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EXCEL - IDEA: XBRL DOCUMENT - MAVERICK MINERALS CORPFinancial_Report.xls
EX-31.1 - CERTIFICATION - MAVERICK MINERALS CORPexhibit31-1.htm
EX-32.1 - CERTIFICATION - MAVERICK MINERALS CORPexhibit32-1.htm

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 June 30, 2012

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE EXCHANGE ACT

For the transition period from _________ to _________

Commission File No. 000-25515

MAVERICK MINERALS CORPORATION
(Exact name of registrant as specified in its charter)

Nevada 88-0410480
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)

Suite 700 – 220 Bay Street, Toronto, Ontario M5J 2W4
(Address of principal executive offices) (zip code)

647-728-4134
(Registrant’s telephone number, including area code)

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.
Yes [X]     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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes [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 definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

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


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

Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after distribution of securities under a plan confirmed by a court.
Yes [   ]     No [   ] N/A

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer’s classes of common equity as of the latest practicable date:
As of August 17, 2012, there were 13,002,617 shares of common stock, par value $0.001, outstanding.

ii


TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION 1
   
ITEM 1. FINANCIAL STATEMENTS. 1
   
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. 2
   
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. 10
   
ITEM 4. CONTROLS AND PROCEDURES. 10
   
PART II - OTHER INFORMATION 10
   
ITEM 1. LEGAL PROCEEDINGS 10
   
ITEM 1A. RISK FACTORS. 11
   
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. 15
   
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 16
   
ITEM 4. MINE SAFETY DISCLOSURES 16
   
ITEM 5. OTHER INFORMATION 16
   
SIGNATURES 19

iii


PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

1



Maverick Minerals Corporation
(An Exploration Stage Company)
Consolidated Balance Sheets
Unaudited
(Expressed in U.S. Dollars)

    June 30     December 31  
    2012     2011  
Current Assets            
           Cash $  23,377   $  87  
             
           Long Term assets            
           Advances to related party (Note 7)   -     43,826  
           Oil & Gas leases (Note 3)   12,981     12,981  
TOTAL ASSETS $  36,358   $  56,894  
             
             
             
Current Liabilities            
           Accounts payable and accrued liabilities (Note 7) $  121,531   $  204,329  
           Accrued interest on loans payable (Note 7)   340,487     248,341  
           Convertible debt (Note 5)   120,756     116,767  
           Loans payable (Note 4)   3,663,950     3,510,243  
TOTAL LIABILITIES   4,246,724     4,079,680  
             
Capital Deficit            
           Capital Stock (Note 8)            
                           Authorized: 
                                     750,000,000 common shares at $0.001 par value 
                           Issued and fully paid 12,152,617 (December 31, 2011 – 
                                     12,152,617) common shares 
                                     Par value 
                                     100,000,000 preferred shares at $0.001 par value
  12,153     12,153  
                           Issued and fully paid Nil (2011 - Nil) preferred shares 
                                     Par value
  -     -  
           Additional paid-in capital   8,010,051     8,010,051  
           Deficit, accumulated during the exploration stage   (12,233,443 )   (12,045,863 )
           Accumulated other comprehensive income   873     873  
TOTALSTOCKHOLDERS EQUITY (CAPITAL DEFICIT)   (4,210,366 )   (4,022,786 )
TOTAL LIABILITIES AND CAPITAL DEFICIT $  36,358   $  56,894  

Nature of Operations and Ability to Continue as a Going Concern – Note 1
Subsequent Events – Note 4

The accompanying notes are an integral part of these financial statements

F-1



Maverick Minerals Corporation
(An Exploration Stage Company)
Consolidated Statements of Operations
and Comprehensive Loss
Unaudited
(Expressed in U.S. Dollars)

                            Cumulative From  
                            Date of Inception  
    Three months ended     Six months ended     (April 21, 2003)
    June 30,     June 30,     to June 30,  
    2012     2011     2012     2011     2012  
General and administration expenses                              
       Audit fees $  -   $  34,677   $  1,833   $  88,428   $  511,381  
       Freight   -     -     -     -     7,600  
       Insurance   -     -     -     -     186,297  
       Accounting, legal, engineering & consulting, 
           investor relations
  19,938     12,384     24,938     14,395     578,926  
       Management fees and stock based compensation 
           (Notes 7 and 9)
  45,000     45,000     90,000     183,250     3,024,839  
       Office   106     488     266     1,819     77,323  
       Telephone and utilities   -     -     -     -     83,059  
       Transfer agent fees   3,090     2,026     3,090     2,324     43,705  
       Travel   3,148     7,646     9,269     30,583     306,560  
       Wages and benefits   -     -     -     -     86,588  
       Write down on oil and gas leases   -     955,274     -     880,274     3,735,683  
       Gain on disposal of assets   -     -     -     -     (795,231 )
Loss from operations   (71,282 )   (1,057,495 )   (129,396 )   (1,201,073 )   (7,846,730 )
Other income (expenses)                              
       Interest expense   (48,285 )   (46,833 )   (96,135 )   (93,283 )   (418,383 )
       Loss on settlement of loan payable (Note 8)   -     -     -     (500 )   (3,458,690 )
       Gain (Loss) on foreign exchange   2,967     (331 )   5,098     (2,280 )   (11,024 )
       Gain on write-off of payables   32,853     -     32,853     -     651,084  
    (12,465 )   (47,164 )   (58,184 )   (96,063 )   (3,237,013 )
Loss from continuing operations   (83,747 )   (1,104,659 )   (187,580 )   (1,297,136 )   (11,083,743 )
                               
Loss from discontinued operations   -     -     -     -     (1,149,700 )
                               
Loss for the period   (83,747 )   (1,104,659 )   (187,580 )   (1,297,136 )   (12,233,443 )
Other Comprehensive Income                              
       Foreign currency translation adjustments   -     -     -     -     873  
Comprehensive Loss $ (83,747 ) $ (1,104,659 ) $ (187,580 ) $ (1,297,136 ) $  (12,232,570 )
                               
Loss per share - basic and diluted   ($0.01 )   ($0.10 )   ($0.02 )   ($0.11 )      
Weighted average shares outstanding - basic and diluted   12,152,617     12,152,617     12,152,617     12,018,363      

The accompanying notes are an integral part of these financial statements

F-2



Maverick Minerals Corporation
(An Exploration Stage Company)
Consolidated Statements of Cash Flows
Unaudited
(Expressed in U.S. Dollars)

                Cumulative From  
                Date of Inception  
    Six months ended     (April 21, 2003)  
    June 30,     to June 30  
    2012     2011     2012  
Operating Activities                  
           Loss for the period $  (187,580 ) $  (1,297,136 ) $  (12,233,443 )
           Adjustments to reconcile Loss for the year                  
                   to cash flows used in operating activities                  
                   Impairment of investment in oil and gas leases   -     880,274     4,155,642  
                   Gain on disposal of assets   -     -     (933,995 )
                   Gain on liabilities write-off   (32,853 )   -     (651,084 )
                   Stock based compensation   -     93,250     1,925,380  
                   Depreciation   -     -     277,578  
                   Shares issued for services   -     -     105,000  
                   Interest accrued on convertible debenture   3,989     3,967     20,756  
                   Unrealized foreign exchange   (1,133 )   -     (1,133 )
                   Loss on settlement of loan payable   -     500     3,458,690  
           Changes in non-cash working capital items                  
                   Advances to related party   43,826     (30,703 )   -  
                   Accrued interest on loans payable   92,146     89,316     336,693  
                   Accounts payable and accrued liabilities   (49,945 )   14,824     1,726,183  
Cash used in operating activities   (131,550 )   (245,708 )   (1,813,733 )
                   
Investing Activities                  
           Investment in oil and gas leases   -     (3,849 )   (2,428,296 )
           Proceeds from the sale of working interests   -     -     650,000  
           Prepaids and deposits on oil and gas leases   -     -     (2,000,565 )
           Refund on oil and gas leases   -     75,000     75,000  
           Proceeds from sale of oil and gas supplies   -     57,738     57,738  
           Purchase of property and equipment   -     -     (311,367 )
Cash used in investing activities   -     128,889     (3,957,490 )
                   
Financing Activities                  
           Proceeds on shares to be issued   -     -     303,850  
           Debt settlement   -     -     35,625  
           Repayments of loans payable   -     -     (70,000 )
           Proceeds from loans payable   154,840     55,250     5,524,252  
Cash provided by financing activities   154,840     55,250     5,793,727  
                   
Increase (decrease) in cash during the period   23,290     (61,569 )   22,504  
Effect of cumulative currency translation   -     -     873  
                   
Cash, beginning of the period   87     64,767     -  
Cash, end of the period $  23,377   $  3,198   $  23,377  

The accompanying notes are an integral part of these financial statements

F-3



Maverick Minerals Corporation
(An Exploration Stage Company)
Consolidated Statements of Cash Flows
Unaudited
(Expressed in U.S. Dollars)

                Cumulative From  
                Date of Inception  
    Six months ended     (April 21, 2003)  
    June 30,     to June 30,  
    2012     2011     2012  
Supplemental Cash Flow information:                  
           Interest paid $  -   $  -   $  35,000  
           Income taxes paid   -     -     -  
           Non-cash investing and financing activities:                  
                   Impairment in oil and gas leases   -     955,274     419,959  
                   Investment in oil and gas leases in exchange for 
                        notes payable to Veneto
  -     -     1,455,000  
                   Transfer of leases in settlement of notes payable   -     -     1,455,000  
                   Assignment of accounts payable from transfer of leases   -     -     193,764  
                   Settlement of loan payable   -     500     1,531,469  
                   Forgiveness of related party balances payable   -     -     1,027,791  
                   Forgiveness of loan payable   -     -     311,400  
                   Shares issued for property services   -     -     210,000  
                   Exchange of accounts payable for convertible debt   -     -     100,000  
                   Shares issued for data purchase   -     -     367,500  
                   Shares issued on conversion of debt   -     -     35,625  
                   Shares issued for accrued interest on conversion of debt   -     -     1,788  
                   Asset retirement obligations   -     -     -  

The accompanying notes are an integral part of these financial statements

F-4


Maverick Minerals Corporation
(An Exploration Stage Company)
Statement of Changes in Stockholders' Equity (Capital Deficit)
For the Period from Date of Inception on April 21, 2003 to June 30, 2012
Unaudited(Expressed in U.S. Dollars)

                      Shares to be           Accumulated        
    Number of     Par Value     Additional     Issued           Other        
    Common     @$0.001 Per     Paid-in     (Subscriptions     Accumulated     Comprehensive     Total Capital  
    Shares     Share     Capital     Receivable)     Deficit     Loss     Deficit  
Balance, April 21, 2003   10   $  -   $  -   $  -   $  -   $  -   $  -  
Adjustment for the issuance of
    common stock on recapitalization
  3,758,040     3,758     (3,758 )   -     -     -     -  
    3,758,050     3,758     (3,758 )   -     -     -     -  
Adjustment to capital deficit of the
    Company at the recapitalization date
  417,603     418     (945,307 )   -     -     -     (944,889 )
    4,175,653     4,176     (949,065 )   -     -     -     (944,889 )
Shares issued for management services (Note 8)   150,000     150     104,850     -     -     -     105,000  
Currency translation adjustment   -     -     -     -     -     873     873  
Net loss for the period   -     -     -     -     (626,985 )   -     (626,985 )
Balance, December 31, 2003   4,325,653     4,326     (844,215 )   -     (626,985 )   873     (1,466,001 )
Shares issued for cash (Note 8)   1,000,000     1,000     24,000     -     -     -     25,000  
Shares subscribed but unissued   -     27,500     -     -     -     -     27,500  
Forgiveness of related party balances payable   -     -     1,027,791     -     -     -     1,027,791  
Net income for the year   -     -     -     -     71,698     -     71,698  
Balance, December 31, 2004   5,325,653     32,826     207,576     -     (555,287 )   873     (314,012 )
Shares subscribed but unissued   -     (27,500 )   -     -     -     -     (27,500 )
Shares issued for cash (Note 8)   2,750,000     2,750     24,750     -     -     -     27,500  
Cancellation of shares (Note 8)   (5,437,932 )   (5,438 )   5,438     -     -     -     -  
Compensation expense on share cancellation (Note 8)   -     -     44,720     -     -     -     44,720  
Shares issued for loan payable settlement (Note 8)   89,500     90     125,211     -     -     -     125,300  
Shares issued for cash (Note 8)   7,500     8     743     -     -     -     750  
Stock based compensation   -     -     140,438     -     -     -     140,438  
Net loss for the year   -     -     -     -     (1,036,098 )   -     (1,036,098 )
Balance, December 31, 2005   2,734,721   $  2,735   $  548,875   $  -   $  (1,591,385 ) $  873   $  (1,038,902 )

F-5


Maverick Minerals Corporation
(An Exploration Stage Company)
Statement of Changes in Stockholders' Equity (Capital Deficit)
For the Period from Date of Inception on April 21, 2003 to June 30, 2012
Unaudited(Expressed in U.S. Dollars)

                      Shares to be           Accumulated        
    Number of     Par Value     Additional     Issued           Other        
    Common     @$0.001 Per     Paid-in     (Subscriptions     Accumulated     Comprehensive     Total Capital  
    Shares     Share     Capital     Receivable)     Deficit     Loss     Deficit  
Balance, December 31, 2005   2,734,721   $  2,735   $  548,875   $  -   $  (1,591,385 ) $  873   $  (1,038,902 )
Shares issued for cash (Note 8)   6,000     6     594     (600 )   -     -     -  
Stock based compensation   -     -     11,401     -     -     -     11,401  
Net loss for the year   -     -     -     -     (128,774 )   -     (128,774 )
Balance, December 31, 2006   2,740,721     2,741     560,870     (600 )   (1,720,159 )   873     (1,156,275 )
Net loss for the year   -     -     -     -     (192,410 )   -     (192,410 )
Balance, December 31, 2007   2,740,721     2,741     560,870     (600 )   (1,912,569 )   873     (1,348,685 )
Share subscriptions paid (Note 8)   -     -     -     600     -     -     600  
Net income for the year   -     -     -     -     109,951     -     109,951  
Balance, December 31, 2008   2,740,721     2,741     560,870     -     (1,802,618 )   873     (1,238,134 )
Cancellation of shares (Note 8)   -2,000,000     -2,000     2,000     -     -     -     -  
Shares issued for loan payable settlement (Note 8)   8,950,000     8,950     3,571,050     -     -     -     3,580,000  
Shares issued for loan payable settlement (Note 8)   436,000     436     217,564     -     -     -     218,000  
Shares issued for consulting services (Note 8)   350,000     350     209,650     -     -     -     210,000  
Stock based compensation   -     -     43,321     -     -     -     43,321  
Net loss for the year   -     -     -     -     (3,433,469 )   -     (3,433,469 )
Balance, December 31, 2009   10,476,721   $  10,477   $  4,604,455   $  -   $  (5,236,087 ) $  873   $  (620,282 )

F-6


Maverick Minerals Corporation
(An Exploration Stage Company)
Statement of Changes in Stockholders' Equity (Capital Deficit)
For the Period from Date of Inception on April 21, 2003 to June 30, 2012
Unaudited(Expressed in U.S. Dollars)

                      Shares to be           Accumulated        
    Number of     Par Value     Additional     Issued           Other        
    Common     @$0.001 Per     Paid-in     (Subscriptions     Accumulated     Comprehensive       Total Capital  
    Shares     Share     Capital     Receivable)     Deficit     Loss     Deficit  
Balance, December 31, 2009   10,476,721   $  10,477   $  4,604,455   $  -   $  (5,236,087 ) $  873   $  (620,282 )
Shares issued upon conversion of debt (Note 8)   49,925     50     37,363     -     -     -     37,413  
Shares issued for loan payable settlement (Note 8)   725,971     726     1,015,633     -     -     -     1,016,359  
Shares issued for data purchase (Note 8)   350,000     350     367,150     -     -     -     367,500  
Stock based compensation (Note 9)   -     -     1,592,250     -     -     -     1,592,250  
Shares to be issued (Note 8)   -     -     -     250,000     -     -     250,000  
Net loss for the year   -     -     -     -     (5,300,187 )   -     (5,300,187 )
Balance, December 31, 2010   11,602,617     11,603     7,616,851     250,000     (10,536,274 )   873     (2,656,947 )
Shares issued for cash (Note 8)   500,000     500     249,500     (250,000 )   -     -     -  
Shares issued for loan payable settlement (Note 8)   50,000     50     50,450     -     -     -     50,500  
Stock based compensation (Note 9)   -     -     93,250     -     -     -     93,250  
Net loss for period   -     -     -     -     (1,509,589 )   -     (1,509,589 )
Balance, December 31, 2011   12,152,617     12,153     8,010,051     -     (12,045,863 )   873     (4,022,786 )
Net loss for period   -     -     -     -     (187,580 )   -     (187,580 )
                                           
Balance, June 30, 2012   12,152,617   $  12,153   $  8,010,051   $  -   $ (12,233,443 ) $  873   $  (4,210,366 )

The accompanying notes are an integral part of these financial statements

F-7



Maverick Minerals Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
June 30, 2012
Unaudited
(Expressed in U.S. Dollars)

Note 1 NATURE OF OPERATIONS AND ABILITY TO CONTINUE AS A GOING CONCERN
 

Maverick Minerals Corporation (“the Company”) was incorporated on August 27, 1998 under the Company Act of the State of Nevada, U.S.A. The Company is in the business of holding and developing mineral and resource properties. The Company is an exploration stage company that has not yet generated or realized any revenues from its business operations.

 

On April 21, 2003 the Company closed a transaction, as set out in the Purchase Agreement (the “Agreement) with UCO Energy Corporation (“UCO”) to purchase the outstanding equity of UCO. To facilitate the transaction, the Company consolidated its share capital at a ratio of one for five. Subsequent to the share consolidation, the Company issued 3,758,040 common shares in exchange for all the issued and outstanding common shares of UCO. As a result of the transaction, the former shareholders of UCO held approximately 90% of the issued and outstanding common shares of the Company. The acquisition of UCO was recorded as a reverse acquisition for accounting purposes as a recapitalization of UCO. A net distribution of $944,889 was recorded in connection with the common stock of the Company for the acquisition of UCO in respect of the Company’s net liabilities at the acquisition date. The Company had minimal assets and had liabilities owing to suppliers as well as amounts owing under agreements with third parties as well as related parties and as there were no other business interests, the Company was acting as a public shell company. The financial statements are now presented as a continuation of UCO. UCO was in the business of pursuing opportunities in the coal mining industry. The Company has since disposed of its coal mining interests and has since engaged in the acquisition, exploration, and development of prospective oil and gas properties and mineral resource properties.

 

These accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. As at June 30, 2012, the Company has negative working capital of $4,223,347, and has an accumulated deficit of $12,233,443. The continuation of the Company is dependent upon obtaining a successful new exploration project, the continuing support of creditors and stockholders as well as achieving and maintaining a profitable level of operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management anticipates that it requires approximately $310,000 to cover general and administrative expenses over the twelve months ending June 30, 2013 to continue operations. In addition to funding the Company’s general, administrative and corporate expenses the Company is obligated to address its current obligations totaling $4,246,724, of which $2,400,000 plus accrued interest thereon of $222,662 is in default as at June 30, 2012 and $357,750 plus accrued interest of $74,255 went into default subsequent to June 30, 2012. Subsequent to June 30, 2012, the Company settled these loans in default in exchange for the issuance of a total of 750,000 common shares of the Company (Note 4). The Company plans to raise necessary cash through equity issuances and/or debt financing. Amounts raised will be used to pursue explorations activities, and for other working capital purposes.

 

Management cannot provide any assurances that the Company will be successful in any of its plans. Although there are no assurances that management's plans will be realized, management believes that the Company will be able to continue operations in the future. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.


F-8



Maverick Minerals Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
June 30, 2012
Unaudited
(Expressed in U.S. Dollars)

Note 2

BASIS OF PRESENTATION

 

The accompanying interim financial statements have been prepared by management, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in the annual financial statements in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the disclosures are adequate to make the information presented not misleading.

 

These statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management are necessary for fair presentation of the information contained herein. These interim financial statements should be read in conjunction with the audited financial statements of the Company for the year ended December 31, 2011. The Company follows the same accounting policies in the preparation of interim reports.

 

Operating results for the six months ended June 30, 2012 are not necessarily indicative of the results that may be expected for the year ended December 31, 2012.

 

 

New Accounting Pronouncements

 

In May 2011, the FASB issued Accounting Standards Update 2011-04, “Fair Value Measurement (Topic 820)”. This Update improves the comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with US GAAP and International Financial Reporting Standards (“IFRS”). The amendments in this Update result in common fair value measurement and disclosure requirements in U.S. GAAP and IFRSs and they explain how to measure fair value and they do not require additional fair value measurements and are not intended to establish valuation standards or affect valuation practices outside of financial reporting. The amendments in this Update apply to all reporting entities that are required or permitted to measure or disclose the fair value of an asset, a liability, or an instrument classified in a reporting entity’s shareholders’ equity in the financial statements. The amendments in this Update are to be applied prospectively. For public entities, the amendments were effective for interim and annual periods beginning after December 15, 2011. The adoption of this standard during the six months ended June 30, 2012 did not have a material impact on the Company’s financial statements.

 

In June 2011, the FASB issued Accounting Standards Update 2011-05, “Presentation of Comprehensive Income (Topic 220)”. The objective of this Update is to improve the comparability, consistency, and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income. To increase the prominence of items reported in other comprehensive income and to facilitate convergence of U.S. generally accepted accounting principles (GAAP) and International Financial Reporting Standards (IFRS), the FASB decided to eliminate the option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity, among other amendments in this Update. The amendments require that all non-owner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The amendments in this Update should be applied retrospectively. For public entities, the amendments were effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The adoption of this standard during the six months ended June 30, 2012 did not have a material impact on the Company’s financial statements.


F-9



Maverick Minerals Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
June 30, 2012
Unaudited
(Expressed in U.S. Dollars)

Note 2

BASIS OF PRESENTATION – continued

 

 

New Accounting Pronouncements – continued

 

In December 2011, the FASB issued Accounting Standards Update 2011-12, “Comprehensive Income (Topic 220)”. The amendments in this Update supersede certain pending paragraphs in Accounting Standards Update 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income, to effectively defer only those changes in Update 2011—5 that relate to the presentation of reclassification adjustments out of accumulated other comprehensive income. For public entities, the amendments were effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The adoption of this standard during the six months ended June 30, 2012 did not have a material impact on the Company’s financial statements.

 

Note 3

OIL AND GAS LEASES

 

On December 14, 2009, the Company entered into a farm-out agreement (the “Farmout Agreement”) with Southeastern Pipe Line Company (“SEPL”) pursuant to which the Company acquired the right to earn an interest in certain oil and gas mineral leases located in Fort Bend and Wharton Counties, Texas (collectively, the “Leases”) and to the lands covered thereby. The Company also acquired an interest in certain oil and gas leases located adjacent to the areas covered by the Farmout Agreement.

 

On January 22, 2011 the Company completed drilling of its Initial Test Well on the Company's 4,513 acre Farm-Out property in Fort Bend County, Texas. The initial test well was spud on December 9, 2010.

 

Based on the results of the drilling program on the Initial Test Well it was determined that zones drilled were not commercially productive, despite the presence of significant down hole pressure and strong natural gas shows during drilling. The target sands were poorly developed and not suitable for a completion attempt. Accordingly, the decision was made to not set production casing and as a result the Company’s engineers completed plugging the well pursuant to regulations of the Texas Railway Commission. As a result management determined during the year ended December 31, 2010 that costs capitalized relating to the drilling and exploration of the Initial Test Well were impaired and recorded a write down on its oil and gas exploration expenditures capitalized of $2,905,409 on the statement of operations during the year ended December 31, 2010.

 

During the six months ended June 30, 2011, the Farmout Agreement lapsed as the Company did not complete drilling of a substitute exploration well within the required period in accordance with the Farmout Agreement. During the three month period ended March 31, 2011 the Company received a $75,000 refund on deposits paid to the Operator of the Initial Test Well and as a result this amount was recorded as a recovery on oil and gas leases. As a result of not completing the drilling of a substitute exploration well, it was determined that the remaining property costs relating to the areas covered by the Farmout Agreement of $955,274 were impaired and the Company recorded a write-down of oil and gas leases of $955,274 on the statement of operations during the six months ended June 30, 2011.


F-10



Maverick Minerals Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
June 30, 2012
Unaudited
(Expressed in U.S. Dollars)

Note 3 OIL AND GAS LEASES – continued
   
  Net carrying costs as at June 30, 2012 and December 31, 2011:

      June 30, 2012     December 31, 2011  
  Deposit on oil and gas leases $  350,000   $  350,000  
  Drilling and exploration   1,179,296     1,179,296  
  Consulting costs   235,113     235,113  
  Legal costs   17,116     17,116  
  Geological services   381,812     381,812  
  Geological data   367,500     367,500  
  Asset retirement obligation   50,000     50,000  
  Incidental revenue   (707,738 )   (707,738 )
      1,873,099     1,873,099  
  Write down of oil and gas leases   (1,860,118 )   (1,860,118 )
  Interest in oil and gas leases $  12,981   $  12,981  

At June 30, 2012, there was $12,981 in unevaluated property costs relating to the acquisition costs of unproved oil and gas leases located adjacent to the areas covered by the Farmout Agreement.

   
Note 4 LOANS PAYABLE
   
  The Company has the following loans payable:

      June 30, 2012     December 31, 2011  
  Art Brokerage - Current (a) $  89,993   $  89,993  
  Art Brokerage - Current (b)   540,000     540,000  
  Art Brokerage - Term Loan (d)   2,400,000     2,400,000  
  Mr. Alonzo B. Leavell (a)   20,000     20,000  
  Ms. Nancy A. Vevoda (a)   25,000     25,000  
  Bear Lair LLC (e)   82,500     77,500  
  Senergy Partners LLC (c)   357,750     357,750  
  Energold Minerals Inc. (f)   148,707     -  
    $  3,663,950   $  3,510,243  

  (a)

These amounts are unsecured; bear no interest, with no specific terms of repayment.

     
  (b)

These amounts are unsecured; bear interest at 5% per annum, with no specific terms of repayment.

     
  (c)

This credit facility is unsecured, bears interest at 8% per annum, maturing on December 31, 2012 (see Note 7(a)). The remaining amount available under this credit facility was $142,250 as at June 30, 2012. Subsequent to June 30, 2012, the Company gave notice to Senergy Partners LLC that this loan had entered into default as a result of the Company’s inability to repay the debt. On August 7, 2012, the Company entered into a debt settlement and subscription agreement with Senergy Partners LLC pursuant to which the Company issued 100,000 common shares of the Company in full settlement of this loan, including accrued interest of $76,686. Accrued interest of $74,255 (December 31, 2011: $59,985) is included in current liabilities at June 30, 2012.


F-11



Maverick Minerals Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
June 30, 2012
Unaudited
(Expressed in U.S. Dollars)

Note 4 LOANS PAYABLE – continued

  (d)

On September 20, 2010, the Company entered into a loan agreement (the “Loan Agreement”) with Art Brokerage, Inc. (“Art Brokerage”), pursuant to which Art Brokerage provided the Company with a non-revolving term loan in the amount of $2,400,000 having an interest rate of 5% per annum. The loan matures on April 1, 2015 with interest calculated and compounded monthly, payable on the 1st day of each calendar month commencing May 1, 2011. In addition to the monthly interest payments, the Company was required to make monthly principal payments in the amount of $50,000, commencing on May 1, 2011 and continuing on the 1st day of each month until the Company’s indebtedness was repaid in full.

     
 

On May 25, 2011, the Company and the creditor agreed to amend the Loan Agreement to allow the Company to postpone commencement of the monthly principal and interest payments until January 1, 2012, with a balloon payment of $450,000 at maturity. All other terms and conditions with respect to the original Loan Agreement remain unchanged. During the six months ended June 30, 2012, the Company did not commence repayment of the loan as required under the Loan Agreement and the loan entered into default. Under the terms of the Loan Agreement, the loan therefore becomes repayable on demand from the lender.

     
 

On August 7, 2012, the Company entered into a debt settlement and subscription agreement with Art Brokerage, Inc., pursuant to which the Company issued 650,000 common shares of the Company in full settlement of this loan, including accrued interest of $233,799. Accrued interest of $222,662 (December 31, 2011: $158,216) is included in current liabilities at June 30, 2012. In addition, Art Brokerage agreed to settle two other unsecured loans owing from the Company in the amount of $89,993 and $540,000 plus accrued interest of $45,863 for no considerations. Accrued interest of $43,570 (December 31, 2011: $30,107) is included in current liabilities at June 30, 2012 in respect of these loans forgiven.

     
 

Both Senergy and Art Brokerage are beneficially controlled by a significant shareholder of the Company.

     
  (e)

The Company has entered into a loan agreement with Bear Lair LLC, a Nevada Corporation, to reflect advances made to the Company during fiscal 2011 and 2012. The loan is due September 30, 2012 and bears no interest or specific repayment terms beyond the initial term.

     
  (f)

The Company received $72,440 (Cdn$72,600) and $77,400 pursuant to a promissory note dated May 15, 2012 and May 29, 2012, respectively. These notes are unsecured, non-interest bearing and are due on November 4, 2012.


Note 5 CONVERTIBLE DEBT
   

On November 26, 2009, the Company issued a convertible note in the amount of $100,000 to a related party to settle an outstanding payable of $100,000. This convertible note is due on demand, and bears interest at 8% per annum. The debt, along with accrued interest, is convertible into common shares at a conversion rate of $0.30 per share.


F-12



Maverick Minerals Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
June 30, 2012
Unaudited
(Expressed in U.S. Dollars)

Note 6

COMMITMENTS

 

The Company entered into an Option and Joint Venture Exploration Agreement dated June 8, 2012, with Energold Minerals Inc. (“Energold”), a Canadian company, under which the Company may earn up to an undivided 51% interest in the Jarvis Island Property, comprising a group of mining claims situated in the Thunder District of Ontario, Canada (the “Property”) and thereafter establish a joint venture with Energold for the joint exploration, development and production of minerals from the Property.

 

To exercise the first option and earn a 30% undivided interest in the Property, the Company must (i) issue to Energold 100,000 shares on or before June 29, 2012 (these were issued subsequent to June 30, 2012); (ii) issue to Energold an additional 100,000 shares on or before September 15, 2013; and (iii) incur a total of $200,000 in exploration expenditures on the Jarvis Property on or before September 15, 2014.

 

To exercise the second option and earn an additional 21% undivided interest in the Property, the Company must exercise the first option and issue a further 200,000 common shares on or before September 15, 2015 and incur an additional $200,000 in exploration expenditures on the Property on or before June 8, 2017.

 

If the Company exercises the first option the parties agreed to participate in a joint venture (the “Joint Venture”) for the purpose of further exploration and development of Jarvis Property where the right to participate and the obligation to fund the Joint Venture will be apportioned 70% to Energold and 30% to Maverick and if Maverick exercises the second option the Joint Venture will be apportioned 51% to Maverick and 49% to Energold.

 

During the period that both options are outstanding and after the formation of the Joint Venture, the Company will to act as operator of the Jarvis Property in consideration of certain management fees in an amount up to 10% on general exploration expenditures and other fees in an amount up to 5% on drilling or other major contract costs as further set out in the Agreement. Decisions regarding exploration and development of the Jarvis Property are determined by a committee.

 

If the Company has acquired a 51% undivided interest in the Jarvis Property as per the Agreement and a feasibility study is completed which demonstrates that the Jarvis Property may be profitably brought into production, then the Company has the right to elect to commit the necessary financing to place the Jarvis Property into production and thereby earn a 70% interest in the newly initiated mining project.

 

Note 7

RELATED PARTY TRANSACTIONS

 

Effective September 23, 2010, the Company entered into two consulting agreements, one with the President, CEO and CFO (the “President”) and one with the Secretary. As consideration for the performance of consulting services under the agreement, the Company agreed to pay the President and Secretary $10,000 and $5,000 per month. Under the agreement the President and Secretary were also granted stock options to acquire 700,000 and 400,000 shares of common stock, respectively, at an exercise price of $1.05 per share until August 20, 2015 in accordance with the terms of the Company’s 2009 Stock Option Plan. The agreement is for a term of three years. Notwithstanding the three year term, the agreement may be terminated at any time by the Company without notice in the event the President breaches the terms of this agreement.


F-13



Maverick Minerals Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
June 30, 2012
Unaudited
(Expressed in U.S. Dollars)

Note 7

RELATED PARTY TRANSACTIONS – continued

 

Management fees of $45,000 and $90,000 were charged to expense in these financial statements for the three and six months ended June 30, 2012 (2011 - $45,000 and $90,000) respectively. Included in accounts payable and accrued liabilities at June 30, 2012 is $71,490 (December 31, 2011 - $34,150) owing to officers of the Company for accrued and unpaid management fees and $1,000 (December 31, 2011 - $Nil) owing to a significant shareholder of the Company for expenses incurred on behalf of the Company.

 

At June 30, 2012 the Company had advanced $Nil (December 31, 2011 - $43,826) to the Company’s president to pay for future expenses incurred by the individual on behalf of the Company and management fees to be charged to the Company. The advances were non-interest bearing and had no specific repayment terms.

 

During the three and six months ended June 30, 2012, the Company incurred $48,285 and $96,135 (2011 - $44,450 and $89,284) in interest charges on loans payable to companies controlled by a significant shareholder of the Company and to a director of the Company. Of these amounts $361,243 (December 31, 2011 - $265,074) was payable as at June 30, 2012.

 

Note 8

SHARE CAPITAL

 

As explained in Note 1, on April 21, 2003 the Company issued 3,758,040 common shares in exchange for all the issued and outstanding common shares of UCO.

 

In July 2003, the Company issued 150,000 common shares to the Company’s CEO in exchange for management services. The transaction was recorded at the quoted market price of $0.07 at the date of issuance per common share and resulted in compensation expense of $105,000. No consideration was received by the Company in the exchange of shares for management services.

 

In June 2004, the Company issued 1,000,000 common shares at a price of $0.25 for proceeds of $25,000.

 

During the year ended December 31, 2004, an agreement was reached between the Company, UCO and its creditors releasing the Company and UCO from any further obligations in relation to amounts owing.

 

As a result, $1,027,791 of payables and liabilities that were owing to related parties was forgiven and recorded against additional paid-in capital. The remaining balance owing to unrelated creditors was recorded as a gain.

 

In January 2005, the Company issued 2,750,000 common shares at a price of $0.01 for proceeds of $27,500.

 

In June 2005, the Company cancelled 5,437,932 common shares, under an agreement with certain stockholders, which included the former stockholders of UCO, and two other stockholders including the CEO of the Company. The former stockholders of UCO surrendered the majority of the shares which was approximately 95% of the total common shares that they held at the time.

 

As a result of the share cancellation, one single common stockholder emerged as the majority stockholder with approximately 76% of the total issued and outstanding common shares. In addition, the CEO’s percentage common share holding increased and resulted in compensation expense of $44,720.


F-14



Maverick Minerals Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
June 30, 2012
Unaudited
(Expressed in U.S. Dollars)

Note 8

SHARE CAPITAL - continued

 

In July 2005, the Company issued 89,500 common shares at a price of $0.60 to settle an amount owing with respect to a loan payable. The transaction was recorded at the quoted market price of $1.40 and resulted in a loss on settlement of loan payable of $71,600.

 

In September 2005, the Company issued 7,500 common shares at a price of $0.10 for cash proceeds of $750 in relation to the exercise of stock options.

 

In April 2006, the Company issued 6,000 common shares at a price of $0.10 for $600 in relation to the exercise of stock options.

 

 

In 2007 and 2008 there were no share capital transactions.

 

On February 2, 2009 a major shareholder returned to treasury 2,000,000 common shares of the Company for nil consideration in contemplation of further share issuances (as described below).


  (a)

The Company entered into a loan agreement with Senergy on February 13, 2009, pursuant to which the Company established an unsecured revolving loan of up to $1,000,000, later amended to $500,000 (Note 4(c)), (the “Credit Facility”). The outstanding principal amount of the Credit Facility together with all the accrued and unpaid interest and all other amounts outstanding there under are due and payable in full on December 31, 2012, the maturity date. Outstanding principal under the Credit Facility bears interest at an annual rate of 8%.

     
  (b)

In connection with the Company entering into the Credit Facility and Debt Settlement Agreement with Senergy, the Company entered into an Assignment and Assumption Agreement with Senergy and Art Brokerage, Inc. (“ABI”) dated February 13, 2009, pursuant to which ABI assigned to Senergy all of its right, title and interest to a debt (the “Assigned Debt”) of $447,500 owed by the Company to ABI.

     
  (c)

On February 13, 2009, the Company entered into a debt settlement and subscription agreement (the “Debt Settlement Agreement”) with Senergy in consideration of Senergy entering into the Credit Facility. Pursuant to the terms of the Debt Settlement Agreement, the company agreed to issue to Senergy 8,950,000 shares of the Company common stock in settlement of a $447,500 debt owed to Senergy.

     
 

As a result of these transactions, Senergy acquired 8,950,000 shares or 92.3% of the Company’s issued and outstanding common stock. The Company issued 8,950,000 common shares to settle an amount owing with respect to a loan payable totaling $447,500. The transaction was recorded at the quoted market price of $0.40 on the date of issuance and resulted in a loss on settlement of loan payable of $3,132,500.

On August 11, 2009 the Company's articles of incorporation were amended and restated to increase the number of authorized shares of its common stock from 100,000,000 to 750,000,000. In addition the Company's articles of incorporation were amended and restated to authorize 100,000,000 shares of preferred stock with a par value of $0.001, which may be divided into and issued in series, with such designations, rights, qualifications, preferences, limitations and terms as fixed and determined by the Company's board of directors.

F-15



Maverick Minerals Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
June 30, 2012
Unaudited
(Expressed in U.S. Dollars)

Note 8

SHARE CAPITAL - continued

 

On September 24, 2009 the Company issued a further 436,000 shares to settle $218,000 owed to ABI. The transaction was recorded at the quoted market price of $0.30 and was treated as a capital transaction which resulted in a charge to equity of $218,000.

 

On December 11, 2009 the Company issued 175,000 shares each to two consultants, (350,000 shares total) for geological consulting services. The transactions were recorded at the quoted market price of $0.60 per share on the date of issuance for total consideration of $210,000 which was capitalized to Oil and Gas Leases on the balance sheet (Note 3).

 

Effective December 31, 2009 the Company effected a ten (10) for one (1) reverse stock split of the Company’s issued and outstanding shares of common stock. All shares and per share amounts in these financial statements have been retroactively restated to reflect the reverse stock split.

 

On July 19, 2010 the Company issued 49,925 common shares upon conversion of its Convertible Debenture dated December 11, 2009 in the principal amount of $35,625 and outstanding interest to July 19, 2010 of $1,788 (Note 5(b)).

 

On July 27, 2010 the Company entered into a data purchase agreement with two individuals (collectively the “Vendors”), pursuant to which the Company agreed to purchase from the Vendors geologic data relating to certain oil and gas mineral leases located in Texas, including among other things: electric logs, seismic work, seismic reprocessing, data from the Texas Railroad Commission. In consideration for the acquisition of the geologic data from the Vendors the Company issued 350,000 shares of the common stock of the Company to the Vendors. The transactions were recorded at the quoted market price of $1.05 per share for total consideration of $367,500 which was capitalized to Oil and Gas Leases on the balance sheet (Note 3).

 

On September 7, 2010 the Company issued a further 725,971 shares to settle $762,269 owed to ABI. The transaction was recorded at the quoted market price of $1.40 and resulted in a loss on settlement of loan payable of $254,090.

 

On December 21, 2010, the Company completed a private placement of 500,000 shares of its common stock at a price of $0.50 for gross proceeds of $250,000 to an offshore subscriber pursuant to Regulation S of the Securities Act of 1933. The offering was completed in connection with the above noted sale of a 15% working interest in the Well. These shares were issued on February 11, 2011.

 

On February 28, 2011, the Company entered into debt settlement and subscription agreements with two subscribers pursuant to which the Company settled an aggregate of $50,000 debt in consideration of the issuance of 50,000 shares on March 7, 2011. The debt related to certain amounts owed from Art Brokerage to third parties that were subsequently assigned to the Company. The transaction was recorded at the quoted market price of $1.01 at the date of issuance and resulted in a loss on settlement of loans payable of $500.


F-16



Maverick Minerals Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
June 30, 2012
Unaudited
(Expressed in U.S. Dollars)

Note 9

STOCK OPTION PLAN

 

 

Stock options

 

The Company has a stock option plan which provides for the granting of up to 7,500,000 stock options to key employees, directors and consultants, of common shares of the Company. Under the stock option plan, the granting of incentive and non-qualified stock options, exercise prices and terms are determined by the Board of Directors.

 

During the six months ended June 30, 2012, no stock options were granted. During the six months ended June 30, 2011, there were 50,000 options granted to two consultants of the Company. All options granted were fully vested at the date of issuance which resulted in stock-based compensation expense of $93,250 being charged to operations during the six month period ended June 30, 2011. These options are exercisable at a price of $1.50 per option and expire on January 13, 2013. The fair value of these options granted was approximately $1.87 per share on the grant date.

 

Weighted average assumptions used in calculating compensation expense in respect of options granted using the Black-Scholes option pricing model were as follows:


    2012            2011  
  Risk-free interest rate   -     0.59%  
  Dividend yield   -     Nil  
  Expected volatility   -     259%  
  Weighted average expected life of options   -     2.00 years  

No stock options were exercised, cancelled or expired during the six months ended June 30, 2012 and 2011.

The following is a summary of the status of the Company’s stock options as of June 30, 2012 and December 31, 2011 and the stock option activity during the periods then ended:

            Weighted Average  
      Number of options     Exercise Price  
  Outstanding, December 31, 2010   1,245,000   $ 0.97  
  Granted   50,000   $ 1.50  
  Outstanding, December 31, 2011 and June 30, 2012   1,295,000   $ 0.99  

All options that were outstanding were exercisable at June 30, 2012 and December 31, 2011 as a result of all options being fully vested upon grant.

At June 30, 2012, the Company had share purchase options outstanding as follows:

Number of Aggregate
Exercise Price options Expiry Date Instrinsic Value
$0.40 145,000 December 31, 2012                            $0.00
$1.05 1,100,000 August 20, 2015                            $0.00
$1.50 50,000 January 13, 2013                            $0.00
June 30, 2012 1,295,000                              $0.00

F-17



Maverick Minerals Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
June 30, 2012
Unaudited
(Expressed in U.S. Dollars)

Note 9 STOCK OPTION PLAN - continued
   

The aggregate intrinsic value in the preceding table represents the total intrinsic value, based on the Company’s closing stock price of $0.25 per share as of June 30, 2012 (December 31, 2011 – $0.31), which would have been received by the option holders had all option holders exercised their options as of that date. There were no in-the-money options vested and exercisable as of June 30, 2012 (December 31, 2011 – Nil).


F-18


ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Forward Looking Statements

This report contains forward-looking statements. Forward-looking statements are projections of events, revenues, income, future economic performance or management’s plans and objectives for our future operations. 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, including the risks in the section entitled “Risk Factors” and the risks set out below, any of which 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. These risks include, by way of example and not in limitation:

  • risks and uncertainties relating to the interpretation of drill results, the geology, grade and continuity of mineral deposits;
  • results of initial feasibility, pre-feasibility and feasibility studies, and the possibility that future exploration, development or mining results will not be consistent with our expectations;
  • mining and development risks, including risks related to accidents, equipment breakdowns, labour disputes or other unanticipated difficulties with or interruptions in production;
  • the potential for delays in exploration or development activities or the completion of feasibility studies;
  • risks related to the inherent uncertainty of production and cost estimates and the potential for unexpected costs and expenses;
  • risks related to commodity price fluctuations;
  • the uncertainty of profitability based upon our history of losses;
  • risks related to failure to obtain adequate financing on a timely basis and on acceptable terms for our planned exploration and development projects;
  • risks related to environmental regulation and liability;
  • risks that the amounts reserved or allocated for environmental compliance, reclamation, post-closure control measures, monitoring and on-going maintenance may not be sufficient to cover such costs;
  • risks related to tax assessments;
  • political and regulatory risks associated with mining development and exploration; and
  • other risks and uncertainties related to our prospects, properties and business strategy.

This list is not an exhaustive list of the factors that may affect any of our forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on our forward-looking statements.

Forward looking statements are made based on management’s beliefs, estimates and opinions on the date the statements are made and we undertake no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change. 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 financial statements are stated in United States dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.

In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common stock” refer to the common shares in our capital stock.

2


As used in this report, the terms “we”, “us”, “our”, the “Company” and “Maverick” mean Maverick Minerals Corporation and our subsidiary, Eskota Energy Corporation, unless otherwise indicated.

Our Current Business

We are currently an exploration stage company engaged in the acquisition, exploration, and development of prospective oil and gas properties and mineral properties.

Recent Corporate Developments

Since the commencement of our first quarter, we experienced the following significant corporate developments:

1.

During the past six months management of Maverick has made a significant investment in time on a third gold property in central Utah in anticipation of participating in its exploration and development. Maverick is working closely with a private U.S. corporation which holds a strategic land position south of Salt Lake City within 3 miles of Barrick Gold’s former Mercur Mine. Barrick operated the Mercur mine from 1982- 1996 mining over one-million ounces of gold before reclaiming the open-pit site. Maverick has assisted in the private company adding adjacent land to its existing gold resource (1988 feasibility study) through acquisition and staking. Maverick management has used its experience in land tenure and acquisition to develop the planned exploration of the acquired properties. The Company is in active negotiations to participate in this shallow, near term gold exploration project.

   
2.

We entered into an Option and Joint Venture Exploration Agreement dated June 8, 2012 (the “Agreement”) with Energold Minerals Inc. (“Energold”). Energold holds a 100% undivided right, title and interest in a group of mining claims situated in Thunder Bay, Ontario, Canada known as the Jarvis Island Property (the “Jarvis Property”). The Island is situated about 35 miles south of Thunder Bay about 5 km from the shore of Lake Superior near to the U.S. border (Minnesota). The property consists of 13.355 hectares and is believed to have mineral potential for the production of barite. Pursuant to the terms of the Agreement Energold granted Maverick the right, in the form of two options, to acquire an aggregate 51% working interest in the Jarvis Property subject to certain conditions, including the issuance of up to 400,000 shares of its common stock and incurring $400,000 in exploration expenditures on or before June 8, 2017.

   
3.

During our second fiscal quarter, we received two unsecured loans from Energold. The loans mature in November, 2012, bear no interest and are evidenced by two promissory notes in the amount of CDN$72,600 and US$77,400.

   
4.

During our third fiscal quarter, we settled two loans outstanding to two creditors totaling $2,757,750 plus accrued interest of $310,485 in exchange for the issuance of 750,000 common shares of the Company. In addition, loans totaling $629,993 plus accrued interest of $45,863 were forgiven for no consideration.

Exploration and Drilling Activities in Fort Bend County, Texas

During the year ended December 31, 2011, our business focus was to implement the terms of the Farmout Agreement pursuant to which were to earn an interest in certain oil and gas mineral leases located in Fort Bend and Wharton Counties, Texas owned by SEPL. As a result of test results showing that zones drilled and tested were not commercially productive management made the decision not to proceed with subsequent drilling and testing as outlined in the agreement and, consequently, the Farm-Out Agreement lapsed.

During the land title curative process on the SEPL Farm-out acreage the company purchased several infill oil and gas leases in order to acquire a contiguous lease block for drilling purposes. The company will review their strategic importance during the balance of 2012 and make a decision as to their status as development opportunities.

Jarvis Island Option and Joint Venture Exploration Agreement

Maverick entered into an Option and Joint Venture Exploration Agreement dated June 8, 2012 with Energold Minerals Inc. (“Energold”). Energold holds a 100% undivided right, title and interest in a group of mining claims situated in Thunder Bay, Ontario, Canada known as the Jarvis Island Property (the “Jarvis Property”). The Island is situated about 35 miles south of Thunder Bay about 5 km from the shore of Lake Superior near to the U.S. border (Minnesota). The property consists of 13.355 hectares and is believed to have mineral potential for the production of barite.

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Pursuant to the terms of the agreement, Energold granted Maverick the right, in the form of two options, to acquire an aggregate 51% working interest in the Jarvis Property subject to certain conditions, including the following:

  1.

To exercise the first option and earn a 30% undivided interest in the Jarvis Property, Maverick must: (i) issue to Energold 100,000 shares on or before June 29, 2012 (these were issued subsequent to June 30, 2012); (ii) issue to Energold an additional 100,000 shares on or before September 15, 2013; and (iii) incur a total of $200,000 in exploration expenditures on the Jarvis Property on or before September 15, 2014;

     
  2.

To exercise the second option and earn an additional 21% undivided interest in the Jarvis Property, Maverick must: (i) exercise the first option, (ii) issue to Energold a further 200,000 shares on or before September 15, 2015, and (iii) incur and additional $200,000 in exploration expenditures on the Jarvis Property on or before June 8, 2017;

     
  3.

During the period that both options are outstanding and after the formation of the joint venture (hereinafter defined), Maverick agreed to act as operator of the Jarvis Property in consideration of certain management fees in an amount up to 10% on general exploration expenditures and other fees in an amount up to 5% on drilling or other major contract costs as further set out in the Agreement. Decisions regarding exploration and development of the Jarvis Property are determined by a committee;

     
  4.

If Maverick exercises the first option the parties agreed to participate in a joint venture (the “Joint Venture”) for the purpose of further exploration and development of Jarvis Property where the right to participate and the obligation to fund the Joint Venture will be apportioned 70% to Energold and 30% to Maverick and if Maverick exercises the second option the Joint Venture will be apportioned 51% to Maverick and 49% to Energold; and

     
  5.

If Maverick has acquired a 51% undivided interest in the Jarvis Property as per the Agreement and a feasibility study is completed which demonstrates that the Jarvis Property may be profitably brought into production, then Maverick has the right to elect to commit the necessary financing to place the Jarvis Property into production and thereby earn a 70% interest in the newly initiated mining project.

Pursuant to the terms of the Agreement both options will terminate and Maverick will have no further interest in the Jarvis Property if it does not exercise the first option by September 15, 2013. If Maverick exercises the first option but does not exercise the second option as contemplated in the Agreement then Maverick’s interest in the Jarvis Property will be limited to the 30% undivided interest and any other interests of Maverick provided for under the Agreement. Each party agreed to indemnify the other against any environmental liabilities in connection with any operating activities on the Jarvis Property. There is no assurance that Maverick will exercise the option as planned or at all.

Plan of Operation

The following is a discussion and analysis of our plan of operation for the six month period ended June 30, 2012, and the factors that could affect our future financial condition. This discussion and analysis should be read in conjunction with our consolidated unaudited interim financial statements and the notes thereto included elsewhere in this quarterly report. Our consolidated interim financial statements are prepared in accordance with United States generally accepted accounting principles. All references to dollar amounts in this section are in United States dollars unless expressly stated otherwise.

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We are currently an exploration stage company engaged in the acquisition, exploration, and development of prospective oil and gas and mineral properties. The Company is reviewing a small number of new opportunities for oil and gas exploration and development in Texas, some of which have production components as well as development opportunities. The Company believes that it is feasible to contemplate, based on discussions with interested parties, a stock predicated acquisition based on the strong capital structure that was implemented by the Company in 2010. Management will review these opportunities diligently; however, no guarantee can be given that any transaction as outlined herein will occur in the time frame covered by this Plan of Operation.

Finally, the Company has a history of acquiring mineral properties outside of the oil and gas arena including silver and coal properties previously owned and produced by the Company. At a time of strong commodity markets for these and other metals and minerals, the Company will not hesitate to exploit any opportunity to utilize its experience gained over the past decade to enter into an agreement for the acquisition and development of a metal or minerals property.

Cash Requirements during the Next Twelve Months

Our estimated expenses over the next twelve months are as follows:

Cash Requirements during the Next Twelve Months

Expense   ($)
Cost to meet Joint Venture Requirements   100,000
Consulting Expenses   20,000
Professional Fees   70,000
General and Administrative expenses   140,000
Total   310,000

To date we have funded our operations primarily with loans from shareholders. In addition to funding our general, administrative and corporate expenses we are obligated to address certain current liabilities. We will need to raise additional funds to meet these current liabilities. To raise these funds we may be required to increase shareholder loans, incur new borrowings or issue new equity which may be dilutive to existing shareholders. We currently have no agreement in place to raise funds for current liabilities and no guarantee can be given that we will be able to raise funds for this purpose on terms acceptable to our company. Failure to raise funds for general, administrative and corporate expenses and current liabilities could result in a severe curtailment of our operations.

Any advance in the oil and gas and mineral development strategy set-out herein will require additional funds. These funds may be raised through equity financing, debt financing or other sources which may result in further dilution of the shareholders percentage ownership in the Company.

On February 13, 2009, we entered into a loan agreement with Senergy Partners LLC (“Senergy”), a private Nevada limited liability corporation, pursuant to which the Company received a revolving loan of up to $1,000,000 (the “Credit Facility”). The outstanding principal amount of the Credit Facility together with all accrued and unpaid interest and all other amounts outstanding thereunder were due and payable in full on December 31, 2012, the maturity date. Outstanding principal under the Credit Facility was bearing interest at an annual rate of 8%. As a condition of the Credit Facility, the Company agreed to use funds received under the Credit Facility solely for the purpose of funding ongoing general and administrative expenses, consulting and due diligence expenses, or professional fees and joint venture programs. As at June 30, 2012, the Company had drawn $357,750 on the credit facility with Senergy. Subsequent to June 30, 2012, the Company gave notice to Senergy that this credit facility had entered into default as a result of the Company’s inability to repay the debt. On August 7, 2012, the Company entered into a debt settlement and subscription agreement with Senergy Partners LLC pursuant to which the Company issued 100,000 common shares of the Company in full settlement of this loan, including accrued interest of $76,686.

5


In September, 2010, in connection with the negotiation of our loan agreement with Art Brokerage, the Company was required to enter into an amendment to its existing loan with Senergy Partners LLC. Under the terms of a amendment agreement dated September 15, 2010, the parties agreed that if and at such time Art Brokerage enters into a loan agreement with the Company with respect to a loan of $2,400,000, the existing loan agreement between the parties dated February 13, 2009 providing for up to $1,000,000 in principal to the Company would be amended to provide a maximum limit of $500,000.

On September 20, 2010, we entered into a loan agreement (the “Loan Agreement”) with Art Brokerage, Inc., pursuant to which Art Brokerage provided the Company with a non-revolving term loan in the principal amount of $2,400,000 having an interest rate of 5% per annum. The loan was to mature on April 1, 2015. As a condition of the Loan Agreement, the Company agreed to enter into a general security agreement dated September 20, 2010 creating a security over the Company’s present and after-acquired personal property and over the Company’s real property and other assets. In addition and as further security of the Company’s indebtedness under the Loan Agreement, the Company and Art Brokerage entered into a pledge and security agreement dated September 20, 2010, pursuant to which the Company agreed to pledge to Art Brokerage a first priority security interest in all of the shares of capital stock of Eskota Energy Corporation, the wholly owned subsidiary of the Company, and all proceeds with respect to such stock. The Company used the funds from the $2,400,000 loan to commence development of the Company’s initial test well on its Farm-Out property located in southwest Texas. Both Senergy and Art Brokerage are beneficially owned by Donna Rose, an affiliate of the Company. In May, 2011, the Company entered into an amendment to its September 20, 2010 loan agreement with Art Brokerage, Inc. (the “Lender”) to postpone the commencement date for payment of the principal and interest on its loan from May 1, 2011 to January 1, 2012. Under the terms of the original loan agreement the Lender provided the Company with a non-revolving term loan in the principal amount of $2,400,000 at the interest rate of 5% per annum, calculated and compounded monthly, maturing on April 1, 2015. The company has been in default on this loan since January 2012.

On August 7, 2012, the Company entered into a debt settlement and subscription agreement with Art Brokerage, Inc., pursuant to which the Company issued 650,000 common shares of the Company in full settlement of this loan, including accrued interest of $233,799. In addition, Art Brokerage agreed to settle two other unsecured loans owing from the Company in the amount of $89,993 and $540,000 plus accrued interest of $45,863 for no consideration.

On September 30, 2011, the Company entered in to a loan agreement with Bear Lair LLC, a Nevada Corporation, to reflect advances made to the Company during fiscal 2011. The loan is due on September 30, 2012, and bears no interest rate or specific terms of repayment beyond the initial term.

During our second fiscal quarter, we received two unsecured loans from Energold. The loans mature in November, 2012, bear no interest and are evidenced by two promissory notes in the amount of CDN$72,600 and US$77,400.

Results of Operations

Three and Six Month Summary



Three Months
Ended June 30,
2012
Three Months
Ended June
30, 2011
Percentage
Increase/
(Decrease)
Six Months
Ended June
30, 2012
Six Months
Ended June
30, 2011
Percentage
Increase/
(Decrease)
Revenue - - N/A - - N/A
Expenses $71,282 $1,057,495 (93.3)% $129,396 $1,201,073 (89.2)%
Other Expenses
$12,465
$47,164
(73.6)%
$58,184
$96,063
(39.4)%
Net Loss $(83,747) $(1,104,659) (92.4)% $(187,580) $(1,297,136) (85.5)%

Revenues

We have had no operating revenues for the three and six months ended June 30, 2012 and 2011. We anticipate that we will not generate any revenues for so long as we are an exploration stage company.

6


General and Administrative

The major components of our general and administrative expenses for the period are outlined in the table below:

    Three months ended     Six months ended  
    June 30,     June 30,  
    2012     2011     2012     2011  
Audit Fees $  -   $ 34,677 $   $ 1,833   $  88,428  
Accounting, legal, engineering & consulting, investor relations   19,938     12,384     24,938     14,395  
Management fees and stock based compensation   45,000     45,000     90,000     183,250  
Office   106     488     266     1,819  
Transfer agent fees   3,090     2,026     3,090     2,324  
Write down on oil and gas leases   -     955,274-     -     880,274  
Travel   3,148     7,646     9,269     30,583  
Total Expenses $  71,282   $ 1,057,495   $ 129,396   $  1,201,073  

The decrease in our general and administrative expenses for the three months ended June 30, 2012 was primarily due to:

  1.

An impairment charge of $955,274 relating to the Company’s drilling project in Fort Bend County, Texas, during the comparative period.

     
  2.

Decreased audit fees in the current period of $34,677 as a result of the delay of the Company’s annual audit and interim reviews to the third quarter of 2012.

The decrease in our general and administrative expenses for the six months ended June 30, 2012 was primarily due to:

  1.

Decreased management and stock based compensation expense of $93,250. During 2011, 50,000 stock options were granted with a fair value of $93,250. During 2012, no stock options were granted.

     
  2.

Decreased audit fees of $86,595 as a result of the delay of the Company’s annual audit to the third quarter of 2012. It is expected that this amount will increase in the third quarter of 2012.

     
  3.

An impairment charge of $955,274 offset by a $75,000 recovery resulting from the refund of deposits paid to the Operator of the Initial Test Well in respect of the Company’s drilling project in Fort Bend County, Texas, during the comparative period.

Liquidity and Capital Resources

Working Capital

    June 30, 2012     December 31, 2011  
Current Assets $  23,377   $  87  
Current Liabilities   4,246,724     4,079,680  
Working Capital Deficit $  (4,223,347 ) $  (4,079,593 )

Cash Flows

    Six Months Ended     Six Months Ended  
    June 30, 2012     June 30, 2011  
Cash used in Operating Activities $  (131,550 ) $  (245,708 )
Cash provided by Investing Activities   -     128,889  
Cash provided by Financing Activities   154,840     55,250  
Net increase (decrease) in Cash $  23,377   $  (61,569 )

7


We had cash of $23,377 and negative working capital of $4,223,347 as of June 30, 2012 compared to a cash of $87 and negative working capital of $4,079,593 at December 31, 2011. We anticipate that we will incur approximately $310,000 for operating expenses, including professional, legal and accounting expenses associated with our reporting requirements under the Exchange Act during the next twelve months therefore we will need to obtain additional financing in order to complete our full business plan.

Cash used in operating activities for the six months ended June 30, 2012 was $131,550 as compared to cash used in operating activities for the same period in 2011 of $245,708. Cash used in operating activities decreased during the period as a result of decreases in audit and legal and a decrease in an amount due from a related party. Cash provided by investing activities for the six months ended June 30, 2012 was $Nil as compared to cash provided by investing activities for the same period in 2011 of $128,889 as a result of excess supplies sold and a refund from the operator of the Texas drilling project in the comparative period. Cash provided by financing activities for the six months ended June 30, 2012 was $154,840 compared to cash provided by financing activities for the same period in 2011 of $55,250. The increase in cash provided by financing activities was primarily due to proceeds from loans payable.

Loans Payable

The Company has the following loans outstanding as of June 30, 2012

          December 31,  
    June 30, 2012     2011  
Art Brokerage – Current (a) $  89,993   $  89,993  
Art Brokerage – Current(b)   540,000     540,000  
Art Brokerage – Term Loan(d)   2,400,000     2,400,000  
Ms. Nancy A.Vevoda(a)   25,000     25,000  
Mr. Alonzo B. Leavell(a)   20,000     20,000  
Bear Lair LLC(e)   82,500     77,500  
Senergy Partners LLC (c)   357,750     357,750  
Energold Minerals Inc. (f)   148,707     -  
  $  3,663,950   $  3,510,243  

(a)

These amounts are unsecured, bear no interest, with no specific terms of repayment.

   
(b)

These amounts are unsecured, bear interest at 5% per annum, with no specific terms of repayment. Subsequent to June 30, 2012, this loan was forgiven in full for no consideration. See Note (d).

   
(c)

This credit facility is unsecured, bears interest at 8% per annum, maturing on December 31, 2012. The remaining amount available under this credit facility was $142,250 as at June 30, 2012. Subsequent to June 30, 2012, the Company gave notice to Senergy Partners LLC that this loan had entered into default as a result of the Company’s inability to repay the debt. On August 7, 2012, the Company entered into a debt settlement and subscription agreement with Senergy Partners LLC pursuant to which the Company issued 100,000 common shares of the Company in full settlement of this loan, including accrued interest to July 31, 2012 of $76,686.

   
(d)

On September 20, 2010, the Company entered into a loan agreement (the “Loan Agreement”) with Art Brokerage, Inc. (“Art Brokerage”), pursuant to which Art Brokerage provided the Company with a non- revolving term loan in the principal amount of $2,400,000 having an interest rate of 5% per annum. The loan matures on April 1, 2015 and is calculated and compounded monthly, payable on the 1st day of each calendar month, commencing May 1, 2011. In addition to the monthly interest payments, the Company was required to make monthly principal payments in the amount of $50,000, commencing on May 1, 2011 and continuing on the 1st day of each month until the Company’s indebtedness is repaid in full. On May 25, 2011 the Company and the creditor agreed to amend the Loan Agreement to allow the Company to postpone commencement of the monthly principal and interest payments until January 1, 2012 with a balloon payment of $450,000 at maturity. All other terms and conditions with respect to the Loan Agreement remain unchanged. During the six months ended June 30, 2012, the Company did not commence repayment of the loan as required under the Loan Agreement and the loan entered into default. Under the terms of the Loan Agreement, the loan therefore becomes repayable on demand from the lender. On August 7, 2012, the Company entered into a debt settlement and subscription agreement with Art Brokerage, Inc., pursuant to which the Company issued 650,000 common shares of the Company in full settlement of this loan, including accrued interest to July 31, 2012 of $233,799. In addition, Art Brokerage agreed to settle two other unsecured loans owing from the Company in the amount of $89,993 and $540,000 plus accrued interest to July 31, 2012 of $45,863.

8



Both Senergy and Art Brokerage are beneficially controlled by a significant shareholder of the Company.

   
(e)

On September 30, 2011the Company entered in to a loan agreement with Bear Lair LLC, a Nevada Corporation, to reflect advances made to the Company during fiscal 2011. The loan is due on September 30, 2012 and bears no interest rate or specific terms of repayment beyond the initial term.

   
(f)

The Company received $72,440 (Cdn$72,600) and $77,400 pursuant to a promissory note dated May 15, 2012 and May 29, 2012, respectively. These notes are unsecured, non-interest bearing and are due on November 4, 2012.

Going Concern

Our interim financial statements for the quarter ended June 30, 2012 have been prepared on a going concern basis, which implies that our company will continue to realize its assets and discharge its liabilities and commitments in the normal course of business. Our company has not generated significant revenues since inception and has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. The continuation of our company as a going concern is dependent upon the continued financial support from our shareholders, the ability of our company to obtain necessary equity financing to achieve our operating objectives, and the attainment of profitable operations. As of June 30, 2012, we had cash of $23,377 and we estimate that we will require approximately $310,000 for costs associated with our plan of operation and operating expenses over the next twelve months. Accordingly, we do not have sufficient funds for planned operations and we will be required to raise additional funds for operations after that date.

These circumstances raise substantial doubt about our ability to continue as a going concern, as described in the explanatory paragraph to our independent auditors’ report on the December 31, 2011 and 2010 consolidated financial statements which are included with our annual report. The consolidated financial statements do not include any adjustments that might result from the outcome of that uncertainty.

The continuation of our business is dependent upon us raising additional financial support. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

There are no assurances that we will be able to obtain further funds required for our continued operations. We are pursuing various financing alternatives to meet our immediate and long-term financial requirements. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we will be forced to scale down or perhaps even cease the operation of our business.

Future Financings

As of June 30, 2012, we had cash of $23,377 and we estimate that we will require approximately $310,000 for costs associated with our business operations over the next twelve months. Accordingly we do not have sufficient funds for planned operations and we will be required to raise additional funds for operations. We anticipate continuing to rely on equity sales of our common shares or shareholder loans in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing stockholders. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our planned activities.

9


Off-Balance Sheet Arrangements

We have no significant 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 are material to stockholders.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Applicable.

ITEM 4. CONTROLS AND PROCEDURES.

As required by Rule 13(a)-15 under the Exchange Act, in connection with this quarterly report on Form 10-Q, under the direction of our Chief Executive Officer and Chief Financial Officer, we have evaluated our disclosure controls and procedures as of June 30, 2012 and we have concluded that, as of June 30, 2012, our disclosure controls and procedures were ineffective based on the following material weaknesses:

  (i)

Lack of a sufficient number of independent directors for our board and audit committee. We currently have no independent director on our board, which is comprised of one director. As a publicly-traded company, we strive to have a majority of our board of directors be independent;

     
  (ii)

Insufficient segregation of duties in our finance and accounting functions due to limited personnel. During the period ended June 30, 2012, we had limited staff that performed nearly all aspects of our financial reporting process, including, but not limited to, access to the underlying accounting records and systems, the ability to post and record journal entries and responsibility for the preparation of the financial statements. This creates certain incompatible duties and a lack of review over the financial reporting process that would likely result in a failure to detect errors in spreadsheets, calculations, or assumptions used to compile the financial statements and related disclosures as filed with the SEC. These control deficiencies could result in a material misstatement to our interim or annual consolidated financial statements that would not be prevented or detected;

     
  (iii)

There is a lack of sufficient supervision and review by our corporate management;

     
  (iv)

Insufficient corporate governance policies. Although we have a code of ethics which provides broad guidelines for corporate governance, our corporate governance activities and processes are not always formally documented. Specifically, decisions made by the board to be carried out by management should be documented and communicated on a timely basis to reduce the likelihood of any misunderstandings regarding key decisions affecting our operations and management; and

As a result of these weaknesses, the Company’s disclosure controls are not effective.

There were no changes in our internal controls over financial reporting during the three months ended June 30, 2012 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, active, or pending legal proceeding against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation where such claim or action involves damages for more than 10% of our current assets. There are no proceedings in which any of our company’s directors, officers, or affiliates, or any registered or beneficial shareholders, is an adverse party or has a material interest adverse to our company’s interest.

10


ITEM 1A. RISK FACTORS.

Our common shares are considered speculative. Prospective investors should consider carefully the risk factors set out below.

The Likelihood of Continued Losses from Operations and Ability To Continue As A Going Concern.

The Company has had no revenue from operations and has incurred cumulative losses from inception through June 30, 2012 of $12,233,443. Losses are expected to continue until such time as the Company can economically produce and sell materials from the Jarvis Island Property and/or otherwise commence planned principal operations. Continued losses will require that the Company raise additional funds by equity or debt financing, failing which the Company will not be able to continue operations. Management cannot provide assurances that this will occur.

These circumstances raise substantial doubt about our ability to continue as a going concern, as described in the explanatory paragraph to our independent auditors’ report on our consolidated financial statements for the period ended June 30, 2012. Although our consolidated financial statements raise substantial doubt about our ability to continue as a going concern, they do not reflect any adjustments that might result if we are unable to continue our business.

We have had negative cash flows from operations and if we are not able to obtain further financing, our business operations may fail.

We had negative working capital of $4,223,347 as of June 30, 2012. We do not expect to generate any revenues for the foreseeable future. Accordingly, we will require additional funds, either from equity or debt financing, to maintain our daily operations and to implement our plan of operation. Obtaining additional financing is subject to a number of factors, including market commodities prices, investor acceptance of our interest pursuant to the Jarvis Island Property Agreement, and investor sentiment. Financing, therefore, may not be available on acceptable terms, if at all. The most likely source of future funds presently available to us is through the sale of equity capital. Any sale of share capital, however, will result in dilution to existing shareholders. If we are unable to raise additional funds when required, we may be forced to delay our plan of operation and our entire business may fail.

We currently do not generate revenues, and as a result, we face a high risk of business failure.

In addition to our oil and gas leases in Fort Bend County the only significant interest we can earn in a property we have is pursuant to the Jarvis Island Property Agreement. From the date of our incorporation, we have primarily focused on the location and acquisition of mineral and oil and gas properties. We have not generated any significant revenues to date. In order to generate revenues, we will incur substantial expenses in the evaluation and development of our oil and gas leases and potential mineral interests. We therefore expect to incur significant losses into the foreseeable future. We recognize that if we are unable to generate significant revenues from our activities, our entire business may fail. There is no history upon which to base any assumption as to the likelihood that we will be successful in our plan of operation, and we can provide no assurance to investors that we will generate any operating revenues or achieve profitable operations.

If we are required for any reason to repay all of our outstanding loans or any other indebtedness, we would be required to deplete our working capital, if available, or raise additional funds.

If we are required to repay the loans payable or any other indebtedness for any reason, we would be required raise additional funds. If we are unable to repay the loans or any other indebtedness when required, the lenders could commence legal action against our company and foreclose on all of our assets to recover the amounts due. Any such sale or legal action would require our company to curtail or possibly cease our operations.

Our ability to obtain financing is likely dependent on the price of certain commodities markets remaining at current levels, which, given historical fluctuations, can vary significantly

Financing to implement our plan of operation will depend upon current price levels for certain commodities, including barite and petroleum, being sustained for the foreseeable future. There is no guarantee that prices will remain at the current levels. Commodities prices historically have fluctuated widely and are affected by numerous factors outside of our control including industrial demand, central bank lending, forward sales of producers and speculators, levels of production, short-term changes in supply and demand because of speculative hedging activities, confidence in the global monetary system, expectations of the future rate of inflation, the strength of the U.S. dollar (the currency in which the price of commodities are generally quoted), interest rates and global or regional political or economic events.

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Risks and Contingencies Associated with the Mining Industry Generally

In addition to the risks noted above, the Company is subject to all of the risks inherent in the mining industry, including environmental risks, fluctuating metals prices, industrial accidents, labor disputes, unusual or unexpected geologic formations, cave-ins, flooding, earth quakes and periodic interruptions due to inclement weather. These risks could result in damage to, or destruction of, production facilities, personal injury, environmental damage, delays, monetary losses and legal liability. Although the Company can be expected to maintain insurance within ranges of coverage consistent with industry practice, no assurance can be given that such insurance will be available at economically feasible premiums. Insurance against environmental risks (including pollution or other hazards resulting from the disposal of waste products generated from production activities) is not generally available to the Company or other companies in the mining industry. If subjected to environmental liabilities, the costs incurred would reduce funds available for other purposes.

The oil and gas exploration and production industry is historically a cyclical industry and market fluctuations in the prices of oil and gas could adversely affect our business.

Prices for oil and gas tend to fluctuate significantly in response to factors beyond our control. These factors include:

  • Weather conditions in the United States and wherever our property interests are located;

  • Economic conditions, including demand for petroleum-based products, in the United States and the rest of the world;

  • Actions by OPEC, the Organization of Petroleum Exporting Countries;

  • Political instability in the Middle East and other major oil and gas producing regions;

  • Governmental regulations, both domestic and foreign; domestic and foreign tax policy;

  • The pace adopted by foreign governments for the exploration, development, and production of their national reserves;

  • The price of foreign imports of oil and gas;

  • The cost of exploring for, producing and delivering oil and gas;

  • The rate of decline of existing and new oil and gas reserves;

  • Available pipeline and other oil and gas transportation capacity;

  • The ability of oil and gas companies to raise capital;

  • The overall supply and demand for oil and gas; and

  • The availability of alternate fuel sources.

Changes in commodity prices may significantly affect our capital resources, liquidity and expected operating results. Price changes will directly affect revenues and can indirectly impact expected production by changing the amount of funds available to reinvest in exploration and development activities. Reductions in oil and gas prices not only reduce revenues and profits, but could also reduce the quantities of reserves that are commercially recoverable. Significant declines in prices could result in non-cash charges to earnings due to impairment.

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Changes in commodity prices may also significantly affect our ability to estimate the value of producing properties for acquisition and divestiture and often cause disruption in the market for oil and gas producing properties, as buyers and sellers have difficulty agreeing on the value of the properties. Price volatility also makes it difficult to budget for and project the return on acquisitions and the development and exploitation of projects. We expect that commodity prices will continue to fluctuate significantly in the future.

Any change to government regulation/administrative practices may have a negative impact on our ability to operate and our profitability.

The laws, regulations, policies or current administrative practices of any government body, organization or regulatory agency in the United States, Canada, or any other jurisdiction, may be changed, applied or interpreted in a manner which will fundamentally alter the ability of our company to carry on our business. The actions, policies or regulations, or changes thereto, of any government body or regulatory agency, or other special interest groups, may have a detrimental effect on us. Any or all of these situations may have a negative impact on our ability to operate and/or our profitability.

If we are unable to hire and retain key personnel, we may not be able to implement our plan of operation and our business may fail.

Our success will be largely dependent on our ability to hire and retain highly qualified personnel. This is particularly true in the highly technical businesses of mineral and oil and gas exploration. These individuals may be in high demand and we may not be able to attract the staff we need. In addition, we may not be able to afford the high salaries and fees demanded by qualified personnel, or we may fail to retain such employees after they are hired. At present, we have not hired any key personnel. Our failure to hire key personnel when needed will have a significant negative effect on our business.

Because our executive officers do not have formal training specific to mineral and oil and gas exploration, there is a higher risk our business will fail.

While Robert Kinloch, our director and one of our executive officer, has experience managing a mineral exploration company, he does not have formal training as a geologist. Donald Kinloch does not have formal training specific to mineral and gas exploration. Accordingly, our management may not fully appreciate many of the specific requirements related to working within the mining and oil and gas industry. Our management decisions may not take into account standard engineering or managerial approaches commonly used by such companies. Consequently, our operations, earnings, and ultimate financial success could be negatively affected due to our management’s lack of experience in the industry.

Our executive officers have other business interests, and as a result, they may not be willing or able to devote a sufficient amount of time to our business operations, thereby limiting the success of our company.

Robert Kinloch presently spends approximately 60% of his business time and Donald Kinloch presently spends approximately 20% of his business time on business management services for our company. At present, both Robert and Donald Kinloch spend a reasonable amount of time in pursuit of our company’s interests. Due to the time commitments from Robert and Donald Kinloch’s other business interests, however, they may not be able to provide sufficient time to the management of our business in the future and our business may be periodically interrupted or delayed as a result of their other business interests.

Risks Relating to Our Common Stock

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If we issue additional shares in the future, it will result in the dilution of our existing shareholders.

Our articles of incorporation authorize the issuance of up to 750,000,000 shares of common stock with a par value of $0.001 per share. Our board of directors may choose to issue some or all of such shares to acquire one or more businesses or to provide additional financing in the future. The issuance of any such shares will reduce the book value and market price of the outstanding shares of our common stock. If we issue any such additional shares, such issuance will reduce the proportionate ownership and voting power of all current shareholders. Further, such issuance may result in a change of control of our corporation.

Our common stock is illiquid and shareholders may be unable to sell their shares.

There is currently a limited market for our common stock and we can provide no assurance to investors that a market will develop. If a market for our common stock does not develop, our shareholders may not be able to re-sell the shares of our common stock that they have purchased and they may lose all of their investment. Public announcements regarding our company, changes in government regulations, conditions in our market segment or changes in earnings estimates by analysts may cause the price of our common shares to fluctuate substantially. In addition, stock prices for junior oil and gas companies fluctuate widely for reasons that may be unrelated to their operating results. These fluctuations may adversely affect the trading price of our common shares.

Penny stock rules will limit the ability of our stockholders to sell their stock.

The Securities and Exchange Commission has adopted regulations which generally define “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors”. The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the Securities and Exchange Commission which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.

The Financial Industry Regulatory Authority, or FINRA, has adopted sales practice requirements which may also limit a shareholder’s ability to buy and sell our stock.

In addition to the “penny stock” rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for its shares.

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Because of the early stage of development and the nature of our business, our securities are considered highly speculative.

Our securities must be considered highly speculative, generally because of the nature of our business and the early stage of our development. We are engaged in the business of identifying, acquiring, exploring and developing commercial reserves of oil and gas. Our properties are in the exploration stage only and are without known reserves of oil and gas. Accordingly, we have not generated any revenues nor have we realized a profit from our operations to date and there is little likelihood that we will generate any revenues or realize any profits in the short term. Any profitability in the future from our business will be dependent upon locating and developing economic reserves of oil and gas, which itself is subject to numerous risk factors as set forth herein. Since we have not generated any revenues, we will have to raise additional monies through the sale of our equity securities or debt in order to continue our business operations.

We do not intend to pay dividends on any investment in the shares of stock of our company.

We have never paid any cash dividends and currently do not intend to pay any dividends for the foreseeable future. To the extent that we require additional funding currently not provided for in our financing plan, our funding sources may prohibit the payment of a dividend. Because we do not intend to declare dividends, any gain on an investment in our company will need to come through an increase in the stock’s price. This may never happen and investors may lose all of their investment in our company.

Risks Related to Our Company

Our by-laws contain provisions indemnifying our officers and directors.

Our by-laws provide the indemnification of our directors and officers to the fullest extent legally permissible under the Nevada corporate law against all expenses, liability and loss reasonably incurred or suffered by him in connection with any action, suit or proceeding. Furthermore, our by-laws provide that our board of directors may cause our company to purchase and maintain insurance for our directors and officers, and we have implemented director and officer insurance coverage.

Our by-laws do not contain anti-takeover provisions and thus our management and directors may change if there is a take-over of our company.

We do not currently have a shareholder rights plan or any anti-takeover provisions in our by-laws. Without any anti-takeover provisions, there is no deterrent for a take-over of our company. If there is a take-over of our company, our management and directors may change.

Because our director and officers are residents of other countries other than the United States, investors may find it difficult to enforce, within the United States, any judgments obtained against our director and officers.

Our director and officers are nationals and/or residents of countries other than the United States, and all or a substantial portion of such persons’ assets are located outside the United States. As a result, it may be difficult for investors to enforce within the United States any judgments obtained against our officers or director, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

In July, 2012 pursuant to the terms of the Option and Joint Venture Exploration Agreement dated June 8, 2012 with Energold Minerals Inc. (“Energold”), Maverick issued 100,000 shares of its common stock to Energold. The shares were issued pursuant to Regulation S of the Securities Act of 1933.

15


On August 7, 2012, Maverick entered into a debt settlement and subscription agreement with The Art Brokerage, Inc. pursuant to which the Company has issued 650,000 shares of common stock of the Company in full settlement of a secured loan by The Art Brokerage, Inc. to the Company of $2,633,799.40 (which was in default) including accrued interest to July 31, 2012. In addition, The Art Brokerage, Inc. agreed to settle two unsecured loans to the Company in the total amount of $675,855.62 including accrued interest to July 31, 2012 for no consideration. On August 7, 2012, the Company entered into a debt settlement and subscription agreement with Senergy Partners LLC pursuant to which the Company has issued 100,000 shares of common stock of the Company in full settlement of an unsecured loan by Senergy Partners LLC to the Company totaling $434,435.93 (which was in default) including accrued interest to July 31, 2012. The shares were issued in reliance on Section 4(2) of the Securities Act of 1933.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit  
Number Description
   
3.1

Amended and Restated Articles (incorporated by reference from our Form 10-Q Quarterly report, filed on August 14, 2009)

 

3.2

Bylaws (incorporated by reference from our Form 10SB Registration Statement, filed on August 8, 1999)

 

3.3

Amended Bylaws (incorporated by reference from our Annual Report on Form 10-KSB, filed on April 24, 2008)

 

4.1

Specimen Stock Certificate (incorporated by reference from our Form 10-SB Registration Statement, filed on August 8, 1999)

 

10.1

Non-Qualified Stock Option Plan (incorporated by reference from our Form S-8 Registration Statement, filed on September 12, 2002)

 

10.2

Mutual Release Agreement between Eskota Energy Corporation and Veneto Exploration, LLC and Assignment of Oil and Gas Leases dated July 6, 2006 (incorporated by reference from our Quarterly Report on Form 10-QSB for the period ended June 30, 2006)

 

10.3

Purchase Agreement between Maverick Minerals Corporation, UCO Energy Corporation and the shareholders of UCO Energy, dated April 21, 2003 (incorporated by reference from our Annual Report on Form 10-KSB filed on May 19, 2004)

 

10.4

Loan Agreement and Civil Action Covenant between Art Brokerage Inc., Eskota Energy Corporation and Maverick Minerals Corporation (incorporated by reference from our Quarterly Report on Form 10-QSB for the period ended June 30, 2006)

 

10.5

Loan Agreement between Alonzo B. Leavell and Maverick Minerals Corporation dated July 20, 2005 (incorporated by reference from our Quarterly Report on Form 10-QSB for the period ended June 30, 2006)

 

10.6

Loan Agreement between Alonzo B. Leavell and Maverick Minerals Corporation dated April 27, 2005 (incorporated by reference from our Quarterly Report on Form 10-QSB for the period ended June 30, 2006)

 

10.7

Management Agreement dated as at March 5, 2003 between Maverick Minerals Corp. and Robert Kinloch (incorporated by reference from our Quarterly Report on Form 10-QSB for the period ended June 30, 2006)

 

10.8

Management Agreement dated as at June 1, 2005 between Maverick Minerals Corp. and Robert Kinloch (incorporated by reference from our Quarterly Report on Form 10-QSB for the period ended June 30, 2006)

 

10.9

Deed of Release dated November 31, 2008 with Pride of Aspen LLC (incorporated by reference from our Current Report on Form 8-K filed on December 3, 2008)

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Exhibit  
Number Description
10.10

Assignment and Assumption Agreement dated February 10, 2009 among Art Brokerage, Inc., Senergy Partners LLC and Maverick Minerals Corp. (incorporated by reference from our Current Report on Form 8-K filed on February 20, 2009)

 

10.11

Loan Agreement dated as of February 13, 2009 between Maverick Minerals Corp. and Senergy Partners LLC (incorporated by reference from our Annual Report on Form 10-K filed on April 13, 2009)

 

10.12

Debt Settlement and Subscription Agreement dated as of February 13, 2009 between Maverick Minerals Corp. and Senergy Partners LLC (incorporated by reference from our Current Report on Form 8-K filed on February 20, 2009)

 

10.13

2009 Stock Option Plan (incorporated by reference from our Form 10-Q Quarterly report, filed on August 14, 2009)

 

10.14

Debt Settlement and Subscription Agreement dated as of September 24, 2009 between Maverick Minerals Corp. and The Art Brokerage Inc. (incorporated by reference from our Form 10-Q Quarterly report, filed on November 16, 2009)

 

10.15

Farmout Agreement dated as of December 7, 2009 between Southeastern Pipe Line Company and Maverick Minerals Corporation (incorporated by reference from our Form 8-K Current report, filed on December 18, 2009)

 

10.16

Subscription Agreement between Maverick Minerals Corporation and Robert Kinloch dated November 26, 2009 (incorporated by reference from our Form 8-K Current report, filed on December 10, 2009)

 

10.17

Convertible Debenture dated November 26, 2009 (incorporated by reference from our Form 8-K Current report, filed on December 10, 2009)

 

10.17

Subscription Agreement and Convertible Debenture dated December 17, 2009 between Maverick Minerals Corporation and David Steiner.

 

10.18

Debt Settlement and Subscription Agreement between Maverick Minerals Corporation and Art Brokerage, Inc. dated September 7, 2010 (incorporated by reference from our Form 8-K Current report, filed on September 16, 2010)

 

10.19

Loan Agreement dated September 20, 2010 (and related security agreements) between Maverick Minerals Corporation and Art Brokerage, Inc. (incorporated by reference from our Form 8-K Current report, filed on September 24, 2010)

 

10.20

Pledge and Security Agreement dated September 20, 2010 between Maverick Minerals Corporation and Art Brokerage, Inc. (incorporated by reference from our Form 8-K Current report, filed on September 24, 2010)

 

10.21

Security Agreement dated September 20, 2010 between Maverick Minerals Corporation and Art Brokerage, Inc. (incorporated by reference from our Form 8-K Current report, filed on September 24, 2010)

 

10.22

Amendment Agreement dated September 15, 2010 between Maverick Minerals Corporation and Art Brokerage, Inc. (incorporated by reference from our Form 8-K Current report, filed on September 24, 2010)

 

10.23

Consulting Agreement dated September 23, 2010 between Maverick Minerals Corporation and Robert Kinloch (incorporated by reference from our Form 8-K Current report, filed on September 24, 2010)

 

10.24

Consulting Agreement dated September 23, 2010 between Maverick Minerals Corporation and Donald Kinloch (incorporated by reference from our Form 8-K Current report, filed on September 24, 2010)

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Exhibit  
Number Description
   
10.25

Form of Subscription Agreement dated December 21, 2010 (incorporated by reference from our Form 8-K Current report, filed on December 28, 2010)

 

10.26

Joint Operating Agreement dated effective December 6, 2010 between Maverick Minerals Corporation, Getty Resources Inc. and James Kearney (incorporated by reference from our Form 8- K Current report, filed on December 28, 2010)

 

10.27

Joint Operating Agreement dated effective December 7, 2010 between Maverick Minerals Corporation and Arrowdog, LLP (incorporated by reference from our Form 8-K Current report, filed on December 28, 2010)

 

10.28

Letter Agreement dated December 6, 2010 between Maverick Minerals Corporation and John Kearney (incorporated by reference from our Form 8-K Current report, filed on December 28, 2010)

 

10.29
Option and Joint Venture Exploration Agreement dated June 8, 2012 between Maverick Minerals Corporation and Energold Minerals Inc. (incorporated by reference from our Form 8-K Current report, filed on June 12, 2012)
   
10.30
Debt Settlement and Subscription Agreement dated August 7, 2012 between Maverick Minerals Corporation and The Art Brokerage, Inc. (incorporated by reference from our Form 8-K Current Report, filed on August 7, 2012)
   
10.31
Debt Settlement and Subscription Agreement dated August 7, 2012 between Maverick Minerals Corporation and Senergy Partners LLC (incorporated by reference from our Form 8-K Current Report, filed on August 7, 2012)
   
14.1

Code of Ethics (incorporated by reference from our Annual Report on Form 10-KSB, filed on April 24, 2008)

 

21.1

List of Subsidiaries (incorporated by reference from our Annual Report on Form 10-KSB, filed on July 26, 2012)

 

31.1*

Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

32.1*

Certification of Chief Executive Officer and Chief Financial Officer pursuant Section 906 Certifications under Sarbanes-Oxley Act of 2002

* Filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

MAVERICK MINERALS CORPORATION

By /s/ Robert Kinloch
   ___________________________
  Robert Kinloch
  President, Chief Executive Officer and Chief Financial Officer
  (Principal Executive Officer, Principal Accounting Officer
  and Principal Financial Officer)
   
Date: August 17, 2012

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