10-K 1 form10k.htm FORM 10-K Maverick Minerals Corporation - Form 10-K - Filed by newsfilecorp.com

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)

[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2013

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

For the transition period from ______________ to________________

Commission file number 000-25515

MAVERICK MINERALS CORPORATION
(Exact name of registrant as specified in its charter)

Nevada 88-0410480
(State or other jurisdiction of incorporation or (I.R.S. Employer Identification
organization) No.)
   
Suite 700 – 220 Bay Street, Toronto, Ontario M5J 2W4
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code 647-728-4134

Securities registered under Section 12(b) of the Act:

None N/A
Title of each class Name of each exchange on which registered

Securities registered under Section 12(g) of the Act:

Common Stock, $0.001 par value
(Title of class)

Indicate by checkmark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes [   ]      No [X]

Indicate by checkmark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.

Yes [   ]      No [X]

Indicate by checkmark whether the registrant has (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X]      No [   ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 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 [X]      No [   ]

Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 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 checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [   ] (Do not check if a smaller reporting company) 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 Act).

Yes [   ]     No [X]

State the aggregate market value of the 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 asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter: $1,443,750 based on a price of $0.09 per share, being the average of the bid and ask price of the registrant’s common equity on June 30, 2013.

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY |PROCEEDINGS DURING THE PAST FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yes [   ]      No [   ] N/A

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
As of April 15, 2014, there were 16,141,674 shares of common stock, par value $0.001, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None

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PART I

Forward Looking Statements.

This annual report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. 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” and the risks set out below, any of which 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. These risks include, by way of example and not in limitation:

  • risks and uncertainties relating to the interpretation of drill results, the geology, grade and continuity of mineral deposits;
  • results of initial feasibility, pre-feasibility and feasibility studies, and the possibility that future exploration, development or mining results will not be consistent with our expectations;
  • mining and development risks, including risks related to accidents, equipment breakdowns, labour disputes or other unanticipated difficulties with or interruptions in production;
  • the potential for delays in exploration or development activities or the completion of feasibility studies;
  • risks related to the inherent uncertainty of production and cost estimates and the potential for unexpected costs and expenses;
  • risks related to commodity price fluctuations;
  • the uncertainty of profitability based upon our history of losses;
  • risks related to failure to obtain adequate financing on a timely basis and on acceptable terms for our planned exploration and development projects;
  • risks related to environmental regulation and liability;
  • risks that the amounts reserved or allocated for environmental compliance, reclamation, post-closure control measures, monitoring and on-going maintenance may not be sufficient to cover such costs;
  • risks related to tax assessments;
  • political and regulatory risks associated with mining development and exploration; and
  • other risks and uncertainties related to our prospects, properties and business strategy.

This list is not an exhaustive list of the factors that may affect any of our forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on our forward-looking statements.

Forward looking statements are made based on management’s beliefs, estimates and opinions on the date the statements are made and we undertake no obligation to update forward-looking statements if these beliefs, estimates and opinions or other circumstances should change. 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, laws 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.

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Our financial statements are stated in United States dollars (US$) and are prepared in accordance with accounting principles generally accepted in the United States of America.

In this annual report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common stock” refer to the shares of common stock in our capital stock.

As used in this annual report, the terms “we”, “us”, “our”, the “Company” and “Maverick” mean Maverick Minerals Corporation and our subsidiaries, Eskota Energy Corporation and Maverick Minerals Canada Corporation, unless otherwise indicated.

ITEM 1. BUSINESS

Corporate History

We were incorporated in the State of Nevada on August 27, 1998 under the name “Pacific Cart Services Ltd.” Following our incorporation, we pursued opportunities in the business of franchising fast food distributor systems. On March 22, 2002, we changed our name to Maverick Minerals Corporation to reflect our change in focus to holding and developing mineral and resource projects. We are an exploration stage company that has not yet generated or realized any revenues from our business operations. From November 2001 until February 2003, we held a 100% interest in the Silver, Lead, Zinc, Keno Hill mining camp in Yukon, Canada through our then subsidiary, Gretna Capital Corporation. Despite a tenure marked by historic maintenance cost reductions and extensive research into a new hydrometallurgical approach to production and environmental remediation at the mine site, the project endured through a period of low commodity prices. On January 1, 2003 we defaulted on a payment of Cdn$1,050,000 required under an agreement of purchase and sale for the acquisition of an interest in the project. Due to the default, the Company was divested of its claims by its creditors by way of court action which culminated on February 14, 2003.

On April 21, 2003 we closed a transaction with UCO Energy Corporation (“UCO”) to purchase the outstanding equity of UCO. To facilitate the transaction, we issued 3,758,040 common shares in exchange for all the issued and outstanding common shares of UCO. As a result of the transaction, the former shareholders of UCO held approximately 90% of the issued and outstanding common shares of Maverick. A net distribution of $944,889 was recorded in connection with the common stock of Maverick for the acquisition of UCO in respect of the Company’s net liabilities at the acquisition date. UCO was in the business of pursuing opportunities in the coal mining industry. From July 7, 2003 until March 5, 2004, we were engaged in the waste coal recovery business by way of a lease agreement at the Old Ben Mine near Sesser, Illinois. We extracted coal fines from holding ponds with a leased dredge and subsequently dried them in a fines plant and sold the dried product to an electrical utility. The operation was conducted in our wholly owned subsidiary UCO.

Effective March 5, 2004, we were in default of our lease agreement that granted access to the waste coal. Default was a function of equipment malfunction and equipment lease default. Extensive efforts to refinance our coal recovery activities were undertaken post default in an effort to return to production. These efforts proved unsuccessful. In April, 2004 Maverick instituted new management at the annual meeting of its wholly-owned subsidiary, UCO Energy Corp. Subsequent to these events, our subsidiary reached a settlement agreement with the lessor of the coal lands and the lessor of our dredging equipment. The settlement provided for a mutual release between our subsidiary and each lessor independently.

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Maverick incorporated a wholly-owned subsidiary, Eskota Energy Corporation, Inc. (“Eskota”) a Texas company, in August, 2005. Eskota entered into an Assignment Agreement with Veneto Exploration LLC of Plano, Texas (“Veneto”) on August 18, 2005 pursuant to which we acquired certain petroleum and natural gas rights and leases, known as the S. Neill Unitized lease (the “Eskota Leases”) comprising a 75%+/- NRI and 100% working interest in approximately 6,000 acres in central Texas approximately 9 miles east of the town of Sweetwater, in exchange for a $1,400,000 note payable. An additional $375,000 cash was paid by the Company for the acquisition of the Eskota Leases.

Eskota was to receive all revenue rightfully owed under the above noted leases. Eskota agreed to contribute not less than $400,000 towards capital improvements on the said lease and equipment during the first twelve months after closing. The parties agreed to negotiate a reasonable covenant to ensure these expenditures were made. A note payable was signed on August 31, 2005 between Eskota and Veneto whereby Eskota promised to pay Veneto $700,000 before August 31, 2006, and $700,000 by May 31, 2007. In light of the above deadlines and the fact that the purchase price was predicated partially on down hole success from the initial re-works, management determined that it was not prudent to proceed with further investment on the property and that settlement discussions should begin with Veneto for a mutual release and return of the property and retirement of the promissory note of $1,400,000 issued by the Company. The effect of the initial failure to increase production from the first two attempts to restore the existing wells was reflected in an asset impairment charge taken by the Company of $419,959 on its fiscal year end financial statement dated December 31, 2005.

In June 2005, the Company cancelled 5,437,932 common shares, under an agreement with certain stockholders, which included the former stockholders of UCO, and two other stockholders including the CEO of the Company. The former stockholders of UCO surrendered the majority of the shares which was approximately 95% of the total common shares that they held at the time. As a result of the share cancellation, one single common stockholder emerged as the majority stockholder with approximately 76% of the total issued and outstanding common shares.

In December 2005, Veneto gave notice to Eskota and Eskota’s customers, to direct any cash payments relating to the Eskota Leases to Veneto directly as a result of non-payment of various payables by Eskota in relation to the Eskota Leases. As a result of this action, all revenues generated from the Eskota Leases were recognized by Veneto, and any expenses and obligations arising from the Eskota Leases after the notice was given, were assumed by Veneto. As a result, Eskota did not recognize revenue or operating expenses from the Eskota Leases during the year ended December 31, 2006.

On December 14, 2009, we entered into a farm-out agreement (the “Farmout Agreement”) with Southeastern Pipe Line Company (“SEPL”) pursuant to which we acquired the right to earn an interest in certain oil and gas mineral leases located in Fort Bend and Wharton Counties, Texas (collectively, the “Leases”) and to the lands covered thereby.

In October, 2010 we engaged a Texas based contractor to commence drill site construction in preparation for the drilling of the Company’s Initial Test Well Fort Bend County, Texas in December, 2010. The construction of location services included widening of an existing 2,000 foot access road and foundational re-enforcement with crushed limestone. In addition, contractors constructed the requisite drilling pad of approximately 1.5 acres in anticipation of rig mobilization. On January 22, 2011 Maverick successfully completed drilling its Initial Test Well to 13,500 on the Company’s 4,513 acre Farm-Out property in Fort Bend County, Texas.

The Initial Test Well was spud on December 9, 2010 and reached its targeted depth of 13,500 feet on day 44 of the drilling program. The Company’s independent log analyst and project engineer concurred at that time that the targeted Wilcox zones were not commercially productive, despite the presence of significant down hole pressure and strong natural gas shows during drilling. The target sands were poorly developed and not suitable for a completion attempt. Accordingly, the decision was made to not set production casing and to look up hole for completion opportunities. The first completion attempt was a potential oil reservoir near 8,000’. The Yegua sand was indicated as potentially productive from open hole log analysis but proved to be non-productive after testing. The second completion attempt was made on a shallow Miocene zone. There had not been an open hole log across this interval but a significant gas show was seen on the mud log while drilling this interval. The zone was perforated and swab tested during the week of March 14-19, 2011 but yielded no significant gas. Maverick’s engineers have completed plugging the Lankford Trust No. 1 pursuant to regulations of the Texas Railway Commission. Concurrent with our entry into the Farmout Agreement, we acquired from a consulting geologist, detailed proprietary geology on the property subject to the Farmout Agreement. The dataset includes seismic and geological interpretations of the underlying geology from historic data. In addition, we obtained access to log data from a well drilled to 12,200 feet in 2003 on the Farm-Out Acreage.

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The farm-out agreement allowed us 120 days to complete the Lankford Trust #1 well and 180 days thereafter to commence drilling a new well. Given the results of the Initial Test Well, we made the decision not to commence drilling of a new well. Consequently, the Farm-Out Agreement lapsed.

Our Current Business

We are currently an exploration stage company engaged in the acquisition, exploration, and development of prospective oil and gas properties and mineral properties.

On June 8, 2012, we entered into an Option and Joint Venture Exploration Agreement (the “Agreement”) with Energold Minerals Inc. (“Energold”). Energold holds a 100% undivided right, title and interest in a group of mining claims situated near Thunder Bay, Ontario, Canada known as the Jarvis Island Property (the “Jarvis Property”). The Jarvis Property is situated about 35 miles south of Thunder Bay and about 5 km from the shore of Lake Superior near to the U.S. border (Minnesota). The property consists of 13.355 hectares and is believed to have mineral potential for the production of barite.

Pursuant to the terms of the Agreement, as amended, Energold granted our company the right, in the form of two options, to acquire an aggregate 51% working interest in the Jarvis Property subject to certain conditions, including the issuance of up to 400,000 shares of our common stock and incurring $400,000 in exploration expenditures on or before June 30, 2018.

We expect to begin sampling and primary geological work in the summer of 2014.

A significant amount of time is given to due diligence on mineral properties in Mexico and Canada which have come to the market in a difficult financial environment for junior exploration companies. We will continue to review projects that we believe offer significant value in a distressed environment that we believe we can finance. These exploration properties are targets for base metals, gold and silver. The dominant targets on these mineral properties are gold silver lead and zinc and all have extensive historical workings. Management will review these opportunities diligently however no guarantee can be given that any transaction as outlined herein will occur in the time frame covered by this plan of operation.

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The company has a significant history in oil and gas production and exploration in the state of Texas. We continue to review opportunities from previous contractors and partners brought to us on an earn in basis because of our demonstrated ability to complete projects in that jurisdiction.

During fiscal 2013, we have been providing site services to a private mining company, registered in Utah. We participated in certain land tenure and mine development activities relating to a gold resource held by the private mining company in central Utah. We have and will continue to invoice the private company from time to time as services are provided. These activities are seen by the Company as a form of ongoing due diligence on the Utah property and may lead to an acquisition, partnership or joint-venture going forward. Preliminary engineering work is ongoing to determine economic feasibility. No guarantee can be provided that any relationship will accrue beyond itinerant services and contract placements on preliminary mine development activities based on relationships we have developed over several years in the area.

The mining property in Utah, for which our company is providing itinerant services, is controlled by a significant shareholder of our company; however, our company has no equity interest in the property.

Jarvis Island Option and Joint Venture Exploration Agreement

We entered into an Option and Joint Venture Exploration Agreement dated June 8, 2012 with Energold (the “Original Agreement”) and on February 21, 2014, we entered into an Amended Option and Joint Venture Exploration Agreement with Energold whereby certain terms of the Original Agreement were amended and extended as follows:

  (i)

Exploration expenditures of $200,000 required to be incurred on or before September 15, 2014 in order to earn a 30% undivided interest on the property under the terms of the first option were extended until September 15, 2016;

  (ii)

The issuance of 200,000 shares to Energold that were required to be issued on or before September 15, 2015 and additional exploration expenditures of $200,000 that were required to be incurred on or before June 30, 2017 in order to earn an additional 21% undivided interest on the property under the terms of the second option were extended until and to September 15, 2017 and June 30, 2018, respectively .

Energold holds a 100% undivided right, title and interest in a group of mining claims situated in Thunder Bay, Ontario, Canada known as the Jarvis Island Property (the “Jarvis Property”). The property is situated about 35 miles south of Thunder Bay, Ontario, about 5 km from the shore of Lake Superior near to the U.S. border (Minnesota). The property consists of 13.355 hectares and is believed to have mineral potential for the production of barite.

Pursuant to the terms of the agreement, as amended on February 21, 2014, Energold has granted us the right, in the form of two options, to acquire an aggregate 51% working interest in the Jarvis Property subject to certain conditions, including the following:

  1.

To exercise the first option and earn a 30% undivided interest in the Jarvis Property, we must: (i) issue to Energold 100,000 shares on or before June 29, 2012 (issued); (ii) issue to Energold an additional 100,000 shares on or before September 15, 2013 (issued); and (iii) incur a total of $200,000 in exploration expenditures on the Jarvis Property on or before September 15, 2016;

     
  2.

To exercise the second option and earn an additional 21% undivided interest in the Jarvis Property, we must: (i) exercise the first option, (ii) issue to Energold a further 200,000 shares on or before September 15, 2017, and (iii) incur and additional $200,000 in exploration expenditures on the Jarvis Property on or before June 30, 2018;

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  3.

During the period that both options are outstanding and after the formation of the joint venture (hereinafter defined), we have agreed to act as operator of the Jarvis Property in consideration of certain management fees in an amount up to 10% on general exploration expenditures and other fees in an amount up to 5% on drilling or other major contract costs as further set out in the Agreement. Decisions regarding exploration and development of the Jarvis Property are determined by a committee;

     
  4.

If we exercise the first option the parties agreed to participate in a joint venture (the “Joint Venture”) for the purpose of further exploration and development of the Jarvis Property where the right to participate and the obligation to fund the Joint Venture will be apportioned 70% to Energold and 30% to Maverick and if we exercise the second option the Joint Venture will be apportioned 51% to Maverick and 49% to Energold; and

     
  5.

If we have acquired a 51% undivided interest in the Jarvis Property as per the Agreement and a feasibility study is completed which demonstrates that the Jarvis Property may be profitably brought into production, then we have the right to elect to commit the necessary financing to place the Jarvis Property into production and thereby earn a 70% interest in the newly initiated mining project.

Pursuant to the terms of the Agreement both options will terminate and we will have no further interest in the Jarvis Property if we do not exercise the first option by September 15, 2016. If we exercise the first option but not the second option as contemplated in the Agreement then our interest in the Jarvis Property will be limited to the 30% undivided interest and any other interests provided for under the Agreement. Each party agreed to indemnify the other against any environmental liabilities in connection with any operating activities on the Jarvis Property. There is no assurance that we will exercise the option as planned or at all.

Competition

We are an exploration stage company engaged in the acquisition of prospective mineral and oil and gas properties. We compete with other natural resource exploration companies for financing and for the acquisition of new mineral properties. Many of the natural resource exploration companies with whom we compete have greater financial and technical resources than those available to us. Accordingly, these competitors may be able to spend greater amounts on acquisitions of mineral properties of merit, on exploration of their mineral properties and on development of their mineral properties. In addition, they may be able to afford more geological expertise in the targeting and exploration of mineral properties. This competition could result in competitors having mineral properties of greater quality and interest to prospective investors who may finance additional exploration and development. This competition could adversely impact on our ability to achieve the financing necessary for us to conduct further exploration of our mineral properties.

We also compete with other junior natural resource exploration companies for financing from a limited number of investors that are prepared to make investments in junior natural resource exploration companies. The presence of competing junior natural resource exploration companies may impact on our ability to raise additional capital in order to fund our exploration programs if investors are of the view that investments in competitors are more attractive based on the merit of the mineral properties under investigation and the price of the investment offered to investors.

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We also compete with other junior and senior natural resource exploration companies for available resources, including, but not limited to, professional geologists, camp staff, helicopters or float planes, mineral exploration supplies and drill rigs.

Compliance with Government Regulation

Our business is subject to various federal, state and local laws and governmental regulations that may be changed from time to time in response to economic or political conditions. We are required to comply with the environmental guidelines and regulations established at the local levels for our field activities and access requirements on our permit lands and leases. Any development activities, when determined, will require, but not be limited to, detailed and comprehensive environmental impact assessments studies and approvals of local regulators.

Environmental legislation provides for restrictions and prohibitions on spills, releases or emissions of various substances produced in association with the mining and oil and gas industries which could result in environmental liability. A breach or violation of such legislation may result in the imposition of fines and penalties. In addition, certain types of operations require the submission and approval of environmental impact assessments. Environmental assessments are increasingly imposing higher standards, greater enforcement, fines and penalties for non-compliance. Environmental assessments of proposed projects carry a heightened degree of responsibility for companies, directors and officers. The cost of compliance in respect of environmental regulation has the potential to reduce the profitability of any future revenues that our company may generate.

Employees

We have no employees. We rely on Robert Kinloch, our president, chief executive officer, chief financial officer and our sole director and Donald Kinloch, our secretary and treasurer to fulfill the function of management. We anticipate that we will be conducting most of our business through agreements with consultants and third parties. We do not have any employment agreements with any of our officers or with our sole director.

ITEM 1A. RISK FACTORS

Our common shares are considered speculative. Prospective investors should consider carefully the risk factors set out below.

The Likelihood of Continued Losses from Operations and Ability To Continue As A Going Concern.

The Company has had no revenue from operations and has incurred cumulative losses from inception through December 31, 2013 of $14,891,890. Losses are expected to continue until such time as the Company can economically produce and sell materials from the Jarvis Island Property and/or otherwise commence planned principal operations. Continued losses will require that the Company raise additional funds by equity or debt financing, failing which the Company will not be able to continue operations. Management cannot provide assurances that this will occur.

These circumstances raise substantial doubt about our ability to continue as a going concern, as described in the explanatory paragraph to our independent auditors’ report on our consolidated financial statements for the year ended December 31, 2013. Although our consolidated financial statements raise substantial doubt about our ability to continue as a going concern, they do not reflect any adjustments that might result if we are unable to continue our business.

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We have had negative cash flows from operations and if we are not able to obtain further financing, our business operations may fail.

We had negative working capital of $483,684 as of December 31, 2013. We do not expect to generate any revenues for the foreseeable future. Accordingly, we will require additional funds, either from equity or debt financing, to maintain our daily operations and to implement our plan of operation. Obtaining additional financing is subject to a number of factors, including market commodities prices, investor acceptance of our interest pursuant to the Jarvis Island Property Agreement, and investor sentiment. Financing, therefore, may not be available on acceptable terms, if at all. The most likely source of future funds presently available to us is through the sale of equity capital. Any sale of share capital, however, will result in dilution to existing shareholders. If we are unable to raise additional funds when required, we may be forced to delay our plan of operation and our entire business may fail.

We currently do not generate revenues, and as a result, we face a high risk of business failure.

The only significant interest we have in a property is an option to acquire an interest in the Jarvis Island Property. From the date of our incorporation, we have primarily focused on the location and acquisition of mineral and oil and gas properties. We have not generated any significant revenues to date. In order to generate revenues, we will incur substantial expenses in the evaluation and development of any oil and gas leases and potential mineral interests. We therefore expect to incur significant losses into the foreseeable future. We recognize that if we are unable to generate significant revenues from our activities, our entire business may fail. There is no history upon which to base any assumption as to the likelihood that we will be successful in our plan of operation, and we can provide no assurance to investors that we will generate any operating revenues or achieve profitable operations.

If we are required for any reason to repay all of our outstanding loans or any other indebtedness, we would be required to deplete our working capital, if available, or raise additional funds.

If we are required to repay the loans payable or any other indebtedness for any reason, we would be required raise additional funds. If we are unable to repay the loans or any other indebtedness when required, the lenders could commence legal action against our company and foreclose on all of our assets to recover the amounts due. Any such sale or legal action would require our company to curtail or possibly cease our operations.

Our ability to obtain financing is likely dependent on the price of certain commodities markets remaining at current levels, which, given historical fluctuations, can vary significantly

Financing to implement our plan of operation will depend upon current price levels for certain commodities, including barite and petroleum, being sustained for the foreseeable future. There is no guarantee that prices will remain at the current levels. Commodities prices historically have fluctuated widely and are affected by numerous factors outside of our control including industrial demand, central bank lending, forward sales of producers and speculators, levels of production, short-term changes in supply and demand because of speculative hedging activities, confidence in the global monetary system, expectations of the future rate of inflation, the strength of the U.S. dollar (the currency in which the price of commodities are generally quoted), interest rates and global or regional political or economic events.

Risks and Contingencies Associated with the Mining Industry Generally

In addition to the risks noted above, the Company is subject to all of the risks inherent in the mining industry, including environmental risks, fluctuating metals prices, industrial accidents, labor disputes, unusual or unexpected geologic formations, cave-ins, flooding, earth quakes and periodic interruptions due to inclement weather. These risks could result in damage to, or destruction of, production facilities, personal injury, environmental damage, delays, monetary losses and legal liability. Although the Company can be expected to maintain insurance within ranges of coverage consistent with industry practice, no assurance can be given that such insurance will be available at economically feasible premiums. Insurance against environmental risks (including pollution or other hazards resulting from the disposal of waste products generated from production activities) is not generally available to the Company or other companies in the mining industry. If subjected to environmental liabilities, the costs incurred would reduce funds available for other purposes.

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Any change to government regulation/administrative practices may have a negative impact on our ability to operate and our profitability.

The laws, regulations, policies or current administrative practices of any government body, organization or regulatory agency in the United States, Canada, or any other jurisdiction, may be changed, applied or interpreted in a manner which will fundamentally alter the ability of our company to carry on our business. The actions, policies or regulations, or changes thereto, of any government body or regulatory agency, or other special interest groups, may have a detrimental effect on us. Any or all of these situations may have a negative impact on our ability to operate and/or our profitability.

If we are unable to hire and retain key personnel, we may not be able to implement our plan of operation and our business may fail.

Our success will be largely dependent on our ability to hire and retain highly qualified personnel. This is particularly true in the highly technical businesses of mineral and oil and gas exploration. These individuals may be in high demand and we may not be able to attract the staff we need. In addition, we may not be able to afford the high salaries and fees demanded by qualified personnel, or we may fail to retain such employees after they are hired. At present, we have not hired any key personnel. Our failure to hire key personnel when needed will have a significant negative effect on our business.

Because our executive officers do not have formal training specific to mineral and oil and gas exploration, there is a higher risk our business will fail.

While Robert Kinloch, our director and one of our executive officer, has experience managing a mineral exploration company, he does not have formal training as a geologist. Donald Kinloch does not have formal training specific to mineral and gas exploration. Accordingly, our management may not fully appreciate many of the specific requirements related to working within the mining and oil and gas industry. Our management decisions may not take into account standard engineering or managerial approaches commonly used by such companies. Consequently, our operations, earnings, and ultimate financial success could be negatively affected due to our management’s lack of experience in the industry.

Our executive officers have other business interests, and as a result, they may not be willing or able to devote a sufficient amount of time to our business operations, thereby limiting the success of our company.

Robert Kinloch presently spends approximately 50% of his business time and Donald Kinloch presently spends approximately 20% of his business time on business management services for our company. At present, both Robert and Donald Kinloch spend a reasonable amount of time in pursuit of our company’s interests. Due to the time commitments from Robert and Donald Kinloch’s other business interests, however, they may not be able to provide sufficient time to the management of our business in the future and our business may be periodically interrupted or delayed as a result of their other business interests.

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Risks Relating to Our Common Stock

If we issue additional shares in the future, it will result in the dilution of our existing shareholders.

Our articles of incorporation authorize the issuance of up to 750,000,000 shares of common stock with a par value of $0.001 per share. Our board of directors may choose to issue some or all of such shares to acquire one or more businesses or to provide additional financing in the future. The issuance of any such shares will reduce the book value and market price of the outstanding shares of our common stock. If we issue any such additional shares, such issuance will reduce the proportionate ownership and voting power of all current shareholders. Further, such issuance may result in a change of control of our corporation.

Our common stock is illiquid and shareholders may be unable to sell their shares.

There is currently a limited market for our common stock and we can provide no assurance to investors that a market will develop. If a market for our common stock does not develop, our shareholders may not be able to re-sell the shares of our common stock that they have purchased and they may lose all of their investment. Public announcements regarding our company, changes in government regulations, conditions in our market segment or changes in earnings estimates by analysts may cause the price of our common shares to fluctuate substantially. In addition, stock prices for junior oil and gas companies fluctuate widely for reasons that may be unrelated to their operating results. These fluctuations may adversely affect the trading price of our common shares.

Penny stock rules will limit the ability of our stockholders to sell their stock.

The Securities and Exchange Commission has adopted regulations which generally define “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 Securities and Exchange Commission 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.

-12-

The Financial Industry Regulatory Authority, or FINRA, has adopted sales practice requirements which may also limit a shareholder’s ability to buy and sell our stock.

In addition to the “penny stock” rules described above, FINRA 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, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA 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 and have an adverse effect on the market for its shares.

Because of the early stage of development and the nature of our business, our securities are considered highly speculative.

Our securities must be considered highly speculative, generally because of the nature of our business and the early stage of our development. We are engaged in the business of identifying, acquiring, exploring and developing commercial reserves of oil and gas. Our properties are in the exploration stage only and are without known reserves of oil and gas. Accordingly, we have not generated any revenues nor have we realized a profit from our operations to date and there is little likelihood that we will generate any revenues or realize any profits in the short term. Any profitability in the future from our business will be dependent upon locating and developing economic reserves of oil and gas, which itself is subject to numerous risk factors as set forth herein. Since we have not generated any revenues, we will have to raise additional monies through the sale of our equity securities or debt in order to continue our business operations.

We do not intend to pay dividends on any investment in the shares of stock of our company.

We have never paid any cash dividends and currently do not intend to pay any dividends for the foreseeable future. To the extent that we require additional funding currently not provided for in our financing plan, our funding sources may prohibit the payment of a dividend. Because we do not intend to declare dividends, any gain on an investment in our company will need to come through an increase in the stock’s price. This may never happen and investors may lose all of their investment in our company.

Risks Related to Our Company

Our by-laws contain provisions indemnifying our officers and directors.

Our by-laws provide the indemnification of our directors and officers to the fullest extent legally permissible under the Nevada corporate law against all expenses, liability and loss reasonably incurred or suffered by him in connection with any action, suit or proceeding. Furthermore, our by-laws provide that our board of directors may cause our company to purchase and maintain insurance for our directors and officers, and we have implemented director and officer insurance coverage.

Our by-laws do not contain anti-takeover provisions and thus our management and directors may change if there is a take-over of our company.

We do not currently have a shareholder rights plan or any anti-takeover provisions in our by-laws. Without any anti-takeover provisions, there is no deterrent for a take-over of our company. If there is a take-over of our company, our management and directors may change.

-13-

Because our director and officers are residents of countries other than the United States, investors may find it difficult to enforce, within the United States, any judgments obtained against our director and officers.

Our director and officers are nationals and/or residents of countries other than the United States, and all or a substantial portion of such persons’ assets are located outside the United States. As a result, it may be difficult for investors to enforce within the United States any judgments obtained against our officers or director, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof.

ITEM 2.           PROPERTIES.

Executive Offices

Our principal business offices are located at Suite 700 – 220 Bay Street, Toronto, Ontario M5J 2W4. Our offices consist of approximately 300 square feet, which we believe provides adequate space for our foreseeable future needs.

Jarvis Island Property Location and History

History

In June 1927 the property was sold to Sudbury Basin Mines, a company controlled by Thayer Lindsley (three quarters acquired from Donald Hogarth and one quarter interest from A.J. McComber.) On June 1, 1943 the property was transferred from Sudbury Basin Mines Limited to Ventures Claims Limited. On the 16th of April, 1956 the property was further transferred from Ventures Claims Limited to Pan American Ventures Limited. In 1960 the property was transferred by Ventures Claims Limited to Westfield Minerals Limited (registered 28th of September, 1960).

Location

The property is described as Jarvis Island, Municipality of Neebing, (Property Identifier 58-01-040-007-31100-0000) in the District of Thunder Bay, in the Province of Ontario, Land Titles Division, Thunder Bay. The property is described as being in the District of Thunder Bay, in the Province of Ontario and being more particularly described as Jarvis Island, lying in front of, and being part of, the location known as Jarvis Location, patented on September 9, 1856. Therefore Jarvis Island is part of Jarvis Location. The Jarvis Property is situated about 35 miles south of Thunder Bay about 5 km from the shore of Lake Superior near to the U.S. border (Minnesota). The Jarvis Property is described as having 13.355 hectares or 33 acres and is described as being of rocky terrain.

-14-

ITEM 3.           LEGAL PROCEEDINGS.

We know of no material, active, or pending legal proceeding against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation where such claim or action involves damages for more than 10% of our current assets. There are no proceedings in which any of our directors, officers, or affiliates, or any registered or beneficial shareholders, are an adverse party or have a material interest adverse to our company’s interest.

ITEM 4.           MINE SAFETY DISCLOSURES.

Not Applicable.

-15-

PART II

ITEM 5.           MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market for Securities

Our common shares were quoted for trading on the OTC Bulletin Board on June 21, 1999 under the symbol “PFCS”. On February 15, 2002 our symbol changed to “MAVM” and on May 22, 2003 our symbol changed to “MVRM”. On August 29, 2006, our stock was delisted from the OTC Bulletin Board and on August 31, 2006, it commenced trading on the Pink Sheets LLC under the symbol “MVRM”. On July 7, 2009 our shares of common stock were quoted for trading on the OTC Bulletin Board under the symbol “MVRM” and on December 31, 2009 our symbol changed to “MVRMD”. On February 23, 2011 our securities were quoted exclusively on the OTC Markets Group Inc. under the symbol “MVRM”.

The following quotations obtained from the OTC Markets Group Inc. reflect the high and low bids for our common stock based on inter-dealer prices, without retail mark-up or mark-down or commission and may not represent actual transactions.

The high and low closing bid prices of our common stock for the periods indicated below are as follows:

Quarter Ended High Low
December 31, 2013 $0.03 $0.03
September 30, 2013 $0.03 $0.03
June 30, 2013 $0.10 $0.03
March 31, 2013 $0.13 $0.10
December 31, 2012 $0.18 $0.10
September 30, 2012 $0.25 $0.18
June 30, 2012 $0.25 $0.25
March 31, 2012 $0.30 $0.20

Pacific Stock Transfer Company, of 4045 South Spencer Street, Suite 403 Las Vegas, NV 89119 (telephone: 702.361.3033; facsimile 702.433.1979) is the registrar and transfer agent for our shares of common stock.

Holders of our Common Stock

As of April 15, 2014, we have 148 registered stockholders and 16,141,674 shares issued and 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 future dividend policy will be determined from time to time by our board of directors.

-16-

Recent Sales of Unregistered Securities

On September 13, 2013 pursuant to the terms of the Option and Joint Venture Exploration Agreement dated June 8, 2012 with Energold, we issued 100,000 shares of our common stock to Energold. The shares were issued pursuant to Regulation S of the Securities Act of 1933.

Securities Authorized for Issuance under Equity Compensation Plans or Individual Compensation Arrangements

On June 1, 2009, our board of directors adopted our 2009 Stock Option Plan. The purpose of our 2009 stock option plan is to retain the services of valued key officers and consultants of our company. Under the plan, the plan administrator is authorized to grant stock options to acquire up to a total of up to 7,500,000 shares of our common stock. On July 31, 2009 we filed a consent solicitation on Schedule 14A to seek stockholder approval of our 2009 Stock Option Plan. On August 3, 2009 we received majority stockholder consent approving our 2009 stock option plan. In August, 2009 we granted an aggregate of 145,000 options to acquire shares of our common stock at an exercise price of $0.40 per share to certain of our officers and consultants under the 2009 option plan. These options expired unexercised during the year ended December 31, 2012 and are no longer outstanding as of the date of this report. In September, 2010 we granted an aggregate of 1,100,000 options to acquire shares of our common stock at an exercise price of $1.05 per share exercisable until August 20, 2015 to certain of our directors and officers under the 2009 option plan. On January 13, 2011 we granted options to acquire an aggregate of 50,000 shares of our common stock at an exercise price of $1.50 per share exercisable until January 13, 2013 to two consultants under the 2009 option plan. These options expired unexercised during the year ended December 31, 2013 and are no longer outstanding as of the date of this report.

The following table provides a summary of the number of stock options granted under the 2009 Plan, the weighted average exercise price and the number of stock options remaining available for issuance under the Company’s option plans as at December 31, 2013:









Number of
securities to be
issued upon
exercise of
outstanding
options, warrants
and rights


Weighted-Average
exercise price of
outstanding
options, warrants
and rights 		Number of
securities
remaining
available for
future issuance
under equity
compensation
plan

Equity compensation plans
approved by security holders
1,100,000

$1.05

6,400,000

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 year ended December 31, 2013.

ITEM 6.           SELECTED FINANCIAL DATA.

Not Applicable.

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ITEM 7.           MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

The following discussion should be read in conjunction with our audited financial statements and the related notes 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 those discussed below and elsewhere in this annual report.

Our audited consolidated financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles.

Plan of Operation

We have entered into a joint venture agreement for the development of Jarvis Island, a 33 acre island in western Lake Superior off the coast from Thunder Bay, Ontario with a history of exploration for Barite. Barite or barium sulphate is a stabilizing agent used in the drilling of oil and gas wells.

We expect to begin sampling and primary geological work in the summer of 2014.

We have budgeted an amount for professional consulting services to assist in the review of the significant number of mineral exploration opportunities that have become available in Canada and Mexico due to the distressed financial environment in junior mining and exploration companies.

Cash Requirements during the Next Twelve Months

Our estimated expenses over the next twelve months are as follows:

Cash Requirements during the Next Twelve Months

Expense   ($)
Consulting Expenses   20,000
Professional Fees   40,000
General and Administrative expenses   60,000
Total   120,000

To date we have funded our operations primarily with loans from shareholders. In addition to funding our general, administrative and corporate expenses we are obligated to address certain current liabilities. We will need to raise additional funds to meet these current liabilities. To raise these funds we may be required to increase shareholder loans, incur new borrowings or issue new equity which may be dilutive to existing shareholders. We currently have no agreement in place to raise funds for current liabilities and no guarantee can be given that we will be able to raise funds for this purpose on terms acceptable to our company. Failure to raise funds for general, administrative and corporate expenses and current liabilities could result in a severe curtailment of our operations.

Any advance in the oil and gas and mineral development strategy set-out herein will require additional funds. These funds may be raised through equity financing, debt financing or other sources which may result in further dilution of the shareholders percentage ownership in the Company.

-18-

RESULTS OF OPERATIONS

Our operating results for the years ended December 31, 2013 and 2012 are summarized as follows:


 Year Ended
December 31, 2013 		Year Ended
December 31, 2012 		Percentage
Increase/(Decrease)
Revenue - - N/A
Expenses $264,553 $315,764 (16.2)%
Other income (expenses) $116,188 $(2,381,898) (104.9)%
Net loss $(148,365) $(2,697,662) (94.5)%

Revenues

We have had no operating revenues for the years ended December 31, 2013 and 2012. We anticipate that we will not generate any revenues for so long as we are an exploration stage company.

General and Administrative

The major components of our general and administrative expenses for the year are outlined in the table below:

    Year Ended December 31,  


 

2013 		   

2012 		    Percentage
Increase /
(Decrease) 		 
Audit Fees $  89,600   $  65,291     37.2%  
Accounting, legal, consulting, and investor relations   23,768     20,442     16.3%  
Management fees   135,000     180,000     (25.0 )%
Office   2,964     1,306     127.0%  
Rent   1,670     2,272     (26.5 )%
Transfer agent fees   11,394     14,133     (19.4 )%
Write-down on oil and gas leases   -     12,981     (100.0 )%
Travel   157     19,339     (91.9 )%
Total Expenses $ 264,553   $  315,764     (16.2 )%

The $51,211 decrease in our general and administrative expenses for the year ended December 31, 2013 was primarily due to a decrease of $45,000 in management fees as a result of the expiration of management fee agreements with our President, CEO and CFO and with our Secretary and Treasurer. The three year terms of these agreements expired during the third quarter of the current fiscal year and were not renewed, although these officers continue to hold these positions.

The decrease in management fees was partially offset by an increase in audit and professional fees as a result of the reduced audit and legal fees in the prior period negotiated with the respective creditors.

Other Income/Expenses

During 2013 we incurred $14,342 in interest expenses compared to $117,934 in 2012. Interest expense decreased as a result of the settlement of interest bearing loans outstanding in the principal amount of $3,297,750 in August, 2012.

-19-

During the year ended December 31, 2013, we entered into a debt settlement agreement with two creditors pursuant to which we were able to settle loans outstanding in the amount of $107,500 through a payment of $26,900, resulting in a gain on settlement of loans payable of $80,600.

During 2013 we had other income of $49,000, relating to consulting services provided to a private mining company, which is an affiliated company controlled by our majority shareholder. We participated in certain land tenure and mine development activities relating to a gold resource held by the private mining company in central Utah.

During 2012, the Company recorded financing fees of $2,269,106 related to (i) shares contributed by a related party of the Company as part of an condition of a loan agreement entered into by the Company, resulting in financing fees recorded of $1,790,000 and (ii) the issuance of a convertible debenture by the Company that was required to be accounted for as a derivative liability at fair value, resulting in financing fees recorded of $479,106. No such comparable transactions occurred during fiscal 2013.

Working Capital


  Year Ended
December 31, 2013 		  Year Ended
December 31, 2012
Current Assets $  4,243 $   17,553
Current Liabilities   487,927   422,872
Working Capital Deficit  $  (483,684) $  (405,319)
Cash Flows

  Year Ended
December 31, 2013 		  Year Ended
December 31, 2012
Cash used in Operating Activities  $ (89,790)  $  (288,894)
Cash provided by Investing Activities   -   -
Cash provided by Financing Activities   76,480   306,360
Net Increase (Decrease) in Cash  $  (13,310)  $  17,466

We had a cash balance of $4,243 and working capital deficiency of $483,684 as of December 31, 2013 compared to a cash of $17,553 and working capital deficiency of $405,319 at December 31, 2012. The decrease in cash and working capital is a result of the net operating loss incurred during the year. We anticipate that we will incur approximately $120,000 for operating expenses, including professional, legal and accounting expenses associated with our reporting requirements under the Exchange Act during the next twelve months. Accordingly, we will need to obtain additional financing in order to complete our full plan of operations.

Cash used in operating activities for the year ended December 31, 2013 was $89,790 as compared to cash used in operating activities for the same period in 2012 of $288,894. The decrease in cash used in operating activities results primarily from the net increase in trade accounts payable balances of $126,471 compared to net decrease of accounts payable of $(33,746) in the prior year.

Cash provided by financing activities for the year ended December 31, 2013 was $76,480 compared to cash provided by financing activities for the same period in 2012 of $306,360. The decrease in cash provided by financing activities was as a result of decreased proceeds received from loans payable in the current year and the settlement of loans payable balances through reduced cash payments.

There were no cash flows from investing activities during the years ended December 31, 2013 and 2012.

-20-

Loans Payable

The Company has the following loans outstanding as of December 31, 2013 and 2012:

      2013     2012  
  Ms. Nancy A.Vevoda(a)   -     25,000  
  Mr. Alonzo B. Leavell(a)   20,000     20,000  
  Bear Lair LLC(a)   -     82,500  
  Energold Minerals Inc.   102,907     -  
  $ 122,907   $  127,500  

For more details please see Note 4 to our consolidated financial statements included in this report.

Going Concern

The audited financial statements accompanying this report have been prepared on a going concern basis, which implies that our company will continue to realize its assets and discharge its liabilities and commitments in the normal course of business. Our company has not generated revenues since inception and has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. The continuation of our company as a going concern is dependent upon the continued financial support from our shareholders, the ability of our company to obtain the necessary financing to achieve our operating objectives, and the attainment of profitable operations. As of December 31, 2013, we had cash of $4,243 and we estimate that we will require approximately $120,000 for costs associated with our plan of operation and operating expenses over the next twelve months. In addition to funding the Company’s general, administrative and corporate expenses the Company is obligated to address its current obligations totaling $487,927. Accordingly, we do not have sufficient funds for planned operations and we will be required to raise additional funds for operations.

These circumstances raise substantial doubt about our ability to continue as a going concern, as described in the explanatory paragraph to our independent auditors’ report on the December 31, 2013 and 2012 consolidated financial statements which are included with this annual report. The consolidated financial statements do not include any adjustments that might result from the outcome of that uncertainty.

The continuation of our business is dependent upon us raising additional financing. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

There are no assurances that we will be able to obtain further funds required for our continued operations. We are pursuing various financing alternatives to meet our immediate and long-term financial requirements. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we will be forced to scale down or perhaps even cease the operation of our business.

Future Financings

As of December 31, 2013, we had cash of $4,243 and we estimate that we will require approximately $120,000 for costs associated with our business operations over the next twelve months. Accordingly we do not have sufficient funds for planned operations and we will be required to raise additional funds for operations. We anticipate continuing to rely on equity sales of our common shares or shareholder loans in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing stockholders. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our planned activities.

-21-

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

Employees

We currently have no employees, and we do not expect to hire any employees in the foreseeable future. We presently conduct our business through agreements with consultants and arms-length third parties.

New Accounting Pronouncements

New accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standards setting bodies that we adopt according to the various timetables the FASB specifies. We do not expect the adoption of recently issued accounting pronouncements will have a significant impact on our results of operations, financial position or cash flows.

Application of Critical Accounting Estimates

The financial statements of our company have been prepared in accordance with accounting principles generally accepted in the United States of America. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates which have been made using careful judgment. The financial statements have, in management’s opinion, been properly prepared within reasonable limits of materiality and within the framework of the significant accounting policies summarized below:

Derivative Liability

From time to time, we may issue convertible promissory notes which include embedded conversion options which, dependent on their specific contractual terms, may be required to be accounted for as separate derivative liabilities. These liabilities are required to be measured at fair value. These instruments are then adjusted to reflect fair value at each period end. Any increase or decrease in the fair value is recorded in results of operations as change in fair value of derivative liabilities. In determining the appropriate fair value, we use the binomial pricing model.

Option pricing models require the input of highly subjective assumptions, including the expected price volatility. Changes in assumptions can materially affect the fair value estimate and therefore the binomial model does not necessarily provide a reliable single measure of the fair value of these instruments.

Stock based compensation

Management has made significant assumptions and estimates determining the fair market value of stock-based compensation granted to employees and non-employees. These estimates have an effect on the stock-based compensation expense recognized and the contributed surplus and share capital balances on the Company’s Balance Sheet. The value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model. For non-employees, such amount is revalued on a quarterly basis. To date, all of our stock option grants have been to non-employees. Increases in our share price will likely result in increased stock option compensation expense. The Black-Scholes option-pricing model requires the input of subjective assumptions, including the expected term of the option award and stock price volatility. The expected term of options granted for the purposes of the Black-Scholes calculation is the term of the award since all grants are to non-employees. These estimates involve inherent uncertainties and the application of management judgment.

These accounting policies are applied consistently for all years presented. Our operating results would be affected if other alternatives were used. Information about the impact on our operating results is included in the notes to our financial statements.

ITEM 8.           FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

INSERT FINANCIAL STATEMENTS HERE

-22-

 

 

Consolidated Financial Statements

Maverick Minerals Corporation
(An Exploration Stage Company)

December 31, 2013 and 2012

(Expressed in United States dollars)

 

 

Tel: 604 688 5421
Fax: 604 688 5132
www.bdo.ca 		BDO Canada LLP
600 Cathedral Place
925 West Georgia Street
Vancouver BC V6C 3L2 Canada

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Directors and Stockholders,
Maverick Minerals Corporation
(an Exploration Stage Company)

We have audited the accompanying consolidated balance sheets of Maverick Minerals Corporation. (the “Company”) as of December 31, 2013 and 2012, and the related consolidated statements of operations and comprehensive loss, cash flows and changes in stockholders’ equity (capital deficit) for the years then ended and for the period from April 21, 2003 (date of inception) to December 31, 2013. 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 audits.

We conducted our audits 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 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. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Maverick Minerals Corporation Corp. at December 31, 2013 and 2012, and the results of its operations and its cash flows for the years then ended and for the period from April 21, 2003 (date of inception) to December 31, 2013, in conformity with accounting principles generally accepted in the United States.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company had a working capital deficit of $483,684 at December 31, 2013, had incurred a net loss of $148,365 for the year then ended and had an accumulated deficit of $14,891,890. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ BDO CANADA LLP

Chartered Accountants

Vancouver, Canada
April 14, 2014

 

BDO Canada LLP, a Canadian limited liability partnership, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms.

Maverick Minerals Corporation
(An Exploration Stage Company)
Consolidated Balance Sheets

    (Expressed in United States Dollars)  
             
As at December 31,   2013     2012  
             
             
Current Asset            
         Cash $  4,243   $  17,553  
             
Mineral property (Note 3)   28,000     25,000  
TOTAL ASSETS $  32,243   $  42,553  
             
             
Current Liabilities            
         Accounts payable and accrued liabilities (Note 7) $ 297,054   $  170,583  
         Convertible debt (Notes 5 and 7)   137,966     124,789  
         Loans payable (Note 4)   52,907     127,500  
    487,927     422,872  
Loans payable (Note 4)   70,000     -  
TOTAL LIABILITIES   557,927     422,872  
             
Capital Deficit            
         Capital Stock (Note 8)            
             Authorized: 
                 750,000,000 common shares at $0.001 par value 
             Issued and fully paid 16,141,674 (2012 - 16,041,674) common shares 
                          Par value 
   16,142     16,042  
                  100,000,000 preferred shares at $0.001 par value
             Issued and fully paid Nil (2012 - Nil) preferred shares 
                          Par value 		  -     -  
         Additional paid-in capital   14,349,191     14,346,291  
         Deficit, accumulated during the exploration stage   (14,891,890 )   (14,743,525 )
         Accumulated other comprehensive income   873     873  
TOTALSTOCKHOLDERS' EQUITY (CAPITAL DEFICIT)   (525,684 )   (380,319 )
TOTAL LIABILITIES AND CAPITAL DEFICIT $  32,243   $  42,553  

The accompanying notes are an integral part of these financial statements

Maverick Minerals Corporation
(An Exploration Stage Company)
Consolidated Statements of Comprehensive Loss

    (Expressed in United States Dollars)  
                   
                Cumulative From  
                Date of Inception  
                (April 21, 2003)
    Year ended December 31,     to December 31,  
    2013     2012     2013  
General and administration expenses                  
         Audit fees   89,600     65,291     664,439  
         Freight   -     -     7,600  
         Insurance   -     -     186,297  
         Accounting, legal, engineering & consulting, investor relations   23,768     20,442     598,198  
         Management fees and stock based compensation (Note 7)   135,000     180,000     3,249,839  
         Office   2,964     1,306     81,327  
         Rent   1,670     2,272     3,942  
         Telephone and utilities   -     -     83,059  
         Transfer agent and filing fees   11,394     14,133     66,142  
         Travel   157     19,339     316,787  
         Wages and benefits   -     -     86,588  
         Writedown on oil and gas leases   -     12,981     3,748,664  
         Gain on disposal of assets   -     -     (795,231 )
Loss from operations   (264,553 )   (315,764 )   (8,297,651 )
                   
Other income (expenses)                  
         Other income   49,000     -     49,000  
         Interest expense (Note 7)   (14,342 )   (117,934 )   (454,524 )
         Gain (loss) on settlement of loans payable (Note 4)   80,600     -     (3,378,090 )
         Financing expense (Note 6)   -     (2,269,106 )   (2,269,106 )
         Change in fair value of derivative liability (Note 6)   -     1,974     1,974  
         Gain (Loss) on foreign exchange   930     3,168     (12,024 )
         Gain on write-off of payables   -     -     618,231  
    116,188     (2,381,898 )   (5,444,539 )
Net loss from continuing operations   (148,365 )   (2,697,662 )   (13,742,190 )
                   
Loss from discontinued operations   -     -     (1,149,700 )
Net loss for the period   (148,365 )   (2,697,662 )   (14,891,890 )
Other Comprehensive Income                  
         Foreign currency translation adjustments   -     -     873  
Total Comprehensive Loss $  (148,365 ) $  (2,697,662 ) $  (14,891,017 )
                   
Loss per share - basic and diluted   ($0.01 )   ($0.21 )      
                   
Weighted average shares outstanding - basic and diluted   16,071,537     12,996,024        

The accompanying notes are an integral part of these financial statements

Maverick Minerals Corporation
(An Exploration Stage Company)
Consolidated Statements of Cash Flows

    (Expressed in United States Dollars)  
                   
                Cumulative From  
                Date of Inception  
                (April 21, 2003)
    Year ended December 31,     to December 31,  
    2013     2012     2013  
Operating Activities                  
   Loss for the period $  (148,365 ) $  (2,697,662 ) $  (14,891,890 )
  Adjustments to reconcile Loss for the year
   to cash flows used in operating activities 		           
       Impairment of investment in oil and gas leases   -     12,981     4,168,623  
       Gain on disposal of assets   -     -     (933,995 )
       Gain on liabilities write-off   -     -     (618,231 )
       Stock based compensation               1,925,380  
       Depreciation   -     -     277,578  
       Shares issued for services   -     -     105,000  
       Interest accrued on convertible debt   13,177     9,876     39,820  
       Unrealized foreign exchange   (473 )   692     219  
       (Gain)/Loss on settlement of loan payable   (80,600 )   -     3,378,090  
       Financing expense   -     2,269,106     2,269,106  
       Change in fair value of derivative liability   -     (1,974 )   (1,974 )
   Changes in non-cash working capital items                  
       Accounts receivable   -     -     -  
       Advances to related party   -     43,826     -  
       Accrued interest   -     108,007     352,554  
       Accounts payable   126,471     (33,746 )   1,868,853  
Cash used in operating activities   (89,790 )   (288,894 )   (2,060,867 )
                   
Investing Activities                  
   Investment in oil and gas leases   -     -     (2,428,296 )
   Proceeds from the sale of working interests   -     -     650,000  
   Prepaids and deposits on oil and gas leases   -     -     (2,000,565 )
   Proceeds from sale of property and equipment   -     -     57,738  
   Purchase of property and equipment   -     -     (311,367 )
   Refund on oil and gas leases   -     -     75,000  
Cash used in investing activities   -     -     (3,957,490 )
                   
Financing Activities                  
   Proceeds on shares to be issued   -     -     303,850  
   Debt settlement   -     -     35,625  
   Repayments of loans payable   (26,900 )   -     33,380  
   Proceeds from loans payable   103,380     306,360     5,648,872  
Cash (used in)/provided by financing activities   76,480     306,360     6,021,727  
                   
(Decrease)/Increase in cash during the period   (13,310 )   17,466     3,370  
Effect of cumulative currency translation   -     -     873  
Cash, beginning of the period   17,553     87     -  
Cash, end of the period $  4,243   $  17,553   $  4,243  

The accompanying notes are an integral part of these financial statements

Maverick Minerals Corporation
(An Exploration Stage Company)
Consolidated Statements of Cash Flows

          (Expressed in United States Dollars)  
                   
                Cumulative From  
                Date of Inception  
                (April 21, 2003)
    Year ended December 31,     to December 31,  
    2013     2012     2013  
                   
Supplemental Cash Flow information:                  
   Interest paid $  -   $  -   $  35,000  
   Income taxes paid   -     -     -  
   Non-cash investing and financing activities:                  
       Impairment in oil and gas leases   -     -     419,959  
       Investment in oil and gas leases in exchange for notes payable to Veneto   -     -     1,455,000  
           Shares issued for acquisition of mineral property interests   3,000     25,000     28,000  
       Transfer of leases in settlement of notes payable   -     -     1,455,000  
       Assignment of accounts payable from transfer of leases   -     -     193,764  
       Settlement of loan payable   -     -     1,481,469  
       Forgiveness of related party balances payable   -     -     1,027,791  
       Forgiveness of loan payable   -     -     311,400  
       Shares issued for property services   -     -     210,000  
       Exchange of accounts payable for convertible debt   -     -     100,000  
       Shares issued for data purchase   -     -     367,500  
       Shares issued on conversion of debt   -     781,038     818,451  
       Financing fee contributed by a principal stockholder   -     1,790,000     1,790,000  
       Shares issued for settlement of loans payable   -     3,744,091     3,744,091  

The accompanying notes are an integral part of these financial statements

Maverick Minerals Corporation
(An Exploration Stage Company)
Statements of Changes in Stockholders’ Equity (Capital Deficit)
For the Period from Date of Inception on April 21, 2003 to December 31, 2013

     
                                           
          Par Value           Shares to be Issued           Accumulated Other        
    Number of     @$0.001 Per      Additional Paid-in     (Subscriptions     Accumulated     Comprehensive     Total Capital  
    Common Shares     Share     Capital     Receivable)     Deficit     Loss     Deficit  
Balance, April 21, 2003   10   $  -   $  -   $  -   $  -   $  -   $  -  
Adjustment for the issuance of
  common stock on recapitalization 		 
3,758,040 		   
3,758 		   
(3,758		 )  
- 		   
- 		   
- 		   
- 		 
    3,758,050     3,758     (3,758 )   -     -     -     -  
Adjustment to capital deficit of the
  Company at the recapitalization date 		 
417,603 		   
418 		   
(945,307		 )  
- 		   
- 		   
- 		   
(944,889		 )
    4,175,653     4,176     (949,065 )   -     -     -     (944,889 )
Shares issued for management services (Note 7)   150,000     150     104,850     -     -     -     105,000  
Currency translation adjustment   -           -     -     -     873     873  
Net loss for the period   -           -     -     (626,985 )   -     (626,985 )
Balance, December 31, 2003   4,325,653     4,326     (844,215 )   -     (626,985 )   873     (1,466,001 )
Shares issued for cash (Note 7)   1,000,000     1,000     24,000     -     -     -     25,000  
Shares subscribed but unissued   -     27,500     -     -     -     -     27,500  
Forgiveness of related party balances payable   -     -     1,027,791     -     -     -     1,027,791  
Net income for the year   -     -     -     -     71,698     -     71,698  
Balance, December 31, 2004   5,325,653     32,826     207,576     -     (555,287 )   873     (314,012 )
Shares subscribed but unissued   -     -27,500     -     -     -     -     (27,500 )
Shares issued for cash (Note 7)   2,750,000     2,750     24,750     -     -     -     27,500  
Cancellation of shares (Note 7)   (5,437,932 )   -5,438     5,438     -     -     -     -  
Compensation expense on share cancellation (Note 7)   -           44,720     -     -     -     44,720  
Shares issued for loan payable settlement (Note 7)   89,500     90     125,210     -     -     -     125,300  
Shares issued for cash (Note 7)   7,500     7     743     -     -     -     750  
Stock based compensation   -           140,438     -     -     -     140,438  
Net loss for the year   -           -     -     (1,036,098 )   -     (1,036,098 )
Balance, December 31, 2005   2,734,721   $  2,735   $  548,875   $  -   $  (1,591,385 ) $  873   $  (1,038,902 )

The accompanying notes are an integral part of these financial statements

Maverick Minerals Corporation
(An Exploration Stage Company)
Statements of Changes in Stockholders’ Equity (Capital Deficit)
For the Period from Date of Inception on April 21, 2003 to December 31, 2013

     
                                           
          Par Value           Shares to be Issued           Accumulated Other        
    Number of     @$0.001 Per      Additional Paid-in     (Subscriptions     Accumulated     Comprehensive     Total Capital  
    Common Shares     Share     Capital     Receivable)     Deficit     Loss     Deficit  
Balance, December 31, 2005   2,734,721   $  2,735   $  548,875   $  -   $  (1,591,385 ) $  873   $  (1,038,902 )
Shares issued for cash (Note 7)   6,000     6     594     (600 )   -     -     -  
Stock based compensation   -           11,401     -     -     -     11,401  
Net loss for the year   -           -     -     (128,774 )   -     (128,774 )
Balance, December 31, 2006   2,740,721     2,741     560,870     (600 )   (1,720,159 )   873     (1,156,275 )
Net loss for the year   -           -     -     (192,410 )   -     (192,410 )
Balance, December 31, 2007   2,740,721     2,741     560,870     (600 )   (1,912,569 )   873     (1,348,685 )
Share subscriptions paid (Note 7)   -           -     600     -     -     600  
Net income for the year   -           -     -     109,951     -     109,951  
Balance, December 31, 2008   2,740,721     2,741     560,870     -     (1,802,618 )   873     (1,238,134 )
Cancellation of shares (Note 7)   (2,000,000 )   -2,000     2,000     -     -     -     -  
Shares issued for loan payable settlement (Note 7)   8,950,000     8,950     3,571,050     -     -     -     3,580,000  
Shares issued for loan payable settlement (Note 7)   436,000     436     217,564     -     -     -     218,000  
Shares issued for consulting services (Note 7)   350,000     350     209,650     -     -     -     210,000  
Stock based compensation   -           43,321     -     -     -     43,321  
Net loss for the year   -           -     -     (3,433,469 )   -     (3,433,469 )
Balance, December 31, 2009   10,476,721     10,477     4,604,455     -     (5,236,087 )   873     (620,282 )
Shares issued upon conversion of debt (Note 7)   49,925     50     37,363     -     -     -     37,413  
Shares issued for loan payable settlement (Note 7)   725,971     726     1,015,633     -     -     -     1,016,359  
Shares issued for data purchase (Note 7)   350,000     350     367,150     -     -     -     367,500  
Stock based compensation   -           1,592,250     -     -     -     1,592,250  
Shares to be issued (Note 7)   -           -     250,000     -     -     250,000  
Net loss for the year   -           -     -     (5,300,187 )   -     (5,300,187 )
Balance, December 31, 2010   11,602,617   $  11,603   $  7,616,851   $  250,000   $  (10,536,274 ) $  873   $  (2,656,947 )

 

The accompanying notes are an integral part of these financial statements

Maverick Minerals Corporation
(An Exploration Stage Company)
Statements of Changes in Stockholders’ Equity (Capital Deficit)
For the Period from Date of Inception on April 21, 2003 to December 31, 2013

    Number of     Par Value       Additional     Shares to be           Accumulated        
    Common     @$0.001 Per     Paid-in     Issued     Accumulated     Other     Total Capital  
    Shares     Share     Capital     (Subscriptions     Deficit     Comprehensive     Deficit  
Balance, December 31, 2010   11,602,617   $  11,603   $  7,616,851   $  250,000   $  (10,536,274 ) $  873   $  (2,656,947 )
Shares issued for cash (Note 7)   500,000     500     249,500     (250,000 )   -     -     -  
Shares issued for loan payable settlement (Note 7)   50,000     50     50,450     -     -     -     50,500  
Stock based compensation   -           93,250     -     -     -     93,250  
Net loss for period   -           -     -     (1,509,589 )   -     (1,509,589 )
Balance, December 31, 2011   12,152,617     12,153     8,010,051     -     (12,045,863 )   873     (4,022,786 )
Shares issued for acquisition of mineral property interest (Note 3)   100,000     100     24,900     -     -     -     25,000  
Shares issued for settlment of loans payable (Note 7)   750,000     750     3,743,341     -     -     -     3,744,091  
Financing fee contributed   -           1,790,000     -     -     -     1,790,000  
Shares issued upon conversion of debt (Note 7)   3,039,057     3,039     777,999     -     -     -     781,038  
Net loss for period   -           -     -     (2,697,662 )   -     (2,697,662 )
Balance, December 31, 2012   16,041,674     16,042     14,346,291     -     (14,743,525 )   873     (380,319 )
Shares issued for acquisition of mineral property interest (Note 3)   100,000     100     2,900     -     -     -     3,000  
Net loss for period   -           -     -     (148,365 )   -     (148,365 )
Balance, December 31, 2013   16,141,674   $  16,142   $  14,349,191   $  -   $  (14,891,890 ) $  873   $  (525,684 )

The accompanying notes are an integral part of these financial statements


Maverick Minerals Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2013
(Expressed in United States Dollars)

Note 1 NATURE OF OPERATIONS AND ABILITY TO CONTINUE AS A GOING CONCERN
   

Maverick Minerals Corporation (“the Company”) was incorporated on August 27, 1998 under the Company Act of the State of Nevada, U.S.A. The Company is in the business of holding and developing mineral and resource properties. The Company is an exploration stage company that has not yet generated or realized any revenues from its business operations.

   

On April 21, 2003 the Company closed a transaction, as set out in the Purchase Agreement (the “Agreement) with UCO Energy Corporation (“UCO”) to purchase the outstanding equity of UCO. To facilitate the transaction, the Company consolidated its share capital at a ratio of one for five. Subsequent to the share consolidation, the Company issued 3,758,040 common shares in exchange for all the issued and outstanding common shares of UCO. As a result of the transaction, the former shareholders of UCO held approximately 90% of the issued and outstanding common shares of the Company. The acquisition of UCO was recorded as a reverse acquisition for accounting purposes as a recapitalization of UCO. A net distribution of $944,889 was recorded in connection with the common stock of the Company for the acquisition of UCO in respect of the Company’s net liabilities at the acquisition date. The Company had minimal assets and had liabilities owing to suppliers as well as amounts owing under agreements with third parties as well as related parties and as there were no other business interests, the Company was acting as a public shell company. The financial statements are now presented as a continuation of UCO and the date of this transaction constitutes the inception of the exploration stage activity of the Company.

   

UCO was in the business of pursuing opportunities in the coal mining industry. The Company has since disposed of its coal mining interests and has since engaged in the acquisition, exploration, and development of prospective oil and gas properties and mineral resource properties.

   

These accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. As at December 31, 2013, the Company has negative working capital of $483,684, incurred a net loss of $148,365 for the year then ended and has an accumulated deficit of $14,891,890. The continuation of the Company is dependent upon obtaining a successful exploration project, the continuing support of creditors and stockholders as well as achieving and maintaining a profitable level of operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management anticipates that it requires approximately $120,000 to cover general and administrative expenses over the twelve months ending December 31, 2014 to continue operations. In addition to funding the Company’s general, administrative and corporate expenses the Company is obligated to address its current obligations totaling $487,927. The Company plans to raise necessary cash through equity issuances and/or debt financing. Amounts raised will be used to pursue explorations activities, and for other working capital purposes.

   

Management cannot provide any assurances that the Company will be successful in any of its plans. Although there are no assurances that management's plans will be realized, management believes that the Company will be able to continue operations in the future. These 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 the Company cannot continue in existence.



Maverick Minerals Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2013
(Expressed in United States Dollars)

Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  (a)

Basis of Presentation
     
 

These financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, and include the accounts of the Company and its wholly-owned subsidiaries, Eskota Energy Corporation and Maverick Minerals Canada Corporation. All intercompany transactions and balances have been eliminated on consolidation.
     
 

Maverick Minerals Canada Corporation was incorporated in the federal jurisdiction of Canada on July 15, 2013.
     
  (b)

Use of Estimates
     
 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires the Company’s management to make estimates and assumptions which affect the amounts reported in these consolidated financial statements, the notes thereto, and the disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.
     
  (c)

Foreign Currency Translation
     
 

The Company’s functional currency is the United States dollar. Transactions undertaken in currencies other than the functional currency are translated using the exchange rate in effect on the transaction date. At the end of the period, monetary assets and liabilities are translated to the respective functional currency balances using the exchange rate in effect at the period end date. Transaction gains and losses are included in the Consolidated Statements of Operations.
     
 

Financial statements of foreign operations for which the functional currency is the local currency are translated into U.S. dollars with assets and liabilities translated at the rate of exchange in effect at the balance sheet date and revenue and expense items translated at the average rates for the period. Unrealized gains and losses resulting from the translation of the consolidated financial statements are included as a component of Accumulated Other Comprehensive Income.
     
  (d)

Financial Instruments
     
 

The Company’s financial instruments consist of cash, accounts payable and accrued liabilities, loans payable and convertible debt. With the exception of loans payable, each of the Company’s financial instruments approximate their carrying values due to their short term or demand nature.
     
 

The fair value hierarchy under GAAP is based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value as follows:

  Level 1 –

quoted prices (unadjusted) in active markets for identical assets or liabilities;

  Level 2 –

observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and

  Level 3 –

assets and liabilities whose significant value drivers are unobservable by little or no market activity and that are significant to the fair value of the asset or liability.



Maverick Minerals Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2013
(Expressed in United States Dollars)

Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

  (d)

Financial Instruments - continued
     
 

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.
     
 

The Company’s convertible debt and loans payable are based on Level 2 inputs in the fair value hierarchy. The Company determined that the fair value of the convertible debt outstanding at December 31, 2013 was equal to its book value based on its demand nature, current borrowing rates and the conversion price. The fair value for term loans payable is estimated at $94,600 (December 31, 2012: $Nil) using an estimated market interest rate of 10%.
     
 

The Company has no Level 3 financial instruments at December 31, 2013 and 2012.
     
  (e)

Derivative liabilities
     
 

The Company evaluates its financial instruments and other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with ASC 815 Derivatives and Hedging. The result of this accounting treatment is that the fair value of the embedded derivative is marked- to-market at each balance sheet date and recorded as a liability and the change in fair value is recorded in the consolidated statements of operations as other income or expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity.
     
 

The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Derivative instruments that become subject to reclassification are reclassified at the fair value of the instrument on the reclassification date. Derivative instrument liabilities will be classified in the balance sheet as current or non-current based on whether or not settlement of the derivative instrument is expected within 12 months of the balance sheet date.
     
 

The Company uses the binomial option pricing model to value derivative liabilities. This model uses Level 3 inputs in the fair value hierarchy established by ASC 820 Fair Value Measurement.
     
  (f)

Mineral Properties
     
 

The cost of acquiring mineral property interests is capitalized. Expenditures for exploration and development on mineral properties with no proven reserves are expensed as incurred. Once a mineral reserve has been established, all future development costs will be capitalized and charged to operations on a unit of production method based on estimated recoverable reserves.
     
 

Capitalized amounts may be written down if future cash flows, including potential sales proceeds related to the property, are estimated to be less than the carrying value of the property. The Company reviews the carrying value of mineral property interests periodically and whenever events or changes in circumstances indicate that the carrying value may not be recoverable, reductions in the carrying value of each property would be recorded to the extent the carrying value of the investment exceeds the property’s estimated recoverable amount.


Maverick Minerals Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2013
(Expressed in United States Dollars)

Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued

  (g)

Impairment of Long-Lived Assets
     
 

Long-lived assets are evaluated for impairment when events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of these assets and their eventual disposition is less than their carrying amount. Impairment, if any, is assessed using discounted cash flows.
     
 

Estimates of undiscounted future cash flows used for conducting impairment tests are subject to significant judgment decisions based on assumptions of highly uncertain future factors such as, crude oil prices, production quantities, estimates of recoverable reserves, and production and transportation costs.
     
  (h)

Stock-Based Compensation
     
 

The Company accounts for all stock-based payments and awards under the fair value based method. Stock-based payments to non-employees are measured at the fair value of the consideration received, or the fair value of the equity instruments issued, or liabilities incurred, whichever is more reliably measurable.
     
 

The fair value of stock-based payments to non-employees is periodically re-measured until the counterparty performance is complete, and any change therein is recognized over the vesting period of the award and in the same manner as if the Company had paid cash instead of paying with or using equity based instruments. Compensation costs for stock-based payments with graded vesting are recognized on a straight-line basis. The cost of the stock-based payments to non-employees that are fully vested and non-forfeitable as at the grant date is measured and recognized at that date, unless there is a contractual term for services in which case such compensation would be amortized over the contractual term.
     
 

The Company accounts for the granting of share purchase options to employees using the fair value method whereby all awards to employees will be recorded at fair value on the date of the grant. The fair value of all share purchase options is expensed over their vesting period with a corresponding increase to additional paid in capital.
     
 

The Company uses the Black-Scholes option valuation model to calculate the fair value of share purchase options at the date of the grant. Option pricing models require the input of highly subjective assumptions, including the expected price volatility. Changes in these assumptions can materially affect the fair value estimates.
     
  (i)

Earnings per Share
     
 

Earnings per share (EPS) is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS is computed by dividing net income (loss) by the weighted-average of all potentially dilutive shares of common stock that were outstanding during the periods presented.
     
 

The treasury stock method is used in calculating diluted EPS for potentially dilutive stock options, which assumes that any proceeds received from the exercise of in-the-money stock options, would be used to purchase common shares at the average market price for the period.


Maverick Minerals Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2013
(Expressed in United States Dollars)

Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued

  (i)

Earnings per Share – continued
     
 

EPS for convertible debt is calculated under the “if-converted” method. Under the if converted method, EPS is calculated as the more dilutive of EPS (i) including all interest (both cash interest and non-cash discount amortization) and excluding all shares underlying the Notes or; (ii) excluding all interest (both cash interest and non-cash discount amortization) and including all shares underlying the convertible debt. For the years ended December 31, 2013 and 2012, diluted EPS was calculated by including interest expense related to the convertible debt and excluding the shares underlying the convertible debt.
     
 

For the year ended December 31, 2013, options to purchase 1,100,000 (2012 –1,150,000) shares of common stock and 459,887 (2012 – 415,963) shares of common stock issuable upon the conversion of convertible debt have been excluded from the calculations of diluted earnings (loss) per share as their effect was anti-dilutive.
     
  (j)

Oil and Gas Leases
     
 

The Company follows the full cost method of accounting for oil and gas operations whereby all costs of exploring for and developing oil and gas reserves are initially capitalized on a country-by- country (cost centre) basis. Such costs include land acquisition costs, geological and geophysical expenses, carrying charges on non-producing properties, costs of drilling and overhead charges directly related to acquisition and exploration activities.
     
 

Costs capitalized, together with the costs of production equipment, are depleted and amortized on the unit-of-production method based on the estimated gross proved reserves. Petroleum products and reserves are converted to a common unit of measure, using 6 MCF of natural gas to one barrel of oil.
     
 

Costs of acquiring and evaluating unproved properties are initially excluded from depletion calculations. These unevaluated properties are assessed periodically to ascertain whether impairment has occurred. When proved reserves are assigned or the property is considered to be impaired, the cost of the property or the amount of the impairment is added to costs subject to depletion calculations.
     
 

If capitalized costs, less related accumulated amortization and deferred income taxes, exceed the “full cost ceiling” the excess is expensed in the period such excess occurs. The “full cost ceiling” is determined based on the present value of estimated future net revenues attributed to proved reserves, using market prices less estimated future expenditures plus the lower of cost and fair value of unproved properties within the cost centre.
     
 

The Company performed evaluations of its capitalized expenditures for oil and gas exploration during the year ended December 31, 2012. As a result of this evaluation, management noted that estimated future cash flows associated with the properties were not sufficient to realize the capitalized costs relating to the capitalized expenditures for oil and gas exploration at December 31, 2012. Consequently, all of the Company’s remaining oil and gas interests were written down to $Nil during the year ended December 31, 2012.
     
 

Proceeds from a sale of petroleum and natural gas properties are applied against capitalized costs, with no gain or loss recognized, unless such a sale would alter the relationship between capitalized costs and proved reserves of oil and gas attributable to a cost centre.


Maverick Minerals Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2013
(Expressed in United States Dollars)

Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued

  (k)

Comprehensive Income
     
 

ASC 220, "Comprehensive Income", establishes standards for reporting and presentation of comprehensive income (loss). This standard defines comprehensive income as the changes in equity of an enterprise except those resulting from stockholder transactions.
     
  (l)

Income Taxes
     
 

The Company accounts for income taxes in accordance with Accounting Standards Codification ("ASC") 740, Income Taxes ("ASC 740"). There are two major components of income tax expense, current and deferred. Current income tax expense approximates cash to be paid or refunded for taxes for the applicable period. Deferred tax assets and liabilities are determined based upon the difference between the financial statement and tax basis of assets and liabilities as measured by the enacted tax rates, which will be in effect when these differences reverse. Deferred tax expense or benefit is the result of changes between deferred tax assets and liabilities.
     
 

A valuation allowance is established when, based on an evaluation of objective verifiable evidence, it is more likely than not that some portion or all of deferred tax assets will not be realized.
     
 

The Company recognizes the impact of an uncertain income tax position at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority and includes consideration of interest and penalties. An uncertain income tax position is not recognized if there is a 50% or less likelihood of being sustained. The liability for unrecognized tax benefits is classified as non-current unless the liability is expected to be settled in cash within 12 months of the reporting date.
     
 

The Company recognizes interest and penalties related to unrecognized tax benefits within the income tax expense line in the statements of operations. Accrued interest and penalties are included within unrecognized tax benefits and other long-term liabilities line in the balance sheet.
     
  (m)

New Accounting Pronouncements
     
 

There are no new accounting pronouncements that the Company recently adopted or are pending the Company’s adoption that are expected to have a material impact on the company’s results of operations, financial position or cash flows.


Maverick Minerals Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2013
(Expressed in United States Dollars)

Note 3 MINERAL PROPERTY

      2013     2012  
  Jarvis Island Property            
     Acquisition costs, common shares $  28,000   $  25,000  
  Mineral property interests $  28,000   $  25,000  

Jarvis Island Property, Ontario, Canada

The Company entered into an Option and Joint Venture Exploration Agreement dated June 8, 2012, and amended on February 21, 2014, with the majority shareholder of the Company, Energold Minerals Inc. (“Energold”), a Canadian company, under which the Company may earn up to an undivided 51% interest in the Jarvis Island Property, comprising a group of mining claims situated in the Thunder Bay District of Ontario, Canada (the “Property”) and thereafter establish a joint venture with Energold for the joint exploration, development and production of minerals from the Property.

To exercise the first option and earn a 30% undivided interest in the Jarvis Property, we must: (i) issue to Energold 100,000 shares on or before June 29, 2012 (issued); (ii) issue to Energold an additional 100,000 shares on or before September 15, 2013 (issued); and (iii) incur a total of $200,000 in exploration expenditures on the Jarvis Property on or before September 15, 2016.

To exercise the second option and earn an additional 21% undivided interest in the Jarvis Property, we must: (i) exercise the first option, (ii) issue to Energold a further 200,000 shares on or before September 15, 2017, and (iii) incur an additional $200,000 in exploration expenditures on the Jarvis Property on or before June 30, 2018.

If the Company exercises the first option the parties agreed to participate in a joint venture (the “Joint Venture”) for the purpose of further exploration and development of the Jarvis Property where the right to participate and the obligation to fund the Joint Venture will be apportioned 70% to Energold and 30% to Maverick and if Maverick exercises the second option the Joint Venture will be apportioned 51% to Maverick and 49% to Energold.

During the period that both options are outstanding and after the formation of the Joint Venture, the Company will act as operator of the Jarvis Property in consideration of certain management fees in an amount up to 10% on general exploration expenditures and other fees in an amount up to 5% on drilling or other major contract costs as further set out in the Agreement. Decisions regarding exploration and development of the Jarvis Property are determined by a committee.

If the Company has acquired a 51% undivided interest in the Jarvis Property as per the Agreement and a feasibility study is completed which demonstrates that the Jarvis Property may be profitably brought into production, then the Company has the right to elect to commit the necessary financing to place the Jarvis Property into production and thereby earn a 70% interest in the newly initiated mining project.


Maverick Minerals Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2013
(Expressed in United States Dollars)

Note 4 LOANS PAYABLE
   
  The Company has the following loans payable:

  December 31,   2013     2012  
  Mr. Alonzo B. Leavell (1) $  20,000   $  20,000  
  Ms. Nancy A. Vevoda (1)   -     25,000  
  Bear Lair LLC (1)   -     82,500  
  Energold Minerals Inc.   102,907     -  
      122,907     127,500  
  Less; current portion   (52,907 )   (127,500 )
    $  70,000   $  -  

 

(1)These amounts are unsecured; bear no interest, with no specific terms of repayment.

   

On July 4, 2013, the Company entered into a loan agreement whereby the Company received a loan in the amount of $70,000 from Energold, the majority shareholder of the Company. The loan is unsecured, bears interest at 3% per annum and is due on June 30, 2015. The maturity date of the loan may be extended an additional twelve months at the request of the Company.

   

On November 14, 2013, the Company entered into a second loan agreement with Energold in the amount of $32,907 (CDN$35,000). The loan is unsecured, bears interest at 3% per annum and is due on November 1, 2014.

   

During the year ended December 31, 2013, the Company entered into a debt settlement agreement (the “Agreement”) with Ms. Nancy A. Vevoda and Bear Lair LLC (the “Creditors”) pursuant to which the Company agreed to pay $26,900 in full and final settlement of loans outstanding to the Creditors in the amount of $107,500, resulting in a gain on settlement of loans payable of $80,600.

   
Note 5

CONVERTIBLE DEBT

   

On November 26, 2009, the Company issued a convertible note in the amount of $100,000 to the Chief Executive Officer of the Company to settle an outstanding payable of $100,000. This convertible note is due on demand, and bears interest at 8% per annum. The debt, along with accrued interest of $37,966 at December 31, 2013, is convertible into common shares at a conversion rate of $0.30 per share.

   
Note 6

DERIVATIVE LIABILITY

   

During the year ended December 31, 2012, the Company received $72,440 (Cdn$72,600) and $77,400 pursuant to promissory notes dated May 15, 2012 and May 29, 2012, respectively, with Energold. These notes were unsecured, non-interest bearing and were due on November 4, 2012. During the year ended December 31, 2012, these notes, along with an additional advance from Energold in the amount of Cdn$150,000 were exchanged for an unsecured convertible debenture in the amount of $304,926 (Cdn$300,000). The debenture was bearing interest at 8% per annum with a maturity date of December 31, 2012. The debenture, along with accrued interest therein, was convertible at any time at the option of the holder into common shares of the Company at a conversion rate of $0.10 per share.



Maverick Minerals Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2013
(Expressed in United States Dollars)

Note 6 DERIVATIVE LIABILITY - continued
   

Pursuant to the guidance of ASC 815-40 Derivatives and Hedging – Contracts in Entity’s Own Equity, the Company determined that the embedded conversion feature of the debenture failed to meet the “fixed for fixed” criteria contained in this guidance because the host instrument is denominated in Canadian currency whereas the conversion feature is denominated in US currency. The exchange of instruments did not constitute a debt extinguishment given that substantive conversion features added to debt instruments do not represent debt extinguishments if the conversion feature is bifurcated as a derivative liability. Thus, included in the financing fee of $2,269,106 recorded during the year ended December 31, 2012 is a balance of $479,106 recorded upon the issuance of the convertible debenture by way of recording a separate derivative liability.

   

Details of the Company’s accounting for the embedded conversion feature classified as a derivative liability at December 31, 2013 and 2012 are as follows:


      2013     2012  
  Balance, beginning of the year $  -   $ -  
  Fair value of embedded conversion feature at issuance   -     479,106  
  Change in fair value of derivative liability   -     (1,974 )
  Settlement with common shares   -     (477,132 )
  Balance, end of the year $  -   $ -  

On October 29, 2012, pursuant to receiving a notice of conversion, the Company issued 3,039,057 common shares of the Company having a fair value of $781,038 based on their quoted market price to extinguish the convertible debenture in the amount of $303,906 including along with accrued interest thereon of $1,854. The Company revalued the derivative liability at the conversion date and determined the fair value to be $477,132 at the conversion date. No gain or loss was recorded as a result of this debt extinguishment.

The fair value of the embedded conversion feature at the date of conversion and at issuance has been determined using the binomial pricing model using the following assumptions:

    At Issuance At Conversion
  Risk-free interest rate 0.10% 0.12%
  Expected life 0.26 years 0.18 years
  Annualized volatility 86.98% 87.27%
  Dividend rate 0.00% 0.00%

Note 7 RELATED PARTY TRANSACTIONS
   

Effective September 23, 2010, the Company entered into two consulting agreements, one with the President, CEO and CFO (the “President”) and one with the Secretary and Treasurer (the “Secretary”). As consideration for the performance of consulting services under the agreement, the Company agreed to pay the President $10,000 per month and the Secretary $5,000 per month, respectively. Under the agreement the President and the Secretary were also granted stock options to acquire 700,000 and 400,000 shares of common stock, respectively, at an exercise price of $1.05 per share until August 20, 2015 in accordance with the terms of the Company’s 2009 Stock Option Plan. The agreement was for a term of three years and expired during the year ended December 31, 2013.



Maverick Minerals Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2013
(Expressed in United States Dollars)

Note 7 RELATED PARTY TRANSACTIONS – continued
   

Management fees of $135,000 were charged to expense in these financial statements for the year ended December 31, 2013 (2012 - $180,000). Included in accounts payable and accrued liabilities at December 31, 2013 is $238,879 (2012 - $129,971) owing to officers of the Company and a company with a common officer of the Company for accrued and unpaid management fees and for expenses incurred on behalf of the Company.

   

During the year ended December 31, 2012, the Company incurred $1,165 in interest charges on loans payable to a significant shareholder of the Company (2012 - $109,913 in interest charges on loans payable to companies controlled a significant shareholder of the Company). Of these amounts $Nil (2012 - $Nil) was payable as at December 31, 2013.

   

During the year ended December 31, 2013, the Company incurred $13,177 (2012 - $8,022 interest charges on convertible debt payable to the director and CEO of the Company. Of these amounts $37,966 (2012 - $24,789) has been aggregated with the balance of the convertible debt owed.

   

During the year ended December 31, 2013, the Company earned consulting income from an company controlled by Energold, the majority shareholder of the Company in the amount of $49,000 (2012 - $Nil). These transactions were measured at the exchange amount, which is the amount agreed upon by the transacting parties, as the services were performed. This income has been included as a non-operating item on the consolidated statement of comprehensive loss as they are not part of the principal planned business operations of the Company.

   

During the year ended December 31, 2012, pursuant to a Share Transfer Agreement between Senergy and Energold, Senergy agreed to sell 8,950,000 common shares of the Company for $1,000 to Energold under the condition that Energold agree to advance the Company an unsecured loan of $150,000. As the share transfer was conditional upon Energold making a loan to the Company, the Company recorded the fair value of the shares transferred by Senergy on behalf of the Company as a financing fee with a corresponding credit to additional paid-in capital during the year ended December 31, 2012. The fair value of the shares of $1,790,000 was determined with reference to their quoted market price on the date of issuance.

   
Note 8

SHARE CAPITAL

   

As explained in Note 1, on April 21, 2003 the Company issued 3,758,040 common shares in exchange for all the issued and outstanding common shares of UCO.

   

In July 2003, the Company issued 150,000 common shares to the Company’s CEO in exchange for management services. The transaction was recorded at the quoted market price of $0.70 per common share and resulted in compensation expense of $105,000. No consideration was received by the Company in the exchange of shares for management services.

   

In June 2004, the Company issued 1,000,000 common shares at a price of $0.025 for proceeds of $25,000.

   

During the year ended December 31, 2004, an agreement was reached between the Company, UCO and its creditors releasing the Company and UCO from any further obligations in relation to amounts owing.



Maverick Minerals Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2013
(Expressed in United States Dollars)

Note 8 SHARE CAPITAL – continued
   

As a result, $1,027,791 of payables and liabilities that were owing to related parties was forgiven and recorded against additional paid-in capital. The remaining balance owing to unrelated creditors was recorded as a gain.

   

In January 2005, the Company issued 2,750,000 common shares at a price of $0.01 for proceeds of $27,500.

   

In June 2005, the Company cancelled 5,437,932 common shares, under an agreement with certain stockholders, which included the former stockholders of UCO, and two other stockholders including the CEO of the Company. The former stockholders of UCO surrendered the majority of the shares which was approximately 95% of the total common shares that they held at the time.

   

As a result of the share cancellation, one single common stockholder emerged as the majority stockholder with approximately 76% of the total issued and outstanding common shares. In addition, the CEO’s percentage common share holding increased and resulted in compensation expense of $44,720.

   

In July 2005, the Company issued 89,500 common shares at a price of $0.60 to settle an amount owing with respect to a loan payable. The transaction was recorded at the quoted market price of $1.40 and resulted in a loss on settlement of loan payable of $71,600.

   

In September 2005, the Company issued 7,500 common shares at a price of $0.10 for cash proceeds of $750 in relation to the exercise of stock options.

   

In April 2006, the Company issued 6,000 common shares at a price of $0.10 for $600 in relation to the exercise of stock options.

   
 

In 2007 and 2008 there were no share capital transactions.

   

On February 2, 2009 a major shareholder returned to treasury 2,000,000 common shares of the Company for nil consideration in contemplation of further share issuances (as described below).


  (a)

The Company entered into a loan agreement with Senergy Partners LLC (“Senergy”) on February 13, 2009, pursuant to which the Company established an unsecured revolving loan of up to $1,000,000, later amended to $500,000 (“the Credit Facility”). The outstanding principal amount of the Credit Facility together with all the accrued and unpaid interest and all other amounts outstanding there under were due and payable in full on December 31, 2012, the maturity date. Outstanding principal under the Credit Facility bore interest at an annual rate of 8%.
     
  (b)

In connection with the Company entering into the Credit Facility and Debt Settlement Agreement with Senergy, the Company entered into an Assignment and Assumption Agreement with Senergy and Art Brokerage, Inc. (“ABI”) dated February 13, 2009, pursuant to which ABI assigned to Senergy all of its right, title and interest to a debt of $447,500 owed by the Company to ABI.
     
  (c)

On February 13, 2009, the Company entered into a debt settlement and subscription agreement (the “Debt Settlement Agreement”) with Senergy in consideration of Senergy entering into the Credit Facility. Pursuant to the terms of the Debt Settlement Agreement, the company agreed to issue to Senergy 8,950,000 shares of the Company common stock in settlement of a $447,500 debt owed to Senergy.


Maverick Minerals Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2013
(Expressed in United States Dollars)

Note 8 SHARE CAPITAL – continued

As a result of these transactions, Senergy acquired 8,950,000 shares or 92.3% of the Company’s issued and outstanding common stock. The Company issued 8,950,000 common shares to settle an amount owing with respect to a loan payable totaling $447,500. The transaction was recorded at the quoted market price of $0.40 and resulted in a loss on settlement of loan payable of $3,132,500.

On August 11, 2009 the Company's articles of incorporation were amended and restated to increase the number of authorized shares of its common stock from 100,000,000 to 750,000,000. In addition the Company's articles of incorporation were amended and restated to authorize 100,000,000 shares of preferred stock with a par value of $0.001, which may be divided into and issued in series, with such designations, rights, qualifications, preferences, limitations and terms as fixed and determined by the Company's board of directors.

On September 24, 2009 the Company issued a further 436,000 shares to settle $218,000 owed to ABI. The transaction was recorded at the quoted market price of $0.30 and was treated as a capital transaction which resulted in a charge to equity of $218,000.

On December 11, 2009 the Company issued 175,000 shares each to two consultants, (350,000 shares total) for geological consulting services. The transactions were recorded at the quoted market price of $0.60 per share for total consideration of $210,000 which was capitalized to Oil and Gas Leases on the balance sheet.

Effective December 31, 2009 the Company effected a ten (10) for one (1) reverse stock split of the Company’s issued and outstanding shares of common stock. Shares and per share amounts have been retroactively restated to reflect the reverse stock split.

On July 19, 2010 the Company issued 49,925 common shares upon conversion of its Convertible Debenture dated December 11, 2009 in the principal amount of $35,625 and outstanding interest to July 19, 2010 of $1,788.

On July 27, 2010 the Company entered into a data purchase agreement with two individuals (collectively the “Vendors”), pursuant to which the Company agreed to purchase from the Vendors geologic data relating to certain oil and gas mineral leases located in Texas, including among other things: electric logs, seismic work, seismic reprocessing and data from the Texas Railroad Commission.

In consideration for the acquisition of the geologic data from the Vendors, the Company issued 350,000 shares of the common stock of the Company to the Vendors. The transactions were recorded at the quoted market price of $1.05 per share for total consideration of $367,500 which was capitalized to Oil and Gas Leases on the balance sheet.

On September 7, 2010 the Company issued a further 725,971 shares to settle $762,269 owed to ABI. The transaction was recorded at the quoted market price of $1.40 and resulted in a loss on settlement of loan payable of $254,090.

On December 21, 2010, the Company completed a private placement of 500,000 shares of its common stock at a price of $0.50 for gross proceeds of $250,000 to an offshore subscriber pursuant to Regulation S of the Securities Act of 1933. The offering was completed in connection with the above noted sale of a 15% working interest in the Well. These shares were issued on February 11, 2011.


Maverick Minerals Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2013
(Expressed in United States Dollars)

Note 8

SHARE CAPITAL – continued

   

On February 28, 2011, the Company entered into debt settlement and subscription agreements with two subscribers pursuant to which the Company settled an aggregate of $50,000 debt in consideration of the issuance of 50,000 shares on March 7, 2011. The debt related to certain amounts owed by ABI to third parties which were subsequently assigned to the Company. The transaction was recorded at the quoted market price of $1.01 and resulted in a loss on settlement of loans payable of $500.

   

On July 10, 2012, the Company issued 100,000 common shares pursuant to the acquisition of a mineral property interest. The fair value of the shares of $25,000 was determined with reference to their quoted market price on the date of issuance.

   

On August 7, 2012, the Company issued 750,000 common shares to Art Brokerage, Inc., in settlement of promissory notes outstanding of $3,387,743 and accrued interest therein of $356,348. Art Brokerage was owned by a significant shareholder of the Company at the date of the agreement and thus the amount of the settlement was recorded as a credit to additional paid-in capital during the year ended December 31, 2012.

   

On October 29, 2012 the Company extinguished a convertible debenture with Energold, a significant shareholder pursuant to a Share Transfer Agreement, in the amount of $302,052 (CDN$300,000) along with accrued interest of $1,854 (CDN$1,841) by issuing 3,039,057 common shares having a fair value of $781,038. At the time, a derivative liability having a carrying value of $477,132, being the embedded conversion option in the convertible debenture, was also extinguished. As a result of this extinguishment, the Company recorded a loss on extinguishment of debt of $Nil because the fair value of common shares issued was equal to the carrying value of the debt instruments at the date of conversion.

   

On September 13, 2013, the Company issued 100,000 common shares pursuant to the acquisition of a mineral property interest. The fair value of the shares of $3,000 was determined with reference to their quoted market price on the date of issuance.

   
Note 9

STOCK OPTION PLAN

   
 

Stock options

   

The Company has a stock option plan which provides for the granting of up to 7,500,000 stock options to key employees, directors and consultants, of common shares of the Company. Under the stock option plan, the granting of incentive and non-qualified stock options, exercise prices and terms are determined by the Board of Directors.

   
 

No stock options were issued during the year ended December 31, 2013 and 2012.

   

The following is a summary of the status of the Company’s stock options as of December 31, 2013 and the stock option activity during the years ended December 31, 2013 and 2012:


    Weighted Average
  Number of options Exercise Price
Outstanding, December 31, 2011 1,295,000 $0.99
Expired (145,000) $0.40
Outstanding, December 31, 2012 1,150,000 $1.07
Expired (50,000) $1.50
Outstanding, December 31, 2013 1,100,000 $1.05


Maverick Minerals Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2013
(Expressed in United States Dollars)

Note 9 STOCK OPTION PLAN – continued
   

All options that were outstanding were exercisable at December 31, 2013 and 2012 as a result of all options being fully vested upon grant.

   

At December 31, 2013, the Company had 1,100,000 share purchase options outstanding. Each share purchase option is exercisable into one common share of the Company at an average exercise price of $1.05 per share until August 20, 2015. These share purchase options had an aggregate intrinsic value of $Nil at December 31, 2013.

   
Note 10

INCOME TAXES

   

The tax effects of temporary differences that give rise to deferred tax assets at December 31, 2013 and 2012 are presented below:


    2013     2012  
Operating losses $ 760,000   $  760,000  
Capital losses   97,000     97,000  
Undeducted accruals   58,000     8,000  
Valuation allowance   (915,000 )   (865,000 )
$ -   $  -  

The Company evaluates its valuation allowance requirements based on projected future operations. When circumstances change and this causes a change in management’s judgment about the recoverability of deferred tax assets, the impact of the change on the valuation allowance is reflected in current income.

A reconciliation of United States federal statutory income tax rates is as follows:

    2013     2012  
Corporate tax rate   34%     34%  
Net loss for the year before income taxes $  (148,365 ) $  (2,697,662 )
             
Expected income tax recovery $  (50,000 ) $  (917,000 )
Gain on settlement of debt   -     1,221,000  
Non-deductible financing expenses   -     771,000  
             
Increase (decrease) in valuation allowance   50,000     (1,075,000 )
  $  -   $  -  

At December 31, 2013, the Company had estimated losses carried forward of approximately $2,234,000 (2012 - $2,085,000) that may be available to offset future taxable income.

The potential tax benefits have been fully allowed for in the valuation allowance in these financial statements. These Federal and state net operating loss carry-forwards begin to expire on various dates from 2026 through 2033.


Maverick Minerals Corporation
(An Exploration Stage Company)
Notes to Consolidated Financial Statements
December 31, 2013
(Expressed in United States Dollars)

Note 10 INCOME TAXES – Continued
   

The Company files income tax returns in the United States. All of the Company’s tax returns are subject to tax examinations until respective statute of limitation. The Company currently has no tax years under examination. The Company’s tax filings for the years 2007 - 2013 remain open to examination.

   

Based on management’s assessment of ASC 740, the Company concluded that the adoption of ASC 740 had no significant impact on our results of operations or financial position, and required no adjustment to the opening balance sheet accounts. The year-end analysis supports the same conclusion, and the Company does not have an accrual for uncertain tax positions as of December 31, 2013 and 2012.

   

As a result, tabular reconciliation of beginning and ending balances would not be meaningful. If interest and penalties were to be assessed, the Company would recognize the amounts within the income tax expense line in the statements of operations It is not anticipated that unrecognized tax benefits would significantly increase or decrease within twelve months of the reporting date.


ITEM 9.           CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

Not Applicable

ITEM 9A.         CONTROLS AND PROCEDURES.

Evaluation of disclosure controls and procedures and remediation

As required by Rule 13(a)-15 under the Exchange Act, in connection with this annual report on Form 10-K, under the direction of our Chief Executive Officer and Chief Financial Officer, we have evaluated our disclosure controls and procedures as of December 31, 2013, including the remedial actions discussed below, and we have concluded that, as of December 31, 2013, our disclosure controls and procedures were ineffective as discussed in greater detail below. As of the date of this filing, we are still in the process of remediating such material weaknesses in our internal controls and procedures.

It should be noted that while our management believes our disclosure controls and procedures provide a reasonable level of assurance, they do not expect that our disclosure controls and procedures or internal controls will prevent all error and all fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of internal control is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Management’s annual report on internal control over financial reporting

Management is responsible for establishing and maintaining internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Our management evaluated, under the supervision and with the participation of our Chief Executive Officer, the effectiveness of our internal control over financial reporting as of December 31, 2013.

Based on its evaluation under the framework in Internal Control—Integrated Framework (1992), issued by the Committee of Sponsoring Organizations of the Treadway Commission our management concluded that our internal control over financial reporting was not effective as of December 31, 2013, due to the existence of significant deficiencies constituting material weaknesses, as described in greater detail below. A material weakness is a control deficiency, or combination of control deficiencies, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

-23-

Limitations on Effectiveness of Controls

Our Chief Executive Officer and Chief Financial Officer does not expect that our disclosure controls or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additional controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Material Weaknesses Identified

We have identified certain significant deficiencies in internal control that represent material weaknesses, including:

  (i)

There is a lack of a sufficient number of independent directors for our board and audit committee. We currently have no independent director on our board, which is comprised of one director. As a publicly-traded company, we strive to have a majority of our board of directors be independent;

     
  (ii)

Due to the limited number of staff resources, there is insufficient segregation of duties in our finance and accounting functions. During the year ended December 31, 2013, we had limited staff that performed nearly all aspects of our financial reporting process, including, but not limited to, access to the underlying accounting records and systems, the ability to post and record journal entries and responsibility for the preparation of the financial statements. This creates certain incompatible duties and a lack of review over the financial reporting process that would likely result in a failure to detect errors in spreadsheets, calculations, or assumptions used to compile the financial statements and related disclosures as filed with the SEC. These control deficiencies could result in a material misstatement to our interim or annual consolidated financial statements that would not be prevented or detected;

     
  (iii)

There is a lack of sufficient supervision and review by our corporate management;

     
  (iv)

There are insufficient corporate governance policies. Although we have a code of ethics which provides broad guidelines for corporate governance, our corporate governance activities and processes are not always formally documented. Specifically, decisions made by the board to be carried out by management should be documented and communicated on a timely basis to reduce the likelihood of any misunderstandings regarding key decisions affecting our operations and management; and

     
  (v)

Due to the limited number of staff resources, the Company may not have the necessary in- house knowledge to address complex accounting and tax issues that may arise.

Plan for Remediation of Material Weaknesses

Our company has taken steps to improve our internal controls over financial reporting and we intend to continue to take appropriate and reasonable steps necessary to remediate these deficiencies. We intend to consider the results of our remediation efforts and related testing as part of our year-end 2014 assessment of the effectiveness of our internal control over financial reporting.

-24-

Subject to receipt of additional financing, we have undertaken, or intend to undertake the following remediation measures to address the material weaknesses described in this annual report. Such remediation activities include the following:

  (1)

We continue to recruit two or more additional independent board members to join our board of directors and will consider the adoption of an audit committee at such time as additional board members are retained; and

     
  (2)

We intend to continue to update the documentation of our internal control processes, including formal risk assessment of our financial reporting processes.

     
  (3)

We intend to hire more staff or engage more consultants with sufficient expertise and knowledge in complex US tax and accounting matters once the resources are available to do so.

Changes in Internal Controls over Financial Reporting

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

ITEM 9B. OTHER INFORMATION.

None.

-25-

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Directors and Executive Officers

Name Age Position
Robert Kinloch 58 President, Chief Executive Officer, Chief Financial Officer and Director
Donald Kinloch 55 Secretary and Treasurer

Summary Background of Executive Officers and Directors

The following is a brief account of the education and business experience of each director and executive officer during at least the past five years, indicating each person’s principal occupation during that period, and the name and principal business of the organization by which he was employed.

Robert Kinloch

Since July 5, 2001, Mr. Robert Kinloch has been the President, Chief Executive Officer, Chief Financial Officer and sole member of the Board of Directors of our company. In his capacity as Chief Financial Officer, Mr. Kinloch is and has been responsible for the finance function of our company including supervising the preparation of our financial statements and as the sole member of our board of directors has served on our audit committee. Mr. Kinloch’s duties as President and Chief Executive Officer include the business development function, investigating qualified investment opportunities and designing and implementing the required due diligence and acquisition financing thereto. In addition, Mr. Kinloch is responsible for our regulatory obligations as a reporting issuer. From June 2002 until May 2005 Mr. Kinloch was the President and sole member of the board of directors of AMT Canada Inc., a private company registered under the laws of the Yukon Territory, Canada. From March 2004 until April 2005, Mr. Kinloch was President and a member of the board of directors of UCO Energy Corporation, a private company incorporated pursuant to the laws of the State of Nevada. In March, 2009, Mr. Kinloch was elected to the board of directors of Conquest Resources Limited, a Canadian based gold exploration company trading on the Toronto Venture Exchange. In September, 2012, Mr. Kinloch was appointed President and Chief Executive Officer of Conquest Resources Limited. Mr. Kinloch is the brother of Donald Kinloch, our Secretary and Treasurer.

Donald Kinloch

Since September 4, 2002, Mr. Donald Kinloch has been our Secretary and Treasurer. Donald Kinloch is the brother of Robert Kinloch, our President, Chief Executive Officer, Chief Financial Officer and sole member of our board of directors. Since January 1998, Mr. Kinloch has been an independent consultant conducting contractual due diligence, supplying market research and developing communication strategies. From March 2004 until April 2005, Mr. Kinloch was the Secretary and Treasurer of UCO Energy Corporation, a private company incorporated pursuant to the laws of the State of Nevada.

Term of Office

The directors serve until their successors are elected by the shareholders. Vacancies on the Board of Directors may be filled by appointment of the majority of the continuing directors. The executive officers serve at the discretion of the Board of Directors.

-26-

Family Relationships

Robert Kinloch and Donald Kinloch are brothers.

Significant Employees

We have no significant employees.

Involvement in Certain Legal Proceedings

Our directors, executive officers and control persons have not been involved in any of the following events during the past ten years:

  1.

any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

     
  2.

any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

     
  3.

being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or

     
  4.

being found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission 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.

Audit Committee

The Company’s audit committee is composed of its directors and officers, Robert Kinloch and Donald Kinloch.

Audit Committee Financial Expert

Our board of directors has determined that it does not have an audit committee member that qualifies as an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K. We believe that the audit committee members are collectively capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. In addition, 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 revenues to date.

Code of Ethics

We adopted a Code of Ethics applicable to all of our directors, officers, and consultants, which is a “code of ethics” as defined by applicable rules of the SEC. Our Code of Ethics is attached as an exhibit to our annual report on Form 10-KSB filed on April 24, 2008. If we make any amendments to our Code of Ethics other than technical, administrative, or other non-substantive amendments, or grant any waivers, including implicit waivers, from a provision of our Code of Ethics to our chief executive officer, chief financial officer, or certain other finance executives, we will disclose the nature of the amendment or waiver, its effective date and to whom it applies in a Current Report on Form 8-K filed with the SEC.

-27-

Section 16(a) Beneficial Ownership Compliance

Section 16(a) of the Exchange Act requires our executive officers and directors and persons who own more than 10% of a registered class of our equity securities to file with the SEC initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common stock and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10% shareholders are required by the SEC regulations to furnish us with copies of all Section 16(a) reports that they file.

Based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that all filing requirements applicable to our officers, directors and greater than ten percent beneficial owners were complied with.

ITEM 11. EXECUTIVE COMPENSATION.

The particulars of compensation paid to the following persons:

  • our principal executive officer;

  • each of our two most highly compensated executive officers who were serving as executive officers at the end of the year ended December 31, 2013; and

  • up to two additional individuals for whom disclosure would have been provided under (b) but for the fact that the individual was not serving as our executive officer at the end of the most recently completed financial year,

who we will collectively refer to as the named executive officers, for our years ended December 31, 2011 and 2010, are set out in the following summary compensation table:

  SUMMARY COMPENSATION TABLE  





Name
and
Principal
Position






Year






Salary
($)






Bonus
($)





Stock
Awards
($)





Option
Awards
($)

Non-
Equity
Incentive
Plan
Compensa-
tion
($)
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)



All
Other
Compensa
-tion
($)






Total
($)
Robert
Kinloch
President,
Chief
Executive
Officer and
Director 		2013
2012




90,000
120,000




 Nil
Nil




Nil
Nil




Nil
Nil




Nil
Nil




Nil
Nil




Nil
Nil




90,000
120,000




Donald
Kinloch
Secretary and
Treasurer 		2013
2012

45,000
60,000

Nil
Nil

Nil
Nil

Nil
Nil

Nil
Nil

Nil
Nil

Nil
Nil

45,000
60,000

-28-

Employment Contracts

Effective September 23, 2010, we entered into a consulting agreement with Robert Kinloch, pursuant to which the Company engaged Mr. Kinloch to, among other things: perform the duties of President, Chief Executive Officer and Chief Financial Officer of the Company, prepare and execute any and all records and filings required to maintain the Company’s public listing, attend to governance issues as they relate to the Nevada registration, provide the Board with any information required to administer the affairs of the Company, advise and recommend, if requested, on any circumstance that may arise relating to asset or acquisition integration, tax matters, market factors and corporate finance. As consideration for the performance his consulting services under the agreement, the Company agreed to pay Mr. Kinloch $10,000 per month. Under the agreement Mr. Kinloch was also granted stock options to acquire 700,000 shares of common stock at an exercise price of $1.05 per share until August 20, 2015 in accordance with the terms of the Company’s 2009 Stock Option Plan. The agreement was for a term of three years and expired during the year ended December 31, 2013. Mr. Kinloch will continue to serve as our Company’s President, Chief Executive Office and Chief Financial Officer, with future compensation to be determined.

Effective September 23, 2010, we entered into a consulting agreement with Donald Kinloch, pursuant to which the Company engaged Mr. Kinloch to, among other things: perform the duties of Secretary of the Company, prepare and execute any and all records and filings required to maintain the Company’s corporate records, interface with shareholders and any person or group having a legitimate interest in the affairs of the Company, provide the board of the Company with any information required to administer the affairs of the Company, and advise and recommend, if requested, on any circumstance that may arise relating to asset management and field operations. As consideration for the performance his consulting services under the agreement, the Company agreed to pay Mr. Kinloch $5,000 per month. Under the agreement Mr. Kinloch was also granted stock options to acquire 400,000 shares of common stock at an exercise price of $1.05 per share until August 20, 2015 in accordance with the terms of the Company’s 2009 Stock Option Plan. The agreement was for a term of three years and expired during the year ended December 31, 2013. Mr. Kinloch will continue to serve as our Company’s Secretary, with future compensation to be determined.

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 stock 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 stock options may be granted at the discretion of our board of directors from time to time. We have no plans or arrangements in respect of remuneration received or that may be received by our executive officers to compensate such officers in the event of termination of employment (as a result of resignation, retirement, change of control) or a change of responsibilities following a change of control.

Outstanding Equity Awards at Fiscal Year-End

The following table sets forth for each director certain information concerning the outstanding equity awards as of December 31, 2013.

-29-


  OPTION AWARDS STOCK AWARDS














Name













Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable













Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable








Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)















Option
Exercise
Price
($)
















Option
Expiration
Date












Number
of
Shares
or
Units of
Stock
That
Have
Not
Vested
(#)







Market
Value
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
($)

Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
(#)


Equity
Incentive
Plan
Awards:
Market
or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
(#)


Robert
Kinloch 		700,000
-
-
$1.05
08/20/15
Nil
-
Nil
Nil
Donald
Kinloch 		400,000
-
-
$1.05
08/20/15
Nil
-
Nil
Nil

Aggregated Options Exercised in the Year Ended December 31, 2013 and Year End Option Values

There were no stock options exercised during the year ended December 31, 2013.

Repricing of Options/SARS

During the year ended December 31, 2013, we did not reprice any options.

Director Compensation

We reimburse our director for expenses incurred in connection with attending board meetings. We did not pay any other director’s fees or other compensation for services rendered as a director for the fiscal year ended December 31, 2013.

We have no formal plan for compensating our directors for their service in their capacity as directors, although such directors are expected in the future to receive stock options to purchase common shares as awarded by our board of directors or (as to future stock options) a compensation committee which may be established. Directors are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of our board of directors. Our board of directors may award special remuneration to any director undertaking any special services on our behalf other than services ordinarily required of a director. No director received and/or accrued any compensation for their services as a director, including committee participation and/or special assignments.

-30-

ITEM 12.         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

As of April 15, 2014, there were 16,141,674 shares of our common stock outstanding. The following table sets forth certain information known to us with respect to the beneficial ownership of our common stock as of that date by (i) each of our directors, (ii) each of our executive officers, and (iii) all of our directors and executive officers as a group. Except as set forth in the table below, there is no person known to us who beneficially owns more than 5% of our common stock.


Title of Class 		Name and Address
of Beneficial Owner 		Number of Shares
Beneficially Owned(1) 		Percentage of Class(2)
Directors and Officers:      
       
Common Stock


Robert J. Kinloch
302-95 Sidney St.
Belleville, Ontario
Canada K8P 1J6 		1,188,853(3)


6.9%


       
Common Stock


Donald Kinloch
1798 Old Highway #2
Unit #2 RR 2 Belleville
ON K8N 4Z2
425,000(4)


2.6%

       
Common Stock
Directors and Officers as
a group (two) 		1,613,8535)
9.1
       
5% Shareholders:      
       
Common Stock


Robert J. Kinloch
302-95 Sidney St.
Belleville, Ontario
Canada K8P 1J6 		1,188,853(3)


6.9%


       
Common Stock


Energold Minerals Inc.
700-220 Bay Street
Toronto, Ontario
Canada M5L 1E9 		12,189,058


75.5%


       
Common Stock



Donna Rose
1000 N. Green Valley
Pkwy
Suite 440-235
Henderson, NV 89074 		1,545,971(6)



9.6%



Notes:
*Less than 1%

(1)

Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights.

-31-


(2)

The percentage of class is based on 16,141,674 shares of common stock issued and outstanding as of April 15, 2014.

 

 

(3)

Total consists of 23,623 shares of the Company beneficially owned by Mr. Robert Kinloch and 700,000 shares of the Company acquirable on exercise of options within 60 days of the date hereof and 465,230 shares of the Company acquirable on the conversion of a convertible loan and accrued interest thereon.

 

 

(4)

Total consists of 25,000 shares of the Company beneficially owned by Mr. Donald Kinloch and 400,000 shares of the Company acquirable on exercise of options within 60 days of the date hereof.

 

 

(5)

Total includes of 1,100,000 shares of the Company acquirable on exercise of options within 60 days of the date hereof and 465,230 shares of the Company acquirable on the conversion of a convertible loan and accrued interest thereon.

 

 

(6)

Total consists of 795,971 shares of the Company owned by Donna Rose, 100,000 shares of the Company owned by Senergy Partners LLC, a private corporation beneficially owned by Donna Rose, and 650,000 shares of the Company owned by Art Brokerage, Inc., a private corporation beneficially owned by Donna Rose.

Changes in Control

We are unaware of any contract or other arrangement the operation of which may at a subsequent date result in a change of control of our company

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

Except as set out below, no director, executive officer, principal shareholder holding at least 5% of our common shares, or any family member thereof, had any material interest, direct or indirect, in any transaction, or proposed transaction, since the beginning of our company’s fiscal year ended December 31, 2013, 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. Effective September 23, 2010, we entered into two consulting agreements, one with Robert Kinloch and one with Donald Kinloch. As consideration for the performance of consulting services under the agreement, the Company agreed to pay the Robert and Donald $10,000 and $5,000 per month. Under the agreement Robert and Donald were also granted stock options to acquire 700,000 and 400,000 shares of common stock, respectively, at an exercise price of $1.05 per share until August 20, 2015 in accordance with the terms of the Company’s 2009 Stock Option Plan. The agreements were for a term of three years and expired during the year ended December 31, 2013.

On November 26, 2009, we entered into a subscription agreement with Robert Kinloch pursuant to which Mr. Kinloch purchased one convertible debenture (the “Debenture”) in the aggregate principal amount of $100,000 in settlement of $100,000 of outstanding debt owed by the Company to Mr. Kinloch. The Debenture and accrued interest is convertible into shares of the Company’s common stock, par value $0.001 at a deemed conversion price per share of $0.30 for an aggregate purchase price of $100,000. The Debenture is payable on demand, and bears interest at the rate of 8% per annum, payable on the date of conversion of the Debenture. Interest is calculated on the basis of a 360-day year and accrues daily commencing on the date the Debenture is issued until payment in full of the principal amount, together with all accrued and unpaid interest and other amounts which may become due have been made.

-32-

Director Independence

Our common stock is quoted on the OTCQB, which does not have director independence requirements. Under NASDAQ rule 4200(a)(15), a director is not considered to be independent if he or she is also an executive officer or employee of the corporation. Mr. Robert Kinloch is our chief executive officer and president and our sole director. As a result, we do not have any independent directors.

As a result of our limited operating history and limited resources, our management believes that we will have difficulty in attracting independent directors. In addition, we would be likely be required to obtain directors and officers insurance coverage in order to attract and retain independent directors. Our management believes that the costs associated with maintaining such insurance is prohibitive at this time.

Board of Directors

Our board of directors facilitates its exercise of independent supervision over management by endorsing the guidelines for responsibilities of the board as set out by regulatory authorities on corporate governance in the United States. Our board’s primary responsibilities are to supervise the management of our company, to establish an appropriate corporate governance system, and to set a tone of high professional and ethical standards.

The board is also responsible for:

  • selecting and assessing members of the Board;
  • choosing, assessing and compensating the Chief Executive Officer of our company, approving the compensation of all executive officers and ensuring that an orderly management succession plan exists;
  • reviewing and approving our company’s strategic plan, operating plan, capital budget and financial goals, and reviewing its performance against those plans;
  • adopting a code of conduct and a disclosure policy for our company, and monitoring performance against those policies;
  • ensuring the integrity of our company’s internal control and management information systems;
  • approving any major changes to our company’s capital structure, including significant investments or financing arrangements; and
  • reviewing and approving any other issues which, in the view of the Board or management, may require Board scrutiny.

Orientation and Continuing Education

We have an informal process to orient and educate new recruits to the board regarding their role of the board, our committees and our directors, as well as the nature and operations of our business. This process provides for an orientation with key members of the management staff, and further provides access to materials necessary to inform them of the information required to carry out their responsibilities as a board member. This information includes the most recent board approved budget, the most recent annual report, the audited financial statements and copies of the interim quarterly financial statements.

The board does not provide continuing education for its directors. Each director is responsible to maintain the skills and knowledge necessary to meet his or her obligations as directors.

Nomination of Directors

The board is responsible for identifying new director nominees. In identifying candidates for membership on the board, the board takes into account all factors it considers appropriate, which may include strength of character, mature judgment, career specialization, relevant technical skills, diversity and the extent to which the candidate would fill a present need on the board. As part of the process, the board, together with management, is responsible for conducting background searches, and is empowered to retain search firms to assist in the nominations process. Once candidates have gone through a screening process and met with a number of the existing directors, they are formally put forward as nominees for approval by the board.

-33-

Assessments

The board intends that individual director assessments be conducted by other directors, taking into account each director’s contributions at board meetings, service on committees, experience base, and their general ability to contribute to one or more of our company’s major needs. However, due to our stage of development and our need to deal with other urgent priorities, the board has not yet implemented such a process of assessment.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit fees

The aggregate fees billed for the two most recently completed fiscal periods ended December 31, 2013 and December 31, 2012 for professional services rendered by BDO Canada LLP, Chartered Accountants, for the audit of our annual consolidated financial statements, quarterly reviews of our interim consolidated financial statements and services normally provided by the independent accountant in connection with statutory and regulatory filings or engagements for these fiscal periods were as follows:



 Year Ended
December 31,
2013 		Year Ended
December 31,
2012
Audit Fees $76,489 $51,145
Audit Related Fees - -
Tax Fees $13,111 $1,700
All Other Fees - -
Total $89,600 $52,845

In the above table, “audit fees” are fees billed by our company’s external auditor for services provided in auditing our company’s annual financial statements for the subject year along with reviews of interim quarterly financial statements. “Audit-related fees” are fees not included in audit fees that are billed by the auditor for assurance and related services that are reasonably related to the performance of the audit review of our company’s financial statements. “Tax fees” are fees billed by the auditor for professional services rendered for tax compliance, tax advice and tax planning. “All other fees” are fees billed by the auditor for products and services not included in the foregoing categories.

Policy on Pre-Approval by Audit Committee of Services Performed by Independent Auditors

The 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. PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

Exhibit  
Number Description
   
3.1

Amended and Restated Articles (incorporated by reference from our Form 10-Q Quarterly report, filed on August 14, 2009)

   
3.2

Bylaws (incorporated by reference from our Form 10SB Registration Statement, filed on August 8, 1999)

   
3.3

Amended Bylaws (incorporated by reference from our Annual Report on Form 10-KSB, filed on April 24, 2008)

   
4.1

Specimen Stock Certificate (incorporated by reference from our Form 10-SB Registration Statement, filed on August 8, 1999)

   
10.1

Non-Qualified Stock Option Plan (incorporated by reference from our Form S-8 Registration Statement, filed on September 12, 2002)

   
10.2

Mutual Release Agreement between Eskota Energy Corporation and Veneto Exploration, LLC and Assignment of Oil and Gas Leases dated July 6, 2006 (incorporated by reference from our Quarterly Report on Form 10-QSB for the period ended June 30, 2006)

   
10.3

Purchase Agreement between Maverick Minerals Corporation, UCO Energy Corporation and the shareholders of UCO Energy, dated April 21, 2003 (incorporated by reference from our Annual Report on Form 10-KSB filed on May 19, 2004)

   
10.4

Loan Agreement and Civil Action Covenant between Art Brokerage Inc., Eskota Energy Corporation and Maverick Minerals Corporation (incorporated by reference from our Quarterly Report on Form 10-QSB for the period ended June 30, 2006)

   
10.5

Loan Agreement between Alonzo B. Leavell and Maverick Minerals Corporation dated July 20, 2005 (incorporated by reference from our Quarterly Report on Form 10-QSB for the period ended June 30, 2006)

   
10.6

Loan Agreement between Alonzo B. Leavell and Maverick Minerals Corporation dated April 27, 2005 (incorporated by reference from our Quarterly Report on Form 10-QSB for the period ended June 30, 2006)

   
10.7

Management Agreement dated as at March 5, 2003 between Maverick Minerals Corp. and Robert Kinloch (incorporated by reference from our Quarterly Report on Form 10-QSB for the period ended June 30, 2006)

   
10.8

Management Agreement dated as at June 1, 2005 between Maverick Minerals Corp. and Robert Kinloch (incorporated by reference from our Quarterly Report on Form 10-QSB for the period ended June 30, 2006)

   
10.9

Deed of Release dated November 31, 2008 with Pride of Aspen LLC (incorporated by reference from our Current Report on Form 8-K filed on December 3, 2008)

   
10.10

Assignment and Assumption Agreement dated February 10, 2009 among Art Brokerage, Inc., Senergy Partners LLC and Maverick Minerals Corp. (incorporated by reference from our Current Report on Form 8-K filed on February 20, 2009)

   
10.11

Loan Agreement dated as of February 13, 2009 between Maverick Minerals Corp. and Senergy Partners LLC (incorporated by reference from our Annual Report on Form 10-K filed on April 13, 2009)

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Exhibit  
Number Description
   
10.12

Debt Settlement and Subscription Agreement dated as of February 13, 2009 between Maverick Minerals Corp. and Senergy Partners LLC (incorporated by reference from our Current Report on Form 8-K filed on February 20, 2009)

   
10.13

2009 Stock Option Plan (incorporated by reference from our Form 10-Q Quarterly report, filed on August 14, 2009)

   
10.14

Debt Settlement and Subscription Agreement dated as of September 24, 2009 between Maverick Minerals Corp. and The Art Brokerage Inc. (incorporated by reference from our Form 10-Q Quarterly report, filed on November 16, 2009)

   
10.15

Farmout Agreement dated as of December 7, 2009 between Southeastern Pipe Line Company and Maverick Minerals Corporation (incorporated by reference from our Form 8-K Current report, filed on December 18, 2009)

   
10.16

Subscription Agreement between Maverick Minerals Corporation and Robert Kinloch dated November 26, 2009 (incorporated by reference from our Form 8-K Current report, filed on December 10, 2009)

   
10.17

Convertible Debenture dated November 26, 2009 (incorporated by reference from our Form 8-K Current report, filed on December 10, 2009)

   
10.18

Debt Settlement and Subscription Agreement between Maverick Minerals Corporation and Art Brokerage, Inc. dated September 7, 2010 (incorporated by reference from our Form 8-K Current report, filed on September 16, 2010)

   
10.19

Loan Agreement dated September 20, 2010 (and related security agreements) between Maverick Minerals Corporation and Art Brokerage, Inc. (incorporated by reference from our Form 8-K Current report, filed on September 24, 2010)

   
10.20

Pledge and Security Agreement dated September 20, 2010 between Maverick Minerals Corporation and Art Brokerage, Inc. (incorporated by reference from our Form 8-K Current report, filed on September 24, 2010)

   
10.21

Security Agreement dated September 20, 2010 between Maverick Minerals Corporation and Art Brokerage, Inc. (incorporated by reference from our Form 8-K Current report, filed on September 24, 2010)

   
10.22

Amendment Agreement dated September 15, 2010 between Maverick Minerals Corporation and Art Brokerage, Inc. (incorporated by reference from our Form 8-K Current report, filed on September 24, 2010)

   
10.23

Consulting Agreement dated September 23, 2010 between Maverick Minerals Corporation and Robert Kinloch (incorporated by reference from our Form 8-K Current report, filed on September 24, 2010)

   
10.24

Consulting Agreement dated September 23, 2010 between Maverick Minerals Corporation and Donald Kinloch (incorporated by reference from our Form 8-K Current report, filed on September 24, 2010)

   
10.25

Form of Subscription Agreement dated December 21, 2010 (incorporated by reference from our Form 8-K Current report, filed on December 28, 2010)

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Exhibit  
Number Description
   
10.26

Joint Operating Agreement dated effective December 6, 2010 between Maverick Minerals Corporation, Getty Resources Inc. and James Kearney (incorporated by reference from our Form 8-K Current report, filed on December 28, 2010)

   
10.27

Joint Operating Agreement dated effective December 7, 2010 between Maverick Minerals Corporation and Arrowdog, LLP (incorporated by reference from our Form 8-K Current report, filed on December 28, 2010)

   
10.28

Letter Agreement dated December 6, 2010 between Maverick Minerals Corporation and John Kearney (incorporated by reference from our Form 8-K Current report, filed on December 28, 2010)

   
10.29

Option and Joint Venture Exploration Agreement dated June 8, 2012 between Maverick Minerals Corporation and Energold Minerals Inc.

   
10.30

Debt Settlement and Subscription Agreement dated August 7, 2012 between Maverick Minerals Corporation and The Art Brokerage, Inc. (incorporated by reference from our Form 8-K Current report, filed on August 7, 2012).

   
10.31

Debt and Subscription Agreement dated August 7, 2012 between Maverick Minerals Corporation and Senergy Partners LLC (incorporated by reference from our Form 8-K Current Report, filed on August 7, 2012).

   
10.32

Share Transfer Agreement dated August 20, 2012 between Energold Minerals Inc. and Senergy Partners LLC (incorporated by reference from our Form 8-K Current Report, filed on August 24, 2012).

   
14.1

Code of Ethics (incorporated by reference from our Annual Report on Form 10-KSB, filed on April 24, 2008)

   
21.1*

List of Subsidiaries

   
31.1*

Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

   
32.1*

Certification of Chief Executive Officer and Chief Financial Officer pursuant Section 906 Certifications under Sarbanes-Oxley Act of 2002

* Filed herewith.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

MAVERICK MINERALS CORPORATION

 

By /s/ Robert Kinloch  
  Robert Kinloch  
  President, Chief Executive Officer and Chief Financial Officer  
  (Principal Executive Officer, Principal Accounting Officer  
  and Principal Financial Officer)  
     
Date: April 15, 2014  

 

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By  /s/ Robert Kinloch  
  Robert Kinloch  
  President, Chief Executive Officer and Chief Financial Officer  
  (Principal Executive Officer, Principal Accounting Officer  
  and Principal Financial Officer)  
     
Date: April 15, 2014  

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