UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of
Earliest Event Reported): February
4, 2010
BLACK HAWK EXPLORATION, INC. | |
(Exact name of registrant as specified in its charter) |
Nevada
|
000-51988
|
27-0670160
|
||
(State
or Jurisdiction
of
Incorporation)
|
(Commission
File
Number)
|
(IRS
Employer
Identification
No.)
|
1174 Manito Dr., NW Fox Island, WA 98333 | |
(Address and telephone number of principal executive office) |
Registrant’s telephone
number, including area code: (253)
973-7135
N/A | |
(Former name or former address, if changed since last report) |
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a
-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d -2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e -4(c))
CAUTIONARY
STATEMENT CONCERNING FORWARD-LOOKING INFORMATION
This
report contains forward-looking statements. These statements relate
to future events or our future financial performance. In some cases,
you can identify forward-looking statements by terminology such as “may”,
“should”, “intends”, “expects”, “plans”, “anticipates”, “believes”, “estimates”,
“predicts”, “potential”, or “continue” or the negative of these terms or other
comparable terminology. These statements are only predictions and
involve known and unknown risks, uncertainties and other factors, including the
risks in the section entitled “Risk Factors” commencing on page 2 of this
current report, which may cause our or our industry’s actual results, levels of
activity or performance to be materially different from any future results,
levels of activity or performance expressed or implied by these forward-looking
statements.
Although
we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity or
performance. 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.
As used
in this report, the terms “the Company” “we”, “us”, “our” and “Black Hawk
Exploration” mean Black Hawk Exploration, Inc. unless otherwise
indicated.
Black
Hawk is an exploration stage corporation. There is no assurance that
commercially viable mineral deposits exist on the claims we have under option.
Further exploration and/or drilling will be required before a final evaluation
as to the economic and legal feasibility of our projects is
determined.
Item
5.01 Changes in Control of Registrant
On
February 4, 2010 Kevin M. Murphy purchased 12,000,000 shares of common stock
from Wayne Weaver, a major shareholder. The shares were purchased for a total
consideration of $10,200,000. Kevin M. Murphy now owns 12,010,000 of our shares
of common stock, which is 19.94% of our issued and outstanding shares of common
stock as of February 25, 2010.
FORM
10 INFORMATION
RISK
FACTORS
In
addition to other information in this report, the following risk factors should
be carefully considered in evaluating our business because such factors may have
a significant impact on our business, operating results, liquidity and financial
condition. As a result of the risk factors set forth below, actual results could
differ materially from those projected in any forward-looking statements.
Additional risks and uncertainties not presently known to us, or that we
currently consider to be immaterial, may also impact our business, operating
results, liquidity and financial condition. If any such risks occur, our
business, operating results, liquidity and financial condition could be
materially affected in an adverse manner. Under such circumstances, the trading
price of our securities could decline, and you may lose all or part of your
investment.
Risks
Associated with our Business
We
are an exploration stage corporation, lack a business history and have losses
that we expect to continue into the future. If the losses continue we will have
to suspend operations or cease functioning.
We were
incorporated on April 14, 2005, and have only started our proposed business but
have not realized any revenues. We have no business history upon which an
evaluation of our future success or failure can be made. Our net loss since
inception is $696,100. Our ability to achieve and maintain profitability and
positive cash flow is dependent upon:
●
|
our
ability to find a profitable exploration property;
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●
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our
ability to generate revenues; and
|
●
|
our
ability to reduce exploration
costs.
|
Because
of the speculative nature of exploration of mineral properties, we may never
discover a commercially exploitable quantity of minerals, our business may fail
and investors may lose their entire investment.
We are in
the very early exploration stage and cannot guarantee that our exploration work
will be successful or that any minerals will be found or that any production of
minerals will be realized. The search for valuable minerals as a business is
extremely risky. We can provide investors with no assurance that
exploration on our properties will establish that commercially exploitable
reserves of minerals exist on our property. Additional potential
problems that may prevent us from discovering any reserves of minerals on our
property include, but are not limited to, unanticipated problems relating to
exploration and additional costs and expenses that may exceed current estimates.
If we are unable to establish the presence of commercially exploitable reserves
of minerals on our property our ability to fund future exploration activities
will be impeded, we will not be able to operate profitably and investors may
lose all of their investment in our company.
Because
of the unique difficulties and uncertainties inherent in mineral exploration
ventures, we face a high risk of business failure.
Potential
investors should be aware of the difficulties normally encountered by new
mineral exploration companies and the high rate of failure of such
enterprises. The likelihood of success must be considered in light of
the problems, expenses, difficulties, complications and delays encountered in
connection with the exploration of the mineral properties that we plan to
undertake. These potential problems include, but are not limited to,
unanticipated problems relating to exploration, and additional costs and
expenses that may exceed current estimates. The expenditures to be
made by us in the exploration of the mineral claim may not result in the
discovery of mineral deposits. Problems such as unusual or unexpected
formations and other conditions are involved in mineral exploration and often
result in unsuccessful exploration efforts. If the results of our
exploration do not reveal viable commercial mineralization, we may decide to
abandon our claims. If this happens, our business will likely
fail.
Because
of the inherent dangers involved in mineral exploration, there is a risk that we
may incur liability or damages as we conduct our business.
The
search for valuable minerals involves numerous hazards. As a result, we may
become subject to liability for such hazards, including pollution, cave-ins and
other hazards against which we cannot insure or against which we may elect not
to insure. At the present time we have no coverage to insure against these
hazards. The payment of such liabilities may have a material adverse effect on
our financial position.
We
have no known mineral reserves and we may not find any gold or lithium if we
find gold or lithium it may not be in economic quantities. If we fail to find
any gold or lithium or if we are unable to find gold or lithium in economic
quantities, we will have to suspend operations.
We have
no known mineral reserves. Even if we find gold or lithium, it may not be of
sufficient quantity so as to warrant recovery. Additionally, even if we find
gold or lithium in sufficient quantity to warrant recovery it ultimately may not
be recoverable. Finally, even if any gold or lithium is recoverable, we do not
know that this can be done at a profit. Failure to locate gold or lithium in
economically recoverable quantities will cause us to suspend
operations.
The
potential profitability of mineral ventures depends in part upon factors beyond
the control of our company and even if we discover and exploit mineral deposits,
we may never become commercially viable and we may be forced to cease
operations.
The
commercial feasibility of mineral properties is dependent upon many factors
beyond our control, including the existence and size of mineral deposits in the
properties we explore, the proximity and capacity of processing equipment,
market fluctuations of prices, taxes, royalties, land tenure, allowable
production and environmental regulation. These factors cannot be
accurately predicted and any one or a combination of these factors may result in
our company not receiving an adequate return on invested
capital. These factors may have material and negative effects on our
financial performance and our ability to continue operations.
We
may be adversely affected by fluctuations in ore and precious metal
prices.
The value
and price of our shares of common stock, our financial results, and our
exploration, development and mining activities, if any, may be significantly
adversely affected by declines in the price of precious metals and
ore. Mineral prices fluctuate widely and are affected by numerous
factors beyond our control such as interest rates, exchange rates, inflation or
deflation, fluctuation in the value of the United States dollar and foreign
currencies, global and regional supply and demand, and the political and
economic conditions of mineral producing countries throughout the
world.
The
prices used in making resource estimates for mineral projects are disclosed, and
generally use significantly lower metal prices than daily metals prices quoted
in the news media. The percentage change in the price of a metal cannot be
directly related to the estimated resource quantities, which are affected by a
number of additional factors. For example, a 10% change in price may have little
impact on the estimated resource quantities, or it may result in a significant
change in the amount of resources.
Transportation
difficulties and weather interruptions may affect and delay proposed mining
operations and impact our proposed business.
Our
mining properties are accessible by road. The climate in the area is hot and dry
in the summer but cold and subject to snow in the winter, which could at times
hamper accessibility depending on the winter season precipitation levels. As a
result, our exploration and mining plans could be delayed for several months
each year.
Supplies
needed for exploration may not always be available.
Competition
and unforeseen limited sources of supplies needed for our proposed exploration
work could result in occasional spot shortages of supplies of certain products,
equipment or materials. There is no guarantee we will be able to obtain certain
products, equipment and/or materials as and when needed, without interruption,
or on favorable terms. Such delays could affect our proposed business
plans.
Management
will devote only a limited amount of time to Black Hawk’s business. Failure of
our management to devote a sufficient amount of time to our business plans may
adversely affect the success of our business.
Mr. Kevin
M. Murphy will be devoting approximately 20 hours per week to black Hawk’s
business. Failure of our management to devote a sufficient amount of time to our
business plans may adversely affect the success of our business.
Management
lacks formal training in mineral exploration.
Our
officers and directors have no professional accreditation or formal training in
the business of exploration. With no direct training or experience in these
areas our management may not be fully aware of many of the specific requirements
related to working within this industry. Decisions so made without this
knowledge may not take into account standard engineering management approaches
that experienced exploration corporations commonly make. Consequently, our
business, earnings and ultimate financial success could suffer irreparable harm
as a result of management’s lack of experience in the industry. Thus, we will
retain such technical experts as are required to provide professional and
technical guidance.
Risks
Associated with our Common Stock
We
do not intend to pay dividends on any investment in the shares of stock of our
company.
We have
never paid any cash dividends and currently do not intend to pay any dividends
for the foreseeable future. To the extent that we require additional
funding currently not provided for in our financing plan, our funding sources
may prohibit the payment of a dividend. Because we do not intend to
declare dividends, any gain on an investment in our company will need to come
through an increase in the stock’s price. This may never happen and
investors may lose all of their investment in our company.
Because
we can issue additional shares of common stock, purchasers of our common stock
may incur immediate dilution and may experience further dilution.
We are
authorized to issue up to 300,000,000 shares of common stock, of which
60,236,722 shares are issued and outstanding. Our board of directors has the
authority to cause us to issue additional shares of common stock, and to
determine the rights, preferences and privileges of such shares, without consent
of any of our stockholders. Consequently, the stockholders may experience more
dilution in their ownership of our stock in the future.
A
decline in the price of our common stock could affect our ability to raise
further working capital, it may adversely impact our ability to continue
operations and we may go out of business.
A
prolonged decline in the price of our common stock could result in a reduction
in the liquidity of our common stock and a reduction in our ability to raise
capital. Because we may attempt to acquire a significant portion of
the funds we need in order to conduct our planned operations through the sale of
equity securities, a decline in the price of our common stock could be
detrimental to our liquidity and our operations because the decline may cause
investors to not choose to invest in our stock. If we are unable to
raise the funds we require for all our planned operations, we may be forced to
reallocate funds from other planned uses and may suffer a significant negative
effect on our business plan and operations, including our ability to develop new
products and continue our current operations. As a result, our
business may suffer, and not be successful and we may go out of
business. We also might not be able to meet our financial obligations
if we cannot raise enough funds through the sale of our common stock and we may
be forced to go out of business.
Our
stock is a penny stock. Trading of our stock may be restricted by the
Securities and Exchange Commission’s penny stock regulations which may limit a
stockholder’s ability to buy and sell our stock.
Our stock
is a penny stock. The Securities and Exchange Commission has adopted
Rule 15g-9 which generally defines “penny stock” to be any equity security that
has a market price (as defined) less than $5.00 per share or an exercise price
of less than $5.00 per share, subject to certain exceptions. Our
securities are covered by the penny stock rules, which impose additional sales
practice requirements on broker-dealers who sell to persons other than
established customers and “accredited investors”. The term
“accredited investor” refers generally to institutions with assets in excess of
$5,000,000 or individuals with a net worth in excess of $1,000,000 or annual
income exceeding $200,000 or $300,000 jointly with their spouse. The
penny stock rules require a broker-dealer, prior to a transaction in a penny
stock not otherwise exempt from the rules, to deliver a standardized risk
disclosure document in a form prepared by the SEC which provides information
about penny stocks and the nature and level of risks in the penny stock
market. The broker-dealer also must provide the customer with current
bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction and monthly account
statements showing the market value of each penny stock held in the customer’s
account. The bid and offer quotations, and the broker-dealer and
salesperson compensation information, must be given to the customer orally or in
writing prior to effecting the transaction and must be given to the customer in
writing before or with the customer’s confirmation. In addition, the
penny stock rules require that prior to a transaction in a penny stock not
otherwise exempt from these rules; the broker-dealer must make a special written
determination that the penny stock is a suitable investment for the purchaser
and receive the purchaser’s written agreement to the
transaction. These disclosure requirements may have the effect of
reducing the level of trading activity in the secondary market for the stock
that is subject to these penny stock rules. Consequently, these penny
stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor
interest in and limit the marketability of our common stock.
FINRA
sales practice requirements may also limit a stockholder’s ability to buy and
sell our stock.
In
addition to the “penny stock” rules promulgated by the Securities and Exchange
Commission, the Financial Industry Regulatory Authority (FINRA) has adopted
rules that require that in recommending an investment to a customer, a
broker-dealer must have reasonable grounds for believing that the investment is
suitable for that customer. Prior to recommending speculative low
priced securities to their non-institutional customers, broker-dealers must make
reasonable efforts to obtain information about the customer’s financial status,
tax status, investment objectives and other information. Under
interpretations of these rules, the FINRA believes that there is a high
probability that speculative low priced securities will not be suitable for at
least some customers. The FINRA requirements make it more difficult
for broker-dealers to recommend that their customers buy our common stock, which
may limit your ability to buy and sell our stock.
Risks
Related to our Financial Results and Need for Additional Financing
Our
auditors’ reports contain a statement that our net loss and limited working
capital raise substantial doubt about our ability to continue as a going
concern.
Our
independent registered public accountants have stated in their report, included
in our annual report on Form 10-K filed with the Securities and Exchange
Commission on November 30, 2009, that our significant operating losses and
working capital deficiency raise substantial doubt about our ability to continue
as a going concern. We had net losses of $66,879 and $283,375, respectively, for
the fiscal years ended August 31, 2009 and 2008. We will be required to raise
substantial capital to fund our capital expenditures, working capital and other
cash requirements since our current cash assets are exhausted. We are currently
searching for sources of additional funding, including potential joint venture
partners, while we continue the initial exploration phase on our mining claims.
The successful outcome of future financing activities cannot be determined at
this time and there are no assurances that, if achieved, we will have sufficient
funds to execute our intended business plan or generate positive operational
results.
We
will need additional capital to achieve our current business strategy and our
inability to obtain additional financing will inhibit our ability to expand or
even maintain our research, exploration and development efforts.
In
addition to our current accumulated deficit, we expect to incur additional
losses in the foreseeable future. Until we are able to determine if there are
mineral deposits available for extraction on our properties, we are unlikely to
be profitable. Consequently, we will require substantial additional capital to
continue our exploration and development activities. There is no assurance that
we will not incur additional and unplanned expenses during our continuing
exploration and development activities. When additional funding is required, we
intend to raise funds either through private placements or public offerings of
our equity securities. There is no assurance that we will be able to obtain
additional financing through private placements and/or public offerings
necessary to support our working capital requirements. To the extent that funds
generated from any private placements and/or public offerings are insufficient,
we will have to raise additional working capital through other sources, such as
bank loans and/or financings. No assurance can be given that additional
financing will be available, or if available, will be on acceptable
terms.
If we are
unable to secure adequate sources of funds, we may be forced to delay or
postpone the exploration, development and research of our properties, and as a
result, we might be required to diminish or suspend our business plans. These
delays in development would have an adverse effect on our ability to generate
revenues and could require us to possibly cease operations. In addition, such
inability to obtain financing on reasonable terms could have a negative effect
on our business, operating results or financial condition to such extent that we
are forced to restructure, file for bankruptcy protection, sell assets or cease
operations, any of which could put your investment dollars at significant
risk.
We
are incurring increased costs as a result of being a publicly-traded
company.
As a
public company, we incur significant legal, accounting and other expenses that
we did not incur as a private company. In addition, the Sarbanes-Oxley Act of
2002, as well as new rules subsequently implemented by the Securities and
Exchange Commission, have required changes in corporate governance practices of
public companies. These new rules and regulations have increased our legal and
financial compliance costs and have made some activities more time-consuming and
costly. For example, as a result of becoming a public company, we have created
additional board committees and have adopted policies regarding internal
controls and disclosure controls and procedures. In addition, we have incurred
additional costs associated with our public company reporting requirements.
These new rules and regulations have made it more difficult and more expensive
for us to obtain director and officer liability insurance, which we currently
cannot afford to do. As a result of the new rules, it may become more difficult
for us to attract and retain qualified persons to serve on our board of
directors or as executive officers. We cannot predict or estimate the amount of
additional costs we may incur as a result of being a public company or the
timing of such costs and/or whether we will be able to raise the funds necessary
to meet the cash requirements for these costs.
Because
we may never earn revenues from our operations, our business may fail and then
investors may lose all of their investment in our company.
We have
no history of revenues from operations. We have never had significant
operations and have no significant assets. We have yet to generate
positive earnings and there can be no assurance that we will ever operate
profitably. Our company has a limited operating history and is in the
exploration stage. The success of our company is significantly
dependent on the uncertain events of the discovery and exploitation of mineral
reserves on our properties or selling the rights to exploit those mineral
reserves. If our business plan is not successful and we are not able
to operate profitably, then our stock may become worthless and investors may
lose all of their investment in our company.
Prior to
completion of the exploration stage, we anticipate that we will incur increased
operating expenses without realizing any revenues. We therefore
expect to incur significant losses into the foreseeable future. We
recognize that if we are unable to generate significant revenues from the
exploration of our mineral claims in the future, we will not be able to earn
profits or continue operations. There is no history upon which to
base any assumption as to the likelihood that we will prove successful, and we
can provide no assurance that we will generate any revenues or ever achieve
profitability. If we are unsuccessful in addressing these risks, our
business will fail and investors may lose all of their investment in our
company.
DESCRIPTION
OF BUSINESS
Overview
We were
incorporated in the State of Nevada on April 14, 2005. We are engaged
in the acquisition and exploration of mining properties. We maintain
our statutory registered agent’s office at 9360 W. Flamingo #110-158
Las Vegas, NV 89147 and our business office is located at 1174 Manitou Dr., PO
Box 363, Fox Island, WA 98333. Our fiscal year end is August 31st. On March 15,
2007, we approved a ten (10) for one (1) forward stock split of our authorized,
issued and outstanding shares of common stock. We amended our Articles of
Incorporation by the filing of a Certificate of Change with the Nevada Secretary
of State wherein it stated that we would issue ten shares for every one share of
common stock issued and outstanding immediately prior to the effective date of
the forward stock split. The change in the Articles of Incorporation was
effected with the Nevada Secretary of State on April 6, 2007. As a result, the
authorized capital increased from 30,000,000 to 300,000,000 shares of common
stock with a par value of $0.001.
Our
Current Business – Mineral Exploration
We are an
exploration stage resource company, and are primarily engaged in the exploration
for and development in the properties in which we have acquired
interests. Black Hawk Exploration is a diversified energy and metals
exploration company focused on identifying and exploring strategic high value
properties and developing new prospective projects globally. Black Hawk
Exploration will establish wholly owned corporate identities in multiple
strategic minerals, high value commodities, and rare earth
projects.
In August
2009 we formed a wholly owned Nevada subsidiary, Blue Lithium Energy Inc. Blue
Lithium Energy will initially acquire, explore and develop a portfolio of
strategic lithium properties in the United States and Canada.
The area the Company is
currently evaluating has a geologic and topographic setting and is located in
Clayton Valley, Nevada. During the mid-to late 1970’s the U.S. Geological
Survey (USGS) evaluated lithium deposits and resources around the world.
During the course of the program they drilled 22 holes in Nevada and
Arizona. Initial drilling was in Clayton Valley. Several of these drill
sites are adjacent to the Black Hawk claims and to Chemetall-Foote, to evaluate
the known continental-brines. USGS holes drilled in the Clayton
Valley target area had 1.3 and 1.7 parts per million (ppm) lithium in the
brines that were intersected plus 287 and 364 ppm lithium in the
sediments. These are within the range of values that could be
indicative for lithium brines in the target area.
We hold
title to 56 placer mineral claims over a 1,120 acre site. The mineral claims
give us the right to all of the minerals which can be claimed by placer claims
underlying the land on which the claims have been staked. We began
exploration on our property in September
2009.
On
September 30, 2009 Black Hawk announced its Clayton Valley, Nevada acquisition.
Black Hawk’s 1,120 acre site is located in the lithium rich Clayton Valley which
is the home of the largest lithium brine production facility in the U.S. The
Chemetall-Foote facility has produced in excess of 50 million Kg of lithium to
date and is scaled to produce 1.2 million Kg a year. The American Institute of
Mining estimates the mineral resource of the Clayton Valley to be 750 million Kg
of lithium. The lithium brine deposits are located at depths of a few hundred
meters and can be extracted in an environmentally friendly manner.
On
December 8, 2009 we incorporated Golden Black Hawk, Inc. as a wholly owned
subsidiary under Nevada law. This subsidiary then entered into an agreement
(“the Option Agreement”) on December 10, 2009 (“the Effective Date”) with
HuntMountain Resources Inc (HNTM) to purchase 75% of HNTM’s option on a precious
metal property in Nevada called Dun Glen. The Option Agreement entitles the
Company to acquire undivided legal and beneficial interests of up to 75% in the
Property free and clear of all liens, charges and claims of others.
Considerations
for the Option Agreement are as follows:
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An
initial payment of $50,000 (paid) and issuance of 250,000 restricted
shares of common stock on the Effective
Date;
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-
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A
further payment of $25,000 and issuance of 100,000 restricted shares of
common stock on the first anniversary of the effective
Date;
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-
|
A
further payment of $25,000 on the second anniversary of the Effective
Date;
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-
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Incur
or fund expenditures on the Property of not less than $700,000 on or
before the fourth anniversary of the Effective
Date.
|
The
Company’s authorized stocks consist of 300,000,000 common shares at a par value
of $0.001.
On March
15, 2007, the board of directors approved a ten (10) for one (1) forward stock
split of authorized, issued and outstanding shares of common stock. The Company
amended its Articles of Incorporation by the filing of a Certificate of Change
with the Nevada Secretary of State wherein it stated that it would issue ten
shares for every one share of common stock issued and outstanding immediately
prior to the effective date of the forward stock split. The change in the
Articles of Incorporation was effected with the Nevada Secretary of State on
April 6, 2007. As a result, the authorized capital increased from 30,000,000 to
300,000,000 shares of common stock with a par value of $0.001. The stock split
is presented retroactively in these financial statements.
As
of February 25, 2010, there are 60,236,722 shares of the Company’s common stock
issued and outstanding.
Our
Proposed Exploration Program – Plan of Operation
Over the
twelve months ending November 30, 2010 we plan to expend a total of
approximately $150,000 in respect of future mineral property
acquisitions.
Based on
our current plan of operations, we require immediate funds to commence our
exploration operations. We currently have cash on hand of $234,684. We
anticipate that we will have to raise additional cash of approximately
$1,000,000 to allow us to complete our proposed exploration program. We entered
into an equity financing agreement (the “Financing Agreement”), whereby we may
draw up to $1,000,000 by issuing units (the “Units”) at $0.85 per unit with each
unit consisting of one share of our common stock and one common stock purchase
warrant exercisable into one common share for two years, at $1.05 for the first
12 months and $1.25 for the second 12 months. The advances are at the discretion
of the counter-party. If we fail to raise sufficient funds, we may modify our
operations plan accordingly. Even if we do raise funds for operations, there is
no assurance that we will be able to maintain operations at a level sufficient
for an investor to obtain a return on his investment in our common stock.
Further, we may continue to be unprofitable.
Over the
twelve months ending November 30, 2010 we intend to use all available funds to
commence exploration of our mineral properties,
Government
Regulations
Any
operations at the our mineral properties will be subject to various federal and
state laws and regulations in the United States which govern prospecting,
development, mining, production, exports, taxes, labor standards, occupational
health, waste disposal, protection of the environment, mine safety, hazardous
substances and other matters. We will be required to obtain those licenses,
permits or other authorizations currently required to conduct exploration and
other programs. There are no current orders or directions relating to us or our
properties with respect to the foregoing laws and regulations. Such compliance
may include feasibility studies on the surface impact of our proposed
operations, costs associated with minimizing surface impact, water treatment and
protection, reclamation activities, including rehabilitation of various sites,
on-going efforts at alleviating the mining impact on wildlife and permits or
bonds as may be required to ensure our compliance with applicable regulations.
It is possible that the costs and delays associated with such compliance could
become so prohibitive that we may decide to not proceed with exploration,
development, or mining operations on any of our mineral properties. We are not
presently aware of any specific material environmental constraints affecting our
properties that would preclude the economic development or operation of property
in the United States.
The U.S.
Forest Service requires that mining operations on lands subject to its
regulation obtain an approved plan of operations subject to environmental impact
evaluation under the National
Environmental Policy Act. Any significant modifications to the plan of
operations may require the completion of an environmental assessment or
Environmental Impact Statement prior to approval. Mining companies must post a
bond or other surety to guarantee the cost of post-mining reclamation. These
requirements could add significant additional cost and delays to any mining
project undertaken by us.
Under the
U.S. Resource
Conservation and Recovery Act, mining companies may incur costs for
generating, transporting, treating, storing, or disposing of hazardous waste, as
well as for closure and post-closure maintenance once they have completed mining
activities on a property. Any future mining operations at our mineral properties
may produce air emissions, including fugitive dust and other air pollutants,
from stationary equipment, storage facilities, and the use of mobile sources
such as trucks and heavy construction equipment which are subject to review,
monitoring and/or control requirements under the Federal Clean Air Act and state
air quality laws. Permitting rules may impose limitations on our production
levels or create additional capital expenditures for pollution control in order
to comply with the rules.
The U.S.
Comprehensive
Environmental Response Compensation and Liability Act of 1980, as amended
(“CERCLA”), imposes strict joint and several liability on parties associated
with releases or threats of releases of hazardous substances. Those liable
groups include, among others, the current owners and operators of facilities
which release hazardous substances into the environment and past owners and
operators of properties who owned such properties at the time the disposal of
the hazardous substances occurred. This liability could include the cost of
removal or remediation of the release and damages for injury to the surrounding
property. We cannot predict the potential for future CERCLA liability with
respect to our mineral properties or surrounding areas.
Employees
At
present, we have no employees. We currently operate with two
executive officers, who devote their time as required to our business
operations. Our executive officers are not presently compensated for their
services and do not have an employment agreement with us.
Reports
to Security Holders
We are
required to file annual, quarterly and current reports, proxy statements and
other information with the Securities and Exchange Commission and our filings
are available to the public over the internet at the Securities and Exchange
Commission’s website at http://www.sec.gov. The public may read and copy any
materials filed by us with the Securities and Exchange Commission at the
Securities and Exchange Commission’s Public Reference Room at 100 F Street N.E.
Washington D.C. 20549. The public may obtain information on the operation of the
Public Reference Room by calling the Securities and Exchange Commission at
1-800-732-0330. The SEC also maintains an Internet site that contains reports,
proxy and formation statements, and other information regarding issuers that
file electronically with the SEC, at http://www.sec.gov.
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
General
Information
Our
financial statements are stated in United States Dollars (USD or US$) and are
prepared in accordance with United States Generally Accepted Accounting
Principles. All references to “common shares” refer to the common shares in our
capital stock.
Black
Hawk is an exploration stage company. There is no assurance that commercially
viable mineral deposits exist on the mineral property that we have under option.
Further exploration will be required before a final evaluation as to the
economic and legal feasibility of the claim is determined.
Our
Proposed Exploration Program – Plan of Operation
Our
business plan is to proceed with the initial exploration of the lithium and gold
properties to determine if there are commercially exploitable deposits of gold
and lithium, and if we decide not to proceed, to seek other mineral exploration
properties. We retained the services of the Hunsaker Inc., a geological company,
to assess the results of our program. Upon receipt of that report we will be in
a position to review the work completed and to properly evaluate the potential
of the property and to determine if gold or lithium exist on the properties and,
if any gold or lithium is found, can be economically extracted & profitably
processed.
We do not
claim to have any ores or reserves whatsoever at this time on our optioned
property.
Phase
I Exploration Program
Over the
twelve months ending November 30, 2010 we intend to use all available funds to
commence exploration of our mineral properties, as follows:
General
and Administrative
|
$
|
50,000
|
||
Operations:
|
||||
Future
property acquisitions
|
130,000
|
|||
Working
capital
|
50,000
|
|||
Development
of properties
|
1,000,000
|
|||
Total
|
$
|
1,230,000
|
Phase II
will not be carried out until 2011 or 2012 and will be contingent upon
favourable results from phase I and specific recommendations in the resulting
report. Specifics of the work to be carried out have not yet been determined and
will be delineated as recommendations in the reporting of the results of phase
I. The second phase may require up to six weeks work. Four months may be
required for analysis and the preparation of a report and evaluation on the work
accomplished.
Employees
We intend
to continue to use the services of subcontractors for manual labour exploration
work and an engineer or geologist to manage the exploration program. Our only
employee will be our senior officers and directors. In regards to phase I of the
planned exploration program, we have retained Buster Hunsaker as senior
geological consultant.
At
present, we have no employees, other than our executive officers who do not have
an employment agreement with us. We presently do not have pension, health,
annuity, insurance, stock options, profit sharing or similar benefit plans;
however, we may adopt such plans in the future. There are presently no personal
benefits available to employees.
Results
of Operations
Black
Hawk was incorporated on April 14, 2005; comparative periods for the three
months ended November 30, 2009, and November 30, 2008, as well as for the period
from April 14, 2005 (inception), through November 30, 2009, are presented
in the following discussion.
Revenues
REVENUE –
Gross revenue for the quarters ended August 31 2009, and August 31, 2008, was
$0. To date, we have not generated any revenues.
COMMON
STOCK – Net cash provided by financing activities during the years ended August
31, 2009, and 2008 was $687,099 and $597,999 respectively. $ 942,098 has been
received from inception on April 14, 2005, through to and including November 30,
2009.
Expenses
Expense
Item
|
For
the
quarter
ended
November
30,
2009
|
For
the
quarter
ended
November
30,
2008
|
April
14,
2005
(Inception)
through
November
30,
2009
|
|||||||||
Mineral
Property Exploring
|
7,963 | 0 | 9,793 | |||||||||
General and
Administrative
|
37,881 | 5510 | 177,589 | |||||||||
Stock based
compensation
|
0 | 0 | 30,000 | |||||||||
Impairment
of Mineral Costs
|
0 | 0 | 524,562 | |||||||||
TOTAL
|
$ | 45,844 | $ | 5,510 | $ | 741,944 |
Black
Hawk continues to carefully control its expenses and overall costs as it moves
its business development plan forward. Black Hawk does not have any employees
and engages personnel through outside consulting contracts or agreements or
other such arrangements, including for legal, accounting and technical
consultants.
Due to
the uncertainty of our ability to meet our current operating and capital
expenses, in their report on the annual financial statements for the year ended
August 31, 2009, our independent auditors included an explanatory paragraph
regarding concerns about our ability to continue as a going concern. Our
financial statements contain additional notes describing the circumstances that
lead to this disclosure by our independent auditors. Our issuance of additional
equity securities could result in a significant dilution in the equity interests
of our current stockholders. Obtaining commercial loans, assuming those loans
would be available, will increase our liabilities and future cash
commitments.
There are
no assurances that we will be able to obtain further funds required for
continued operations. We are pursuing various financing alternatives to meet
immediate and long-term financial requirements. There can be no assurance that
additional financing will be available to us when needed or, if available, that
it could be obtained on commercially reasonable terms. If we are not able to
obtain the additional financing on a timely basis, we will not be able to meet
our obligations as they come due.
Liquidity
and Capital Resources
Since
inception, we have used our common stock and loans or advances from our officers
and directors to raise money for our optioned acquisition and for corporate
expenses. Net cash provided by financing activities from inception on April 14,
2005, to November 30, 2009, was $789,299 as a result of gross proceeds received
from sales of our common stock.
As of
November 30, 2009, our total assets consisting entirely of cash amounted to
$234,684 and total liabilities were $9,000.
For the
quarter ended November 30, 2009, the net loss was $45,844 ($0.00 per share). The
loss per share was based on a weighted average of 59,201428 common shares
outstanding. The net loss from inception to November 30, 2009, is
$741,944.
Inflation
/ Currency Fluctuations
Inflation
has not been a factor during the recent quarter ended November 30, 2009.
Although inflation is moderately higher than it was during 2008 the actual rate
of inflation is not material and is not considered a factor in our contemplated
capital expenditure program.
Off-Balance
Sheet Arrangements
We have
not entered into any transactions with unconsolidated entities whereby we have
financial guarantees or other contingent arrangements that expose us to material
continuing risks, contingent liabilities or any other obligations that provide
financing, liquidity, market risk or credit risk support to us.
Critical
Accounting Policies
The
preparation of financial statements in conformity with generally accepted
accounting principles in the United States requires management to make estimates
and assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amount of revenue and expenses during the period.
Actual results may differ from those estimates.
Exploration
and Development Costs
Exploration
costs are expensed as incurred. 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.
Basic
Loss per Share
Basic
loss per share has been calculated based on the weighted average number of
shares of common stock outstanding during the period. The weighted average
number of shares outstanding during the periods has been retroactively restated
to reflect a forward stock split of 10 new shares for 1 old share, effective
March 15, 2007.
Description
of Properties
Our
principal office is located at 1174 Manito Dr., NW, Fox Island, WA 98333. Our
telephone number is (253) 973-7135. On December 1, 2009 we entered into an
office rent agreement with a public company that has a common director and
officer with us at $400 per month for office space in Nevada. The term of the
agreement is on a month by month basis starting from December,
2009.
During
August, 2009, a geologist whom we engaged identified and acquired 56 lithium
claims in the state of Nevada on behalf of our company in the area known as
Clayton Valley, Nevada. The titles to these claims were transferred
to us in November, 2009.
On
December 8, 2009 we formed Golden Black Hawk, Inc., a wholly owned subsidiary
under the laws of the State of Nevada to acquire, explore and develop gold
properties in the United States and Canada.
On
December 10, 2009, (the “Effective Date”), we entered into a property interest
purchase option agreement (the “Option Agreement”) with HuntMountain Resources
Ltd. (“HuntMountain”), a public company that has the right to acquire 100%
interest in a total of 73 mining claims (the “Claims”) in Pershing County in the
State of Nevada (the “Dun Glen Project”). The Option Agreement entitles us to
acquire undivided legal and beneficial interests of up to 75% in the Property
free and clear of all liens, charges and claims of others.
Dun
Glen Project
Location
and Access
The Dun
Glen Project is located approximately 40 miles south west of Winnemucca, Nevada
in Pershing County. Access is available from Highway 80, exit 151
over a county maintained gravel road. The entire area covers roughly
1870 acres comprised of 73 federal unpatented lode mining claims, which are
covered by our agreement with HuntMountain.
Ownership
Interest
Under the
Option Agreement with HuntMountain we have an option entitling us to acquire
certain legal and beneficial interests in and to Dun Glen Project, and to
participate in the further exploration and, if deemed warranted, the development
of the Dun Glen Project. Specifically, we have acquired a right and
option to acquire undivided legal and beneficial interests of up to 75% in the
Dun Glen Project free and clear of all liens, charges and claims of
others.
In order
for us to exercise the option and acquire the 75% interest we are required to
make the following payments to HuntMountain, and incur the expenses indicated,
prior to the fourth anniversary of the date of the Option Agreement (the “Option
Deadline”):
(1)
|
an
initial payment of $50,000, which has been paid by us and issue 250,000
restricted shares of common stock (issued);
|
|
(2)
|
pay
a further $25,000 on the first anniversary of the Effective Date and issue
100,000 restricted shares of common stock;
|
|
(3)
|
pay
a further $25,000 on the second anniversary of the Effective Date;
and
|
|
(4)
|
incur
or fund expenditures on the Property prior to the Option Deadline of not
less than $700,000 on or before the fourth anniversary of the
Effective Date.
|
History
of Previous Operations
The Dun
Glen Property is an exploration stage property that has had a relatively small
amount of contemporary geologic work done on it. Historically,
exploration and mineral production in the area began in the
1860’s. During the 1930’s the Standard Gold Reduction and Milling
Company worked on the Auld Lang Syne Mine on the Dun Glen
Property. Eventually all production from the mines in the area ceased
and minimal work was undertaking until 2002.
Five
drill holes were completed by Newmont Exploration in 2002 and consisted of a
total of 2113 feet. This drilling was inconclusive due largely to
unforeseen drilling problems that required termination of some of the drill
holes prior to reaching target depths.
Four
drill holes were completed by HuntMountain Resources in 2006 and consisted of a
total of 3,645 feet. Three of the four holes reached their target
depth and the core intervals contained up to 3.18 grams per tonne of gold and
8.0 grams per tonne of silver.
Present
Condition of Property and Current State of Exploration
We have
not yet commenced exploration of the Dun Glen Property. We intend to use a
phased exploration approach by which the results of each phase will determine
the nature and level of activities for the next.
Our
initial plan of exploration is to complete comprehensive compilation of all
acquired geophysical, geochemical, and geological data. From this a
phased program can be developed to evaluate the economic potential of the
property.
In
particular, over the next 12 months beginning March 2010, we intend to carry out
the following actions with respect to the Dun Glen Property (1) in two
phases. Phase 1 is an evaluation phase totalling
$60,700. Phase 2 is comprised of dump processing ($600,000) and
exploration drilling ($404,352). The Phase 2 plans are based on the
results of Phase 1 work which is as follows:
Description
of Phase
of
Exploration
|
Description
of Exploration Work Required
|
Estimated
Expenses
($)
|
||||
Phase
1
|
1)
Property-wide data compilation
|
$ |
9,750
|
|||
2)
Measure and sample historic dumps (Geologist and
Technician)
|
$ |
16,950
|
||||
3)
Sample Costs (including trenching, assaying, and permit
upgrades)
|
$ |
22,000
|
||||
4)
Metallurgical Evaluation
|
$ |
12,000
|
||||
Second
Phase
(Dump
Processing )
|
1)
Load
and Move 50,000 tons of historic mine tailings
|
$ |
550,000
|
|||
2)
Permit upgrades and estimated road improvements
|
$ |
50,000
|
||||
Second
Phase (Exploration Drilling)
|
1)
8,000 foot drill program
|
$ |
276,988
|
|||
2)
Drill Sample Assaying
|
$ |
54,686
|
||||
3)
Drill Site Preparation
|
$ |
21,170
|
||||
4)
Drill Supervision and Evaluation
|
$ |
51,508
|
(1)
|
All
costs and timings are estimates only, and these may change dramatically
depending on unforeseen circumstances arising at each stage of the
exploration program
|
Mineralization
The Dun
Glen Project is situated in a region of alternating, northerly-trending, faulted
mountains and flat, sediment-filled valley floors. It was created
roughly 20 million years ago as a result of block faulting during extensional
tectonics. Rocks exposed in the region range in age from Cambrian to
Holocene and comprise thick sequences of sedimentary, volcanic, intrusive and
metamorphic rocks in a complex structural environment.
There are
three separate areas at the Dun Glen Project which have previously undergone
mining activity. These are, from North to South, the Auld Lang Syne
Mine area, the Black Hole Mine area and the Monroe Mine
area. Gold/silver-bearing veins were the prime target historically,
although there is some low-grade sediment-hosted mineralization on the property
that has not yet been well-documented, along with solidified breccias that
tentatively appear to be localized. The main zone of mineralization,
which connects the Monroe Mine, Old Mill Adit and the Black Hole Mine, consists
of a north-easterly trending corridor that appears to the about 300 feet wide on
the south end near the Monroe Mine and as much as 1000 feet wide on the north
end near the Auld Lang Syne Mine.
Mineralization
at the Auld Lang Syne consists of several separate quartz veins that trend in a
northerly direction, dipping 45-80 degrees to the east, hosted by silicified
rhyolites. Although the true width of this vein system is uncertain
due to copious overburden, the apparent width is approximately 100
feet. The vein system here contains four parallel veins, the average
width of which is reported to be 0.8 meters. No systematic chip
sampling across this zone has yet been undertaken.
Mineralization
at the Black Hole Mine consists primarily of gold/silver-bearing quartz veins
that appear to follow the contact between two mineral
formations. This contact is probably faulted according to a geology
report. Both Type A (bright white, massive to stockwork, coarse
crystalline, opaque quartz with traces of sulfides, most commonly pyrite) and
Type B (light grey, fine-crystalline, translucent, vuggy quartz that contains up
to 0.5% sphalerite and galena with lesser amounts of pyrite, chalcopyrite,
arsenopyrite and stibnite) quartz vein mineralization were found on the dump in
previous reviews of the property. No historic data on the Black Hole
Mine workings is readily available, and the mine is presently
inaccessible. Therefore, the true width of the mineralization at the
Black hole Mine is uncertain. At the Black Hole Mine, the quartz vein
reportedly strikes northeast with a 45 degree dip to the southeast.
Mineralization
in the Monroe Mine area also consists of gold/silver-bearing quartz vein
mineralization, although it is hosted entirely in a Metarhyolite rock
formation. The Monroe Mine dump contains much Type A quartz vein
material and scarce samples of Type B quartz vein material. A small
prospect pit which lies about 500 feet off the main Monroe Mine Adit contains
scarce samples of Type B quartz vein material also. This
mineralization could not be seen in place since the adit is partially caved near
the portal and partially flooded. Therefore the true width of the
quartz vein mineralization in the Monroe Mine area is uncertain.
Historically
this area has been explored and mined for gold/silver
production. However, our management believes that there are
significant deposits of gold which has not yet been explored. We have
not yet undertaken any exploration work on the Dun Glen Project and the
existence of any gold cannot be assured.
Clayton
Valley Claims
Location
and Access
The
Clayton Valley Claims are located in Clayton Valley, Esmeralda County, Nevada,
214 highway miles North of Las Vegas, Nevada. They are accessible via
Nevada State Highway 264 that proceeds south from US Interstate 95 and then
connects to a gravel road within Clayton Valley which crosses the center of the
claims. Sources of power and water are available less than 3 miles
from the claims. Labor and supplies are available at Tonopah, Las
Vegas or Reno which are local and regional mining and supply
centers. The entire area covers approximately 1120 acres comprised of
56 placer mineral claims located in the same geological formation as
Chemetall-Foote mining operation.
We hold
mineral exploration rights on the Clayton Valley Claims directly from the
Department of the Interior, Bureau of Land Management (BLM), through our wholly
owned subsidiary Blue Lithium Energy, Inc. Our annual expenses
associated with keeping this property in good standing are estimated at
$8,432.
History
of Previous Operations
During
the mid-to late 1970’s the U.S. Geological Survey (“USGS”) evaluated lithium
deposits and resources around the world. During the course of the program
they drilled 22 holes in Nevada and Arizona. Initial drilling was in
Clayton Valley (one of these drill sites was near our claims adjacent to the
Chemetall-Foote Mine) to evaluate the known
continental-brines.
The
Clayton Valley Claims’ 1,120 acre site is located in the Clayton Valley which is
the home of the largest lithium brine production facility in the U.S. The
Chemetall-Foote facility has produced in excess of 50 million kilograms of
lithium to date and is scaled to produce 1.2 million kilograms a
year.
Present
Condition of Property and Current State of Exploration
Hunsaker,
Inc., our consulting geologists have recommended an initial drill program for
lithium bearing brines. The brines are expected to occur between 600 and 800
feet based on the 1980’s U.S. Geological Survey work completed in the 1970’s by
the U.S. Geological Survey and the nearby producing wells at the Chemetall-Foote
Silver Peak operation also in Clayton Valley. Drilling costs are estimated to be
$60 a foot and the 1000 foot drill program is designed to identify the depth of
the Brines, Lithium concentration, chemical characteristics and the
geologic/aquifer settings.
We have
recently engaged Boart Longyear Limited (“Boart”) to commence drilling on the
Clayton Valley Claims. We had previously received an affirmative
decision from the United States Department of Interior, Bureau of Land
Management (“BLM”), Tonopah, Nevada for exploration on the Clayton Valley
Claims. A financial guarantee bond was required and has been submitted and
accepted by the BLM, Branch of Minerals Adjudication to warranty complete
reclamation of any environmental disturbance to the drill area and keep within
our corporate “Green Policy”. The BLM determination notice will remain in effect
for 2 years from the date of the approval decision. The original Notice of Drill
Exploration was filed by Blue Lithium Energy, Inc., our wholly owned subsidiary,
on November 25th, 2009 and the engagement of Boart will allow our management to
put into effect our drill program and confirm the lithium brine levels at the
Clayton Valley Claims.
Mineralization
The
American Institute of Mining estimates the mineral resource of the Clayton
Valley to be 750 million kg of lithium. The Clayton Valley lithium brine deposit
is found at depths of a few hundred meters and is easily extractable in an
environmentally friendly manner. The American Institute of Mining estimates the
Lithium resources of the Clayton Valley to be 750,000,000
kilograms. USGS holes drilled in the new target area had
1.3 and 1.7 parts per million (“ppm”) lithium in the brines that were
intersected plus 287 and 364 ppm lithium in the sediments. Our
management believes that these results are within the range of values that could
be indicative for lithium brines in the target area. Please refer to
the map of the Clayton Valley area on the previous page for a reference on
location of the drill holes.
Aside
from lithium, minerals that can easily be identified in this area (mostly as
crystals a few millimetres in size) include: Plagioclase (a type of feldspar),
Hornblende, Clinopyroxene and Orthopyroxene, Olivine, and
Magnetite.
Index
of Geologic Terms
Term
|
Definition
|
|
Adit
|
a
passage driven into a mine from the side of a hill
|
|
Arsenopyrite
|
monoclinic
mineral, 8[FeAsS] ; pseudo-orthorhombic, prismatic, and metallic
silver-white to steel gray; the most common arsenic mineral and principal
ore of arsenic; occurs in many sulfide ore deposits, particularly those
containing lead, silver, and gold
|
|
Breccia
|
a
rock formed from fragments of pre-existing rock in which the gravel-sized
particles are angular in shape and make up an appreciable volume of
the rock.
|
|
Chalcopyrite
|
a
sulfide of copper and iron, CuFeS2;
sometimes called copper pyrite or yellow copper ore
|
|
Clinopyroxene
|
a
group name for monoclinic pyroxenes
|
|
Galena
|
a
mineral containing mainly lead sulfide that is blue-gray in
color.
|
|
Hornblende
|
A
rock-forming ferromagnesian silicate mineral with double chains of
silicon-oxygen tetrahedra
|
|
Magnetite
|
iron
oxide, Fe3O4.
Black; strongly magnetic. Important ore of iron
|
|
Olivine
|
A
mineral group including fayalite, Fe2
SiO4;
forsterite, Mg2
SiO4;
liebenbergite, (Ni,Mg)2
SiO4; and
tephroite, Mn2
SiO4;
orthorhombic; olive green, grayish green, brown, or
black
|
|
Orthopyroxene
|
The
subgroup name for pyroxenes crystallizing in the orthorhombic system,
commonly containing no calcium and little or no
aluminum
|
|
Overburden
|
Designates
material of any nature, consolidated or unconsolidated, that overlies a
deposit of useful materials, ores, or coal - esp. those deposits that are
mined from the surface by open cuts
|
|
Plagioclase
|
common
rock-forming minerals, have characteristic polysynthetic twinning, and
commonly display zoning. The term was originally applied to all feldspars
having an oblique angle between the two main cleavages
|
|
Pyrite
|
A
sulfide mineral, iron sulfide, FeS2
|
|
Pyroxene
|
A
group of chiefly magnesium-iron, and many other rock-forming minerals.
Although members of the group fall into different systems (orthorhombic,
monoclinic, and triclinic), they are closely related in form, composition,
and structure
|
|
Pyrrhotite
|
a
brownish iron sulfide mineral having weak magnetic
properties
|
|
Quartz
|
A silicate mineral, SiO2, composed exclusively of silicon-oxygen
tetrahedra, with all oxygens joined in a three-dimensional network.
Crystal form is six-sided prism tapering at end, with prism faces striated
transversely
|
|
Rhyolite
|
Fine-grained igneous rock with composition of
granite
|
|
Silicification
|
A process of fossilization whereby the original
organic components of an organism are replaced by silica, as quartz,
chalcedony, or opal
|
|
Sphalerite
|
a
mineral; zinc sulfide, nearly always contains iron, (Zn, Fe)S. Principal
ore of zinc
|
|
Stibnite
|
An
orthorhombic mineral, Sb2
S3 ;
dimorphous with metastibnite; soft; metallic; may contain gold and silver;
occurs in massive forms and in vertically striated prisms having perfect
cleavage, in low-temperature veins and around hot springs; the chief
source of antimony
|
|
Sulfide
|
A
mineral compound characterized by the linkage of sulfur with a metal or
semimetal
|
|
Vug
|
Small
unfilled cavity in rock, usually lined with crystalline layer of different
composition from surrounding rock
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
Security
Ownership of Certain Beneficial Owners
The
following table sets forth, as of the date of this report, the total number of
shares owned beneficially by each of our directors, officers and key employees,
individually and as a group, and the present owners of 5% or more of our total
outstanding shares. The shareholder listed below has direct ownership of his
shares and possesses sole voting and dispositive power with respect to the
shares.
Title of Class
|
Name
and Address of
Beneficial
Owner
|
Amount and Nature of
Beneficial Ownership (2)
|
Percentage of
Class (3)
|
|||||||||
Common
|
Kevin M. Murphy
(1)
1174
Manito Dr, NW
Fox
Island, WA 98333
|
12,010,000 |
Direct
|
19.94% | ||||||||
Common
|
Howard Bouch(5)
Grove
House
13
Low Seaton Workington
Cumbria,
England CA141PR UK
|
10,000 |
Direct
|
(4) | ||||||||
Common
|
Wayne
Weaver
Maison
de Grant,
Rue
de L’Etocquet,
St.
Ouen, Jersey JE3 2EL UK
|
9,135,294 |
Direct
|
15.16% | ||||||||
Common
|
Total
Directors and Officers
|
12,020,000 |
Direct
|
19.94% |
All
directors and officers hold office until our next annual general meeting of
shareholders or until a successor is appointed.
(1) The person named above may be
deemed to be a “parent” and “promoter” of Black Hawk, within the meaning of such
terms under the Securities Act by virtue of his direct and indirect stock
holdings. Mr. Murphy is the only “promoter” of Black Hawk Exploration,
Inc. Mr. Murphy is also Black Hawk’s President and
CEO.
(2) Beneficial owner of a security
includes any person who, directly or indirectly, through any contract,
arrangement, understanding, relationship, or otherwise has or shares: (i) voting
power, which includes the power to vote, or to direct the voting of shares; and
(ii) investment power, which includes the power to dispose or direct the
disposition of shares. Certain shares may be deemed to be beneficially owned by
more than one person (if, for example, persons share the power to vote or the
power to dispose of the shares). In addition, shares are deemed to be
beneficially owned by a person if the person has the right to acquire the shares
(for example, upon exercise of an option) within 60 days of the date as of which
the information is provided. In computing the percentage ownership of any
person, the amount of shares outstanding is deemed to include the amount of
shares beneficially owned by such person (and only such person) by reason of
these acquisition rights. As a result, the percentage of outstanding shares of
any person as shown in this table does not necessarily reflect the person’s
actual ownership or voting power with respect to the number of shares of common
stock actually outstanding on the date of this report as of which there were
60,236,722
shares of our common stock issued and outstanding.
(3)
Based on 60,236,722
number of shares of common stock issued and outstanding as of February
25, 2010.
(4) |
Less
than 1%
|
(5) | Mr. Bouch is Black Hawk’s CFO. |
There are
no outstanding stock options.
DIRECTORS,
EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The
following individuals serve as the directors and executive officers of our
company as of the date of this annual report. All directors of our company hold
office until the next annual meeting of our shareholders or until their
successors have been elected and qualified. The executive officers of our
company are appointed by our board of directors and hold office until their
death, resignation or removal from office.
Name
|
Position
Held with our Company
|
Age
|
Date
First Elected or
Appointed
|
||||
Kevin
M. Murphy
|
former
Chief Executive Officer, President, and Director
|
63
|
July
27, 2009
|
||||
Howard
Bouch
|
Secretary,
Chief Financial Officer, and Director
|
64
|
|
July
27, 2009
|
None of
the directors or officers has professional or technical accreditation in the
exploration, development or operations of mining or mining related projects.
During the past year, our president, Mr. Murphy, spent approximately 50% of his
time (approximately 20 hours per week) on the affairs of Black Hawk. For the
coming year, it is anticipated that time commitment and requirement will remain
approximately the same.
Business
Experience
The
following is a brief account of the education and business experience during at
least the past five years of each director, executive officer and key employee
of our company, indicating the person’s principal occupation during that period,
and the name and principal business of the organization in which such occupation
and employment were carried out.
Kevin
M. Murphy
Mr.
Murphy, age 63, is an international consultant, with many years of executive
management experience in corporate reorganization, finance, administration, and
new business development. He has served on the Board of Directors of several
companies. Mr. Murphy has served as President and Director of Greenleaf Forum
Investments, Inc. from February 2000 to present. Mr. Murphy became
CEO and Chairman of the Board of Absolute Future.Com, Inc. on August 15,
2001. He applied for reorganization for Absolute Future.Com through
the Federal Bankruptcy Courts January 31, 2002. Mr. Murphy filed
Bankruptcy in June of 2001. Mr. Murphy has served as President and Director of
Greenleaf Forum Investments, Inc. from February 2000 to present. Mr. Murphy has
served as President and Director of Wannigan Capital from September 2002 to the
present. Mr. Murphy is associated with Neighborhood Choices, a private company,
in the International Domain registration and resale industry and has served as
President and Director from incorporation in April of 2006 to present. Mr.
Murphy has served as President and Director of Evergreen Firewood Inc., a
private company in the Alternate Fuel industry from March 2007 to present. Mr.
Murphy has served as Director of Convenientcast Inc. (formerly Lone Mountain
Mines) from August 15th,
2003 to present. Mr. Murphy has served as President and Director of Silver
Mountain Mines Inc. a private company from November 29th,
2007 to present. Mr. Murphy has served as President and Director of Black Hawk
Exploration, Inc. from July 2009 to present and its two wholly owned
subsidiaries Blue Lithium, Inc. since August 2009 and Golden Black Hawk, Inc.
from December 2009 to the present. Mr. Murphy is an alumnus of the University Of
California (UCLA), Los Angeles School of Economics and the California State
University (CSULA) at Los Angeles’s School of Business, and is an Alumni of
Sigma Alpha Epsilon.
Howard
Bouch
Howard
Bouch, age 64, is a Private Practice Chartered Accountant with over 36 years of
Public and Private international experience. Mr. Bouch originally qualified as a
Chartered Accountant (English and Wales Institute) in 1968. Mr. Bouch joined
Deloitte & Co, Lusaka, Zambia from 1970 - 1972. Mr. Bouch joined Anglo
American Corp, Zambia working as Head Office Chief Accountant for Nchanga
Consolidated Copper Mines (world’s 2nd largest) from 1972 - 1976. In 1976, Mr.
Bouch returned to the UK and joined Babcock and Wilcox, Engineers,
Nottinghamshire, England as Chief Accountant for one of their subsidiaries. Mr.
Bouch was Chief Accountant of a private building firm in Cumbria, England from
1978 - 1984. In 1984 Mr. Bouch established a Private Practice as a
Chartered Accountant and continues to provide professional services to Cumbrian
firms to the present. Mr. Bouch is a Director of Viavid Broadcasting Inc., a
fully reporting, US Public Company, trading on the Pink Sheets under the symbol
VVDB; also of UTEC, Inc. symbol UTEI.
Involvement
in Certain Legal Proceedings
During
the past five years, none of our officers, directors, promoters or control
persons have had any of the following events occur:
●
|
a
bankruptcy petition filed by or against any business of which such person
was a general partner or executive officer either at the time of the
bankruptcy or within two years prior to that time;
|
|
●
|
conviction
in a criminal proceeding or being subject to a pending criminal
proceeding, excluding traffic violations and other minor
offenses;
|
|
●
|
being
subject to any order, judgement or decree, not substantially reversed,
suspended or vacated, of any court of competent jurisdiction, permanently
enjoining, barring, suspending or otherwise limiting his involvement in
any type of business, securities or banking business;
and/or
|
|
●
|
being
found by a court of competent jurisdiction, in a civil action, the SEC or
the Commodity Futures Trading Commission to have violated a federal or
state securities or commodities law, and the judgement has not been
reversed, suspended or vacated.
|
Other
Directorships
Other
than the above, none of our directors hold any other directorships in any
company with a class of securities registered pursuant to section 12 of the
Exchange Act or subject to the requirements of section 15(d) of such Act or any
company registered as an investment company under the Investment Company Act of
1940.
Board
of Directors and Director Nominees
Since our
Board of Directors does not include a majority of independent directors, the
decisions of the Board regarding director nominees are made by persons who have
an interest in the outcome of the determination. The Board will consider
candidates for directors proposed by security holders, although no formal
procedures for submitting candidates have been adopted. Unless otherwise
determined, at any time not less than 90 days prior to the next annual Board
meeting at which a slate of director nominees is adopted, the Board will accept
written submissions from proposed nominees that include the name, address and
telephone number of the proposed nominee; a brief statement of the nominee’s
qualifications to serve as a director; and a statement as to why the security
holder submitting the proposed nominee believes that the nomination would be in
the best interests of our security holders. If the proposed nominee is not
the same person as the security holder submitting the name of the nominee, a
letter from the nominee agreeing to the submission of his or her name for
consideration should be provided at the time of submission. The
letter should be accompanied by a résumé supporting the nominee’s qualifications
to serve on the Board, as well as a list of references.
The Board
identifies director nominees through a combination of referrals from different
people, including management, existing Board members and security
holders. Once a candidate has been identified, the Board reviews the
individual’s experience and background and may discuss the proposed nominee with
the source of the recommendation. If the Board believes it to be
appropriate, Board members may meet with the proposed nominee before making a
final determination whether to include the proposed nominee as a member of the
slate of director nominees submitted to security holders for election to the
Board.
Some of
the factors which the Board considers when evaluating proposed nominees include
their knowledge of and experience in business matters, finance, capital markets
and mergers and acquisitions. The Board may request additional
information from each candidate prior to reaching a determination, and it is
under no obligation to formally respond to all recommendations, although as a
matter of practice, it will endeavor to do so.
Conflicts
of Interest
Our
directors are not obligated to commit their full time and attention to our
business and, accordingly, they may encounter a conflict of interest in
allocating their time between our operations and those of other
businesses. In the course of their other business activities, they
may become aware of investment and business opportunities which may be
appropriate for presentation to us as well as other entities to which they owe a
fiduciary duty. As a result, they may have conflicts of interest in
determining to which entity a particular business opportunity should be
presented. They may also in the future become affiliated with
entities that are engaged in business activities similar to those we intend to
conduct.
In
general, officers and directors of a corporation are required to present
business opportunities to the corporation if:
the
corporation could financially undertake the opportunity;
the
opportunity is within the corporation’s line of business; and
it would
be unfair to the corporation and its stockholders not to bring the opportunity
to the attention of the corporation.
We plan
to adopt a code of ethics that obligates our directors, officers and employees
to disclose potential conflicts of interest and prohibits those persons from
engaging in such transactions without our consent.
Audit
Committee
We do not
currently have an audit committee or a committee performing similar functions.
The Board of Directors as a whole participates in the review of our financial
statements and disclosure.
EXECUTIVE
COMPENSATION
General
The
particulars of the compensation paid to the following persons:
(a)
|
our
principal executive officer;
|
|
(b)
|
each
of our two most highly compensated executive officers who were serving as
executive officers at the end of the years ended August 31, 2009, and 2008
and
|
|
(c)
|
up
to two additional individuals for whom disclosure would have been provided
under (b) but for the fact that the individual was not serving as our
executive officer at the end of the years ended August 31, 2009, and
2008,
|
whom we
will collectively refer to as the named executive officers of our company, are
set out in the following summary compensation table, except that no disclosure
is provided for any named executive officer, other than our principal executive
officers, whose total compensation did not exceed $100,000 for the respective
fiscal year.
Summary
Compensation Table
Name
and
Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-Equity
Incentive
Plan
Compensation
($)
|
Nonqualified
Deferred
Compensation
Earnings
($)
|
All
Other
Compensation
($)
|
Total
($)
|
||||||||||
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
||||||||||
Garrett Ainsworth
(1)
former
President,
CEO, CFO, COO and Director |
2009
2008
|
Nil
Nil
|
Nil
Nil
|
Nil
Nil
|
Nil
Nil
|
Nil
Nil
|
Nil
Nil
|
Nil
Nil
|
Nil
Nil
|
||||||||||
Kevin M. Murphy
(2)
President,
CEO,
CFO, COO and Director |
2009
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
||||||||||
Howard Bouch
(3)
Secretary,
CFO and Director
|
2009
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
Nil
|
(1) The
fair market value of the 20,000,000 shares of Black Hawk issued to Mr. Ainsworth
in October 2006 for cash consideration of $2,000 did not exceed the $0.001 per
share that he paid for the shares.
(2) Mr.
Murphy, our Chief Executive Officer and director, has received
10,000 common shares, par value $ .001 for his time and/or services
rendered to Black Hawk and there are no plans to compensate him in the near
future, unless and until we begin to realize revenues and become profitable in
our business.
(3) Mr.
Bouch, our Chief Financial Officer and director, has received
10,000 common shares, par value $.001 for his time
and/or services rendered to Black Hawk and there are no plans to
compensate him in the near future, unless and until we begin to realize revenues
and become profitable in our business.
Options
Grants During the Last Fiscal Year / Stock Option Plans
We do not
currently have a stock option plan in favor of any director, officer, consultant
or employee of our company. No individual grants of stock options, whether or
not in tandem with stock appreciation rights known as SARs or freestanding SARs
have been made to any executive officer or director since our inception;
accordingly, no stock options have been granted or exercised by any of the
officers or directors since we were founded.
Aggregated
Options Exercises in Last Fiscal Year
No
individual grants of stock options, whether or not in tandem with stock
appreciation rights known as SARs or freestanding SARs have been made to any
executive officer or any director since our inception; accordingly, no stock
options have been granted or exercised by any of the officers or directors since
we were founded.
Long-Tem
Incentive Plans and Awards
We do not
have any long-term incentive plans that provide compensation intended to serve
as incentive for performance. No individual grants or agreements regarding
future payouts under non-stock price-based plans have been made to any executive
officer or any director or any employee or consultant since our inception;
accordingly, no future payouts under non-stock price-based plans or agreements
have been granted or entered into or exercised by any of the officers or
directors or employees or consultants since we were founded.
Compensation
of Directors
The
members of the Board of Directors are not compensated by Black Hawk for acting
as such. Directors are reimbursed for reasonable out-of-pocket expenses
incurred. There are no arrangements pursuant to which directors are or will be
compensated in the future for any services provided as a director.
We do not
have any agreements for compensating our directors for their services in their
capacity as directors, although such directors are expected in the future to
receive stock options to purchase shares of our common stock as awarded by our
board of directors.
Employment
Contracts, Termination of Employment, Change-in-Control
Arrangements
There are
no employment contracts or other contracts or arrangements with our officers or
directors other than those disclosed in this report. There are no compensation
plans or arrangements, including payments to be made by Black Hawk, with respect
to the officers, directors, employees or consultants of Black Hawk that would
result from the resignation, retirement or any other termination of such
directors, officers, employees or consultants. There are no arrangements for
directors, officers or employees that would result from a
change-in-control.
Indebtedness
of Directors, Senior Officers, Executive Officers and Other
Management
None of
our directors or executive officers or any associate or affiliate of our company
during the last two fiscal years is or has been indebted to our company by way
of guarantee, support agreement, letter of credit or other similar agreement or
understanding currently outstanding.
Family
Relationships
There are
no family relationships between any of our directors, executive officers or
directors.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS AND
DIRECTOR INDEPENDENCE
During
the three months ended November 30, 2009, in accordance with a consulting
agreement signed in July, 2009 and amended in September, 2009, we paid total
consulting fees of $13,000 to a private company that has a common director with
us.
There
have been no other transactions since the beginning of our last fiscal year or
any currently proposed transactions in which we are, or plan to be, a
participant and the amount involved exceeds $120,000 or one percent of the
average of our total assets at year end for the last two completed fiscal years,
and in which any related person had or will have a direct or indirect material
interest.
During
the last two years and except as disclosed above, none of the following persons
has had any direct or indirect material interest in any transaction to which our
company was or is a party, or in any proposed transaction to which our company
proposes to be a party:
(a)
|
any
director or officer of our company;
|
|
(b)
|
any
proposed director of officer of our company;
|
|
(c)
|
any
person who beneficially owns, directly or indirectly, shares carrying more
than 5% of the voting rights attached to our common stock;
or
|
|
(d)
|
any
member of the immediate family of any of the foregoing persons (including
a spouse, parents, children, siblings, and
in-laws).
|
Director
Independence
Our
securities are quoted on the OTC Bulletin Board which does not have any director
independence requirements. Once we engage further directors and
officers, we plan to develop a definition of independence and scrutinize our
Board of Directors with regard to this definition.
LEGAL
PROCEEDINGS
We know
of no material, active or pending legal proceedings against us, nor are we
involved as a plaintiff in any material proceedings or pending litigation. There
are no proceedings in which any of our directors, officers or affiliates, or any
registered beneficial shareholder are an adverse party or has a material
interest adverse to us.
MARKET
PRICE OF AND DIVIDENDS ON THE REGISTRANT’S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Market
Information
Our
shares of common stock are quoted on the OTC Bulletin Board under the symbol
“BHWX”. Our CUSIP number is 09206P107. The following table reflects
the high and low bid information for our common stock obtained from Stockwatch
and reflects inter-dealer prices, without retail mark-up, markdown or
commission, and may not necessarily represent actual transactions.
The high
and low bid prices of our common stock for the periods indicated below are as
follows:
OTC
Bulletin Board
|
|||
Quarter
Ended(1)
|
High
|
Low
|
|
November
30, 2009
|
$1.73
|
$0.43
|
(1) The
first trade in our stock did not occur until September 24, 2009.
Holders
of our Common Stock
Our
common shares are issued in registered form. Empire Stock Transfer Co., 1859
Whitney Mesa Dr., Henderson, NV 89014 is our stock transfer agent. They can be
contacted by telephone at (702) 818-5898 and by facsimile at (702) 974-1444. As
of February 25, 2010 our stock was held by 15 holders of record.
Dividends
We have
not declared any dividends since incorporation and do not anticipate that we
will do so in the foreseeable future. Although there are no restrictions that
limit the ability to pay dividends on our common shares, our intention is to
retain future earnings for use in our operations and the expansion of our
business.
Securities
Authorized for Issuance under Equity Compensation Plans
We do not
have any equity compensation plans in place.
RECENT
SALES OF UNREGISTERED SECURITIES
In
October 2006, the Company raised $20,000 from the sale of 2,000,000 post-split
common shares at $0.10 per share.
On March
15, 2007, the board of directors approved a ten (10) for one (1) forward stock
split of authorized, issued and outstanding shares of common stock. The Company
amended its Articles of Incorporation by the filing of a Certificate of Change
with the Nevada Secretary of State wherein it stated that it would issue ten
shares for every one share of common stock issued and outstanding immediately
prior to the effective date of the forward stock split. The change in the
Articles of Incorporation was effected with the Nevada Secretary of State on
April 6, 2007. As a result, the authorized capital increased from 30,000,000 to
300,000,000 shares of common stock with a par value of $0.001. The stock split
is presented retroactively.
In
October 2006, the Company raised $20,000 from the sale of 2,000,000 post-split
common shares at $0.10 per share.
On March
15, 2007, the board of directors approved a ten (10) for one (1) forward stock
split of authorized, issued and outstanding shares of common stock. The Company
amended its Articles of Incorporation by the filing of a Certificate of Change
with the Nevada Secretary of State wherein it stated that it would issue ten
shares for every one share of common stock issued and outstanding immediately
prior to the effective date of the forward stock split. The change in the
Articles of Incorporation was effected with the Nevada Secretary of State on
April 6, 2007. As a result, the authorized capital increased from 30,000,000 to
300,000,000 shares of common stock with a par value of $0.001. The stock split
is presented retroactively in these financial statements.
On May
30, 2007, the Company closed a private placement of 571,428 common shares for
gross proceeds of $400,000.
From June
to August 2007, the Company issued 210,000 common shares valued at $147,000 in
connection with its mineral property option agreements and acquisition
agreement.
In August
2009, the Company issued 280,000 common shares valued at $0.10 per share to a
related-party consultant of the Company.
In August
2009, the Company issued 20,000 common shares valued at $0.10 per share to the
two new directors of the Company.
On August
6, 2009 the Company closed a private placement of 600,000 common shares at $0.10
for proceeds of $60,000.
On
October 16, 2009 the Company closed a private placement of 64,705 common shares
at a price of $0.85 for proceeds of $54,999.25.
On
November 20, 2009 the Company received a first tranche of $200,000 under a share
agreement that provides the Company with up to $1,000,000. The
agreement is to issue common shares at a price of $0.85 upon receipt of funds
and to issue a warrant for the like number of shares priced at $1.05 for the
first year and $1.25 if exercised in the second year.
On
January 29, 2010 the Company received a second tranche of $200,000 under a share
agreement that provides the Company with up to $1,000,000. The
agreement is to issue common shares at a price of $0.85 upon receipt of funds
and to issue a warrant for the like number of shares priced at $1.05 for the
first year and $1.25 if exercised in the second year.
As
of February 25, 2010, there are 60,236,722 shares of the Company’s common stock
issued and outstanding.
All of
these shares were issued to accredited investors
under the exemption from Section 5 of the Securities Act of 1933 (the
“Act”)
contained in Section 4(6) of the Act.
DESCRIPTION
OF REGISTRANT’S SECURITIES
As of
February 25, 2010, there are 60,236,722 shares of the Company’s common stock
issued and outstanding, held by 15 holders of record.
Common
Stock
Our
authorized capital stock consists of 300,000,000 shares of common stock, par
value $0.001 per share. Our shareholders (i) have equal ratable rights to
dividends from funds legally available therefore, when, as and if declared by
the board of directors; (ii) are entitled to share ratably in all of the assets
for distribution to holders of common stock upon liquidation, dissolution or
winding up of our business affairs; (iii) do not have pre-emptive, subscription
or conversion rights, and there are no redemption or sinking fund provisions or
rights applicable thereto; and (iv) are entitled to one non-cumulative vote per
share on all matters on which stockholders may vote. All shares of common stock
now outstanding are fully paid and non-assessable.
There are
no provisions in our articles of incorporation or bylaws that would delay, defer
or prevent a change in control of our company or a change in type of
business.
Voting
Rights
Each
holder of our common stock is entitled to one vote per share on all matters on
which such stockholders are entitled to vote. Since the shares of our
common stock do not have cumulative voting rights, the holders of more than 50%
of the shares voting for the election of directors can elect all the directors
if they choose to do so and, in such event, the holders of the remaining shares
will not be able to elect any person to our Board of Directors.
Dividends
We have
not declared any dividends since incorporation and do not anticipate that we
will do so in the foreseeable future. Although there are no restrictions that
limit the ability to pay dividends on our common shares, our intention is to
retain future earnings for use in our operations and the expansion of our
business.
INDEMNIFICATION
OF DIRECTORS AND OFFICERS
Section
78.138 of the Nevada Revised Statute (“NRS”) provides for immunity of directors
from monetary liability, except in certain enumerated circumstances, as
follows:
“Except
as otherwise provided in NRS 35.230, 90.660, 91.250, 452.200, 452.270, 668.045
and 694A.030, or unless the Articles of Incorporation or an amendment thereto,
in each case filed on or after October 1, 2003, provide for greater individual
liability, a director or officer is not individually liable to the corporation
or its stockholders or creditors for any damages as a result of any act or
failure to act in his capacity as a director or officer unless it is proven
that:
(a)
|
his
act or failure to act constituted a breach of his fiduciary duties as a
director or officer; and
|
(b)
|
his
breach of those duties involved intentional misconduct, fraud or a knowing
violation of law.”
|
Section
78.5702 of the NRS provides as follows:
1.
|
A
corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, except an action by or in the right of the corporation, by
reason of the fact that he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise,
against expenses, including attorneys’ fees, judgments, fines and amounts
paid in settlement actually and reasonably incurred by him in connection
with the action, suit or proceeding if
he:
|
(a)
|
is
not liable pursuant to NRS 78.138;
or
|
|
(b)
|
acted
in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful.
|
2.
|
A
corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment
in its favor by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request
of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses, including amounts paid in settlement and attorneys’ fees
actually and reasonably incurred by him in connection with the defense or
settlement of the action or suit if
he:
|
|
(a)
|
is
not liable pursuant to NRS 78.138;
or
|
(b)
|
acted
in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the
corporation.
|
To the
extent that a director, officer, employee or agent of a corporation has been
successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in subsections 1 and 2, or in defense of any claim, issue
or matter therein, the corporation shall indemnify him against expenses,
including attorneys’ fees, actually and reasonably incurred by him in connection
with the defense.
Insofar
as indemnification for liabilities arising under the Securities Act of 1933, as
amended, may be permitted to directors or officers pursuant to the foregoing
provisions, we are informed that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy, as expressed in said
Act and is, therefore, unenforceable.
FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA
Our
financial statements are stated in U.S. dollars and are prepared in conformity
with generally accepted accounting principles of the United States. The
following financial statements pertaining to our company are filed as part of
this registration statement: Audited financial statements for the period from
April 14, 2005 (inception) through August 31, 2009. Unaudited interim financial
statements for the three month period ended November 30, 2009.
BLACK HAWK EXPLORATION,
INC.
(An Exploration Stage
Company)
CONTENTS
Page
|
|||
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
F-2
|
||
FINANCIAL
STATEMENTS
|
|||
Balance
Sheets
|
F-3
|
||
Statements
of Operations
|
F-4
|
||
Statements
of Stockholders’ Equity
|
F-5
|
||
Statements
of Cash Flows
|
F-6
|
||
Notes
to the Consolidated Financial Statements
|
F-7
to F-12
|
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors of
Black
Hawk Exploration Inc.
(An
Exploration Stage Company)
Fox
Island, WA
We have
audited the accompanying consolidated balance sheets of Black Hawk Exploration
Inc. (the “Company”) as of August 31, 2009 and 2008, and the related
consolidated statements of operations, stockholders’ equity, and cash flows for
each of the years then ended and the period from April 14, 2005 (inception)
through August 31, 2009. These financial statements are the responsibility of
the Company’s management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. The
Company is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audit included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no
such opinion. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Black Hawk Exploration Inc.
as of August 31, 2009 and 2008, and the results of its operations and its cash
flows for each of the years then ended and the period from April 14, 2005
(inception) through August 31, 2009 in conformity with accounting principles
generally accepted in the United States of America.
As
discussed in Note 1 to the consolidated financial statements, the Company’s
absence of significant revenues, recurring losses from operations, and its need
for additional financing in order to fund its projected loss in 2010 raise
substantial doubt about its ability to continue as a going concern. The 2009
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
LBB &
Associates Ltd., LLP
Houston,
Texas
November
24, 2009
F-2
BLACK
HAWK EXPLORATION INC.
(An
Exploration Stage Company)
CONSOLIDATED
BALANCE SHEETS
August
31,
|
August
31,
|
|||||||
2009
|
2008
|
|||||||
ASSETS
|
||||||||
Current
assets
|
||||||||
Cash
|
$ | 13,000 | $ | 26,393 | ||||
Prepaid
expenses
|
33,500 | 5,000 | ||||||
Total
current assets
|
46,500 | 31,393 | ||||||
Mineral
property
|
3,700 | - | ||||||
Total
assets
|
$ | 50,200 | $ | 31,393 | ||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
Current
liabilities
|
||||||||
Accounts payable
|
$ | - | $ | 4,314 | ||||
Total
current liabilities
|
- | 4,314 | ||||||
Total
liabilities
|
- | 4,314 | ||||||
COMMITMENTS
|
||||||||
STOCKHOLDERS’
EQUITY:
|
||||||||
Common
stock, $.001 par value, 300,000,000 shares authorized,
|
||||||||
59,201,428
and 58,301,428 shares issued and outstanding as of August 31, 2009 and
2008, respectively
|
59,201 | 58,301 | ||||||
Additional
paid-in capital
|
687,099 | 597,999 | ||||||
Deficit
accumulated during the exploration stage
|
(696,100 | ) | (629,221 | ) | ||||
Total
Stockholders’ Equity
|
50,200 | 27,079 | ||||||
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$ | 50,200 | $ | 31,393 |
The
accompanying notes are an integral part of these consolidated financial
statements
F-3
(An
Exploration Stage Company)
CONSOLIDATED
STATEMENTS OF OPERATIONS
Years
Ended August 31, 2009 and 2008
and
the Period from April 14, 2005 (Inception) through August 31, 2009
Years
Ended August 31,
|
Inception
through
|
|||||||||||
2009
|
2008
|
August
31, 2009
|
||||||||||
Cost
and expenses:
|
||||||||||||
Mineral
costs
|
$ | 1,300 | $ | 530 | $ | 1,830 | ||||||
General
and administrative
|
35,579 | 49,794 | 139,708 | |||||||||
Stock-based
compensation
|
30,000 | - | 30,000 | |||||||||
Impairment
of mineral property costs
|
- | 233,051 | 524,562 | |||||||||
Loss
from operations
|
(66,879 | ) | (283,375 | ) | (696,100 | ) | ||||||
Net
loss
|
$ | (66,879 | ) | $ | (283,375 | ) | $ | (696,100 | ) | |||
Net
loss per share:
|
||||||||||||
Basic
and diluted
|
$ | (0.00 | ) | $ | (0.00 | ) | ||||||
Weighted
average shares outstanding:
|
||||||||||||
Basic
and diluted
|
58,359,784 | 58,291,182 |
The
accompanying notes are an integral part of these consolidated financial
statements
F-4
BLACK
HAWK EXPLORATION INC.
(An
Exploration Stage Company)
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY
Period
from April 14, 2005 (Inception) through August 31, 2009
Deficit | ||||||||||||||||||||||||
Common
Stock
|
Additional
Paid-
|
Subscription
|
Accumulated
During the |
|
||||||||||||||||||||
Shares*
|
Amount
|
in Capital | Receivable | Exploration Stage | Total | |||||||||||||||||||
Issuance
of common stock for cash
|
55,470,000 | $ | 55,470 | $ | (1,170 | ) | $ | (2,000 | ) | $ | - | $ | 52,300 | |||||||||||
Net
loss
|
- | - | - | - | (2,095 | ) | (2,095 | ) | ||||||||||||||||
Balance,
August 31, 2005
|
55,470,000 | 55,470 | (1,170 | ) | (2,000 | ) | (2,095 | ) | 50,205 | |||||||||||||||
Cash
receipt for subscription receivable
|
- | - | - | 2,000 | - | 2,000 | ||||||||||||||||||
Net
loss
|
- | - | - | - | (17,510 | ) | (17,510 | ) | ||||||||||||||||
Balance,
August 31, 2006
|
55,470,000 | 55,470 | (1,170 | ) | - | (19,605 | ) | 34,695 | ||||||||||||||||
Issuance
of common stock for cash
|
2,571,428 | 2,571 | 417,429 | - | - | 420,000 | ||||||||||||||||||
Issuance
of common stock for mineral property costs
|
210,000 | 210 | 146,790 | - | - | 147,000 | ||||||||||||||||||
Net
loss
|
- | - | - | - | (326,241 | ) | (326,241 | ) | ||||||||||||||||
Balance,
August 31, 2007
|
58,251,428 | 58,251 | 563,049 | - | (345,846 | ) | 275,454 | |||||||||||||||||
Issuance
of common stock for mineral property costs
|
50,000 | 50 | 34,950 | - | - | 35,000 | ||||||||||||||||||
Net
loss
|
- | - | - | - | (283,375 | ) | (283,375 | ) | ||||||||||||||||
Balance,
August 31, 2008
|
58,301,428 | 58,301 | 597,999 | - | (629,221 | ) | $ | 27,079 | ||||||||||||||||
Issuance
of common stock for cash
|
600,000 | 600 | 59,400 | - | - | 60,000 | ||||||||||||||||||
Issuance
of common stock for services
|
300,000 | 300 | 29,700 | - | - | 30,000 | ||||||||||||||||||
Net
loss
|
- | - | - | - | (66,879 | ) | (66,879 | ) | ||||||||||||||||
Balance,
August 31, 2009
|
59,201,428 | $ | 59,201 | $ | 687,099 | $ | - | $ | (696,100 | ) | $ | 50,200 |
*The
common stock issued has been retroactively restated to reflect a forward
stock split of 10 new shares for 1 old share, effective March 15,
2007.
|
The accompanying notes are an
integral part of these consolidated financial
statements
F-5
BLACK
HAWK EXPLORATION INC.
(An
Exploration Stage Company)
CONSOLIDATED
STATEMENTS OF CASH FLOWS
Years
Ended August 31, 2009 and 2008
and
the Period from April 14, 2005 (Inception) through August 31,
2009
August
31,
2009
|
August
31,
2008
|
Inception
through
August
31, 2009
|
||||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
Net
loss
|
$ | (66,879 | ) | $ | (283,375 | ) | $ | (696,100 | ) | |||
Adjustments
to reconcile net loss to cash used by operating
activities:
|
||||||||||||
Impairment
of mineral property costs
|
- | 233,051 | 524,562 | |||||||||
Stock-based
compensation
|
30,000 | - | 30,000 | |||||||||
Net
change in:
|
||||||||||||
Prepaid
expenses
|
(28,500 | ) | (5,000 | ) | (33,500 | ) | ||||||
Accounts
payable
|
(4,314 | ) | 164 | - | ||||||||
Due
to related party
|
- | (5,087 | ) | - | ||||||||
CASH
FLOWS USED IN OPERATING ACTIVITIES
|
(69,693 | ) | (60,247 | ) | (175,038 | ) | ||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||
Mineral
property expenditures
|
(3,700 | ) | (2,665 | ) | (346,262 | ) | ||||||
CASH
FLOWS USED IN INVESTING ACTIVITIES
|
(3,700 | ) | (2,665 | ) | (346,262 | ) | ||||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||
Cash
received from common stock issuance
|
60,000 | - | 534,300 | |||||||||
Cash
received for share subscriptions
|
- | - | - | |||||||||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
60,000 | - | 534,300 | |||||||||
NET
INCREASE (DECREASE) IN CASH
|
(13,393 | ) | (62,912 | ) | 13,000 | |||||||
Cash,
beginning of period
|
26,393 | 89,305 | - | |||||||||
Cash,
end of period
|
$ | 13,000 | $ | 26,393 | $ | 13,000 | ||||||
SUPPLEMENTAL
CASH FLOW INFORMATION:
|
||||||||||||
Cash
paid for interest
|
$ | - | $ | - | $ | - | ||||||
Cash
paid for income taxes
|
$ | - | $ | - | $ | - | ||||||
SUPPLEMENTAL
DISCLOSURE OF NON CASH TRANSACTION:
|
||||||||||||
Stock
issued for mineral property costs
|
$ | - | $ | 35,000 | $ | 182,000 | ||||||
Reclassification
of deposit to mineral property costs
|
$ | - | $ | 80,062 | $ | - |
The accompanying notes are an
integral part of these consolidated financial
statements
F-6
BLACK
HAWK EXPLORATION INC.
(An
Exploration Stage Company)
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE
1 - NATURE OF BUSINESS
Black
Hawk Exploration Inc. (“the Company”) was incorporated in Nevada on April 14,
2005, to engage in acquisition and exploration of mineral
properties.
On August
11, 2009 the Company formed Blue Lithium Energy Inc. (“Blue Lithium”), a wholly
owned subsidiary under the laws of the State of Nevada to acquire, explore and
develop lithium properties in the United States and Canada.
On
December 09, 2009 The Company formed Golden Black Hawk, Inc. (“Golden Black
Hawk”), a wholly owned subsidiary under the laws of the State of Nevada to
acquire, explore and develop gold properties in the United States and
Canada.
Going
concern
These
consolidated financial statements have been prepared in accordance with United
States generally accepted accounting principles, on a going concern basis, which
contemplates the realization of assets and the satisfaction of liabilities and
commitments in the normal course of business. The Company has incurred losses
since inception of $696,100. Further losses are anticipated in the development
of its business and there can be no assurance that the Company will be able to
achieve or maintain profitability.
The
continuing operations of the Company and the recoverability of the carrying
value of assets is dependent upon the ability of the Company to obtain necessary
financing to fund its working capital requirements, and upon future profitable
operations. The accompanying financial statements do not include any adjustments
relative to the recoverability and classification of asset carrying amounts or
the amount and classification of liabilities that might result from the outcome
of this uncertainty.
There can
be no assurance that capital will be available as necessary to meet the
Company’s working capital requirements or, if the capital is available, that it
will be on terms acceptable to the Company. The issuances of additional equity
securities by the Company may result in dilution in the equity interests of its
current stockholders. Obtaining commercial loans, assuming those loans would be
available, will increase the Company’s liabilities and future cash commitments.
If the Company is unable to obtain financing in the amounts and on terms deemed
acceptable, the business and future success may be adversely
affected.
NOTE
2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Consolidation
The
accompanying consolidated financial statements included all of the accounts of
the Company and its wholly-owned subsidiary, Blue Lithium Energy Inc., a Nevada
Corporation. All intercompany transactions have been eliminated.
F-7
Cash
and Cash Equivalents
Cash and
cash equivalents are defined as cash on hand, demand deposits and short-term,
highly liquid investments with an original maturity of ninety days or
less.
Exploration
Stage Company
The
Company complies with Financial Accounting Standard Board Statement (“SFAS”) No.
7 for its characterization of the Company as an Exploration Stage
Company.
Use
of Estimates
The
preparation of financial statements in conformity with generally accepted
accounting principles in the United States requires management to make estimates
and assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amount of revenue and expenses during the period.
Actual results may differ from those estimates.
Mineral
Property Acquisition Costs
The costs
of acquiring mineral properties are capitalized and amortized over their
estimated useful lives following the commencement of production or expensed if
it is determined that the mineral property has no future economic value or the
properties are sold or abandoned.
Cost
includes cash consideration and the fair market value of shares issued on the
acquisition of mineral properties. Properties acquired under option agreements,
whereby payments are made at the sole discretion of the Company, are recorded in
the accounts at such time as the payments are made.
The
recoverable amounts for mineral properties is dependent upon the existence of
economically recoverable reserves; the acquisition and maintenance of
appropriate permits, licenses and rights; the ability of the Company to obtain
financing to complete the exploration and development of the properties; and
upon future profitable production or alternatively upon the Company’s ability to
recover its spent costs from the sale of its interests. The amounts recorded as
mineral properties reflect actual costs incurred and are not intended to express
present or future values.
The
capitalized amounts may be written down if potential future cash flows,
including potential sales proceeds, related to the property are estimated to be
less than the carrying value of the property. Management of the Company reviews
the carrying value of each mineral property interest quarterly, and whenever
events or changes in circumstances indicate that the carrying value may not be
recoverable. Reductions in the carrying value of each property would be recorded
to the extent the carrying value of the investment exceeds the estimated future
net cash flows.
Exploration
and Development Costs
Exploration
costs are expensed as incurred. 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.
F-8
Impairment
of Mineral Rights
The
Company reviews mineral rights for indicators of impairment whenever events or
changes in circumstances indicate that the carrying value may not be
recoverable. If the review indicates that the carrying amount of the asset may
not be recoverable, the potential impairment is measured based on a projected
discounted cash flow method using a discount rate that is considered to be
commensurate with the risk inherent in the company’s current business model.
During the years ended August 31, 2009 and 2008, the Company recorded impairment
to mineral rights of $Nil and $233,051, respectively.
Asset
Retirement Obligations
The
Company has adopted the provisions of SFAS No. 143 “Accounting for Asset
Retirement Obligations,” which establishes standards for the initial measurement
and subsequent accounting for obligations associated with the sale, abandonment
or other disposal of long-lived tangible assets arising from the acquisition,
construction or development and for normal operations of such assets. The
adoption of this standard has had no effect on the Company’s financial position
or results of operations. As of August 31, 2009 any potential costs relating to
the ultimate disposition of the Company’s mineral property interests have not
yet been determinable.
Stock
Based Compensation
Stock
based compensation expense is recorded in accordance with SFAS 123R (Revised
2004), Share-Based
Payment, for stock and stock options awarded in return for services
rendered. The expense is measured at the grant-date fair value of the award and
recognized as compensation expense on a straight-line basis over the service
period, which is the vesting period. The Company estimates forfeitures that it
expects will occur and records expense based upon the number of awards expected
to vest.
Basic
Loss per Share
Basic
loss per share has been calculated based on the weighted average number of
shares of common stock outstanding during the period. The weighted average
number of shares outstanding during the periods has been retroactively restated
to reflect a forward stock split of 10 new shares for 1 old share, effective
March 15, 2007.
Income
Taxes
The asset
and liability approach is used to account for income taxes by recognizing
deferred tax assets and liabilities for the expected future tax consequences of
temporary differences between the carrying amounts and the tax basis of assets
and liabilities. The Company records a valuation allowance to reduce the
deferred tax assets to the amount that is more likely than not to be
realized.
Financial
Instruments
As of
August 31, 2009, the Company’s financial instruments consist of cash. Unless
otherwise noted, it is management’s opinion that the Company is not exposed to
significant interest, currency or credit risks arising from these financial
instruments. Because of the short maturity of such assets and liabilities the
fair value of the financial instrument approximates its carrying value, unless
otherwise noted.
F-9
Recent
Accounting Pronouncements
During
the year ended August 31, 2009 and subsequently, the Financial Accounting
Standards Board (“FASB”) has issued a number of financial accounting standards,
none of which did or are expected to have a material impact on the Company’s
results of operations, financial position, or cash flows, with exception
of:
New
Accounting Pronouncements (Adopted)
SFAS
No. 157. In September 2006, the FASB issued
SFAS No. 157, Fair
Value Measurements (“SFAS No. 157”). This statement defines fair
value, establishes a framework for measuring fair value in GAAP, and expands
disclosures about fair value measurements, but does not require any new fair
value measurements. SFAS No. 157 is effective for fiscal years beginning
after November 15, 2007, and interim periods within those fiscal years. In
February 2008, the FASB issued FASB Staff Position, or FSP, No. FAS 157-2,
Effective Date of FASB
Statement No. 157 (“FSP FAS 157-2”), which delayed the effective
date of SFAS No. 157 for certain nonfinancial assets and liabilities to
fiscal years beginning after November 15, 2008, and interim periods within
those fiscal years. We adopted SFAS No. 157 for the Company’s financial
assets and liabilities in the first quarter of fiscal 2009, and provisions for
nonfinancial assets and liabilities in the first quarter of fiscal 2010, which
did not result in recognition of a transaction adjustment to retained earnings
or have a material impact on our financial condition, results of operations or
cash flows.
SFAS
No. 165. In May 2009, the FASB issued SFAS
No. 165, Subsequent
Events (“SFAS No. 165”). This statement provides guidance to
establish general standards of accounting for and disclosure of events that
occur after the balance sheet date but before the financial statements are
issued or are available to be issued. This statement is effective for interim or
fiscal periods ending after June 15, 2009, and is applied prospectively. We
adopted SFAS No. 165 in the year ended August 31, 2009; this adoption did
not have any impact on our financial condition, results of operations or cash
flows.
New
Accounting Pronouncements (Not yet adopted)
SFAS
No. 168. In June 2009, the FASB issued SFAS
No. 168, The FASB
Accounting Standards Codification and the Hierarchy of Generally of Generally
Accepted Accounting Principles — a Replacement of FASB Statement
No. 162 (“SFAS No. 168”). SFAS No. 168 establishes the
FASB Accounting Standards Codification as the source of authoritative accounting
principles recognized by the FASB to be applied by nongovernmental entities in
the preparation of financial statements in conformity with GAAP. SFAS
No. 168 is effective for financial statements issued for interim and annual
periods ending after September 15, 2009. We do not expect the adoption of
SFAS No. 168 will not have a material impact on our financial condition,
results of operations or cash flows.
NOTE
3 – MINERAL RIGHTS
During
August, 2009, a geologist engaged by the Company identified and acquired 56
lithium claims in the State of Nevada on behalf of the Company. The titles to
these claims were transferred to the Company subsequent to the year
end.
F-10
During
the year ended August 31, 2008, the Company allowed its mineral property options
on the Northwest Territories property to expire. Accordingly, an
impairment charge of $233,051 was recorded to write-off the assets.
NOTE
4 - RELATED PARTY TRANSACTIONS
On July
27, 2009, the Company signed a consulting agreement (the “Consulting Agreement”)
for a term of eight months with a private company (the “Consultant”) that has a
common director with the Company, whereby the Consultant receives $3,000 per
month for consulting services on corporate, administrative, business planning
and business analysis, and receives a maximum of $500 per month for preapproved
expenses. In accordance with the Consulting Agreement, consulting fees of $6,000
for the first and last month of the term of the Agreement were paid and 280,000 common shares of the Company were
issued to the Consultant upon signing of the Consulting Agreement (Note 6). On
September 5, 2009 the consulting fees were increased to $4,000 per month in an
amended agreement, which were further amended to $4,500 per month on October 5,
2009 (Note 5). In addition, the Company paid consulting fees of $3,000 to the
Consultant for services provided prior to the signing of the
Agreement.
During
the year ended August 31, 2009, the Company issued 20,000 common shares to the
two new directors of the Company, valued at $0.10 per share for total director’s
compensation of $2,000.
During
the year ended August 31, 2008, total management fee of $22,449 was paid to a
director of the Company. As of August 31, 2008, this director resigned and no
balance was owed to this director.
NOTE
5 - COMMITMENTS
In
accordance with the amended Consulting Agreements with a related party of the
Company, the Company pays the related consultant consulting fees of $4,000 for
the month of September, 2009, and $4,500 per month for the five months from
October 2009 to February 2010, and a maximum of $500 for preapproved expenses
per month for the six months from September 2009 to February 2010 (Note
4).
NOTE
6 - COMMON STOCK
The
Company’s authorized stocks consist of 300,000,000 common shares at a par value
of $0.001.
In
October 2006, the Company raised $20,000 from the sale of 2,000,000 post-split
common shares at $0.10 per share.
On March
15, 2007, the board of directors approved a ten (10) for one (1) forward stock
split of authorized, issued and outstanding shares of common stock. The Company
amended its Articles of Incorporation by the filing of a Certificate of Change
with the Nevada Secretary of State wherein it stated that it would issue ten
shares for every one share of common stock issued and outstanding immediately
prior to the effective date of the forward stock split. The change in the
Articles of Incorporation was effected with the Nevada Secretary of State on
April 6, 2007. As a result, the authorized capital increased from 30,000,000 to
300,000,000 shares of common stock with a par value of $0.001. The stock split
is presented retroactively in these financial statements.
On May 30
2007, the Company closed a private placement for an aggregate of 571,428 common
shares at a price of $0.70 for total proceeds of $400,000. These common shares
were issued in June 2007.
F-11
From June
to August 2007, the Company issued 210,000 common shares valued at $147,000 in
connection with its mineral property option agreements and acquisition
agreement.
The
Company issued 50,000 shares for a mineral property option in November 2007
valued at $35,000.
In August
2009, the Company issued 600,000 common shares at $0.10 per share for total
proceeds of $60,000.
In August
2009, the Company issued 280,000 common shares valued at $0.10 per share to a
related-party consultant of the Company (Note 4).
In August
2009, the Company issued 20,000 common shares valued at $0.10 per share to the
two new directors of the Company (Note 4).
As of
August 31 2009, 59,201,428 shares of the Company’s common stock are issued and
outstanding.
NOTE
7 - INCOME TAXES
The
Company follows Statement of Financial Accounting Standards Number 109 (“SFAS
109”), “Accounting for Income Taxes.” Deferred income taxes reflect the net
effect of (a) temporary difference between carrying amounts of assets and
liabilities for financial purposes and the amounts used for income tax reporting
purposes, and (b) net operating loss carry-forwards. No net provision for
refundable Federal income tax has been made in the accompanying statement of
loss because no recoverable taxes were paid previously. Similarly, no deferred
tax asset attributable to the net operating loss carry-forward has been
recognized, as it is not deemed likely to be realized.
The
cumulative tax effect at the expected rate of 34% of significant items
comprising our net deferred tax amount is as follows:
August 31, 2009 | August 31, 2008 | |||||||
Income
tax benefit attributable to:
|
||||||||
Net
operating loss
|
$ | 12,500 | $ | 96,000 | ||||
Change
in valuation allowance
|
(12,500 | ) | (96,000 | ) | ||||
Net
refundable amount
|
$ | - | $ | - |
The
cumulative tax effect at the expected rate of 34% of significant items
comprising our net deferred tax amount is as follows:
August 31, 2009 | August 31, 2008 | |||||||
Deferred
tax asset attributable to:
|
||||||||
Net
operating loss carryover
|
$ | 226,400 | $ | 213,900 | ||||
Valuation
allowance
|
(226,400 | ) | (213,900 | ) | ||||
Net
deferred tax asset
|
$ | - | $ | - |
At August
31, 2009, the Company had an unused net operating loss carry-forward
approximating $666,000 that is available to offset future taxable income; the
loss carry-forward will start to expire in 2025.
F-12
NOTE
8 – SUBSEQUENT EVENTS
On
October 16, 2009 the Company received gross proceeds of $55,000 for
subscriptions of 64,705 shares of the Company’s common stock at $0.85 per share.
These shares have not been issued.
On
October 19, 2009 the Company entered into an equity financing agreement (the
“Financing Agreement”), whereby the Company may draw up to $1,000,000 by issuing
units (the “Units”) at $0.85 per unit with each unit consisting of one share of
the Company’s common stock and one common stock purchase warrant exercisable
into one common share for two years, at $1.05 for the first 12 months and $1.25
for the second 12 months. Under the terms of the agreement the Company has the
right to call upon funds as needed. The securities will be issued upon receiving
registration approval. In accordance with the Financing Agreement on November
20, 2009 the Company received gross proceeds of $200,000 for subscription of
235,294 units at $0.85 per unit. The units have not been issued.
In
November 2009 the Company completed its acquisition of 100% interest in 56
lithium claims at a 1,120 acre site in the state of Nevada at a total cost of
$34,434.
The
Company has evaluated subsequent events for recognition or disclosure through
the date these financial statements were available to be issued, November 24,
2009.
As
required by Rule 13a-15 under the Securities Exchange Act of 1934, as of the end
of the period covered by the annual report, being August 31, 2009, we have
carried out an evaluation of the effectiveness of the design and operation of
our company’s disclosure controls and procedures. This evaluation was
carried out under the supervision and with the participation of our company’s
management, including our company’s president along with our company’s
secretary. Based upon that evaluation, our company’s president along
with our company’s secretary concluded that our company’s disclosure controls
and procedures are effective as at the end of the period covered by this report.
There have been no significant changes in our internal controls over financial
reporting that occurred during our most recent fiscal quarter that have
materially affected, or are reasonably likely to materially affect our internal
controls over financial reporting.
Disclosure
controls and procedures and other procedures that are designed to ensure that
information required to be disclosed in our reports filed or submitted under the
Securities Exchange Act of 1934 is recorded, processed, summarized and reported,
within the time period specified in the Securities and Exchange Commission’s
rules and forms. Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information required
to be disclosed in our reports filed under the Securities Exchange Act of 1934
is accumulated and communicated to management including our president and
secretary as appropriate, to allow timely decisions regarding required
disclosure.
Internal
Controls over Financial Reporting
Internal
control over financial reporting refers to the process designed by, or under the
supervision of, our Chief Executive Officer and Chief Financial Officer, and
effected by our board of directors, management and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles, and includes those policies and
procedures that:
F-13
(1)
Pertain to the maintenance of records that in reasonable detail accurately and
fairly reflect the transactions and dispositions of our assets;
(2)
Provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that our receipts and expenditures are being made
only in accordance with authorization of our management and directors;
and
(3)
Provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisitions, use or disposition of our assets that could have a
material effect on the financial statements.
Internal
control over financial reporting cannot provide absolute assurance of achieving
financial reporting objectives because of its inherent limitations. Internal
control over financial reporting is a process that involves human diligence and
compliance and is subject to lapses in judgment and breakdowns resulting from
human failures. Internal control over financial reporting also can be
circumvented by collusion or improper management override. Because of such
limitations, there is a risk that material misstatements may not be prevented or
detected on a timely basis by internal control over financial reporting.
However, these inherent limitations are known features of the financial
reporting process. Therefore, it is possible to design into the process
safeguards to reduce, though not eliminate, this risk. Management is responsible
for establishing and maintaining adequate internal control over financial
reporting for the Company.
Management
conducted an assessment of the effectiveness of the Company’s internal control
over financial reporting as of August 31, 2009, including (i) the control
environment, (ii) risk assessment, (iii) control activities, (iv) information
and communication, and (v) monitoring, based on the framework in Internal Control – Integrated
Framework, issued by the Committee of Sponsoring Organizations of the
Treadway Commission (“COSO”). As of August 31, 2009, management has determined
that the Company’s internal control over financial reporting as of August 31, 2009 was effective.
Currently,
Management and Board review are being utilized to mitigate the risk of material
misstatement in financial reporting, and also to ensure that existing internal
controls remain effective. Based on this assessment, management has concluded
that our internal control over financial reporting was effective as of August
31, 2009.
This
Annual Report does not include an attestation report of our independent
registered public accounting firm regarding internal control over financial
reporting. Our internal control over financial reporting was not subject to
attestation by our independent registered public accounting firm pursuant to
temporary rules of the SEC that permit us to provide only management’s report in
this Annual Report.
There has
been no change in our internal controls over financial reporting during our most
recent fiscal year that has materially affected, or is reasonably likely to
materially affect, our internal controls over financial
reporting.
F-14
Financial
Statements (un-audited) for period ended November 30, 2009
Our
financial statements are stated in United States Dollars (US$) and are prepared
in accordance with United States Generally Accepted Accounting
Principles.
BLACK
HAWK EXPLORATION INC.
(An
Exploration Stage Company)
CONSOLIDATED
BALANCE SHEETS
November
30,
|
August
31,
|
|||||||
2009
|
2009
|
|||||||
(Unaudited)
|
||||||||
ASSETS
|
||||||||
Current
assets
|
||||||||
Cash
|
$ | 234,684 | $ | 13,000 | ||||
Prepaid
expenses
|
8,500 | 33,500 | ||||||
Total
current assets
|
243,184 | 46,500 | ||||||
Mineral
property claims
|
25,171 | 3,700 | ||||||
Total
assets
|
$ | 268,355 | $ | 50,200 | ||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
Current
liabilities
|
||||||||
Accounts payable
|
$ | 9,000 | $ | - | ||||
Total
current liabilities
|
9,000 | - | ||||||
Total
liabilities
|
9,000 | - | ||||||
COMMITMENTS
|
||||||||
STOCKHOLDERS’
EQUITY:
|
||||||||
Common
stock, $.001 par value, 300,000,000 shares authorized,
|
||||||||
59,201,428
shares issued and outstanding as of November 30, 2009 and August 31,
2009
|
59,201 | 59,201 | ||||||
Additional
paid-in capital
|
942,098 | 687,099 | ||||||
Deficit
accumulated during the exploration stage
|
(741,944 | ) | (696,100 | ) | ||||
Total
Stockholders’ Equity
|
259,355 | 50,200 | ||||||
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$ | 268,355 | $ | 50,200 |
The
accompanying notes are an integral part of these consolidated financial
statements
F-15
BLACK
HAWK EXPLORATION INC.
(An
Exploration Stage Company)
CONSOLIDATED
STATEMENTS OF OPERATIONS
Three
Months Ended November 30, 2009 and 2008
and
the Period from April 14, 2005 (Inception) through November 30,
2009
(Unaudited)
Three
Months Ended
November
30,
|
Inception
through
|
|||||||||||
2009
|
2008
|
November
30, 2009
|
||||||||||
Cost
and expenses:
|
||||||||||||
Mineral
costs
|
$ | 7,963 | $ | - | $ | 9,793 | ||||||
General
and administrative
|
37,881 | 5,510 | 177,589 | |||||||||
Stock-based
compensation
|
- | - | 30,000 | |||||||||
Impairment
of mineral property costs
|
- | - | 524,562 | |||||||||
Loss
from operations
|
(45,844 | ) | (5,510 | ) | (741,944 | ) | ||||||
Net
loss
|
$ | (45,844 | ) | $ | (5,510 | ) | $ | (741,944 | ) | |||
Net
loss per share:
|
||||||||||||
Basic
and diluted
|
$ | (0.00 | ) | $ | (0.00 | ) | ||||||
Weighted
average shares outstanding:
|
||||||||||||
Basic
and diluted
|
59,201,428 | 58,301,428 |
The
accompanying notes are an integral part of these consolidated financial
statements
F-16
BLACK
HAWK EXPLORATION INC.
(An
Exploration Stage Company)
CONSOLIDATED
STATEMENTS OF CASH FLOWS
Years
Ended August 31, 2009 and 2008
and
Period from April 14, 2005 (Inception) through August 31, 2009
(Unaudited)
Three
Months
Ended November 30, 2009 |
Three
Months
Ended November 30, 2008 |
Inception
through November 30, 2009 |
||||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
Net
loss
|
$ | (45,844 | ) | $ | (5,510 | ) | $ | (741,944 | ) | |||
Adjustments
to reconcile net loss to cash used by operating
activities:
|
||||||||||||
Impairment
of mineral property costs
|
- | - | 524,562 | |||||||||
Stock-based
compensation
|
- | - | 30,000 | |||||||||
Net
change in:
|
||||||||||||
Prepaid
expenses
|
3,529 | - | (29,971 | ) | ||||||||
Accounts
payable
|
9,000 | 290 | 9,000 | |||||||||
Due
to related party
|
- | - | - | |||||||||
CASH
FLOWS USED IN OPERATING ACTIVITIES
|
(33,315 | ) | (5,220 | ) | (208,353 | ) | ||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||
Mineral
property expenditures
|
- | - | (346,262 | ) | ||||||||
CASH
FLOWS USED IN INVESTING ACTIVITIES
|
- | - | (346,262 | ) | ||||||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||
Cash
received from sales of common stock
|
254,999 | - | 789,299 | |||||||||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
254,999 | - | 789,299 | |||||||||
NET
INCREASE (DECREASE) IN CASH
|
221,684 | (5,220 | ) | 234,684 | ||||||||
Cash,
beginning of period
|
13,000 | 26,393 | - | |||||||||
Cash,
end of period
|
$ | 234,684 | $ | 21,173 | $ | 234,684 | ||||||
SUPPLEMENTAL
CASH FLOW INFORMATION:
|
||||||||||||
Cash
paid for interest
|
$ | - | $ | - | $ | - | ||||||
Cash
paid for income taxes
|
$ | - | $ | - | $ | - | ||||||
SUPPLEMENTAL
DISCLOSURE OF NON CASH TRANSACTION:
|
||||||||||||
Stock
issued for mineral property costs
|
$ | - | $ | - | $ | 182,000 | ||||||
Reclassification
of deposit to mineral property costs
|
$ | 21,471 | $ | - | $ | 21,471 |
The accompanying notes are an
integral part of these consolidated financial
statements
F-17
BLACK
HAWK EXPLORATION INC.
(An
Exploration Stage Company)
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE
1 – BASIS OF PRESENTATION
The
accompanying unaudited interim consolidated financial statements of Black Hawk
Exploration Inc. (the “Company”) have been prepared in accordance with
accounting principles generally accepted in the United States of America and the
rules of the Securities and Exchange Commission (“SEC”), and should be read in
conjunction with the audited financial statements and notes thereto contained in
the Company’s registration statement filed with the SEC on Form 10-K. In the
opinion of management, all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation of financial position and the
results of operations for the interim periods presented have been reflected
herein. The results of operations for interim periods are not necessarily
indicative of the results to be expected for the full year. Notes to the
financial statements which would substantially duplicate the disclosures
contained in the audited financial statements for the most recent fiscal year
August 31, 2009 as reported in Form 10-K, have been omitted.
The
Company has evaluated subsequent events for recognition or disclosure through
January 13, 2010, the date these financial statements were available to be
issued.
NOTE
2 – MINERAL RIGHTS
During
August, 2009, a geologist engaged by the Company identified and acquired 56
lithium claims in the State of Nevada on behalf of the Company. The titles to
these claims were transferred to the Company in November, 2009.
NOTE
3 - RELATED PARTY TRANSACTIONS
During
the three months ended November 30, 2009, in accordance with a consulting
agreement signed in July, 2009 and amended in September, 2009, the Company paid
total consulting fees of $13,000 to a private company that has a common director
with the Company.
NOTE
4 - COMMITMENTS
In
accordance with the amended consulting agreements with a related party of the
Company, the Company pays the related consultant consulting fees of $4,500 per
month and a maximum of $500 for preapproved expenses per month to February,
2010.
NOTE
5 - COMMON STOCK
On
October 16, 2009 the Company received gross proceeds of $54,999 for
subscriptions of 64,705 shares of the Company’s common stock at $0.85 per share.
These shares have not been issued to date.
On
October 19, 2009 the Company entered into an equity financing agreement (the
“Financing Agreement”), whereby the Company may draw up to $1,000,000 by issuing
units (the “Units”) at $0.85 per unit with each unit consisting of one share of
the Company’s common stock and one common stock purchase warrant exercisable
into one common share for two years, at $1.05 for the first 12 months and $1.25
for the second 12 months. Under the term of the agreement the Company has the
right to call upon funds as needed. The advances are at the discretion of the
counter-party. In accordance with the Financing Agreement, on November 20, 2009
the Company received gross proceeds of $200,000 for subscription of 235,294
units at $0.85 per unit. The shares of common stock have not been issued to
date.
F-18
NOTE
6 – SUBSEQUENT EVENTS
On
December 1, 2009 the Company entered into an office rent agreement with a public
company that has a common director and officer with the Company at $400 per
month for office space in Nevada. The term of the agreement is on a month by
month basis starting from December, 2009. A deposit of $1,200 was paid upon
signing of the agreement.
On
December 8, 2009 the Company formed Golden Black Hawk, Inc., a wholly owned
subsidiary under the laws of the State of Nevada to acquire, explore and develop
gold properties in the United States and Canada.
On
December 10, 2009, (the “Effective Date”), the Company entered into a property
interest purchase option agreement (the “Option Agreement”) with HuntMountain
Resources Ltd. (“HuntMountain”), a public company that has the option right to
acquire 100% interest in a total of 73 mining claims (the “Claims”) in Pershing
County in the State of Nevada (the “Property”).
The
Option Agreement entitles the Company to acquire undivided legal and beneficial
interests of up to 75% in the Property free and clear of all liens, charges and
claims of others. Considerations for the Option Agreement are as
follows:
-
|
An
initial payment of $50,000 (paid) and issuance of 250,000 restricted
shares of common stock (not issued) on the Effective
Date;
|
-
|
A
further payment of $25,000 and issuance of 100,000 restricted shares of
common stock on the first anniversary of the Effective
Date;
|
-
|
A
further payment of $25,000 on the second anniversary of the Effective
Date;
|
-
|
Incur
or fund expenditures on the Property of not less than $700,000 on or
before the fourth anniversary of the Effective
Date.
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
There
were no disagreements related to accounting principles or practices, financial
statement disclosure, internal controls or auditing scope or procedure during
the two fiscal years and interim periods, including the interim period up
through the date the relationship ended.
F-19
ITEM
5.06 CHANGE IN SHELL COMPANY STATUS
Management
has determined that, as of the date hereof given the current level of our
operations, our company is not a shell company as defined in Rule 12b-2 of the
United States Securities Exchange Act of 1934, as amended. Please refer to
Item 5.01 of this current report for a detailed description of the business of
our company.
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 hereunto
duly authorized.
BLACK
HAWK EXPLORATION, INC.
Per:
/s/
Kevin M. Murphy
|
|
Kevin
M. Murphy
|
|
President,
Chief Executive Officer, and Director
|
|
February
25, 2010
|
/s/
Howard Bouch
|
|
Howard
Bouch
|
|
Secretary,
CFO, and Director
|
|
February
25, 2010
|