SECTION 4 - MATTERS RELATED TO ACCOUNTANTS AND FINANCIAL STATEMENTS
Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.
On August 23, 2012, South American Gold Corp. (“the Company”) determined that the Company’s previously issued unaudited interim consolidated financial statements as of and for the quarterly periods ended December 31, 2011 (Q2) and March 31, 2012 (Q3) should no longer be relied upon due to the improper recording of a bargain purchase gain associated with an acquisition. Accordingly the Company filed re-stated financial statements on August 23,2012 as of and for the quarterly periods ending December 31,2011 and March 31,2012.
In November 2011, the Company purchased the minority interest in Kata Enterprises, Inc., a company which it had management control over, and a twenty five per cent ownership interest. This transaction finalized the purchase accounting of the Kata subsidiary acquired. The company originally recorded a bargain purchase gain considering that the transaction was a step-acquisition. However upon further evaluation it was determined that this was inappropriate as the company had management control of the subsidiary which requires the gain on acquisition of the minority interest to be recorded as an increase in capital.
The authorized officers of the Company have discussed with the independent accountant the matters disclosed in the filing pursuant to Item 4.02(b).