10QSB 1 km_10qsb053107.txt QUARTERLY REPORT ON FORM 10QSB UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended May 31, 2007 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission file # 333-133232 KINGSTON MINES LTD. (Exact Name of Registrant as Specified in its Charter) NEVADA (State or other jurisdiction of incorporation or organization) 98-0471111 (I.R.S. Employer Identification number) 102-2020 S.E. KENT AVE., VANCOUVER, BRITISH COLUMBIA V5P 4X5 (Address of principal executive offices) (Zip Code) Issuer's telephone number: (604) 642-9561 106-1990 S.E. KENT AVE., VANCOUVER, BRITISH COLUMBIA V5P 4X5 (Former Name or Address if Changed Since Last Report) Securities registered under Section 12(b) of the Act: NONE Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK, $0.0001 PAR VALUE Check whether the Issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the Issuer 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [ ] As of May 31, 2007, the Issuer had 9,250,250 shares of its Common Stock outstanding. Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X] PART I -- FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS
KINGSTON MINES LTD. (An exploration stage company) Balance Sheets May 31, 2007 (EXPRESSED IN U.S. DOLLARS) --------------------------------------------------------------------------------------------------------- May 31 August 31 2007 2006 --------------------------------------------------------------------------------------------------------- (audited) ASSETS CURRENT ASSETS Cash and cash equivalents $ 95,953 $ 6,804 Prepaid expenses - 2,500 Funds held by escrow agent 51,360 - --------------------------------------------------------------------------------------------------------- TOTAL CURRENT ASSETS $147,313 $ 9,304 --------------------------------------------------------------------------------------------------------- TOTAL ASSETS $147,313 $ 9,304 --------------------------------------------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) LIABILITIES CURRENT LIABILITIES Promissory note - Related Party - 4,297 Other payable 430 Accounts payable and accrued liabilities 829 14,827 --------------------------------------------------------------------------------------------------------- TOTAL CURRENT LIABILITIES 1,259 19,124 CONVERTIBLE DEBENTURE - RELATED PARTY 15,000 15,000 --------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES 16,259 34,124 --------------------------------------------------------------------------------------------------------- STOCKHOLDERS' EQUITY (DEFICIENCY) SHARE CAPITAL Authorized: 50,000,000 preferred shares at a par value of $0.0001 per share Issued and outstanding: Nil 100,000,000 common shares with a par value of $0.0001 per share Issued and outstanding: 9,250,000 common shares 525 400 (August 31, 2006: 8,000,000 common shares) ADDITIONAL PAID-IN CAPITAL 125,674 463 Share subscriptions received 51,195 - (DEFICIT) ACCUMULATED DURING THE EXPLORATION STAGE (46,340) (25,683) --------------------------------------------------------------------------------------------------------- TOTAL STOCKHOLDERS' EQUITY (DEFICIENCY) 131,054 (24,820) --------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) $147,313 $ 9,304 =========================================================================================================
The accompanying notes are an integral part of these financial statements.
KINGSTON MINES LTD. (An exploration stage company) Statements of Stockholders' Equity (Deficiency) For the period from June 16, 2005 (inception) to May 31, 2007 (EXPRESSED IN U.S. DOLLARS) ------------------------------------------------------------------------------------------------------------------------------------ Deficit accumulated Total Additional Share during stockholders' Preferred Stock Common Stock paid-in subscriptions exploration equity Shares Amount Shares Amount capital received stage (deficiency) ------------------------------------------------------------------------------------------------------------------------------------ Issuance of common stock for cash July 5, 2005 ($0.00005 per share) - $ - 8,000,000 $ 400 $ - $ - $ - $ 400 Imputed interest from a shareholder - - - - 13 - - 13 Loss and comprehensive loss for the period - - - - - - (6,313) (6,313) ------------------------------------------------------------------------------------------------------------------------------------ Balance, August 31, 2005 - $ - 8,000,000 $ 400 $ 13 $ - $ (6,313) $ (5,900) ------------------------------------------------------------------------------------------------------------------------------------ Imputed interest from a shareholder - - - - 450 - - 450 Loss and comprehensive loss for the year - - - - - - (19,370) (19,370) ------------------------------------------------------------------------------------------------------------------------------------ Balance, August 31, 2006 - $ - 8,000,000 $ 400 $ 463 $ - $ (25,683) $ (24,820) ------------------------------------------------------------------------------------------------------------------------------------ Issuance of common stock for cash February 28, 2007 ($0.10 per share) - $ - 1,250,000 $ 125 $ 124,875 $ - $ - $ 125,000 Accepted share subscriptions of 511,950 common shares at $0.10 per share - $ - - $ - $ - $ 51,195 - 51,195 Imputed interest from a shareholder - - - - 336 - - 336 Loss and comprehensive loss for the period - - - - - - (20,657) (20,657) ------------------------------------------------------------------------------------------------------------------------------------ Balance, May 31, 2007 - $ - 9,250,000 $ 525 $ 125,674 $ 51,195 $ (46,340) $ 131,054 ====================================================================================================================================
The accompanying notes are an integral part of these financial statements
KINGSTON MINES LTD. (An exploration stage company) Statements of Operations (EXPRESSED IN U.S. DOLLARS) ------------------------------------------------------------------------------------------------------------------------- Cumulative from June 16, 2005 Three months ended Nine months ended (inception) to May 31 May 31 May 31, 2007 2007 2006 2007 2006 ------------------------------------------------------------------------------------------------------------------------- EXPENSES Accounting and audit $ 16,947 $ 1,166 $ 3,758 $ 7,282 $ 7,758 Legal fees 3,323 - 3,000 - 3,000 Bank charges 467 344 46 379 74 Filing fees 1,997 - - - - Interest 1,073 385 113 610 337 Consulting fees 2,803 - - - 2,803 Office expenses 936 239 - 435 212 Transfer agent 4,329 2,328 - 4,329 - Foreign exchange (gain) loss 40 (65) - (65) 105 Resource property acquisition and exploration costs 14,425 1,976 - 7,687 463 ------------------------------------------------------------------------------------------------------------------------- LOSS FROM OPERATIONS 46,340 6,373 6,917 20,657 14,752 ------------------------------------------------------------------------------------------------------------------------- NET LOSS AND COMPREHENSIVE LOSS FOR THE PERIOD $ (46,340) $ (6,373) $ (6,917) $ (20,657) $ (14,752) ------------------------------------------------------------------------------------------------------------------------- BASIC AND DILUTED LOSS PER SHARE $ (0.00) $ (0.00) $ (0.00) $ (0.00) ========================================================================================================================= WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - basic and diluted 9,250,000 8,000,000 8,421,245 8,000,000 =========================================================================================================================
The accompanying notes are an integral part of these financial statements
KINGSTON MINES LTD. (An exploration stage company) Statements of Cash Flows (EXPRESSED IN U.S. DOLLARS) ------------------------------------------------------------------------------------------------------- Cumulative from June 16, 2005 Nine months ended (inception) to May 31 May 31, 2007 2007 2006 ------------------------------------------------------------------------------------------------------- CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES Net (Loss) for the period $ (46,340) $ (20,657) $ (14,752) Adjustments to reconcile net (loss) to net cash provided by (used in) operating activities: - imputed interest 799 336 337 Changes in operating assets and liabilities - (increase) in prepaid expenses - 2,500 (2,500) - accounts payable and accrued liabilities and other payable 1259 (13,568) 8,433 ------------------------------------------------------------------------------------------------------- NET CASH USED IN OPERATING ACTIVITIES (44,282) (31,389) (8,482) ------------------------------------------------------------------------------------------------------- CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES Increase in promissory note - Related Party - (4,297) - Proceeds from convertible debenture - Related Party 15,000 - - Proceeds from issuance of common stock / share subscriptions 176,595 176,195 - ------------------------------------------------------------------------------------------------------- NET CASH PROVIDED BY FINANCING ACTIVITIES 191,595 171,898 - ------------------------------------------------------------------------------------------------------- INCREASE IN CASH AND CASH EQUIVALENTS 147,313 140,509 (8,482) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD - 6,804 15,394 ------------------------------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 147,313 $ 147,313 $ 6,912 ------------------------------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS COMPRISE OF: CASH AND CASH EQUIVALENTS $ 95,953 $ 95,953 $ 6,912 FUNDS HELD IN ESCROW AGENT 51,360 51,360 - $ 147,313 $ 147,313 $ 6,912 =======================================================================================================
The accompanying notes are an integral part of these financial statements NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS Kingston Mines Ltd. (hereinafter "the Company") was incorporated in the State of Nevada, U.S.A., on June 16, 2005. The Company's fiscal year end is August 31. The Company has been in the exploration stage since its formation and has not yet realized any revenues from its operations. It is primarily engaged in the acquisition and exploration of mining properties. Upon location of a commercially minable reserve, the Company expects to actively prepare the site for its extraction and enter a development stage. In 2005, the Company acquired a mineral interest in a property located near the southern boundary of the Town of Merritt in British Columbia, Canada and has not yet determined whether this property contains reserves that are economically recoverable. These financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America applicable to a going concern which assume that the Company will realize its assets and discharge its liabilities in the normal course of business. The Company has incurred accumulated losses of $46,340 since inception and has no source of revenue. The future of the Company is dependent upon its ability to obtain financing and upon future acquisition, exploration and development of profitable operations from its mineral properties. These factors create doubt as to the ability of the Company to continue as a going concern. Realization values may be substantially different from the carrying values as shown in these financial statements should the Company be unable to continue as a going concern. Management is in the process of identifying sources for additional financing to fund the ongoing development of the Company's business. On November 30, 2005, the board of directors approved a 2 for 1 forward stock split of our issued and outstanding shares of common stock. These Financial Statements of Kingston Mines Ltd. have been restated to reflect the 2 for 1 forward stock split. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the Company have been prepared in accordance with the generally accepted accounting principles 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 that 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: Accounting Method The Company's financial statements are prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. Cash and Cash Equivalents For purposes of the statement of cash flows, the Company considers all highly liquid investments and short-term debt instruments with original maturities of three months or less to be cash equivalents. As at May 31, 2007, there were no cash equivalents. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses for the reporting period. Actual results could differ from these estimates. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Concentration of Credit Risk The Company places its cash and cash equivalents with high credit quality financial institutions. As of May 31, 2007, the Company had no balance in a bank beyond insured limits. Foreign Currency Transactions The Company is located and operating outside of the United States of America. It maintains its accounting records in U.S. Dollars as follows: At the transaction date each asset, liability, revenue and expense is translated into U.S. dollars by the use of the exchange rate in effect at that date. At the period end, monetary assets and liabilities are remeasured by using the exchange rate in effect at that date. The resulting foreign exchange gains and losses are included in operations. Fair Value of Financial Instruments The Company's financial instruments as defined by Statement of Financial Accounting Standards No. 107, "Disclosures about Fair Value of Financial Instruments," include cash and cash equivalents, accounts payable and accrued liabilities, promissory note and convertible debenture. Fair values were assumed to approximate carrying value for these financial instruments, except where noted. Management is of the opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments. The Company is operating outside the United States of America and has significant exposure to foreign currency risk due to the fluctuation of currency in which the Company operates and U.S. dollars. Mineral Property Payments and Exploration Costs The Company expenses all costs related to the acquisition, maintenance and exploration of mineral claims in which it has secured exploration rights prior to establishment of proven and probable reserves. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs incurred to develop such property are capitalized. Such costs will be amortized using the units-of-production method over the estimated life of the probable reserve. To date, the Company has not established the commercial feasibility of its exploration prospects; therefore, all costs are being expensed. Long-lived assets impairment Long-term assets of the Company are reviewed for impairment whenever events or circumstances indicate that the carrying amount of assets may not be recoverable, pursuant to guidance established in SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. Management considers assets to be impaired if the carrying value exceeds the future projected cash flows from related operations (undiscounted and without interest charges). If impairment is deemed to exist, the assets will be written down to fair value. Fair value is generally determined using a discounted cash flow analysis. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Assets retirement obligations The Company has adopted SFAS No 143, Accounting for Assets Retirement Obligations which requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred. SFAS No. 143 requires the Company to record a liability for the present value of the estimated site restoration costs with corresponding increase to the carrying amount of the related long-lived assets. The liability will be accreted and the asset will be depreciated over the life of the related assets. Adjustments for changes resulting from the passage of time and changes to either the timing or amount of the original present value estimate underlying the obligation will be made. As at May 31, 2007, the Company does not have any asset retirement obligations. Costs associated with environmental remediation obligations will be accrued when it is probable that such costs will be incurred and they can be reasonably estimated. Stock-Based Compensation The Company adopted SFAS No. 123(revised), "Share-Based Payment", to account for its stock options and similar equity instruments issued. Accordingly, compensation costs attributable to stock options or similar equity instruments granted are measured at the fair value at the grant date, and expensed over the expected vesting period. SFAS No. 123(revised) requires excess tax benefits be reported as a financing cash inflow rather than as a reduction of taxes paid. The Company did not grant any stock options during the period ended May 31, 2007. Comprehensive Income The Company adopted Statement of Financial Accounting Standards No. 130 (SFAS 130), Reporting Comprehensive Income, which establishes standards for reporting and display of comprehensive income, its components and accumulated balances. The Company is disclosing this information on its Statement of Stockholders' Equity (Deficiency). Comprehensive income comprises equity except those resulting from investments by owners and distributions to owners. The Company has no elements of "other comprehensive income" for the period ended May 31, 2007. Income Taxes The Company has adopted Statement of Financial Accounting Standards No. 109 (SFAS 109), Accounting for Income Taxes, which requires the Company to recognize deferred tax liabilities and assets for the expected future tax consequences of events that have been recognized in the Company's financial statements or tax returns using the liability method. Under this method, deferred tax liabilities and assets are determined based on the temporary differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. Basic and Diluted Loss Per Share In accordance with SFAS No. 128 - "Earnings Per Share", the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional common shares that would be outstanding if the potential common shares had been issued and if the additional common shares were dilutive. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) New Accounting Pronouncements In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 153. This statement addresses the measurement of exchanges of non-monetary assets. The guidance in APB Opinion No. 29, "Accounting for Non-monetary Transactions," is based on the principle that exchanges of non-monetary assets should be measured based on the fair value of the assets exchanged. The guidance in that opinion; however, included certain exceptions to that principle. This statement amends Opinion 29 to eliminate the exception for non-monetary exchanges of similar productive assets and replaces it with a general exception for exchanges of non-monetary assets that do not have commercial substance. A non-monetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange. This statement is effective for financial statements for fiscal years beginning after June 15, 2005. Earlier application is permitted for non-monetary asset exchanges incurred during fiscal years beginning after the date of this statement is issued. Management believes the adoption will have no impact on the financial statements of the Company. In May 2005, the FASB issued SFAS No. 154, entitled Accounting Changes and Error Corrections--a replacement of APB Opinion No. 20 and FASB Statement No. 3. This Statement replaces APB Opinion No. 20, Accounting Changes, and FASB Statement No. 3, Reporting Accounting Changes in Interim Financial Statements, and changes the requirements for the accounting for and reporting of a change in accounting principle. This Statement applies to all voluntary changes in accounting principle. It also applies to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. Opinion 20 previously required that most voluntary changes in accounting principle be recognized by including in net income of the period of the change the cumulative effect of changing to the new accounting principle. This Statement requires retrospective application to prior periods' financial statements of changes in accounting principle, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. This Statement defines retrospective application as the application of a different accounting principle to prior accounting periods as if that principle had always been used or as the adjustment of previously issued financial statements to reflect a change in the reporting entity. This Statement also redefines restatement as the revising of previously issued financial statements to reflect the correction of an error. The adoption of SFAS 154 did not impact the financial statements. In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 48, "Accounting for Uncertainties in Income Taxes", ("FIN 48"). FIN 48 clarifies the accounting for uncertainty in income taxes and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 is effective for financial statements as of December 15, 2006. The adoption of FIN 48 is expected to have no impact on the Company's financial statements. In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" ("FAS 157"). FAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements but does not require any new fair value measurements. FAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company has not yet determined the impact of applying FAS 157. In September 2006, the FASB issued Statement of Financial Accounting Standards No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans", ("FAS 158"). FAS 158 requires an employer to recognize the overfunded or underfunded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income. FAS 158 is effective for financial statements as of December 31, 2006. The adoption of FAS No. 158 is expected to have no impact on the Company's financial statements. In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities". SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS No. 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The Company has not yet determined whether it will elect the fair value option for any of its financial instruments. NOTE 3 - MINERAL PROPERTY INTEREST On August 30, 2005 the Company acquired a 100% interest in a mineral claim from its principal shareholder and a director of the Company, known as the "Sugarloaf Property" located near the southern boundary of the Town of Merritt in British Columbia, Canada, for consideration of $4,297 being the cost to the principal shareholder, by issuance of a promissory note. The Company expensed the entire amount. On November 21, 2005, the Company acquired a 100% interest in four claims that are contiguous with the Company's other mineral claim and are located near the southern boundary of the Town of Merritt in British Columbia, Canada. The total cost of acquisition of these claims was $463. The Company expensed entire amount. NOTE 4 - PROMISSORY NOTE On August 30, 2005, the Company issued a non-interest bearing promissory note to its principal shareholder and a director in the amount of $4,297 for the purchase of the mineral property (See Note 3). The promissory note was repaid in full on March 5, 2007. NOTE 5 - CONVERTIBLE DEBENTURE On August 22, 2005, the Company issued a convertible debenture to its principal shareholder and a director in the amount of $15,000. The convertible debenture is unsecured, non-interest bearing, due December 31, 2007 and convertible at the option of the holder at a price of $0.25 per share at any time. The Company charged imputed interest at 3.0% per annum and recorded a total of $799 to the additional paid-in capital for the period from inception to May 31, 2007. The Company did not incur beneficial conversion charges because the conversion price is greater than the fair value of the equity of the Company. NOTE 6 - PREFERRED AND COMMON STOCK The Company has 50,000,000 shares of preferred stock authorized and none issued. The Company has 100,000,000 shares of common stock authorized, of which 8,000,000 shares are issued and outstanding. All shares of common stock are non-assessable and non-cumulative, with no preemptive rights. On February 28, 2007, the Company's Board of Directors approved, accepted and issued 1,250,000 shares of common stock subscription for cash proceeds of $125,000. NOTE 7 - SEGMENT INFORMATION The Company currently conducts all of its operations in Canada NOTE 8 - SUBSEQUENT EVENTS Subsequent to May 31, 2007, the Company's Board of Directors approved and issued 511,950 shares of common stock subscription for cash proceeds of $51,195. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES We are a mineral resource exploration stage company that has not begun operations. Our capital has been obtained via issuance of common stock and shareholder loans. On September 12, 2006, the Securities and Exchange Commission declared our Form SB-2 Registration Statement (Commission File No. 333-133232) effective. Our offering commenced on September 12, 2006, and is ongoing. We have sold 1,761,950 shares of our common stock through the offering for gross proceeds of $176,195. As of May 31, 2007, we had total assets of $147,313, comprised of $95,953 in cash and $51,360 held in escrow by our transfer agent. This is an increase from $9,304 in total assets as of August 31, 2006, and is entirely due to our public offering. As of May 31, 2007, our total liabilities decreased to $16,259 from $34,124 as of August 31, 2006, due primarily to the payment of trade creditors. As of May 31, 2007, we had working capital of $146,054 compared with a working capital deficit of $9,820 as of August 31, 2006. We have not generated revenue since the date of inception. We presently have sufficient working capital to satisfy our cash requirements for the next 12 months of operations. We do not intend to purchase any significant equipment during the next 12 months. We do not anticipate hiring any employees over the next 12 months. RESULTS OF OPERATIONS We posted an operating loss of $6,373 for the three month period ending May 31, 2007, due primarily to renewal of the original Sugarloaf claim, transfer agent fees and quarterly review fees. This was a nominal decrease from the operating loss of $6,917 for the three month period ending May 31, 2005. ITEM 3. CONTROLS AND PROCEDURES As required by Rule 13a-15 under the Securities Exchange Act of 1934, as of the end of the period covered by this quarterly report, being May 31, 2007, we have carried out an evaluation of the effectiveness of the design and operation of our company's disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of our company's management, including our company's president. Based upon that evaluation, our company's president concluded that our company's disclosure controls and procedures are effective as at the end of the period covered by this report. There have been no significant changes in our internal controls over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting. Disclosure controls and procedures and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time period specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934 is accumulated and communicated to management, including our president and secretary as appropriate, to allow timely decisions regarding required disclosure. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company is not a party to any material legal proceedings and to its knowledge, no such proceedings are threatened or contemplated. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS At present, our common stock is not traded publicly. As of July 5, 2007, there were 88 owners of record of our common stock. DIVIDEND POLICY Our Board of Directors may declare and pay dividends on outstanding shares of common stock out of funds legally available therefor in our sole discretion; however, to date no dividends have been paid on common stock and we do not anticipate the payment of dividends in the foreseeable future. USE OF PROCEEDS FROM REGISTERED SECURITIES On September 12, 2006, the Securities and Exchange Commission declared our Form SB-2 Registration Statement (Commission File No. 333-130922) effective. Our offering commenced on the effective date and terminated on May 13, 2007. As of May 31, 2007, we have sold 1,761,950 shares of our common stock for gross proceeds of $176,195, which 511,950 common shares have been approved and issued subsequent to May 31, 2007. We budgeted $25,000 from the proceeds of our offering for offering expenses. Of this amount, we paid a total of $9,665 for accounting fees. All other offering expenses were paid from the proceeds of a non-interest bearing loan of $15,000 from a director advanced prior to the commencement of our offering. We will use the remainder of the amount budgeted for offering expenses ($15,335) to repay the director's loan in full, with the surplus ($335) being used for working capital. After paying offering expenses and repaying the director's loan, net proceeds from our offering that are available for operations are $151,530. As of May 31, 2007, we spent $399 on office expenses, $19,113 for professional fees, and $9,790 on claim maintenance. Professional fees significantly exceeded our budgeted amount of $10,000 due to higher than expected accounting costs. Claim maintenance fees also exceeded budgeted amounts due to fluctuations in currency exchange rates. We budgeted $6,323 from the proceeds of our offering for the repayment of a debt owing to a director. This debt was repaid from the proceeds of the director's loan. The proceeds that would otherwise have been allocated for debt repayment will be used to pay for professional fees. ITEM 3. DEFAULT UPON SENIOR NOTES Not applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS EXHIBIT DESCRIPTION 31.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 31.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.1 Officers' Certification 32.2 Officers' Certification SIGNATURES In accordance with the requirements of the Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. KINGSTON MINES LTD. By:/s/ Lou Hilford Lou Hilford President, Chief Executive Officer and a director (Principal Executive Officer) By:/s/ Thomas Mills Thomas Mills Vice-President, Treasurer, Secretary and a director (Principal Financial Officer and Principal Accounting Officer) Date: July 5, 2007