Oro East Mining, Inc. - FORM 10-Q - November 13, 2013

Attached files

file filename
EXCEL - IDEA: XBRL DOCUMENT - Oro East Mining, Inc.Financial_Report.xls
EX-31.2 - EX-31.2 - Oro East Mining, Inc.ex31-2.htm
EX-31.1 - EX-31.1 - Oro East Mining, Inc.ex31-1.htm
EX-32.2 - EX-32.2 - Oro East Mining, Inc.ex32-2.htm
EX-32.1 - EX-32.1 - Oro East Mining, Inc.ex32-1.htm
 U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
 
 
FORM 10-Q 
 

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2013

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                       to                      

Commission file number 000-53136

Oro East Mining, Inc.

Delaware
(State or other jurisdiction of incorporation or organization)

26-2012582
(I.R.S. Employer Identification Number)

7817 Oakport Street, Suite 205, Oakland, CA 94621
(Address of Principal Offices)

(510) 638-5000
(Issuer’s Telephone Number)
 
                                                                                                                                
(Former name, former address and former fiscal year, if changed since last report)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the 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 Website, if any, every interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T 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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large Accelerated Filer ¨
Accelerated Filer ¨
Non-Accelerated Filer ¨
(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 CORPORATE ISSUERS
 
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 27,165,290 shares of common stock, par value $.0001 per share, outstanding as of November 10, 2013.  
 
 
 
ORO EAST MINING, INC.
 
- Table of Contents -

     
Page(s)
  
PART I – FINANCIAL INFORMATION:
      
         
Item 1.
  
1
  
         
   
1
  
         
   
2
  
         
   
3
  
         
   
4
  
         
Item 2.
  
7
  
         
Item 3.
  
8
  
         
Item 4.
  
9
  
         
PART II – OTHER INFORMATION:
      
         
Item 1.
  
10
  
         
Item 1A.
  
10
  
         
Item 2.
  
10
  
         
Item 3.
  
10
  
         
Item 4.
  
10
  
         
Item 5.
  
10
  
         
Item 6.
  
11
  
         
 
12
  
 
 
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q of Oro East Mining, Inc., a Delaware corporation (the “Company”), contains “forward-looking statements,” as defined in the United States Private Securities Litigation Reform Act of 1995.  In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “could”, “expects”, “plans”, “intends”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of such terms and other comparable terminology.  These forward-looking statements include, without limitation, statements about our market opportunity, our strategies, competition, expected activities and expenditures as we pursue our business plan, and the adequacy of our available cash resources.  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.  Actual results may differ materially from the predictions discussed in these forward-looking statements.  The economic environment within which we operate could materially affect our actual results. Additional factors that could materially affect these forward-looking statements and/or predictions include, among other things: the volatility of minerals prices, the possibility that exploration efforts will not yield economically recoverable quantities of minerals, accidents and other risks associated with mineral exploration and development operations, the risk that the Company will encounter unanticipated geological factors, the Company’s need for and ability to obtain additional financing, the possibility that the Company may not be able to secure permitting and other governmental clearances necessary to carry out the Company’s exploration and development plans, the exercise of the approximately 87.8% control the Company’s voting securities the Company’s Chief Executive Officer, Tian Qing Chen, holds, other factors over which we have little or no control; and other factors discussed in the Company’s filings with the Securities and Exchange Commission (“SEC”).

Our management has included projections and estimates in this Form 10-Q, which are based primarily on management’s experience in the industry, assessments of our results of operations, discussions and negotiations with third parties and a review of information filed by our competitors with the SEC or otherwise publicly available.  We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made.  We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
 
 
PART I — FINANCIAL INFORMATION
  
Item 1.             FINANCIAL STATEMENTS

ORO EAST MINING, INC.
(An Exploration Stage Company)
CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
   
September 30,
    
December 31,
  
   
2013
    
2012
  
ASSETS
            
Current assets:
            
Cash
  
$
32,867
    
$
374,748
  
Prepaid expenses
    
2,477
      
87,339
  
Other current assets
    
951
      
941
  
Total current assets
    
36,295
      
463,028
  
Property and equipment, net of depreciation of $104,255 and $70,913
    
223,933
      
227,412
  
TOTAL ASSETS
  
$
260,228
    
$
690,440
  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT
                
Current liabilities:
                
Accounts payable
  
$
65,955
    
$
20,830
  
Due to related party
    
-
      
11,000
  
Convertible note payable
    
-
      
199,169
  
Short-term notes payable to a shareholder
    
100,000
      
-
  
Capital lease obligation
    
3,440
      
-
  
Accrued consulting costs
    
115,215
      
552,318
  
Accrued penalties
    
60,012
      
-
  
Other accrued liabilities
    
61,405
      
28,637
  
Advances-related party
    
65,838
      
127,327
  
Total current liabilities
    
471,865
      
939,281
  
Capital lease obligation
    
8,297
      
-
  
TOTAL LIABILITIES
    
480,162
      
939,281
  
                 
COMMITMENTS
                
                 
STOCKHOLDERS' DEFICIT
                
Preferred stock, $.0001 par value per share, 10,000,000 shares
    authorized; no shares issued and outstanding
    
 -
      
 -
  
Common stock, $.0001 par value per share, 100,000,000 shares authorized;
   27,165,290 and 28,198,990 shares issued and outstanding at September 30, 2013
   and December 31, 2012, respectively
    
2,717
      
2,820
  
Additional paid-in capital
    
4,189,822
      
2,878,769
  
Accumulated deficit
    
(4,394,331
)
    
(3,134,229
)
Accumulated other comprehensive income (loss)
    
(18,142
)
    
3,799
  
TOTAL STOCKHOLDERS' DEFICIT
    
(219,934
)
    
(248,841
)
                 
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT
  
$
260,228
    
$
690,440
  

See accompanying notes to unaudited consolidated financial statements.


ORO EAST MINING, INC.
(An Exploration Stage Company)
CONSOLIDATED STATEMENTS OF EXPENSES AND COMPREHENSIVE LOSS
(Unaudited)

                           
February 15,
  
                           
2008
  
                           
(Inception)
  
                           
Through
  
   
Three months ended September 30,
    
Nine months ended September 30,
    
September 30,
  
   
2013
    
2012
    
2013
    
2012
    
2013
  
Operating expenses:
                              
General and administrative
  
$
283,453
    
$
211,203
    
$
820,441
    
$
570,347
    
$
2,951,608
  
Exploration costs
    
31,623
      
-
      
437,592
      
-
      
1,420,910
  
Total operating expenses
    
315,076
      
211,203
      
1,258,033
      
570,347
      
4,372,518
  
                                         
Other income (expense):
                                        
Interest expense
    
(1,407
)
    
(3,012
)
    
(1,407
)
    
(9,045
)
    
(29,246
)
Foreign currency gain (loss)
    
(1
)
    
355
      
(662
)
    
658
      
(21,247
)
Gain on disposal of assets
    
-
      
-
      
-
      
-
      
28,680
  
Total other income (expense)
    
(1,408
)
    
(2,657
)
    
(2,069
)
    
(8,387
)
    
(21,813
)
                                         
Net loss
    
(316,484
)
    
(213,860
)
    
(1,260,102
)
    
(578,734
)
    
(4,394,331
)
                                         
Other comprehensive loss,
                                        
Foreign currency translation adjustment
    
(9,949
)
    
(1,802
)
    
(21,941
)
    
(7,545
)
    
(18,142
)
                                         
Comprehensive loss
  
$
(326,433
)
  
$
(215,662
)
  
$
(1,282,043
)
  
$
(586,279
)
  
$
(4,412,473
)
                                         
Basic earnings (loss) per share - Basic and diluted
  
$
(0.01
)
  
$
(0.01
)
  
$
(0.05
)
  
$
(0.02
)
        
                                         
Weighted average number of common shares outstanding
    
27,159,714
      
27,923,212
      
27,792,460
      
27,918,714
          
 
See accompanying notes to unaudited consolidated financial statements.

 
ORO EAST MINING, INC.
(An Exploration Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
               
February 15,
  
               
2008
  
               
(Inception)
  
               
Through
  
   
Nine months ended September 30,
    
September 30,
  
   
2013
    
2012
    
2013
  
CASH FLOW FROM OPERATING ACTIVITES:
                  
   Net loss
  
$
(1,260,102
)
  
$
(578,734
)
  
$
(4,394,331
)
   Adjustments to reconcile net loss to net cash used in operating activities:
                        
   Depreciation
    
33,342
      
30,692
      
112,344
  
   Gain on disposal of assets
    
-
      
-
      
(28,680
)
   Share-based compensation
    
29,199
      
187,083
      
524,010
  
   Changes in operating assets and liabilities:
                        
   Prepaid expenses
    
84,862
      
-
      
(2,477
)
   Other current assets
    
(10
)
    
(1,988
)
    
(950
)
   Accounts payable
    
45,125
      
39,034
      
65,955
  
   Accounts payable – related party
    
(11,000
)
    
-
      
-
  
   Accrued liabilities
    
(344,322
)
    
38,368
      
241,075
  
Net cash used in operating activities
    
(1,422,906
)
    
(285,545
)
    
(3,483,054
)
                         
CASH FLOW USED IN INVESTING ACTIVITES,
                        
   Purchases of property and equipment
    
(17,863
)
    
(8,596
)
    
(96,429
)
                         
CASH FLOW FROM FINANCING ACTIVITIES:
                        
   Proceeds from issuance of common stock
    
1,281,900
      
103,950-
      
3,661,235
  
   Stock redemption
    
(150
)
    
-
      
(150
)
   Principal payments under capital lease obligation
    
(263
)
    
-
      
(263
)
   Proceeds from short-term note
    
100,000
      
-
      
182,000
  
   Repayment of short-term note
    
-
      
-
      
(82,000
)
   Repayment of convertible note
    
(199,169
)
    
-
      
(199,169
)
   Net proceeds from (repayment of) shareholder advances
    
(61,489
)
    
178,984
      
68,839
  
Net cash provided by financing activities
    
1,120,829
      
282,934
      
3,630,492
  
                         
Effect of exchange rate on cash
    
(21,941
)
    
(7,545
)
    
(18,142
)
                         
NET INCREASE (DECREASE) IN CASH
    
(341,881
)
    
(18,752
)
    
32,867
  
                         
CASH AT BEGINNING OF PERIOD
    
374,748
      
83,633
      
-
  
                         
CASH AT END OF PERIOD
  
$
32,867
    
$
64,881
    
$
32,867
  
                         
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
                        
   Interest paid
  
$
18,031
    
$
-
    
$
27,942
  
                         
NON-CASH INVESTING AND FINANCING ACTIVITIES:
                        
   Equipment acquired under capital lease obligation
  
$
12,000
    
$
-
    
$
12,000
  
   Subscription receivable
  
$
-
    
$
300
    
$
300
  
   Note payable forgiven by shareholder
  
$
-
    
$
-
    
$
7,443
  
   Equipment purchased on short-term note payable
  
$
-
    
$
-
    
$
199,169
  
   Trade in of truck
  
$
-
    
$
-
    
$
79,682
  

See accompanying notes to unaudited consolidated financial statements.
 
 
ORO EAST MINING, INC.
(An Exploration Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
 
NOTE 1          ORGANIZATION, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
(a)         Organization and Business
 
Oro East Mining, Inc. (“we”, “our”, or the “Company”) was incorporated in Delaware on February 15, 2008. The Company is currently in the exploration stage and does not have any customers or revenue.

In June 2013, the Company established a wholly owned subsidiary, Oro East Mariposa, LLC (“Oro East Mariposa”), a California limited liability company, to operate the Red Bank Gold Mine (“Red Bank”) in Mariposa County, California.  Oro East Mariposa has started its operations since its establishment.  In October 2013, Oro East Mariposa issued an additional 158,000 units to a foreign corporation owned by a shareholder.  The Company now owns 95% equity interest of Oro East Mariposa.

On or about July 1, 2013, the Company, through its subsidiary, entered into an exclusive Mining Lease and Royalties Agreement for Red Bank. Red Bank is a gold mine located in the prime Mother Lode vein system just east of San Francisco and within the western Sierra Nevada Ranges.
 
(b)       Emerging Growth Company 

We are an “emerging growth company,” as defined in the Jumpstart our Business Startups Act of 2012, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden
parachute payments not previously approved.

Under the Jumpstart Our Business Startups Act, “emerging growth companies” can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have elected not to avail ourselves to this exemption from new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not “emerging growth companies.”

 (c)         Basis of Consolidation
 
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries.  All significant intercompany accounts and transactions have been eliminated.
 
(d)         Basis of Presentation
 
The accompanying interim consolidated financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission. In the opinion of management, all adjustments for a fair statement of the results and operations and financial position for the interim periods presented have been included. All such adjustments are of a normal recurring nature.   The September 30, 2013 interim consolidated financial statements presented herein may not be indicative of the results of the Company for the year ending December 31, 2013. These unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2012 filed with the SEC on April 12, 2013.
 
(e)         Share-based Compensation
 
The Company recognizes the services received in a share-based payment transaction as the services are received. The services received are measured at the fair value of the equity instruments issued.
 
 
NOTE 2          GOING CONCERN

The accompanying interim consolidated financial statements have been prepared on a going concern basis, which assumes the Company will realize its assets and discharge its liabilities in the normal course of business. As reflected in the accompanying interim consolidated financial statements, the Company has a negative deficit accumulated during the exploration stage of $4,394,331 and a negative working capital of $435,570 at September 30, 2013. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management’s plan includes obtaining additional funds by equity and debt financing and/or related party advances, but there is no assurance of additional funding being available. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying interim consolidated financial statements do not include any adjustments that might arise as a result of this uncertainty.

NOTE 3          COMMITMENTS
 
Capital Leases

The Company classifies the equipment lease, which is for 3 years expiring in 2016, as a capital lease.  The following is an analysis of the leased equipment under capital leases by major classes.

Classes of Equipment
  
September 30, 2013
    
December 31, 2012
  
Mining equipment
   $ 12,000     $ -  
Less: Accumulated depreciation
     (214 )     -  
    $ 11,786     $ -  

The following is a schedule by years of future minimum lease payments under capital leases together with the present value of the net minimum lease payments as of September 30, 2013.

Year ending December 31:
  
Total
  
2013 (remainder of the year)
   $ 1,260  
2014
     5,040  
2015
     5,040  
2016
     3,360  
      14,700  
Less: Amount representing interest (a)
     (2,963 )
Present value of net minimum lease payments (b)
   $ 11,737  
 
(a)
Amount necessary to reduce net minimum lease payments to present value calculated at the Company's incremental borrowing rate at lease inception.
(b)
Reflected in the balance sheet as current and noncurrent obligation under capital lease of $3,440 and $8,297, respectively.

NOTE 4          RELATED PARTY TRANSACTIONS
 
The shareholder and officer of the Company paid expenses on behalf of the Company during the nine months ended September 30, 2013. As of September 30, 2013 and December 31, 2012, the Company owed a shareholder and officer the amount of $65,838 and $127,327, respectively. The balances are unsecured, non-interest bearing and due on demand.
 
During a three month period ending on September 30, 2013, the Company entered into two $50,000 promissory note agreements totaling $100,000 with a foreign corporation owned by a shareholder.  The notes are due January 31, 2014 and March 15, 2014 respectively, with interest at 12% with no collateral. As of September 30, 2013, the Company has accrued interest of $1,250.
 
 
NOTE 5          EQUITY

During the three months ended March 31, 2013, the Company sold 427,300 common shares at $3 per share for $1,281,900.

In June 2013, the Company entered into a consulting agreement with an individual to issue up to 6,000 common shares for services to be received over a period of six months.  The services can be terminated at any time with or without cause.  The shares were valued at $3 per share for a total of $18,000, and 3,000 shares have been issued.

In July 2013, the Company entered into a consulting agreement with another individual and issued 35,000 common shares for services to be received over a period of two years.  The shares are forfeitable if the services are not provided.  The shares were valued at $3 per share for a total of $105,000.

The Company recognized $29,199 in share-based compensation for consulting services provided during the nine months ended September 30, 2013.

NOTE 6          SUBSEQUENT EVENTS

In October 2013, the Company’s subsidiary, Oro East Mariposa, LLC issued an additional 158,000 units to the same foreign corporation as disclosed in Note 4 for $100,000.  The Company now owns 95% equity interest of Oro East Mariposa.
 
 
Item 2.             MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS    
 
The following discussion provides information that the Company’s management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with the Company’s consolidated financial statements and related notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q. This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. Undue certainty should not be placed on these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions.

Business Overview

We are an exploration stage mining company engaged in the search for gold, copper and other precious or industrial mineral deposits and have not yet generated or realized any revenues from our business.

We do not expect any significant changes or hiring of employees since contracts are given to consultants and sub-contractor specialists in specific fields of expertise for the exploration work. We do not expect to purchase or sell any plant or significant equipment. We intend to lease or rent any equipment, such as flotation equipment, backhoe, diamond drill, generators and so on, that we will need in order to carry out our exploration and refinery activities.

In June, 2013 we established a wholly owned subsidiary, Oro East Mariposa, LLC to operate the Red Bank in Mariposa County, California. On June 24, 2013, the Company, through its subsidiary, entered into an exclusive Mining Lease and Royalties Agreement for Red Bank. Red Bank is located in the Mother Lode vein system just east of San Francisco and within the western Sierra Nevada Ranges.

In October 2013, Oro East Mariposa issued additional 158,000 units to a foreign corporation for $100,000.  The Company now owns 95% equity interest of Oro East Mariposa.

Around that same time, Oro East Mariposa commenced negotiations with third and fourth generation gold mine proprietors in the western region of the United States to acquire control over exploration and prospective gold refinery operations in the region. Currently, there are no known mineral reserves and no refinery operations on any property the Company is examining.  Oro East Mariposa has commenced research, due diligence, and a pilot plant testing phase at various site locations to determine viability of full refinery operations. It is expected that the pilot testing of these sites will result in sales by the last fiscal quarter of 2013. Acquisition negotiations are all still in the preliminary discussion stage.  Oro East Mariposa has no agreement, arrangement or understanding to acquire the referenced property and has no plan of how to pay for such property even if an agreement, arrangement or understanding is consummated.

Results of Operations

The following is a summary of the Company’s operation results for the three and nine months ended September 30, 2013 and 2012:
 
 
Three months ended September 30,
  
Nine months ended September 30,
  
 
2013
  
2012
  
2013
  
2012
  
 
(Unaudited)
  
(Unaudited)
  
Total operating expenses
   $ 315,076     $ 211,203     $ 1,258,033     $ 570,347  
Total other income (expense)
     (1,408 )     (2,657 )     (2,069 )     (8,387 )
Net loss
   $ (316,484 )   $ (213,860 )   $ (1,260,102 )   $ (578,734 )
 
The Company is still in the exploration stage, and no revenue has been generated since the inception of the Company on February 15, 2008. 
 
 
Operating expenses increased by about $104,000 and $688,000 for the three and nine months ended September 30, 2013 and 2012 was due to the increase of about $32,000 and $438,000 in exploration costs and $72,000 and $250,000 in general and administrative expenses for the respective periods.  There were no exploration activities due to heavy flooding in the Philippines during the first quarter of 2012 and the pending of SEC’s approval of Form S-1 for funding from additional stock issuance.  Beginning in the last quarter of 2012, we started smaller scale exploration activities in Philippines.  We have also started small scale exploration activities since the signing of the exclusive Mining Lease and Royalties Agreement for Red Bank.  General and administrative expenses increased was due to the increase of about $100,000 in donations to Philippines government agencies for flooding victims and other government activities, $150,000 in payroll expenses, $97,000 in consulting costs and $61,000 in tax penalties due to late filings, and the decrease of about $158,000 in share-based compensation, for the respective nine month periods. During the three months ended September 30, 2013 and 2012, general and administrative expenses increased was due to the increase of about $80,000 in payroll expense, $30,000 in consulting costs and $60,000 in tax penalties, and the decrease of about $40,000 in share-based compensation and $58,000 in legal and professional expense.

Liquidity and Capital Resources

As of September 30, 2013 and December 31, 2012, the Company had a total of $260,228 and 690,440 in assets including $32,867 and $374,748 of cash, respectively.  Decrease of about $430,000 in total assets was due to the $342,000 and $85,000 decrease in cash and prepaid expenses and the $30,000 and $33,000 increase in property and equipment and accumulated depreciation for the first nine months of 2013.  The Company also had $471,865 and $939,281 current liabilities as of September 30, 2013 and December 31, 2012, respectively.  Decrease of about $467,000 in total current liabilities was due to the decrease of $310,200, $199,000, and $61,500 in accounts payable and accrued liabilities, convertible note, and related party advance, and the increase of $100,000 and $3,400 in short-term notes and capital lease obligation, respectively.
 
The following is a summary of the Company's cash flows provided by (used in) operating, investing, and financing activities for the nine months ended September 30, 2013 and 2012:

   
2013
    
2012
  
   
(Unaudited)
  
Net Cash Used In Operating Activities
  
$
(1,422,906
)
  
$
(285,545
)
Net Cash Used In Investing Activities
    
(17,863
)
    
(8,596
)
Net Cash Provided By Financing Activities
    
1,120,829
      
282,934
  
Effect Of Exchange Rate On Cash
    
(21,941
)
    
(7,545
)
Net Decrease In Cash
  
$
(341,881
)
  
$
(18,752
)

Our principal sources of liquidity are our cash and the cash flow provided by the shareholder advances and debt and equity financing.  We believe that further debt and equity financing is needed to satisfy our anticipated cash requirements through the next 12 months.

Total cash decreased by about $320,000 before the effect of exchange rate was mainly due to about $1,423,000, $199,000, $62,000, and $18,000 of cash used for funding the operations, repayment of a convertible note, repayment of shareholder/officer advances, and purchases of property and equipment, respectively, despite about $1,282,000 and $100,000 of cash provided by stock and short-term notes issuances during the nine months ended September 30, 2013.  

Critical Accounting Policies

There have been no material changes in the critical accounting policies since December 31, 2012.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Item 3.             QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
 
 
Item 4.             CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures
 
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (Exchange Act), as of September 30, 2013.   Disclosure controls and procedures means that the material information required to be included in our Securities and Exchange Commission reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms relating to our company, including any consolidating subsidiaries, and was made known to us by others within those entities, particularly during the period when this report was being prepared.  Based on this evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures are effective as of September 30, 2013.

Changes in Internal Control over Financial Reporting

There were no changes in our internal controls over financial reporting that occurred during the quarter ended September 30, 2013,  that have materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


PART II — OTHER INFORMATION

Item 1.             LEGAL PROCEEDINGS

The Company is not currently subject to any legal proceedings.  From time to time, the Company may become subject to litigation or proceedings in connection with its business, as either a plaintiff or defendant.  There are no such pending legal proceedings to which the Company is a party that, in the opinion of management, is likely to have a material adverse effect on the Company’s business, financial condition or results of operations.

Item 1A.          RISK FACTORS
 
As a “smaller reporting company” (as defined in Rule 12b-2 of the Exchange Act), the Company is not required to provide information required by this Item 1A.

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

None.

Item 3.             DEFAULTS UPON SENIOR SECURITIES

None.

Item 4.             MINE SAFETY DISCLOSURES

None.

Item 5.             OTHER INFORMATION

Resignation of Officer

On November 8, 2013 Danni Zhong resigned as President of the Company.
 
 
Item 6.             EXHIBITS

(a)  Exhibits required by Item 601 of Regulation SK. 
 
Exhibit
  
Description
3.1.1
  
Certificate of Incorporation (1)
3.1.2
  
Certificate of Amendment to Certificate of Incorporation (2)
3.2
  
Bylaws (1)
31.1
  
31.2
  
32.1
  
32.2
  
101.INS
  
XBRL Instance Document *
101.SCH
  
XBRL Taxonomy Extension Schema Document. *
101.CAL
  
XBRL Taxonomy Extension Calculation Linkbase Document *
101.DEF
  
XBRL Taxonomy Extension Definition Linkbase Document *
101.LAB
  
XBRL Taxonomy Extension  Labels Linkbase Document *
101.PRE
  
XBRL Taxonomy Extension Presentation Linkbase Document *

(1)  Filed and incorporated by reference to the Company’s Registration Statement on Form 10-SB (File No. 000-53136), as filed with the Securities and Exchange Commission on March 19, 2008.

(2)  Filed and incorporated by reference to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-177509), as filed with the Securities and Exchange Commission on January 30, 2012.

*           Filed herewith

 
 
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.

Dated: November 13, 2013
  
 
ORO EAST MINING, INC.
              (Registrant)
  
       
 
By:
/s/ Tian Q. Chen
  
 
Name:  Tian Q. Chen
Title:    Chief Executive Officer
 
(Principal Executive Officer)

 
By:
/s/ Rex Yuen
  
 
Name:  Rex Yuen
Title:    Chief Financial Officer
 
(Principal Accounting and Financial Officer)
  
 
 
 
Exhibit
  
Description
3.1.1
  
Certificate of Incorporation (1)
3.1.2
  
Certificate of Amendment to Certificate of Incorporation (2)
3.2
  
Bylaws (1)
31.1
  
31.2
  
32.1
  
32.2
  
101.INS
  
XBRL Instance Document *
101.SCH
  
XBRL Taxonomy Extension Schema Document. *
101.CAL
  
XBRL Taxonomy Extension Calculation Linkbase Document *
101.DEF
  
XBRL Taxonomy Extension Definition Linkbase Document *
101.LAB
  
XBRL Taxonomy Extension  Labels Linkbase Document *
101.PRE
  
XBRL Taxonomy Extension Presentation Linkbase Document *

(1)  Filed and incorporated by reference to the Company’s Registration Statement on Form 10-SB (File No. 000-53136), as filed with the Securities and Exchange Commission on March 19, 2008.

(2)  Filed and incorporated by reference to the Company’s Amendment No. 1 to Registration Statement on Form S-1 (File No. 333-177509), as filed with the Securities and Exchange Commission on January 30, 2012.
 
*           Filed herewith
 
 
13
 

Oro East Mining, Inc. Reports