, from 25,000,000 shares, par value $0.001, to 1,000,000,000 shares,
par value $0.0001.
Since
inception, we have had an insignificant amount of revenues. Our operations
have
been limited to general administrative operations. We are considered a
development stage company in accordance with Statement of Financial Accounting
Standards No. 7.
Our
Business
Currently,
we have no assets, operations, business or contractual arrangements other than
the execution of a Stock Purchase Agreement entered into on November 30, 2006.
Pursuant to this with UniverCompany Limited Liability Company, a Russian limited
liability society ("UniverCompany"), and the former shareholders of
UniverCompany (the "UniverCompany Shareholders"), we agreed to purchase from
the
UniverCompany Shareholders 100% of the issued and outstanding shares of common
stock of UniverCompany in exchange for shares of the Registrant's common stock.
Although the agreement with the UniverCompany Shareholders provides that the
consideration for their shares will be the issuance by us of 41,000,000 shares,
it is contemplated that we will issue 15,000,000 shares for the UniverCompany
shares. It has been represented to us that UniverCompany owns a license to
the
"Karalon" gold deposit, which includes both precious metals and scarce resources
such as cooper, lead and tin.
In
December 2006 we received $1,000,000 gross proceeds from the sale of 1,000,000
units to Hampton Park Capital LLC. Each unit consisted of one share of common
stock and one share purchase warrant, exercisable for one share of common stock
at an exercise price of US$2.50 for two years from the date of issuance. The
$1,000,000 raised by us was lent to UniverCompany on an unsecured basis, with
no
specific terms for repayment.
The
consummation of the acquisition of UniverCompany is subject to certain
conditions. We cannot assure you that those conditions will be satisfied or
waived by us.
5
Plan
of Operation
We
do not
expect to generate any revenues over the next twelve months. Our principal
business objective for the next 12 months will be to successfully consummate
the
proposed acquisition of UniverCompany. If we are not successful, we will then
have to seek, investigate and, if such investigation warrants, engage in a
business combination with another private entity whose business presents an
opportunity for our shareholders.
During
the next 12 months we anticipate incurring costs related to the proposed
acquisition of UniverCompany and the filing of Exchange Act reports. We believe
we will be able to meet these costs through funds to be loaned by or invested
in
us by our stockholder, management or other investors. We have no specific plans,
understandings or agreements with respect to the raising of such funds, and
we
may seek to raise the required capital by the issuance of equity or debt
securities or by other means. Since we have no such arrangements or plans
currently in effect, our inability to raise funds for the consummation of an
acquisition may have a severe negative impact on our ability to become a viable
company.
The
condensed financial statements contained in this Report have been prepared
on a
‘going concern’ basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. For the reasons
discussed in this Report, there is a significant risk that we will be unable
to
continue as a going concern, in which case, you would suffer a total loss on
your investment in our company.
Off-Balance
Sheet Arrangements
None.
Item
3. Controls
and Procedures.
Evaluation
of Disclosure Controls and Procedures
Our
disclosure controls and procedures are designed to ensure that information
required to be disclosed in reports that we file or submit under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported within
the
time periods specified in the rules and forms of the United States Securities
and Exchange Commission. Our Chief Executive Officer and Chief Financial Officer
have reviewed the effectiveness of our "disclosure controls and procedures"
(as
defined in the Securities Exchange Act of 1934 Rules 13a-14(c) and 15d-14(c))
within the end of the period covered by this Quarterly Report on Form 10-QSB
and
have concluded that the disclosure controls and procedures are effective to
ensure that material information relating to the Company is recorded, processed,
summarized, and reported in a timely manner. There were no significant changes
in our internal controls or in other factors that could significantly affect
these controls subsequent to the last day they were evaluated by our Chief
Executive Officer and Chief Financial Officer.
6
Changes
in Internal Controls over Financial Reporting
There
have been no changes in the Company's internal control over financial reporting
during the last quarterly period covered by this report that have materially
affected, or are reasonably likely to materially affect, the Company's internal
control over financial reporting.
PART
II. OTHER INFORMATION
Item
1. Legal
Proceedings.
There
are
no pending legal proceedings to which the Company is a party or in which any
director, officer or affiliate of the Company, any owner of record or
beneficially of more than 5% of any class of voting securities of the Company,
or security holder is a party adverse to the Company or has a material interest
adverse to the Company. The Company’s property is not the subject of any pending
legal proceedings.
Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds.
In
March
2007, we sold 83,200 shares of our common stock at a purchase price of $0.10
per
share, amounting in the aggregate purchase price $8,320. The shares were offered
and sold pursuant to a placement held under Regulation D promulgated under
the
Securities Act of 1933, as amended. Each purchaser represented to us that such
purchaser was an accredited investor as that term is defined in Rule 501(a)
of
Regulation D.
Purchases
of equity securities by the issuer and affiliated purchasers
None.
7
Item
3. Defaults
Upon Senior Securities.
None.
Item
4. Submission
of Matters to a Vote of Security Holders.
There
was
no matter submitted to a vote of security holders during the fiscal quarter
ended March 31, 2007.
Item
5. Other
Information.
None.
Item
6. Exhibits
Exhibit
No.
Description
Where
Found
31.1
Rule
13a-14(a)/15d14(a) Certifications
Attached
Hereto
32.1
Section
1350 Certifications
Attached
Hereto
8
SIGNATURES
In
accordance with to requirements of the Exchange Act, the registrant caused
this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.