UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 December 31, 2013

 

o  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from ______________________ to ______________________

 

Commission file number 000-52752

 

SILVER STREAM MINING CORP..
(Exact name of registrant as specified in its charter)

 

Nevada	98-0439650
(State or other jurisdiction of incorporation or	(I.R.S. Employer Identification No.)
organization)

 

9550 South Eastern Avenue

Suite 253, Las Vegas, NV 89123

(Address of principal executive offices)

 

(702) 818-1775
(Registrant’s telephone number including area code)

 

Indicate by check mark whether the registrant (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 require to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

 

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 (of for such shorter period that the registrant was required to submit and post such files). Yes þ No o

 

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 definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer o    Accelerated filer o    Non-accelerated filer o    Smaller reporting company þ

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

 

As of February 19, 2014, the registrant’s outstanding common stock consisted of 37,431,000 shares.

TABLE OF CONTENTS

 

PART I – FINANCIAL INFORMATION		3
ITEM 1. FINANCIAL STATEMENTS.		3
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.		14
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.		19
ITEM 4. CONTROL AND PROCEDURES.		19
PART II – OTHER INFORMATION		20
ITEM 1. LEGAL PROCEEDINGS.		20
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES.		21
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.		21
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.		21
ITEM 5. OTHER INFORMATION.		21
ITEM 6. EXHIBITS.		21

PART I – FINANCIAL INFORMATION

 

ITEM 1.

FINANCIAL STATEMENTS.

 

Silver Stream Mining Corp. (formerly W.S. Industries Inc.)

Consolidated Financial Statements

For the period ended December 31, 2013

(U.S. Dollars)

 

Silver Stream Mining Corp. (formerly W.S. Industries Inc.)

(An Exploration Stage Company)

Consolidated Balance Sheets

 

		December 31, 2013				March 31, 2013
		(unaudited)
ASSETS
Current assets
Cash		$	14,567			$	188,607
Prepaid expenses			-				2,462
HST receivable			11,068				8,750
			25,635				199,819
Non-current assets
Unproved mineral properties			23,505				957,980
IVA receivable			-				256,057
		$	49,140			$	1,413,856
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities
Trade payables		$	384,219			$	119,471
Accrued liabilities			45,930				48,782
Interest payable			395,576				363,721
Loans			1,587,258				2,726,912
			2,412,983				3,258,886
Stockholders’ deficit
Common stock: $0.001 par value, authorized shares, 37,431,000 issued and outstanding (March 31, 2013 – 12,563,702)			37,431				1,095,536
Obligation to issue shares			60,291				166,165
Additional paid-in capital			2,649,715				150,372
Deficit accumulated during the exploration stage			(5,289,952	)			(3,293,571	)
Cumulative translation adjustment			178,672				36,468
			(2,363,843	)			(1,845,030	)
		$	49,140			$	1,413,856

 

The accompanying notes are an integral part of these interim consolidated financial statements

Silver Stream Mining Corp. (formerly W.S. Industries Inc.)

(An Exploration Stage Company)

Consolidated Statements of Operations

(Unaudited)

		3 months ended December 31,								9 months ended December 31,								From August 16, 2006 (Inception) to December 31,2013
		2013				2012				2013				2012
Expenses
Consulting fees		$	168,141			$	800			$	383,335			$	20,700			$	423,103
Depreciation			-				-				87				-				87
Filing fees			9,886				-				32,434				3,955				78,491
Investor relations			-				(20,000	)			-				2,000				3,803
Management fees			17,322				7,500				27,145				22,500				222,646
Mineral exploration costs			161,966				5,235				359,888				24,167				1,940,900
Office and miscellaneous			2,650				5,814				16,402				16,277				208,739
Professional fees			45,377				2,770				47,445				2,770				505,506
Stock-based compensation			-				-				-				-				154,334
Travel and promotion			15,756				4,655				53,778				13,037				99,427
Loss before other items			(421,098	)			(6,774	)			(920,514	)			(105,406	)			(3,637,036	)
Other items
Foreign exchange gain (loss) realized			12,205				-				2,057				-				2,057
Gain on debt settlement			25,968				-				1,176,328				-				1,176,328
Interest expense			(160,597	)			(90,104	)			(325,486	)			(208,999	)			(868,602	)
Mineral property impairment			(957,980	)			-				(957,980	)			-				(991,913	)
Impairment of IVA receivable			(263,707	)			-				(263,706	)			-				(263,707	)
Net loss		$	(1,765,209	)		$	(96,878	)		$	(1,289,301	)		$	(314,405	)		$	(4,582,873	)
Loss per share – basic and diluted		$	(0.01	)		$	(0.01	)		$	(0.03	)		$	(0.02	)
Weighted average number of shares outstanding			37,431,000				12,940,367				37,431,000				12,940,367

 

The accompanying notes are an integral part of these interim consolidated financial statements

Silver Stream Mining Corp. (formerly W.S. Industries Inc.)

(An Exploration Stage Company)

Consolidated Statement of Stockholders’ Equity (Deficit)

(Unaudited)

 

		Common Stock
										Additional				Obligation												Cumulative
		Number of								Paid-in				to issue				Subscriptions				Accumulated				Translation
		Shares				Amount				Capital				Shares				Receivable				Deficit				Adjustment				Total
		#				$				$				$				$				$				$				$
Balance at August 16, 2006 (Inception)			-				-				-				-				-				-				-				-
Common stock issued for cash			9,372,500				558,157				-				-				-				-				-				558,157
Stock-based compensation			-				-				150,372				-				-				-				-				150,372
Subscriptions receivable			-				-				-				-				(275,569	)			-				-				(275,569	)
Net loss for the year			-				-				-				-				-				(296,251	)			-				(296,251	)
Translation adjustment			-				-				-				-				-				-				11,881				11,881
Balance at March 31, 2007			9,372,500				558,157				150,372				-				(275,569	)			(296,251	)			11,881				(148,590	)
Subscriptions receivable			-				-				-				-				78,988				-				-				78,988
Obligation to issue shares			-				-				-				50,340				-				-				-				50,340
Net loss for the year			-				-				-				-				-				(207,264	)			-				(207,264	)
Translation adjustment			-				-				-				-				-				-				25,577				25,577
Balance at March 31, 2008			9,372,500				558,157				150,372				50,340				(196,581	)			(503,515	)			37,458				96,231
Common stock issued for cash			1,605,400				390,754				-				-				-				-				-				390,754
Subscriptions receivable			-				-				-				-				196,581				-				-				196,581
Shares issued			-				-				-				(50,340	)			-				-				-				(50,340	)
Net loss for the year			-				-				-				-				-				(470,751	)			-				(470,751	)
Translation adjustment			-				-				-				-				-				-				(42,709	)			(42,709	)
Balance at March 31, 2009			10,977,900				948,911				150,372				-				-				(974,266	)			(5,251	)			119,766
Common stock issued for cash			1,200,000				111,169				-				-				-				-				-				111,169
Common stock issued-loan arrangements			70,400				6,577				-				-				-				-				-				6,577
Net loss for the year			-				-				-				-				-				(211,221	)			-				(211,221	)
Translation adjustment			-				-				-				-				-				-				20,680				20,680
Balance at March 31, 2010			12,248,300				1,066,657				150,372				-				-				(1,185,487	)			15,429				46,971
Common stock issued-loan arrangements			272,066				24,674				-				-				-				-				-				24,674
Net loss for the year			-				-				-				-				-				(342,281	)			-				(342,281	)
Translation adjustment			-				-				-				-				-				-				(13,045	)			(13,045	)
Balance at March 31, 2011			12,520,366				1,091,331				150,372				-				-				(1,527,768	)			2,384				(283,681	)
Common stock issued-loan arrangements			43,336				4,205				-				-				-				-				-				4,205
Obligation to issue shares			-				-				-				30,906				-				-				-				30,906
Net loss for the year			-				-				-				-				-				(453,888	)			-				(453,888	)
Translation adjustment			-				-				-				-				-				-				16,971				16,971
Balance at March 31, 2012			12,563,702				1,095,536				150,372				30,906				-				(1,981,656	)			19,355				(685,487	)
Obligation to issue shares			-				-				-				135,259				-				-				-				135,259
Net loss for the year			-				-				-				-				-				(1,311,915	)			-				(1,311,915	)
Translation adjustment			-				-				-				-				-				-				(17,133	)			(17,133	)
Balance at March 31, 2013			12,563,702				1,095,536				150,372				166,165				-				(3,293,571	)			36,468				(1,845,030	)
Conversion of loans			6,338,423				6,338				627,170				-				-				-				-				633,508
Bonus shares issued			1,720,004				1,720				164,154				(165,874	)			-				-				-				-
Share exchange and recapitalization:																															-
Debt conversion			5,000,000				5,000				563,002				-				-				-				-				568,002
Shares cancelled of WSI			(17,957,680	)			(17,958	)			17,958				-				-				-				-				-
Shares issued to former shareholders of Rio Plata			28,000,000				28,000				562,445				-				-				-				-				590,445
Recapitalization adjustment			466,551				(1,082,505	)			(73,809	)			-				-				(707,080	)			-				(1,863,395	)
Forgiveness of related party debt			-				-				509,723				-				-				-				-				509,723
Compensation expense			1,300,000				1,300				128,700				60,000				-				-				-				190,000
Net loss for the period			-				-				-				-				-				(1,289,301	)			-				(1,289,301	)
Translation adjustment			-				-				-				-				-				-				142,204				142,204
Balance at December 31, 2013			37,431,000				37,431				2,649,715				60,291				-				(5,289,952	)			178,672				(2,363,843	)

 

The accompanying notes are an integral part of these interim consolidated financial statements

Silver Stream Mining Corp. (formerly W.S. Industries Inc.)

(An Exploration Stage Company)

Consolidated Statements of Cash Flows

(Unaudited)

 

										From August 16,
										2006 (Inception)
		Nine months ended December 31,								to December 31,
		2013				2012				2013
Cash flows used in operating activities:
Net income (loss)		$	(1,289,301	)		$	(224,940	)		$	(4,582,872	)
Items not affecting cash:
Accretion of loans			86,036				3,123				197,555
Stock-based compensation			-				-				154,334
Accrued interest			233,157				-				625,021
Gain on debt settlement			(1,176,328	)			-				(1,176,328	)
Consulting fees			190,000								190,000
Impairment of mineral property			957,980								957,980
Impairment of IVA receivable			263,707								263,707
Changes in working capital:
HST receivable			(15,268	)			-				(279,263	)
Prepaid expenses			2,462				3,926				(21	)
Accrued liabilities			(3,376	)			-				45,765
Accounts payable			255,234				187,880				372,198
Net cash used in operating activities			(495,697	)			(30,011	)			(3,231,924	)
Cash flows used in investing activities:
Mineral property acquisition			(23,505	)			-				(981,485	)
Net cash used in investing activities			(23,505	)			-				(981,485	)
Cash flows provided by financing activities:
Issuance of common stock			-				-				1,095,536
Short term loans			434,960				27,881				3,200,742
Net cash provided by financing activities			434,960				27,881				4,296,278
Effects of foreign currency translation			(89,798	)							(68,302	)
							-
Decrease in cash			(174,040	)			2,130				14,567
Cash, beginning of period			188,607				2,165				-
Cash, end of period		$	14,567			$	35			$	14,567
Interest paid in cash		$	-			$	-
Income taxes paid in cash		$	-			$	-

 

The accompanying notes are an integral part of these interim consolidated financial statements

Silver Stream Mining Corp. (formerly W.S. Industries Inc.)

(An Exploration Stage Company)

NOTES TO THE FINANCIAL STATEMENTS

December 31, 2013

 

NOTE 1 – BASIS OF PRESENTATION

 

Silver Stream Mining Corp. (the “Company”) entered into an Agreement (the “Agreement”) with Rio Plata Exploration Inc. (“Rio Plata”), a private corporation incorporated under the laws of British Columbia, Canada; and certain holders of the Company’s convertible promissory notes (the “Debt Holders”) on May 14, 2013 (Note 5).

 

Rio Plata is in the exploration stage and has an option to purchase 100% of the Metates property, an unproved mineral property, in the State of Sinaloa, Mexico (Note 3).

 

Pursuant to the Agreement, the Company agreed to acquire all of the issued and outstanding shares of common stock of Rio Plata by issuing 28,000,000 shares of its common stock and, as a result, the former shareholders of Rio Plata controlled approximately 77% of the issued and outstanding common shares of the Company upon completion of the acquisition contemplated under the Agreement. The acquisition is a reverse takeover (“RTO”) and therefore has been accounted for using the acquisition method with Rio Plata as the accounting acquirer (legal subsidiary) and continuing entity for accounting and financial reporting purposes, and the Company as the legal parent (accounting subsidiary) (Note 5). These financial statements include the operations of Rio Plata for the nine months ended December 31, 2013 together with the operations of the Company from May 14, 2013 to December 31, 2013.

 

Effective with the acquisition, the Debt Holders of the Company consented to the conversion of $568,002 of convertible notes into 5,000,000 shares of the Company. The fair value of assets acquired and liabilities assumed by Rio Plata are as follows:

 

Cash		$	67
Equipment			87
Accounts payable and accrued liabilities			(446,543	)
Loans and advances payable			(144,056	)
		$	(590,445	)

 

In conjunction with the Agreement, at the effective time of the reverse merger on May 14, 2013, the Company changed its year end from August 31 to March 31 which was the year end of Rio Plata.

 

The Company’s consolidated financial statements are prepared on a going concern basis in accordance with generally accepted accounting principles of the United States of America (“GAAP”), which contemplates the realization of assets and discharge of liabilities and commitments in the normal course of business. The Company is in the exploration stage and not generated operating revenues to date. The Company has funded its operations through the issuance of common stock and debt. Management plans to raise additional funds through equity and/or debt financings. There is no certainty that further funding will be available as needed. The Company is also delinquent on the repayment of certain short term loans and option payments on its main mineral property. These factors raise substantial doubt about the ability of the Company to continue operations as a going concern. The Company’s ability to continue its operations as a going concern, realize the carrying value of its assets, and discharge its liabilities in the normal course of business is dependent upon its ability to raise new capital sufficient to fund its commitments and ongoing losses, and ultimately on generating profitable operations.

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Accounting Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain of the reported amounts of assets and liabilities,

disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year. The Company regularly evaluates estimates and assumptions. The Company bases its estimates and assumptions on current facts, historical experience and various other factors it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. The most significant estimates with regard to these financial statements relate to the carrying values of unproven mineral properties, determination of fair values of stock based transactions and deferred income tax rates.

 

Asset Retirement Obligations

 

The Company records the fair value of an asset retirement obligation as a liability in the period in which it incurs an obligation associated with the retirement of tangible long-lived assets that result from the acquisition, construction, development and/or normal use of the assets. The estimated fair value of the asset retirement obligation is based on the current cost escalated at an inflation rate and discounted at a credit adjusted risk-free rate. This liability is capitalized as part of the cost of the related asset and amortized over its useful life. The liability accretes until the Company settles the obligation. To date the Company has not incurred any measurable asset retirement obligations.

 

Long Lived Assets

 

The carrying value of intangible assets and other long-lived assets is reviewed on a regular basis for the existence of facts or circumstances that may suggest impairment. The Company recognizes impairment when the sum of the expected undiscounted future cash flows is less than the carrying amount of the asset or when the carrying value is greater than the fair value of the asset. Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value.

 

Fair Value of Financial Instruments

 

The estimated fair values for financial instruments are determined at discrete points in time based on relevant market information. These estimates involve uncertainties and cannot be determined with precision. The estimated fair value of cash, trade payables, and loans approximates their carrying value due to their short-term nature.

 

Foreign Currency Translation and Transactions

 

The functional currency of the Company is the Canadian dollar. The Company translates assets and liabilities to Canadian dollars using year-end exchange rates, translates unproved mineral properties and equity accounts using historical exchange rates, and translates revenues and expenses using average exchange rates during the period. Exchange gains and losses arising from the translation of the Mexican subsidiary’s financial statements are recorded to profit and loss.

 

The reporting currency is the US Dollar. Assets and liabilities denominated in currencies other than the US Dollar are translated to the US Dollar equivalent using the year end exchange rate. Stockholders equity accounts are translated to US Dollars using the historical exchange rates. Revenues and expenses are translated using average exchange rates during the period. Exchange gains and losses arising from the translation to the reporting currency are recorded within the cumulative translation adjustment account.

 

Loss per Share

 

The Company presents both basic and diluted loss per share (“LPS”) on the face of the statements of operations. Basic LPS is computed by dividing net loss available to common shareholders by the weighted average number of shares outstanding during the year. Diluted LPS gives effect to all dilutive potential common shares outstanding during the period including convertible debt, stock options, and warrants, using the treasury stock method. Diluted LPS excludes all dilutive potential shares if their effect is anti-dilutive.

Income Taxes

 

Income taxes are determined using the liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes that date of enactment. In addition, a valuation allowance is established to reduce any deferred tax asset for which it is determined that it is more likely than not that some portion of the deferred tax asset will not be realized.

 

The Company accounts for uncertainty in income taxes by applying a two-step method. First, it evaluates whether a tax position has met a more likely than not recognition threshold, and second, it measures that tax position to determine the amount of benefit, if any, to be recognized in the financial statements. The application of this method did not have a material effect on the Company’s financial statements.

 

Mineral Properties

 

Realization of the Company’s investment in and expenditures on mineral properties is dependent upon the establishment of legal ownership, the attainment of successful production from the properties or from the proceeds of their disposal.

 

Title to mineral properties involves certain inherent risks due to the difficulties of determining the validity of certain claims as well as the potential for problems arising from the frequently ambiguous conveyancing history characteristics of many mineral properties. To the best of its knowledge the Company believes all of its unproved mineral interests are in good standing and that it has title to all of these mineral interests.

 

The Company classifies its mineral rights as tangible assets and accordingly acquisition costs are capitalized as mineral property costs. Long-lived assets are to be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In performing the review for recoverability, the Company is to estimate the future cash flows expected to result from the use of the asset and its eventual disposition. If the sum of the undiscounted expected future cash flows is less than the carrying amount of the asset, an impairment loss is recognized. Mineral exploration costs are expensed as incurred until commercially mineable deposits are determined to exist within a particular property.

 

Recently Adopted Accounting Guidance

 

The Company has reviewed recently issued accounting pronouncements and plans to adopt those that are applicable to it. It does not expect the adoption of these pronouncements to have a material impact on its financial position, results of operations or cash flows.

 

NOTE 3 – UNPROVED MINERAL PROPERTIES

 

		Metates				Solomon Pillars				Total Unproved    mineral properties
Beginning of period			495,236				-				495,236
Acquisition-option payments			462,744				-				462,744
March 31, 2013			957,980				-				957,980
Beginning of period			957,980				-				957,980
Acquisition-option payments			-				23,505				23,505
Impairment			(957,980	)			-				(957,980	)
December 31, 2013			-				23,505				23,505

a)

Metates

 

On June 9, 2008, the Company entered into an Option Agreement (the “Metates Option Agreement”) providing the right to acquire up to a 100% interest in mineral claims located near Mazatlan, Sinaloa, Mexico. The Metates Option Agreement was renegotiated and amended on August 27, 2010 following the transfer of the underlying title to the claims to a third party, and amended again on April 24, 2013. Under the terms of the amended Metates Option Agreement, covering the Metates Project claim group and any new claims within an agreed upon area of interest, the Company has an option to purchase 100% interest in mining concessions by making payments under the amended Option Agreement as follows (plus applicable Value Added Taxes):

 

$	750,000	(paid);
$	450,000	Due July 15, 2013 (not paid); and
$	2,000,000	Due July 15, 2014.

 

Since the Company did not make the payment by July 15, 2013 above, the payment terms revert to the following:

 

$	450,000	Due July 15, 2013 (not paid);
$	600,000	Due January 15, 2014(not paid);
$	650,000	Due July 15, 2014;
$	750,000	Due January 15, 2015; and
$	2,000,000	Due January 15, 2016.

 

Under the Metates Option Agreement, the Company shall pay a royalty of 0.5% calculated on the Net Smelter Returns (“NSR”) as long as the option is exercised by January 15, 2014. If the option is not exercised by that date, the royalty shall be 0.33% calculated on the NSR on the minerals extracted on the concessions.

 

In addition, the Company is entitled to a net production royalty of 20% from the tailings and other previously mined materials refined by the optionor from the effective date of the agreement. The Company has a pledge of the optionor’s production assets as a performance guarantee.

 

The Metates Option Agreement will terminate: (i) at any time during the term of the Option Agreement by the Company giving 15 days notice to the Optionor; or (ii) upon election of a party if the other party is in breach of any of its obligations under the Metates Option Agreement and the default has not been cured by the defaulting party within 30 days of notice of default.

 

The Company did not make the $450,000 payment due July 15, 2013 and the Metates Option Agreement is in default. Therefore, the property has been fully impaired during the nine months ended December 31, 2013.

 

b)

Solomon Pillars Gold Property

 

On November 5, 2013, the Company entered into an Option Agreement (the “Option Agreement”) providing the right to acquire initially 55% undivided interest and ultimately an 80% undivided interest in the Solomon Pillars Gold Property located in Townships of Walters and Leduc in Beardmore, Ontario. Under the terms of Option Agreement covering the Solomon Pillars Gold Property, the Company has an option to earn a 55% interest in mining concessions by making payments under the Option Agreement as follows:

 

$	CAD25,000	Upon signing the Option Agreement (paid);
$	CAD30,000	Due November 5, 2014 (In cash or shares at the Company’s option); and
$	CAD40,000	Due November 5, 2015 (In cash or shares at the Company’s option).

 

The Company must also incur exploration expenditures as follows:

 

●

$50,000 in exploration expenditures by November 5, 2014;

 

●

An additional $100,000 in exploration expenditures by November 5, 2015; and

 

●

An additional $150,000 in exploration expenditures by November 5, 2016.

The Company has the exclusive right to a one-time option to increase the undivided interest from 55% to 80% by making a payment of $250,000 within 90 days of completing the initial earn-in and exercising of the option. Once the initial interest is earned by the Company in the Solomon Pillars Gold Property, the Company and the optionor will fund continuing exploration and development costs on a pro-rata basis according to their equity in the Solomon Pillars Gold Property. The Company will be the project operator.

 

The Solomon Pillars Gold Property is divided into two sets of claims each with a different royalty structure. The “Solomon Pillars” on the eastern section of the Solomon Pillars Gold Property has a NSR of 1%. The “King Solomon Pillars” on the western section of the Solomon Pillars Gold Property has a 3% NSR on precious metals with a 1% buyback provision for $1,500,000 and is subject to a $25,000 annual advance royalty payment preceding the commencement of commercial production.

 

The Agreement may be terminated in the event any of the payments set forth above are not paid, or upon written notice by the Company.

 

NOTE 4 – SHORT-TERM LOANS PAYABLE

 

Details of the loan balance outstanding:

 

		Maturity Date		December 31, 2013				March 31, 2013
Short term loans payable - face value		12/31/10 (i),(ii),(iv)		$	23,975			$	78,768
		01/31/11 (i),(ii),(iv)			-				50,214
		03/01/11 (i),(ii),(iv)			-				5,908
		03/31/11 (i),(ii),(iv)			51,617				178,262
		08/31/11 (i),(ii),(iv)			108,123				113,229
		12/31/12 (i),(ii),(iv)			249,153				457,839
		08/17/13 (i),(ii),(iv)			-				393,840
		12/31/13 (ii)			-				147,690
		04/30/14 (ii)			1,105,158				1,388,286
		On demand (iii)			49,232				-
Unamortized equity consideration					-				(87,124	)
Balance				$	1,587,258			$	2,726,912

 

(i)

At December 31, 2013 these loans had matured, are in default and are due on demand.

 

(ii)

Accrues interest at 15% per annum, calculated semi-annually and are unsecured.

 

(iii)

Due to a director of the Company, is non interest bearing and is unsecured.

 

(iv)

As additional consideration, bonus common shares are to be issued to the lenders. Management estimated the fair value of the shares based on inputs such as the most recent share subscriptions.

 

During the 9 months ended December 31, 2013, and prior to the RTO, the Company issued 1,720,004 bonus shares owing under its loan agreements to various debt holders. The fair value of the bonus shares issued was estimated to be $165,874.

 

During the 9 months ended December 31, 2013, and prior to the RTO, various debt holders converted loans in the principal amount of $1,591,192 plus interest to 6,338,423 common shares. The fair value of the shares issued was estimated to be $602,974. Accordingly, a gain on the conversion of the debt of $1,176,328 has been recorded. $46,704 of the loans converted were

due to a director of the Company. The gain on the settlement of the related party debt of $30,534 has been recorded in additional paid in capital.

 

(v)

The loans may be converted to common shares of the Company at the option of the holder at the Company’s next financing at the same terms of the financing.

 

NOTE 5 – COMMON STOCK

 

Authorized: 150,000,000 $0.001 par value.

Issued and outstanding 37,431,000

 

In accordance with the Agreement, the Debt Holders converted $568,002 of convertible notes into 5,000,000 shares of the Company in effecting the RTO, the accounting acquirer (Rio Plata) is the continuing entity. Accordingly, the capital accounts of the Company were eliminated, except where par value requirements were to be maintained for share capital.

 

Effective with the Agreement, the Company also issued 28,000,000 shares of common stock to the Rio Plata shareholders to acquire all of the issued and outstanding shares of common stock of Rio Plata.

 

On September 5, 2013, the Company entered into 3 consulting agreements for a term of 1 year, and on November 1, 2013, the Company entered into another consulting agreement for a term of 1 year. Under the agreements, the Company is to issue 400,000 shares to each of the consultants as a sign on bonus to be issued to them at the time of their choosing during the term of the agreement. During the nine months ended December 31, 2013, the Company issued 1,200,000 shares with a fair value of $120,000 under the September 5, 2013 agreements. As at December 31, 2013, the shares under the November 1, 2013 agreement have not been issued to the consultant engaged under this agreement. Accordingly, the fair value of the compensation expense of $60,000 has been recorded as an obligation to issue shares in these financial statements.

 

During the nine months ended December 31, 2013, the Company issued 100,000 shares with a fair value of $10,000 to a director of the Company as compensation for management fees.

 

NOTE 6 – RELATED PARTY DISCLOSURES

 

As at December 31, 2013, $67,738 (March 31, 2013 - $777) due to current and former directors of the Company were included in trade payables. During the 9 months ended December 31, 2013, rent of $9,000 (December 31, 2012 - $9,000) and management fees of $22,500 (December 31, 2012 - $22,500) was paid to companies owned by a former director of the Company.

 

During the 9 months ended December 31, 2013, the Company was forgiven related party advances of $509,723. The gain on the settlement of the related party debt has been recorded in additional paid in capital.

ITEM 2.

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

 

Cautionary Statement Regarding Forward-Looking Information

 

The statements in this quarterly report that are not reported financial results or other historical information are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. These statements appear in a number of different places in this report and can be identified by words such as “estimates”, “projects”, “expects”, “intends”, “believes”, “plans”, or their negatives or other comparable words. Also look for discussions of strategy that involve risks and uncertainties. Forward-looking statements include, among others, statements regarding our business plans and availability of financing for our business.

 

You are cautioned that any such forward-looking statements are not guarantees and may involve risks and uncertainties. Our actual results may differ materially from those in the forward-looking statements due to risks facing us or due to actual facts differing from the assumptions underlying our estimates. Some of these risks and assumptions include those set forth in reports and other documents we have filed with or furnished to the United States Securities and Exchange Commission (“SEC”). We advise you that these cautionary remarks expressly qualify in their entirety all forward-looking statements attributable to us or persons acting on our behalf. Unless required by law, we do not assume any obligation to update forward-looking statements based on unanticipated events or changed expectations. However, you should carefully review the reports and other documents we file from time to time with the SEC.

 

Presentation of Information

 

W. S. Industries, Inc. (“WS Industries”) entered into an Agreement and Plan of Merger dated April 22, 2013 (the “Merger Agreement”) by and among WS Industries, W.S. Merger Corp., a Nevada company and a wholly owned subsidiary of WS Industries (“Merger Sub”), Rio Plata Exploration Corporation, a company organized pursuant to the laws of the Province of British Columbia, Canada (the “Rio Plata”), and certain holders (the “WS Debt Holders”) of debt of WS Industries (the “WS Debt”), pursuant to which, at the effective time of the merger on May 14, 2013, the WS Debt Holders sold their WS Debt to certain purchasers, who converted such debt into an aggregate of 5,000,000 shares of WS Industries, and Merger Sub was merged with and into Rio Plata (the “Merger”). Merger Sub remained as the surviving entity in the Merger and succeeded to all of the assets, liabilities and operations of the Rio Plata and Rio Plata effectively became a wholly owned operating subsidiary of WS Industries. Shareholders of Rio Plata exchanged their shares of Rio Plata for an aggregate of 28,000,000 shares of WS Industries under the Merger, including holders of short-term debt of Rio Plata that converted their debt into shares of Rio Plata prior to the effective time of the Merger. See our Current Report on Form 8-K/A (Amendment No. 3) filed February 19, 2014 with the SEC for more information regarding the Merger.

 

The Merger constitutes a change in control of WS Industries and, accordingly, is accounted for as a “reverse merger” with Rio Plata treated as the acquiring entity and operating company for accounting purposes. Subsequent to the Merger, on July 26, 2013, Merger Sub was merged with and into WS Industries, with WS Industries as the

surviving entity, and the name of the Corporation was changed to “Silver Stream Mining Corp.” Finra approval of the name change was received on August 8, 2013.

 

The following discussion and analysis includes the results of Rio Plata for the three and nine months ended December 31, 2013 and the results of Silver Stream Mining Corp. from the date of the Merger on May 14, 2013 to December 31, 2013. All financial information in this quarterly report is presented in U.S. dollars, unless otherwise indicated, and should be read in conjunction with the financial statements and notes thereto included in this quarterly report.

 

As used herein, the words the “Corporation,” “we,” “us,” and “our” refer to the current Nevada corporation operating the business acquired from Rio Plata.

 

Overview

 

We are engaged in the business of mineral exploration in Mexico. Our primary property is the Metates property located approximately 110 kilometers NW of the city of Mazatlan, Municipality of Mazatlan, in the State of Sinaloa, Mexico, which is referred to as the property. The property is in the exploration stage and is currently without a known body of commercial minerals.

 

In addition, effective November 5, 2013, we entered into an option agreement (“Option Agreement”) with Sage Gold Inc. (“Sage”), a Canadian public company listed on the TSX Venture Exchange. Under the Option Agreement, we can initially earn a 55% undivided interest, and ultimately an 80% undivided interest, in the Solomon Pillars Gold Property owned by Sage and located in the Townships of Walters and Leduc in Beardmore, Ontario, Canada. As we have yet to meet the requirements to earn our initial interest in the Solomon Property, this property is not material to our current operations. See our Form 8-K filed November 18, 2013 with the SEC for more information relating to this option.

 

See our Current Report on Form 8-K/A (Amendment No. 3) filed February 19, 2014 with the SEC for more information regarding our business.

 

Our plan of operations for the next 12 months is to continue to explore (mapping and sampling) at our Metates property. We anticipate we will require approximately $300,000 to carry out our plans and for working capital over the next 12 months. As at December 31, 2013, we had cash of $14,567 and a working capital deficit of $2,387,348 and will require significant financing to pursue our exploration plans.

 

While we are currently in discussions with third parties regarding financing for our company, there can be no assurance that we will obtain any additional financing, on terms acceptable to us or at all. In the event we are unable to obtain the required financing, we may be required to curtail our plans or may not be able to pursue our plans altogether until we obtain additional funds and our business may fail. An investment in our securities involves significant risks and you could lose your entire investment.

Results of Operations

 

The following discussion and analysis of our results of operations and financial condition for the three and nine months ended December 31, 2013 should be read in conjunction with our unaudited interim consolidated financial statements and related notes included in this report.

 

Three Months Ended December 31, 2013 Compared to Three Months Ended December 31, 2012

 

Revenues

 

We have earned no revenues and have sustained operational losses since our inception on August 16, 2006 to December 31, 2013. As of December 31, 2013, we had an accumulated deficit of $5,289,952. We anticipate that we will not earn any revenues during the current fiscal year as we are an exploration stage company. We anticipate that we will incur substantial losses for the foreseeable future and our ability to generate any revenues in the next 12 months continues to be uncertain.

 

Expenses

 

Our total expenses increased to $421,098 for the three months ended December 31, 2013 from $6,774 for the three months ended December 31, 2012 mainly due to an increase in exploration activity and consulting fees. During the three months ended December 31, 2013, we spent $161,966 on the exploration and evaluation of the Metates property, compared to $5,235 during the three months ended December 31, 2012. During the three months ended December 31, 2013, consulting fees increased to $168,141 from $800 in the prior period, as we engaged three new consultants in September 2013 and another in November 2013, to advise our board of directors on mining property acquisition and exploration matters. Three of these consultants are also now directors or officers of our company.

 

Our other operating expenses also increased overall in the nine months ended December 31, 2013 from the prior period due to the increase in our business activity. In the three months ended December 31, 2013, we incurred $15,756 in travel and promotional expenses, compared to $4,655 in travel and promotional expenses in the prior period. Professional fees increased to $45,377 in the current period from $2,770 in prior period. Management fees increased to $17,322 in the current period from $7,500 in the prior period. Office and miscellaneous expenses decreased to $2,650 in the current period from $5,814 in the prior period, while amounts spent on regulatory filings increased to $9,886 in the current period from $nil in the prior period.

 

We incurred interest expense of $160,597 in the three months ended December 31, 2013, compared to $90,104 in the three months ended December 31, 2012, relating to loans required to fund our operations. We realized a foreign exchange loss of $12,205 in the current period, compared to $nil in the prior period relating primarily to the Mexican peso. We also recorded a gain on the settlement of debt of $25,968 in the current period relating to the Merger.

During the three months ended December 31, 2013, we recorded an impairment charge of $957,980 on our Metates property due to the unproven nature of the claims. In addition, during the three months ended December 31, 2013, we determined that refunds of certain taxes we expected to collect from the Mexican government may not occur, and we accordingly recorded an impairment charge of $263,707 with respect to these IVA taxes.

 

Net Loss

 

For the three months ended December 31, 2013, we realized a net loss of $1,765,209, compared to a net loss of $96,878 during the three months ended December 31, 2013.

 

Nine Months Ended December 31, 2013 Compared to Nine Months Ended December 31, 2012

 

Revenues

 

We have earned no revenues and have sustained operational losses since our inception on August 16, 2006 to December 31, 2013. As of December 31, 2013, we had an accumulated deficit of $5,289,952. We anticipate that we will not earn any revenues during the current fiscal year as we are an exploration stage company. We anticipate that we will incur substantial losses for the foreseeable future and our ability to generate any revenues in the next 12 months continues to be uncertain.

 

Expenses

 

Our total expenses increased to $920,514 for the nine months ended December 31, 2013 from $105,406 for the nine months ended December 31, 2012 mainly due to an increase in exploration activity and consulting fees. During the nine months ended December 31, 2013, we spent $359,888 on the exploration and evaluation of the Metates property, compared to $24,167 during the nine months ended December 31, 2012. During the nine months ended December 31, 2013, consulting fees increased to $383,335 from $20,700 in the prior period, as we engaged three new consultants in September 2013 and another in November 2013, to advise our board of directors on mining property acquisition and exploration matters. Three of these consultants are also now directors or officers of our company.

 

Our other operating expenses also increased overall in the nine months ended December 31, 2013 from the prior period due to the increase in our business activity. In the nine months ended December 31, 2013, we incurred $53,778 in travel and promotional expenses, compared to $13,037 in travel and promotional expenses in the prior period. Professional fees increased to $47,445 in the current period from $2,770 in prior period. Management fees increased to $27,145 in the current period from $22,500 in the prior period. Office and miscellaneous expenses were $16,402 in the current period, compared to $16,277 in the prior period, while amounts spent on regulatory filings increased to $32,434 in the current period from $3,955 in the prior period.

 

We incurred interest expense of $325,486 in the nine months ended December 31, 2013, compared to $208,999 in the nine months ended December 31, 2012, relating to loans required to fund our operations. We realized a foreign exchange gain of $2,057 in

the current period, compared to $nil in the prior period relating primarily to the Mexican peso. We also recorded a gain on the settlement of debt of $1,176,328 in the current period relating to the Merger.

 

During the nine months ended December 31, 2013, we recorded an impairment charge of $957,980 on our Metates property due to the unproven nature of the claims. In addition, during the three months ended December 31, 2013, we determined that refunds of certain taxes we expected to collect from the Mexican government may not occur, and we accordingly recorded an impairment charge of $263,707 with respect to these IVA taxes.

 

Net Income

 

For the nine months ended December 31, 2013, we incurred a net loss of $1,289,301, compared to $314,405 during the nine months ended December 31, 2012.

 

Liquidity and Capital Resources

 

As of December 31, 2013, we had cash of $14,567, total assets of $49,140, total liabilities of $2,412,983, a working capital deficit of $2,387,348 and an accumulated deficit of $5,289,952. We have been dependent on funds raised through the issuance of shares and loans to finance our operations.

 

Financing Activities

 

We have funded our operations primarily through the sale of our shares and short-term loans. During the nine months ended December 31, 2013, financing activities provided cash of $434,960, compared to $27,881 in the prior period, from short-term loans.

 

Operating Activities

 

Operating activities used cash of $495,697 for the nine months ended December 31, 2013, compared to $30,011 for the nine months ended December 31, 2012. An increase in accounts payable provided cash of $255,234 in the current period, compared to $187,880 in the prior period. An increase in accounts receivable used cash of $15,268 in the nine months ended December 31, 2013, compared to $nil in the prior period. A decrease in prepaid expenses provided cash of $2,462 in the nine months ended December 31, 2013, compared to $3,926 in the prior period. A decrease in accrued liabilities used cash of $3,376 in the current period, compared to $nil in the prior period.

 

Investing Activities

 

Investing activities used cash of $23,505 in the nine months ended December 31, 2013 relating to the purchase of interests in our mineral properties, compared to $nil in the prior period.

 

We expect that our total expenses will increase over the next year as we increase our business operations. We do not anticipate generating any revenues over the next year. Our plan of operations for the next 12 months is to continue to explore our Metates property (mapping and sampling). We anticipate we will require approximately $300,000

to carry out our plans and for working capital over the next 12 months. As at December 31, 2013, we had cash of $14,567 and a working capital deficit of $2,387,348 and will require significant financing to pursue our exploration plans.

 

While we are currently in discussions with third parties regarding financing for our company, there can be no assurance that we will obtain any additional financing, on terms acceptable to us or at all. In the event we are unable to obtain the required financing, we may be required to curtail our plans or may not be able to pursue our plans altogether until we obtain additional funds and our business may fail. An investment in our securities involves significant risks and you could lose your entire investment.

 

We intend to raise additional capital for the next 12 months from the sale of our equity or debt securities or loans from related parties. If we are unsuccessful in raising sufficient capital through such efforts, we may consider other financing avenues such as bank financing. There is no assurance that any financing will be available to us or, if available, on terms that will be acceptable to us. If we are unable to raise additional capital, our business may fail.

 

Going Concern

 

Our financial statements included herein have been prepared on a going concern basis and Note 1 to the statements identifies issues that raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

We have not generated any revenues, have achieved losses since our inception, and rely upon the sale of our common stock and loans to fund our operations. We may not generate any revenues for the foreseeable future, and if we are unable to raise equity or secure alternative financing, we may not be able to pursue our plans and our business may fail.

 

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, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

Quantitative and Qualitative Disclosures about Market Risk

Not applicable.

 

ITEM 4.

CONTROL AND PROCEDURES.

 

Evaluation of Disclosure Controls and Procedures

 

In connection with the preparation of this report, an evaluation was carried out by our principal executive officer and principal financial officer of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) as of December 31, 2013 as

contemplated by the Sarbanes-Oxley Act of 2002. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management to allow timely decisions regarding required disclosures.

 

Based on that evaluation, and the material weaknesses outlined below, our principal executive officer and principal financial officer concluded, as of the end of the period covered by this report, that our disclosure controls and procedures were not effective in recording, processing, summarizing and reporting information required to be disclosed, within the time periods specified in the SEC’s rules and forms, and that such information may not be accumulated and communicated to our principal executive officer and principal financial officer to allow timely decisions regarding required disclosures.

 

A material weakness is a deficiency, or combination of deficiencies, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Based on the assessment of the effectiveness of disclosure controls and procedures as of December 31, 2013, the following significant deficiencies were identified:

 

1. Lack of proper segregation of duties due to limited personnel.

 

2. Lack of a formal review process that includes multiple levels of review, resulting in adjustments related to common stock, unrecorded liabilities and share based compensation.

 

Management is currently evaluating remediation plans for the above control deficiencies.

 

In light of these control deficiencies, management concluded that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by the company’s disclosure controls or internal controls.

 

Changes in Internal Control

 

During the quarter ended December 31, 2013, there were no other changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II – OTHER INFORMATION

 

ITEM 1.

LEGAL PROCEEDINGS.

 

We are not a party to any pending material legal proceedings and are not aware of any material legal proceedings threatened against us or of which our property is the subject. None of our directors, officers or affiliates: (i) are a party adverse to us in any legal proceedings, or (ii) have an adverse interest to us in any legal proceedings.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES.

 

On September 5, 2013, we issued 100,000 shares of common stock to a director for his services. We inadvertently did not include this issuance in the Form 8-K filed September 12, 2013 in connection with the engagement of new consultants. The director subsequently resigned on January 17, 2014 when we appointed new directors and officers.

 

The securities were issued pursuant to the exemption from the registration requirements of the United States Securities Act of 1933, as amended, provided by Section 4(2) of the Act in a transaction not involving any public offering.

 

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES.

 

None.

 

ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

 

None.

 

ITEM 5.

OTHER INFORMATION.

 

None.

 

ITEM 6.

EXHIBITS.

 

Exhibit		Exhibit
Number		Description
31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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.

 

	Silver Stream Mining Corp.
	/s/ Terrence Byberg
Date: February 19, 2014	Terrence Byberg
	President