Attached files
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| EX-31.1 - EXHIBIT 31.1 - SHAMIKA 2 GOLD, INC. | ex311.htm |
| EX-32.1 - EXHIBIT 32.1 - SHAMIKA 2 GOLD, INC. | ex321.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
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[X]
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
for the quarterly period ended June 30, 2010
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[ ]
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TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD ________TO ________
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Commission File Number: 333-126748
SHAMIKA 2 GOLD, INC.
(formerly known as Aultra Gold, Inc.).
(Exact name of small business issuer as specified in its charter)
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Nevada
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98-0448154
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(State or other jurisdiction of incorporation or
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(IRS Employer Identification No.)
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organization)
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1350 Broadway, 11th Floor
New York, New York 10018
(Address of principal executive offices)
(Registrant's telephone number, including area code (212) 216-8000)
Indicate by check mark whether the issuer (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. Yes þ No o
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 229.405 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 o No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o
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Smaller Reporting Company þ
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ
State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: As of May 17, 2011, the Issuer had 50,800,006 shares of common stock issued and outstanding.
*The Registrant is amending this Form 10-Q for the quarterly period ending June 30, 2010 to restate its financial statements in order to give effect to the reverse acquisition of the Registrant by Shamika Gold Inc.
1
SHAMIKA 2 GOLD, INC.
FOR THE QUARTER ENDED JUNE 30, 2010
TABLE OF CONTENTS
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PART I. FINANCIAL INFORMATION
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Page
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ITEM 1.
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Consolidated Financial Statements (unaudited and restated)
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Consolidated Balance Sheet at June 30, 2010 (unaudited and restated)
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F-2
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Consolidated Statement of Operations for the three months ended June 30, 2010 and the period from inception January 13, 2010 through June 30, 2010 (unaudited and restated)
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F-3
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Consolidated Statement of Cash Flows for the three months ended June 30, 2010 and the period from inception January 13, 2010 through June 30, 2010 (unaudited and restated)
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F-4
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Notes to Financial Statements (unaudited and restated)
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F-6-F-14
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ITEM 2
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Management’s Discussion and Analysis of Financial condition and Results of Operation
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4
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ITEM 3
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Quantitative and Qualitative Disclosures About Market Risk
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6
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ITEM 4
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Controls and Procedures
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6
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Legal Proceedings
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8
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Unregistered Sales of Equity Securities and Use of Proceeds
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9
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Defaults Upon Senior Securities
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9
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(Removed and Reserved)
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9
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Other Information
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9
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Exhibits
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9
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Signatures
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10
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2
PART I - FINANCIAL INFORMATION
The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-Q and Item 310(b) of Regulation S-B, and, therefore, do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows, and stockholders' equity in conformity with generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. Operating results for the period from inception January 13, 2010 to June 30, 2010 are not necessarily indicative of the results that can be expected for the year ending December 31, 2010.
As used in this Quarterly Report on Form 10-Q (the “Quarterly Report”), the terms "we", "us", "our", the “Company” and mean Shamika 2 Gold Inc., unless otherwise indicated. All dollar amounts in this Quarterly Report are in U.S. dollars unless otherwise stated.
F-1
An Exploration Stage Company
Consolidated Balance Sheet
As of June 30, 2010
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June 30,
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2010
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$
(unaudited and restated)
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A S S E T S
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Current Assets
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Mining properties
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500,002 | |||
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Total Assets
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$ | 500,002 | ||
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L I A B I L I T I E S A N D S T O C K H O L D E R S’ D E F I C I T
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Current Liabilities
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Accounts payable, notes payable and other accrued liabilities
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$ | 72,634 | ||
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Accounts payable related parties (note 4)
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87,691 | |||
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Accounts payable mining properties (note 5)
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459,000 | |||
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Total Liabilities
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$ | 619,325 | ||
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S TOCK H O L D E R S ’ E Q U I T Y
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Common stock, $0.001 par value, 500,000,000 shares authorized: 50,000,000 shares issued and outstanding
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$ | 500 | ||
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Accumulated deficit
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(119,823 | ) | ||
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Total stockholders’ deficit
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(119,323 | ) | ||
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Total liabilities and stockholders’ deficit
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$ | 500,002 | ||
See notes to financial statements
F-2
Shamika 2 Gold Inc.
An Exploration Stage Company
Consolidated Statement of Operations
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For the three months Ended June 30, 2010 (unaudited and restated)
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From inception January 13, 2010 through June 30, 2010 (unaudited and restated)
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R E V E N U E
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$ | - | $ | - | ||||
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Operating Expenses
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Mining property expenditures
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28,724 | 29,239 | ||||||
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Office and administrative
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26,660 | 30,160 | ||||||
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Legal and professional
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30,424 | 59,924 | ||||||
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Total operating expenses
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85,808 | 119,323 | ||||||
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Loss from operations
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85,808 | 119,323 | ||||||
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Other Revenues and Expenses
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Organization Expense
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- | 500 | ||||||
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Loss for period
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85,808 | 119,823 | ||||||
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Loss per shares - basic and diluted
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$ | 0.00 | $ | 0.00 | ||||
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Weighted Average Number of Shares Outstanding
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50,000,000 | 50,000,000 | ||||||
See notes to financial statements
F-3
An Exploration Stage Company
Consolidated Statement of Cash Flows
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From Inception January 13, 2010 to June 30, 2010
(unaudited and restated)
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Cash flows from operating activities
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Gain (Loss) for the period
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$ |
(119,823
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)
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Changes in:
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Accounts payable and accrued liabilities
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119,823
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Total change in cash for the period
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$ |
-
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Non-Cash investing activities
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Mining permits acquired in exchange for notes payable
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500,002
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See notes to financial statements
F-4
An Exploration Stage Company
June 30, 2010
(unaudited and restated)
1. Basis of Presentation
The condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (the “SEC”) for quarterly reports on Form 10-Q. In the opinion of management, all adjustments (consisting of normal and recurring adjustments) considered necessary for a fair statement of the results of the interim periods presented have been included. The results of operations for the period from inception January 13, 2010 to June 30, 2010 are not necessarily indicative of the results expected for the full year.
The Company is restating its historical financial statements for the quarter ended June 30, 2010. The restatement and resulting revisions primarily relate to the accounting for the reverse acquisition of Aultra by Shamika as well as other processing errors which resulted in expenses not being properly recorded and the reclassification of the statement of operations to reflect expenses by function. Accordingly, the Company’s financial statements for the three months ended June 30, 2010 have been restated to correct for these errors and are included in the accompanying condensed consolidated financial statements. For the three months ended June 30, 2010, these corrections in the aggregate reduced the Company’s previously reported net loss by $29,241 or $0.0006 per share. Note 7 provides the effect of the restatement on the June 30, 2010 condensed consolidated financial statements.
2. Nature of Operations
a) Organization and Change of Business
Aultra Gold Inc. (" Aultra"), was incorporated under the laws of the State of Nevada on January 26, 2005 and was primarily engaged in the acquisition and exploration of mining properties until April 2006. On April 26, 2006, there was a change in management and direction and Aultra engaged in the acquisition and licensing of online gaming technologies. In 2008 and 2009, Aultra changed strategy to focus on exploration and mining and had acquired interests in certain mining properties in Nevada, Oregon, and Montana.
On January 6, 2010, pursuant to a Stock Purchase Agreement, Dutch Gold Resources, Inc. (“Dutch Gold”) acquired 6.4 million shares of Aultra common stock which was a 67% controlling interest of Aultra for a purchase price of one million newly-issued shares of Dutch Gold’s common stock. On January 6, 2010, Aultra entered into an Asset Purchase Agreement (the “Agreement”) with Dutch Gold to be effective as of December 31, 2009 in which Aultra sold substantially all of its assets to Dutch Gold. As consideration for these assets, Dutch Gold issued 9,614,667 shares of its common stock, par value $0.001 per share, to the Aultra shareholders. In accordance with the transaction, Dutch Gold acquired substantially all of the assets related to Aultra’s gold and mineral business, including inventory, accounts receivable, certain supply and distribution and other vendor contracts, good will and other various assets and intangibles.
On January 13, 2010, Aultra entered into an Agreement and Plan of Share Exchange (the “Exchange”) with Shamika Gold Inc. ("SGI") and the shareholders of SGI pursuant to which Aultra acquired all of the outstanding shares of SGI. For accounting purposes, this is a reverse acquisition with SGI the accounting acquirer of Aultra. For legal purposes Aultra issued shares to the SGI shareholders followed by a merger and recapitalization of Aultra whereby SGI shares were cancelled and Aultra is the surviving entity.
SGI is a Canadian private corporation created by Articles of incorporation on January 13, 2010. SGI primary business activity consists of mining property acquisition, mineral exploration and development.
F-5
Shamika 2 Gold Inc.
An Exploration Stage Company
Notes to Financial Statements
June 30, 2010
(unaudited and restated)
2. Nature of Operations - continued
a) Organization and Change of Business - continued
As a result of the transaction, 50 million shares were outstanding with 25.5 million (approximately 51%) held by the SGI shareholders, 23.5 million issued to settle liabilities and obligations of Aultra and approximately 1 million held by the former Aultra shareholders.
Upon consummation of the Exchange, the business plan of SGI was adopted and Aultra changed its name to Shamika 2 Gold, Inc. (the “Company”).
b) Going Concern
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The Company’s financial statements are prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business.
As shown in the accompanying financial statements, the Company has incurred a net loss of $119,823 for the period from January 13, 2010 (inception) to June 30, 2010. The future of the Company is dependent upon its ability to obtain financing and upon future profitable operations from the development of acquisitions. Management has plans to seek additional capital through a private placement and public offering of its common stock. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
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3.
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Significant Accounting Policies
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a) Basis of Accounting
These consolidated financial statements are prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States of America and include our accounts and the accounts of our majority-owned controlled subsidiary. As the Company has not generated any revenues from is principal intended activity of mining operations, the Company is considered to be in the exploration stage. The Company currently operates in one reportable segment. Summarized below are those policies considered particularly significant to the Company.
b) Use of Estimates
The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of any contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenues earned and expenses incurred during the period. Actual results could differ from those estimates.
F-6
Shamika 2 Gold Inc.
An Exploration Stage Company
Notes to Financial Statements
June 30, 2010
(unaudited and restated)
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3.
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Significant Accounting Policies-continued
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c) Financial Instruments and Financial Risk
The Company’s financial instruments consists of cash, prepaid expenses, accounts payable and accrued liabilities, the fair values of which approximate their carrying amounts due to the short-term nature of these instruments. The fair value of the Company’s debt instruments are calculated based upon the availability of debt instruments with similar terms, rates, privileges and credit quality.
d) Cash and Concentrations
Financial instruments, which could potentially subject the Company to credit risk, consist primarily of cash. Cash is managed for the Company by a related party, Shamika Resources Inc. The Company is at risk of loss to the extent that the related party does not uphold its obligations to the Company.
The Company’s operations are all related to the minerals and mining industry. A reduction in mineral prices, political unrest in the countries in which the Company operates or other disturbances in the minerals market could have an adverse effect on the Company’s operations.
e) Environmental Costs
Environmental expenditures that relate to current operations are charged to operations or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations, and which do not contribute to current or future revenue generation, are charged to operations. Liabilities are recorded when environmental assessments and/or remedial efforts are probable, and the cost can be reasonably estimated. Generally, the timing of these accruals coincides with the earlier of completion of a feasibility study or the Company’s commitments to plan of action based on the then known facts. Management has determined that recording a liability pertaining to environmental expenditures as of June 30, 2010 is not needed.
f) Per Share Data
Basic loss per share is computed by dividing net loss by the weighted average number of common shares outstanding for the year. Diluted loss per share is computed by dividing net loss by the weighted average number of common shares outstanding plus common stock equivalents (if dilutive) related to warrants and convertible notes.
The Company has excluded all common equivalent shares outstanding for warrants and convertible notes from the calculation of diluted net loss per share because all such securities are anti-dilutive for the periods presented.
F-7
Shamika 2 Gold Inc.
An Exploration Stage Company
Notes to Financial Statements
June 30, 2010
(unaudited and restated)
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3.
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Significant Accounting Policies (continued)
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g) Income Taxes
The Company accounts for income taxes under ASC 740, Income Taxes. Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carry-forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. ASC 740 also requires that uncertain tax positions are evaluated in a two-step process, whereby (1) it is determined whether it is more likely than not that the tax positions will be sustained based on the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the largest amount of tax benefit that is greater than fifty percent likely of being realized upon ultimate settlement with the related tax authority would be recognized.
h) Revenue Recognition
The Company plans to recognize revenue from the sale of product when an agreement of sale exists, product delivery has occurred, title has transferred to the customer and collection is reasonably assured. The price to be received is based upon terms of a sales contract. The Company has not generated revenue activity for the periods presented in the consolidated financial statements.
i) Stock Based Compensation
The Company has adopted ASC 718, Stock Compensation, which requires the Company to measure the compensation cost of stock options and other stock-based awards to employees and directors at fair value at the grant date and recognize compensation expense over the requisite service period for awards expected to vest. The Company has not issued any stock based compensation awards in 2010.
The Company may periodically issue stock for payment of certain professional fees and these stock issuances are expensed based on the market value of the stock on the date granted. The Company expenses these professional fees at the time of stock issuance as the stock issuance date approximates the date the services are performed. No such issuances were made in 2010.
j) Asset Retirement Obligation
The Company follows ASC 410-20, which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated retirement costs. The standard applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and normal use of the asset.
F-8
Shamika 2 Gold Inc.
An Exploration Stage Company
Notes to Financial Statements
June 30, 2010
(unaudited and restated)
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3.
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Significant Accounting Policies-continued
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j) Asset Retirement Obligation - continued
ASC 410-20 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The fair value of the liability is added to the carrying amount of the associated asset and this additional carrying amount is depreciated over the life of the asset. The liability is accreted at the end of each period through charges to operating expense. If the obligation is settled for other than the carrying amount of the liability, the Company will recognize a gain or loss on settlement. The Company has no mining projects in production as of June 30, 2010, and the asset retirement obligations are usually created as part of the production process. Accordingly, at June 30, 2010, the Company had no asset retirement obligations.
k) Mineral Properties, Mineral Claim Payments and Exploration Expenses
The Company expenses all costs related to the acquisition, maintenance and exploration of the unproven mineral properties to which it has secured exploration rights. If and when proven and probable reserves are determined for a property and a feasibility study is completed, then subsequent development costs of the property are capitalized. Once capitalized, such costs will be amortized using the units-of-production method over the estimated life of the probable reserves. To date, excluding the mineral properties in the Democratic Republic of Congo which were discontinued subsequent to year end (see note 4), the Company has not established the commercial feasibility of its exploration prospects, therefore all costs have been expensed. The costs related to acquisition, maintenance and exploration were not material for the years presented in the consolidated statement of operations.
The Company assesses the carrying costs for impairment under ASC 930 Extractive Activities – Mining (ASC 930) annually. An impairment is recognized when the sum of the expected undiscounted future cash flows is less than the carrying amount of the mineral property. Impairment losses, if any, are measured as the excess of the carrying amount of the mineral property over its estimated fair value. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to operations.
l) Convertible Instruments
The Company reviews the terms of convertible debt and equity instruments to determine whether there are conversion features or embedded derivative instruments including embedded conversion options that are required to be bifurcated and accounted for separately as a derivative financial instrument. In circumstances where the convertible instrument contains more than one embedded derivative instrument, including conversion options that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single compound instrument. Also, in connection with the sale of convertible debt and equity instruments, the Company may issue free standing warrants that may, depending on their terms, be accounted for as derivative instrument liabilities, rather than as equity. When convertible debt or equity instruments contain embedded derivative instruments that are to be bifurcated and accounted for separately, the total proceeds allocated to the convertible host instruments are first allocated to the fair value of all the bifurcated derivative instruments. The remaining proceeds, if any, are then allocated to the convertible instruments themselves, usually resulting in those instruments being recorded at a discount from their face amount. When the Company issues debt securities, which bear interest at rates that are lower than market rates, the Company recognizes a discount, which is offset against the carrying value of the debt. Such discount from the face value of the debt, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to income.
F-9
Shamika 2 Gold Inc.
An Exploration Stage Company
Notes to Financial Statements
June 30, 2010
(unaudited and restated)
l) Convertible Instruments - continued
In addition, certain conversion features are recognized as beneficial conversion features to the extent the conversion price as defined in the convertible note is less than the closing stock price on the issuance of the convertible notes.
Fees incurred in the placement of the convertible notes are deferred and recognized over the life of the debt agreement as an adjustment to interest expense using the interest method.
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m)
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Recent Accounting Pronouncements
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Fair Value Measurements and Disclosures ASC 820, Improving Disclosures about Fair Value Measurements: In January 2010, the Financial Accounting Standards Board (FASB) issued accounting guidance intended to improve disclosures related to fair value measurements. This guidance requires significant transfers in and out of Level 1 and Level 2 fair value measurements to be disclosed separately along with the reasons for the transfers. Additionally, in the reconciliation for the fair value measurements using significant unobservable inputs (Level 3), information about purchases, sales, issuances and settlements must be presented separately (cannot net as one number). This guidance also provides clarification for existing disclosures on (i) level of disaggregation and (ii) inputs and valuation techniques. In addition, this guidance includes conforming amendments for employers’ disclosure of postretirement benefit plan assets. This guidance was effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances and settlements in the roll-forward of activity in Level 3 fair value measurements. Those disclosures are required for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The adoption of ASC 820 did not have a material impact on the Company’s consolidated results of operations or financial position.
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4.
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Business Acquisitions
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Prior to the reverse acquisition discussed herein, Aultra Gold Inc. was an exploration and mining company with certain claims and permits and limited operational activity.
Pursuant to a Stock Purchase Agreement, on January 6, 2010 Dutch Gold Resources Inc. (Dutch Gold) acquired 6,442,500 shares of Aultra which comprised a 67% controlling interest in Aultra after giving effect to a 1 for 10 reverse stock split completed by Aultra just prior to the transaction. Dutch Gold issued one million shares of Dutch Gold’s common stock with a fair value at date of closing of $135,000 as consideration for the purchase.
On January 6, 2010, Dutch Gold also entered into an Asset Purchase Agreement with Aultra pursuant to which, Dutch Gold acquired all of Aultra’s assets which at the time consisted of mining property rights to several parcels in Montana, Nevada and Oregon. As consideration for these assets, Dutch Gold issued 9,614,667 shares of Dutch Gold common stock, par value $0.001 per share, to Aultra's shareholders at a total value of $1,297,980.
As a result of the January 6, 2010 transactions with Dutch Gold, Aultra was 67% owed by Dutch Gold, and was a publically traded company with no assets, approximately $900,000 in carry over liabilities and no means of generating any future revenues.
F-10
Shamika 2 Gold Inc.
An Exploration Stage Company
Notes to Financial Statements
June 30, 2010
(unaudited and restated)
4. Business Acquisitions - continued
On March 26, 2010, Aultra Gold, Inc. entered into an Agreement and Plan of Share Exchange with SGI. Pursuant to the agreement Aultra Gold, Inc. acquired all of the outstanding SGI shares from the SGI shareholders in exchange for an aggregate of 25,500,000 newly issued shares of Aultra’s common stock, par value $0.00001 per share resulting in, SGI and its 99.9% owned subsidiary Shamika Gold Mining Sprl., a Congolese limited partnership became subsidiaries of Aultra. Aultra shares were issued to the SGI shareholders on a pro rata basis, on the basis of the shares held by such SGI shareholders at the time of the transaction. In addition, Aultra issued 23,547,067 shares of its common stock to various former Aultra Shareholders to satisfy certain liabilities at the time of the transaction in the amount of $301,000 and of this amount Dutch Gold receiving 4,950,000 shares. Upon completion of the transaction, there were 50,000,000 shares of Aultra outstanding including 952,933 shares retained by the former Aultra shareholders.
This transaction represents a reverse acquisition with SGI being the acquirer. The business purpose of this transaction was for SGI to be a publically traded company and have access to capital markets in the United States.
As Aultra had no operations subsequent to the Asset Purchase Agreement noted above, issuing shares that would result in SGI having a controlling interest allowed Aultra shareholders an exit strategy or way to get value.
As a result of the acquisition by SGI, Dutch Gold assumed the remaining Aultra liabilities of $616,154 which represents amounts owed to Ron Perttu at the time of the transaction.
At the effective time of the acquisition, Aultra’s board of directors and officers was reconstituted by the resignation of: Rauno Perttu from his role as President, Secretary and director, Daniel Hollis from his role as Chief Financial Officer and director, and the appointment of Robert Vivian as President and Chief Executive Officer and Terence Orstlan as Secretary and Director. Therefore, subsequent to the acquisition, Dutch Gold no longer has a controlling interest in Aultra.
Subsequent to the transaction, Aultra changed its name to Shamika 2 Gold, Inc and adopted the business plan of the Company.
5. Per Share Data
Basic loss per share is computed by dividing net loss by the weighted average number of common shares outstanding for the year. Diluted loss per share is computed by dividing net loss by the weighted average number of common shares outstanding plus common stock equivalents (if dilutive) related to warrants, convertible notes and convertible preferred stock.
The Company has excluded all common equivalent shares outstanding for warrants, convertible notes and convertible preferred stock to purchase common stock from the calculation of diluted net loss per share because all such securities are antidilutive for the periods presented. As of June 30, 2010, the Company had no warrants of convertible notes outstanding representing potential shares which may be issued.
F-11
Shamika 2 Gold Inc.
An Exploration Stage Company
Notes to Financial Statements
June 30, 2010
(unaudited and restated)
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6.
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Related Party Balances and Transactions
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As of June 30, 2010, the Company had accounts payable to related parties in the amount of $87,691. This amount is payable to Shamika Congo Kalehe Sprl., a subsidiary of Shamika Resources Inc. registered to do business in the Congo, for management and administration services. We are currently unable to repay these amounts.
The Company operates under a management agreement with a related party Shamika Resources, Inc, which is controlled by the Company's CEO, Robert Vivian. The Company has no employees or office expenses as such are provided by Shamika Resources Inc. through the management agreement. The Company does not maintain any cash or bank accounts but relies upon advances from and payables to Shamika Resources, Inc, under the management agreement, which holds any cash the company has raised as a result of debt or equity issuances and makes payments for services on the Company's behalf.
Related party payables are recorded at their cost, are non-interest bearing, unsecured and have no specific terms for repayment.
F-12
Shamika 2 Gold Inc.
An Exploration Stage Company
Notes to Financial Statements
June 30, 2010
(unaudited and restated)
7. Restatement of Financial Statements
The Company is restating its historical financial statements for the quarter ended June 30, 2010. The restatement and resulting revisions primarily relate to the accounting for the reverse acquisition of Aultra by Shamika as well as other processing errors which resulted in expenses not being properly recorded and the reclassification of the statement of operations to reflect expenses by function. Accordingly, the Company’s financial statements for the three months ended June 30, 2010 have been restated to correct for these errors and are included in the accompanying condensed consolidated financial statements.
The restatement effect on the condensed consolidated statement of operations for the quarter ended June 30, 2010 is reflected below.
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Quarter ended June 30, 2010
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as previously reported
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Adjustments
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As restated
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R E V E N U E
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$ | - | $ | - | $ | - | ||||||
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Operational Expenses
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Legal and professional fees
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60,500 | (30,076 | ) | 30,424 | ||||||||
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Mineral property expenditures
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41,199 | (12,475 | ) | 28,724 | ||||||||
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Other operational expenses
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13,350 | 13,310 | 26,660 | |||||||||
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Net Loss
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(115,049 | ) | 29,241 | (85,808 | ) | |||||||
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Loss per share - basic and diluted
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$ | 0.00 | $ | (0.00 | ) | $ | 0.00 | |||||
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Weighted Average Number of Shares Outstanding
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50,000,000 | 50,000,000 | 50,000,000 | |||||||||
F-13
Shamika 2 Gold Inc.
An Exploration Stage Company
Notes to Financial Statements
June 30, 2010
(unaudited and restated)
7. Restatement of Financial Statements - continued
The restatement effect on the condensed consolidated statement of cash flows for the period of inception January 13, 2010 to June 30, 2010 is reflected below.
| as previously reported | Adjustments | As restated | ||||||||||
|
Operating activities
|
||||||||||||
|
Net Loss from continuing operations
|
$ | (115,049 | ) | $ | (4,774 | ) | $ | (119,823 | ) | |||
|
Changes in:
|
||||||||||||
|
Accounts Receivable
|
115,049 | (115,049 | ) | |||||||||
|
Accounts payable
|
119,823 | 119,823 | ||||||||||
|
Total change in cash for period
|
$ | - | $ | - | $ | - | ||||||
|
8.
|
Accounts payable mining properties
|
The amount of $459,000 is payable as a result of the acquisition of two mining permits on properties in Lubutu. Under the agreement $59,000 is payable on July 2, 2010. We are unlikely to be able to make this payment and we will be in default. We will not be able to repay the amount until we have the funding from our next financing. The terms of repayment of $400,000 are to be negotiated. We intend to negotiate a long-term repayment schedule in line with the development and financing plan for the properties. There can be no assurance that we will be successful in
these negotiations. No provision has been made in these accounts for interest, if any, which may be payable on the outstanding amount.
|
9.
|
Subsequent events
|
Share Capital
Subsequent to June 30, 2010, the Company sold capital units (Units) using a subscription agreement. Each Unit consisted of 83,334 shares of common stock and 41,667 warrants. The warrants have a three year expiration. The warrants also are subject to a mandatory exercise provision which will require the holder of the warrants to exercise the warrants when the average closing price of the Company’s Common Stock has been equal to or greater than $0.75 for ten consecutive trading days.
As a result of a subscription agreement that was executed with Dutch Gold on November 16, 2010, the Company received $100,000 in payments from Dutch Gold for 4 units. The Company issued 333,336 Common Stock of the Company, par value $0.00001 per share and166,668 warrants with a $0.50 exercise strike price.
F-14
The following discussion should be read in conjunction with our audited Financial Statements and Notes thereto included herein beginning on page F-1.
Certain statements in this Report constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. We intend that such forward-looking statements be subject to the safe harbors created thereby.
References in this Quarterly Report on Form 10-Q (the “Annual Report”) to “we”, “us,” “our,” “the Company,” “Aultra Gold” and “AGI” mean Aultra Gold, Inc. and our subsidiaries, unless the context otherwise requires.
SGI (Shamika Gold Inc.) was a private Company formed in Montreal, Canada on January 13, 2010. The Company is engaged in the business of acquiring and exploring mining properties principally located in Cambodia and Quebec, Canada.
On March 26, 2010, Aultra USA entered into an Agreement and Plan of Share Exchange (the “Exchange Agreement”) with Shamika Gold, Inc., a Canadian corporation (“Shamika”), and the stockholders of Shamika (the “Shamika Stockholders”) whereby Aultra USA acquired all of the issued and outstanding capital stock of Shamika in exchange (the “Exchange”) for 25,500,000 newly issued shares of Common Stock par value $0.00001 per share (the “Common Exchange Shares”). As a result of the Exchange, Shamika became a wholly-owned subsidiary of the Company. The Company shares were issued to the Shamika Holders on a pro rata basis, on the basis of the shares held by such Shamika Holders at the time of the Exchange. Shamika Resources Inc., a Canadian private company became the controlling shareholder (51%) of the Company.
Applications have been made to FINRA to change the name of Aultra Gold Inc to Shamika 2 Gold Inc on upon approval from FINRA, the name change will be announced.
General Overview of Business
S2G is engaged in the business of acquiring and exploring mining properties principally located in Cambodia and Quebec, Canada, with the objective of identifying gold and mineralized deposits economically worthy of continued production and/or subsequent development, mining or sale.
Employees
As of June 30, 2010, the Company had no full time employees. The Company anticipates that it will be conducting most of its business through agreements with consultants and third parties.
3
Discussion of mining projects
The following is a summary of our two projects in the Democratic Republic of Congo as follows:
PROJECT-POKO
Exploration permit number 8315 covering an area of 120 mining blocks and 103 sq. kilometers located in Poko, Province Orientale. This property is in the Kilo-Moto Greenstone belt. The greenstone rocks and quartz veins found in this area have a reputation for an abnormally high content of gold and the area is well known for large deposits. The property is largely unexplored but it is accessible by road and by water and it is an excellent prospect for further exploration. Our business plan calls for the preparation of a 43-101 geological report, further exploration based on the recommendations in the report, the conversion to an exploitation permit and the development of the property. The exploration permit has a term of five years with two rights to renew for five years each. We pay an annual permit fee of $3,800 and we must make periodical payments into an environmental fund.
PROJECT-LUBUTU
Two mining exploitation permits numbered 133 and 134 covering 72 mining blocks and 61 sq. kilometers located on lands in Lubutu, Province of Maniema. This location is in the heart of the Kibara Metallogenic Belt approximately 300 kilometers northwest of Lake Kivu. The permits give us the right to develop and exploit the properties for gold and the properties have been in production through artisanal mining. Our business plan envisages feasibility studies to determine the most effective way to put the properties into full scale production and a subsequent financing to enable this to be done. We acquired the properties in April 2010 for $600,000 of which $100,000 is payable to a related party, Shamika Congo Kalehe Sprl., under an option agreement, and $500,000 is payable to a third party. The $100,000 payable to Shamika Congo Kalehe Sprl. is payable within six months from the date of our next financing. The $500,000 to a third party was payable $100,000 by July 2, 2010 and $400,000 longer-term. So far we have only paid the third party $41,000 leaving $59,000 overdue and in default. We will not be able to make this payment until we receive the proceeds of our next financing. The terms of repayment of $400,000 are to be negotiated. We intend to negotiate a long-term repayment schedule in line with our development and financing plan for the properties. There can be no assurance that our plan can be successfully executed and there can be no assurance that we will be able to successfully negotiate the repayment terms that we need. The exploitation permit has a term of thirty years and several rights to renew for fifteen years. Our permits have approximately twenty years to run and we pay annual permit fees of $37,000 for them.
Expenses
The loss for the three months ended June 30, 2010 was $85,808. Losses during the three months June 30, 2010 can be attributed to the costs relating to the permits in the Democratic Republic of Congo and the restructuring of the business.
Liquidity and Capital Resources
At June 30, 2010, our cash was $0. Since our inception on January 13, 2010, to the end of the period ended June 30, 2010, we have incurred losses of $119,823. We attribute our net loss to having no revenues to offset our operating expenses.
4
We have no cash flow from operations and do not have cash to meet our current liabilities nor our operational requirements for the next 12 months. In addition we will also be required to raise additional working capital to fund the exploration and development plans as discussed above.
Shamika Congo Kalehe Sprl. a related party has incurred expenses of $46,689 on our behalf. We are currently unable to pay this amount until we receive the funds from our next financing. This amount is included in the balance sheet in the item ‘Accounts payable related parties ’
We have no assurance that future financings will be available to us on acceptable terms. If financing is not available to us on acceptable terms, we may be unable to continue our operations. Should our costs and expenses prove to be greater than we currently anticipate, or should we change our current Plan of Mining Operations in a manner that will increase or accelerate our anticipated costs and expenses, such as through the acquisition of new properties, the depletion of our working capital would be accelerated. To the extent that it becomes necessary to raise additional cash in the future as our current cash and working capital resources are depleted, we will seek to raise it through the public or private sale of debt or equity securities, the procurement of advances on contracts or funding from joint-venture or strategic partners, debt financing or term loans, or a combination of the foregoing. We also may seek to satisfy indebtedness without any cash outlay through the private issuance of debt or equity securities.
We have no assurance that future financings will be available to us on acceptable terms. If financing is not available to us on acceptable terms, we may be unable to continue our operations.
The Company is not exposed to market risk related to interest rates or foreign currencies.
ITEM 4. CONTROLS AND PROCEDURES.
|
(a)
|
Evaluation of Disclosure Controls and Procedures
|
Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. This rule defines internal control over financial reporting as a process designed by, or under the supervision of Company management to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP.
Based on this evaluation, our chief executive officer and principal accounting officer concluded that, as of the end of the quarter ending June 30, 2010 our disclosure controls and procedures were not effective to ensure that the information required to be disclosed in reports we submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the applicable rules and forms, and that such information was accumulated and communicated to our chief executive officer and principal accounting officer in a manner that allowed for timely decisions regarding required disclosure.
5
Management does not expect that our Disclosure Controls and internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management or board override of the control.
The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the company's CEO and CFO and effected by the company's 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 accounting principles generally accepted in the United States of America and includes those policies and procedures that: pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, 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.
As of June 30, 2010 management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") and SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules as more fully described below. This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.
6
Identified Weaknesses
The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board was the lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures.
·We lack sufficient trained personnel with experience in accounting and financial reporting functions due to the size of our Company and our lack of financial resources to pay such personnel; and
·We do not have a sufficient number of employees to adequately segregate accounting duties to provide for sufficient internal controls.
Management also believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.
The Company does not have an adequate segregation of duties due to a limited number of employees among whom duties can be allocated. In particular there is not a segregation of access to cash and the ability to authorize and record transactions.
Management's Remediation Initiatives
In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we have initiated a plan to appoint one or more outside directors to our board of directors who shall be appointed to an audit committee resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures such as reviewing and approving estimates and assumptions made by management.
Management believes that the appointment of one or more outside directors, who shall be appointed to a fully functioning audit committee, will remedy the lack of a functioning audit committee and a lack of a majority of outside directors on our Board. While we are actively seeking outside members, including candidates with accounting experience, we cannot provide any assurance that we will be successful. Given the size of our company, lack of revenues and current lack of financing to continue with our business, it is unlikely that anyone will agree to join our Board until general economic conditions and our own business prospects improve significantly.
Changes in Internal Control Over Financial Reporting.
During the quarter ended June 30, 2010, there were no changes in our internal controls over financial reporting that we believe could materially affect, or is reasonably likely to materially affect, our internal controls over financial reporting.
This Annual Report does not include an attestation report of the Company’s registered accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the company’s registered public accounting firm pursuant to temporary rules of the SEC.
7
PART II - OTHER INFORMATION
|
ITEM 1.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
During 2010 Fiscal Year
On January 6, 2010, Aultra USA entered into an Asset Purchase Agreement with Dutch Gold, Inc. Pursuant to the Agreement, Dutch Gold acquired all of Aultra USA's assets. As consideration for these assets, the Dutch Gold issued 9,614,667 shares of its common stock, par value $0.001 per share, to the Aultra USA shareholders. In accordance with the transaction, Dutch Gold acquired substantially all of the assets related to Aultra USA's gold and mineral business, including inventory, accounts receivable, certain supply and distribution and other vendor contracts, good will and other various assets and intangibles. The parties made customary representations, warranties and indemnities that are typical and consistent for a transaction of this size and scope.
On March 26, 2010, Aultra USA entered into an Agreement and Plan of Share Exchange with Shamika Gold Inc., a Canada Corporation (“Shamika”), and certain shareholders of Shamika (the “Shamika Holders”). Pursuant to the Agreement, Aultra acquired all of the outstanding shares from the Shamika Holders in exchange for an aggregate of 25,500,000 shares of Aultra’s Common Stock (the “Exchange”) As a result of the Exchange, Shamika became a wholly-owned subsidiary of the Registrant and the Registrant adopted the business plan of Shamika Gold, Inc.
|
ITEM 3.
|
DEFAULTS UPON SENIOR SECURITIES
|
None.
|
ITEM 4.
|
(REMOVED AND RESERVED)
|
|
ITEM 5.
|
OTHER INFORMATION.
|
On January 13, 2010, Shamika Gold Mining SPRL, a subsidiary, was contributed as initial capital to the Company. During 2010 the Company spent resources on permits to develop the Congo claims: the Lubutu project consists in 72 mining blocks controlled, covering 61 km2 located on lands in Lubutu, Pting the province of Maniema. This location is in the heart of the Kibara Metallogenic Belt approximately 300 kilometers northwest of Lake Kivu. The Poko project consists in an exploration permit located on lands in the Kilo-Moto Greenstone belt area in Congo’s Eastern region covering an area of 120 mining blocks and 101 km2.
8
|
EXHIBITS.
|
|||
|
Number
|
Description of Exhibits
|
||
|
31.1
|
Certification of Chief Executive Officer and Chief Financial Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
|
||
|
32.1
|
Certification of Chief Executive Officer and Chief Financial Officer as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *
|
||
9
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
/s/ Robert Vivian
|
||
|
Date: May 17, 2011
|
Name: Robert Vivian
|
|
|
Title: President and Chief Executive Officer and Interim Financial Officer
|
||
|
(Principal Executive and Accounting Officer)
|
||
10