Notes to Condensed Financial Statements
June 30, 2016
(Unaudited)
NOTE 1 - CONDENSED FINANCIAL STATEMENTS
The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at June 30, 2016, and for all periods presented herein, have been made.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 2015 audited financial statements. The results of operations for the periods ended June 30, 2016 and 2015 are not necessarily indicative of the operating results for the full years.
NOTE 2 - GOING CONCERN
The Company
’
s financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company does not have significant cash or other material assets, nor does it have an established source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern. It is the intent of the Company to seek a merger with an existing, operating company. In the interim, shareholders of the Company have committed to meeting its minimal operating expenses
NOTE 3
–
SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Basic (Loss) per Common Share
Basic loss per share is calculated by dividing the Company
’
s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company
’
s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. There are no such common stock equivalents outstanding as of June 30, 2016 and 2015.
Recent Accounting Pronouncements
Management has considered all other recent accounting pronouncements issued since the last audit of the Company
’
s financial statements. The Company
’
s management believes that these recent pronouncements will not have a material effect on the Company
’
s financial statements.
NOTE 4
–
RELATED-PARTY TRANSACTIONS
The Company has recorded advances from related parties and expenses paid by related parties on behalf of the Company as related party payables. As of June 30, 2016 and December 31, 2015, respectively, the related party payable outstanding balance totaled $39,639 and $30,798, respectively. These payables are non-interest bearing, unsecured, and are due on demand.
Contributed Capital
During the six months ended June 30, 2016 and 2015, a related-party has contributed various administrative services to the Company. These services have
been valued at $3,000 for the
six
month periods then ended.
NOTE 5
–
STOCKHOLDERS
’
EQUITY
On September 19, 2014, the Company issued 26,000 shares of common stock to Blue Cap Development Corp. in exchange for certain mining and/or mineral claims and/or leases located in New Mexico. Two principals of Blue Cap, Edward F. Cowle and H. Deworth Williams, are principal stockholders of the Company.
On November 4, 2014, the Company effected a reverse stock split of its issued and outstanding shares of common stock on a one (1) share for one thousand (1,000) shares basis. As per the terms of the reverse stock split, any fractional share amount resulting from the split was automatically rounded up to the next higher whole share amount, with the provision that no individual stockholder
’
s holdings would be reduced below 100 shares. Additional shares to restore each such affected stockholder
’
s holdings to 100 shares were issued, with certain shares issued during the 2014 calendar year, and the remainder issued during the six months ended June 30, 2015. The par value of the common stock remains at $0.005 per share. As a result of the reverse stock split and the rounding up of odd lots to 100 shares, at June 30, 2015, there were 1,111,460 shares certificated and outstanding.
NOTE 6
–
SUBSEQUENT EVENTS
In accordance with ASC 855-10, Company management reviewed all material events through the date of this report and determined that there are no additional material subsequent events to report.
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Item 2.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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The Following information should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this Form 10-Q.
Forward-Looking and Cautionary Statements
This report contains forward-looking statements relating to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as
“
may,
”
“
will
”
“
should,"
“
expect," "intend," "plan," anticipate," "believe," "estimate," "predict," "potential," "continue," or similar terms, variations of such terms or the negative of such terms. These statements are only predictions and involve known and unknown risks, uncertainties and other factors included in our periodic reports with the SEC. Although forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment, actual results could differ materially from those anticipated in such statements. 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.
Results of Operations
Three and six months Ended June 30, 2016 and 2015
The company did not realize revenues for the three-month and six month periods ended June 30, 2016 and 2015. For the three months ended June 30, 2016 (
“
second quarter
”
), total operating expenses were $10,458, consisting of $8,855 in professional fees, $1,500 in executive compensation and $103 in general and administrative expenses. Total operating expenses for the comparable second quarter of 2015 were $7,562, consisting of $5,851 in professional fees, $1,500 in executive compensation and $211 in general and administrative expenses. The increase in operating expenses during the second quarter of 2016 was due primarily to increased professional fees from $5,851 in 2015 to $8,855 in 2016, due to increased costs related to ongoing reporting obligations with the SEC. The net loss for the second quarter of 2016 was $10,458 ($0.00 per share), compared to net loss of $7,562 ($0.00 per share) for the second quarter of 2015.
For the six months ended June 30, 2016 (
“
first half
”
), total operating expenses were $12,505, consisting of $10,935 in professional fees, $3,000 in executive compensation and $195 in general and administrative expenses. Total operating expenses for the comparable first half of 2015 were $13,000, consisting of $9,789 in professional fees, $3,000 in executive compensation and $211 in general and administrative expenses. The increase in operating expenses during the first half of 2016 was due primarily to increases in professional fees from $9,789 in 2015 to $9,310 in 2016, related to increased costs of ongoing reporting obligations with the SEC. The net loss for the first half of 2016 was $12,505 ($0.00 per share), compared to net loss of $13,000 ($0.00 per share) for the first half of 2015.
Liquidity and Capital Resources
Total assets at June 30, 2016 were $287 in cash, compared to $7 in cash at December 31, 2015. Total liabilities at June 30, 2016 were $111,864, consisting of $72,225 in accounts payable and accrued expenses, and $39,639 in related-party payables. At December 31, 2015, total liabilities were $100,454, consisting of $69,656 in accounts payable and accrued expenses, and $30,798 in related-party payables.
Because we currently have no revenues and limited available cash, for the immediate future we believe we will have to rely on potential advances from stockholders to continue to implement our business activities. There is no assurance that our stockholders will continue indefinitely to provide additional funds or pay our expenses. It is likely the only other source of funding future operations will be through the private sale of our securities, either equity or debt.
At June 30, 2016, we had stockholders
’
deficit of $111,577 compared to stockholders
’
deficit of $100,447 at December 31, 2015. The increased deficit during the first half of 2016 is primarily due to the net loss
7
of $14,130 and the increase in accounts payable from $69,656 to $72,225, and the increase in related party payables from $30,798 to $39,639 during the first half of 2016.
Plan of Operation
Following the sale of patents, patent applications and technologies in 2011, we have endeavored to explore possible plans for the remaining patents and new generation drug delivery technologies acquired in 2010. However, without adequate personnel with the requisite scientific expertise, we found it difficult to further develop the technologies and endeavored to explore alternative business ventures. Following the acquisition of certain mining and mineral claims and leases in September 2014, we have directed our focus on the initial exploration of the acquired properties to determine whether there is commercial potential. We are now in the process of developing a definitive plan for the initial exploration of our claims.
We are classified or considered an exploration stage mining company, which is defined as a company engaged in the search for mineral deposits or reserves of precious and base metal targets, which are not in either the development or production stage. We have no known mineral reserves on our properties and our proposed preliminary studies of the claims is intended to be exploratory in nature.
Our current plan is to finalize and initiate an exploration program, to identify our objectives and anticipated growth for the next 12 months, and identify our cash requirements to fulfill our business objectives. We will need to raise additional funds during the next 12 months to complete our exploration commitments and to pay for general business and operating expenses. We estimate that we will need up to $100,000 during the next twelve months to facilitate an exploration program. Management plans to explore a possible private placement of our securities and/or debt financing to raise the additional fund, although no definitive plan has been formulated and there can be no assurance that we will be able to realize the necessary funds.
If exploration results do not warrant drilling or further exploration, we will most likely suspend operations on the property. In that event, we would need to seek additional exploration properties and additional funding with which to conduct the work. If we are unable to obtain additional financing or additional properties, we may not be able to continue active business operations.
If we are able to complete an initial exploration programs and successfully identify a mineral deposit, we will need substantial additional funds for drilling and engineering studies to determine whether any identified mineral deposit is commercially viable. If we are unable to raise additional funds for this work or secure a strategic partner, we would be unable to proceed, even if a mineral deposit is discovered and is believed to be commercially viable.
We do not anticipate conducting any product research or development over the next 12 months. Also, we do not expect to make any major equipment purchasers or make any significant capital expenditures in the immediate future unless we have the necessary funds. We do not have employees and do not expect to add employees over the next 12 months, except for part-time clerical assistance on an as-needed basis and possibly engaging outside advisors or consultants as requisite funds are available. We anticipate that our current management team will satisfy our everyday operating requirements for the foreseeable future.
Because we currently have limited cash, it may be necessary for officers, directors or stockholders to advance funds and we will most likely accrue expenses until a funding can be accomplished. Management intends to hold expenses to a minimum and to obtain services on a contingency basis when possible. Further, we expect directors to defer any compensation until such time as we have sufficient funds. We have not yet entered into any arrangements or definitive agreements to use outside advisors or consultants or to raise any capital.
We are currently exploring possible funding sources, but we have not entered into any arrangements or agreements for funding as of this time. If we are unable to raise the necessary funding, our research and development plans will be delayed indefinitely. There can be no assurance that we will be able to raise the funds necessary to carry out our business plan on terms favorable to the company, or at all.
8
Off-balance Sheet Arrangements
We have no off-balance sheet arrangements.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
. Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Disclosure and control procedures are also designed to ensure that such information is accumulated and communicated to management, including the chief executive officer and principal accounting officer, to allow timely decisions regarding required disclosures.
As of the end of the period covered by this quarterly report, we carried out an evaluation, under the supervision and with the participation of management, including our chief executive officer and principal accounting officer, of the effectiveness of the design and operation of our disclosure controls and procedures. In designing and evaluating the disclosure controls and procedures, management recognizes that there are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their desired control objectives. Additionally, in evaluating and implementing possible controls and procedures, management is required to apply its reasonable judgment. Based on the evaluation described above, management, including our principal executive officer and principal accounting officer, has concluded that, as of June 30, 2016, our disclosure controls and procedures were not effective.
Changes in Internal Control Over Financial Reporting
. Management has evaluated whether any change in our internal control over financial reporting occurred during the second quarter of fiscal 2016. Based on its evaluation, management, including the chief executive officer and principal accounting officer, has concluded that there has been no change in our internal control over financial reporting during the second quarter of fiscal 2016 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
