Attached files
EXHIBIT 99.1
AUDITED
FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
MILLENNIUM
MINING, LLC
(A
Development Stage Company)
March
3, 2008 (Inception) to November 30, 2009
1
Brown
& Company CPAS PC
MILLENNIUM
MINING, LLC TABLE OF CONTENTS
PAGE
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
3
|
|
AUDITED
FINANCIAL STATEMENTS
|
|
|
BALANCE
SHEETS
|
4
|
|
STATEMENTS
OF OPERATIONS
|
5
|
|
STATEMENT
OF COMPREHENSIVE LOSS
|
6
|
|
STATEMENT
OF CHANGES IN MEMBERS' CAPITAL
|
7
|
|
STATEMENTS
OF CASH FLOWS
|
8
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NOTES
TO THE AUDITED FINANCIAL STATEMENTS
|
9
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2
Brown
& Company CPAs PC
REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Board
of Directors
Millennium
Mining, LLC.
Dovid
Hauck
12701
Cumpston Street
Valley
Village, CA 91607
We have
audited the accompanying balance sheets of Millennium Mining, LLC (a development
stage company) (the "Company") as of November 30, 2009 and February 28, 2009,
and the related statements of operations, other comprehensive loss, changes in
members' capital, and cash flows for the nine months ended November 30, 2009,
the period from March 3. 2008 (inception) through February 28. 2009, and the
period from March 3. 2008 (date of inception) through November 30, 2009. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States of America). 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 audit provides a
reasonable basis for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of the Company as of November 30, 2009
and February 28, 2009, and the results of its operations and cash flows for the
period of March 3, 2008 (inception) through February 28, 2009, and for the
period March 3,2008 (date of inception) through November 30, 2009, in conformity
with accounting principles generally accepted in the United States of
America.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note I to the financial
statements, the Company generated minimal revenues from operations and has
incurred net losses since inception. This raises substantial doubt about the
Company's ability to meet its obligations and to continue as a going concern.
Management's plans in regard to this matter are described in Note 1. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ BROWN
& COMPANY
APRIL 9,
2010
Brown
& Company CPAs PC
3838
Regency Parkway
Maryland
New
York. New Jersey. Pennsylvania. Maryland
Phone:
856.673.0647. 347.489.4913. Fax 8S6.673.3635
3
MILLENNIUM
MINING. LLC
(A
Development Stage Company)
BALANCE
SHEETS
|
As
of
November
30, 2009
|
As
of
February
28, 2009
|
|||||||
|
ASSETS
|
||||||||
|
Current
Assets
|
||||||||
|
Cash
and cash equivalents (Note 2)
|
$ | 69,850 | $ | 81,637 | ||||
|
Accounts
receivable (Note 2)
|
4,621 | - | ||||||
|
Total
current assets
|
74,471 | 81,637 | ||||||
|
Property
and equipment, net (Note 2)
|
609,014 | 311,197 | ||||||
|
Total
assets
|
$ | 683,485 | 311,197 | |||||
|
LIABILITIES
AND MEMBERS' CAPITAL
|
||||||||
|
Current
liabilities
|
||||||||
|
Accounts
payable (Note 2)
|
184,762 | 165,983 | ||||||
|
Notes
payable (Note 4)
|
34,624 | 34,353 | ||||||
|
Total
liabilities
|
219,386 | 200,336 |
|
Members'
capital
|
||||||||
|
Common
units. 30,000.000 issued and outstanding, $.01 per unit (Note
3)
|
739,405 | 304,719 | ||||||
|
Accumulated
other comprehensive income -net of tax (Note 2)
|
(5,012 | ) | (1,650 | ) | ||||
|
Deficit
accumulated during development stage
|
(270,294 | ) | (110,571 | ) | ||||
|
Total
members' capital
|
464,099 | 192,498 | ||||||
|
Total
liabilities and members’ capital
|
$ | 683,485 | $ | 392,834 | ||||
The
accompanying notes are an integral part of the audited financial
statements
4
MILLENNIUM
MINING, LLC
(A
Development Stage Company)
STATEMENTS
OF OPERATIONS
|
Nine
months
|
March
3, 2008
|
Since
March 3, 2008
|
||||||||||
|
ended
|
(inception)
|
(inception)
|
||||||||||
|
November
|
thru
February
|
thru
November
|
||||||||||
| 30, 2009 | 28,2009 | 30, 2009 | ||||||||||
|
Sales
|
$ | 22,092 | $ | 16,603 | $ | 38,695 | ||||||
|
Cost
of production
|
||||||||||||
|
Depreciation
|
52,183 | 34,577 | 86,760 | |||||||||
|
Fuel
|
23,435 | 8,512 | 31,947 | |||||||||
|
Spare
parts and maintenance
|
26.936 | 29,265 | 56,201 | |||||||||
|
Corporation
expenses
|
546 | 2,082 | 2,628 | |||||||||
|
Food
|
9,628 | 124 | 9,752 | |||||||||
|
Communication
|
1,067 | 711 | 1,778 | |||||||||
|
Motor
vehicle maintenance
|
5,837 | 1.098 | 6,935 | |||||||||
|
Other
expense
|
1,682 | - | 1,682 | |||||||||
|
Total
cost of production
|
121,314 | 76,369 | 197,683 | |||||||||
|
Gross
profit
|
(99.222 | ) | (59,766 | ) | (158,988 | ) | ||||||
|
Expenses
|
||||||||||||
|
Rent
|
13,105 | 1,257 | 14,362 | |||||||||
|
Entertainment
|
1,977 | - | 1,977 | |||||||||
|
Printing
and stationary
|
815 | - | 815 | |||||||||
|
Compensation
|
16,781 | 26,563 | 43,344 | |||||||||
|
General
and administrative
|
27,823 | 22,985 | 50,808 | |||||||||
|
Total
expenses
|
60,501 | 50,805 | 111,306 | |||||||||
|
Net
loss from operations
|
(159.723 | ) | (1 10,571 | ) | (270,294 | ) | ||||||
|
Other
income (expense)
|
||||||||||||
|
Interest
expense (Note 4)
|
(5,639 | ) | (6,843 | ) | (12,482 | ) | ||||||
|
Other
income (Note 4)
|
5,639 | 6,843 | 12,482 | |||||||||
|
Total
other income (expense)
|
- | - | - | |||||||||
|
Net
loss attributable to common unit
|
||||||||||||
|
holders
|
$ | (159,723 | ) | $ |
(110,571)
|
$ | (270,294) | |||||
|
Net
loss per common unit
|
$ | (0.005 | ) | (0.003) | ||||||||
|
Weighted
average common units
|
||||||||||||
|
outstanding
|
30.000.000 | 30.000.000 | ||||||||||
The
accompanying notes are an integral part of the audited financial
statements
5
MILLENNIUM
MINING, LLC
(A
Development Stage Company)
STATEMENTS
OF COMPREHENSIVE LOSS
|
March
3,
|
Since
March
|
||||||||||
|
2008
|
3, 2008 | ||||||||||
|
Nine
months
|
(inception)
|
(inception)
|
|||||||||
|
ended
|
thru
|
thru
|
|||||||||
|
November
30,
|
February
28,
|
November
30,
|
|||||||||
|
2009
|
2009
|
2009 | |||||||||
|
Net
loss
|
$ | (159,723 | ) | $ | (110,571) | $ |
(270,294)
|
||||
|
Other
comprehensive loss, net of tax
|
|||||||||||
|
Foreign
currency translation adjustment
|
(3,362 | ) | (1,650 | ) | (5,012 | ) | |||||
|
Comprehensive
loss
|
$
(163,085)
|
$ | (112,221 | ) | $ | (275,306 | ) | ||||
The
accompanying notes are an integral part of the audited financial
statements
6
MILLENNIUM
MINING, LLC
(A
Development Stage Company)
STATEMENTS
OF CHANGES INMEMBER'SCAPITAL
March 3, 2008 (Inception) to November 30, 2009
|
Deficit
|
|
||||||||||||||||||||||
|
Accumulated
|
Accumulated
|
||||||||||||||||||||||
|
During
|
Other
|
Total | |||||||||||||||||||||
|
Common
Units
|
Dev
|
Comprehensive
|
Members' | ||||||||||||||||||||
|
Units
|
Amount
|
Stage
|
Income
|
Capital
|
|||||||||||||||||||
|
Balance,
March 3, 2008 (inception)
|
- | - | - | - | |||||||||||||||||||
|
Issuance
of common units, March 3, 2008, $.01 per unit
|
30,000,000 | 300,000 | 300,000 | ||||||||||||||||||||
|
Foreign
currency translation adjustment (Note 2)
|
- | - | (1,650 | ) | (1,650 | ) | |||||||||||||||||
|
Member
contributions
|
4,719 | 4,719 | |||||||||||||||||||||
|
Net
loss
|
- | (110,571 | ) | (110,571 | ) | ||||||||||||||||||
|
Balance
February 28, 2009
|
30,000,000 | 304,719 | (110,571 | ) | (1,650 | ) | 192,498 | ||||||||||||||||
|
Foreign
currency translation adjustment (Note 2)
|
- | - | (3,362 | ) | (3,362 | ) | |||||||||||||||||
|
Member
contributions
|
434,686 | 434,686 | |||||||||||||||||||||
|
Net
loss
|
- | (159,723 | ) | (159,723 | ) | ||||||||||||||||||
|
Balance,
November 30, 2009
|
30,000,000 | 739,405 | (270,294 | ) | (5,012 | ) | 464,099 | ||||||||||||||||
The
accompanying notes are an integral part of the audited financial
statements
7
MILLENNIUM
MINING, LLC
(A
Development Stage Company)
STATEMENTS
OF CASH FLOWS
|
|
||||||||||||
|
Nine months
ended
|
March
3, 2008 (inception) thru
|
Since
March 3, 2008 (inception) to
|
||||||||||
| November 30, |
February
28,
|
November
30,
|
||||||||||
|
2009
|
2009
|
2009
|
||||||||||
|
(cumulative)
|
||||||||||||
|
Cash Flows from Operating Activities
|
||||||||||||
|
Net loss
|
$ | (159,723 | ) | $ | (110,571 | ) | $ | (270,294 | ) | |||
|
Adjustments to reconcile net
loss to net cash provided by (used in) operations:
|
||||||||||||
|
Depreciation
|
52,183 | 34,577 | 86,760 | |||||||||
|
Changes in operating assets and
liabilities
|
||||||||||||
|
Increase in accounts
receivable
|
(4,621) | - | (4,621) | |||||||||
|
Increase in accounts
payable
|
18,779 | 165,983 | 184,762 | |||||||||
|
Net
cash provided by (used in) operating activities
|
(93,382 | ) | 89,989 | (3,393 | ) | |||||||
|
Cash
Flows from Investing Activities
|
||||||||||||
|
Purchases of property, plant
and equipment, net
|
(350,000) | (345,774) | (695,774) | |||||||||
|
Net
cash used in investing activities
|
(350,000) | (345,774) | (695,774) | |||||||||
|
Cash
Flows from Financing Activities
|
||||||||||||
|
Proceeds from issuance of
common units
|
- | 300,000 | 300,000 | |||||||||
| Member contributions | 434,686 | 4,719 | 439,405 | |||||||||
| Proceeds from notes payable | 271 | 34,353 | 34,624 | |||||||||
|
Net
cash provided by financing activities
|
434,957 | 339,072 | 774,029 | |||||||||
|
Net
cash increase (decrease) for period
|
(8,425 | ) | 83,287 | 74,862 | ||||||||
|
Foreign
currency translation adjustment
|
(3,362 | ) | (1,650 | ) | (5,012) | |||||||
|
Cash,
beginning of period
|
81,637 | - | - | |||||||||
|
Cash,
end of period
|
$ | 69,850 | $ | 81,637 | $ | 69,850 | ||||||
| Supplemental Cash Flow Information: | ||||||||||||
| Cash paid for income taxes | $ | - | $ | - | $ | - | ||||||
|
Cash
paid for interest
|
$ | - | $ | - | $ | - | ||||||
|
Non-cash
investing and Financing Activities
|
||||||||||||
| None | ||||||||||||
The
accompanying notes are an integral part of the audited financial
statements
8
MILLENNIUM
MINING, LLC.
(A
Development Stage Company)
NOTES
TO THE AUDITED FINANCIAL STATEMENTS
March
3, 2008 (Inception) to November 30, 2009
NOTE I
NATURE AND CONTINUANCE OF OPERATIONS
Organization
The
Company was incorporated in Sierra Leone as a private limited liability company
on March 3. 2008 and commenced commercial operations after obtaining its license
from the Ministry of Mineral Resources shortly thereafter. The Company's core
operation is to mine, extract, refine, and purify precious minerals. The Company
sells, buys, distributes, and exports diamond bauxite, rutile, gold, silver, and
all other precious minerals in Sierra Leone and internationally.
Going
Concern
These
financial statements have been prepared on a going concern basis. As at November
30, 2009, the Company has a working capital deficiency of $144,915, and has
accumulated a deficit of $270,294 since inception. Its ability to continue as a
going concern is dependent upon the ability of the Company to generate
profitable operations in the future and/or to obtain the necessary financing to
meet its obligations and repay its liabilities arising from normal business
operations when they come due. The outcome of these matters cannot be predicted
with any certainty at this time. These factors raise substantial doubt that the
Company will be able to continue as a going concern. The Company to date has
funded its initial operations through the members' equity consisting of
30,000,000 member shares issued for $300,000 cash, and member contributions of
$439,405, for total equity investments of $739,405. Management plans to continue
to provide for its capital needs by seeking investments by new partners to the
LLC, loans, and production of existing mining operation. These financial
statements do not include any adjustments to the amounts and classification of
assets and liabilities that may be necessary should the Company be unable to
continue as a going concern.
NOTE 2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The
financial statements of the Company have been prepared in accordance with
accounting principles generally accepted in the United States of America (US
GAAP). Because a precise determination of many assets and liabilities is
dependent upon future events, the preparation of financial statements for a
period necessarily involves the use of estimates which have been made using
careful judgment. Actual results may vary from these estimates.
The
financial statements have, in management's opinion, been properly prepared
within reasonable limits of materiality and within the framework of the
significant accounting policies summarized below.
Development Stage
Company
The
Company complies with ASC 9l5and the Securities and Exchange Commission Industry
Guide 7 (as interpreted for mining companies) for its characterization of the
Company as development stage.
9
MILLENNIUM
MINING, LLC.
(A
Development Stage Company)
NOTES
TO THE AUDITED FINANCIAL STATEMENTS
March
3, 2008 (Inception) to November 30, 2009
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Foreign Currency
Translation
The
Company's functional currency is the Sierra Leone, Leone. Nonmonetary assets and
liabilities are translated at historical rates and monetary assets and
liabilities are translated at exchange rates in effect at the end of the year
based on government determined exchange rates. Income statement accounts are
translated at average rates for the year.
Aggregate foreign currency translation losses included in other comprehensive
loss totaled $1,650 for the period of March 3, 2008 (inception) through February
28. 2009 and $3,362 for the nine months ended November 30, 2009, for an
accumulated other comprehensive loss of $5,012 at November 30,
2009.
Substantially
all of the Company's operations are centralized in Sierra Leone, and all
transactions are denominated in the Leone currency; thus, there are no
transaction gains (losses) reflected in earnings. These foreign operations
represent captive mining facilities of the Company. The Company's operations are
subject to various political, economic, and other risks and uncertainties
inherent in the countries in which the Company operates. Among other risks, the
Company's operations are subject to the risks of restrictions on transfer of
funds; export duties, quotas, and embargoes; domestic and international customs
and tariffs; changing taxation policies; foreign exchange restrictions: and
political conditions and governmental regulations
Fair Value of Financial
Instruments
The
carrying value of the Company's financial
instruments consisting of cash, accounts receivable, and accounts payable
approximate their carrying value due to the short-term maturity of such
instruments. 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.
Estimates
Preparing
the Company's financial statements in conformity with US GAAP requires
management to make estimates and assumptions that affect reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Foreign
Operations
The
Company's future operations and earnings will depend on the results of the
Company's operations in Sierra Leone. There can be no assurance that the Company
will be able to successfully conduct such operations, and a failure to do so
would have a material adverse effect on the Company's financial position,
results of operations, and cash Hows. In addition, the success of the Company's
operations will be subject to numerous contingencies, some of which are beyond
management's control. These contingencies include general and regional economic
conditions, prices for the Company's products, competition, and changes in
regulation. Because the Company is dependent on international operations,
specifically those in Sierra Leone, the Company will be subject to various
additional political, economic, and other uncertainties. Among other risks, the
Company's operations will be subject to the risks of restrictions on transfer of
funds; export duties, quotas and embargoes; domestic and international customs
and tariffs; changing taxation policies; foreign exchange restrictions; and
political conditions and governmental regulations.
10
MILLENNIUM
MINING, LLC.
(A
Development Stage Company)
NOTES TO
THE AUDITED FINANCIAL STATEMENTS
March 3,
2008 (Inception) to November 30, 2009
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Environmental
Costs
Accruals
for environmental matters are recorded when it is probable that a liability has
been incurred and the amount of the liability can be reasonably estimated, or if
an amount is likely to fall within a range and no amount within that range can
be determined to be the better estimate, the minimum amount of the range is
recorded. Accruals for environmental matters exclude claims for recoveries from
insurance carriers and other third parties until it is probable that such
recoveries will be realized. As of November 30. 2009 the Company is not
obligated nor recorded any environmental costs.
Cash and Cash
Equivalents
Cash and
cash equivalents include all cash balances and highly liquid investments with an
initial maturity of three months or less. The Company places its temporary cash
investments with high credit quality financial institutions.
At
November 30. 2009. the Company had cash of $69,850 USD held in banks located in
Sierra Leone and denominated in Leones. At February 28, 2009. the Company had
cash of $81,637 USD held in banks located in Sierra Leone and denominated in
Leones. On, November 30, 2009, one U.S. dollar was equivalent to 3,870 Leones
(bid price), and on February 28, 2009, one U.S. dollar was equivalent to 3.050
Leones (bid price).
Accounts and Notes
Receivable
Trade
accounts receivable are stated at the amount the Company expects to collect. The
Company maintains allowances for doubtful accounts for estimated losses
resulting from the inability of its customers to make required payments.
Management considers the following factors when determining the collectability
of specific customer accounts: customer credit-worthiness, past transaction
history with the customer, current economic industry trends, and changes in
customer payment terms. If the financial condition of the Company's customers
were to deteriorate, adversely affecting their ability to make payments,
additional allowances would be required. Based on management's assessment, the
Company provides for estimated uncollectible amounts through a charge to
earnings and a credit to a valuation allowance. Balances that remain outstanding
after the Company has used reasonable collection efforts are written off through
a charge to the valuation allowance and a credit to accounts receivable. At the
November 30, 2009. the Company had receivables from its staff of $4,621, and no
trade receivables: therefore not allowance for doubtful accounts are recorded.
On February 28, 2009 the Company had no receivables.
Inventory
The
Company normally carries minimal inventories. After extraction of raw aggregate,
minerals obtained are then sold at the current government price within Sierra
Leone, and at negotiated prices where export sales are made. As of November 30,
2009 and February 28, 2009, the Company held no inventory.
Property. Plant and
Equipment
Property
and equipment are recorded at cost. Depreciation is provided over the estimated
useful lives of the related assets using the straight-line method for financial
statement purposes. Amortization of leasehold improvements is computed using the
straight-line method over the shorter of the remaining lease term or the
estimated useful lives of the improvements.
11
MILLENNIUM
MINING, LLC.
(A
Development Stage Company)
NOTES TO
THE AUDITED FINANCIAL STATEMENTS
March 3,
2008 (Inception) to November 30, 2009
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
During
the nine-months ended November 30. 2009 and period of March 3, 2008 (inception)
to February 28, 2009, the Company acquired $350,000 and $345,774. respectively,
of vehicles, plant, and machinery. Since inception, the Company has purchased
$69,289 of vehicles and $626,485 of plant and machinery. For the nine months
ended November 30, 2009 and the period of March 3. 2008 (inception) to February
28, 2009. the Company had $52,183 and $34,577 of depreciation, resulting in
$86,760 of accumulated depreciation since inception through November 30,
2009.
The
estimated service lives of property and equipment are principally as
follows:
Machinery
and
equipment 10
years
Transportation
vehicles
10 years
Mineral
Properties
The
Company obtains rights for mining under lease with landowners, and by license
with the government of Sierra Leone. The Company records property lease payments
and licensing costs when incurred. ASC 930-360 "Extractive Activities "
requires firms capitalize costs for mineral rights. As of November 30,
2009, the Company has not incurred significant costs to obtain mineral rights to
leased and licensed property.
On
January 26, 2008 (pre-incorporation) the Company entered into a mining agreement
to dredge mine land in the towns of Gandorhun and Njala in the Tikonko Chiefdom,
Bo District of Sierra Leone. This area is known as the Baimbawai Pool of the
Sewa River located between those two towns. The pool is owned by individuals
from two villages. Gandorhun and Njala, located on either side of the
river.
The
Company has not acquired the property, and determinable mining rights are
uncertain as of November 30, 2009, therefore the Company has not thus far
capitalized the expense for mineral properties.
Income
Taxes
No
provision for income taxes has been made in these financial statements because
each member is individually responsible for reporting income or loss based on
its respective share of the Company's income and expenses as reported for income
tax purposes. The Company prepares calendar year federal and state information
tax returns and reports to the members their allocable shares of the Company's
income, expenses, and gains or losses.
Operations
in Sierra Leone are subject to corporate tax of 37.5% for mining companies.
Losses are allowable and can be carried forward indefinitely. Loss carry forward
is limited to 50% of the tax due in any year. Foreign exchange losses can also
be deducted where there has been a change in control or ownership of a
company.
12
MILLENNIUM
MINING, LLC.
(A
Development Stage Company)
NOTES TO
THE AUDITED FINANCIAL STATEMENTS
March 3,
2008 (Inception) to November 30, 2009
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED
Accounts
Payable
Accounts
payable consists of the following items:
|
As
of
|
As
of
|
|||||||
|
November
30, 2009
|
February
28,2009
|
|||||||
|
Trade
payables
|
$ | 169,762 | $ | 155.983 | ||||
|
Audit
fees
|
15,000 | 10,000 | ||||||
|
Total
Payables
|
$ | 184,762 | $ | 165,983 | ||||
Revenue
Recognition
The
Company generally recognizes product revenue when persuasive evidence of an
arrangement exists, delivery has occurred, the fee is fixed or determinable, and
collectability is probable. In instances where final acceptance of the product
is specified by the customer, revenue is deferred until all acceptance criteria
have been met. Cash payments received in advance are recorded as deferred
revenue. The Company is generally not contractually obligated to accept returns,
except for defective product.
Sales
within Sierra Leone are based on government determined prices for precious
minerals. These prices are based on quality, clarity, and size of the minerals
and are adjusted from time to time for market conditions as the government may
so determine. Sales outside of Sierra Leone through export are determined
through negotiation per stone based on quality, clarity, size, and prevailing
market prices and conditions.
Net Loss per Common
Unit
Net loss
per common unit is computed based on the weighted-average number of common units
and. as appropriate, dilutive common unit equivalents outstanding during the
period in accordance with ASC 260 "'Earnings per Share." Basic net loss per
common unit is the amount of net loss for the period available to each common
unit outstanding during the reporting period. Diluted net loss per common unit
is the amount of net loss for the period available to each common unit
outstanding during the reporting period and to each unit that would have been
outstanding assuming the issuance of common units for all dilutive potential
common units outstanding during the period. At November 30, 2009 and February
28, 2009. the basic and diluted net loss per common unit is the same as there
are no common unit equivalents outstanding.
The
Company has issued no dividends since inception. The net loss per common unit
for the nine months ending November 30, 2009 and for the period of March 3, 2008
(inception) through February 28, 2009 was $.01 and $.00,
respectively.
13
MILLENNIUM
MINING, LLC.
(A
Development Stage Company)
NOTES TO
THE AUDITED FINANCIAL STATEMENTS
March 3,
2008 (Inception) to November 30, 2009
NOTE 3
MEMBERS'CAPITAL
Upon
formation the Company issued 30,000.000 common membership units at $01 per unit
for $300,000 cash. Members' capital is as follows:
|
Name
|
Title
|
Number
of units
|
|
Dovid
Hauck
|
President
|
22,500,000
|
|
Mariama
Sajoh Cheung
|
Vice
President
|
7,500,000
|
Common
units share in the profits and losses of the Company based on the weighted
dollar amount invested during the period. Every member shall have one vote for
each common unit held. Common units shall be at the disposal of the directors
and they may allot or otherwise dispose of them to such persons at such times
and generally on such terms and conditions as they think proper, provided that
such transfer shall not have the effect of preventing the Company from
continuing operations under the provisions of laws of Sierra Leone. Directors
possess the first right of refusal for all new units issued whether common or
preferred. The creation of new units shall be considered part of the original
capital.
The
number of members of the Company is limited to fifty not including persons who
are in the employment of the Company. The Company has authorized, but has not
issued any preferred units. Preferred units carry a preferential right to a
fixed rate of dividend which is determined by the Board of Directors. Preferred
shares are redeemable by the Company at their nominal or par value at the date
the Board or holder shall agree.
In
addition, the members contributed additional capital to support operations.
During the period of March 3. 2008 (inception) through February 28, 2009 and for
the nine months ended November 30, 2009, members provided additional capital of
$4,719 and $434,686 respectively, for total contributed capital of $439,405 at
November 30, 2009.
NOTE 4
NOTES PAYABLE
The
Company issued two notes payable as follows (collectively "the Notes"): Note One
is a non-interest bearing loan disbursed to the Company on multiple dates
between March 15. 2008 and August 5, 2009. All amounts were payable November 1,
2009. Note Two is a non-interest bearing loan obtained on March 30, 2008 and
payable June 30, 2008. Both notes are in default at November 30,
2009.
As of
February 28, 2009, the Company owed $34,353 on the Notes, and was in default on
$26,661. As of November 30, 2009 the Company owed $34.624 on the Notes and was
in default on the full amount. The Company has imputed interest on the Notes
based on rate of 28 percent, which is recorded as interest expense, or other
income for portions not requiring payment. For the period of March 3, 2008
(inception) through February 28, 2009, the Company reported interest expense of
$6,843, and for the nine-months ended November 30, 2009. the Company reported
interest expense of $5,639.
14
MILLENNIUM
MINING, LLC.
(A
Development Stage Company)
NOTES TO
THE AUDITED FINANCIAL STATEMENTS
March 3,
2008 (Inception) to November 30, 2009
NOTE
5 RECENT ACCOUNTING PRONOUNCEMENTS
Recently Implemented
Standards
ASC 105,
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" (ASC 105) (formerly
Statement of Financial Accounting Standards No. 168. "THE FASB ACCOUNTING
STANDARDS CODIFICATION AND THE HIERARCHY OF GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES A REPLACEMENT OF FASB STATEMENT NO. 162)" reorganized by topic
existing accounting and reporting guidance issued by the Financial Accounting
Standards Board ("FASB") into a single source of authoritative generally
accepted accounting principles ("GAAP") to be applied by nongovernmental
entities. All guidance contained in the Accounting Standards Codification
("ASC") carries an equal level of authority. Rules and interpretive releases of
the Securities and Exchange Commission ("SEC") under authority of federal
securities laws are also sources of authoritative GAAP for SEC registrants.
Accordingly, all other accounting literature will be deemed "non-authoritative".
ASC 105 is effective on a prospective basis for financial statements issued for
interim and annual periods ending after September 15, 2009. The Company has
implemented the guidance included in ASC 105 as of July I. 2009. The
implementation of this guidance changed the Company's references to GAAP
authoritative guidance but did not impact the Company's financial position or
results of operations.
ASC 855,
"SUBSEQUENT EVENTS" (ASC 855) (formerly Statement of Financial Accounting
Standards No. 165. SUBSEQUENT EVENTS) includes guidance that was issued by the
FASB in May 2009, and is consistent with current auditing standards in defining
a subsequent event. Additionally, the guidance provides for disclosure regarding
the existence and timing of a company's evaluation of its subsequent events. ASC
855 defines two types of subsequent events, "recognized" and
"non-recognized". Recognized subsequent events provide additional
evidence about conditions that existed at the date of the balance sheet and are
required to be reflected in the financial statements. Non-recognized subsequent
events provide evidence about conditions that did not exist at the date of the
balance sheet but arose after that date and, therefore; are not required to be
reflected in the financial statements. However, certain non-recognized
subsequent events may require disclosure to prevent the financial statements
from being misleading. This guidance was effective prospectively for interim or
annual financial periods ending after June 15, 2009. The Company implemented the
guidance included in ASC 855 as of April 1. 2009. The effect of implementing
this guidance was not material to the Company's financial position or results of
operations.
In August
2009, the FASB issued Accounting Standards Update No. 2009-05, "MEASURING
LIABILITIES AT FAIR VALUE," (ASU 2009-05). ASU 2009-05 provides guidance on
measuring the fair value of liabilities and is effective for the first interim
or annual reporting period beginning after its issuance. The Company's adoption
of ASU 2009-05 did not have an effect on its disclosure of the fair value of its
liabilities.
Recently Issued
Standards
In
September 2009, the FASB issued ASC Update No. 2009-12, "FAIR VALUE MEASUREMENTS
AND DISCLOSURES (TOPIC 820): INVESTMENTS IN CERTAIN ENTITIES THAT CALCULATE NET
ASSET VALUE PER SHARE (OR ITS EQUIVALENT)" (ASC Update No. 2009-12). This update
sets forth guidance on using the net asset value per share provided by an
investee to estimate the fair value of an alternative investment. Specifically,
the update permits a reporting entity to measure the fair value of this type of
investment on the basis of the net asset value per share of the investment (or
its equivalent) if all or substantially all of the underlying investments used
in the calculation of the net asset value is consistent with ASC
820.
15
MILLENNIUM
MINING, LLC.
(A
Development Stage Company)
NOTES
TO THE AUDITED FINANCIAL STATEMENTS
March 3,
2008 (Inception) to November 30, 2009
The
update also requires additional disclosures by each major category of
investment, including, but not limited to, fair value of underlying investments
in the major category, significant investment strategies, redemption
restrictions, and unfunded commitments related to investments in the major
category. The
amendments in this update are effective for interim and annual periods ending
after December 15, 2009 with early application permitted. The Company does not
expect that the implementation of ASC Update No. 2009-12 will have a material
effect on its financial position or results of operations.
In June
2009, FASB issued Statement of Financial Accounting Standards No. 167,
AMENDMENTS TO FASB INTERPRETATION NO. 46(R) ("Statement No. 167"). Statement No.
167 amends FASB Interpretation No. 46R, CONSOLIDATION OF VARIABLE INTEREST
ENTITIES AN INTERPRETATION OF ARB NO. 51 ("FIN 46R") to require an analysis to
determine whether a company has a controlling financial interest in a variable
interest entity. This analysis identifies the primary beneficiary of a variable
interest entity as the enterprise that has a) the power to direct the activities
of a variable interest entity that most significantly impact the entity's
economic performance and b) the obligation to absorb losses of the entity that
could potentially be significant to the variable interest entity or the right to
receive benefits from the entity that could potentially be significant to the
variable interest entity. The statement requires an ongoing assessment of
whether a company is the primary beneficiary of a variable interest entity when
the holders of the entity, as a group, lose power, through voting or similar
rights, to direct the actions that most significantly affect the entity's
economic performance. This statement also enhances disclosures about a company's
involvement in variable interest entities. Statement No. 167 is effective as of
the beginning of the first annual reporting period that begins after November
15, 2009. Although Statement No. 167 has not been incorporated into the
Codification, in accordance with ASC 105, the standard shall remain
authoritative until it is integrated. The Company does not expect the adoption
of Statement No. 167 to have a material impact on its financial position or
results of operations.
NOTE 6
MINING OPERATION
On August
31, 2005, the government of Sierra Leone issued a mining license to for a
section of the Sewa River. On February 8, 2008 (pre-incorporation). The Company
was assigned the mining license to this area. The license is renewable every
three years. Both a license from the government and mining lease are
required.
On
January 26, 2008 (pre-incorporation), the Company entered into a mining
agreement to dredge mine land in the towns of Gandorhun and Njala in the Tikonko
Chiefdom. Bo District of Sierra Leone. This area is known as the Baimbawai Pool
of the Sewa River located between those two towns. The pool is owned by
individuals from two villages, Gandorhun and Njala, located on either side of
the river, and is reachable by vehicle. The site is free of natural rock
formations, and may have precious mineral deposit from river wash through the
natural tributary of the Sewa River.
Dredge
mining is considered open-pit mining, where dredge rigs work the bottom and
sides of the river pool, and retrieved material is washed through a screening
process to reveal precious minerals. The Company operates one dredge machine and
plans on expansion through an additional dredge rig and seeking additional
mining claims within Sierra Leone. Machinery is petroleum powered and readily
capable of operation with routine maintenance. Fuel is readily available as of
November 30, 2009. However, disruptions to fuel supplies may occur if civil
unrest in the area were to occur. Significant efforts of the Company have been
the acquisition of equipment to support dredge operations.
NOTE 7
SUBSEQUENT EVENTS
The
Company has evaluated subsequent events from November 30, 2009 through the date
of this report, and determined there are no items to
disclose.
16