Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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 May 31, 2011
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ________ to ________
Commission file # 333-106291
AMERICAN MINING CORPORATION
(FORMERLY THRUST ENERGY CORP.)
(Exact Name of Registrant as Specified in its Charter)
NEVADA
(State or other jurisdiction of incorporation or organization)
20-3373669
(I.R.S. Employer Identification number)
970 CAUGHLIN CROSSING, SUITE 100, RENO, NEVADA 89519
(Address of principal executive offices)
Issuer's telephone number: (888) 505-5808
Securities registered under Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK,
$0.0001 PAR VALUE
Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the Issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [ x ] No [ ]
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.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
As of July 19, 2011, the Issuer had 31,680,202 shares of its Common Stock
outstanding.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMERICAN MINING CORPORATION (FORMERLY THRUST ENERGY CORP.)
(A Development Stage Company)
Balance Sheets
May 31, 2011
(Unaudited - prepared by management)
(EXPRESSED IN U.S. DOLLARS)
----------------------------------------------------------------------------------------------------------
MAY 31, 2011 AUGUST 31, 2010
----------------------------------------------------------------------------------------------------------
ASSETS
Mineral equipment (Note 4) $ 1,685,658 $ 89,200
Investment in joint venture (Note 5) 400,000 -
----------------------------------------------------------------------------------------------------------
TOTAL ASSETS 2,085,658 89,200
==========================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 590,303 $ -
Due to a related party (Note 6) 35,385 -
----------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 625,688 -
----------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
PREFERRED STOCK
100,000,000 preferred shares at a par value of $0.0001 per share
Issued and outstanding: 2,000,000 shares of Series A Preferred Stock 200 200
(August 31, 2010: 2,000,000)
COMMON STOCK
900,000,000 common shares at a par value of $0.0001 per share
Issued and outstanding: 31,680,202 common shares 3,100 3,100
(August 31, 2010: 31,680,202)
ADDITIONAL PAID-IN CAPITAL 1,543,118 85,900
(DEFICIT) ACCUMULATED DURING THE DEVELOPMENT STAGE (86,448) -
----------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 1,459,970 89,200
----------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,085,658 $ 89,200
==========================================================================================================
The accompanying notes are an integral part of these financial statements.
AMERICAN MINING CORPORATION (FORMERLY THRUST ENERGY CORP.)
(A Development Stage Company)
Statements of Operations and Comprehensive Income (Loss)
(Unaudited - prepared by management)
(EXPRESSED IN U.S. DOLLARS)
----------------------------------------------------------------------------------------------------------------------
Nine months ended Three months ended
May 31 May 31 May 31 May 31
2011 2010 2011 2010
----------------------------------------------------------------------------------------------------------------------
EXPENSES
Maintenance and repairs 35,760 - 35,760 -
----------------------------------------------------------------------------------------------------------------------
OPERATING LOSS 35,760 - 35,760 -
----------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) FOR THE PERIOD $ (35,760) $ - $ (35,760) $ -
======================================================================================================================
BASIC AND DILUTED EARNINGS (LOSS) PER SHARE $ (0.00) $ - $ (0.00) $ -
======================================================================================================================
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 31,680,202 31,680,202 31,680,202 31,680,202
- basic and diluted
======================================================================================================================
The accompanying notes are an integral part of these financial statements
AMERICAN MINING CORPORATION (FORMERLY THRUST ENERGY CORP.)
(A Development Stage Company)
Statements of Cash Flows
(Unaudited - prepared by management)
(EXPRESSED IN U.S. DOLLARS)
-------------------------------------------------------------------------------------------
Nine months ended
May 31
2011 2010
-------------------------------------------------------------------------------------------
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES
Net Income (Loss) $ (35,760) $ -
Adjustments for items not involving cash:
- amortization - -
- imputed interest - -
- increase (decrease) in accounts payable and accrued liabilities 50,688 -
-------------------------------------------------------------------------------------------
NET CASH USED IN OPERATING ACTIVITIES 14,928 -
-------------------------------------------------------------------------------------------
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES
Investment in joint venture (400,000) -
Acquisition of equipment (1,021,458) (89,200)
-------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (1,421,458) (89,200)
-------------------------------------------------------------------------------------------
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES
Contribution from shareholders 1,406,530 89,200
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,406,530 89,200
INCREASE IN CASH - -
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD - -
-------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ - $ -
===========================================================================================
The accompanying notes are an integral part of these financial statements
NOTE 1 - NATURE OF OPERATIONS AND CONTINUANCE OF OPERATIONS
American Mining Corporation (the "Company"), was incorporated in the State of
Nevada, on September 15, 2004, under the name of Thrust Energy Corp. On May 5,
2011, the Company changed its name to American Mining Corporation.
The Company was originally engaged in the exploration, exploitation, development
and production of oil and gas projects within North America, but was unable to
operate profitably. On April 18, 2011, the Company entered into an agreement of
purchase and sale with North American Mining Corporation ("NAMC"), a Nevada
Corporation (formerly, American Mining Corporation), whereby the Company agreed
to acquire certain equipment and options on equipment held by North American
Mining Corporation (the "Acquisition") in exchange for 31,000,000 shares of the
Company's common stock at a deemed price of $0.05 per share and an assumption of
certain liabilities associated with the assets. The Acquisition was subject to
the consent of a secured creditor of North American Mining Corporation, which
the Company obtained in consideration of 2,000,000 shares of Series A Preferred
Stock at a deemed price of $0.05 per share. The Acquisition closed on May 31,
2011.
Upon closing of the Acquisition, the Company suspended its oil and gas
operations and changed its business to toll milling and refining, mineral
exploration and mine development. The Company's principal offices are in Reno,
Nevada.
These financial statements have been prepared in conformity with generally
accepted accounting principles in the United States of America with the on-going
assumption that the Company will be able to realize its assets and discharge its
liabilities in the normal course of business. As shown in the accompanying
financial statements, the Company has incurred operating losses since inception
and further losses are anticipated in the development of its business. As of May
31, 2011, the Company has limited financial resources and requires additional
financing to fund its operations. These factors raise substantial doubt about
its ability to continue as a going concern. The ability of the Company to
achieve and maintain profitability and positive cash flow is dependent upon its
ability to locate profitable mineral properties, generate revenue from its
planned business operations, and control exploration cost. These financial
statements do not include any adjustments to the amounts and classifications of
assets and liabilities that might be necessary if the Company is unable to
continue as a going concern. The management of the Company plans to fund its
future operation by obtaining additional financing and commencing commercial
production. However, there is no assurance that the Company will be able to
obtain additional financing from investors or private lenders.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
ACCOUNTING METHOD
The financial statements of the Company are prepared by management in conformity
with United States generally accepted accounting principles using the accrual
method of accounting. The fiscal year end of the Company is August 31.
For accounting purposes, the Acquisition was treated as a reverse acquisition
with NAMC being the accounting acquirer (Note 3). Accordingly, the historical
financial information in this Form 10-Q prior to the acquisition is that of
NAMC's assets acquired and liabilities assumed by Thrust.
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
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Differences in these estimates and actual results could be
material to the Company's financial position and results of operations.
CONCENTRATIONS
Concentration of Credit Risk - Financial instruments, which could potentially
subject the Company to credit risk, consist primarily of cash bank deposits. The
Company maintains certain of its cash in bank accounts insured by the Federal
Deposit Insurance Corporation up to $250,000. However, the Company's account
balances, at times, may exceed federally insured limits and may be deposited in
a foreign bank. The Company has not experienced material losses in such
accounts, and believes it is not exposed to any significant credit risk with
respect to its cash accounts.
Concentration of Operations - The Company's operations are currently all related
to the minerals and mining industry. A reduction in mineral prices or other
disturbances in the minerals markets could have an adverse effect on the
Company's operations.
CASH AND CASH EQUIVALENTS
The Company considers all investments purchased with original maturities of
three or fewer months to be cash equivalents. The Company had no cash
equivalents at May 31, 2011 and August 31, 2010.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation and amortization are
calculated using the straight-line method over estimated useful lives as
follows:
Computer equipment 3-5 years
Drilling equipment 4-5 years
Support equipment 5-7 years
Office furniture and equipment 5-7 years
Mining and milling equipment 5-7 years
Mine development costs are capitalized after proven and probable reserves have
been identified. Amortization of mine development costs will be calculated using
the units-of-production method over the expected life of the operation based on
the estimated proven and probable reserves. As of May 31, 2011, the Company had
no mineral properties with proven or probable reserves and no amortizable mine
development costs.
Expenditures for maintenance and repairs are expensed when incurred and
betterments are capitalized. Gains and losses on sales of property and equipment
are reflected in operations.
The cost and accumulated depreciation of property and equipment sold or
otherwise disposed of are removed from the accounts and any related gain or loss
on disposition is reflected in net income or loss for the period.
MINERAL PROPERTY ACQUISITION COSTS
Mineral property acquisition costs are recorded at cost and capitalized where an
evaluation of market conditions and other factors imply the acquisition costs
are recoverable. Such factors may include the existence or indication of
economically mineable reserves, a market for the subsequent sale of the mineral
property, the stage of exploration and evaluation of the property, historical
exploration or production data, and the geographic location of the property.
Once a determination has been made that a mineral property has proven or
probable reserves that can be produced profitably, depletion of the capitalized
acquisition costs will be computed on the commencement of commercial production
on the units-of-production basis using estimated proven and probable reserves.
As of May 31, 2011 and August 31, 2010, the Company had no capitalized mineral
property acquisition costs.
Where an evaluation of market conditions and other factors results in
uncertainty as to the recoverability of exploration mineral property acquisition
costs, the costs are expensed as incurred and included in exploration and
evaluation expenses.
EXPLORATION AND EVALUATION EXPENSES
Exploration expenses relating to the search for resources suitable for
commercial production, including researching and analyzing historic exploration
data, conducting topographical, geological, geochemical and geophysical studies,
exploratory drilling, trenching and sampling are expensed as incurred.
Evaluation expenses relating to the determination of the technical feasibility
and commercial viability of a mineral resource, including determining volume and
grade of deposits, examining and testing extraction methods, metallurgical or
treatment processes, surveying transportation and infrastructure requirements
and conduction market and finance studies are expensed as incurred.
MINERAL PROPERTY DEVELOPMENT COSTS
Mineral property development costs relate to establishing access to an
identified mineral reserve and other preparations for commercial production,
including infrastructure development, sinking shafts and underground drifts,
permanent excavations, and advance removal of overburden and waste rock.
When it is determined that commercially recoverable reserves exist and a
decision is made by management to develop the mineral property, mineral property
development costs are capitalized and carried forward until production begins.
The capitalized mineral property development costs are then amortized using the
units-of-production method using proven and probable reserves as the mineral
resource is mined.
INVESTMENT IN JOINT VENTURE
Joint ventures are analyzed under the FASB ASC Topics of Consolidation in order
to determine whether the entity should be consolidated.
We use the equity method of accounting for investment in unconsolidated joint
venture when we own more than 20% up to 50% of the voting interests and have
significant influence but do not have a controlling financial interest. Under
the equity method, we record our investments in and advances to these entities
in our consolidated balance sheets and our proportionate share of earnings or
losses earned by the joint venture is recognized in equity in income (loss) of
unconsolidated joint ventures in the accompanying consolidated statements of
income.
On a periodic basis, we evaluate our investment in unconsolidated joint venture
for impairment in accordance with the Investments-Equity Method and Joint
Ventures Topic of the FASB ASC. We assess whether there are any indicators,
including underlying property operating performance and general market
conditions, that the value of our investments in unconsolidated joint ventures
may be impaired. An investment in a joint venture is considered impaired only if
we determine that its fair value is less than the net carrying value of the
investment in that joint venture on an other-than-temporary basis.
ASSETS RETIREMENT OBLIGATIONS
The Company has adopted ASC 410, Asset Retirement and Environmental Obligations,
which requires that the fair value of a liability for an asset retirement
obligation be recognized in the period in which it is incurred. ASC 410 requires
the Company to record a liability for the present value of the estimated site
restoration costs with corresponding increase to the carrying amount of the
related long-lived assets. The liability will be accreted and the asset will be
depreciated over the life of the related assets. Adjustments for changes
resulting from the passage of time and changes to either the timing or amount of
the original present value estimate underlying the obligation will be made. As
at May 31, 2011 and August 31, 2010, the Company does not have any asset
retirement obligations.
Costs associated with environmental remediation obligations will be accrued when
it is probable that such costs will be incurred and they can be reasonably
estimated.
IMPAIRMENT OF LONG-LIVED ASSETS
The Company reviews and evaluates the carrying amounts of its mineral
properties, capitalized mineral property development costs and related buildings
and equipment, and other long-lived assets when events or changes in
circumstances indicate that the carrying amount may not be recoverable.
Management considers assets to be impaired if the carrying value exceeds the
future projected cash flows from related operations (undiscounted and without
interest charges). If impairment is deemed to exist, the assets will be written
down to fair value. Fair value is generally determined using a discounted cash
flow analysis.
REVENUE RECOGNITION
The Company records revenue when title passes, delivery occurs to its customers
and the customer assumes the risks and rewards of ownership, when the price is
fixed and determinable, and when collectability is reasonably assured.
INCOME TAXES
The Company recognizes a liability or asset for deferred tax consequences of all
temporary differences between the tax bases of assets and liabilities and their
reported amounts in the financial statements that will result in taxable or
deductible amounts in future years when the reported amounts of the assets and
liabilities are recovered or settled. Deferred tax items mainly relate to net
operating loss carry forwards and accrued expenses. These deferred tax assets or
liabilities are measured using the enacted tax rates that will be in effect when
the differences are expected to reverse. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date. Deferred tax assets are reviewed periodically for
recoverability, and valuation allowances are provided when it is more likely
than not that some or all of the deferred tax assets may not be realized.
STOCK-BASED COMPENSATION AND EQUITY TRANSACTIONS
In accordance with ASC Topic 718, Compensation - Stock Compensation, the Company
measures the compensation cost of stock options and other stock-based awards
issued to employees and directors pursuant to stock-based compensation plans at
fair value at the grant date and recognize compensation expense over the
requisite service period for awards expected to vest.
Except for transactions with employees and directors that are within the scope
of ASC Topic 718, all transactions in which goods or services are the
consideration received for the issuance of equity instruments are accounted for
based on the fair value of the consideration received or the fair value of the
equity instruments issued, whichever is more reliably measurable. Additionally,
in accordance with ASC Topic 505-50, Equity-Based Payments to Non-Employees, the
Company has determined that the dates used to value the transaction are either:
(1) the date at which a commitment for performance by the counter party to earn
the equity instruments is established; or (2) the date at which the counter
party's performance is complete.
The Company did not grant any stock options during the three and nine month
periods ended May 31, 2011 and 2010.
FOREIGN CURRENCY TRANSACTIONS
The Company's functional and reporting currency is U.S. Dollars. At the
transaction date, each asset, liability, revenue and expense involves foreign
currencies is translated into U.S. dollars by the use of the exchange rate in
effect at that date. At the period end, monetary assets and liabilities
involving foreign currencies are remeasured by using the exchange rate in effect
at that date. The resulting foreign exchange gains and losses are included in
operations. Our currency exposure is insignificant and immaterial and we do not
use derivative instruments to reduce our potential exposure to foreign currency
risk.
COMPREHENSIVE INCOME (LOSS)
Comprehensive Income (loss) is the change in the Company's net assets that
results from transactions, events and circumstances from sources other than the
Company's shareholders and includes items that would not normally be included in
net earnings such as unrealized gains or losses on available-for-sale
investments. Other comprehensive income includes the holding gains and losses
from available-for-sale securities, which are not included in net income (loss)
until realized.
For the three and nine months periods ended May 31, 2011 and 2010 the Company's
only component of comprehensive income or loss was the net loss reported in the
statement of operations and comprehensive income (loss).
BASIC AND DILUTED LOSS PER SHARE
In accordance with ASC 260, Earnings Per Share, the basic loss per common share
is computed by dividing net loss available to common stockholders by the
weighted average number of common shares outstanding. Diluted loss per common
share is computed similar to basic loss per common share except that the
denominator is increased to include the number of additional common shares that
would be outstanding if the potential common shares had been issued and if the
additional common shares were dilutive.
NOTE 3 - ACQUISITION OF ASSETS
On May 31, 2011, the Company issued 31,000,000 shares of its common stock to
NAMC in exchange for certain mining equipment and options held by NAMC.
The Acquisition was subject to the consent of Gary MacDonald, the President of
NAMC, in his personal capacity as a secured creditor of NAMC under the terms of
a General Security Agreement dated May 1, 2007. On May 31, 2011, the Company
issued 2,000,000 shares of Series A Preferred Stock to Gary MacDonald in
exchange for his consent to the asset acquisition. On May 31, 2011, the Company
appointed Gary MacDonald as its President and Chief Executive Officer, effective
on June 1, 2011.
The Acquisition was accounted for as a reverse acquisition for business
combinations under the acquisition method of business combination in accordance
with GAAP. Under this method of accounting, the Company is treated as the
acquired company for financial reporting purposes. On May 31, 2011, the Company
had net liabilities of $50,688. Under the terms of the Asset Purchase Agreement,
as of the closing date, NAMC (the former holder of the acquired assets) acquired
98% of the capital stock of the Company (on a fully diluted basis). In addition,
the secured creditor, who is also the primary beneficiary of NAMC, manages the
operations of the Company. In accordance with guidance applicable to these
circumstances, the Acquisition was considered to be a capital transaction in
substance. Accordingly, for accounting purposes, the acquisition was treated as
the equivalent of the Company issuing stock for the net monetary assets of
Thrust. The net liabilities of Thrust as at the acquisition date were treated as
a charge to the retained earnings of the Company.
The comparative figures presented in the financial statements prepared after the
reverse takeover are those of the NAMC, which are mainly the carrying amount of
the assets acquired and liabilities assumed in the acquisition recorded at the
historical basis.
NOTE 4 - MINERAL EQUIPMENT
On May 31, 2011, the Company acquired the right, under a Binding Letter of
Intent and Term Sheet dated March 21, 2011, to acquire certain used milling
equipment from NJB Mining Inc., including a Marcy ball mill, five used
thickener mechanisms (Eimco Type B), and one Eimco 2.6 meter belt press
with dual "P" rolls for a total purchase price of $800,000 of which
$225,000 has already been paid as of May 31, 2011. The remainder of the
purchase price for the equipment is now due and payable by the Company. All
payments are non-refundable.
As at May 31, 2011, the Company has acquired a 100% ownership interest in
certain used milling and related equipment, free and clear of encumbrances,
including two Denver 3' x 3'6" ball mill circuits, one 750 kg capacity plasma
(pillar) tilt furnace (with skidding and platforms), two Cress furnaces for
assaying, one 3' x 3' 6" Denver ball mill, one 3' x 3.5' Denver ball mill
circuit, one jaw-crusher circuit with screen (skid mounted), and one jaw-crusher
circuit with screen (skid mounted) for a total cost of $1,685,658.
NOTE 5 - INVESTMENT IN JOINT VENTURE
On May 31, 2011, the Company acquired the right to enter into 50% joint venture
interest in a permitted mill facility, currently operated by Win-Eldrich Gold
Inc. ("WEG"), together with ancillary used equipment and supplies suitable for
concentrating gold, silver and other precious metals, including one 800
ton-per-day crushing circuit, one 100 ton-per-day AC Ball Mill and two 50,000
ton tailings impoundments (collectively referred to as the "Ashdown Mill"). The
Ashdown Mill is located on 39.7 acres of privately owned land in Humboldt
County, Nevada.
Under the terms of a binding letter of intent, the Company will acquire a 50%
ownership and revenue interest in the Ashdown Mill in exchange for total cash
consideration of $2 million (the "WEG Payment") and the contribution of a 100
ton per day gold mill circuit to the Ashdown Mill. As of May 31, 2011, $400,000
of the WEG Payment had been paid, with $1.6 million remaining payable to WEG. On
July 5, 2011, a further $100,000 was paid by the Company. On July 15, 2011, in
consideration of a $50,000 cash payment by the Company, WEG agreed to accept
2,000,000 shares of the Company's common stock in lieu of $500,000 of the WEG
Payment, with the remainder due by September 15, 2011.
NOTE 6 - RELATED PARTY TRANSACTIONS
For the nine months ended May 31, 2011, Thomas Mills, a former director, officer
and stockholder of the Company, advanced the Company $1,865. For the years ended
August 31, 2010, Mr. Mills advanced the Company $33,520. As of May 31, 2011, the
Company owed a total principal balance of $35,385 related to these payables. As
of the date of this Report, all of such amounts remain unpaid and
outstanding.
See also Note 3.
NOTE 7 - STOCKHOLDERS' EQUITY
The Company is authorized to issue up to 100,000,000 shares of preferred stock,
par value $0.0001 per share.
SERIES A PREFERRED STOCK
The Company has designated 2,000,000 shares of its authorized preferred stock as
"Series A Preferred Stock". Each share of Series A Preferred Stock has a par
value of $0.0001 and entitles the holder to ten (10) votes at all stockholder
meetings (except meetings at which only holders of other classes or series of
shares are entitled to attend) for a period of three years from the date of
issuance, and thereafter to one (1) vote at all such meetings.
Each share of Series A Preferred Stock will be automatically converted into one
fully paid and non-assessable share of the Company's common stock if the holder
transfers the share other than to certain permitted transferees, or upon the
fifth anniversary date of the date of its issuance. There are no other
conversion rights or privileges attached to the Series A Preferred Stock.
Each holder of Series A Preferred Stock has a right of retraction, to require
the Company to redeem all or any of the holder's Series A Preferred Stock at a
price of $25.00 per share within seven days following a change of control of the
Company. If the Company does not redeem all shares of Series A Preferred Stock
when presented for redemption, then all the holders of Series A Preferred Stock
will be entitled, as a class, to elect a majority of the members of the Board
for a period of one year. The Company may not redeem any shares of Series A
Preferred Stock without the consent of the holder of such shares.
The Company is prohibited from taking certain corporate actions while any
shares of Series A Preferred Stock are outstanding, without first obtaining
the approval of the holders of two-thirds of the issued and outstanding
Series A Preferred Stock.
During the three months ended May 31, 2011, a total of 2,000,000 shares of
Series A Preferred Stock were issued to Gary MacDonald in exchange for his
consent to the acquisition of the certain assets from NAMC. At the time of the
issuance, Gary MacDonald was the President of NAMC and its secured creditor.
Gary MacDonald became the President and CEO of the Company on June 1, 2011. As a
result of the Company obtaining the consent of Gary MacDonald to the acquisition
of the assets from NAMC, Gary MacDonald has acquired 38.7% voting control of the
Company. No other shares of the Company's preferred stock are outstanding. All
of the issued and outstanding shares of Series A Preferred Stock are duly
authorized, validly issued, and non-assessable. To the extent that additional
shares of Series A Preferred Stock are issued, the relative interests of
existing stockholders will be diluted.
COMMON STOCK
The Company is authorized to issue up to 900,000,000 shares of common stock, par
value $0.0001 per share. Each outstanding share of common stock entitles the
holder thereof to one vote per share on all matters submitted to a stockholder
vote.
As of May 31, 2011, the Company had a total of 31,680,202 shares of common stock
outstanding. During the three months ended May 31, 2011, the Company issued a
total of 31,000,000 shares of its common stock to NAMC in exchange for the
assets and options held by NAMC.
As a result of the Acquisition, NAMC has acquired 59.9% voting control of the
Company. This represents a change of control from Thomas Mills, our former
President and CEO to NAMC.
NOTE 8 - COMMITMENTS
CONSULTING AND EMPLOYMENT AGREEMENTS
On May 31, 2011, we entered into an Executive Employment Agreement with Gary
MacDonald to serve as our President and Chief Executive Officer for a term of
seven years, commencing June 1, 2011, which term will be automatically extended
for one year on June 1, of each succeeding year unless the Company gives notice
to the contrary, subject to termination upon notice or certain other conditions.
Gary MacDonald's annual base salary will be $120,000 exclusive of bonuses,
benefits and other compensation, which will be increased by five percent each
year. Gary MacDonald will be entitled to employee benefits comparable to those
provided to other senior executives of the Company, and to participate in any
share option plan, share purchase plan, retirement plan or similar plan offered
by the Company from time to time to its senior executives.
The Executive Employment Agreement also provides Mr. MacDonald with certain
severance benefits if his employment is terminated due to death or disability.
See also Notes 3 and 7.
NOTE 9 - RECENT ACCOUNTING PRONOUNCEMENTS
In December 2010, the FASB issued ASC Update No. 2010-29, Business Combinations
(Topic 805): Disclosure of Supplementary Pro Forma Information for Business
Combinations (a consensus of the FASB Emerging Issues Task Force. This update
specifies that if a public entity presents comparative financial statements, the
entity should disclose revenue and earnings of the combined entity as though the
business combination(s) that occurred during the current year had occurred as of
the beginning of the comparable prior annual reporting period only. The update
also expands the supplemental pro forma disclosures under Topic 805 to include a
description of the nature and amount of material, nonrecurring pro forma
adjustments directly attributable to the business combination included in the
reported pro forma revenue and earnings. The amendments in this update are
effective prospectively for business combinations for which the acquisition date
is on or after the beginning of the first annual reporting period beginning on
or after December 15, 2010, or the Company's fiscal year beginning January 1,
2011. To the extent that the Company enters into business combinations in the
future that fall under the requirements of Topic 805, it will be required to
provide the disclosures required by the update.
Accounting Standards Update ("ASU") No. 2010-13 was issued in April 2010, and
clarified the classification of an employee share based payment award with an
exercise price denominated in the currency of a market in which the underlying
security trades. This ASU will be effective for the first fiscal quarter
beginning after December 15, 2010, with early adoption permitted. The adoption
of ASU No. 2010-13 is not expected to have a material impact on the Company's
financial statements.
Other accounting standards that have been issued or proposed by the FASB or
other standards-setting bodies that do not require adoption until a future date
are not expected to have a material impact on the Company's financial statements
upon adoption.
NOTE 10 - SUBSEQUENT EVENTS
On June 14, 2011, the Company executed a financing agreement with Juniper
Resources LLC ("Juniper") under which we received a loan of $400,000 (the
"Loan") for the purpose of installing and putting into operation a large format
plasma furnace, specialty master control center and ancillary cooler, scrubber,
dor buttons and miscellaneous other equipment for refining having an estimated
book value of $600,000 (the "Equipment"). The Loan is due by December 15, 2011,
and is secured by a registered charge against the Equipment. Interest on the
Loan accrues at the rate of 1.65% per month, and is convertible at the election
of Juniper into shares of our common stock at the rate of $0.35 per share, which
election must be exercised before October 15, 2011, or before the completion of
our next public offering. In addition to the foregoing, we will issue to Juniper
75,000 shares of common stock at $0.25 per share upon completion of the
financing as a Loan origination fee.
See also Note 5.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
FORWARD LOOKING STATEMENTS
Except for historical information, the following Management's Discussion and
Analysis contains forward-looking statements based upon current expectations
that involve certain risks and uncertainties. Such forward-looking statements
include statements regarding, among other things, (a) our estimates of mineral
reserves and mineralized material, (b) our projected sales and profitability,
(c) our growth strategies, (d) anticipated trends in our industry, (e) our
future financing plans, (f) our anticipated needs for working capital, (g) our
lack of operational experience and (h) the benefits related to ownership of our
common stock. Forward-looking statements, which involve assumptions and describe
our future plans, strategies, and expectations, are generally identifiable by
use of the words "may," "will," "should," "expect," "anticipate," "estimate,"
"believe," "intend," or "project" or the negative of these words or other
variations on these words or comparable terminology. This information may
involve known and unknown risks, uncertainties, and other factors that may cause
our actual results, performance, or achievements to be materially different from
the future results, performance, or achievements expressed or implied by any
forward-looking statements. These statements may be found under "Management's
Discussion and Analysis of Financial Condition" as well as in this Report
generally. Actual events or results may differ materially from those discussed
in forward-looking statements as a result of various factors, including, without
limitation, the risks outlined under "Risk Factors" described in our Current
Report on Form 8-K filed with the Securities and Exchange Commission on June 7,
2011 and matters described in this Report generally. In light of these risks and
uncertainties, there can be no assurance that the forward-looking statements
contained in this Report will in fact occur as projected.
OVERVIEW
American Mining Corporation (the "Company," "AMC," "we," "us" or "our") was
incorporated in the State of Nevada, on September 15, 2004, under the name of
Thrust Energy Corp. On May 5, 2011, the Company changed its name to American
Mining Corporation. Our principal offices are in Reno, Nevada.
The Company was originally engaged in the exploration, exploitation, development
and production of oil and gas projects within North America, but was unable to
operate profitably. On April 18, 2011, the Company entered into an agreement of
purchase and sale with North American Mining Corporation, a Nevada Corporation
(formerly, American Mining Corporation), whereby the Company agreed to acquire
certain equipment and options on equipment held by North American Mining
Corporation (the "Assets") in exchange for 31,000,000 shares of the Company's
common stock at a deemed price of $0.05 per share and an assumption of certain
liabilities associated with the Assets. The acquisition of the Assets was
subject to the consent of a secured creditor of North American Mining
Corporation, which the Company obtained in consideration of 2,000,000 shares of
Series A Preferred Stock at a deemed price of $0.05 per share. The acquisition
closed on May 31, 2011.
Upon closing the acquisition of the Assets from North American Mining
Corporation, we suspended our oil and gas operations and changed our business to
toll milling and refining, mineral exploration and mine development. Toll
milling is a process whereby mined material is crushed and ground into fine
particles to ease the extraction of any valuable minerals contained therein,
such as gold, silver, lead, zinc and copper, and rare earth metals. We plan to
generate revenue from multiple sources, including milling and refining
operations, concentrate sales, gold dor sales and joint venture partnerships. We
do not intend to rely on a single project, but rather on multiple mills and
sources of feedstock.
Management intends to position our milling and refining operations within
economic proximity of advanced stage exploration properties that are located
within a 300 mile radius. Advanced exploration stage properties typically have
identified high grade deposits. Our milling facilities will enable independent
mineral properties within our service areas to realize shortened investment
horizons, reduced permitting fees, lower mine development costs, lessened
environmental impact and other significant economic benefits.
Toll milling is a new area of business for us, and our management team has
limited experience in toll milling operations. Although we intend to hire
knowledgeable and experienced employees or consultants with significant
experience in toll milling operations, there is no assurance that this line of
business will be successful, or that it will ever generate significant revenue
or achieve profitability.
If our milling operations are generating cash flow, we also intend to engage in
the acquisition and exploration of mineral properties that we believe have a
high potential for new mineral discoveries and profitability. We do not
presently own or have any rights to a mineral property and we have no reserves
of any type of mineral.
The Company had never earned revenue. We have suffered recurring losses and net
cash outflows from operations since inception, and our activities have been
financed from the proceeds of share subscriptions and loans from management and
non-affiliated third parties. We expect to continue to incur substantial losses
to implement our business plan. We have not established any other source of
equity or debt financing and there can be no assurance that we will be able to
obtain sufficient funds to implement our business plan. If we cannot continue as
a going concern, then our investors may lose all of their investment.
RESULTS OF OPERATIONS
NINE MONTH PERIOD ENDED MAY 31, 2011 COMPARED TO THE NINE MONTH PERIOD ENDED MAY
31, 2010
We realized a net loss of $35,760 during the nine month period ended May 31,
2011, all of which was due to maintenance and repair to our milling and refining
equipment.
No such costs incurred for the nine month period ended May 31, 2010 as the
Company just acquired a small amount of equipment at that time.
QUARTER ENDED MAY 31, 2011 COMPARED TO THE QUARTER ENDED MAY 31, 2010
We realized a net loss of $35,760 during the three month period ended May 31,
2011, all of which was due to maintenance and repair to our milling and refining
equipment.
No such costs incurred for the three month period ended May 31, 2010 as the
Company just acquired a small amount of equipment at that time.
LIQUIDITY AND CAPITAL RESOURCES.
As at May 31, 2011, we had total assets of $2,085,658 represents mineral milling
and refining equipment in the amount of $1,685,658 and cash investment in the
amount of $400,000 for the right to enter into 50% joint venture interest in a
permitted mill facility. We also had accounts payable and accrued liabilities of
$590,303, mainly the unpaid portion of equipment cost, and due to a related
party of $35,385, accumulated from the operations of Thrust.
As at May 31, 2010, we had total assets of $89,200 representing our costs of
mineral milling equipment acquired at that time.
On June 14, 2011, the Company executed a financing agreement with Juniper
Resources LLC ("Juniper") under which we received a loan of $400,000 (the
"Loan") for the purpose of installing and putting into operation a large format
plasma furnace, specialty master control center and ancillary cooler, scrubber,
dor buttons and miscellaneous other equipment for refining having an estimated
book value of $600,000 (the "Equipment"). The Loan is due by December 15, 2011,
and is secured by a registered charge against the Equipment. Interest on the
Loan accrues at the rate of 1.65% per month, and is convertible at the election
of Juniper into shares of our common stock at the rate of $0.35 per share, which
election must be exercised before October 15, 2011, or before the completion of
our next public offering. In addition to the foregoing, we will issue to Juniper
75,000 shares of common stock at $0.25 per share upon completion of the
financing as a Loan origination fee.
Our business is in the early stages of development, and we have not generated
revenue since inception. We do not have sufficient working capital to sustain
our present level of operations for the next 12 months or to implement our
business plan. We will be required to pursue sources of additional capital
through various means, including joint venture projects and debt or equity
financings. Future financings through equity investments are likely to be
dilutive to existing stockholders. Also, the terms of securities we may issue in
future capital transactions may be more favorable for our new investors. Newly
issued securities may include preferences, superior voting rights, and the
issuance of warrants or other derivative securities, which may have additional
dilutive effects. Further, we may incur substantial costs in pursuing future
capital and financing, including investment banking fees, legal fees, accounting
fees, printing and distribution expenses and other costs. We may also be
required to recognize non-cash expenses in connection with certain securities we
may issue, such as convertible notes and warrants, which will adversely impact
our financial condition.
Our ability to obtain needed financing may be impaired by such factors as the
capital markets, both generally and specifically in the mining industry, and the
fact that we have not been profitable, which could impact the availability or
cost of future financings. If the amount of capital we are able to raise from
financing activities, together with our revenue from operations, is not
sufficient to satisfy our capital needs, even to the extent that we reduce our
operations accordingly, we may be required to cease operations.
There is no assurance that we will be able to obtain financing on terms
satisfactory to use, or at all. We do not have any arrangements in place for any
future financing. If we are unable to secure additional funding, we may cease or
suspend operations. We have no plans, arrangements or contingencies in place in
the event that we cease operations.
ITEM 4. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
As of May 31, 2011, we carried out an evaluation, under the supervision and with
the participation of our management, including our Chief Executive Officer and
Chief Financial Officer (who are one and the same person), of the effectiveness
of the design and operation of our disclosure controls and procedures pursuant
to Exchange Act Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act
of 1934, as amended. Based solely on the material weaknesses described below,
our Chief Executive Officer and Chief Financial Officer concluded that, as of
May 31, 2011, our disclosure controls and procedures were not effective:
1. We presently have only one officer and no employees. Inasmuch as there is
no segregation of duties within the Company, there is no management oversight,
no one to review control documentation and no control documentation is being
produced.
CHANGES IN DISCLOSURE CONTROLS AND PROCEDURES
There were no changes in disclosure controls and procedures that occurred during
the period covered by this report that have materially affected, or are
reasonably likely to materially effect, our disclosure controls and procedures.
We will not be implementing any changes to our disclosure controls and
procedures until there is a significant change in our operations or capital
resources.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not a party to any material legal proceedings and to its
knowledge, no such proceedings are threatened or contemplated.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On May 31, 2011, the Company issued 31,000,000 shares of its common stock to
North American Mining Corporation in exchange for certain milling and refining
equipment and options on additional milling and refining equipment (the
"Assets"). The shares were issued at a deemed price of $0.05 per share without
registration in reliance upon exemptions provided by Section 4(2) of the
Securities Act of 1933. North American Mining Corporation has agreed that it
will not make any disposition of the issued shares unless such transfer is
pursuant to registration under the Securities Act of 1933, as amended, or
pursuant to an available exemption from registration thereunder.
The acquisition of the Assets from North American Mining Corporation was subject
to the consent of Gary MacDonald, the president of North American Mining
Corporation, in his capacity as a secured creditor of North American Mining
Corporation. On May 31, 2011, the Company issued 2,000,000 shares of Series A
Preferred Stock to Gary MacDonald in exchange for his consent to the acquisition
of the Assets from North American Mining Corporation. The shares of Series A
Preferred Stock were issued at a deemed price of $0.05 per share without
registration in reliance upon an exemption provided by Section 4(2) of the
Securities Act of 1933. Gary MacDonald was appointed the President and CEO of
the Company on June 1, 2011, and as a director on July 1, 2011.
Our management has estimated the net value of the assets acquired from North
American Mining Corporation to be $1,635,618, based on the historic costs of the
assets as of May 31, 2011. Our management has based its estimates and
assumptions on current facts, historical experience and various other factors
that its management believes to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying values
of assets and liabilities. While our management believes that the estimated net
value of the acquired assets is fair and reasonable, our management does not
have any experience in asset valuation. Actual results experienced by the
Company may differ materially and adversely from our management's estimates. To
the extent there are material differences between the estimates and the actual
results, future results of operations will be affected.
DIVIDEND POLICY
Our Board of Directors may declare and pay dividends on outstanding shares of
common stock out of funds legally available therefor in our sole discretion;
however, to date no dividends have been paid on common stock and we do not
anticipate the payment of dividends in the foreseeable future.
ITEM 3. DEFAULT UPON SENIOR NOTES
Not applicable.
ITEM 5. OTHER INFORMATION
AMENDMENT OF A MATERIAL DEFINITIVE AGREEMENT AND UNREGISTERED SALE OF EQUITY
SECURITIES
On July 15, 2011, the Company and Win-Eldrich Gold Inc. ("WEG") agreed to amend
their binding Letter of Intent dated March 24, 2011 (the "LOI"), which concerns
a joint-venture between the parties with respect to the improvement and
operation of an ore milling facility located near Denio Junction, Nevada (the
"Ashdown Mill"). Under the terms of the LOI, we are obligated to pay $1.5
million (the "WEG Payment") to WEG upon execution of a definitive agreement by
June 23, 2011, or such other date as may be agreed upon by the parties in
writing (the "Due Date").
We have agreed with WEG to amend the LOI by extending the Due Date to September
15, 2011. WEG has further agreed to accept 2,000,000 shares of our common stock
(the "Shares"), issuable immediately, in lieu of $500,000 payable in respect of
the WEG Payment, with the remaining $1 million of the WEG Payment being payable
by the Due Date. If we default on our obligations under the amended LOI, the
Shares will not be returned to us. In consideration of WEG's agreement to the
foregoing, we will pay WEG $50,000 cash.
The Shares will be issued to WEG without registration in reliance upon an
exemption provided by Section 4(2) of the Securities Act of 1933.
ITEM 6. EXHIBITS
EXHIBIT DESCRIPTION
10.1 Letter of Intent dated March 22, 1011, between Win-Eldrich Gold, Inc.
and American Mining Corporation
31.1 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
99.1 Map showing the location of the Ashdown Mill
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.
AMERICAN MINING CORPORATION
Date: July 19, 2011 /s/ Gary MacDonald
Gary MacDonald
President, Chief Executive Officer,
Chief Financial Officer, and
Principal Accounting Office