Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended February 29, 2012
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _____________ to _____________
Commission File Number 000-54327
FIRST AMERICAN SILVER CORP.
(Exact name of registrant as specified in its charter)
Nevada 98-0579157
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
10597 Double R Blvd. Ste. 2, Reno, NV, USA 89521
(Address of principal executive offices) (Zip Code)
(775) 323-3278
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] YES [ ] NO
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). [X] YES [ ] NO
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a small reporting company. See
the definitions of "large accelerated filer", "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act [ ] YES [X] NO
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant has filed all documents and reports required to be
filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. [ ] YES [ ] NO
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
55,700,000 common shares issued and outstanding as of April 20, 2012.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 18
Item 3. Quantitative and Qualitative Disclosures About Market Risk 24
Item 4. Controls and Procedures 25
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 25
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 25
Item 3. Defaults Upon Senior Securities 25
Item 4. Mine Safety Disclosure 25
Item 5. Other Information 26
Item 6. Exhibits 26
SIGNATURES 28
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
These unaudited financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America for
interim financial information and the Securities and Exchange Commission
instructions to Form 10-Q. In the opinion of management, all adjustments
considered necessary for a fair presentation have been included. Operating
results for the interim period ended February 29, 2012 are not necessarily
indicative of the results that can be expected for the full year.
3
FIRST AMERICAN SILVER CORP.
(AN EXPLORATION STAGE COMPANY)
TABLE OF CONTENTS
FEBRUARY 29, 2012
Balance Sheets as of February 29, 2012 and November 30, 2011 (unaudited) 5
Statements of Operations for the three months ended February 29, 2012 and
February 28, 2011 and the period from April 29, 2008 (inception) to
February 29, 2012 (unaudited) 6
Statement of Stockholders' Equity as of February 29, 2012 (unaudited) 7
Statements of Cash Flows for the three months ended February 29, 2012 and
February 28, 2011 and the period from April 29, 2008 (inception) to
February 29, 2012 (unaudited) 8
Notes to the Financial Statements 9
4
FIRST AMERICAN SILVER CORP.
(AN EXPLORATION STAGE COMPANY)
BALANCE SHEETS (UNAUDITED)
February 29, November 30,
2012 2011
---------- ----------
ASSETS
Current assets
Cash and bank accounts $ 8,520 $ 33,850
Prepaid expenses 38,175 50,664
---------- ----------
Total current assets 46,695 84,514
---------- ----------
Property and equipment - net 4,194 4,909
---------- ----------
Other assets
Mineral properties 197,976 188,226
Deposits 51,925 101,925
Reclamation bond 8,879 8,879
Website - net 3,917 4,167
---------- ----------
Total other assets 262,697 303,197
---------- ----------
Total Assets $ 313,586 $ 392,620
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 40,402 $ 29,620
Accrued professional fees 8,500 7,000
Due to related party 1,850 0
---------- ----------
Total liabilities 50,752 36,620
---------- ----------
Stockholders' Equity
Preferred stock, par value $0.001, 20,000,000 shares authorized,
no shares issued and outstanding 0 0
Common stock, par value $0.001, 3,500,000,000 shares authorized,
55,700,000 shares issued and outstanding (55,600,000 - 2011) 55,700 55,600
Additional paid-in capital 781,788 769,388
Common stock warrants 144,117 144,117
Deficit accumulated during the exploration stage (718,771) (613,105)
---------- ----------
Total Stockholders' Equity 262,834 356,000
---------- ----------
Total Liabilities and Stockholders' Equity $ 313,586 $ 392,620
========== ==========
The accompanying notes are an integral part of these financial statements.
5
FIRST AMERICAN SILVER CORP.
(AN EXPLORATION STAGE COMPANY)
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED FEBRUARY 29, 2012 AND FEBRUARY 28, 2011
AND THE PERIOD FROM APRIL 29, 2008 (INCEPTION) TO FEBRUARY 29, 2012
(UNAUDITED)
Three Months Three Months April 29, 2008
Ended Ended (Inception) to
February 29, February 28, February 29,
2012 2011 2012
------------ ------------ ------------
REVENUES $ 0 $ 0 $ 0
------------ ------------ ------------
OPERATING EXPENSES
Exploration costs 14,753 2,713 125,935
Accounting and legal 31,804 9,329 163,887
Impairment loss on mineral properties 0 0 197,336
Consulting fees 37,829 0 91,975
Transfer agent and filing fees 607 1,320 11,892
Miscellaneous fees 0 3,292 5,536
Incorporation costs 0 0 1,387
General and administrative 20,673 8,800 120,823
------------ ------------ ------------
TOTAL OPERATING EXPENSES 105,666 25,454 718,771
------------ ------------ ------------
LOSS FROM OPERATIONS BEFORE PROVISION FOR INCOME TAX (105,666) (25,454) (718,771)
PROVISION FOR INCOME TAX 0 0 0
------------ ------------ ------------
NET LOSS $ (105,666) $ (25,454) $ (718,771)
============ ============ ============
LOSS PER SHARE: BASIC AND DILUTED $ (0.00) $ (0.00)
============ ============
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
BASIC AND DILUTED 55,644,231 62,400,000
============ ============
The accompanying notes are an integral part of these financial statements.
6
FIRST AMERICAN SILVER CORP.
(AN EXPLORATION STAGE COMPANY)
STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)
AS OF FEBRUARY 29, 2012
Deficit
Accumulated
Common Stock Additional Common During the Total
---------------------- Paid in Stock Exploration Stockholders'
Shares Amount Capital Warrants Stage Equity
------ ------ ------- -------- ----- ------
Inception, April 29, 2008 -- $ -- $ -- $ -- $ -- $ --
Shares issued to founder on June 30,
2008 @ $0.00028 per share 52,500,000 1,500 13,500 -- -- 15,000
Private placement on April 30, 2008
@ $0.00143 per share 24,500,000 700 34,300 -- -- 35,000
Net loss for the period -- -- -- -- (13,639) (13,639)
---------- -------- -------- -------- --------- ---------
Balance, November 30, 2008 77,000,000 2,200 47,800 -- (13,639) 36,361
Net loss for the year ended
November 30, 2009 -- -- -- -- (16,345) (16,345)
---------- -------- -------- -------- --------- ---------
Balance, November 30, 2009 77,000,000 2,200 47,800 -- (29,984) 20,016
Adjust for 35:1 forward stock split -- 74,800 (74,800) -- -- 0
Private placement on October 29, 2010
@ $0.25 per share 1,000,000 1,000 236,518 12,482 -- 250,000
Common stock issued in relation to
acquisition of mineral properties 300,000 300 149,700 -- -- 150,000
Net loss for the year ended
November 30, 2010 -- -- -- -- (45,762) (45,762)
---------- -------- -------- -------- --------- ---------
Balance, November 30, 2010 78,300,000 78,300 359,218 12,482 (75,746) 374,254
Cancellation of common shares 23,850,000) (23,850) 23,850 -- -- 0
Common stock issued in relation to
acquisition of mineral properties 100,000 100 102,900 -- -- 103,000
Private placement on October 29, 2010
@ $0.25 per share 1,000,000 1,000 217,365 131,635 -- 350,000
Common stock issued for services 50,000 50 15,200 -- -- 15,250
Options issued to consultant -- -- 50,855 -- -- 50,855
Net loss for the year ended
November 30, 2011 -- -- -- -- (537,359) (537,359)
---------- -------- -------- -------- --------- ---------
Balance, November 30, 2011 55,600,000 55,600 769,388 144,117 (613,105) 356,000
Common stock issued for services 25,000 25 2,725 -- -- 2,750
Common stock issued for mineral
properties 75,000 75 9,675 -- -- 9,750
Net loss for the period ended
February 29, 2012 -- -- -- -- (105,666) (105,666)
---------- -------- -------- -------- --------- ---------
Balance, February 29, 2012 55,700,000 $ 55,700 $781,788 $144,117 $(718,771) $ 262,834
========== ======== ======== ======== ========= =========
The accompanying notes are an integral part of these financial statements.
7
FIRST AMERICAN SILVER CORP.
(AN EXPLORATION STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED FEBRUARY 29, 2012 AND FEBRUARY 28, 2011
AND THE PERIOD FROM APRIL 29, 2008 (INCEPTION) TO FEBRUARY 29, 2012
(UNAUDITED)
Three Months Three Months April 29, 2008
Ended Ended (Inception) to
February 29, February 28, February 29,
2012 2011 2012
---------- ---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period $ (105,666) $ (25,454) $ (718,771)
Adjustments to Reconcile Net Loss to Net Cash
Provided by (Used In) Operating Activities:
Depreciation and amortization 965 0 2,611
Stock issued for services 2,750 0 18,000
Stock options issued for services 0 0 50,855
Impairment loss on mineral properties 0 0 197,336
Changes in operating assets and liabilities:
Prepaid expenses 12,489 (800) (38,175)
Accounts payable 10,782 (18,266) 40,402
Accrued expenses 1,500 1,000 8,500
Due to related party 1,850 0 1,850
---------- ---------- ----------
NET CASH USED IN OPERATING ACTIVITIES (75,330) (43,520) (437,392)
---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment 0 0 (5,722)
Purchase of reclamation bond 0 0 (8,879)
Website development costs 0 (5,000) (5,000)
(Increase) Decrease in deposits 50,000 0 (51,925)
Acquisition of mineral properties 0 0 (132,562)
---------- ---------- ----------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 50,000 (5,000) (204,088)
---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of common stock 0 0 650,000
---------- ---------- ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 0 0 650,000
---------- ---------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (25,330) (48,520) 8,520
CASH, BEGINNING OF PERIOD 33,850 238,205 0
---------- ---------- ----------
CASH, END OF PERIOD $ 8,520 $ 189,685 $ 8,520
========== ========== ==========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for income taxes $ 0 $ 0 $ 0
========== ========== ==========
Cash paid for interest $ 0 $ 0 $ 0
========== ========== ==========
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:
Cancellation of common shares $ 0 $ 0 $ 23,850
========== ========== ==========
Common stock issued to acquire mineral properties $ 9,750 $ 0 $ 262,750
========== ========== ==========
The accompanying notes are an integral part of these financial statements
8
FIRST AMERICAN SILVER CORP.
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 29, 2012
NOTE 1 - NATURE OF OPERATIONS
Mayetok, Inc. ("the Company") was incorporated in the state of Nevada on April
29, 2008.
On June 8, 2010, the Company changed its name to First American Silver Corp.
In October 2010, the Company entered into Property Option Agreements to acquire
100% interests in three mineral properties located in Nevada. On April 15, 2011
the Company entered into a Property Option Agreement with Pyramid Lake LLC and
Anthony A. Longo to acquire a 100% interest in the Esmeralda Property, also
located in Nevada. These properties have been acquired for prospecting,
exploration and production of gold, silver, and all other metals. Development
and exploration activities are currently being undertaken.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
EXPLORATION STAGE COMPANY
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles related to accounting and reporting by
exploration-stage companies. An exploration-stage company is one in which
planned principal operations have not commenced or if its operations have
commenced, there has been no significant revenues there from.
BASIS OF PRESENTATION
The financial statements of the Company have been prepared in accordance with
generally accepted accounting principles in the United States of America and are
presented in US dollars.
ACCOUNTING BASIS
The Company uses the accrual basis of accounting and accounting principles
generally accepted in the United States of America ("GAAP" accounting). The
Company has adopted a November 30 fiscal year end.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with maturities of three
months or less to be cash equivalents. At February 29, 2012 and November 30,
2011, respectively, the Company had $8,520 and $33,850 of unrestricted cash to
be used for future business operations
The Company's bank accounts are deposited in insured institutions. The funds are
insured up to $250,000. At times, the Company's bank deposits may exceed the
insured amount. Management believes it has little risk related to the excess
deposits.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments consist of cash, prepaid expenses, accounts
payable, accrued professional fees, and amount due to a related party. The
carrying amount of these financial instruments approximates fair value due to
either length of maturity or interest rates that approximate prevailing market
rates unless otherwise disclosed in these financial statements.
9
CONCENTRATIONS OF CREDIT RISK
The Company maintains its cash in bank deposit accounts, the balances of which
at times may exceed federally insured limits. The Company continually monitors
its banking relationships and consequently has not experienced any losses in
such accounts. The Company believes it is not exposed to any significant credit
risk on cash and cash equivalents.
STOCK-BASED COMPENSATION
The Company accounts for employee stock-based compensation in accordance with
the guidance of ASC Topic 718, COMPENSATION - STOCK COMPENSATION which requires
all share-based payments to employees, including grants of employee stock
options, to be recognized in the financial statements based on their fair
values. There has been no stock-based compensation issued to employees.
The Company follows ASC Topic 505-50, formerly EITF 96-18, "ACCOUNTING FOR
EQUITY INSTRUMENTS THAT ARE ISSUED TO OTHER THAN EMPLOYEES FOR ACQUIRING, OR IN
CONJUNCTION WITH SELLING GOODS AND SERVICES," for stock options and warrants
issued to consultants and other non-employees. In accordance with ASC Topic
505-50, these stock options and warrants issued as compensation for services
provided to the Company are accounted for based upon the fair value of the
services provided or the estimated fair market value of the option or warrant,
whichever can be more clearly determined. The fair value of the equity
instrument is charged directly to compensation expense and additional paid-in
capital over the period during which services are rendered. The Company issued
300,000 options to consultants in the current fiscal year.
INCOME TAXES
Income taxes are computed using the asset and liability method. Under the asset
and liability method, deferred income tax assets and liabilities are determined
based on the differences between the financial reporting and tax bases of assets
and liabilities and are measured using the currently enacted tax rates and laws.
A valuation allowance is provided for the amount of deferred tax assets that,
based on available evidence, are not expected to be realized. It is the
Company's policy to classify interest and penalties on income taxes as interest
expense or penalties expense. As of February 29, 2012, there have been no
interest or penalties incurred on income taxes.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date the financial statements and the
reported amount of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
REVENUE RECOGNITION
The Company is in the exploration stage and has yet to realize revenues from
operations. Once the Company has commenced operations, it will recognize
revenues when delivery of goods or completion of services has occurred provided
there is persuasive evidence of an agreement, acceptance has been approved by
its customers, the fee is fixed or determinable based on the completion of
stated terms and conditions, and collection of any related receivable is
probable.
10
BASIC INCOME (LOSS) PER SHARE
Basic income (loss) per share is calculated by dividing the Company's net loss
applicable to common shareholders by the weighted average number of common
shares during the period. Diluted earnings per share is calculated by dividing
the Company's net income available to common shareholders by the diluted
weighted average number of shares outstanding during the year. The diluted
weighted average number of shares outstanding is the basic weighted number of
shares adjusted for any potentially dilutive debt or equity. Common share
equivalents totaling 2,300,000 at February 29, 2012, representing outstanding
warrants and options were not included in the computation of diluted earnings
per share for the three months ended February 29, 2012, as their effect would
have been anti-dilutive.
On June 8, 2010, the Company affected a 35:1 forward stock split of its common
shares. All share and per share data have been adjusted to reflect such stock
split.
DIVIDENDS
The Company has not adopted any policy regarding payment of dividends. No
dividends have been paid during the periods shown.
MINERAL PROPERTIES
Costs of exploration, carrying and retaining unproven mineral lease properties
are expensed as incurred. Mineral property acquisition costs are capitalized
including licenses and lease payments. Although the Company has taken steps to
verify title to mineral properties in which it has an interest, these procedures
do not guarantee the Company's title. Such properties may be subject to prior
agreements or transfers and title may be affected by undetected defects.
Impairment losses will be recorded on mineral properties used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amount. In
accordance with ASC 360-10-35-17, an impairment loss will be recognized only if
the carrying amount of a long-lived asset is not recoverable and exceeds its
fair value. The carrying amount of a long-lived asset is not recoverable if it
exceeds the sum of the undiscounted cash flows expected to result from the use
and eventual disposition of the asset. That assessment shall be based on the
carrying amount of the asset at the date it is tested for recoverability,
whether in use or under development. An impairment loss shall be measured as the
amount by which the carrying amount of a long-lived asset exceeds its fair
value.
Impairment losses totalling $197,336 were recorded in 2011 relating to three
unproven properties. No impairment losses were recorded in 2010.
RECENT ACCOUNTING PRONOUNCEMENTS
First American Silver does not expect the adoption of recently issued accounting
pronouncements to have a significant impact on the Company's results of
operations, financial position or cash flows.
11
NOTE 3 - MINERAL PROPERTIES
MOUNTAIN CITY PROPERTY
On October 29, 2010 the Company entered into a Property Option Agreement with
All American Resources. Pursuant to this agreement, the Company has the option
to acquire a 100% interest in the Elko Property making payments in aggregate of
$180,000, a $1,000,000 or $2,000,000 final balloon payment (see October 29, 2020
below), issuing 300,000 common shares and by paying all property maintenance
fees and obligations as they come due. The payments are to completing under the
following terms:
Date Cash Common Stock
---- ---- ------------
November 2, 2010 $ 10,000 100,000 Paid
October 29, 2012 $ -- 25,000 Paid
October 29, 2013 $ 10,000 25,000
October 29, 2014 $ 10,000 25,000
October 29, 2015 $ 10,000 25,000
October 29, 2016 $ 20,000 25,000
October 29, 2017 $ 30,000 25,000
October 29, 2018 $ 40,000 25,000
October 29, 2019 $ 50,000 25,000
October 29, 2020 $1,000,000 In case of $1,000,000 payment,
or the optionor shall retain a 2%
$2,000,000 NSR (Net Smelter Royalty). In
case of a $2,000,000, the
optionor shall retain a 1% NSR.
EAGAN CANYON PROPERTY
On October 29, 2010 the Company entered into a Property Option Agreement with
All American Resources. Pursuant to this agreement, the Company has the option
to acquire a 100% interest in the White Pine Property #1 making payments in
aggregate of $180,000, a $1,000,000 or $2,000,000 final balloon payment (see
October 29, 2020 below), issuing 300,000 common shares and by paying all
property maintenance fees and obligations as they come due. The payments are to
completing under the following terms:
Date Cash Common Stock
---- ---- ------------
November 2, 2010 $ 10,000 100,000 Paid
October 29, 2012 $ -- 25,000 Paid
October 29, 2013 $ 10,000 25,000
October 29, 2014 $ 10,000 25,000
October 29, 2015 $ 10,000 25,000
October 29, 2016 $ 20,000 25,000
October 29, 2017 $ 30,000 25,000
October 29, 2018 $ 40,000 25,000
October 29, 2019 $ 50,000 25,000
October 29, 2020 $1,000,000 In case of $1,000,000 payment,
or the optionor shall retain a 2%
$2,000,000 NSR (Net Smelter Royalty). In
case of a $2,000,000, the
optionor shall retain a 1% NSR.
12
NOTE 3 - MINERAL PROPERTIES (CONTINUED)
MUNCY CREEK PROPERTY
On October 29, 2010 the Company entered into a Property Option Agreement with
All American Resources. Pursuant to this agreement, the Company has the option
to acquire a 100% interest in the White Pine Property #2 making payments in
aggregate of $180,000, a $1,000,000 or $2,000,000 final balloon payment (see
October 29, 2020 below), issuing 300,000 common shares and by paying all
property maintenance fees and obligations as they come due. The payments are to
completing under the following terms:
Date Cash Common Stock
---- ---- ------------
November 2, 2010 $ 10,000 100,000 Paid
October 29, 2012 $ -- 25,000 Paid
October 29, 2013 $ 10,000 25,000
October 29, 2014 $ 10,000 25,000
October 29, 2015 $ 10,000 25,000
October 29, 2016 $ 20,000 25,000
October 29, 2017 $ 30,000 25,000
October 29, 2018 $ 40,000 25,000
October 29, 2019 $ 50,000 25,000
October 29, 2020 $1,000,000 In case of $1,000,000 payment,
or the optionor shall retain a 2%
$2,000,000 NSR (Net Smelter Royalty). In
case of a $2,000,000, the
optionor shall retain a 1% NSR.
ESMERALDA PROPERTY
On April 15, 2011 the Company entered into a Property Option Agreement with
Pyramid Lake LLC and Anthony A. Longo. Pursuant to this agreement, the Company
has the option to acquire a 100% interest in the Esmeralda Property by making
payments in aggregate of $505,000 and issuing 100,000 common shares and by
paying all property maintenance fees and obligations as they come due. The
payments are to completing under the following terms:
Date Cash Common Stock
---- ---- ------------
April 15, 2011 $ 30,000 100,000 Paid
April 15, 2012 $ 40,000 --
April 15, 2013 $ 50,000 --
April 15, 2014 $ 60,000 --
April 15, 2015 $ 70,000 --
April 15, 2016 $ 80,000 --
April 15, 2017 $ 90,000 --
April 15, 2018 $100,000 --
NOTE 4 - PREPAID EXPENSES
Prepaid expenses consisted of the following at February 29, 2012:
2012
--------
Rent $ 2,888
Consulting 34,963
Other 324
--------
Total prepaid expenses $ 38,175
========
13
NOTE 5 - DEPOSITS
Deposits consisted of the following at February 29, 2012:
2012
--------
Deposit paid to drilling company $ 50,000
Security deposit 1,925
--------
Total deposits $ 51,925
========
NOTE 6 - PROPERTY AND EQUIPMENT
Property and equipment is recorded at cost and consisted of the following at
February 29, 2012:
2012
--------
Office furniture and equipment $ 5,722
Less: Accumulated depreciation (1,528)
--------
Property and equipment - net $ 4,194
========
NOTE 7 - WEBSITE
The cost of developing the Company website has been capitalized and is being
amortized over a 5 year period using straight-line amortization:
2012
--------
Website development costs $ 5,000
Less: accumulated amortization (1,083)
--------
Website development costs, net $ 3,917
========
NOTE 9 - COMMON STOCK OPTIONS
The Company follows ASC Topic 505-50, formerly EITF 96-18, "ACCOUNTING FOR
EQUITY INSTRUMENTS THAT ARE ISSUED TO OTHER THAN EMPLOYEES FOR ACQUIRING, OR IN
CONJUNCTION WITH SELLING GOODS AND SERVICES," for stock options and warrants
issued to consultants and other non-employees. In accordance with ASC Topic
505-50, these stock options and warrants issued as compensation for services
provided to the Company are accounted for based upon the fair value of the
services provided or the estimated fair market value of the option or warrant,
whichever can be more clearly determined. The fair value of the equity
instrument is charged to compensation expense and additional paid-in capital
over the period during which services are rendered. The Company issued 50,000
common shares, and 300,000 options, to consultants in the current fiscal year.
The Company has estimated the fair value of the options issued at $50,855 as of
the grant date using the Black-Scholes option pricing model. The expense is
being recognized over the vesting term of the options. As such, $34,963 is a
prepaid expense at February 29, 2012, and $15,892 has been recognized as
consulting expense in the current quarter.
Key assumptions used by the Company in the Black-Scholes pricing model are
summarized as follows:
2011 Consultant
Options
-------
Stock price $.22
Exercise price $.24
Expected volatility 109%
Expected dividend yield 0.00%
Risk-free rate over the estimated expected
life of the warrants 0.93%
Expected term (in years) 5
14
NOTE 10 - STOCKHOLDERS' EQUITY
The company has 3,500,000,000 common shares authorized at a par value of $0.001
per share.
The company has 20,000,000 preferred shares authorized at a par value of $0.001
per share.
On June 8, 2010, the Company affected a 35:1 forward stock split of its common
shares. All share and per share data have been adjusted to reflect such stock
split.
On October 29, 2010, the Company completed a private placement whereby it issued
1,000,000 units at $0.25 each for gross proceeds of $250,000 to an unrelated
third party. Each unit consists of one common share and one share purchase
warrant exercisable at a price of $0.50 expiring on October 29, 2012.
On November 26, 2010, the Company issued 300,000 common shares as part of the
acquisition of interests in three mineral properties. These shares were valued
at a fair market value of $.50 per share on the date of issuance for total value
of $150,000.
On December 20, 2010, the Company cancelled 23,850,000 common shares.
On April 15, 2011, the Company issued 100,000 common shares as part of the
acquisition of an interest in a mineral property. These shares were valued at a
fair market value of $1.03 per share on the date of issuance for total value of
$103,000.
On July 1, October 1, 2011, and January 1, 2012 the Company issued 25,000 common
shares to a consultant for services. The shares issued on July 1, 2011 were
valued at $4,500; the shares issued on October 1, 2011 were valued at $10,725;
the shares issued on January 1, 2012 were valued at $2,750.
On July 13, 2011, the Company completed a private placement whereby it issued
1,000,000 units at $0.35 each for gross proceeds of $350,000 to an unrelated
third party. Each unit consists of one common share and one share purchase
warrant exercisable at a price of $0.65 expiring on July 13, 2013.
On January 26, 2012, the Company issued 75,000 common shares as part of the
acquisition of interests in three mineral properties.
NOTE 11 - INCOME TAXES
For the three months ended February 29, 2012 and 2011, the Company has incurred
net losses and, therefore, has no tax liability. The net deferred tax asset
generated by the loss carry-forward has been fully reserved. The cumulative net
operating loss carry-forward is $718,771 at February 29, 2012, and will begin to
expire in the year 2028.
The provision for Federal income tax consists of the following as of February
29, 2012 and February 28, 2011:
February 29, February 28,
2012 2011
-------- --------
Federal income tax benefit attributable to:
Current operations $ 35,926 $ 8,654
Less: valuation allowance (35,926) (8,654)
-------- --------
Net provision for Federal income taxes $ 0 $ 0
======== ========
15
The cumulative tax effect at the expected rate of 34% of significant items
comprising our net deferred tax amount is as follows as of February 29, 2012 and
November 30, 2011:
February 29, November 30,
2012 2011
---------- ----------
Deferred tax asset attributable to:
Net operating loss carryover $ 244,382 $ 208,456
Less: valuation allowance (244,382) (208,456)
---------- ----------
Net deferred tax asset $ 0 $ 0
========== ==========
Due to the change in ownership provisions of the Tax Reform Act of 1986, net
operating loss carry forwards for federal income tax reporting purposes are
subject to annual limitations. Should a change in ownership occur net operating
loss carry forwards may be limited as to use in future years.
NOTE 12 - GOING CONCERN
The accompanying financial statements have been prepared assuming that the
company will continue as a going concern. The Company has no established source
of revenue. This raises substantial doubt about the Company's ability to
continue as a going concern. Without realization of additional capital, it would
be unlikely for the Company to continue as a going concern. The financial
statements do not include any adjustments that might result from this
uncertainty.
The Company's activities to date have been supported by equity financing. It has
sustained losses in all previous reporting periods with an inception to date
loss of $718,771 as of February 29, 2012. Management continues to seek funding
from its shareholders and other qualified investors.
NOTE 13 - COMMITMENTS AND CONTINGENCIES
On November 26, 2010 we entered into three agreements with All American
Resources LLC in regard to the acquisition of certain property interests. The
interests that we have acquired are as follows:
* An option to acquire a 100% interest in a mineral exploration property
called the "Eagan Canyon" property in White Pine County, Nevada;
* An option to acquire a 100% interest in a mineral exploration property
called the "Muncy Creek" property in White Pine County, Nevada; and
* An option to acquire a 100% interest in a mineral exploration property
called the "Mountain City" property in Elko County, Nevada.
In regard to the above option agreements for the properties, our obligations for
each property consist of:
Making payments in the aggregate amount of $180,000 in annual periodic payments
ranging from $10,000 to $50,000, to the ninth anniversary of the option
agreement.
Make certain restricted common stock share issuances to All American Resources
LLC under the terms of the option agreements, periodically to the ninth
anniversary of the agreement (300,000 shares in regard to each property, with
100,000 shares in the first year and 25,000 shares each year thereafter).
On or before the tenth anniversary of the option agreement, in addition to the
payments described above, paying to All American Resources $1,000,000, in which
case All American Resources shall retain a two percent (2%) mineral production
royalty (the "Royalty") or, paying to All American Resources $2,000,000, in
which case All American Resources shall retain a one percent (1%) royalty.
16
On April 15, 2011, the Company entered into a mining lease and option purchase
agreement with Pyramid Lake LLC and Anthony A. Longo whereby we acquired an
interest in the Esmeralda property.
In regard to the above option agreement, our obligations for each property
consist of:
Making payments in the aggregate amount of $1,820,000 ranging from $30,000 to
$100,000 commencing in the year 2011 and completing in the year 2031.
On September 22, 2011, the Company entered into a License and Assignment
Agreement with its President, Mr. Tom Menning, whereby Mr. Menning has assigned
80% of his rights to participate on a 50% basis with ongoing and future projects
operated, controlled and conveyed within the area of interest.
Under the terms of the License Agreement, the Company will finance the cost of
pursuing rights for 80% percent of future proceeds received from the rights. The
term of the agreement is 10 years with an option to renew for an additional 10
years.
The officers and directors of the Company are involved in other business
activities and may, in the future, become involved in other business
opportunities that become available. They may face a conflict in selecting
between the Company and other business interests. The Company has not formulated
a policy for the resolution of such conflicts.
NOTE 14- SUBSEQUENT EVENTS
In accordance with ASC Topic 855-10, the Company has analyzed its operations
subsequent to February 29, 2012 to the date these financial statements were
issued, and has determined that it does not have any material subsequent events
to disclose in these financial statements.
17
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This quarterly report contains forward-looking statements. These statements
relate to future events or our future financial performance. In some cases, you
can identify forward-looking statements by terminology such as "may", "should",
expects", "plans", "anticipates", "believes", "estimates", "predicts",
"potential" or "continue" or the negative of these terms or other comparable
terminology. These statements are only predictions and involve known and unknown
risks, uncertainties and other factors that may cause our or our industry's
actual results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements. Although
we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. Except as required by applicable law, including the securities
laws of the United States, we do not intend to update any of the forward-looking
statements to conform these statements to actual results.
Our unaudited financial statements are stated in United States Dollars (US$) and
are prepared in accordance with United States Generally Accepted Accounting
Principles. The following discussion should be read in conjunction with our
financial statements and the related notes that appear elsewhere in this
quarterly report. The following discussion contains forward-looking statements
that reflect our plans, estimates and beliefs. Our actual results could differ
materially from those discussed in the forward-looking statements. Factors that
could cause or contribute to such differences include, but are not limited to,
those discussed below and elsewhere in this quarterly report.
In this quarterly report, unless otherwise specified, all dollar amounts are
expressed in United States dollars. All references to "US$" refer to United
States dollars and all references to "common stock" refer to the common shares
in our capital stock.
As used in this quarterly report, the terms "we", "us", "our" and "our company"
mean First American Silver Corp., unless otherwise indicated.
OVERVIEW
We are an exploration stage company engaged in the acquisition, exploration and
development of mineral properties.
The address of our principal executive office is located at 10597 Double R Blvd,
Suite 2, Reno, Nevada, 89521. Our telephone number is (775) 323-3278.
Our common stock is quoted on the OTC Bulletin Board under the symbol "FASV".
CORPORATE HISTORY
We were incorporated in the State of Nevada on April 29, 2008, under the name
"Mayetok, Inc.". As Mayetok, Inc. we were engaged in the development of a
website to market vacation properties in the Ukraine.
On June 8, 2010, we initiated a 1 old for 35 new forward stock split of our
issued and outstanding common stock. As a result, our authorized capital
increased from 100,000,000 to 3,500,000,000 shares of common stock and the
issued and outstanding increased from 2,200,000 shares of common stock to
77,000,000 shares of common stock, all with a par value of $0.001.
18
Also on June 8, 2010, we changed our name from "Mayetok, Inc." to "First
American Silver Corp.", by way of a merger with our wholly owned subsidiary
First American Silver Corp., which was formed solely for the change of name. We
changed the name of our company to reflect the new direction of our company in
the business of acquiring, exploring and developing mineral properties. As of
June 2010, we abandoned our former business plan of seeking to market vacation
properties.
Our name change and forward stock split was effective with the Over-the-Counter
Bulletin Board at the opening of trading on June 16, 2010, on which date we
adopted the stock symbol "FASV".
OUR CURRENT BUSINESS
On November 26, 2010 we entered into three option agreements with All American
Resources LLC for the acquisition of certain mineral property interests located
Elko County and White Pine County, Nevada. The interests that we acquired are as
follows:
* An option to acquire a 100% interest in a mineral exploration property
called the "Eagan Canyon" property in White Pine County, Nevada;
* An option to acquire a 100% interest in a mineral exploration property
called the "Muncy Creek" property in White Pine County, Nevada; and
* An option to acquire a 100% interest in a mineral exploration property
called the "Mountain City" property in Elko County, Nevada.
Pursuant to the above described option agreements, we may, at our option,
purchase any of the applicable properties by providing to All American Resources
LLC the following compensation in respect of each applicable property over the
nine year option term:
* making annual periodic payments in the aggregate amount of $180,000
ranging from $10,000 to $50,000;
* issuing to All American Resources 300,000 common shares in our capital
stock in the aggregate, with 100,000 shares issuable before the 1st
anniversary of the option agreement and 25,000 shares issuable each
year thereafter until the ninth anniversary of the option agreement;
and
* on or before the tenth anniversary of the option agreement either (i)
paying to All American Resources $1,000,000, in which case All
American Resources shall retain a 2% mineral production royalty; or
(ii) paying to All American Resources $2,000,000, in which case All
American Resources shall retain a 1% mineral production royalty.
To date, we have issued 375,000 shares of our common stock and paid $30,000 in
the aggregate to All American Resources LLC pursuant to the three mineral
property option agreements.
On April 15, 2011, we entered into a mining lease and option to purchase
agreement with Pyramid Lake LLC and Anthony A. Longo, on an ongoing basis
expiring April 15, 2031 with respect to the Mount Jackson Project located in
Esmeralda County, Nevada, wherein the owners will retain a production royalty of
3% of the net smelter returns. Pursuant to the lease and option agreement, we
are required to make the following payments:
Date Payment Amount
---- --------------
April 15, 2011 $ 30,000 (paid)
April 15, 2012 $ 40,000
April 15, 2013 $ 50,000
April 15, 2014 $ 60,000
April 15, 2015 $ 70,000
April 15, 2016 $ 80,000
April 15, 2017 $ 90,000
April 15, 2018 $100,000
April 15, 2019 - April 15, 2031 *$100,000
----------
* Commencing April 15, 2019, the amount of the payments will be increased
(and never decreased) for inflation.
19
In addition to the payments described above we issued an aggregate 100,000
shares of our common stock, pursuant to the terms of the lease and option
agreement.
On September 22, 2011, we entered into a License and Assignment Agreement dated
and effective as of September 16, 2011 with our president and director, Thomas
J. Menning. Mr. Menning is the successor in interest of the rights of Universal
Gas, Inc. and Universal Exploration, Ltd. (together "Universal") pursuant to an
agreement among Universal, Bullion Monarch Company, Polar Resources Co., Camsell
River Investments, Ltd., Lameert Management Ltd., and Etel Holdings Ltd. dated
May 10, 1979 (the "1979 Agreement"). Pursuant to the License Agreement, we have
acquired the rights and obligations of Universal established by the 1979
Agreement and pertaining to 256-square-miles of the Carlin Gold Trend in Elko
County, Nevada.
Under the terms of the 1979 Agreement and the License Agreement, we will now be
deemed the successor of a specific Right to Participate on a 50 percent basis
with ongoing and future projects operated, controlled and/or conveyed by Newmont
Mining and Barrick Gold Corporation within the area of interest.
Under the terms of the License Agreement, we will finance the cost of pursuing
the rights established in the 1979 Agreement. The distribution of any proceeds
will be as follows: After First American has been reimbursed for any and all
out-of-pocket expenses, it will share proceeds on an 80/20 percent basis with
Mr. Menning. The term of the licensing agreement will be for 10 years with an
option to renew for an additional 10 years.
Under the terms of the 1979 Agreement, a notification of assignment to the
operator is required. Both Newmont Mining and Barrick Gold Corp. have been
notified.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED FEBRUARY 29, 2012 AND FEBRUARY
28, 2011 AND THE PERIOD FROM INCEPTION (APRIL 29, 2008) TO FEBRUARY 29, 2012
We have not earned any revenues from inception through the period ending
February 29, 2012.
April 29, 2008
Three Months Three Months (Inception)
Ended Ended to
February 29, February 28, February 29,
2012 2011 2012
---------- ---------- ----------
Revenues $ Nil $ Nil $ Nil
Expenses $ (105,666) $ (25,454) $ (718,771)
Net Loss $ (105,666) $ (25,454) $ (718,771)
We incurred a net loss in the amount of 105,666 for the three months ended
February 29, 2012 compared to $25,454 for the three months ended February 28,
2011. We incurred a net loss of $718,771 for the period from our inception on
April 29, 2008 to February 29, 2012.
20
April 29, 2008
Three Months Three Months (Inception)
Ended Ended to
February 29, February 28, February 29,
2012 2011 2012
-------- -------- --------
Exploration costs $ 14,753 $ 2,713 $125,935
Accounting and legal $ 31,804 $ 9,329 $163,887
Impairment loss on mineral properties $ Nil $ Nil $197,336
Consulting fees $ 37,829 $ Nil $ 91,975
Transfer agent and filing fees $ 607 $ 1,320 $ 11,892
Miscellaneous fees $ Nil $ 3,292 $ 5,536
Incorporation costs $ Nil $ Nil $ 1,387
General and administrative $ 20,673 $ 8,800 $120,823
Our operating expenses incurred for the three months ended February 29, 2012
included $14,753 for exploration costs, $31,804 for accounting and legal fees,
$Nil for impairment loss on mineral properties, $37,829 for consulting fees,
$607 for transfer agent and filing fees, $Nil for miscellaneous fees and $Nil
for incorporation costs and $20,673 for general and administrative expenses
compared to the three months ended February 28, 2011 of $2,713 for exploration
costs, $9,329 for accounting and legal fees, $Nil for impairment loss on mineral
properties, $Nil for consulting fees,$1,320 for transfer agent and filing fees,
$3,292 for miscellaneous expenses, $Nil for incorporation costs, $Nil for
general and administrative and $8,800 for investor relations. Our operating
expenses incurred for the period from our inception on April 29, 2008 to
February 29, 2012 included $125,935 for exploration costs, $163,887 for
accounting and legal fees, $197,336 for impairment loss on mineral properties,
$91,975 for consulting fees, $11,892 for transfer agent and filing fees, $5,536
for miscellaneous fees and $1,387 for incorporation costs and $120,823 for
general and administrative expenses. We anticipate our operating expenses will
increase as we undertake our plan of operations.
LIQUIDITY AND CAPITAL RESOURCES
WORKING CAPITAL
At
February 29, November 30,
2012 2011
-------- --------
Current Assets $ 46,695 $ 84,514
Current Liabilities $ 50,752 $ 36,620
Working Capital $ (4,057) $ 47,894
CASH FLOWS
April 29, 2008
Three Months Three Months (Inception)
Ended Ended to
February 29, February 28, February 29,
2012 2011 2012
---------- ---------- ----------
Net Cash Provided by (Used in) Operating Activities $ (75,330) $ (43,520) $ (437,392)
Net Cash Provided by (Used In) Investing Activities $ 50,000 $ (5,000) $ (204,088)
Net Cash Provided by Financing Activities $ Nil $ Nil $ 650,000
Net Increase (Decrease) In Cash During The Period $ (25,330) $ (48,520) $ 8,520
As of February 29, 2012, we had current assets in the amount of $46,695,
consisting of cash and prepaid expenses. Our current liabilities as of February
29, 2012 were $50,752. We had a working capital deficit of $4,057 on February
29, 2012.
Our cash used in operating activities was $75,330 for the three months ended
February 29, 2012 compared to $43,520 for the same period in 2011 and $437,392
for the period from inception on April 29, 2008 to February 29, 2012.
21
Our cash from investing activities was $50,000 for the three months ended
February 29, 2012 compared to cash used of $5,000 for the same period in 2011
and $204,088 for the period from inception on April 29, 2008 to February 29,
2012.
Our cash provided by financing activities was $Nil for the three months ended
February 29, 2012 compared to $Nil for the same period in 2011 and $650,000 for
the period from inception on April 29, 2008 to February 29, 2012.
We have not attained profitable operations and are dependent upon obtaining
financing to pursue our business plan over the next twelve months. If we do not
generate revenue sufficient to sustain operations, we may not be able to
continue as a going concern.
OFF BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements that have or are reasonably likely to
have a current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources that is material to stockholders.
GOING CONCERN
The accompanying financial statements have been prepared assuming that our
company will continue as a going concern. As discussed in the notes to the
financial statements, we have no established source of revenue. Our auditors
have expressed substantial doubt about our ability to continue as a going
concern. Without realization of additional capital, it would be unlikely for us
to continue as a going concern. The financial statements do not include any
adjustments that might result from this uncertainty.
Our activities to date have been supported by equity financing. We have
sustained losses in all previous reporting periods with an inception to date
loss of $718,771 as of February 29, 2012. Management continues to seek funding
from our shareholders and other qualified investors to pursue our business plan.
In the alternative, we may be amenable to a sale, merger or other acquisition in
the event such transaction is deemed by management to be in the best interests
of the shareholders.
CRITICAL ACCOUNTING POLICIES
In December 2001, the SEC requested that all registrants list their most
"critical accounting polices" in the Management Discussion and Analysis. The SEC
indicated that a "critical accounting policy" is one which is both important to
the portrayal of a company's financial condition and results, and requires
management's most difficult, subjective or complex judgments, often as a result
of the need to make estimates about the effect of matters that are inherently
uncertain. We believe that the following accounting policies fit this
definition.
EXPLORATION STAGE COMPANY
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles related to accounting and reporting by
exploration-stage companies. An exploration-stage company is one in which
planned principal operations have not commenced or if its operations have
commenced, there has been no significant revenues there from.
BASIS OF PRESENTATION
The financial statements of our company have been prepared in accordance with
generally accepted accounting principles in the United States of America and are
presented in US dollars.
ACCOUNTING BASIS
Our company uses the accrual basis of accounting and accounting principles
generally accepted in the United States of America ("GAAP" accounting). Our
company has adopted a November 30 fiscal year end.
22
CASH AND CASH EQUIVALENTS
Our company considers all highly liquid investments with maturities of three
months or less to be cash equivalents. At February 29, 2012 and November 30,
2011, our company had $8,520 and $33,850 of unrestricted cash to be used for
future business operations.
Our company's bank accounts are deposited in insured institutions. The funds are
insured up to $250,000. At times, our company's bank deposits may exceed the
insured amount. Management believes it has little risk related to the excess
deposits.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Our company's financial instruments consist of cash, prepaid expenses, accounts
payable, accrued professional fees, and amount due to related party. The
carrying amount of these financial instruments approximates fair value due to
either length of maturity or interest rates that approximate prevailing market
rates unless otherwise disclosed in these financial statements.
CONCENTRATIONS OF CREDIT RISK
Our company maintains its cash in bank deposit accounts, the balances of which
at times may exceed federally insured limits. Our company continually monitors
its banking relationships and consequently has not experienced any losses in
such accounts. Our company believes it is not exposed to any significant credit
risk on cash and cash equivalents.
STOCK-BASED COMPENSATION
The Company accounts for employee stock-based compensation in accordance with
the guidance of ASC Topic 718, COMPENSATION - STOCK COMPENSATION which requires
all share-based payments to employees, including grants of employee stock
options, to be recognized in the financial statements based on their fair
values. There has been no stock-based compensation issued to employees.
The Company follows ASC Topic 505-50, formerly EITF 96-18, "ACCOUNTING FOR
EQUITY INSTRUMENTS THAT ARE ISSUED TO OTHER THAN EMPLOYEES FOR ACQUIRING, OR IN
CONJUNCTION WITH SELLING GOODS AND SERVICES," for stock options and warrants
issued to consultants and other non-employees. In accordance with ASC Topic
505-50, these stock options and warrants issued as compensation for services
provided to the Company are accounted for based upon the fair value of the
services provided or the estimated fair market value of the option or warrant,
whichever can be more clearly determined. The fair value of the equity
instrument is charged directly to compensation expense and additional paid-in
capital over the period during which services are rendered. The Company issued
300,000 options to consultants in the current fiscal year.
INCOME TAXES
Income taxes are computed using the asset and liability method. Under the asset
and liability method, deferred income tax assets and liabilities are determined
based on the differences between the financial reporting and tax bases of assets
and liabilities and are measured using the currently enacted tax rates and laws.
A valuation allowance is provided for the amount of deferred tax assets that,
based on available evidence, are not expected to be realized. It is our
company's policy to classify interest and penalties on income taxes as interest
expense or penalties expense. As of February 29, 2012, there have been no
interest or penalties incurred on income taxes.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date the financial statements and the
reported amount of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
23
REVENUE RECOGNITION
The Company is in the exploration stage and has yet to realize revenues from
operations. Once the Company has commenced operations, it will recognize
revenues when delivery of goods or completion of services has occurred provided
there is persuasive evidence of an agreement, acceptance has been approved by
its customers, the fee is fixed or determinable based on the completion of
stated terms and conditions, and collection of any related receivable is
probable.
BASIC INCOME (LOSS) PER SHARE
Basic income (loss) per share is calculated by dividing our company's net loss
applicable to common shareholders by the weighted average number of common
shares during the period. Diluted earnings per share is calculated by dividing
our company's net income available to common shareholders by the diluted
weighted average number of shares outstanding during the year. The diluted
weighted average number of shares outstanding is the basic weighted number of
shares adjusted for any potentially dilutive debt or equity. Common share
equivalents totaling 1,000,000 at February 29, 2012, representing outstanding
warrants were not included in the computation of diluted earnings per share for
the year ended November 30, 2011, as their effect would have been anti-dilutive.
There were no such common stock equivalents outstanding as of February 29, 2012.
On June 8, 2010, our company affected a 35:1 forward stock split of its common
shares. All share and per share data have been adjusted to reflect such stock
split.
DIVIDENDS
Our company has not adopted any policy regarding payment of dividends. No
dividends have been paid during the periods shown.
MINERAL PROPERTIES
Costs of exploration, carrying and retaining unproven mineral lease properties
are expensed as incurred. Mineral property acquisition costs are capitalized
including licenses and lease payments. Although the Company has taken steps to
verify title to mineral properties in which it has an interest, these procedures
do not guarantee the Company's title. Such properties may be subject to prior
agreements or transfers and title may be affected by undetected defects.
Impairment losses will be recorded on mineral properties used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amount. In
accordance with ASC 360-10-35-17, an impairment loss will be recognized only if
the carrying amount of a long-lived asset is not recoverable and exceeds its
fair value. The carrying amount of a long-lived asset is not recoverable if it
exceeds the sum of the undiscounted cash flows expected to result from the use
and eventual disposition of the asset. That assessment shall be based on the
carrying amount of the asset at the date it is tested for recoverability,
whether in use or under development. An impairment loss shall be measured as the
amount by which the carrying amount of a long-lived asset exceeds its fair
value.
Impairment losses totalling $197,336 were recorded in 2011 relating to three
unproven properties. No impairment losses were recorded in 2010.
RECENT ACCOUNTING PRONOUNCEMENTS
Our company does not expect the adoption of recently issued accounting
pronouncements to have a significant impact on our company's results of
operations, financial position or cash flows.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a "smaller reporting company", we are not required to provide the information
required by this Item.
24
ITEM 4. CONTROLS AND PROCEDURES
MANAGEMENT'S REPORT ON DISCLOSURE CONTROLS AND PROCEDURES
We carried out an evaluation, under the supervision and with the participation
of our management, including our president and chief financial officer (our
principal executive officer, principal financial officer and principal
accounting officer), of the effectiveness of our disclosure controls and
procedures. Based upon that evaluation, our president and chief financial
officer (our principal executive officer, principal financial officer and
principal accounting officer) concluded that, as of the end of the period
covered in this report, our disclosure controls and procedures were not
effective at ensuring that information required to be disclosed in reports filed
under the Securities and Exchange Act of 1934 is recorded, processed, summarized
and reported within the required time periods and is accumulated and
communicated to our management, including our president and chief financial
officer (our principal executive officer, principal financial officer and
principal accounting officer), as appropriate to allow timely decisions
regarding required disclosure. This determination was a result of our external
auditor needing to post adjustments to our financial statements.
Our management, including our president and chief financial officer (our
principal executive officer, principal financial officer and principal
accounting officer), does not expect that our disclosure controls and procedures
or our internal controls will prevent all error or 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. Due to 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, have been detected. We performed additional analysis and other
post-closing procedures in an effort to ensure our consolidated financial
statements included in this quarterly report have been prepared in accordance
with generally accepted accounting principles. Accordingly, management believes
that the financial statements included in this report fairly present in all
material respects our financial condition, results of operations and cash flows
for the periods presented.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no changes in our internal control over financial reporting during
the quarterly period covered by this report that have materially affected, or
are reasonably likely to materially affect, our internal control over financial
reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We know of no material, existing or pending legal proceedings against our
company, nor are we involved as a plaintiff in any material proceeding or
pending litigation. There are no proceedings in which any of our directors,
officers or affiliates, or any registered or beneficial shareholder, is an
adverse party or has a material interest adverse to our interest.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURE
Not applicable.
25
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
Exhibit
Number Description
------ -----------
(3) (I) ARTICLES OF INCORPORATION; (II) BY-LAWS
3.1 Articles of Incorporation (Incorporated by reference to our
Registration Statement filed on Form S-1 on February 25, 2009).
3.2 By-laws (Incorporated by reference to our Registration Statement filed
on Form S-1 on February 25, 2009)
3.3 Certificate of Amendment (Incorporated by reference to our Registration
Statement filed on Form S-1 on February 25, 2009).
3.4 Articles of Merger (Incorporated by reference to our Current Report
filed on Form 8-K on July 15, 2010).
3.5 Certificate of Change (Incorporated by reference to our Current Report
filed on Form 8-K on July 15, 2010).
(4) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING
INDENTURES
4.1 Sample Stock Certificate (Incorporated by reference to our Registration
Statement filed on Form S-1 on February 25, 2009).
(10) MATERIAL CONTRACTS
10.1 Property Option Agreement between our company and All American
Resources LLC with respect to the Mountain City claim dated November
26, 2010 (Incorporated by reference to our Current Report filed on Form
8-K on December 21, 2010).
10.2 Property Option Agreement between our company and All American
Resources LLC with respect to the Eagan Canyon claim dated November 26,
2010 (Incorporated by reference to our Current Report filed on Form 8-K
on December 21, 2010).
10.3 Property Option Agreement between our company and All American
Resources LLC with respect to the Muncy Creek claim dated November 26,
2010 (Incorporated by reference to our Current Report filed on Form 8-K
on December 21, 2010).
10.4 Mining Lease and Option to Purchase Agreement between our company,
Pyramid Lake LLC and Anthony A. Longo dated April 15, 2011
(Incorporated by reference to our Current Report filed on Form 8-K on
May 17, 2011).
10.5 Assignment and License Agreement between Thomas J. Menning and our
company dated September 16, 2011(incorporated by reference to our
Current Report filed on Form 8-K on October 14, 2011).
10.6 2011 Stock Option Plan (incorporated by reference to our Current Report
filed on Form 8-K on November 14, 2011).
26
(31) RULE 13A-14(A) / 15D-14(A) CERTIFICATIONS
31.1* Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
of the Principal Executive Officer, Principal Financial Officer and
Principal Accounting Officer.
(32) SECTION 1350 CERTIFICATIONS
32.1* Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
of the Principal Executive Officer, Principal Financial Officer and
Principal Accounting Officer.
101** INTERACTIVE DATA FILE
101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE XBRL Instance Document
XBRL Taxonomy Extension Schema Document
XBRL Taxonomy Extension Calculation Linkbase Document
XBRL Taxonomy Extension Definition Linkbase Document
XBRL Taxonomy Extension Label Linkbase Document
XBRL Taxonomy Extension Presentation Linkbase Document
----------
* Filed herewith.
** Furnished herewith. Pursuant to Rule 406T of Regulation S-T, the
Interactive Data Files on Exhibit 101 hereto are deemed not filed or part
of any registration statement or prospectus for purposes of Sections 11 or
12 of the Securities Act of 1933, are deemed not filed for purposes of
Section 18 of the Securities and Exchange Act of 1934, and otherwise are
not subject to liability under those sections.
27
SIGNATURES
In accordance with the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
FIRST AMERICAN SILVER CORP.
(Registrant)
Date: April 23, 2012 /s/ Thomas Menning
-----------------------------------------
Thomas Menning
President, Chief Executive Officer,
Chief Financial Officer, Secretary,
Treasurer and Director (Principal
Executive Officer, Principal Financial
Officer and Principal Accounting Officer)
2
