Aurum, Inc. - FORM 10-Q - March 20, 2014

Attached files

file	filename
EXCEL - IDEA: XBRL DOCUMENT - Aurum, Inc.	Financial_Report.xls
EX-31.1 - EXHIBIT 31.1 - Aurum, Inc.	a50824121_ex31-1.htm
EX-32.2 - EXHIBIT 32.2 - Aurum, Inc.	a50824121_ex32-2.htm
EX-31.2 - EXHIBIT 31.2 - Aurum, Inc.	a50824121_ex31-2.htm
EX-32.1 - EXHIBIT 32.1 - Aurum, Inc.	a50824121_ex32-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
	ACT OF 1934

For the Quarterly Period Ended January 31, 2014

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: 000-53861

AURUM, INC.

(Exact name of registrant as specified in its charter)

Delaware	27-1728996
(State or Other Jurisdiction	(I.R.S. Employer
of Incorporation)	Identification No.)

Level 8, 580 St Kilda Road
Melbourne, Victoria, Australia	3004
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: 001 (613) 8532 2800

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12-b2 of the Exchange Act.

(Check one): Large accelerated filer ¨

Accelerated filer ¨

Non-accelerated filer ¨

Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12-b2 of the Exchange Act). ¨ Yes x No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. There were 105,600,000 outstanding shares of Common Stock as of March 15, 2014.

Table Of Contents

		PAGE NO

PART I.	FINANCIAL INFORMATION

Item 1	Financial Statements	2
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3	Quantitative and Qualitative Disclosure about Market Risk	15
Item 4	Controls and Procedures	15

PART II	OTHER INFORMATION

Item 1	Legal Proceedings	16
Item 1A	Risk Factors	16
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	16
Item 3	Defaults Upon Senior Securities	16
Item 4	Mine Safety Disclosures	16
Item 5	Other Information	16
Item 6	Exhibits	16

SIGNATURES		17

EXHIBIT INDEX		18

Exh. 31.1	Certification	19
Exh. 31.2	Certification	20
Exh. 32.1	Certification	21
Exh. 32.2	Certification	22

PART I – FINANCIAL INFORMATION

Item 1.

FINANCIAL STATEMENTS

Introduction to Interim Financial Statements.

The interim financial statements included herein have been prepared by Aurum, Inc. (“Aurum” or the “Company”) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (The “Commission”). Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles in United States of America (“US GAAP”) have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.

The interim financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended October 31, 2013.

In the opinion of management, all adjustments, consisting of normal recurring adjustments necessary to present fairly the financial position of the Company as of January 31, 2014, the results of its operations for the three month periods ended January 31, 2014 and January 31, 2013 and for the cumulative period September 29, 2008 (inception) through January 31, 2014, and the changes in its cash flows for the three month periods ended January 31, 2014 and January 31, 2013 and for the cumulative period September 29, 2008 (inception) through January 31, 2014, have been included. The results of operations for the interim periods are not necessarily indicative of the results for the full year.

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

AURUM, INC.

(An Exploration Stage Company)

Balance Sheets

	January 31, 2014 US$ (unaudited)			October 31, 2013 US$

ASSETS

Current Assets:
Cash		2,845			12,797
Receivables - Affiliates		19,635			19,696
Prepayments		5,896			8,744
Total Current Assets		28,376			41,237

Non-Current Assets:
Property and equipment		-			423
Total Non-Current Assets		-			423

Total Assets		28,376			41,660

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current Liabilities:
Accounts payable and accrued expenses		522,495			402,738
Total Current Liabilities		522,495			402,738

Non-Current Liabilities:
Advances from affiliates		7,080,131			7,558,320
Total Non-Current Liabilities		7,080,131			7,558,320

Total Liabilities		7,602,626			7,961,058

Stockholders’ Equity (Deficit) :
Common stock: $.0001 par value 500,000,000 shares authorised, and 105,600,000 shares issued and outstanding at January 31, 2014 and October 31, 2013.		10,560			10,560
Additional Paid-in-Capital		2,740,207			2,740,207
Retained (Deficit) during exploration stage		(10,235,008	)		(10,580,156	)
Retained (Deficit) prior to exploration activities		(90,009	)		(90,009	)
Total Stockholders’ Equity (Deficit)		(7,574,250	)		(7,919,398	)

Total Liabilities and Stockholders’ Equity (Deficit)		28,376			41,660

See Notes to Financial Statements

AURUM, INC.

(An Exploration Stage Company)

Statements of Operations

(Unaudited)

	For the three months ended January 31, 2014			For the three months ended January 31, 2013			For the period from inception September 29, 2008 to January 31, 2014
	US$			US$			US$

Revenues	$	-		$	-		$	-

Costs and expenses:
Legal, accounting and professional		10,077			8,810			315,081
Administration expenses		49,530			66,696			1,069,652
Consultants salaries - stock based compensation		-			76,154			2,729,167
Exploration expenditure		167,052			321,892			7,079,559
Donations		-			-			100,000
Interest expense		-			1,215			1,629
Total costs and expenses		226,659			474,767			11,295,088

(Loss) from operations		(226,659	)		(474,767	)		(11,295,088	)
Foreign currency exchange gain (loss)		571,807			(54,901	)		970,537
Other income - interest		-			-			134

Profit/(Loss) before income taxes		345,148			(529,668	)		(10,324,417	)
Provision for income taxes		-			-			-

Net income/(loss)		345,148			(529,668	)		(10,324,417	)

Basic and diluted net income/(loss) per common equivalent shares		(0.00	)		(0.01	)		(0.10	)

Weighted average number of common equivalent shares (in 000’s)		105,600			105,600			104,724

See Notes to Financial Statements

AURUM, INC.

(An Exploration Stage Company)

Statements of Stockholders’ Equity (Deficit)

(Unaudited)

	Shares		Common Stock Amount		Additional Paid-in Capital		Retained (Deficit) during exploration stage			Retained (Deficit) prior to exploration activities			Total
			US$		US$		US$			US$			US$

Inception, September 29, 2008		-		-		-		-			-			-

Issuance of shares		96,000,000		9,600		-		-			(600	)		9,000

Net (loss)		-		-		-		-			(12	)		(12	)

Balance, October 31, 2008		96,000,000		9,600		-		-			(612	)		8,988

Issuance of shares		9,600,000		960		11,040		-			-			12,000

Net (loss)		-		-		-		-			(89,397	)		(89,397	)
Balance, October 31, 2009		105,600,000		10,560		11,040		-			(90,009	)		(68,409	)

Net (loss)		-		-		-		(981,396	)		-			(981,396	)
Balance, October 31, 2010		105,600,000		10,560		11,040		(981,396	)		(90,009	)		(1,049,805	)

Amortization of 3,250,000 options under 2010 equity incentive plan		-		-		2,005,676		-			-			2,005,676

Net (loss)		-		-		-		(4,777,291	)		-			(4,777,291	)
Balance, October 31, 2011		105,600,000		10,560		2,016,716		(5,758,687	)		(90,009	)		(3,821,420	)

Amortization of 3,250,000 options under 2010 equity incentive plan		-		-		646,953		-			-			646,953

Net (loss)		-		-		-		(3,531,780	)		-			(3,531,780	)
Balance, October 31, 2012		105,600,000		10,560		2,663,669		(9,290,467	)		(90,009	)		(6,706,247	)

Amortization of 3,250,000 options under 2010 equity incentive plan		-		-		76,538		-			-			76,538
Net (loss)		-		-				(1,289,689	)		-			(1,289,689	)
Balance, October 31, 2013		105,600,000		10,560		2,740,207		(10,580,156	)		(90,009	)		(7,919,398	)

Net income		-		-		-		345,148			-			345,148
Balance, January 31, 2014		105,600,000		10,560		2,740,207		(10,235,008	)		(90,009	)		(7,574,250	)

See Notes to Financial Statements

AURUM, INC.

(An Exploration Stage Company)

Statements of Cash Flows

(Unaudited)

	Three months ended January 31, 2014 US$			Three months ended January 31, 2013 US$			For the period from inception September 29, 2008 to January 31, 2014 US$

CASH FLOWS FROM OPERATING ACTIVITIES
Net income/(loss)		345,148			(529,668	)		(10,324,417	)

Adjustments to reconcile net income (loss) to net cash (used)
in operating activities:
Employee options issued for stock based compensation		-			76,154			2,729,167
Foreign currency exchange (gain) loss		(571,807	)		54,901			(972,553	)
Depreciation		423			8,590			106,455
Net change in:
Prepayments		2,848			(8,207	)		(5,896	)
Receivables		61			(767	)		(19,635	)
Accounts payable and accrued expenses		119,757			(9,720	)		522,495

Net Cash (Used) in Operating Activities		(103,570	)		(408,717	)		(7,964,384	)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property and equipment		-			-			(106,455	)

Net Cash (Used) in Investing Activities		-			-			(106,455	)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issuance of stock		-			-			21,000
Advances from affiliates		92,405			398,829			8,038,653

Net Cash Provided by Financing Activities		92,405			398,829			8,059,653

Effect of exchange rate changes on cash		1,213			(595	)		14,031

Net increase/(decrease) in cash		(9,952	)		(10,483	)		2,845

Cash at beginning of period		12,797			18,721			-

Cash at end of period		2,845			8,238			2,845
Supplemental Disclosures Interest Paid		-			1,215			1,629

See Notes to Financial Statements

AURUM, INC.

(An Exploration Stage Company)

Notes to Financial Statements

January 31, 2014

(unaudited)

(1)	ORGANIZATION AND BUSINESS

Aurum, Inc. ("Aurum” or the “Company") is a Delaware corporation, originally incorporated in Florida as Liquid Financial Engines, Inc. The principal stockholder of Aurum is Golden Target Pty Ltd., an Australian corporation (“Golden”), which owned 96.21% of Aurum as of January 31, 2014.

On January 20, 2010, the Company re-incorporated in the state of Delaware (the “Reincorporation”) through a merger involving Liquid Financial Engines Inc. (“Liquid”) and Aurum, Inc., a Delaware Corporation that was a wholly owned subsidiary of Liquid. The Reincorporation was effected by merging Liquid with Aurum, with Aurum being the surviving entity. For financial reporting purposes Aurum is deemed a successor to Liquid.

In July 2009, Golden acquired a 96% interest in Aurum from certain stockholders. In connection therewith, the Company appointed a new President/Chief Executive Officer and Chief Financial Officer/Secretary and a new sole Director. The sole director and stockholder of Golden is also the President of the Company.

Commencing August 2009, the Company decided to focus on mineral exploration for gold and copper in the Lao Peoples Democratic Republic (Lao P.D.R or Laos). The Company is considered to be in the exploration stage.

In December 2010, the Company executed a Management and Shareholders Agreement with Argonaut Overseas Investments Ltd (“AOI”), an indirectly wholly owned Subsidiary of Argonaut Resources N.L., in respect to Argonaut’s 70% held Century Concession in Laos.

The agreement appoints Aurum as the manager of the Century Thrust Joint Venture Agreement (“Joint Venture”) and the Company has the right to earn 72.86% of AOI’s interest in the Joint Venture which is equivalent to a 51% beneficial interest in the Century Concession. In order to acquire this interest, Aurum may be required to spend US$6.5 million on exploration within the five year period ending, December 2015.

The Company’s ability to continue operations through the remainder of 2014 is dependent upon future funding from affiliated entities, capital raisings, or its ability to commence revenue producing operations and positive cash flows.

(2)	RECENT ACCOUNTING PRONOUNCEMENTS

The Company has implemented all new accounting pronouncements that are in effect and applicable to the Company. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

(3)	PROPERTY AND EQUIPMENT

Property and equipment is stated at cost. The Company records depreciation and amortization, when appropriate, using the straight-line method over the estimated useful lives of the assets. Expenditures for maintenance and repairs are charged to expense as incurred. Additions, major renewals and replacements that increase the property’s useful life are capitalized. Property sold or retired, together with the related accumulated depreciation is removed from the appropriate accounts and the resultant gain or loss is included in net income (loss).

		At January 31, 2014							At October 31, 2013
	Depreciable Life (in years)	Cost $		Accumulated Depreciation $			Net Book Value		Cost $		Accumulated Depreciation $			Net Book Value
							$							$
Office Equipment	1-2		3,830		(3,830	)		-		3,830		(3,830	)		-
Computer Equipment	1-3		101,975		(101,975	)		-		101,975		(101,552	)		423
Furniture	1-2		650		(650	)		-		650		(650	)		-
			106,455		(106,455	)		-		106,455		(106,032	)		423

The depreciation expense for the three months ended January 31, 2014 amounted to $423 and for the three months ended January 31, 2013 amounted to $8,590. At January 31, 2014 the Company’s property and equipment is fully depreciated.

(4)	AFFILIATE TRANSACTIONS

The Company entered into an agreement with AXIS Consultants Pty Ltd (“AXIS”) to provide management and administration services to the Company. AXIS is affiliated through common management. The Company is one of nine affiliated companies to which AXIS provides services. Each of the companies has some common Directors, officers and shareholders. Currently, there are no material arrangements or planned transactions between the Company and any of the affiliated companies other than AXIS.

During the three months ended January 31, 2014, AXIS provided services in accordance with the services agreement, incurred direct costs on behalf of the Company and provided funding of $92,405. During the three months ended January 31, 2014, the foreign exchange effect on the amounts owed to affiliates was a gain of $571,807. The amounts owed to affiliates as of January 31, 2014 and October 31, 2013 is $7,080,131 and $7,558,320, respectively, and are reflected in non-current liabilities - advance from affiliates. Included in these amounts is $232,500 respectively being funds advanced by the Manager of the Laos operations. During the three months ended January 31, 2014 and 2013, the affiliates have agreed not to charge interest.

The Company intends to repay these amounts with funds raised either via additional debt or equity offerings. Both affiliates have agreed not to call the advance within the next twelve months and accordingly the Company has classified the amounts payable as non-current in the accompanying balance sheets.

(5)	GOING CONCERN

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of Aurum as a going concern. Aurum has incurred net losses since inception and may continue to incur substantial and increasing losses for the next several years, all of which raises substantial doubt as to its ability to continue as a going concern.

In addition, Aurum is reliant on loans and advances from corporations affiliated with the President of Aurum. Based on discussions with these affiliate companies, Aurum believes this source of funding will continue to be available. Other than the arrangements noted above, Aurum has not confirmed any other arrangement for ongoing funding. As a result Aurum may be required to raise funds by additional debt or equity offerings in order to meet its cash flow requirements during the forthcoming year.

The retained deficit of the Company from inception (September 2008) through January 31, 2014 amounted to approximately $10.3 million.

(6)	INCOME TAXES

Aurum files its income tax returns on an accrual basis.

The Company follows the accounting requirements associated with uncertainty in income taxes using the provisions of FASB ASC 740, Income Taxes. Using that guidance, tax positions initially need to be recognized in the financial statements when it is more-likely-than-not the positions will be sustained upon examination by the tax authorities. It also provides guidance for derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. As of January 31, 2014, the Company has no uncertain tax positions that qualify for either recognition or disclosure in the financial statements.

The Company is required to file tax returns in the United States.

	USA 2013 $			Total 2013 $
Deferred tax assets

Net operating loss carry-forward		659,242			659,242
Less valuation allowance		(659,242	)		(659,242	)
Net deferred taxes		-			-

The Company has available net operating loss carry forwards which are subject to limitations aggregating approximately $1,938,900 which would expire in years 2028 through 2033.

The Company’s tax returns for all years since fiscal 2010 remain open to examination by the respective tax authorities. There are currently no tax examinations in progress.

(7)	STOCKHOLDERS’ EQUITY

In September 2008, 96,000,000 shares of common stock were issued to the Company’s founder raising $9,000.

In March 2009, the Company raised $12,000 in a registered public offering of 9,600,000 shares of common stock share pursuant to a prospectus dated January 30, 2009.

On September 29, 2009 the Company’s Board of Directors declared an 8-for-1 stock split in the form of a stock dividend that was payable in October 2009 to stockholders of record as of October 23, 2009. The Company has accounted for this bonus issue as a stock split and accordingly, all share and per share data has been retroactively restated.

(8)	ISSUE OF OPTIONS UNDER EQUITY INCENTIVE PLAN

(i)

In December 2010, the Company issued 2,500,000 options over shares of Common Stock to employees under the 2010 Equity Incentive Plan that has been adopted by the Directors of the Company. The options vested 1/3 on December 13, 2010, 1/3 vested on November 17, 2011 and the balance vested on November 17, 2012. The exercise price of the options is US$1.00 and the latest exercise date for the options is November 17, 2020.

The Company has accounted for all options issued based upon their fair value using the Binomial pricing model.

An external consultant has calculated the fair value of the 2,500,000 options using the Binomial valuation method using the following inputs:

Grant date	Dec 13, 2010	Dec 13, 2010	Dec 13, 2010
Grant date share price	US$1.10	US$1.10	US$1.10
Vesting date	Dec 13, 2010	Nov 17, 2011	Nov 17, 2012
Expected life in years	4.5	5.0	5.5
Risk-free rate	1.91%	1.91%	1.91%
Volatility	95%	95%	95%
Exercise price	US$1.00	US$1.00	US$1.00
Call option value	US$0.78	US$0.81	US$0.83

At October 31, 2013 and January 31, 2014, there are 2,500,000 options outstanding with an option price per share and weighted average exercise price of US$1.00. The exercise price is US$1.00 per option. The weighted average per option fair value of options granted during fiscal 2011 was US$0.81 and the weighted average remaining contractual life of those options at January 31, 2014 is 6¾ years. At January 31, 2014 there are 2,500,000 options exercisable.

(ii)

In May 2011, the Company issued 750,000 options over shares of Common Stock to employees under the 2010 Equity Incentive Plan that has been adopted by the Directors of the Company. The options vested 1/3 upon grant date, 1/3 vested on February 1, 2012 and the balance vested on February 1, 2013. The exercise price of the options is US$1.00 and the latest exercise date for the options is February 1, 2018.

The Company has accounted for all options issued based upon their fair value using the Binomial pricing model.

An external consultant has calculated the fair value of the 750,000 options using the Binomial valuation method using the following inputs:

Grant date	May 1, 2011	May 1, 2011	May 1, 2011
Grant date share price	$US1.30	$US1.30	$US1.30
Vesting date	May 1, 2011	Feb 1, 2012	Feb 1, 2013
Expected life in years	3.5	4.0	4.5
Risk-free rate	2.02%	2.02%	2.02%
Volatility	100%	100%	100%
Exercise price	$US1.00	$US1.00	$US1.00
Call option value	$US0.91	$US0.95	$US0.99

At October 31, 2013 and January 31, 2014, there are 750,000 options outstanding with an option price per share and weighted average exercise price of US$1.00. The exercise price is US$1.00 per option. The weighted average per option fair value of options granted during fiscal 2011 was US$0.95 and the weighted average remaining contractual life of those options at January 31, 2014 is 4 years. At January 31, 2014 there are 750,000 options exercisable.

(9)	FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company’s financial instruments consist of cash, receivables, accounts payable, accrued expenses and advances from affiliates. The carrying amounts of cash, receivables, accounts payables and accrued expenses approximates their fair values because of the short term maturities of those instruments. The fair value of advances from affiliates is not readily determinable as no similar market exists for these instruments and it doesn’t have a specified date of repayment.

(10)	EXPLORATION STAGE COMPANY

As a result of the Company’s focus on mineral exploration, it is considered an exploration stage company and accordingly reports operations, stockholders deficit and cash flows since inception through the date that revenues are generated from management’s intended operations. Since inception, the Company has incurred an operating loss of approximately $10.3 million. The Company’s working capital has been primarily generated through the sales of common stock as well as advances from an affiliated entity.

(11)	NET LOSS PER SHARE

Basic income (loss) per share is computed by dividing net profit (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share is similarly calculated using the treasury stock method except that the denominator is increased to reflect the potential dilution that would occur if dilutive securities at the end of the applicable period were exercised. Options to acquire 3,250,000 shares of common stock were not included in the diluted weighted average shares outstanding as such effects would be anti-dilutive.

(12)

CASH

The Company maintains cash deposits with financial institutions in Australia and in Laos (USD). Cash deposits maintained in Australian dollars are translated into US dollars at the period end exchange rate with the related adjustment recognized in statements of operations.

(13)	COMMITMENTS

Pursuant to the Century Thrust Joint Venture Agreement (Joint Venture), the Company may fund up to $6.50 million in exploration expenditure, of which $4.49 million has already been funded, in order to acquire a 51% beneficial interest in the Joint Venture. Should Aurum wish to execute its rights under the agreement, it may be required to expend an additional $2.01 million on the Century Thrust Concession (see note 1). All such exploration costs are being expensed as incurred.

(14)	SUBSEQUENT EVENTS

The Company has evaluated significant events subsequent to the balance sheet date through the date the financial statements were issued and has determined that there were no subsequent events or transactions which would require recognition or disclosure in the financial statements, other than noted herein.

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

General

The following discussion and analysis of our financial condition and results of operation should be read in conjunction with the Financial Statements and accompanying notes and the other financial information appearing elsewhere in this report. This report contains numerous forward-looking statements relating to our business. Such forward-looking statements are identified by the use of words such as believes, intends, expects, hopes, may, should, plan, projected, contemplates, anticipates or similar words. Actual operating schedules, results of operations and other projections and estimates could differ materially from those projected in the forward-looking statements.

Overview

Aurum, Inc. is an exploration stage company and was incorporated in Florida on September 29, 2008, to develop and market financial software. In July 2009, Golden Target Pty Ltd, an Australian corporation ("Golden") acquired a 96% interest in Aurum from Daniel McKelvey and certain other stockholders. Commencing August 2009, the Company decided to focus on mineral exploration for gold and copper in the Lao Peoples Democratic Republic. The Company is considered to be in the exploration stage. On January 20, 2010, the Company re-incorporated in the state of Delaware through a merger involving Liquid Financial Engines Inc. and Aurum, Inc., with Aurum being the surviving entity.

The agreement appoints Aurum as the manager of the Century Thrust Joint Venture Agreement, which currently exists between Argonaut and two other parties, and the Company has the right to earn 72.86% of AOI’s interest in the Joint Venture which is equivalent to a 51% beneficial interest in the Century Concession. In order to acquire this interest, Aurum may spend US$6.5 million on exploration withn the five year period ending, December 2015.

We have incurred net losses since our inception and may continue to incur substantial and increasing losses for the next several years. Since inception (September 2008), we have incurred accumulated losses of approximately $10.3 million which was funded primarily by the sale of equity securities and advances from affiliates.

RESULTS OF OPERATIONS

Three Months Ended January 31, 2014 vs. Three Months Ended January 31, 2013.

Costs and expenses decreased from $474,767 in the three months ended January 31, 2013 to $226,659 in the three months ended January 31, 2014. The decrease in costs and expenses is a net result of:

	a)	An increase in legal, accounting and professional expense from $8,810 for the three months ended January 31, 2013 to $10,077 for the three months ended January 31, 2014, primarily as a result of a small increase in audit fees and share registry expenses; and accounting fees incurred in Laos.
	b)	a decrease in administrative expenses from $66,696 in the three months ended January 31, 2013 to $49,530 in the three months ended January 31, 2014, primarily as a result of an decrease in direct costs charged to the Company by AXIS.
	c)	a decrease in stock based compensation from $76,154 in the three months ended January 31, 2013 to $nil in the three months ended January 31, 2014. In December 2010 and May 2011, the Company issued options over shares of Common Stock to employees under the 2010 Equity Incentive Plan. The decrease is due to options being fully vested in prior periods.
	d)	a decrease in exploration expenditure expense from $321,892 for the three months ended January 31, 2013 to $167,052 for the three months ended January 31, 2014. The decrease is primarily due to reduced exploration activities for the quarter ending January 31, 2014 in comparison to the prior period. The exploration costs include salaries for both our staff and contract field staff, accommodations, Laos office costs, field work expenditure and reviewing data on exploration targets in Laos.

As a result of the foregoing, the loss from operations decreased from $474,767 for the three months ended January 31, 2013 to $226,659 for the three months ended January 31, 2014.

The Company recorded a foreign currency exchange gain of $571,807 for the three months ended January 31, 2014 compared to a foreign currency exchange loss of $54,901 for the three months ended January 31, 2013, primarily due to revaluation of the advance from affiliate which is denominated in Australian dollars.

The net income was $345,148 for the three months ended January 31, 2014 compared to a net loss of $529,668 for the three months ended January 31, 2013.

Liquidity and Capital Resources

For the three months ended January 31, 2014, net cash used in operating activities was $103,570 consisting primarily of the net profit from operations of $345,148, which was offset by a foreign currency exchange gain of $571,807, a decrease in prepayments of $2,848, a decrease in receivables of $61 and an increase in accounts payable and accrued expenses of $119,757. Net cash used in investing activities was $nil; and net cash provided by financing activities was $92,405 being advances from affiliates.

As of January 31, 2014 the Company has short term obligations of $522,495 comprising accounts payable and accruals.

The Company has $2,845 in cash at January 31, 2014.

The Company may fund up to $6.5 million in exploration expenditure, of which $4.49 million has already been funded, in order to acquire a 51% beneficial interest in the Century Thrust Joint Venture (“Joint Venture”).

As of December 31, 2011, the Company had completed its initial drilling program on the Century Thrust Joint Venture tenements and is currently compiling assay results. Depending upon available capital resources, the Company may conduct additional exploration drilling programs during 2014 on the Joint Venture.

The Company’s ability to continue operations through 2014, including the ability to acquire any interest in the Joint Venture, is dependent upon future funding from affiliated entities, capital raisings, or its ability to commence revenue producing operations and positive cash flows, of which there can be no assurance.

The Company continues to search for additional sources of capital, as and when needed; however, there can be no assurance funding will be successfully obtained. Even if it is obtained, there is no assurance that it will not be secured on terms that are highly dilutive to existing shareholders.

Information Concerning Forward Looking Statements

This report and other reports, as well as other written and oral statements made or released by us, may contain forward looking statements. Forward looking statements are statements that describe, or that are based on, our current expectations, estimates, projections and beliefs. Forward looking statements are based on assumptions made by us, and on information currently available to us. Forward-looking statements describe our expectations today of what we believe is most likely to occur or may be reasonably achievable in the future, but such statements do not predict or assure any future occurrence and may turn out to be wrong. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. The words "believe," "anticipate," "intend," "expect," "estimate," "project", "predict", "hope", "should", "may", and "will", other words and expressions that have similar meanings, and variations of such words and expressions, among others, usually are intended to help identify forward-looking statements.

Forward-looking statements are subject to both known and unknown risks and uncertainties and can be affected by inaccurate assumptions we might make. Risks, uncertainties and inaccurate assumptions could cause actual results to differ materially from historical results or those currently anticipated. Consequently, no forward-looking statement can be guaranteed. The potential risks and uncertainties that could affect forward looking statements include, but are not limited to:

	●	The risk factors set forth in Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2013,
	●	The risks and hazards inherent in the mineral exploration business (including environmental hazards, industrial accidents, weather or geologically related conditions),
	●	The uncertainties inherent in our exploratory activities, including risks relating to permitting and regulatory delays,
	●	The political, governmental and regulatory risks affecting mineral exploration activities in foreign countries,
	●	The effects of environmental and other governmental regulations, and
	●	Uncertainty as to whether financing will be available to enable further exploration and development.
	●	Movements in foreign exchange rates,
	●	Performance of information systems,
	●	Ability of the Company to hire, train and retain qualified employees,
	●	Our ability to enter into key exploration agreements and the performance of contract counterparties.

In addition, other risks, uncertainties, assumptions, and factors that could affect the Company's results and prospects are described in this Quarterly Report on Form 10-Q and in the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2013, including under the heading “Risk Factors” and elsewhere herein and therein and may further be described in the Company's prior and future filings with the Securities and Exchange Commission and other written and oral statements made or released by the Company.

We caution you not to place undue reliance on any forward-looking statements, which speak only as of the date of this document. The information contained in this report is current only as of its date, and we assume no obligation to update any forward-looking statements.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

At January 31, 2014, the Company had no outstanding loan facilities.

The Company reports in US$ and holds cash in Australian dollars. At January 31, 2014, this amounted to A$1,667 A change in the exchange rate between the A$ and the US$ will have an effect on the amounts reported in the Company’s financial statements, and create a foreign exchange gain or loss. A movement of 1% in the A$ versus the US$ exchange rate will have a US$14 effect on the balance sheet and income statement.

Item 4.

Controls and Procedures.

Disclosure Controls and Procedures

Our principal executive officer and our principal financial officer evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 as amended) as of the end of the period covered by this report. Based on that evaluation, such principal executive officer and principal financial officer concluded that, the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report at the reasonable level of assurance.

Change in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the first quarter of fiscal 2014 that materially affected, or are reasonably likely to materially affect, internal control over financial reporting.

Other

We believe that a controls system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Therefore, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Our disclosure controls and procedures are designed to provide such reasonable assurances of achieving our desired control objectives, and our principal executive officer and principal financial officer have concluded, as of January 31, 2014, that our disclosure controls and procedures were effective in achieving that level of reasonable assurance.

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings.
Not Applicable
Item 1A.	Risk Factors.
Not Applicable for smaller reporting company.
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.
Not Applicable
Item 3.	Defaults Upon Senior Securities.
Not Applicable
Item 4.	Mine Safety Disclosures.
Not Applicable
Item 5.	Other Information.
Not Applicable
Item 6.	Exhibits.
(a)	Exhibit No.	Description
	31.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Joseph Isaac Gutnick
	31.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Simon Joseph Lee
	32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley act of 2002 by Joseph Isaac Gutnick
	32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley act of 2002 by Simon Joseph Lee
	101	The following materials from the Aurum, Inc. Quarterly Report on Form 10-Q for the quarter ended January 31, 2014 formatted in Extensible Business Reporting Language (XBRL): (i) the Statements of Operations, (ii) the Balance Sheets, (iii) the Statements of Cash Flows, (iv) Statement of Stockholders’ (Deficit) and (v) related notes.

		#101.INS XBRL Instance Document.

		#101.SCH XBRL Taxonomy Extension Schema Document.

		#101.CAL XBRL Taxonomy Extension Calculation Linkbase Document.

		#101.LAB XBRL Taxonomy Extension Label Linkbase Document.

		#101.PRE XBRL Taxonomy Extension Presentation Linkbase Document.

		#101.DEF XBRL Taxonomy Extension Definition Linkbase Document.
		_________________
		# Filed herewith. In accordance with Rule 406T of Regulation S-T, these interactive data files are deemed “not filed” for purposes of section 18 of the Exchange Act, and otherwise are not subject to liability under that section.

(FORM 10-Q)

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.

	Aurum, Inc.





	By: /s/ Joseph Gutnick
	Joseph Gutnick
	Chairman of the Board, President and Chief Executive Officer
	(Principal Executive Officer)





	By: /s/ Craig Michael
	Craig Michael
	Director





	By: /s/ Simon Lee
	Simon Lee
	Chief Financial Officer
	(Principal Financial Officer)

Dated March 15, 2014

EXHIBIT INDEX

Exhibit No.		Description
31.1		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Joseph Isaac Gutnick
31.2		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Simon Joseph Lee
32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley act of 2002 by Joseph Isaac Gutnick
32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley act of 2002 by Simon Joseph Lee

Aurum, Inc. - FORM 10-Q - March 20, 2014

Attached files

Aurum, Inc. Reports