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EX-31.1 - SECTION 302 CERTIFICATION - Century Cobalt Corp.ex31-1.txt
EX-32.1 - SECTION 906 CERTIFICATION - Century Cobalt Corp.ex32-1.txt

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-Q

[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange
    Act of 1934

                For the quarterly period ended February 28, 2011

[ ] Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act
    of 1934

               For the transition period __________ to __________

                        Commission File Number: 000-54327


                           FIRST AMERICAN SILVER CORP.
        (Exact name of small business issuer as specified in its charter)

           Nevada                                         98-0579157
(State or other jurisdiction of                (IRS Employer Identification No.)
 incorporation or organization)

10900 N.E. 4th Street, Suite 2300, Bellevue, Washington, USA     98004
          (Address of principal executive offices)            (Zip Code)

                                 (425) 698-2030
              (Registrant's telephone number, including area code)

                                       N/A
              (Former name, former address and former fiscal year,
                         if changed since last report)

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

Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). [ ] YES [ ] NO

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a small reporting company. See
the definitions of "large accelerated filer", "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ]                        Accelerated filer [ ]
Non-accelerated filer  [ ]                         Smaller reporting company [X]
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act [ ] YES [X] NO

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                   PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant has filed all documents and reports required to be
filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. [ ] YES [ ] NO

                      APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

54,450,000 common shares issued and outstanding as of April 14, 2011

TABLE OF CONTENTS PART I - FINANCIAL INFORMATION Item 1. Financial Statements........................................... 3 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation....................................... 16 Item 3. Quantitative and Qualitative Disclosures about Market Risk..... 21 Item 4. Controls and Procedures........................................ 21 PART II - OTHER INFORMATION Item 1. Legal Proceedings.............................................. 22 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.... 22 Item 3. Defaults upon Senior Securities................................ 22 Item 4. [Removed and Reserved]......................................... 22 Item 5. Other Information.............................................. 22 Item 6. Exhibits....................................................... 22 SIGNATURES................................................................... 24 2
PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended February 28, 2011 are not necessarily indicative of the results that can be expected for the full year. 3
FIRST AMERICAN SILVER CORP. (formerly Mayetok, Inc.) (AN EXPLORATION STAGE COMPANY) BALANCE SHEETS (unaudited) AS OF FEBRUARY 28, 2011 AND NOVEMBER 30, 2010 February 28, November 30, 2011 2010 ---------- ---------- ASSETS Current assets Cash and bank accounts $ 189,685 $ 238,205 Prepaid expenses 800 -- ---------- ---------- Total current assets 190,485 238,205 Website development 5,000 -- Mineral properties 180,000 180,000 ---------- ---------- Total assets $ 375,485 $ 418,205 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 18,235 $ 36,501 Accrued professional fees 6,600 5,600 Due to related party 1,850 1,850 ---------- ---------- Total liabilities 26,685 43,951 ---------- ---------- Stockholders' Equity Preferred stock, par value $0.001, 20,000,000 shares authorized, no shares issued and outstanding -- -- Common stock, par value $0.001, 3,500,000,000 shares authorized, 54,450,000 shares issued and outstanding (2010: 78,300,000) 54,450 78,300 Additional paid-in capital 383,068 359,218 Common stock warrants 12,482 12,482 Deficit accumulated during the exploration stage (101,200) (75,746) ---------- ---------- Total stockholders' equity 348,800 374,254 ---------- ---------- Total liabilities and stockholders' equity $ 375,485 $ 418,205 ========== ========== The accompanying notes are an integral part of these financial statements 4
FIRST AMERICAN SILVER CORP. (formerly Mayetok, Inc.) (AN EXPLORATION STAGE COMPANY) STATEMENTS OF OPERATIONS (unaudited) FOR THE THREE MONTHS ENDED FEBRUARY 28, 2011 AND 2010 AND THE PERIOD FROM APRIL 29, 2008 (INCEPTION) TO FEBRUARY 28, 2011 Three Months Three Months April 29, 2008 Ended Ended (Inception) To February 28, February 28, February 28, 2011 2010 2011 ------------ ------------ ------------ REVENUE $ -- $ -- $ -- ------------ ------------ ------------ OPERATING EXPENSES Accounting and legal 9,329 1,500 57,975 Transfer agent and filing fees 1,320 -- 6,497 Miscellaneous fees 3,292 1,050 8,828 Investor relations 8,800 -- 8,800 Exploration costs 2,713 -- 2,713 Incorporation costs -- -- 1,387 General and administrative -- -- 15,000 ------------ ------------ ------------ TOTAL OPERATING EXPENSES (25,454) (2,550) (101,200) ------------ ------------ ------------ LOSS BEFORE PROVISION FOR INCOME TAX (25,454) (2,550) (101,200) PROVISION FOR INCOME TAX -- -- -- ------------ ------------ ------------ NET LOSS $ (25,454) $ (2,550) $ (101,200) ============ ============ ============ LOSS PER SHARE: Basic and Diluted $ (.00) $ (.00) ============ ============ WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: Basic and diluted 62,400,000 77,000,000 ============ ============ The accompanying notes are an integral part of these financial statements 5
FIRST AMERICAN SILVER CORP. (formerly Mayetok, Inc.) (AN EXPLORATION STAGE COMPANY) STATEMENT OF STOCKHOLDERS' EQUITY (unaudited) AS OF FEBRUARY 28, 2011 Deficit Accumulated Common Stock Additional During the Total --------------------- Paid in Common Stock Exploration Stockholders' Shares Amount Capital Warrants Stage Equity ------ ------ ------- -------- ----- ------ Inception, April 29, 2008 -- $ -- $ -- $ -- $ -- $ -- Shares issued to founder on June 30, 2008 @ $0.00028 per share 52,500,000 52,500 (37,500) -- -- 15,000 Private placement on April 30, 2008 @ $0.00143 per share 24,500,000 24,500 10,500 -- -- 35,000 Net loss for the year -- -- -- -- (13,639) (13,639) ----------- -------- -------- -------- --------- -------- Balance, November 30, 2008 77,000,000 77,000 (27,000) -- (13,639) 36,361 Net loss for the year -- -- -- -- (16,345) (16,345) ----------- -------- -------- -------- --------- -------- Balance, November 30, 2009 77,000,000 77,000 (27,000) -- (29,984) 20,016 Private placement on October 29, 2010 @ $0.25 per share 1,000,000 1,000 236,518 12,482 -- 250,000 Common stock issued in relation to acquisition of mineral properties 300,000 300 149,700 -- -- 150,000 Net loss for the year -- -- -- (45,762) (45,762) ----------- -------- -------- -------- --------- -------- Balance, November 30, 2010 78,300,000 78,300 359,218 12,482 (75,746) 374,254 Cancellation of stock (23,850,000) (23,850) 23,850 -- -- -- Net loss for the period -- -- -- -- (25,454) (25,454) ----------- -------- -------- -------- --------- -------- Balance, February 28, 2011 54,450,000 $ 54,450 $383,068 $ 12,482 $(101,200) $348,800 =========== ======== ======== ======== ========= ======== The accompanying notes are an integral part of these financial statements 6
FIRST AMERICAN SILVER CORP. (formerly Mayetok, Inc.) (AN EXPLORATION STAGE COMPANY) STATEMENTS OF CASH FLOWS (unaudited) FOR THE THREE MONTHS ENDED FEBRUARY 28, 2011 AND 2010 AND THE PERIOD FROM APRIL 29, 2008 (INCEPTION) TO FEBRUARY 28, 2011 Three Months Three Months April 29, 2008 Ended Ended (Inception) To February 28, February 28, February 28, 2011 2010 2011 ---------- ---------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss for the period $ (25,454) $ (2,550) $ (101,200) Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities: Changes in operating assets and liabilities: (Increase) Decrease in prepaid expenses (800) -- (800) Increase in accounts payable (18,266) (1,950) 18,235 Increase in accrued professional fees 1,000 -- 6,600 Increase in due to related party -- -- 1,850 ---------- ---------- ---------- CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES (43,520) (4,500) (75,315) CASH FLOWS FROM INVESTING ACTIVITIES Increase in website development (5,000) (5,000) Acquisition of mineral properties -- -- (30,000) ---------- ---------- ---------- CASH FLOWS USED IN INVESTING ACTIVITIES (5,000) -- (35,000) ---------- ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from the issuance of common stock -- -- 300,000 ---------- ---------- ---------- CASH FLOWS PROVIDED BY FINANCING ACTIVITIES -- -- 300,000 ---------- ---------- ---------- NET INCREASE (DECREASE) IN CASH (48,520) (4,500) 189,685 CASH, BEGINNING OF PERIOD 238,205 10,516 -- ---------- ---------- ---------- CASH, END OF PERIOD $ 189,685 $ 6,016 $ 189,685 ========== ========== ========== SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for income taxes $ -- $ -- $ -- ========== ========== ========== Cash paid for interest $ -- $ -- $ -- ========== ========== ========== SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES: Common stock issued to acquire mineral properties $ -- $ -- $ 150,000 ========== ========== ========== The accompanying notes are an integral part of these financial statements 7
FIRST AMERICAN SILVER CORP. (formerly Mayetok, Inc.) (AN EXPLORATION STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 2011 NOTE 1 - NATURE OF OPERATIONS Mayetok, Inc. ("the Company") was incorporated in the state of Nevada on April 29, 2008. On June 8, 2010, the Company changed its name to First American Silver Corp. In October 2010, the Company entered into Property Option Agreements to acquire 100% interests in three mineral properties located in Nevada for prospecting, exploration and production of gold, silver, and all other metals. Development and exploration activities are currently being undertaken. NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES EXPLORATION STAGE COMPANY The accompanying financial statements have been prepared in accordance with generally accepted accounting principles related to accounting and reporting by exploration-stage companies. An exploration-stage company is one in which planned principal operations have not commenced or if its operations have commenced, there has been no significant revenues there from. BASIS OF PRESENTATION The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in US dollars. ACCOUNTING BASIS The Company uses the accrual basis of accounting and accounting principles generally accepted in the United States of America ("GAAP" accounting). The Company has adopted a November 30 fiscal year end. CASH AND CASH EQUIVALENTS The Company considers all highly liquid investments with maturities of three months or less to be cash equivalents. At February 28, 2011 and November 30, 2010, the Company had $189,685 and $238,205 of unrestricted cash to be used for future business operations. The Company's bank accounts are deposited in insured institutions. The funds are insured up to $250,000. At times, the Company's bank deposits may exceed the insured amount. Management believes it has little risk related to the excess deposits. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company's financial instruments consist of cash, prepaid expenses, accounts payable, accrued professional fees, and amount due to related party. The carrying amount of these financial instruments approximates fair value due to either length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements. 8
FIRST AMERICAN SILVER CORP. (formerly Mayetok, Inc.) (AN EXPLORATION STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 2011 NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) CONCENTRATIONS OF CREDIT RISK The Company maintains its cash in bank deposit accounts, the balances of which at times may exceed federally insured limits. The Company continually monitors its banking relationships and consequently has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash and cash equivalents. STOCK-BASED COMPENSATION The Company accounts for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, COMPENSATION - STOCK COMPENSATION which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. There has been no stock-based compensation issued to employees. The Company follows ASC Topic 505-50, formerly EITF 96-18, "ACCOUNTING FOR EQUITY INSTRUMENTS THAT ARE ISSUED TO OTHER THAN EMPLOYEES FOR ACQUIRING, OR IN CONJUNCTION WITH SELLING GOODS AND SERVICES," for stock options and warrants issued to consultants and other non-employees. In accordance with ASC Topic 505-50, these stock options and warrants issued as compensation for services provided to the Company are accounted for based upon the fair value of the services provided or the estimated fair market value of the option or warrant, whichever can be more clearly determined. The fair value of the equity instrument is charged directly to compensation expense and additional paid-in capital over the period during which services are rendered. There has been no stock-based compensation issued to non-employees. INCOME TAXES Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized. It is the Company's policy to classify interest and penalties on income taxes as interest expense or penalties expense. As of February 28, 2011, there have been no interest or penalties incurred on income taxes. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. 9
FIRST AMERICAN SILVER CORP. (formerly Mayetok, Inc.) (AN EXPLORATION STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 2011 NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) REVENUE RECOGNITION The Company is in the exploration stage and has yet to realize revenues from operations. Once the Company has commenced operations, it will recognize revenues when delivery of goods or completion of services has occurred provided there is persuasive evidence of an agreement, acceptance has been approved by its customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection of any related receivable is probable. BASIC INCOME (LOSS) PER SHARE Basic income (loss) per share is calculated by dividing the Company's net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company's net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. Common share equivalents totalling 1,000,000 at February 28, 2011, representing outstanding warrants were not included in the computation of diluted earnings per share for the year ended February 28, 2011, as their effect would have been anti-dilutive. There were no such common stock equivalents outstanding as of February 28, 2011. On June 8, 2010, the Company affected a 35:1 forward stock split of its common shares. All share and per share data have been adjusted to reflect such stock split. DIVIDENDS The Company has not adopted any policy regarding payment of dividends. No dividends have been paid during the periods shown. MINERAL PROPERTIES Costs of exploration, carrying and retaining unproven mineral lease properties are expensed as incurred. Mineral property acquisition costs are capitalized including licenses and lease payments. Although the Company has taken steps to verify title to mineral properties in which it has an interest, these procedures do not guarantee the Company's title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects. Impairment losses are recorded on mineral properties used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amount. RECENT ACCOUNTING PRONOUNCEMENTS First American Silver does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company's results of operations, financial position or cash flows. 10
FIRST AMERICAN SILVER CORP. (formerly Mayetok, Inc.) (AN EXPLORATION STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 2011 NOTE 3 - MINERAL PROPERTIES MOUNTAIN CITY PROPERTY On October 29, 2010 the Company entered into a Property Option Agreement with All American Resources. Pursuant to this agreement, the Company has the option to acquire a 100% interest in the Elko Property making payments in aggregate of $180,000, a $1,000,000 or $2,000,000 final balloon payment (see October 29, 2020 below), issuing 300,000 common shares and by paying all property maintenance fees and obligations as they come due. The payments are to completing under the following terms: Date Cash Common Stock ---- ---- ------------ November 2, 2010 $ 10,000 100,000 Paid October 29, 2012 -- 25,000 October 29, 2013 $ 10,000 25,000 October 29, 2014 $ 10,000 25,000 October 29, 2015 $ 10,000 25,000 October 29, 2016 $ 20,000 25,000 October 29, 2017 $ 30,000 25,000 October 29, 2018 $ 40,000 25,000 October 29, 2019 $ 50,000 25,000 October 29, 2020 $1,000,000 In case of $1,000,000 payment, or the optionor shall retain a 2% $2,000,000 NSR (Net Smelter Royalty). In case of a $2,000,000, the optionor shall retain a 1% NSR. EAGAN CANYON PROPERTY On October 29, 2010 the Company entered into a Property Option Agreement with All American Resources. Pursuant to this agreement, the Company has the option to acquire a 100% interest in the White Pine Property #1 making payments in aggregate of $180,000, a $1,000,000 or $2,000,000 final balloon payment (see October 29, 2020 below), issuing 300,000 common shares and by paying all property maintenance fees and obligations as they come due. The payments are to completing under the following terms: Date Cash Common Stock ---- ---- ------------ November 2, 2010 $ 10,000 100,000 Paid October 29, 2012 -- 25,000 October 29, 2013 $ 10,000 25,000 October 29, 2014 $ 10,000 25,000 October 29, 2015 $ 10,000 25,000 October 29, 2016 $ 20,000 25,000 October 29, 2017 $ 30,000 25,000 October 29, 2018 $ 40,000 25,000 October 29, 2019 $ 50,000 25,000 October 29, 2020 $1,000,000 In case of $1,000,000 payment, or the optionor shall retain a 2% $2,000,000 NSR (Net Smelter Royalty). In case of a $2,000,000, the optionor shall retain a 1% NSR. 11
FIRST AMERICAN SILVER CORP. (formerly Mayetok, Inc.) (AN EXPLORATION STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 2011 NOTE 3 - MINERAL PROPERTIES (CONTINUED) MUNCY CREEK PROPERTY On October 29, 2010 the Company entered into a Property Option Agreement with All American Resources. Pursuant to this agreement, the Company has the option to acquire a 100% interest in the White Pine Property #2 making payments in aggregate of $180,000, a $1,000,000 or $2,000,000 final balloon payment (see October 29, 2020 below), issuing 300,000 common shares and by paying all property maintenance fees and obligations as they come due. The payments are to completing under the following terms: Date Cash Common Stock ---- ---- ------------ November 2, 2010 $ 10,000 100,000 Paid October 29, 2012 -- 25,000 October 29, 2013 $ 10,000 25,000 October 29, 2014 $ 10,000 25,000 October 29, 2015 $ 10,000 25,000 October 29, 2016 $ 20,000 25,000 October 29, 2017 $ 30,000 25,000 October 29, 2018 $ 40,000 25,000 October 29, 2019 $ 50,000 25,000 October 29, 2020 $1,000,000 In case of $1,000,000 payment, or the optionor shall retain a 2% $2,000,000 NSR (Net Smelter Royalty). In case of a $2,000,000, the optionor shall retain a 1% NSR. NOTE 4 - RELATED PARTY TRANSACTION As of February 28, 2011, there is a balance owing to a former director of the Company in the amount of $1,850. The amount is unsecured, non-interest bearing and has no specific terms of repayment. NOTE 5 - COMMON STOCK WARRANTS On October 29, 2010, the Company issued 1,000,000 common stock warrants in connection with a private placement to an unrelated third party. The Company has accounted for these warrants as equity instruments in accordance with EITF 00-19 (ASC 815-40), Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company's Own Stock, and as such, will be classified in stockholders' equity as they meet the definition of "...indexed to the issuer's stock" in EITF 01-06 (ASC 815-40) The Meaning of Indexed to a Company's Own Stock. The Company has estimated the fair value of the warrants issued in connection with the private placements at $12,482 as of the grant date using the Black-Scholes option pricing model. 12
FIRST AMERICAN SILVER CORP. (formerly Mayetok, Inc.) (AN EXPLORATION STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 2011 NOTE 5 - COMMON STOCK WARRANTS (CONTINUED) Key assumptions used by the Company in the Black-Scholes pricing model are summarized as follows: PPM Warrants ------------ Stock price $ .25 Exercise price .50 Expected volatility 42% Expected dividend yield 0.00% Risk-free rate over the estimated expected term of the warrants .34% Expected term (in years) 2 The warrants issued in connection with the private placement have been accounted for as an equity transaction for the year ended November 30, 2010. NOTE 6 - STOCKHOLDERS' EQUITY The company has 3,500,000,000 common shares authorized at a par value of $0.001 per share. The company has 20,000,000 preferred shares authorized at a par value of $0.001 per share. During the period ended November 30, 2008, the Company issued 77,000,000 common shares for total proceeds of $50,000. On June 8, 2010, the Company affected a 35:1 forward stock split of its common shares. All share and per share data have been adjusted to reflect such stock split. On October 29, 2010, the Company completed a private placement whereby it issued 1,000,000 units at $0.25 each for gross proceeds of $250,000 to an unrelated third party. Each unit consists of one common share and one share purchase warrant exercisable at a price of $0.50 expiring on October 29, 2012. On November 26, 2010, the Company issued 300,000 common shares as part of the acquisition of interests in three mineral properties. These shares were valued at a fair market value of $.50 per share on the date of issuance for total proceeds of $150,000. On December 20, 2010, 23,850,000 common shares were cancelled. As at February 28, 2011, the Company has 1,000,000 warrants outstanding which are exercisable at $0.50 per warrant and expire on October 29, 2012. 13
FIRST AMERICAN SILVER CORP. (formerly Mayetok, Inc.) (AN EXPLORATION STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 2011 NOTE 7 - INCOME TAXES For the periods ended February 28, 2011 and 2010, the Company has incurred net losses and, therefore, has no tax liability. The net deferred tax asset generated by the loss carry-forward has been fully reserved. The cumulative net operating loss carry-forward is $101,200 at February 28, 2011, and will begin to expire in the year 2030. The provision for Federal income tax consists of the following: February 28, February 28, 2011 2010 -------- -------- Federal income tax attributable to: Current operations $ 8,654 $ 868 Less: valuation allowance (8,654) (868) -------- -------- Net provision for Federal income taxes $ -- $ -- ======== ======== The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows: February 28, November 30, 2011 2010 -------- -------- Deferred tax asset attributable to: Net operating loss carryover $ 34,408 $ 25,754 Less: valuation allowance (34,408) (25,754) -------- -------- Net deferred tax asset $ -- $ -- ======== ======== Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur net operating loss carry forwards may be limited as to use in future years. NOTE 8 - COMMITMENTS AND CONTINGINCIES On November 26, 2010 we entered into three agreements with All American Resources LLC in regards to the acquisition of certain property interests. The interests that we have acquired are as follows: * An option to acquire a 100% interest in a mineral exploration property called the "Eagan Canyon" property in White Pine County, Nevada; * An option to acquire a 100% interest in a mineral exploration property called the "Muncy Creek" property in White Pine County, Nevada; and * An option to acquire a 100% interest in a mineral exploration property called the "Mountain City" property in Elko County, Nevada. 14
FIRST AMERICAN SILVER CORP. (formerly Mayetok, Inc.) (AN EXPLORATION STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 2011 NOTE 8 - COMMITMENTS AND CONTINGINCIES (CONTINUED) In regard to the above option agreements for the properties, our obligations for each property consist of: Making payments in the aggregate amount of $180,000 in annual periodic payments ranging from $10,000 to $50,000, to the ninth anniversary of the option agreement. Make certain restricted common stock share issuances to All American Resources LLC under the terms of the option agreements, periodically to the ninth anniversary of the agreement (300,000 shares in regards to each property, with 100,000 shares in the first year and 25,000 shares each year thereafter). On or before the tenth anniversary of the option agreement, in addition to the payments described above, paying to All American Resources $1,000,000, in which case All American Resources shall retain a two percent (2%) mineral production royalty (the "Royalty") or, paying to All American Resources $2,000,000, in which case All American Resources shall retain a one percent (1%) royalty. The officers and directors of the Company are involved in other business activities and may, in the future, become involved in other business opportunities that become available. They may face a conflict in selecting between the Company and other business interests. The Company has not formulated a policy for the resolution of such conflicts. NOTE 9 - GOING CONCERN The accompanying financial statements have been prepared assuming that the company will continue as a going concern. The Company has no established source of revenue. This raises substantial doubt about the Company's ability to continue as a going concern. Without realization of additional capital, it would be unlikely for the Company to continue as a going concern. The financial statements do not include any adjustments that might result from this uncertainty. The Company's activities to date have been supported by equity financing. It has sustained losses in all previous reporting periods with an inception to date loss of $101,200 as of February 28, 2011. Management continues to seek funding from its shareholders and other qualified investors. NOTE 10 - SUBSEQUENT EVENTS Management has analyzed its operations through the date on which the financial statements were issued, April 11, 2011, and has determined it does not have any material subsequent events to disclose. 15
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FORWARD-LOOKING STATEMENTS This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results. Our unaudited financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report. In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars. All references to "US$" refer to United States dollars and all references to "common stock" refer to the common shares in our capital stock. As used in this quarterly report, the terms "we", "us", "our" and "our company" mean First American Silver Corp., unless otherwise indicated. OVERVIEW We were incorporated in the State of Nevada on April 29, 2008, under the name "Mayetok, Inc.". As Mayetok, Inc. we were engaged in the development of a website to market vacation properties in the Ukraine. On June 8, 2010, we initiated a 1 old for 35 new forward stock split of our issued and outstanding common stock. As a result, our authorized capital increased from 100,000,000 to 3,500,000,000 shares of common stock and the issued and outstanding increased from 2,200,000 shares of common stock to 77,000,000 shares of common stock, all with a par value of $0.001. On December 20, 2010, we cancelled 23,850,000 common shares held by a former director and officer of our company. Also on June 8, 2010, we changed our name from "Mayetok, Inc." to "First American Silver Corp.", by way of a merger with our wholly owned subsidiary First American Silver Corp., which was formed solely for the change of name. We changed the name of our company to reflect the new direction of our company in the business of acquiring, exploring and developing mineral properties. As of June, 2010, we had abandoned our former business plan of seeking to market vacation properties. Our name change and forward stock split was effective with the Over-the-Counter Bulletin Board at the opening of trading on June 16, 2010, on which date we adopted the stock symbol "FASV". OUR CURRENT BUSINESS On November 26, 2010 we entered into three option agreements with All American Resources LLC for the acquisition of certain mineral property interests located Elko County and White Pine County, Nevada. The interests that we have acquired are as follows: 16
* An option to acquire a 100% interest in a mineral exploration property called the "Eagan Canyon" property in White Pine County, Nevada; * An option to acquire a 100% interest in a mineral exploration property called the "Muncy Creek" property in White Pine County, Nevada; and * An option to acquire a 100% interest in a mineral exploration property called the "Mountain City" property in Elko County, Nevada. Pursuant to the above described option agreements, we may, at our option, purchase any of the applicable properties by providing to All American Resources LLC the following compensation in respect of each applicable property over the nine year option term: * making annual periodic payments in the aggregate amount of $180,000 ranging from $10,000 to $50,000; * issuing to All American Resources 300,000 common shares in our capital stock in the aggregate, with 100,000 shares issuable before the 1st anniversary of the option agreement and 25,000 shares issuable each year thereafter until the ninth anniversary of the option agreement; and * on or before the tenth anniversary of the option agreement either (i) paying to All American Resources $1,000,000, in which case All American Resources shall retain a 2% mineral production royalty; or (ii) paying to All American Resources $2,000,000, in which case All American Resources shall retain a 1% mineral production royalty. To date, we issued 300,000 shares of our common stock and paid $30,000 in the aggregate to All American Resources LLC pursuant to the three mineral property option agreement. As a result our entry into the option agreements for the Eagan Canyon, Muncy Creek, and Mountain City properties, we became a mineral exploration company and presently endeavor to plan and implement an exploration program for those properties commencing in 2012. Currently, however, we maintain nominal operations and are seeking additional sources of financing or collaborators to further the development of our business plan. If we are unable to secure additional financing, we will be unable to develop or implement our new business plan, including our prospective exploration plan, and our business may fail. We are a development stage company that has not generated any revenue and has had limited operations to date. From April 29, 2008 (inception) to February 28, 2010, we have incurred accumulated net losses of $101,200. As of February 28, 2010, we had total assets of $375,485 and total liabilities of $26,685. Based on our financial history since inception, our independent auditor has expressed doubt as to our ability to continue as a going concern. 17
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED FEBRUARY 28, 2011 AND 2010 AND THE PERIOD FROM INCEPTION (APRIL 30, 2008) TO FEBRUARY 28, 2011 We have not earned any revenues from inception through the period ending February 28, 2011. April 30, 2008 Three Months Three Months (Inception) Ended Ended through February 28, February 28, February 28, 2011 2010 2011 ---------- ---------- ---------- Revenues $ Nil $ Nil $ Nil Expenses $ (25,454) $ (2,550) $ (101,200) Net Loss $ (25,454) $ (2,550) $ (101,200) We incurred a net loss in the amount of $25,454 for the three months ended February 28, 2011 compared to $2,550 for the three months ended February 28, 2010. We incurred a net loss of $101,200 for the period from our inception on April 29, 2008 to February 28, 2011. April 30, 2008 Three Months Three Months (Inception) Ended Ended through February 28, February 28, February 28, 2011 2010 2011 ---------- ---------- ---------- Accounting and legal $ 9,329 $ 1,500 $ 57,975 Transfer agent and filing fees $ 1,320 $ Nil $ 6,497 Miscellaneous fees $ 3,292 $ 1,050 $ 8,828 Investor relations $ 8,880 $ Nil $ 8,880 Explorations costs $ 2,713 $ Nil $ 2,713 Incorporation costs $ Nil $ Nil $ 1,387 General and administrative $ Nil $ Nil $ 15,000 Our operating expenses incurred for the three months ended February 28, 2011 included $9,329 for accounting and legal fees, $1,320 in transfer agent and filing fees, $3,292 in miscellaneous fees, $8,880 in investor relations expenses, $2,713 in exploration costs compared the three months ended February 28, 2010 of $1,500 for accounting and legal fees and $1,050 in miscellaneous expenses. Our operating expenses incurred for the period from our inception on April 29, 2008 to February 28, 2011 included $57,975 for accounting and legal fees, $6,497 in transfer agent and filing fees, $8,828 in miscellaneous fees, $8,880 in investor relations expenses, $2,713 in exploration costs, $1,387 in incorporation costs and $15,000 in general and administrative expenses. We anticipate our operating expenses will increase as we undertake our plan of operations. LIQUIDITY AND CAPITAL RESOURCES WORKING CAPITAL At February 28, November 30, 2011 2010 ---------- ---------- Current Assets $ 190,485 $ 238,205 Current Liabilities $ 26,685 $ 43,951 Working Capital $ 163,800 $ 194,254 18
CASH FLOWS Three Months Three Months April 30, 2008 Ended Ended (Inception) to February 28, February 28, February 28, 2011 2010 2011 -------- -------- -------- Net Cash Provided by (Used in) Operating Activities $(43,520) $ (4,500) $(75,315) Net Cash Provided by (Used In) Investing Activities $ (5,000) $ Nil $(35,000) Net Cash Provided by Financing Activities $ Nil $ Nil $300,000 Net Increase (Decrease) In Cash During The Period $(48,520) $ (4,500) $189,685 As of February 28, 2011, our company had a working capital deficit of $163,800. As of February 28, 2011, we had current assets in the amount of $190,485, consisting of cash and prepaid expenses. Our current liabilities as of February 28, 2011 were $26,685. Thus we had a working capital deficit of $163,800 on February 28, 2011. Our cash used in operating activities was $43,520 for the three months ended February 28, 2011 and $4,500 for the same period in 2010 and $75,315 for the period from inception on April 29, 2008 to February 28, 2011. Our cash used in investing activities was $5,000 for the three months ended February 28, 2011 and $Nil for the same period in 2010 and $3,500 for the period from inception on April 29, 2008 to February 28, 2011. Our cash used in financing activities was $Nil for the three months ended February 28, 2011 and $Nil for the same period in 2010 and $300,000 for the period from inception on April 29, 2008 to February 28, 2011. We have not attained profitable operations and are dependent upon obtaining financing to pursue our business plan over the next twelve months. If we do not generate revenue sufficient to sustain operations, we may not be able to continue as a going concern. OFF BALANCE SHEET ARRANGEMENTS We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders. GOING CONCERN The accompanying financial statements have been prepared assuming that our company will continue as a going concern. As discussed in the notes to the financial statements, we have no established source of revenue. Our auditors have expressed substantial doubt about our ability to continue as a going concern. Without realization of additional capital, it would be unlikely for us to continue as a going concern. The financial statements do not include any adjustments that might result from this uncertainty. Our activities to date have been supported by equity financing. We have sustained losses in all previous reporting periods with an inception to date loss of $101,200 as of February 28, 2011. Management continues to seek funding from its shareholders and other qualified investors to pursue our business plan. In the alternative, we may be amenable to a sale, merger or other acquisition in the event such transaction is deemed by management to be in the best interests of the shareholders. CRITICAL ACCOUNTING POLICIES In December 2001, the SEC requested that all registrants list their most "critical accounting polices" in the Management Discussion and Analysis. The SEC indicated that a "critical accounting policy" is one which is both important to the portrayal of a company's financial condition and results, and requires 19
management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. We believe that the following accounting policies fit this definition. BASIS OF PRESENTATION The financial statements of our company have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in US dollars. ACCOUNTING BASIS Our company uses the accrual basis of accounting and accounting principles generally accepted in the United States of America ("GAAP" accounting). Our company has adopted a November 30 fiscal year end. CASH AND CASH EQUIVALENTS Our company considers all highly liquid investments with maturities of three months or less to be cash equivalents. At February 28, 2011 and November 30, 2010, we had $189,685 and $238,205 of unrestricted cash to be used for future business operations. Our company's bank accounts are deposited in insured institutions. The funds are insured up to $250,000. At times, our bank deposits may exceed the insured amount. Management believes it has little risk related to the excess deposits. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company's financial instruments consist of cash, prepaid expenses, accounts payable, accrued professional fees, and amount due to related party. The carrying amount of these financial instruments approximates fair value due to either length of maturity or interest rates that approximate prevailing market rates unless otherwise disclosed in these financial statements. INCOME TAXES Income taxes are computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized. It is our company's policy to classify interest and penalties on income taxes as interest expense or penalties expense. As of February 28, 2011, there have been no interest or penalties incurred on income taxes. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. BASIC INCOME (LOSS) PER SHARE Basic income (loss) per share is calculated by dividing our company's net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by our company's net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. Common share equivalents totaling 1,000,000 at February 28, 2011, representing outstanding warrants were not included in the computation of diluted earnings per share for the year ended February 28, 2011, as their effect would have been anti-dilutive. There were no such common stock equivalents outstanding as of February 28, 2011. 20
On June 8, 2010, we affected a 35:1 forward stock split of its common shares. All share and per share data have been adjusted to reflect such stock split. DIVIDENDS We have not adopted any policy regarding payment of dividends. No dividends have been paid during the periods shown. MINERAL PROPERTIES Costs of exploration, carrying and retaining unproven mineral lease properties are expensed as incurred. Mineral property acquisition costs are capitalized including licenses and lease payments. Although our company has taken steps to verify title to mineral properties in which it has an interest, these procedures do not guarantee our company's title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects. Impairment losses are recorded on mineral properties used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amount. RECENT ACCOUNTING PRONOUNCEMENTS Our company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on our company's results of operations, financial position or cash flows. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As a "smaller reporting company", we are not required to provide the information required by this Item. ITEM 4. CONTROLS AND PROCEDURES MANAGEMENT'S REPORT ON DISCLOSURE CONTROLS AND PROCEDURES Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management carried out an evaluation under the supervision and with the participation of our chief executive officer and chief financial officer (our principal executive officer, principal financial officer and principal accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act"). Based upon that evaluation, our chief executive officer and chief financial officer (our principal executive officer, principal financial officer and principal accounting officer) have concluded that our disclosure controls and procedures were not effective as of February 28, 2011, due to the material weaknesses resulting from i) a lack of a formally adopted and written code of business conduct and ethics that governs to our company's employees, officers and directors; ii) controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements; and, iii) controls were not designed and in place to ensure that equity transactions were properly reflected. Please refer to our Annual Report on Form 10-K as filed with the SEC on October 15, 2010, for a complete discussion relating to the foregoing evaluation of Disclosures and Procedures. 21
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING There were no changes in internal controls over financial reporting that occurred during the three months ended February 28, 2011, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS We did not have any previously unannounced unregistered sales of equity securities during the period covered by this report. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. [REMOVED AND RESERVED] ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS Exhibit Number Description ------ ----------- (3) (I) ARTICLES OF INCORPORATION; (II) BY-LAWS 3.1 Articles of Incorporation (Incorporated by reference to our Registration Statement filed on Form S-1 on February 25, 2009). 3.2 By-laws (Incorporated by reference to our Registration Statement filed on Form S-1 on February 25, 2009) 3.3 Certificate of Amendment (Incorporated by reference to our Registration Statement filed on Form S-1 on February 25, 2009). 3.4 Articles of Merger (Incorporated by reference to our Current Report filed on Form 8-K on July 15, 2010). 3.5 Certificate of Change (Incorporated by reference to our Current Report filed on Form 8-K on July 15, 2010). (4) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING INDENTURES 4.1 Sample Stock Certificate (Incorporated by reference to our Registration Statement filed on Form S-1 on February 25, 2009). 22
(10) MATERIAL CONTRACTS 10.1 Property Option Agreement between our company and All American Resources LLC with respect to the Mountain City claim (Incorporated by reference to our Current Report filed on Form 8-K on December 21, 2010). 10.2 Property Option Agreement between our company and All American Resources LLC with respect to the Eagan Canyon claim (Incorporated by reference to our Current Report filed on Form 8-K on December 21, 2010). 10.3 Property Option Agreement between our company and All American Resources LLC with respect to the Muncy Creek claim (Incorporated by reference to our Current Report filed on Form 8-K on December 21, 2010). (31) RULE 13A-14(A) / 15D-14(A) CERTIFICATIONS 31.1* Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer. (32) SECTION 1350 CERTIFICATIONS 32.1* Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer. ---------- * Filed herewith. 23
SIGNATURES In accordance with the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. FIRST AMERICAN SILVER CORP. Date: April 14, 2011 /s/ Thomas Menning ----------------------------------------- Thomas Menning President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Director (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer) 2