UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURUTIES EXCHANGE
ACT OF 1934
For the fiscal year ended August 31, 2012
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from [ ] to [ ]
Commission file number 333-138148
AMERICAN PARAMOUNT GOLD CORP.
(Exact name of registrant as specified in its charter)
Nevada 20-5243308
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
355 Burrard Street, Suite 1000, Vancouver, BC Canada V6C 2G8
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (250) 258-7481
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange On Which Registered
N/A N/A
Securities registered pursuant to Section 12(g) of the Act:
N/A
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act Yes [ ] No [X]
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 last 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Website, if any, every Interactive Data File required to
be submitted and posted pursuant to Rule 405 of Regulation S-K (ss.229.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes [ ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [ ]
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.
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 12b-2 of the Exchange Act). Yes [ ] No [X]
State the aggregate market value of voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and ask price of such common equity, as of the
last business day of the registrant's most recently completed second fiscal
quarter.
The aggregate market value of Common Stock held by non-affiliates of the
Registrant on August 31, 2012 was $96,000 based on a $0.06 closing price for the
Common Stock on August 31, 2012. For purposes of this computation, all executive
officers and directors have been deemed to be affiliates. Such determination
should not be deemed to be an admission that such executive officers and
directors are, in fact, affiliates of the Registrant.
Indicate the number of shares outstanding of each of the registrant's classes of
common stock as of the latest practicable date.
1,612,500 shares of common stock issued & outstanding as of August 31, 2012.
DOCUMENTS INCORPORATED BY REFERENCE
None.
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TABLE OF CONTENTS
PART I
Item 1. Business 3
Item 1A. Risk Factors 6
Item 1B. Unresolved Staff Comments 10
Item 2. Properties 10
Item 3. Legal Proceedings 11
Item 4. Mine Safety Disclosures 11
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities 11
Item 6. Selected Financial Data 12
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations 12
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 16
Item 8. Financial Statements and Supplementary Data 17
Item 9. Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure 30
Item 9A. Controls and Procedures 30
Item 9B. Other Information 31
PART III
Item 10. Directors, Executive Officers and Corporate Governance 31
Item 11. Executive Compensation 34
Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters 35
Item 13. Certain Relationships and Related Transactions, and
Director Independence 35
Item 14. Principal Accounting Fees and Services 36
PART IV
Item 15. Exhibits, Financial Statement Schedules 36
SIGNATURES 38
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PART I
ITEM 1. BUSINESS
This annual report contains forward-looking statements. These statements relate
to future events or our future financial performance. In some cases, you can
identify forward-looking statements by terminology such as "may", "should",
"expects", "plans", "anticipates", "believes", "estimates", "predicts",
"potential" or "continue" or the negative of these terms or other comparable
terminology. These statements are only predictions and involve known and unknown
risks, uncertainties and other factors, including the risks in the section
entitled "Risk Factors", that may cause our or our industry's actual results,
levels of activity, performance or achievements to be materially different from
any future results, levels of activity, performance or achievements expressed or
implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Except as required by applicable law,
including the securities laws of the United States, we do not intend to update
any of the forward-looking statements to conform these statements to actual
results.
Our financial statements are stated in United States Dollars (US$) and are
prepared in accordance with United States Generally Accepted Accounting
Principles.
In this annual report, unless otherwise specified, all dollar amounts are
expressed in United States dollars and all references to "common shares" refer
to the common shares in our capital stock.
As used in this annual report, the terms "we", "us", "our", "our company" and
"American Paramount" refer to American Paramount Gold Corp., unless otherwise
indicated.
CORPORATE OVERVIEW
Our principal executive offices are located at 355 Burrard Street, Suite 1000,
Vancouver, BC, Canada, V6C 2G8. Our telephone number is (250) 258-7481.
Our common stock is quoted on the OTC Bulletin Board under the symbol "APGA".
CORPORATE HISTORY
We were incorporated under the laws of the State of Nevada on July 20, 2006
under the name "Zebra Resources Incorporated" (aka "Zebra Resources Inc."). At
inception, we were an exploration stage company engaged in the acquisition,
exploration and development of mineral properties.
We are investigating several business opportunities to enhance shareholder
value.
On February 26, 2010, Monaco Capital Inc. acquired a controlling interest in our
company by purchasing 20,000,000 shares of our common stock in a private
transaction.
Effective March 17, 2010, we effected a one (1) old for two (2) new forward
stock split of our issued and outstanding common stock. As a result, our
authorized capital increased from 75,000,000 to 150,000,000 shares of common
stock and our issued and outstanding increased from 32,000,000 shares of common
stock to 64,000,000 shares of common stock, all with a par value of $0.001.
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Also effective March 17, 2010, we changed our name from "Zebra Resources
Incorporated" to "American Paramount Gold Corp.", by way of a merger with our
wholly owned subsidiary American Paramount Gold Corp., which was formed solely
for the change of name.
The name change and forward stock split became effective with the
Over-the-Counter Bulletin Board at the opening for trading on April 12, 2010
under the new stock symbol "APGA".
On April 16, 2010, we entered into an option agreement to acquire a 100%
long-term lease interest in 189 unpatented mining claims situated in the Walker
Lane Structural Belt in Nye County, Nevada, known as Cap Gold Project. The 189
claims making up the Cap Gold Project form a contiguous block of approximately
3,960 acres (1,602 hectares). We paid $125,000 to secure the option, giving us
the right acquire a 100% long-term lease interest in the Cap Gold Project. To
exercise the option we must: (i) make ongoing yearly advance production royalty
cash payments during the term of the agreement of $125,000 in years two (2)
through five (5), $150,000 in years six (6) through twelve (12), $200,000 in
years 13 through 20 and $300,000 in years 21 through 30; (ii) incur expenditures
on exploration of the Cap Gold Project of not less than an aggregate of
$1,250,000 over five (5) years; and (iii) make production royalty payments from
production from the property after the advance production royalty cash payments
described above have been repaid to our company from production from the
property. At our company's election, the production royalty may be calculated
either on a sliding scale or on a fixed production royalty basis, and must range
from 1% to a maximum of 3%. We do not currently intend on conducting any further
exploration on the Cap Gold Project.
On April 22, 2010, we entered into a convertible loan agreement with Monaco
Capital Inc., wherein Monaco Capital Inc. has agreed to loan our company up to
$500,000. The loan (and accrued interest) is convertible in whole or in part
into common shares of our company at a conversion price of $1.05 and will bear
interest at 10% per annum. The principal amount of the loan and accrued interest
is due and payable one year from the advancement date. We may at any time during
the term of the loan prepay any sum up to the full amount of the loan and
accrued interest then outstanding for an additional 10% of such amount. This
agreement was subsequently cancelled and replaced with a new agreement on
December 17, 2010. The new agreement provided for funding of up to $5,000,000,
and any amounts advanced would bear interest at 10% per annum. In addition, any
outstanding principal and accrued interest would be convertible at the volume
weighted average trading price for the company's shares of common stock for the
ten trading day period prior to any conversion.
On July 30, 2010, our directors approved the adoption of the 2010 Stock Option
Plan ("2010 Plan") which permits our company to issue up to 6,500,000 shares of
our common stock to directors, officers, employees and consultants of our
company upon the exercise of stock options granted under the 2010 Plan.
On July 28, 2010, we obtained an extra-provincial license to carry on business
in the Province of Ontario, Canada. Our Ontario Corporation Number is 1827852.
On October 6, 2010, we granted an aggregate of 5,400,000 stock options to ten
individuals, including directors, officers, consultants and employees, pursuant
to our 2010 Plan, at an exercise price of $0.68 per share. Of the 5,400,000
stock options, 400,000 options are exercisable until October 6, 2012 and
5,000,000 options are exercisable until October 6, 2015. All the stock options
vested upon issuance. We issued the stock options to seven (7) non-U.S. persons
(as that term is defined in Regulation S of the Securities Act of 1933), in an
offshore transaction relying on Regulation S and/or Section 4(2) of the
Securities Act of 1933 and to three (3) U.S. persons (as that term is defined in
Regulation S of the Securities Act of 1933) relying upon Rule 506 of Regulation
D of the Securities Act of 1933.
On November 9, 2010, we announced by press release our entry into a non-binding
letter of intent with Lonsdale Acquisition Corporation to acquire the Kisita
Gold Mine Property, an operational gold property four hours northwest of the
capital city of Kampala, Uganda. The acquisition was subject to further
negotiation and due diligence of the project satisfactory to us. On December 9,
2010, having performed the due diligence required to acquire the Kisita Gold
Mine Property, advised Lonsdale Acquisition Corporation that we declined to
proceed with the purchase agreement under its current terms and conditions.
Discussions with Lonsdale Acquisition Corporation are ongoing.
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On December 17, 2010, we entered into a convertible loan agreement with Monaco
Capital Inc. This agreement replaces the convertible loan agreement entered into
with Monaco Capital Inc. on April 22, 2010. The new agreement provided for
funding of up to $5,000,000, and any amounts advanced would bear interest at 10%
per annum. In addition, any outstanding principal and accrued interest would be
convertible at the volume weighted average trading price for the company's
shares of common stock for the ten trading day period prior to any conversion.
On November 16, 2011, our company's board of directors approved a forty (40) for
one (1) reverse stock split of our authorized and issued and outstanding common
shares.
On November 28, 2011, the Nevada Secretary of State accepted for filing a
Certificate of Change, wherein we effected an amendment to our Articles of
Incorporation to decrease the authorized number of shares of our common stock
from 150,000,000 to 3,750,000 shares of common stock, par value of $0.001. On
November 29, 2011 the Nevada Secretary of State accepted for filing a
Certificate of Correction, wherein we effected an amendment to our Articles of
Incorporation to correct the Certificate of Change filed on November 28, 2011 to
state that no fractional shares shall be issued and that fractional shares shall
be rounded up rather than rounded down.
The reverse split became effective with the Over-the-Counter Bulletin Board at
the opening of trading on January 26, 2012. Our new symbol is "APGA". Our new
CUSIP number is 02882T 204.
OUR CURRENT BUSINESS
We are an exploration stage mining company engaged in the identification,
acquisition, and exploration of metals and minerals which until recently was
focused on gold mineralization on our property located in Nevada. We intend to
conduct exploration and development programs on our recently optioned property.
Since we are an exploration stage company, there is no assurance that a
commercially viable mineral reserve exists on any of our current or future
properties, To date, we do not know if an economically viable mineral reserve
exists on our property and there is no assurance that we will discover one. Even
if we do eventually discover a mineral reserve on our property, there can be no
assurance that we will be able to develop our property into a producing mine and
extract those resources. Both mineral exploration and development involve a high
degree of risk and few properties which are explored are ultimately developed
into producing mines.
Our operational focus has been to conduct exploration activities on the Cap Gold
Project and to complete the terms of the Cap Gold option agreement. After
completing drilling on our first hole, the Board determined to abandon the
project entirely.
SUBSIDIARIES
We do not have any subsidiaries.
RESEARCH AND DEVELOPMENT EXPENDITURES
We have incurred $nil in research and development expenditures over the last two
fiscal years.
EMPLOYEES
Currently, with the exception of our directors and officers, we do not have any
employees. Additionally, we have not entered into any consulting or employment
agreements with our president, chief executive officer, treasurer, secretary or
chief financial officer. Our directors, executive officers and certain
contracted individuals play an important role in the running of our company. We
do not expect any material changes in the number of employees over the next 12
month period. We do and will continue to outsource contract employment as
needed.
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We engage contractors from time to time to consult with us on specific corporate
affairs or to perform specific tasks in connection with our exploration
programs.
INTELLECTUAL PROPERTY
We own all copyright in and to the contents of our website,
www.americanparamountgold.com. We do not own, either legally or beneficially,
any patent or trademark.
REPORTS TO SECURITY HOLDERS
We are required to file annual, quarterly and current reports, proxy statements
and other information with the Securities and Exchange Commission and our
filings are available to the public over the internet at the Securities and
Exchange Commission's website at http://www.sec.gov. The public may read and
copy any materials filed by us with the Securities and Exchange Commission at
the Securities and Exchange Commission's Public Reference Room at 100 F Street
N.E. Washington D.C. 20549. The public may obtain information on the operation
of the Public Reference Room by calling the Securities and Exchange Commission
at 1-800-732-0330. The SEC also maintains an Internet site that contains
reports, proxy and formation statements, and other information regarding issuers
that file electronically with the SEC, at http://www.sec.gov.
ITEM 1A. RISK FACTORS
RISKS ASSOCIATED WITH MINING
OUR PROPERTY IS IN THE EXPLORATION STAGE. THERE IS NO ASSURANCE THAT WE CAN
ESTABLISH THE EXISTENCE OF ANY MINERAL RESOURCE ON OUR PROPERTY IN COMMERCIALLY
EXPLOITABLE QUANTITIES. UNTIL WE CAN DO SO, WE CANNOT EARN ANY REVENUES FROM
OPERATIONS AND IF WE DO NOT DO SO WE WILL LOSE ALL OF THE FUNDS THAT WE EXPEND
ON EXPLORATION. IF WE DO NOT DISCOVER ANY MINERAL RESOURCE IN A COMMERCIALLY
EXPLOITABLE QUANTITY, OUR BUSINESS COULD FAIL.
Despite exploration work on our mineral property, we have not established that
it contains any mineral reserve, and there can be no assurance that we will be
able to do so. If we do not, our business could fail.
A mineral reserve is defined by the Securities and Exchange Commission in its
Industry Guide 7 (which can be viewed over the Internet at
http://www.sec.gov/divisions/corpfin/forms/industry.htm#secguide7 ) as that part
of a mineral deposit which could be economically and legally extracted or
produced at the time of the reserve determination. The probability of an
individual prospect ever having a "reserve" that meets the requirements of the
Securities and Exchange Commission's Industry Guide 7 is extremely remote; in
all probability our mineral resource property does not contain any 'reserve' and
any funds that we spend on exploration will probably be lost.
Even if we do eventually discover a mineral reserve on our property, there can
be no assurance that we will be able to develop our property into a producing
mine and extract those resources. Both mineral exploration and development
involve a high degree of risk and few properties which are explored are
ultimately developed into producing mines.
The commercial viability of an established mineral deposit will depend on a
number of factors including, by way of example, the size, grade and other
attributes of the mineral deposit, the proximity of the resource to
infrastructure such as a smelter, roads and a point for shipping, government
regulation and market prices. Most of these factors will be beyond our control,
and any of them could increase costs and make extraction of any identified
mineral resource unprofitable.
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MINERAL OPERATIONS ARE SUBJECT TO APPLICABLE LAW AND GOVERNMENT REGULATION. EVEN
IF WE DISCOVER A MINERAL RESOURCE IN A COMMERCIALLY EXPLOITABLE QUANTITY, THESE
LAWS AND REGULATIONS COULD RESTRICT OR PROHIBIT THE EXPLOITATION OF THAT MINERAL
RESOURCE. IF WE CANNOT EXPLOIT ANY MINERAL RESOURCE THAT WE MIGHT DISCOVER ON
OUR PROPERTY, OUR BUSINESS MAY FAIL.
Both mineral exploration and extraction require permits from various foreign,
federal, state, provincial and local governmental authorities and are governed
by laws and regulations, including those with respect to prospecting, mine
development, mineral production, transport, export, taxation, labor standards,
occupational health, waste disposal, toxic substances, land use, environmental
protection, mine safety and other matters. There can be no assurance that we
will be able to obtain or maintain any of the permits required for the continued
exploration of our mineral properties or for the construction and operation of a
mine on our properties at economically viable costs. If we cannot accomplish
these objectives, our business could fail.
We believe that we are in compliance with all material laws and regulations that
currently apply to our activities but there can be no assurance that we can
continue to remain in compliance. Current laws and regulations could be amended
and we might not be able to comply with them, as amended. Further, there can be
no assurance that we will be able to obtain or maintain all permits necessary
for our future operations, or that we will be able to obtain them on reasonable
terms. To the extent such approvals are required and are not obtained, we may be
delayed or prohibited from proceeding with planned exploration or development of
our mineral properties.
IF WE ESTABLISH THE EXISTENCE OF A MINERAL RESOURCE ON OUR PROPERTY IN A
COMMERCIALLY EXPLOITABLE QUANTITY, WE WILL REQUIRE ADDITIONAL CAPITAL IN ORDER
TO DEVELOP THE PROPERTY INTO A PRODUCING MINE. IF WE CANNOT RAISE THIS
ADDITIONAL CAPITAL, WE WILL NOT BE ABLE TO EXPLOIT THE RESOURCE, AND OUR
BUSINESS COULD FAIL.
If we do discover mineral resources in commercially exploitable quantities on
our property, we will be required to expend substantial sums of money to
establish the extent of the resource, develop processes to extract it and
develop extraction and processing facilities and infrastructure. Although we may
derive substantial benefits from the discovery of a major deposit, there can be
no assurance that any discovered resource will be large enough to justify
commercial operations, nor can there be any assurance that we will be able to
raise the funds required for development on a timely basis. If we cannot raise
the necessary capital or complete the necessary facilities and infrastructure,
our business may fail.
MINERAL EXPLORATION AND DEVELOPMENT IS SUBJECT TO EXTRAORDINARY OPERATING RISKS.
WE DO NOT CURRENTLY INSURE AGAINST THESE RISKS. IN THE EVENT OF A CAVE-IN OR
SIMILAR OCCURRENCE, OUR LIABILITY MAY EXCEED OUR RESOURCES, WHICH WOULD HAVE AN
ADVERSE IMPACT ON OUR COMPANY.
Mineral exploration, development and production involve many risks which even a
combination of experience, knowledge and careful evaluation may not be able to
overcome. Our operations will be subject to all the hazards and risks inherent
in the exploration for mineral resources and, if we discover a mineral resource
in commercially exploitable quantity, our operations could be subject to all of
the hazards and risks inherent in the development and production of resources,
including liability for pollution, cave-ins or similar hazards against which we
cannot insure or against which we may elect not to insure. Any such event could
result in work stoppages and damage to property, including damage to the
environment. We do not currently maintain any insurance coverage against these
operating hazards. The payment of any liabilities that arise from any such
occurrence would have a material adverse impact on our company.
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MINERAL PRICES ARE SUBJECT TO DRAMATIC AND UNPREDICTABLE FLUCTUATIONS.
We expect to derive revenues, if any, either from the sale of our mineral
resource property or from the extraction and sale of ore. The price of those
commodities has fluctuated widely in recent years, and is affected by numerous
factors beyond our control, including international, economic and political
trends, expectations of inflation, currency exchange fluctuations, interest
rates, global or regional consumptive patterns, speculative activities and
increased production due to new extraction developments and improved extraction
and production methods. The effect of these factors on the price of base and
precious metals, and therefore the economic viability of any of our exploration
properties and projects, cannot accurately be predicted.
THE MINING INDUSTRY IS HIGHLY COMPETITIVE AND THERE IS NO ASSURANCE THAT WE WILL
CONTINUE TO BE SUCCESSFUL IN ACQUIRING MINERAL CLAIMS. IF WE CANNOT CONTINUE TO
ACQUIRE PROPERTIES TO EXPLORE FOR MINERAL RESOURCES, WE MAY BE REQUIRED TO
REDUCE OR CEASE OPERATIONS.
The mineral exploration, development, and production industry is largely
un-integrated. We compete with other exploration companies looking for mineral
resource properties. While we compete with other exploration companies in the
effort to locate and acquire mineral resource properties, we will not compete
with them for the removal or sales of mineral products from our properties if we
should eventually discover the presence of them in quantities sufficient to make
production economically feasible. Readily available markets exist worldwide for
the sale of mineral products. Therefore, we will likely be able to sell any
mineral products that we identify and produce.
In identifying and acquiring mineral resource properties, we compete with many
companies possessing greater financial resources and technical facilities. This
competition could adversely affect our ability to acquire suitable prospects for
exploration in the future. Accordingly, there can be no assurance that we will
acquire any interest in additional mineral resource properties that might yield
reserves or result in commercial mining operations.
RISKS RELATED TO OUR COMPANY
THE FACT THAT WE HAVE NOT EARNED ANY OPERATING REVENUES SINCE OUR INCORPORATION
RAISES SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE TO EXPLORE OUR MINERAL
PROPERTIES AS A GOING CONCERN.
We have not generated any revenue from operations since our incorporation and we
anticipate that we will continue to incur operating expenses without revenues
unless and until we are able to identify a mineral resource in a commercially
exploitable quantity on our mineral property and we build and operate a mine. We
had no cash as of August 31, 2012 and a working capital deficit of $1409,335. We
have also incurred a net loss of $896,886 during the year ended August 31, 2012
and a cumulative net loss of $5,178,509 from our inception on July 20, 2006
through August 31, 2012. We estimate that our average monthly operating expenses
will be approximately $50,000, including exploration costs, management services
and administrative costs, assuming we recommence exploration or the Cap Gold
Project Should the results of our planned exploration require us to increase our
current operating budget, we may have to raise additional funds to meet our
currently budgeted operating requirements for the next 12 months. As we cannot
assure a lender that we will be able to successfully explore and develop our
mineral property, we will probably find it difficult to raise debt financing
from traditional lending sources. We have traditionally raised our operating
capital from sales of equity securities, but there can be no assurance that we
will continue to be able to do so. If we cannot raise the money that we need to
continue exploration of our mineral property, we may be forced to delay, scale
back, or eliminate our exploration activities. If any of these were to occur,
there is a substantial risk that our business would fail.
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Management plans to seek additional capital through a private placement of its
capital stock. These conditions raise substantial doubt about our company's
ability to continue as a going concern. Although there are no assurances that
management's plans will be realized, management believes that our company will
be able to continue operations in the future. The financial statements do not
include any adjustments relating to the recoverability and classification of
recorded assets, or the amounts of and classification of liabilities that might
be necessary in the event our company cannot continue in existence." We continue
to experience net operating losses.
RISKS ASSOCIATED WITH OUR COMMON STOCK
TRADING ON THE OTC BULLETIN BOARD MAY BE VOLATILE AND SPORADIC, WHICH COULD
DEPRESS THE MARKET PRICE OF OUR COMMON STOCK AND MAKE IT DIFFICULT FOR OUR
STOCKHOLDERS TO RESELL THEIR SHARES.
Our common stock is quoted on the OTC Bulletin Board service of the Financial
Industry Regulatory Authority. Trading in stock quoted on the OTC Bulletin Board
is often thin and characterized by wide fluctuations in trading prices, due to
many factors that may have little to do with our operations or business
prospects. This volatility could depress the market price of our common stock
for reasons unrelated to operating performance. Moreover, the OTC Bulletin Board
is not a stock exchange, and trading of securities on the OTC Bulletin Board is
often more sporadic than the trading of securities listed on a quotation system
like NASDAQ or a stock exchange like NYSE Amex. Accordingly, shareholders may
have difficulty reselling any of their shares.
OUR STOCK IS A PENNY STOCK. TRADING OF OUR STOCK MAY BE RESTRICTED BY THE SEC'S
PENNY STOCK REGULATIONS AND FINRA'S SALES PRACTICE REQUIREMENTS, WHICH MAY LIMIT
A STOCKHOLDER'S ABILITY TO BUY AND SELL OUR STOCK.
Our stock is a penny stock. The Securities and Exchange Commission has adopted
Rule 15g-9 which generally defines "penny stock" to be any equity security that
has a market price (as defined) less than $5.00 per share or an exercise price
of less than $5.00 per share, subject to certain exceptions. Our securities are
covered by the penny stock rules, which impose additional sales practice
requirements on broker-dealers who sell to persons other than established
customers and "accredited investors". The term "accredited investor" refers
generally to institutions with assets in excess of $5,000,000 or individuals
with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or
$300,000 jointly with their spouse. The penny stock rules require a
broker-dealer, prior to a transaction in a penny stock not otherwise exempt from
the rules, to deliver a standardized risk disclosure document in a form prepared
by the SEC which provides information about penny stocks and the nature and
level of risks in the penny stock market. The broker-dealer also must provide
the customer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction and
monthly account statements showing the market value of each penny stock held in
the customer's account. The bid and offer quotations, and the broker-dealer and
salesperson compensation information, must be given to the customer orally or in
writing prior to effecting the transaction and must be given to the customer in
writing before or with the customer's confirmation. In addition, the penny stock
rules require that prior to a transaction in a penny stock not otherwise exempt
from these rules; the broker-dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor interest
in, and limit the marketability of, our common stock.
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In addition to the "penny stock" rules promulgated by the Securities and
Exchange Commission, the Financial Industry Regulatory Authority has adopted
rules that require that in recommending an investment to a customer, a
broker-dealer must have reasonable grounds for believing that the investment is
suitable for that customer. Prior to recommending speculative low priced
securities to their non-institutional customers, broker-dealers must make
reasonable efforts to obtain information about the customer's financial status,
tax status, investment objectives and other information. Under interpretations
of these rules, the Financial Industry Regulatory Authority believes that there
is a high probability that speculative low-priced securities will not be
suitable for at least some customers. The Financial Industry Regulatory
Authority requirements make it more difficult for broker-dealers to recommend
that their customers buy our common stock, which may limit your ability to buy
and sell our stock.
OTHER RISKS
TRENDS, RISKS AND UNCERTAINTIES
We have sought to identify what we believe to be the most significant risks to
our business, but we cannot predict whether, or to what extent, any of such
risks may be realized nor can we guarantee that we have identified all possible
risks that might arise. Investors should carefully consider all of such risk
factors before making an investment decision with respect to our common stock.
ITEM 1B. UNRESOLVED STAFF COMMENTS
As a "smaller reporting company", we are not required to provide the information
required by this Item.
ITEM 2. PROPERTIES
EXECUTIVE OFFICES
Our executive, administrative, and operating offices are located at 141 Adelaide
St. West, Suite 240, Toronto, Ontario, Canada, M5H 3L5. We believe these
facilities are adequate for our current needs. They are free of charge.
MINERAL PROPERTIES
THE CAP GOLD PROJECT
LOCATION AND ACCESS
The Cap Gold Project consists of the CAP (14 claims), KAP (2 claims), and the
CAPX (173 claims) unpatented mining claims forming a contiguous block of
approximately 3,960 acres (1,602 hectares). The claims are located in sections
25, 26, 27, 34, 35, and 36, Township 1 South, Range 51 East, and MDB&M, in Nye
County, Nevada. The geographic coordinates are 37(degree)49' North Latitude,
116(degree)15' West Longitude. The property is in the Reveille Valley on the
pediment east of the Kawich Range on lands administered by the U.S. Department
of the Interior, Bureau of Land Management ("BLM"), Tonopah District.
OPTION AGREEMENT
Our company has an option to earn an interest in the Cap Gold Project through an
agreement entered into between our company and Royce L. Hackworth and Belva
L.Tomany. In order to complete the transactions contemplated by the agreement,
we paid $25,000 upon the closing of the agreement and an additional $100,000
upon satisfaction of our due diligence. The agreement gives our company the
option to acquire a 100% long-term lease interest in the Cap Gold Project by (i)
making ongoing yearly advance production royalty cash payments during the term
of the agreement of $125,000 in years two (2) through five (5), $150,000 in
years six (6) through twelve (12), $200,000 in years 13 through 20 and $300,000
in years 21 through 30; (ii) incurring expenditures on exploration of the Cap
Gold Project of not less than an aggregate of $1,250,000 over five (5) years;
and (iii) making production royalty payments from production from the property
after the advance production royalty cash payments described above have been
repaid to our company from production from the property. The production royalty
is based on, at our company's election, a sliding scale or fixed production
royalty basis, which in either case ranges from 1% to a maximum of 3%.
Currently, we do not intend to conduct any further activity on the Cap Gold
Project.
10
<PAGE>
As noted herein, we do not currently intend to conduct any further exploration
on the CAP Gold project, and have provided notice of our termination of the
option agreement.
ITEM 3. LEGAL PROCEEDINGS
Other than as noted below, there are no proceedings in which any of our
directors, officers or affiliates, or any registered or beneficial shareholder,
is an adverse party or has a material interest adverse to our company.
On May 14, 2012 our resident agent was served on our behalf with a summons in
regards to a lawsuit commenced by DOSECC Exploration Services, LLC. The action
has been commenced in District Court, in Nye County, Nevada. The plaintiff is
claiming approximately $200,000 for drilling work done on the Cap Gold Project.
We are currently considering what course of action is warranted in regards to
this recent development, but have not made any final determination.
ITEM 4. MINE SAFETY DISCLOSURES
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Our common shares are quoted on the Over-the-Counter (OTC) Bulletin Board under
the symbol "APGA." The following quotations, obtained from Yahoo Finance,
reflect the high and low bids for our common shares based on inter-dealer
prices, without retail mark-up, mark-down or commission and may not represent
actual transactions.
The high and low bid prices of our common stock for the periods indicated below
are as follows:
OTC BULLETIN BOARD (1)
Quarter Ended High Low
------------- ---- ---
August 31, 2012 $ 0.07 $ 0.02
May 31, 2012 $ 0.07 $ 0.07
February 28, 2012 $ 0.16 $ 0.07
November 30, 2011 $ 0.03 $ 0.01
August 31, 2011 $ 0.05 $ 0.03
(1) Over-the-counter market quotations reflect inter-dealer prices without
retail mark-up, mark- down or commission, and may not represent actual
transactions.
(2) No trades occurred during this period.
(3) The first trade in our stock did not occur until March 4, 2010.
Our shares are issued in registered form. Nevada Agency and Transfer Company, 50
West Liberty Street, Suite 880, Reno, Nevada 89501 (Telephone: (775) 322-0626;
Facsimile: (775) 322-5623) is the registrar and agent for our common and
preferred shares.
On August 31, 2012, the shareholders' list showed 40 registered shareholders,
1,612,500 common shares outstanding.
DIVIDEND POLICY
We have not paid any cash dividends on our common stock and have no present
intention of paying any dividends on the shares of our common stock. Our current
policy is to retain earnings, if any, for use in our operations and in the
development of our business. Our future dividend policy will be determined from
time to time by our board of directors.
11
<PAGE>
RECENT SALES OF UNREGISTERED SECURITIES; USE OF PROCEEDS FROM REGISTERED
SECURITIES
We did not sell any equity securities which were not registered under the
Securities Act during the year ended August 31, 2012 that were not otherwise
disclosed on our quarterly reports on Form 10-Q or our current reports on Form
8-K filed during the year ended August 31, 2012.
EQUITY COMPENSATION PLAN INFORMATION
We have no long-term incentive plans, other than the Stock Option Plan described
below.
2010 STOCK OPTION PLAN
On July 30, 2010, our directors approved the adoption of the 2010 Stock Option
Plan which permits our company to issue up to 6,500,000 shares of our common
stock to directors, officers, employees and consultants of our company upon the
exercise of stock options granted under the 2010 Plan. As of August 31, 2012,
there are 5,150,000 options outstanding under the 2010 Plan.
EQUITY COMPENSATION PLAN INFORMATION
Number of Securities
Number of Securities to be Remaining Available for
Issued Upon Exercise of Weighted-Average Exercise Future Issuance Under
Outstanding Options, Price of Outstanding Options, Equity Compensation Plans
Plan Category Warrants and Rights Warrants and Rights (excluding column (a))
(a) (b) (c)
------------- ------------------- ------------------- -------------------------
Equity Compensation Plans to Nil Nil Nil
be Approved by Security
Holders
Equity Compensation Plans Not
Approved by Security Holders 5,150,000 $0.12 Nil
--------- ------- -------
TOTAL 5,150,000 $0.12 Nil
========= ======= =======
PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
We did not purchase any of our shares of common stock or other securities during
the fourth quarter of our fiscal year ended August 31, 2012.
ITEM 6. SELECTED FINANCIAL DATA
As a "smaller reporting company", we are not required to provide the information
required by this Item.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with our audited
consolidated financial statements and the related notes for the years ended
August 31, 2012 and August 31, 2011 that appear elsewhere in this annual report.
The following discussion contains forward-looking statements that reflect our
plans, estimates and beliefs. Our actual results could differ materially from
those discussed in the forward looking statements. Factors that could cause or
contribute to such differences include, but are not limited to those discussed
below and elsewhere in this annual report, particularly in the section entitled
"Risk Factors" beginning on page 7 of this annual report.
12
<PAGE>
Our audited consolidated financial statements are stated in United States
Dollars and are prepared in accordance with United States Generally Accepted
Accounting Principles.
CASH REQUIREMENTS
Over the next 12 months we intend to operate as a business development company.
We anticipate that we will incur the following operating expenses during this
period:
ESTIMATED FUNDING REQUIRED DURING THE NEXT 12 MONTHS
Expense Amount
------- ------
General, Administrative, and Corporate Expenses $200,000
Operating Expenses $200,000
Exploration $200,000
--------
TOTAL $600,000
========
At present, our cash requirements for the next 12 months outweigh the funds
available to maintain or develop our properties. Of the $600,000 that we require
for the next 12 months, we have $Nil in cash as of August 31, 2012 and a working
capital deficit of $1,409,335. In order to improve our liquidity, we plan pursue
additional equity financing from private investors or possibly a registered
public offering. With the exception of the ongoing convertible loan agreement
with Monaco Capital Inc. described below, we do not currently have any
definitive arrangements in place for the completion of any further private
placement financings and there is no assurance that we will be successful in
completing any further private placement financings. If we are unable to achieve
the necessary additional financing, then we plan to reduce the amounts that we
spend on our business activities and administrative expenses in order to be
within the amount of capital resources that are available to us.
On December 17, 2010, we entered into a convertible loan agreement with Monaco
Capital Inc., wherein Monaco Capital Inc. has agreed to loan our company up to
$5,000,000. The convertible loan agreement replaced the original agreement with
Monaco Capital Inc., dated April 22, 2010 and provided that the principal of
$500,933 advanced under it, along with $20,664 in unpaid, accrued interest, to
and including December 17, 2010, be treated as if issued under the terms of the
new agreement. The loan is unsecured and bears interest at the rate of 10% per
annum payable on the due date. The loan is convertible into securities of our
company at a conversion price calculated as the mean volume weighted average
price for our company's common stock during the ten (10) trading day period
ending on the latest complete trading day prior to the conversion date. The
principal amount of the loan and accrued interest is due and payable one year
from the advancement date. We may at any time during the term of the loan prepay
any sum up to the full amount of the loan and accrued interest then outstanding
for an additional 10% of such amount.
As at August 31, 2012, the total advanced under the convertible loan is
$975,652.
PURCHASE OF SIGNIFICANT EQUIPMENT
We do not anticipate the purchase or sale of any plant or significant equipment
during the next 12 months.
GOING CONCERN
The financial statements included in this filing have been prepared in
conformity with generally accepted accounting principles that contemplate the
continuance of our company as a going concern, which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. However, our company is in the exploration stage and, accordingly, has
not generated revenues from operations. As shown on the accompanying financial
statements, our company has incurred a net loss of $5,178,509 for the period
from inception (July 20, 2006) to August 31, 2012. These conditions raise
substantial doubt about our company's ability to continue as a going concern.
13
<PAGE>
The future of our company is dependent upon its ability to obtain financing and
upon future profitable operations from the development of its mining activities.
OFF-BALANCE SHEET ARRANGEMENTS or capital resources that is material to
stockholders.
There were none during the years ended August 31, 2012 or 2011.
RESULTS OF OPERATIONS FOR THE YEARS ENDED AUGUST 31, 2012 AND 2011
The following summary of our results of operations should be read in conjunction
with our audited consolidated financial statements for the years ended August
31, 2012 and 2011.
Our operating results for the years ended August 31, 2012 and 2011 are
summarized as follows:
Year Ended August 31,
2012 2011
------------ ------------
Operating Expenses $ 536,251 $ 3,423,199
Other Expenses $ 360,635 $ 77,577
Net Income (Loss) $ (896,886) $ (3,500,776)
EXPENSES
Our operating expenses for the years ended August 31, 2012 and 2011 are outlined
in the table below:
Year Ended August 31,
2012 2011
------------ ------------
Consulting expenses $ 44,953 $ 2,774,909
Exploration $ 432,281 $ 216,344
General and administrative $ 47,473 $ 174,362
Rent expenses $ -- $ 36,153
Management fees $ -- $ 162,389
Professional fees $ 11,544 $ 59,042
EQUITY COMPENSATION
We currently do not have any equity compensation plans or arrangements. On July
31, 2010 our directors approved the adoption of our 2010 Stock Option Plan which
permits our company to grant up to 6,500,000 options to acquire shares of common
stock, to directors, officers, employees and consultants of our company.
LIQUIDITY AND FINANCIAL CONDITION
WORKING CAPITAL
At August 31,
2012 2011
------------ ------------
Current Assets $ 977 $ 146,357
Current Liabilities $ 1,410,312 $ 924,499
Working Capital Deficit $ (1,409,335) $ (778,142)
CONTRACTUAL OBLIGATIONS
As a "smaller reporting company", we are not required to provide tabular
disclosure obligations.
14
<PAGE>
CRITICAL ACCOUNTING POLICIES
Our financial statements and accompanying notes have been prepared in conformity
with accounting principles generally accepted in the United States of America
for financial statements. Preparing financial statements requires management to
make estimates and assumptions that affect the reported amounts of assets,
liabilities, revenue, and expenses. These estimates and assumptions are affected
by management's application of accounting policies. We believe that
understanding the basis and nature of the estimates and assumptions involved
with the following aspects of our financial statements is critical to an
understanding of our financials.
ACCOUNTING ESTIMATES
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements and
the reported amount of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, our company considers highly liquid
financial instruments purchased with a maturity of three months or less to be
cash equivalents.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company measures the fair value of financial assets and liabilities based on
GAAP guidance which defines fair value, establishes a framework for measuring
fair value, and expands disclosures about fair value measurements. Under GAAP,
fair value is defined as the exchange price that would be received for an asset
or paid to transfer a liability (exit price) in the principal or most
advantageous market for the asset or liability in an orderly transaction between
market participants on the measurement date. A fair value hierarchy is also
established, which requires an entity to maximize the use of observable inputs
and minimize the use of unobservable inputs when measuring fair value.
Level 1 - Quoted prices in active markets for identical assets or
liabilities.
Level 2 - Quoted prices for similar assets and liabilities in active
markets or inputs that are observable.
Level 3 - Inputs that are unobservable (for example cash flow modelling
inputs based on assumptions).
The table below presents the carrying value and fair value of our company's
financial instruments.
The fair value represents management's best estimates based on a range of
methodologies and assumptions. The carrying value of receivables and payables
arising in the ordinary course of business and the receivable from taxing
authorities, approximate fair value because of the relatively short period of
time between their origination and expected realization.
Quoted Significant Significant
Carrying value Prices in Other Unobservable
August 31, 2012 (Level 1) (Level 2) (Level 3)
--------------- --------- --------- ---------
FINANCIAL ASSETS
Cash $ -- $ -- $ -- $ --
FINANCIAL LIABILITIES
Bank overdraft $ 5,529 $ 5,529 $ -- $ --
Accounts payable and accrued expenses $429,131 $429,131 $ -- $ --
Convertible notes - related parties $975,652 $ -- $975,652 $ --
15
<PAGE>
INCOME TAXES
The Company follows the asset and liability method of accounting for income
taxes, which requires recognition of deferred tax assets and liabilities for
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax basis and tax credit carry-forwards. Deferred tax assets and
liabilities are measured using 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 operations in the period that includes the
enactment date. The Company has a net operating loss carry-forward to be used in
future years. The Company has established a valuation allowance for the full tax
benefit of the operating loss carry-forwards due to the uncertainty regarding
realization.
NET LOSS PER COMMON SHARE
Basic net loss per share is computed by dividing the net loss available to
common stockholders for the period by the weighted average number of shares of
common stock outstanding during the period. The calculation of diluted net loss
per share gives effect to common stock equivalents; however, potential common
shares are excluded if their effect is anti-dilutive. For the period from
Inception (July 20, 2006) through August 31, 2012, common stock equivalents are
the rights conferred upon Monaco Capital Inc. pursuant to the convertible loan
agreement (Note 7) and those arising from the 2010 Plan (Note 9). These stock
equivalents were not included as their effect was anti-dilutive for the periods
presented.
STOCK-BASED COMPENSATION
The Company applies the fair value method for accounting for stock option
awards, whereby the Company recognizes a compensation expense for all stock
options awarded to employees, officers and consultants based on the fair value
of the options on the date of grant, which is determined using the Black-Scholes
Option Pricing Model. The options are expensed over the vesting period of the
options on a graded vesting basis.
The Company accounts for equity instruments issued in exchange for the receipt
of goods or services from other than at the estimated fair market value of the
consideration received or the estimated fair value of the equity instruments
issued, whichever is more reliably measurable. The value of equity instruments
issued for consideration for other than employee services is determined on the
earliest of a performance commitment or completion of performance by the
provider of goods or services.
CONCENTRATION OF CREDIT RISK
Our company places our cash and cash equivalents with high credit quality
financial institutions. Our company obtained financing during the year from
Monaco Capital Inc. which holds 51% of our company's common shares. The balance
of the loan as at August 31, 2012 was $975,652.
RECENT ACCOUNTING PRONOUNCEMENTS
Our company has evaluated the recent accounting pronouncements through April
2012 and believes that none of them will have a material effect on the company's
financial position, results of operations or cash flows.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a "smaller reporting company", we are not required to provide the information
required by this Item.
16
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
AMERICAN PARAMOUNT GOLD CORP.
FINANCIAL STATEMENTS
AUGUST 31, 2012
(U.S. DOLLARS)
17
<PAGE>
[LETTERHEAD OF DALE MATHESON CARR-HILTON LABONTE LLP]
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of American Paramount Gold Corp.
We have audited the accompanying balance sheet of American Paramount Gold Corp.
(the "Company") as at August 31, 2012 and the related statements of operations,
stockholders' equity (deficit), and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company's internal control over the
financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Company as at August 31,
2012 and the results of its operations and its cash flows for the year then
ended in conformity with accounting principles generally accepted in the United
States of America.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 2 to the financial
statements, the Company has suffered recurring losses from operations, which
raise substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 2. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ DMCL
-------------------------------------
DALE MATHESON CARR-HILTON LABONTE LLP
CHARTERED PROFESSIONAL ACCOUNTANTS
Vancouver, Canada
October 14, 2015
18
<PAGE>
AMERICAN PARAMOUNT GOLD CORP.
BALANCE SHEETS
(Stated in U.S. Dollars)
August 31, 2012 August 31, 2011
--------------- ---------------
$ $
ASSETS
Current Assets
Cash -- 71,552
Excise Tax receivable 977 35,176
Prepaid and deposit -- 39,629
------------ ------------
Total current assets 977 146,357
------------ ------------
Mining claims -- 250,000
Website -- 14,618
Equipment -- 1,075
------------ ------------
Total Assets 977 412,050
============ ============
LIABILITIES
Current Liabilities
Bank overdraft 5,529 21,882
Accounts payable and accrued liabilities 429,131 122,740
Convertible loan payable - related party 975,652 779,877
------------ ------------
Total current liabilities 1,410,312 924,499
------------ ------------
Total Liabilities 1,410,312 924,499
------------ ------------
STOCKHOLDERS'DEFICIT
Common stock
3,750,000 authorized shares, par value $0.001
1,612,500 shares issued and outstanding
as at August 31, 2012 and 2011 1,613 1,613
Additional paid-in-capital 3,291,370 3,291,370
Stock payable 476,191 476,191
Deficit (5,178,509) (4,281,623)
------------ ------------
Total Stockholders' Deficit (1,409,335) (512,449)
------------ ------------
Total Liabilities and Stockholders' Deficit 977 412,050
============ ============
See accompanying notes to the financial statements
19
<PAGE>
AMERICAN PARAMOUNT GOLD CORP.
STATEMENTS OF OPERATIONS
(Stated in U.S. Dollars)
Year Ended
August 31, 2012 August 31, 2011
--------------- ---------------
$ $
EXPENSES
Operating expenses
Consulting 44,953 2,774,909
Exploration 432,281 216,344
General and administrative 47,473 174,362
Rent - related party -- 36,153
Management fees -- 162,389
Professional fees 11,544 59,042
---------- ----------
Total operating expenses 536,251 3,423,199
---------- ----------
Net loss from operations (536,251) (3,423,199)
---------- ----------
Other expenses
Impairment of mining claims 250,000 --
Impairment of capital assets 15,693 --
Amortization of debt discount 1,719 9,072
Interest 93,223 68,505
---------- ----------
Total other expenses 360,635 77,577
---------- ----------
Net loss (896,886) (3,500,776)
========== ==========
BASIC EARNINGS PER COMMON SHARE (0.56) (2.18)
========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING - BASIC 1,612,500 1,604,281
========== ==========
See accompanying notes to the financial statements
20
<PAGE>
AMERICAN PARAMOUNT GOLD CORP.
Statement of Stockholders' Equity (Deficit)
from Inception (July 20, 2006) to August 31, 2012
(Stated in U.S. Dollars)
Additional
Common Stock Paid in Stock Deficit
Number Amount Capital Payable Accumulated Total
------ ------ ------- ------- ----------- -----
$ $ $ $ $
Balance, August 31, 2010 1,600,000 1,600 620,433 -- (780,847) (158,814)
Issued for cash at $0.10 per share,
net of issuance cost -- -- -- 476,191 -- 476,191
Issued to settle debt 12,500 13 67,487 -- -- 67,500
Share based compensation -- -- 2,603,450 -- -- 2,603,450
Net loss -- -- -- -- (3,500,776) (3,500,776)
---------- ------ ---------- -------- ---------- ----------
Balance, August 31, 2011 1,612,500 1,613 3,291,370 476,191 (4,281,623) (512,449)
Net loss -- -- -- -- (896,886) (896,886)
---------- ------ ---------- -------- ---------- ----------
Balance, August 31, 2012 1,612,500 1,613 3,291,370 476,191 (5,178,509) (1,409,335)
========== ====== ========== ======== ========== ==========
See accompanying notes to the financial statements
21
<PAGE>
AMERICAN PARAMOUNT GOLD CORP.
STATEMENTS OF CASH FLOWS
(Stated in U.S. Dollars)
Year Ended
August 31, 2012 August 31, 2011
--------------- ---------------
$ $
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss (896,886) (3,500,776)
Adjustments to reconcile net loss to net
cash used in operating activities:
Impairment of mining claims 250,000 --
Impairment of capital assets 15,693 --
Amortization of website -- 8,771
Depreciation of equipment -- 215
Share based compensation -- 2,603,450
Shares issued to settle debt -- 67,500
Amortized debt discount 1,719 9,072
Interest expense 93,223 68,505
Change in operating assets and liabilities:
Decrease (increase) in excise tax receivable 34,199 (35,176)
Decrease in prepaids 39,629 31,094
Increase (decrease) in accounts payable and accrued liabilities 213,168 (21,788)
Decrease in accounts payable - related parties -- (1,000)
---------- ----------
NET CASH FLOWS USED IN OPERATING ACTIVITIES (249,255) (770,133)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Mining claims -- (125,000)
Equipment -- (1,290)
---------- ----------
NET CASH FLOWS USED IN INVESTING ACTIVITIES -- (126,290)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Bank overdraft advances (repayments) (16,353) 21,882
Convertible loan proceeds - related party 194,056 530,663
Notes payable -- (62,907)
Proceeds on sale of common stock -- 476,191
---------- ----------
NET CASH FLOWS FROM FINANCING ACTIVITIES 177,703 965,829
---------- ----------
NET CHANGE IN CASH (71,552) 69,406
CASH, BEGINNING OF THE PERIOD 71,552 2,146
---------- ----------
CASH, END OF THE PERIOD -- 71,552
========== ==========
NON CASH FINANCING ACTIVITIES
Shares issued to settle accounts payable -- 67,500
========== ==========
See accompanying notes to the financial statements
22
<PAGE>
AMERICAN PARAMOUNT GOLD CORP.
NOTES TO THE FINANCIAL STATEMENTS
AUGUST 31, 2012 AND 2011
(Stated in U.S. Dollars)
1. ORGANIZATION AND NATURE OF BUSINESS
American Paramount Gold Corp., a Nevada corporation, (the "Company") was
incorporated in the State of Nevada on July 20, 2006. The Company was formed to
engage in the acquisition, exploration and development of natural resource
properties.
2. BASIS OF PRESENTATION AND GOING CONCERN
BASIS OF PRESENTATION
The financial statements of the Company have been prepared in accordance with
generally accepted accounting principles ("GAAP") in the United States of
American and are presented in US dollars.
GOING CONCERN
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As of August 31, 2012 and 2011, the Company
has not achieved profitable operations and has incurred net losses of $896,886
and $3,500,776. At August 31, 2012 the Company had a deficit accumulated of
$5,178,509. Continuation as a going concern is dependent upon the ability of the
Company to obtain the necessary financing to meet obligations and pay its
liabilities arising from normal business operations when they come due and
ultimately upon its ability to achieve profitable operations. The outcome of
these matters cannot be predicted with any certainty at this time and raise
substantial doubt that the Company will be able to continue as a going concern.
These financial statements do not include any adjustments to the amounts and
classification of assets and liabilities that may be necessary should the
Company be unable to continue as a going concern.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ACCOUNTING ESTIMATES
The preparation of these consolidated financial statements in conformity with US
GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company measures the fair value of financial assets and liabilities based on
GAAP guidance which defines fair value, establishes a framework for measuring
fair value, and expands disclosures about fair value measurements. Under GAAP,
fair value is defined as the exchange price that would be received for an asset
or paid to transfer a liability (exit price) in the principal or most
advantageous market for the asset or liability in an orderly transaction between
market participants on the measurement date. A fair value hierarchy is also
established, which requires an entity to maximize the use of observable inputs
and minimize the use of unobservable inputs when measuring fair value.
Level 1 - Quoted prices in active markets for identical assets or
liabilities.
Level 2 - Quoted prices for similar assets and liabilities in active
markets or inputs that are observable.
Level 3 - Inputs that are unobservable (for example cash flow modelling
inputs based on assumptions).
The Company's financial instruments include cash, bank overdraft, accounts
payable, and the convertible loan payable to a related party. The fair values of
these financial instruments approximate their carrying values due to their short
maturities.
23
<PAGE>
AMERICAN PARAMOUNT GOLD CORP.
NOTES TO THE FINANCIAL STATEMENTS
AUGUST 31, 2012 AND 2011
(Stated in U.S. Dollars)
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES
Income tax expense is based on pre-tax financial accounting income. 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 bases. Deferred tax assets,
including tax loss and credit carry forwards, and liabilities are measured using
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 the enactment date. Deferred income tax
expense represents the change during the period in the deferred tax assets and
deferred tax liabilities. The components of the deferred tax assets and
liabilities are individually classified as current and non-current based on
their characteristics. Deferred tax assets are reduced by a valuation allowance
when, in the opinion of management, it is more likely than not that some portion
or all of the deferred tax assets will not be realized.
LONG-LIVED ASSETS
In accordance with ASC 360, "Property, Plant, and Equipment", the Company tests
long-lived assets or asset groups for recoverability when events or changes in
circumstances indicate that their carrying amount may not be recoverable.
Circumstances which could trigger a review include, but are not limited to:
significant decreases in the market price of the asset; significant adverse
changes in the business climate or legal factors; accumulation of costs
significantly in excess of the amount originally expected for the acquisition or
construction of the asset; current period cash flow or operating losses combined
with a history of losses or a forecast of continuing losses associated with the
use of the asset; and current expectation that the asset will more likely than
not be sold or disposed significantly before the end of its estimated useful
life. Recoverability is assessed based on the carrying amount of the asset and
its fair value which is generally determined based on the sum of the
undiscounted cash flows expected to result from the use and the eventual
disposal of the asset, as well as specific appraisal in certain instances. An
impairment loss is recognized when the carrying amount exceeds fair value.
NET LOSS PER COMMON SHARE
Basic net loss per share is computed by dividing the net loss available to
common stockholders for the period by the weighted average number of shares of
common stock outstanding during the period. The calculation of diluted net loss
per share gives effect to common stock equivalents; however, potential common
shares are excluded if their effect is anti-dilutive. These stock equivalents
were not included as their effect was anti-dilutive for the periods presented.
STOCK-BASED COMPENSATION
The Company applies the fair value method for accounting for stock option
awards, whereby the Company recognizes a compensation expense for all stock
options awarded to employees, officers and consultants based on the fair value
of the options on the date of grant, which is determined using the Black-Scholes
Option Pricing Model. The options are expensed over the vesting period of the
options on a graded vesting basis.
The Company accounts for equity instruments issued in exchange for the receipt
of goods or services from other than at the estimated fair market value of the
consideration received or the estimated fair value of the equity instruments
issued, whichever is more reliably measurable. The value of equity instruments
issued for consideration for other than employee services is determined on the
earliest of a performance commitment or completion of performance by the
provider of goods or services.
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AMERICAN PARAMOUNT GOLD CORP.
NOTES TO THE FINANCIAL STATEMENTS
AUGUST 31, 2012 AND 2011
(Stated in U.S. Dollars)
RECENT ACCOUNTING PRONOUNCEMENTS
The following are recent FASB accounting pronouncements, which may have an
impact on the Company's future consolidated financial statements:
"Income Taxes (ASC Topic 740): Presentation of an Unrecognized Tax Benefit when
a Net Operating Loss Carry-forward, a Similar Tax Loss, or a Tax Credit
Carry-forward Exists" ("ASU 2013-11") was issued during July 2013. FASB issued
guidance on how to present an unrecognized tax benefit. The guidance is
effective for annual periods beginning after December 15, 2013 for public
companies. The Company has adopted this pronouncement. The adoption of ASC Topic
740 did not have a significant impact on the Company's results of operations,
financial performance or cash flows.
In June 2014, the FASB issued ASU No. 2014-10, "DEVELOPMENT STAGE ENTITIES
(TOPIC 915): ELIMINATION OF CERTAIN FINANCIAL REPORTING REQUIREMENTS, INCLUDING
AN AMENDMENT TO VARIABLE INTEREST ENTITIES GUIDANCE IN TOPIC 810,
CONSOLIDATION." This ASU is intended to improve financial reporting by reducing
the cost and complexity associated with the incremental reporting requirements
for development stage entities. In addition, the amendments eliminate the
requirements for development stage entities to (1) present inception-to-date
information in the statements of income, cash flows, and shareholder equity, (2)
label the financial statements as those of a development stage entity, (3)
disclose a description of the development stage activities in which the entity
is engaged, and (4) disclose in the first year in which the entity is no longer
a development stage entity that in prior years it had been in the development
stage. As of the first annual period beginning after December 15, 2014, the
presentation and disclosure requirements in Topic 915 will no longer be
required. The revised consolidation standards are effective one year later, in
annual periods beginning after December 15, 2015. The Company has early adopted
these changes and removed inception-to-date information and no longer describes
as an exploration stage entity.
In August 2014, the FASB issued ASU No. 2014-15, "PRESENTATION OF FINANCIAL
STATEMENTS--GOING CONCERN (SUBTOPIC 205-40): DISCLOSURE OF UNCERTAINTIES ABOUT
AN ENTITY'S ABILITY TO CONTINUE AS A GOING CONCERN." This ASU is intended to
define management's responsibility to evaluate whether there is substantial
doubt about an entity's ability to continue as a going concern and to provide
related footnote disclosures. Specifically, ASU 2014-15 provides a definition of
the term substantial doubt and requires an assessment for a period of one year
after the date that the financial statements are issued (or available to be
issued). It also requires certain disclosures when substantial doubt is
alleviated as a result of consideration of management's plans and requires an
express statement and other disclosures when substantial doubt is not
alleviated. The new standard will be effective for annual reporting periods,
including interim periods within those annual periods, beginning after December
15, 2016, with early adoption permitted. The Company is currently evaluating the
impact of this standard on its financial statements.
4. MINERAL PROPERTIES
On April 16, 2010, the Company entered into an option agreement to acquire a
100% long-term lease interest in mining claims situated in the Walker Lane
Structural Belt in Nye County, Nevada (the "Cap Gold Project").
During the year ended August 31, 2012, the Company decided not to continue with
its planned drill program at the Cap Gold Project, and as a result, wrote off
capitalized costs of $250,000 to operations.
5. WEBSITE DEVELOPMENT AND EQUIPMENT
As at August 31, 2011, the Company had $14,618 and $1,075 of capitalized website
development costs and equipment, respectively. During the year ended august 31,
2012, the Company concluded that these costs were not recoverable, and recorded
an impairment of $15,693 in the statement of operations.
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AMERICAN PARAMOUNT GOLD CORP.
NOTES TO THE FINANCIAL STATEMENTS
AUGUST 31, 2012 AND 2011
(Stated in U.S. Dollars)
6. CONVERTIBLE LOAN - RELATED PARTY
On December 17, 2010, the Company entered into an agreement with Monaco Capital
Inc., majority shareholder, for a principal amount of up to $5,000,000. The loan
is unsecured and bears interest at the rate of 10% per annum. The Company may at
any time during the term of the loan prepay any sum up to the full amount of the
loan and accrued interest then outstanding at any time for an additional 10% of
such amount. The loan (including accrued interest) is convertible into
securities of the Company at a conversion price calculated as the mean volume
weighted average price for the Company's common stock during the ten (10)
trading day period ending on the latest complete trading day prior to the
conversion date. At any time after the advancement date, if the Company has not
paid the loan and accrued interest in full, the Lender may, by providing written
notice to the Company, exercise its rights of conversion in respect of either a
portion of the total outstanding amount of the loan as of that date into shares
of the Company.
As at August 31, 2012, Monaco Capital Inc. has advanced to the Company $975,652
(2011 - $779,877).
As at August 31, 2012, $140,092 (2011 - $47,258) of accrued interest is owing
and included in accounts payable and accrued liabilities.
When the loan was received, an initial beneficial conversion feature was
recorded of $16,833. As at August 31, 2012, $Nil (2011 - $1,719) was
unamortized, and included in the convertible loan balance on the balance sheet.
During the year ended August 31, 2012, $1,719 (2011 - $9,072) of the beneficial
conversion feature was amortized into the statement of operations. Accrued
interest as at august 31, 2012 is $140,092 (2011 - $46,869) and is included in
accounts payable and accrued liabilities.
7. STOCKHOLDERS' EQUITY (DEFICIT)
On March 28, 2011 and April 19, 2011, the Company collected net proceeds
$476,191 for an aggregate of 5,000,000 common shares of the Company under the
Private Placement Offering. As at August 31, 2012, these shares have not issued
to the shareholders and are recorded as Stock Payable.
On April 11, 2011, the Company issued 500,000 restricted common shares of the
Company, valued at $67,500, in full satisfaction of debt owed to Investors
Resource Group ("IRG") in the amount of $180,000 for consulting services.
8. STOCK OPTIONS
The Company has adopted a stock option plan (the "2010 Plan") which permits the
Company to issue up to 6,500,000 shares of common stock to directors, officers,
employees and consultants of the Company upon the exercise of stock options
granted under the 2010 Plan. At the time of the grant of the option, the plan
administrator shall designate the expiration date of the option, which date
shall not be later than five (5) years from the date of grant. The vesting
schedule for each option shall be specified by the plan administrator at the
time of grant of the option. Effective September 29, 2010 the 2010 Plan provides
for an exercise price to be established based on the fair market value of a
common share of the Company being the average of the high and low sales prices
(or bid and ask prices, if sales prices are not reported) for the common stock
for the last trading day immediately preceding the date with respect to which
fair market value is being determined, as reported for the principal trading
market for the common stock.
In April 2014, the company issued 1,000,000 stock options exercisable at $1.00
per option to the president, CEO, and CFO of the Company. On October 4, 2010 the
exercise price of these options was amended to $0.68, with an expiry date of
October 6, 2015. In connection with this modification the Company recorded
stock-based compensation of $276,000.
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AMERICAN PARAMOUNT GOLD CORP.
NOTES TO THE FINANCIAL STATEMENTS
AUGUST 31, 2012 AND 2011
(Stated in U.S. Dollars)
8. STOCK OPTIONS (CONTINUED)
Also on October 6, 2010, an additional 4,400,000 stock options at an exercise
price of $.68 per share. Of the aggregate 5,400,000 stock options, 400,000
options are exercisable until October 5, 2012 and 5,000,000 options are
exercisable until October 6, 2015. These options all vest immediately.
The fair value of the 5,400,000 options using the Black-Scholes Option Pricing
Model with the following weighted average assumptions and including the $276,000
modification was recorded in the statement of operations as consulting expenses
at a value of $2,480,800:
Risk Free Interest Rate 0.38% and 1.16% respectively
Expected life 730 days and 1825 days respectively
Expected volatility 85.4 %
Dividend per share $Nil
On March 2, 2011, the Company cancelled 5,400,000 stock options previously
granted on October 6, 2010. The Company concurrently reissued 5,150,000 stock
options at an exercise price of $0.12 per share. Of the 5,150,000 stock options,
150,000 options are exercisable until March 2, 2013 and 5,000,000 options are
exercisable until March 2, 2016. These stock options all vested immediately. In
connection with this modification the Company recorded stock-based compensation
of $122,650.
A summary of the status of the Company's stock option plan as of August 31, 2012
and 2011 and changes during the years is presented below:
2012 2011
Weighted Weighted
Number of average Number of average
Shares exercise price Shares exercise price
------ -------------- ------ --------------
# $ # $
Outstanding at beginning of year 5,150,000 0.12 1,000,000 1.00
Granted -- -- 10,550,000 0.41
Forfeited or cancelled -- -- (6,400,000) (0.73)
----------- ---- ----------- ------
Outstanding at end of year 5,150,000 0.12 5,150,000 0.12
----------- ---- ----------- ------
Exercisable 5,150,000 0.12 5,150,000 0.12
----------- ---- ----------- ------
The weighted average remaining life of the options outstanding as at August 31,
2012 is 3.42 years.
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AMERICAN PARAMOUNT GOLD CORP.
NOTES TO THE FINANCIAL STATEMENTS
AUGUST 31, 2012 AND 2011
(Stated in U.S. Dollars)
9. INCOME TAXES
The reported income taxes differ from the amounts obtained by applying statutory
rates to the loss before income taxes as follows:
August 31, 2012 August 31, 2011
--------------- ---------------
Net loss $ (896,886) $(3,500,776)
Statutory tax rate 35.0% 35.0%
----------- -----------
Expected income tax recovery (314,000) (1,225,000)
Permanent differences -- 911,000
Other 34,000 --
Change in valuation allowance 280,000 314,000
----------- -----------
Income tax recovery $ -- $ --
=========== ===========
The Company's tax-effected future tax assets and liabilities are estimated as
follows:
August 31, 2012 August 31, 2011
--------------- ---------------
Deferred tax assets
Net operating loss carry forwards $ 591,000 $ 404,000
Capital assets 5,000
Mineral properties 88,000 --
----------- -----------
Total deferred tax assets 684,000 404,000
Less: Valuation allowance (684,000) (404,000)
----------- -----------
Net deferred income tax assets $ -- $ --
=========== ===========
At August 31, 2012, the Company has a deferred tax asset. A full valuation
allowance has been established; as management believes it is more likely that
not that the deferred tax asset will not be realized.
As at August 31, 2012, the Company has net operating loss carry forwards of
approximately $1,690,000 (2011: $1,152,973) to reduce future federal and state
taxable income. These losses expire between 2020 and 2032.
The Company is not currently subject to any income tax examinations by any tax
authority. Should a tax examination be opened, management does not anticipate
any tax adjustments, if accepted, that would result in a material change to its
financial position.
Tax attributes are subject to review, and potential adjustment by tax
authorities.
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AMERICAN PARAMOUNT GOLD CORP.
NOTES TO THE FINANCIAL STATEMENTS
AUGUST 31, 2012 AND 2011
(Stated in U.S. Dollars)
10. RELATED PARTY TRANSACTIONS
During the year ended August 31, 2012, the Company incurred consulting fees of
$35,453 and $9,500 to the President and a director of the Company, respectively.
During the year ended August 31 2011, the company paid American Lithium Minerals
Inc., whose President and Director is Hugh H. Aird (who was the President, CEO,
and a director of the Company during the year ended August 31, 2011) CND$5,000
per month for office rent, supplies, and administrative support.
At August 31, 2012, Monaco Capital Inc., a majority shareholder has advanced
$975,652 (2011 - $781,597) with terms as discussed in Note 6.
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There were no disagreements related to accounting principles or practices,
financial statement disclosure, internal controls or auditing scope or procedure
during the two fiscal years and interim periods.
ITEM 9A. CONTROLS AND PROCEDURES
MANAGEMENT'S REPORT ON DISCLOSURE CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our reports filed under the SECURITIES
EXCHANGE ACT OF 1934 , as amended, is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission's rules and forms, and that such information is accumulated and
communicated to our management, including our president and chief financial
officer (who are acting as our principal executive officer and as our principal
financial officer and principle accounting officer) to allow for timely
decisions regarding required disclosure
As of August 31, 2012, the end of our fiscal year covered by this report, we
carried out an evaluation, under the supervision and with the participation of
our president (our principal executive officer) and our chief financial officer
(our principal financial and accounting officer), of the effectiveness of the
design and operation of our disclosure controls and procedures. Based on the
foregoing, our president (our principal executive officer) and our chief
financial officer (our principal financial and accounting officer) concluded
that our disclosure controls and procedures were not effective as of the end of
the period covered by this annual report.
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting. Responsibility, estimates and judgments by
management are required to assess the expected benefits and related costs of
control procedures. The objectives of internal control include providing
management with reasonable, but not absolute, assurance that assets are
safeguarded against loss from unauthorized use or disposition, and that
transactions are executed in accordance with management's authorization and
recorded properly to permit the preparation of consolidated financial statements
in conformity with accounting principles generally accepted in the United
States. Our management assessed the effectiveness of our internal control over
financial reporting as of August 31, 2012. In making this assessment, our
management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission ("COSO") in INTERNAL CONTROL-INTEGRATED
FRAMEWORK . Our management has concluded that, as of August 31, 2012, our
internal control over financial reporting is not effective. Our management
reviewed the results of their assessment with our Board of Directors.
This annual report does not include an attestation report of our company's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by our Company's
registered public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission that permit our Company to provide only management's
report in this annual report.
INHERENT LIMITATIONS ON EFFECTIVENESS OF CONTROLS
Internal control over financial reporting has inherent limitations which include
but is not limited to the use of independent professionals for advice and
guidance, interpretation of existing and/or changing rules and principles,
segregation of management duties, scale of organization, and personnel factors.
Internal control over financial reporting is a process which involves human
diligence and compliance and is subject to lapses in judgment and breakdowns
resulting from human failures. Internal control over financial reporting also
can be circumvented by collusion or improper management override. Because of its
inherent limitations, internal control over financial reporting may not prevent
or detect misstatements on a timely basis, however these inherent limitations
are known features of the financial reporting process and it is possible to
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design into the process safeguards to reduce, though not eliminate, this risk.
Therefore, even those systems determined to be effective can provide only
reasonable assurance with respect to financial statement preparation and
presentation. Projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because of changes
in conditions, or that the degree of compliance with the policies or procedures
may deteriorate.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There have been no changes in our internal controls over financial reporting
that occurred during the year ended August 31, 2012 that have materially or are
reasonably likely to materially affect, our internal controls over financial
reporting.
ITEM 9B. OTHER INFORMATION
Effective February 24, 2012, H. Neville Rhoden and J. Trevor Eyton resigned as
directors of our company.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The following individuals serve as the directors and executive officers of our
company as of the date of this annual report. All directors of our company hold
office until the next annual meeting of our shareholders or until their
successors have been elected and qualified. The executive officers of our
company are appointed by our board of directors and hold office until their
death, resignation or removal from office.
Position Held Date First Elected
Name with the Company Age or Appointed
---- ---------------- --- ------------
Hugh Aird President, Chief Executive 56 August 30, 2010
Officer, Director
Wayne Parsons Director 48 April 14, 2010
BUSINESS EXPERIENCE
The following is a brief account of the education and business experience during
at least the past five years of each director, executive officer and key
employee of our company, indicating the person's principal occupation during
that period, and the name and principal business of the organization in which
such occupation and employment were carried out.
HUGH AIRD--PRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR
Mr. Aird was appointed a director of our company on August 30, 2010 and as
president and chief executive officer on September 29, 2010.
Since graduating from Harvard University, Hugh Aird has held numerous top level
executive positions throughout the financial industry. From 1998 to 2002 he was
the Managing Director at Berenson, Mineralla LTD, a firm providing Mergers &
Acquisitions advisory services, and from 1994 to 1998 he was Vice-Chairman of
Merrill Lynch Canada. From 2002 to 2004 Mr. Aird was President of DRIA Capital,
a financial consulting firm. Since 2004, Mr. Aird has been the Vice-Chairman,
North America, and Business Development for Edelman Public Relations.
Mr. Aird served as President of American Lithium Minerals, Inc. from September
29, 2009 until September 29, 2010, when he was appointed Chairman of the Board
of Directors.
WAYNE PARSONS--CHIEF FINANCIAL OFFICER AND DIRECTOR
Mr. Parsons served as our secretary and treasurer from April 14, 2010 until
August 30, 2010. He also served as our president, chief financial officer and
chief executive from April 14, 2010 to September 29, 2010. Mr. Parsons has been
a member of our board of directors since April 14, 2010. Mr. Parsons was
appointed as our Chief Financial Officer, Secretary and Treasurer on July 14,
2011.
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Wayne Parsons graduated University of Western Ontario 1985, Richard Ivey School
of Business, and HBA. He began his career as an investment advisor in Toronto
with Nesbitt Thomson Bongard, moving to RBC Dominion Securities in 1994 as
Senior Investment Advisor. Mr. Parson's then joined National Bank Financial in
2003 as Senior Investment Advisor, working in London until 2008. He has been
involved in many mining deals over the years and helped fund a number of junior
mining projects in North America and abroad.
FAMILY RELATIONSHIPS
There are no family relationships between any of our directors, executive
officers and proposed directors or executive officers.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
To the best of our knowledge, none of our directors or executive officers has,
during the past ten years:
1. been convicted in a criminal proceeding or been subject to a pending
criminal proceeding (excluding traffic violations and other minor
offences);
2. had any bankruptcy petition filed by or against the business or
property of the person, or of any partnership, corporation or business
association of which he was a general partner or executive officer,
either at the time of the bankruptcy filing or within two years prior
to that time;
3. been subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction
or federal or state authority, permanently or temporarily enjoining,
barring, suspending or otherwise limiting, his involvement in any type
of business, securities, futures, commodities, investment, banking,
savings and loan, or insurance activities, or to be associated with
persons engaged in any such activity;
4. been found by a court of competent jurisdiction in a civil action or
by the SEC or the Commodity Futures Trading Commission to have
violated a federal or state securities or commodities law, and the
judgment has not been reversed, suspended, or vacated;
5. been the subject of, or a party to, any federal or state judicial or
administrative order, judgment, decree, or finding, not subsequently
reversed, suspended or vacated (not including any settlement of a
civil proceeding among private litigants), relating to an alleged
violation of any federal or state securities or commodities law or
regulation, any law or regulation respecting financial institutions or
insurance companies including, but not limited to, a temporary or
permanent injunction, order of disgorgement or restitution, civil
money penalty or temporary or permanent cease-and-desist order, or
removal or prohibition order, or any law or regulation prohibiting
mail or wire fraud or fraud in connection with any business entity; or
6. been the subject of, or a party to, any sanction or order, not
subsequently reversed, suspended or vacated, of any self-regulatory
organization (as defined in Section 3(a)(26) of the Exchange Act (15
U.S.C. 78c(a)(26))), any registered entity (as defined in Section
1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any
equivalent exchange, association, entity or organization that has
disciplinary authority over its members or persons associated with a
member.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Our common stock is not registered pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Accordingly, our
officers, directors, and principal stockholders are not subject to the
beneficial ownership reporting requirements of Section 16(a) of the Exchange
Act.
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CODE OF ETHICS
Effective December 13, 2011, our company's board of directors adopted a Code of
Business Conduct and Ethics that applies to, among other persons, members of our
board of directors, our company's officers including our president (being our
principal executive officer and principal financial officer), contractors,
consultants and advisors. As adopted, our Code of Business Conduct and Ethics
sets forth written standards that are designed to deter wrongdoing and to
promote:
1. honest and ethical conduct, including the ethical handling of actual
or apparent conflicts of interest between personal and professional
relationships;
2. full, fair, accurate, timely, and understandable disclosure in reports
and documents that we file with, or submit to, the Securities and
Exchange Commission and in other public communications made by us;
3. compliance with applicable governmental laws, rules and regulations;
4. the prompt internal reporting of violations of the Code of Business
Conduct and Ethics to an appropriate person or persons identified in
the Code of Business Conduct and Ethics; and
5. accountability for adherence to the Code of Business Conduct and
Ethics.
Our Code of Business Conduct and Ethics requires, among other things, that all
of our company's personnel shall be accorded full access to our president and
secretary with respect to any matter which may arise relating to the Code of
Business Conduct and Ethics.
Further, all of our company's personnel are to be accorded full access to our
company's board of directors if any such matter involves an alleged breach of
the Code of Business Conduct and Ethics by our Company officers. In addition,
our Code of Business Conduct and Ethics emphasizes that all employees, and
particularly managers and/or supervisors, have a responsibility for maintaining
financial integrity within our company, consistent with generally accepted
accounting principles and federal and state securities laws. Any employee who
becomes aware of any incidents involving financial or accounting manipulation or
other irregularities, whether by witnessing the incident or being told of it,
must report it to his or her immediate supervisor or to our company's president
or secretary. If the incident involves an alleged breach of the Code of Business
Conduct and Ethics by the president or secretary, the incident must be reported
to any member of our board of directors. Any failure to report such
inappropriate or irregular conduct of others is to be treated as a severe
disciplinary matter. It is against our company policy to retaliate against any
individual who reports in good faith the violation or potential violation of our
company's Code of Business Conduct and Ethics by another. We will provide a copy
of the Code of Business Conduct and Ethics to any person without charge, upon
request. Requests may be sent in writing to our company, 130 King Street West,
Suite 3670, Toronto, Ontario M5X 1A9.
AUDIT COMMITTEE AND AUDIT COMMITTEE FINANCIAL EXPERT
Our audit committee consists of Wayne Parsons.
Our board of directors has determined that it does not have a member of its
audit committee that qualifies as an "audit committee financial expert" as
defined in Item 407(d)(5)(ii) of Regulation S-K, and is "independent" as the
term is used in Item 7(d)(3)(iv) of Schedule 14A under the Securities Exchange
Act of 1934, as amended.
We believe that the members of our audit committee are collectively capable of
analyzing and evaluating our financial statements and understanding internal
controls and procedures for financial reporting. We believe that retaining an
independent director who would qualify as an "audit committee financial expert"
would be overly costly and burdensome and is not warranted in our circumstances
given the early stages of our development and the fact that we have not
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generated any material revenues to date. In addition, we currently do not have
nominating or compensation committee or committees performing similar functions
nor do we have a written nominating or compensation committee charters. Our
board of directors does not believe that it is necessary to have such committees
because it believes the functions of such committees can be adequately performed
by our board of directors.
ITEM 11. EXECUTIVE COMPENSATION
Mr. Dennis Petke is paid $2,500 per month for his services.
There are no arrangements or plans in which we provide pension, retirement or
similar benefits for directors or executive officers. Our directors and
executive officers may receive share options at the discretion of our board of
directors in the future. We do not have any material bonus or profit sharing
plans pursuant to which cash or non-cash compensation is or may be paid to our
directors or executive officers, except that share options may be granted at the
discretion of our board of directors.
STOCK OPTION PLAN
On June 30, 2010 our directors approved the adoption of our 2010 Stock Option
Plan which permits our company to grant up to 6,500,000 options to acquire
shares of common stock, to directors, officers, employees and consultants of our
company.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
None
OPTION EXERCISES
During our fiscal year ended August 31, 2012, there were no options exercised by
our named officers.
COMPENSATION OF DIRECTORS
Other than as set forth below, we do not have any agreements for compensating
our directors for their services in their capacity as directors, although such
directors are expected in the future to receive stock options to purchase shares
of our common stock as awarded by our board of directors.
PENSION, RETIREMENT OR SIMILAR BENEFIT PLANS
There are no arrangements or plans in which we provide pension, retirement or
similar benefits for directors or executive officers. We have no material bonus
or profit sharing plans pursuant to which cash or non-cash compensation is or
may be paid to our directors or executive officers, except that stock options
may be granted at the discretion of the board of directors or a committee
thereof.
INDEBTEDNESS OF DIRECTORS, SENIOR OFFICERS, EXECUTIVE OFFICERS AND OTHER
MANAGEMENT
None of our directors or executive officers or any associate or affiliate of our
company during the last two fiscal years, is or has been indebted to our company
by way of guarantee, support agreement, letter of credit or other similar
agreement or understanding currently outstanding.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The following table sets forth, as of April 11, 2012, certain information with
respect to the beneficial ownership of our common shares by each shareholder
known by us to be the beneficial owner of more than 5% of our common shares, as
well as by each of our current directors and executive officers as a group. Each
person has sole voting and investment power with respect to the shares of common
stock, except as otherwise indicated. Beneficial ownership consists of a direct
interest in the shares of common stock, except as otherwise indicated.
Amount and
Nature of
Name and Address Beneficial Percentage
of Beneficial Owner Title of Class Ownership of Class (1)
------------------- -------------- --------- ------------
Hugh H. Aird Common Nil 0%
Wayne Parsons Common Nil 0%
Directors and Officers as a group Common Nil 0%
Monaco Capital Ltd. Common 863,750 53.6%
PO Box 2079
7 New Rd. FL 2 Ste. 6
Belize City, Belize
(1) Based on 1,612,500 shares of common stock issued and outstanding as of
August 31, 2012. Except as otherwise indicated, we believe that the
beneficial owners of the common shares listed above, based on information
furnished by such owners, have sole investment and voting power with
respect to such shares, subject to community property laws where
applicable. Beneficial ownership is determined in accordance with the rules
of the Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of common stock subject
to options or warrants currently exercisable, or exercisable within 60
days, are deemed outstanding for purposes of computing the percentage
ownership of the person holding such option or warrants, but are not deemed
outstanding for purposes of computing the percentage ownership of any other
person.
CHANGES IN CONTROL
We are unaware of any contract or other arrangement or provisions of our
Articles or Bylaws the operation of which may at a subsequent date result in a
change of control of our company. There are not any provisions in our Articles
or Bylaws, the operation of which would delay, defer, or prevent a change in
control of our company.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
Except as disclosed herein, no director, executive officer, shareholder holding
at least 5% of shares of our common stock, or any family member thereof, had any
material interest, direct or indirect, in any transaction, or proposed
transaction since the year ended August 31, 2012, in which the amount involved
in the transaction exceeded or exceeds the lesser of $120,000 or one percent of
the average of our total assets at the year end for the last three completed
fiscal years.
DIRECTOR INDEPENDENCE
We have determined that we do not have a director that is an "independent
director" as defined in NASDAQ Marketplace Rule 4200(a)(15).
Our audit committee consists of Wayne Parsons.
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Our board of directors has determined that it does not have a member of its
audit committee that qualifies as an "audit committee financial expert" as
defined in Item 407(d)(5)(ii) of Regulation S-K, and is "independent" as the
term is used in Item 7(d)(3)(iv) of Schedule 14A under the Securities Exchange
Act of 1934, as amended.
We believe that the members of our audit committee are collectively capable of
analyzing and evaluating our financial statements and understanding internal
controls and procedures for financial reporting. We believe that retaining an
independent director who would qualify as an "audit committee financial expert"
would be overly costly and burdensome and is not warranted in our circumstances
given the early stages of our development and the fact that we have not
generated any material revenues to date. In addition, we currently do not have
nominating or compensation committee or committees performing similar functions
nor do we have a written nominating or compensation committee charters. Our
board of directors does not believe that it is necessary to have such committees
because it believes the functions of such committees can be adequately performed
by our board of directors.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The aggregate fees billed for the most recently completed fiscal year ended
August 31, 2012 and for fiscal year ended August 31, 2011 for professional
services rendered by the principal accountant for the audit of our annual
financial statements and review of the financial statements included in our
quarterly reports on Form 10-Q and services that are normally provided by the
accountant in connection with statutory and regulatory filings or engagements
for these fiscal periods were as follows:
Year Ended
August 31, 2012 August 31, 2011
--------------- ---------------
$ $
Audit Fees 16,000 16,000
Audit Related Fees Nil Nil
Tax Fees Nil Nil
All Other Fees Nil Nil
Total 16,000 16,000
Our board of directors pre-approves all services provided by our independent
auditors. All of the above services and fees were reviewed and approved by the
board of directors either before or after the respective services were rendered.
Our board of directors has considered the nature and amount of fees billed by
our independent auditors and believes that the provision of services for
activities unrelated to the audit is compatible with maintaining our independent
auditors' independence.
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a) Financial Statements
(1) Financial statements for our company are listed in the index under
Item 8 of this document
(2) All financial statement schedules are omitted because they are not
applicable, not material or the required information is shown in the
financial statements or noted thereto.
(b) Exhibits
Exhibit
Number Exhibit Description
------ -------------------
(3) ARTICLES OF INCORPORATION AND BY-LAWS
3.1 Articles of Incorporation (incorporated by reference from our
Registration Statement on Form SB-2 filed on October 23, 2006).
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Exhibit
Number Exhibit Description
------ -------------------
3.2 By-laws (incorporated by reference from our Registration Statement on
Form SB-2 filed on October 23, 2006).
3.3 Articles of Merger (incorporated by reference from our Current Report
on Form 8-K filed on April 12, 2010).
3.4 Certificate of Change (incorporated by reference from our Current
Report on Form 8-K filed on April 12, 2010).
3.5 Certificate of Change filed with the Nevada Secretary of State on
November 28, 2010 (incorporated by reference from our Current Report on
Form 8-K filed on January 24, 2012).
3.6 Certificate of Correction filed with the Nevada Secretary of State on
November 29, 2012 (incorporated by reference from our Current Report on
Form 8-K filed on January 24, 2012).
(4) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING
INDENTURES
4.1* Code of Ethics
(10) MATERIAL CONTRACTS
10.1 Mineral Lease Agreement between Royce L. Hackworth and Belva L. Tomany
and Zebra Resources (now know as American Paramount Gold Corp.) dated
April 16, 2011. (incorporated by reference from our Current Report on
Form 8-K filed on April 19, 2011).
10.2 Consulting Agreement between our company and Wayne Parsons dated April
14, 2011. (incorporated by reference from our Current Report on Form
8-K filed on April 27, 2011).
10.3 Option Cancellation Agreement between our company and Wayne Parsons
dated November 18, 2011.
10.4* Convertible Loan Agreement between our company and Monaco Capital Inc.
dated December 17, 2010.
(31) SECTION 302 CERTIFICATIONS
31.1* Section 302 Certification - Principal Executive Officer and Principal
Financial Officer
(32) SECTION 906 CERTIFICATION
32.1* Section 906 Certification - Principal Executive Officer and Principal
Financial Officer
(101)** INTERACTIVE DATA FILE (FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2012)
101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema Document.
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB XBRL Taxonomy Extension Label Linkbase Document.
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document.
* Filed herewith.
** Furnished herewith. Pursuant to Rule 406T of Regulation S-T, the
Interactive Data Files on Exhibit 101 hereto are deemed not filed or part
of any registration statement or prospectus for purposes of Sections 11 or
12 of the Securities Act of 1933, are deemed not filed for purposes of
Section 18 of the Securities and Exchange Act of 1934, and otherwise are
not subject to liability under those sections.
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SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
AMERICAN PARAMOUNT GOLD CORP.
(Registrant)
Dated: October 20, 2015 /s/ Dennis Petke
-----------------------------------
Dennis Petke
President, Chief Executive Officer,
Chief Financial Officer,
Secretary, Treasurer and Director
(Principal Executive Officer,
Principal Financial Officer and
Principal Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Dated: October 20, 2015 /s/ Dennis Petke
-----------------------------------
Dennis Petke
President, Chief Executive Officer,
Chief Financial Officer,
Secretary, Treasurer and Director
(Principal Executive Officer,
Principal Financial Officer and
Principal Accounting Officer)
38
