10-Q/A 1 aaamar2008a3.txt MAIN DOCUMENT UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 Amendment #3 FORM 10-QSB /A [X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended January 31, 2008 ------------------ [ ] Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period to ------------------ -------------------- Commission File Number 333-119848 ----------------- AAA ENERGY, INC. ----------------------------------------------------------------------- (Exact name of small Business Issuer as specified in its charter) Nevada 90-0338080 --------------------------------- ------------------------------- (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 3841 Amador Way Reno, Nevada 89502 ---------------------------------------- ----------------------------- (Address of principal executive offices) (Zip Code) Issuer's telephone number, including area code: (775) 827-2324 --------------------------- ----------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days [ X ] Yes [ ] No Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [ X ] Yes [ ] No State the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 34,272,000 shares of $0.001 par value common stock outstanding as of March 14, 2008 AAA ENERGY INC. (AN EXPLORATION STAGE COMPANY) FINANCIAL STATEMENTS JANUARY 31, 2008 BALANCE SHEETS STATEMENTS OF OPERATIONS STATEMENTS OF CASH FLOWS NOTES TO THE FINANCIAL STATEMENTS AAA ENERGY INC. (An Exploration Stage Company) BALANCE SHEETS (unaudited)
January 31, July 31, 2008 2007 ASSETS Current Cash $82,388 $114,425 Prepaid expenses 28,875 - Due from related parties 315 - Total Assets $111,578 $114,425 LIABILITIES Current Accounts payable and accrued liabilities $41,577 $46,333 Convertible Note (Note 3) 137,974 58,063 Total Liabilities 179,551 104,396 STOCKHOLDERS' EQUITY Common Stock Authorized: 100,000,000 common shares $0.001 par value Issued: 34,272,000 common shares (July 31, 2007 - 34,272,000 shares) 34,272 34.272 Additional Paid-in Capital 334,535 234,535 Deficit accumulated during the exploration stage (436,780) (258,778) Total Stockholders' (Deficit) Equity (67,973) 10,029 Total Liabilities and Stockholders' (Deficit) Equity $111,578 $114,425
The accompanying notes are an integral part of these financial statements. AAA ENERGY INC. (An Exploration Stage Company) STATEMENTS OF OPERATIONS (unaudited)
Cumulative From May 26, Three Six 2004 - months ended months ended (Inception) January 31, January 31, to January 2008 2007 2008 2007 31, 2008 EXPENSES Accounting and audit fees $5,103 $3,743 $13,578 $5,873 $50,589 Bank charges 115 191 253 253 827 Consulting fees 16,861 1,391 29,026 21,151 88,409 Filing and transfer agent fees - 1,044 250 1,474 7,748 Interest expense (Note 3) 50,035 2,073 79,911 2,073 127,281 Investor relation - - - - 19,350 Legal fees - - 2,500 - 19,530 Mineral property costs (Note 2) 5,000 - 5,000 - 17,500 Mineral property exploration costs 2,867 - 11,005 - 11,005 Office expenses 7,000 690 9,983 2,190 18,244 Travel and promotion 14,226 14,233 26,496 22,848 76,297 NET LOSS (101,207) (23,365) (178,002 (55,862) (436,780) BASIC AND DILUTED LOSS PER SHARE $(0.00) $(0.00) $(0.01) $(0.00) WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - 34,272,000 34,272,000 34,272,000 34,727,000 BASIC AND DILUTED
The accompanying notes are an integral part of these financial statements. AAA ENERGY INC. (An Exploration Stage Company) STATEMENTS OF CASH FLOWS (unaudited)
Cumulative From Six May 26, 2004 months ended (Inception) to January 31, January 31, 2008 2007 2008 CASH FLOWS FROM OPERATING ACTIVITIES Net loss $(178,002) $(55,862) $(436,780) Non cash items:, Interest expense 79,911 2,073 127,281 Shares issued for mineral property costs - - 500 Change in non-cash working capital item: Prepaid expenses (28,875) - (28,875) Accounts payable and accrued liabilities (4,756) 9,300 41,577 Due to related parties (315) - (315) NET CASH USED IN OPERATIONS (132,037) (44,489) (296,612) CASH FLOWS FROM FINANCING ACTIVITIES Capital stock issued for cash - - 94,000 Convertible Note 100,000 50,000 285,000 NET CASH (USED IN) FROM FINANCING ACTIVITIES 100,000 50,000 379,000 INCREASE (DECREASE) IN CASH (32,037) 5,511 82,388 CASH, BEGINNING 114,425 60,910 - CASH, ENDING $82,388 $66,421 $82,388 Supplemental Cash Flow Disclosures: Cash paid for: Interest - - - Income taxes - - - Non cash item: Shares issued for acquisition of mineral - - $500 property
The accompanying notes are an integral part of these financial statements.. Note 1 Basis of presentation Unaudited Interim Financial Statements The accompanying unaudited interim financial statements have been prepared in accordance with United States generally accepted accounting principles ("US GAAP") for interim financial information and with the instructions to Form 10-QSB of Regulation S-B. Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to such rules and regulations. However, except as disclosed herein, there have been no material changes in the information disclosed in the notes to the financial statements for the year ended July 31, 2007 included in the Company's annual report filed with the Securities and Exchange Commission. The interim unaudited financial statements should be read in conjunction with those financial statements included in the Form 10-KSB. In the opinion of Management, all adjustments considered necessary for a fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the six months ended January 31, 2008 are not necessarily indicative of the results that may be expected for the year ending July 31, 2008. Note 2 Advance During the period ending January 31, 2008, the Company advanced a consultant $28,875. The advance is to be used to investigate and secure projects in China Note 3 Convertible Note On November 8, 2007, a Lender advanced to the Company, as a part of a Note agreement an additional amount of $100,000. All such amounts advanced under the Note will comprise the principal amount which bears interest at 10% per annum and matures on January 11, 2009. The principal amount will be subject to conversion terms, where by at any time from the date of the Note until the date that the Company repays the entire amount of principal to the Lender, the lender at its sole option, may convert a portion, or all, of the principal amount outstanding into units in the capital stock of the Company. Each $0.40 of principal outstanding at the time of conversion may be converted into one unit consisting of one common share and one non-transferable share purchase warrant exercisable for a period of up to two years from the date of conversion. Each warrant shall entitle the Lender to purchase an additional common share of the Company at $0.60 during the term of warrants. Note 3 Mineral Property At August 4, 2007, the Company was granted an option to acquire 100% interest, subject to a 2% net smelter royalty, in one mineral claim located in the Lillooet Mining Division in the Province of British Columbia, Canada. Uner the terms of the option agreement, the Company must make cash payment of $255,000 CAD and issue 500,000 shares of common stock in various stages as follows: Cash Payment Number of Option Exercise Schedule (CAD) common shares ------------------------ ------------ ------------- Upon signing of agreement $5,000(paid) Nil First anniversary of agreement $30,000 100,000 Second anniversary of agreement $40,000 100,000 Third anniversary of agreement $50,000 100,000 Fourth anniversary of agreement $60,000 100,000 ------------------------------------------------------------------- Total $255,000 500,000 The company must also pay 2% net smelter returns for royalty ("NSR") upon commencement of commercial production. The Company may purchase half of the 2% NSR for on-time payment of $1,000,000 CAD. During the quarter ended January 31, 2008, the Company decided not to pursue further on this option agreement FORWARD LOOKING STATEMENTS This quarterly report contains forward-looking statements that involve risks and uncertainties. We use words such as anticipate, believe, plan, expect, future, intend and similar expressions to identify such forward-looking statements. You should not place too much reliance on these forward-looking statements. Our actual results are likely to differ materially from those anticipated in these forward-looking statements for many reasons, including the risks faced by us described in this Risk Factors section and elsewhere in this annual report. PLAN OF OPERATION We commenced operations as a company involved in the acquisition and exploration of resource properties. During the fiscal year ended July 31, 2005, we held a 100% interest in five mineral claims comprising the BA property. During the fiscal year ended July 31, 2006, our interest in the BA property lapsed. We are continuing to review potential acquisitions in the resource sector. Currently, we are in the process of completing due diligence investigation of various opportunities in the base and precious metals sectors in China Specifically, during the quarter, the Company undertook various due diligence trips to China to field visit and commence negotiations on various molybdenum prospects located in the Guangdong, Henan and Shaanxi Provinces. However, there is no guarantee that we will be able to reach any agreement to acquire such assets. On August 4, 2007, the Company was granted an option to acquire 100% interest, subject to a 2% net smelter royalty, in one mineral claim located in the Lillooet Mining Division in the Province of British Columbia. Under the terms of the option agreement, the Company must make cash payment of CDN$255,000 and issue 500,000 shares of common stock in various stages as follows: CDN$5,000 (paid) upon signing of the agreement, CDN$30,000 and issuance of 100,000 shares of common stock by the first anniversary of this agreement; CDN$40,000 and 100,000 shares by the second anniversary of this agreement; CDN$50,000 and issuance of 100,000 shares by the third anniversary of this agreement; CDN$60,000 and issuance of 100,000 shares by the fourth anniversary of this agreement; and CDN$70,000 and issuance of 100,000 shares by the fifth anniversary of this agreement. The Company must also pay 2% Net Smelter Returns Royalty ("NSR") upon commencement of commercial production. The Company may purchase half of the 2% NSR for a one-time payment of $1,000,000. During the quarter, in light of exploration logistics and access issues relating to this mineral property and the Company's focus on its Chinese molybdenum prospects, the Company has announced its intent to drop its interest in this prospect. We anticipate spending an additional $35,000 on administrative fees, including fees we will incur in complying with reporting obligations. The Company has previously announced that it was proceeding with the sale of up to $1,000,000 in convertible debentures to finance potential acquisition of natural and mineral resource projects and for working capital requirements, including administrative expenses and costs incurred in connection with our review of potential projects. Although upon the completion of the convertible debenture financing, we will have sufficient funds for any immediate working capital needs, additional funding may still be required in the form of equity financing from the sale of our common stock. However, we do not have any arrangements in place for any future equity financing. RESULTS OF OPERATIONS FOR PERIOD ENDING JANUARY 31, 2008 We did not earn any revenues during the three-month period ending January 31, 2008. We incurred operating expenses in the amount of $101,207 for the three- month period ending January 31, 2008. Our operating expenses were comprised of travel and promotion costs of $14,226, consulting fees of $16,861, mineral property costs of $5,000, mineral property exploration costs of $2,867, accounting and audit fees of $5,103, office expenses of $7,000, interest expense of $50,035, and bank charges of $115. At January 31, 2008, we had total assets of $112,578 consisting of cash of $82,388, advance of $28,875 and due from related parties of $315 and $179,551 in liabilities consisting of accounts payable and accrued liabilities of $41,577 and $137,974 pursuant to a convertible note. ITEM 3: CONTROLS AND PROCEDURES EVALUATION OF DISCLOSURE CONTROLS Our management evaluated the effectiveness of our disclosure controls and procedures as of the end of our fiscal quarter on January 31, 2008. This evaluation was conducted by our chief executive officer, Dr. Earl Abbott, and our principal accounting officer, David Lorge. Disclosure controls are controls and other procedures that are designed to ensure that information that we are required to disclose in the reports we file pursuant to the Securities Exchange Act of 1934 is recorded, processed, summarized and reported. LIMITATIONS ON THE EFFECTIVE OF CONTROLS Our management does not expect that our disclosure controls or our internal controls over financial reporting will prevent all error and fraud. A control system, no matter how well conceived and operated, can provide only reasonable, but no absolute, assurance that the objectives of a control system are met. Further, any control system reflects limitations on resources, and the benefits of a control system must be considered relative to its costs. These limitations also 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 a control. A design of a control system is also based upon certain assumptions about 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 may not be detected. CONCLUSIONS Based upon his evaluation of our controls, our chief executive officer and principal accounting officer have concluded that, subject to the limitations noted above, the disclosure controls are effective providing reasonable assurance that material information relating to us is made known to management on a timely basis during the period when our reports are being prepared. There were no changes in our internal controls that occurred during the quarter covered by this report that have materially affected, or are reasonably likely to materially affect our internal controls. PART II- OTHER INFORMATION Item 1. Legal Proceedings We are not a party to any pending legal proceeding. Management is not aware of any threatened litigation, claims or assessments. Item 2. Changes in Securities The Company did not issue any securities during the quarter ended January 31, 2007. Item 3. Defaults Upon Senior Securities None. Item 4. Submission of Matters to a Vote of Security Holders None. Item 5. Other Information None. Item 6. Exhibits and Report on Form 8-K Exhibits 31.1 Certification pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 31.2 Certification pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Current Reports on Form 8-K None SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. DATED: March 14, 2008 AAA Energy, Inc. /s/ Earl W. Abbott ------------------------------ Dr. Earl W. Abbott, President /s/ Dave Lorge ------------------------------- David Lorge, Director