Filed by Automated Filing Services Inc. (604) 609-0244 - Buckingham Exploration Inc. - Form 10-QSB
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC
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 August 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 number 333-137978
BUCKINGHAM EXPLORATION INC.
(Exact name of registrant as specified in its
charter)
NEVADA |
98-054-3851 |
(State or other jurisdiction of incorporation or
|
(I.R.S. Employer Identification No.)
|
organization) |
|
|
|
1978 Vine Street, Suite 502 |
V6K 4S1 |
Vancouver, British Columbia, Canada |
|
(Address of principal executive offices) |
(Zip Code) |
(604) 737 0203
(Registrants
telephone number, including area code)
______________________________________________________
(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
Exchange Act during the past 12 months
(or for such shorter period that the registrant was
require 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). [ ]
Yes [X] No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING
THE PRECEDING FIVE YEARS:
Check whether the registrant has filed all documents and reports
required to be filed by Sections
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
APPLICABLE ONLY TO CORPORATE ISSUERS
As of October 17, 2007, the registrants outstanding common
stock consisted of 40,032,250
shares.
Table of Contents
PART I Financial Information
ITEM 1. Financial Statements
Buckingham Exploration Inc.
(An Exploration Stage Company)
August 31, 2007
(unaudited)
2
Buckingham Exploration Inc.
(An Exploration Stage Company)
Consolidated Balance Sheets
(Expressed in US dollars)
(unaudited)
|
|
August 31 |
|
|
May 31, |
|
|
|
2007 |
|
|
2007 |
|
|
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
Cash |
|
189,715 |
|
|
456,274 |
|
Other
receivables |
|
9,579 |
|
|
22,112 |
|
Prepaid expenses |
|
39,401 |
|
|
6,125
|
|
Total Current Assets |
|
238,695 |
|
|
484,511 |
|
|
|
|
|
|
|
|
Property and Equipment (Note 4) |
|
42,165 |
|
|
- |
|
|
|
|
|
|
|
|
Total Assets |
|
280,860 |
|
|
484,511 |
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities |
|
|
|
|
|
|
Accounts payable |
|
26,084 |
|
|
12,462 |
|
Accrued
liabilities |
|
24,240 |
|
|
6,456 |
|
Due to related parties
(Note 6) |
|
- |
|
|
13,672 |
|
Note payable (Note 5)
|
|
23,674 |
|
|
23,362 |
|
Total Liabilities
|
|
73,998 |
|
|
55,952 |
|
|
|
|
|
|
|
|
Commitments and Contingencies (Notes 1 and 10) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock, 20,000,000 shares authorized, $0.0001 par
value, |
|
|
|
|
|
|
NIL issued and outstanding |
|
- |
|
|
- |
|
Common Stock, 80,000,000 shares authorized, $0.0001 par
value |
|
|
|
|
|
|
38,882,250 and 35,382,250 shares issued and
outstanding |
|
3,888 |
|
|
3,538 |
|
Additional Paid-in Capital |
|
3,827,218 |
|
|
2,095,386 |
|
Deficit Accumulated During the Exploration Stage |
|
(3,624,244 |
) |
|
(1,670,365 |
) |
Total
Stockholders Equity |
|
196,862 |
|
|
428,559 |
|
Total Liabilities and Stockholders Equity |
|
280,860 |
|
|
484,511 |
|
(The accompanying notes are an integral part of these
consolidated financial statements)
F-1
Buckingham Exploration Inc.
(An Exploration Stage Company)
Consolidated Statements of Operations
(Expressed in US dollars)
(unaudited)
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
Three Months |
|
|
Three Months |
|
|
from April 4, 2006 |
|
|
|
Ended |
|
|
Ended |
|
|
(Date of |
|
|
|
August 31, |
|
|
August 31, |
|
|
Inception) to |
|
|
|
2007 |
|
|
2006 |
|
|
August 31, 2007 |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
- |
|
|
- |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
|
|
Amortization |
|
2,811 |
|
|
- |
|
|
2,811 |
|
General and
administrative (1) |
|
346,346 |
|
|
13,166 |
|
|
574,746 |
|
Impairment of mineral property costs (Note 4) |
|
1,475,000 |
|
|
200,000 |
|
|
2,820,125 |
|
Mineral property costs
|
|
58,960 |
|
|
2,392 |
|
|
61,352 |
|
Professional fees |
|
70,736 |
|
|
25,425 |
|
|
164,257 |
|
Total Expenses |
|
1,953,853 |
|
|
240,983 |
|
|
3,633,291 |
|
|
|
|
|
|
|
|
|
|
|
Other (Income) Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
(684 |
) |
|
(313 |
) |
|
(1,244 |
) |
Interest expense |
|
710 |
|
|
- |
|
|
2,197 |
|
|
|
|
|
|
|
|
|
|
|
Net Loss |
|
(1,953,879 |
) |
|
(240,670 |
) |
|
(3,624,244 |
) |
|
|
|
|
|
|
|
|
|
|
Net Loss Per Share Basic and Diluted |
|
(0.05 |
) |
|
(0.01 |
) |
|
- |
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares Outstanding |
|
36,181,000 |
|
|
22,849,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Stock based compensation
included as follows: |
|
|
|
|
|
|
|
|
|
General and administrative expenses |
|
157,182 |
|
|
- |
|
|
292,181 |
|
(The accompanying notes are an integral part of these
consolidated financial statements)
F-2
Buckingham Exploration Inc.
(An Exploration Stage Company)
Consolidated Statements of Cash Flows
(Expressed in US dollars)
(unaudited)
|
|
|
|
|
|
|
|
Accumulated from |
|
|
|
Three Months |
|
|
Three Months |
|
|
April 4, 2006 (Date |
|
|
|
Ended August 31, |
|
|
Ended August 31, |
|
|
of Inception) to |
|
|
|
2007 |
|
|
2006 |
|
|
August 31, 2007 |
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
Operating Activities |
|
|
|
|
|
|
|
|
|
Net loss for the period |
|
(1,963,879 |
) |
|
(240,670 |
) |
|
(3,624,244 |
) |
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net loss to net cash used in
operating |
|
|
|
|
|
|
|
|
|
activities |
|
|
|
|
|
|
|
|
|
Impairment of mineral
property costs |
|
1,475,000 |
|
|
200,000 |
|
|
2,820,125 |
|
Amortization |
|
2,811 |
|
|
- |
|
|
2,811 |
|
Stock based compensation
|
|
157,182 |
|
|
- |
|
|
292,181 |
|
Common
shares issued for services |
|
- |
|
|
- |
|
|
32,000 |
|
|
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
|
|
Accounts payable and
accrued liabilities |
|
31,406 |
|
|
33,295 |
|
|
50,324 |
|
Other
receivables |
|
12,533 |
|
|
- |
|
|
(9,579 |
) |
Prepaid expenses |
|
(33,276 |
) |
|
(5,000 |
) |
|
(39,401 |
) |
Net Cash Used in Operating Activities |
|
(308,223 |
) |
|
(12,375 |
) |
|
(475,783 |
) |
|
|
|
|
|
|
|
|
|
|
Investing Activities |
|
|
|
|
|
|
|
|
|
Acquisition of mineral
properties |
|
(1,475,000 |
) |
|
(200,000 |
) |
|
(2,020,125 |
) |
Acquisition of property
and equipment |
|
(44,976 |
) |
|
- |
|
|
(44,976 |
) |
Net Cash Used in
Investing Activities |
|
(1,519,976 |
) |
|
(200,000 |
) |
|
(2,065,101 |
) |
|
|
|
|
|
|
|
|
|
|
Financing Activities |
|
|
|
|
|
|
|
|
|
Advances
from a related party |
|
- |
|
|
750 |
|
|
16,760 |
|
Proceeds from issuance of
note payable |
|
- |
|
|
- |
|
|
23,362 |
|
Proceeds
from the issuance of common stock , net |
|
1,575,000 |
|
|
242,375 |
|
|
2,706,925 |
|
Repayment of related party advances |
|
(13,672 |
) |
|
(3,088 |
) |
|
(16,760 |
) |
Net Cash Provided by Financing Activities |
|
1,561,328 |
|
|
240,037 |
|
|
2,730,287 |
|
Effect of Exchange
Rate Changes on Cash |
|
312 |
|
|
- |
|
|
312 |
|
(Increase) Decrease In Cash |
|
(266,559 |
) |
|
27,662 |
|
|
189,715 |
|
Cash - Beginning
of Period |
|
456,274 |
|
|
13,837 |
|
|
|
|
Cash End of Period |
|
189,715 |
|
|
41,499 |
|
|
189,715 |
|
|
|
|
|
|
|
|
|
|
|
Non-Cash Investing and Financing
Activities: |
|
|
|
|
|
|
|
|
|
Common stock issued for
mineral property acquisitions |
|
- |
|
|
- |
|
|
800,000 |
|
Common stock issued for
mineral property acquisition finders fee |
|
- |
|
|
- |
|
|
100,000 |
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosures |
|
|
|
|
|
|
|
|
|
Interest paid |
|
710 |
|
|
- |
|
|
2,197 |
|
Income tax paid |
|
- |
|
|
- |
|
|
- |
|
(The accompanying notes are an integral part of these
consolidated financial statements)
F-3
1. |
Nature of Operations and Continuance of
Business |
|
|
|
Buckingham Exploration Inc. (the Company) was
incorporated in the State of Nevada on April 4, 2006. The Company is an
Exploration Stage Company, as defined by Statement of Financial Accounting
Standard (SFAS) No.7 Accounting and Reporting for Development Stage
Enterprises. The Companys principal business is the acquisition and
exploration of mineral resources. The Company has not presently determined
whether its properties contain mineral reserves that are economically
recoverable. |
|
|
|
These financial statements have been prepared on a going
concern basis, which implies the Company will continue to realize its
assets and discharge its liabilities in the normal course of business. The
Company has never 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 the Company as a
going concern is dependent upon the continued financial support from its
shareholders, the ability of the Company to obtain necessary equity
financing to continue operations, and the attainment of profitable
operations. As at August 31, 2007, the Company has an accumulated loss of
$3,624,244. These factors raise substantial doubt regarding the Companys
ability to continue as a going concern. These financial statements do not
include any adjustments to the recoverability and classification of
recorded asset amounts and classification of liabilities that might be
necessary should the Company be unable to continue as a going
concern. |
|
|
|
On August 10, 2007, the Company sold a private placement
of 3,500,000 units at a price of $0.50 per unit, raising a total of
$1,575,000, net of share issuance costs of $175,000. Each unit consists of
one common share and one non-transferable warrant to purchase of one
further common share at an exercise price of $1.00. Each warrant will
expire on the earlier of two years from the date it is issued or after
five business days following the seventh consecutive trading day on which
the Companys common stock trades at least once on the OTCBB at a price
equal to or above $1.25 per share. |
|
|
|
The Company currently trades on the Over-the-Counted
Bulletin Board (OTCBB) under the symbol BUKX.OB. |
|
|
2. |
Summary of Significant Accounting
Policies |
|
a) |
Basis of Presentation and
Consolidation |
|
|
|
|
|
These consolidated financial statements and related notes
are presented in accordance with accounting principles generally accepted
in the United States, and are expressed in US dollars. The consolidated
financial statements include the financial statements of the Company and
its wholly-owned subsidiary, Hyde Park Uranium, Inc. All intercompany
balances and transactions have been eliminated. The Companys fiscal
year-end is May 31. |
|
|
|
|
(b) |
Interim Financial Statements |
|
|
|
|
|
The interim unaudited financial statements have been
prepared on the same basis as the annual financial statements and in the
opinion of management, reflect all adjustments, which include only normal
recurring adjustments, necessary to present fairly the Companys financial
position, results of operations and cash flows for the periods shown. The
results of operations for such periods are not necessarily indicative of
the results expected for a full year or for any future period
|
F-4
2. |
Summary of Significant Accounting Policies
(continued) |
|
|
|
|
(c) |
Use of Estimates |
|
|
|
|
|
The preparation of financial statements in conformity
with U.S. 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 during the reporting period. Actual results could differ from
those estimates. The Company regularly evaluates estimates and assumptions
related to donated expenses, stock-based compensation expense and deferred
income tax asset valuations. The Company bases its estimates and
assumptions on current facts, historical experience and various other
factors that it believes to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying
values of assets and liabilities and the accrual of costs and expenses
that are not readily apparent from other sources. The actual results
experienced by the Company may differ materially and adversely from the
Companys estimates. To the extent there are material differences between
the estimates and the actual results, future results of operations will be
affected. |
|
|
|
|
(d) |
Property and Equipment |
|
|
|
|
|
Office furniture and equipment and motor vehicles are
recorded at cost and are amortized at the rate of 25% per annum which will
reduce original cost to estimated residual value over the useful life of
each asset. |
|
|
|
|
(e) |
Basic and Diluted Net Income (Loss) Per Share |
|
|
|
|
|
The Company computes net income (loss) per share in
accordance with SFAS No. 128, "Earnings per Share". SFAS No. 128
requires presentation of both basic and diluted earnings per share (EPS)
on the face of the income statement. Basic EPS is computed by dividing net
income (loss) available to common shareholders (numerator) by the weighted
average number of shares outstanding (denominator) during the period.
Diluted EPS gives effect to all dilutive potential common shares
outstanding during the period using the treasury stock method and
convertible preferred stock using the if-converted method. In computing
Diluted EPS, the average stock price for the period is used in determining
the number of shares assumed to be purchased from the exercise of stock
options or warrants. Diluted EPS excludes all dilutive potential shares if
their effect is anti dilutive. |
|
|
|
|
(f) |
Comprehensive Loss |
|
|
|
|
|
SFAS No. 130, Reporting Comprehensive Income,
establishes standards for the reporting and display of comprehensive loss
and its components in the financial statements. As at August 31, 2007, the
Company has no items that represent a comprehensive loss and, therefore,
has not included a schedule of comprehensive loss in the financial
statements. |
|
|
|
|
(g) |
Cash and Cash Equivalents |
|
|
|
|
|
The Company considers all highly liquid instruments with
maturity of three months or less at the time of issuance to be cash
equivalents. |
|
|
|
|
(h) |
Mineral Property Costs |
|
|
|
|
|
The Company has been in the exploration stage since its
inception on April 4, 2006 and has not yet realized any revenues from its
planned operations. It is primarily engaged in the acquisition and
exploration of mining properties. Mineral property exploration costs are
expensed as incurred. Mineral property acquisition costs are initially
capitalized when incurred using the guidance in EITF 04-02, Whether
Mineral Rights Are Tangible or Intangible Assets. The Company
assesses the carrying costs for impairment under SFAS 144, Accounting for
Impairment or Disposal of Long Lived Assets at each fiscal quarter end.
When it has been determined that a mineral property can be economically
developed as a result of establishing proven and probable reserves, the
costs then 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. If mineral properties are subsequently
abandoned or impaired, any capitalized costs will be charged to
operations. |
F-5
2. |
Summary of Significant Accounting Policies
(continued) |
|
|
|
|
(i) |
Long-Lived Assets |
|
|
|
|
|
In accordance with SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets, the carrying value of
long-lived assets is reviewed on a regular basis for the existence of
facts or circumstances that may suggest impairment. The Company recognizes
impairment when the sum of the expected undiscounted future cash flows is
less than the carrying amount of the asset. Impairment losses, if any, are
measured as the excess of the carrying amount of the asset over its
estimated fair value. |
|
|
|
|
(j) |
Financial Instruments |
|
|
|
|
|
The fair value of financial instruments, which include
cash, other receivables, accounts payable, accrued liabilities and amounts
due to related parties, were estimated to approximate their carrying
values due to the immediate or short-term maturity of these financial
instruments. Foreign currency transactions are primarily undertaken in
Canadian dollars. The financial risk is the risk to the Companys
operations that arise from fluctuations in foreign exchange rates and the
degree of volatility of these rates. Currently, the Company does not use
derivative instruments to reduce its exposure to foreign currency
risk. |
|
|
|
|
(k) |
Income Taxes |
|
|
|
|
|
Potential benefits of income tax losses are not
recognized in the accounts until realization is more likely than not. The
Company has adopted SFAS No. 109 Accounting for Income Taxes as
of its inception. Pursuant to SFAS No. 109 the Company is required to
compute tax asset benefits for net operating losses carried forward.
Potential benefit of net operating losses have not been recognized in
these financial statements because the Company cannot be assured it is
more likely than not it will utilize the net operating losses carried
forward in future years. |
|
|
|
|
(l) |
Stock-Based Compensation |
|
|
|
|
|
The Company records stock-based compensation in
accordance with SFAS No. 123R, Share- Based Payments, using the
fair value method. The Company also complies with the provisions of FASB
Emerging Issues Task Force (EITF) Issue No. 96-18, Accounting for
Equity Instruments That Are Issued to Other Than Employees for Acquiring,
or in Conjunction with Selling, Goods or Services (EITF 96-18). All
transactions in which goods or services are the consideration received for
the issuance of equity instruments are accounted for based on the fair
value of the consideration received or the fair value of the equity
instrument issued, whichever is more reliably measurable. Equity
instruments issued to employees and the cost of the services received as
consideration are measured and recognized based on the fair value of the
equity instruments issued. |
|
|
|
|
(m) |
Foreign Currency Translation |
|
|
|
|
|
The Companys functional and reporting currency is the
United States dollar. Monetary assets and liabilities denominated in
foreign currencies are translated in accordance with SFAS No. 52
Foreign Currency Translation, using the exchange rate prevailing
at the balance sheet date. Gains and losses arising on settlement of
foreign currency denominated transactions or balances are included in the
determination of income. Foreign currency transactions are primarily
undertaken in Canadian dollars. The Company has not, to the date of these
financials statements, entered into derivative instruments to offset the
impact of foreign currency fluctuations. |
F-6
2. |
Summary of Significant Accounting Policies
(continued) |
|
|
|
|
(n) |
Recent Accounting Pronouncements |
|
|
|
|
|
In February 2007, the Financial Accounting Standards
Board (FASB) issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities Including an Amendment of FASB
Statement No. 115. This statement permits entities to choose to
measure many financial instruments and certain other items at fair value.
Most of the provisions of SFAS No. 159 apply only to entities that elect
the fair value option. However, the amendment to SFAS No. 115
Accounting for Certain Investments in Debt and Equity Securities
applies to all entities with available-for-sale and trading securities.
SFAS No. 159 is effective as of the beginning of an entitys first fiscal
year that begins after November 15, 2007. Early adoption is permitted as
of the beginning of a fiscal year that begins on or before November 15,
2007, provided the entity also elects to apply the provision of SFAS No.
157, Fair Value Measurements. The adoption of this statement is
not expected to have a material effect on the Company's financial
statements. |
|
|
|
|
|
In September 2006, the SEC issued Staff Accounting
Bulletin (SAB) No. 108, Considering the Effects of Prior Year
Misstatements when Quantifying Misstatements in Current Year Financial
Statements. SAB No. 108 addresses how the effects of prior year
uncorrected misstatements should be considered when quantifying
misstatements in current year financial statements. SAB No. 108 requires
companies to quantify misstatements using a balance sheet and income
statement approach and to evaluate whether either approach results in
quantifying an error that is material in light of relevant quantitative
and qualitative factors. SAB No. 108 is effective for periods ending after
November 15, 2006. The adoption of SAB No. 108 did not have a material
effect on its financial statements. |
|
|
|
|
|
In September 2006, the FASB issued SFAS No. 158,
Employers Accounting for Defined Benefit Pension and Other
Postretirement Plans an amendment of FASB Statements No. 87, 88, 106,
and 132(R). This statement requires employers 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
of a business entity or changes in unrestricted net assets of a
not-for-profit organization. This statement also requires an employer to
measure the funded status of a plan as of the date of its year-end
statement of financial position, with limited exceptions. The provisions
of SFAS No. 158 are effective for employers with publicly traded equity
securities as of the end of the fiscal year ending after December 15,
2006. The adoption of this statement did not have a material effect on the
Company's future reported financial position or results of
operations. |
|
|
|
|
|
In September 2006, the FASB issued SFAS No. 157, Fair
Value Measurements. The objective of SFAS No. 157 is to increase
consistency and comparability in fair value measurements and to expand
disclosures about fair value measurements. SFAS No. 157 defines fair
value, establishes a framework for measuring fair value in generally
accepted accounting principles, and expands disclosures about fair value
measurements. SFAS No. 157 applies under other accounting pronouncements
that require or permit fair value measurements and does not require any
new fair value measurements. The provisions of SFAS No. 157 are effective
for fair value measurements made in fiscal years beginning after November
15, 2007. The adoption of this statement is not expected to have a
material effect on the Company's future reported financial position or
results of operations. |
|
|
|
|
|
In June 2006, the Financial Accounting Standards Board
(FASB) issued FASB Integration No. 48, Accounting for Uncertainty in
Income Taxes, an interpretation of FASB Statements No. 109 (FIN 48). FIN
48 clarifies the accounting for uncertainty in income taxes by prescribing
a two-step method of first evaluating whether a tax position has met a
more likely than not recognition threshold and second, measuring that tax
position to determine the amount of benefit to be recognized in the
financial statements. FIN 48 provides guidance on the presentation of such
positions within a classified statement of financial position as well as
on derecognition, interest and penalties, accounting in interim periods,
disclosure, and transition. FIN 48 is effective for fiscal years beginning
after December 15, 2006. The adoption of this standard did not have a
material effect on the Companys results of operations or financial
position. |
F-7
3. |
Mineral Property |
|
|
|
|
(a) |
On August 8, 2006, the Company acquired a 100% interest
in two mineral claims located in the Northwest Territories for
consideration of $245,125 payable as to $45,125 (CDN$50,000) cash, and
2,000,000 common shares, with a fair value of $200,000. The mineral claims
are subject to a 2% net smelter return. The Company has the option to
acquire up to an additional 1% of the net smelter royalty for proceeds of
$902,500 throughout the life of the agreement. As it has not been
determined whether there are proven or probable reserves on the property,
the Company has recognized an impairment loss of $245,125 of mineral
property acquisition costs for the year ended May 31, 2007. |
|
|
|
|
(b) |
On May 9, 2007, the Company entered into a purchase
agreement with Pikes Peak Resources, Inc., a British Columbia corporation,
for the acquisition of 29 unpatented mining claims located in Teller
County, Colorado. The purchase consideration for the claims is $1,000,000,
payable as to $500,000 cash and the issuance of 5,000,000 common shares of
the Company with a fair value of $500,000. Pikes Peak Resources, Inc. will
also receive net returns royalty of 2% of the proceeds of minerals mined
and sold from the claims. The Company will also reimburse $3,700 to Pikes
Peak Resources, Inc. for the costs of locating the claims. The Company has
an option to purchase the royalty for $1,000,000 as adjusted for
inflation. The Company has also agreed to buy back shares of common stock
from Pikes Peak Resources, Inc. at prevailing market price up to $150,000
for any taxes payable by Pikes Peak Resources, Inc. as a result of the
transaction. Pikes Peak Resources, Inc. shall also have the option to
repurchase the claims upon abandonment by the Company. As it has not been
determined whether there are proven or probable reserves on the property,
the Company has recognized an impairment loss of $1,100,000 of mineral
property acquisition costs for the year ended May 31, 2007. |
|
|
|
|
(c) |
On July 27, 2007, the Company entered into an exploration
agreement with an option to purchase a property known as High Park Trails
Ranch in Teller County, Colorado. The property adjoins the Companys High
Park Uranium Project. Pursuant to the terms of the Option Agreement, the
Company must make an option payment of $100,000 to acquire the surface and
mineral estates over 265 acres (paid on July 27, 2007), with a further
payment of $2,900,000 at the end of a twelve month period to exercise the
non-exclusive option to purchase the property. During the option period,
the Company has full access to the property to conduct an exploration and
drill program to ascertain whether it wishes to exercise its option. The
Company must also pay the Seller a production royalty of approximately 5%
of the net returns generated by the Company from the exploration of the
property. |
|
|
|
|
(d) |
On August 27, 2007, the Company entered into an exclusive
option agreement with Proteus Mining Limited (Proteus) for the
acquisition of 939 unpatented lode mining claims located in Colorado. As
at August 31, 2007, the Company has made payments of $1,375,000 relating
to the acquisition of the mining claims and is committed to a future
payment of $6,300,000 and issuance of 2,000,000 common shares of the
Company prior to November 28, 2007. As it has not been determined whether
there are proven or probable reserves on the property, the Company has
recognized an impairment loss of $1,375,000 of mineral property
acquisition costs. Refer to Note 10(d). |
|
|
|
4. |
Property and Equipment |
|
|
|
Cost |
|
|
Accumulated |
|
|
Net |
|
|
Net May 31, |
|
|
|
|
|
|
|
Amortization |
|
|
|
|
|
2007 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
Office furniture and equipment |
|
17,913 |
|
|
1,120 |
|
|
16,793 |
|
|
- |
|
|
Motor Vehicle |
|
27,063 |
|
|
1,691
|
|
|
25,372 |
|
|
- |
|
|
|
|
44,976 |
|
|
2,811 |
|
|
42,165 |
|
|
- |
|
F-8
5. |
Note Payable |
|
|
|
On February 19, 2007, the Company issued a promissory
note in exchange for proceeds of $23,362 (CDN$25,000) in the form of an
unsecured loan, bearing interest at 1% per month with no repayment terms.
During the period ended August 31, 2007, interest expense of $710 (May 31,
2007 $137) relating to the note was accrued. |
|
|
6. |
Related Party Transactions |
|
(a) |
During the three month period ended August 31, 2007, the
Company incurred $30,000 (May 31, 2007 - $34,500) for management services
provided by the President of the Company. |
|
|
|
|
(b) |
At August 31, 2007, the Company is indebted to the
President of the Company for $Nil (May 31, 2007 - $10,172), representing
cash proceeds and expenses paid on behalf of the Company. These amounts
are unsecured, non-interest bearing, and have no repayment
terms. |
|
|
|
|
(c) |
At August 31, 2007, the Company is indebted to a company
with a common director for $Nil (May 31, 2007 - $3,500) for rent expense.
This amount is unsecured, non-interest bearing, and has no repayment
terms. |
|
|
|
|
(d) |
On May 7, 2007, the Company granted 2,000,000 stock
options to the President of the Company. Refer to Note
9. |
7. |
Common Shares |
|
|
|
On August 10, 2007, the Company sold a private placement
of 3,500,000 units at a price of $0.50 per unit, raising a total of
$1,575,000, net of share issuance costs of $175,000. Each unit consists of
one common share and one non-transferable warrant to purchase of one
further common share at an exercise price of $1.00. Each warrant will
expire on the earlier of two years from the date it is issued or after
five business days following the seventh consecutive trading day on which
the Companys common stock trades at least once on the OTCBB at a price
equal to or above $1.25 per share. |
|
|
8. |
Stock Options |
|
|
|
The following is a summary of the stock option activity
during the period ended August 31, 2007 |
|
|
August 31, 2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted |
|
|
|
Number |
|
|
Average |
|
|
|
Of |
|
|
Exercise |
|
|
|
Shares |
|
|
Price |
|
|
|
|
|
|
|
|
Balance, beginning of period
|
|
2,000,000 |
|
$ |
0.10 |
|
|
|
|
|
|
|
|
Granted |
|
1,000,000 |
|
|
0.60 |
|
Exercised |
|
- |
|
|
- |
|
Expired |
|
- |
|
|
- |
|
|
|
|
|
|
|
|
Balance, end of period |
|
3,000,000 |
|
$ |
0.27 |
|
F-9
8. |
Stock Options (continued) |
|
|
|
On August 27, 2007, the Company granted 1,000,000 stock
options to Wingspan Foundation (Wingspan) as part of the consulting
agreement (the Agreement), as disclosed in Note 10(b). Under the terms
of the Agreement, the stock options are exercisable at $0.60 per option,
are immediately vested, and expire two years from the date of the
Agreement. The total fair value of the 1,000,000 stock options granted was
$157,182 based on the Black Scholes option pricing model, which was
charged to operations using the following risk
factors: |
|
August 27, 2007 |
Risk-Free Interest Rate |
4.21% |
Expected Life of the Options |
2 years |
Expected Volatility of the Options |
41.16% |
Expected Dividend Yield |
0.00% |
Weighted-Average fair Value at Grant Date
|
$0.60
|
The following is a summary of the status of stock options
outstanding and exercisable at August 31, 2007:
|
Weighted |
|
Number |
Average |
Remaining |
Of |
Exercise |
Contractual |
Options |
Price |
Life
|
|
|
|
2,000,000 |
$ 0.10 |
2.75 years |
1,000,000 |
$ 0.60 |
2.00 years |
|
As at August 31, 2007, the aggregate intrinsic value of
outstanding and exercisable stock options was $1,800,000. The company had
no unvested options outstanding at August 31, 2007. |
|
|
9. |
Warrants |
|
|
|
The following is a summary of the warrant activity during
the period ended August 31, 2007: |
|
|
August 31, 2007 |
|
|
|
|
|
|
|
|
|
Weighted |
|
|
|
Number |
|
|
Average |
|
|
|
Of |
|
|
Exercise |
|
|
|
Warrants |
|
|
Price
|
|
|
|
|
|
|
|
|
Balance, beginning of period
|
|
4,300,000 |
|
$ |
0.325 |
|
|
|
|
|
|
|
|
Granted |
|
3,500,000 |
|
|
1.00 |
|
Exercised |
|
- |
|
|
- |
|
Expired |
|
- |
|
|
- |
|
|
|
|
|
|
|
|
Balance, end of period |
|
7,800,000 |
|
$ |
0.63 |
|
On August 10, 2007, the Company granted
3,500,000 share purchase warrants as part of the private placement for an
exercise price of $1.00 per warrant, and expiring two years from the date of
grant. As at August 31, 2007, no warrants have been exercised.
F-10
9. |
Warrants (continued) |
|
|
|
The following is a summary of the warrants outstanding at
August 31, 2007: |
Number |
|
Weighted |
|
Expiry |
Of Warrants |
|
Average |
|
Date |
|
|
Exercise |
|
|
|
|
Price
|
|
|
|
|
|
|
|
4,300,000 |
|
$ 0.325 |
|
May 15, 2009 |
3,500,000 |
|
1.00 |
|
August 10, 2009 |
10. |
Commitments |
|
|
|
|
|
(a) |
On May 7, 2007, the Company entered into a Management
Agreement (the Agreement) with the President of the Company for
management services. Per the Agreement, the Company is required to pay
$10,000 per month, commencing May 7, 2007, and will remain in effect on
month-to-month basis until terminated by either party giving 14 days
notice. |
|
|
|
|
|
(b) |
On August 27, 2007 the Company entered into
a consulting Agreement (the “Agreement”) with Wingspan for
operational, financial, management and public relations services. Per
the Agreement, the Company is required to pay $10,000 per month, commencing
August 27, 2007 and terminating on May 31, 2008 unless terminated by either
party providing 30 days notice. In addition, the Company is required to
grant 1,000,000 stock options at an exercise price of $0.60 per option,
vesting immediately, and exercisable within two years of the date of the
signed Agreement. The Agreement is renewable for a further period of one
year at the option of the Company. |
|
|
|
|
|
(c) |
On July 27, 2007, the Company entered into an exploration
agreement with an option to purchase a property known as High Park Trails
Ranch in Teller County, Colorado. The property adjoins the Companys High
Park Uranium Project. Pursuant to the terms of the Option Agreement, the
Company must make an option payment of $100,000 to acquire the surface and
mineral estates over 265 acres (paid on July 27, 2007), with a further
payment of $2,900,000 at the end of a twelve month period to exercise the
non-exclusive option to purchase the property. During the option period,
the Company has full access to the property to conduct an exploration and
drill program to ascertain whether it wishes to exercise its option. The
Company must also pay the Seller a production royalty of approximately 5%
of the net returns generated by the Company from the exploration of the
property. |
|
|
|
|
|
(d) |
On August 27, 2007, the Company entered into an exclusive
option agreement with Proteus Mining Limited (Proteus) for the
acquisition of 100% of the outstanding securities of its wholly owned
subsidiaries to whom 939 unpatented lode mining claims located in Colorado
have been assigned. In consideration for the exclusive option the Company
paid Proteus an amount of $250,000. The Company may exercise the option by
making all of the following payments of cash and shares to
Proteus. |
|
|
|
|
|
|
a. |
$1,125,000 to be paid on August 27, 2007 (paid) |
|
|
b. |
$6,300,000 to be paid by November 28, 2007 |
|
|
c. |
2,000,000 fully paid and non assessable common shares of
the Company to be issued by November 28, 2007 |
|
|
|
|
|
|
If the payments are not made according to the time period
set out the option will terminate and be of no further effect. |
|
|
|
|
|
|
The claims are subject to net returns royalty of two
percent of the proceeds of minerals mined and sold and an option of Pikes
Peak Energy LLC to purchase any of the claims for $550 per claim after
receiving notice of the intention to abandon any claim. |
|
|
|
|
|
|
As at August 31, 2007, the Company has paid $1,375,000 in
relation to the option agreement. Refer to Note 3. |
F-11
10. |
Commitments (continued) |
|
|
|
|
(e) |
On April 15, 2006, the Company entered into a commercial
lease agreement to lease premises from a related party at the rate of
$250 per month. The lease terminates on December 31, 2007. The Company
has recorded rent expense of $1,500 for the period ended August 31, 2007
(May 31, 2007 - $3,000). |
|
|
|
|
(f) |
On August 1, 2007, the Company entered into a commercial
lease agreement to lease premises at the rate of $1,073 per month. The
lease terminates on July 31, 2008. |
|
|
|
|
(g) |
On July 27, 2007, the Company entered into a residential
lease agreement to lease premises at the rate of $900 per month. The lease
terminates on July 31, 2008. |
|
|
|
11. |
Subsequent Events |
|
|
|
|
(a) |
On September 14, 2007, the Company entered
into a Business Development Agreement (the “Agreement”) to
manage, report and supervise all activities and field work of the Canon
City office. Per the agreement the Company is required to pay $2,500 per
month commencing September 17, 2007, and terminating September 18, 2008,
with an automatic six month renewal period. |
|
|
|
|
(b) |
On September 18, 2007, the Company issued
650,000 units of a private placement at $0.50 per unit for gross proceeds
of $325,000. Each unit consists of one common share of the Company and
one non-transferable warrant to purchase one additional common share of
the Company at $1.00 per common share within the earlier of two years
from the closing date of the private placement or after five business
days after the Company’s common shares trade at least once on the
OTCBB at a share price equal to or above $1.25 per common share for seven
consecutive trading days. |
|
|
|
|
(c) |
On October 15, 2007, the Company issued
500,000 units of a private placement at $0.50 per unit for gross proceeds
of $250,000. Each unit consists of one common share of the Company and
one non-transferable warrant to purchase on additional common share of
the Company at $1.00 per common share within the earlier of September
30, 2009, or after five business days after the earlier of September 30,
2009, or after five business days after the Company’s common shares
trade at least once on the OTCBB at a share price equal to or above $1.25
per common share for seven consecutive trading days. |
F-12
ITEM 2. Management Discussion and Analysis of Financial
Condition / Plan of Operations
Forward Looking Statements
This report on Form 10-QSB contains certain forward-looking
statements. All statements other than statements of historical fact are
forward-looking statements for purposes of these provisions, including any
projections of earnings, revenues, or other financial items; any statements of
the plans, strategies, and objectives of management for future operation; any
statements concerning proposed new products, services, or developments; any
statements regarding future economic conditions or performance; statements of
belief; and any statement of assumptions underlying any of the foregoing. Such
forward-looking statements are subject to inherent risks and uncertainties, and
actual results could differ materially from those anticipated by the
forward-looking statements.
Introduction
We were incorporated as a Nevada company on April 4, 2006. We
have been engaged in the acquisition, exploration and development of mineral
properties since our inception. We have one wholly owned subsidiary, Hyde Park
Uranium Inc., a Colorado corporation through which we have acquired mineral
claims in Colorado.
We have earned no revenues and have sustained operational
losses since inception, as well as an accumulated shareholder deficit. As of
August 31, 2007, we had net losses since inception (April 4, 2006) in the amount
of $3,624,244. We do not expect to generate significant revenues in the next two
years. We may not generate significant revenues even if our exploration program
indicates that mineral deposits may exist on our mineral claims.
Our registration statement on Form SB-2 became effective as of
December 22, 2006. Our common stock became eligible for trading on the OTC
Bulletin Board on May 8, 2007 under the ticker symbol BUKX.OB.
Overview
We are an exploration stage company. Our most advanced projects
are at the exploration stage and there is no assurance that any of our mining
claims contain a commercially viable ore body. We plan to undertake further
exploration of our properties. We anticipate that we will require additional
financing in order to pursue full exploration of these claims. We do not have
sufficient financing to undertake full exploration of our mineral claims at
present and there is no assurance that we will be able to obtain the necessary
financing.
There is no assurance that a commercially viable mineral
deposit exists on any of our mineral properties. Further exploration beyond the
scope of our planned exploration activities will be required before a final
evaluation as to the economic feasibility of mining of any of our properties is
determined. There is no assurance that further exploration will result in a
final evaluation that a commercially viable mineral deposit exists on any of our
mineral properties.
3
Mineral Properties
We are engaged in the acquisition and exploration of mineral
resources with a focus on the exploration of uranium properties in North
America. Currently, we own two mineral interests in the Northwest Territories of
Canada and Teller County, Colorado. We also hold options to purchase additional
mining claims and land in Colorado. Our mineral and land interests are as
follows:
Name of Property |
Location |
Nature of Interest |
Status |
Simpson Island Property
|
Simpson Island, Northwest Territories, Canada
|
100% of the right, title and interest, subject
to a 2% net smelter return
|
No permit required for small scale exploratory
drilling.
Additional permission required for large scale drilling
|
High Park Uranium Property |
Teller County, Colorado, USA |
100% of the right, title and interest in 29
unpatented mining claims subject to a net mineral returns royalty of 2%
(with an option to purchase royalty for $1,000,000). |
25 additional claims have been staked.
Drilling permit has been granted and drilling commenced on October
9, 2007. |
High Park Trails Property |
Teller County, Colorado, USA |
Option to purchase surface and mineral estates
over 265 acres subject to a net mineral returns royalty of 5% (with
exploration rights during the option period). |
Drilling permit has been granted |
Proteus Claims |
Fremont County, Park County, Saguache County,
San Juan County and Teller County, Colorado, USA |
Option to purchase 100% of the issued and
outstanding securities of Colorado companies which hold 939 unpatented
lode uranium mining claims |
Permit required for exploratory drilling
|
As of October 17, 2007 we have generated no revenues, have
achieved losses since inception, have been issued a going concern opinion by our
auditors and rely upon the sale of our securities to fund operations. We will
not generate significant revenues in the short term, even if our exploration
program indicates that a mineral deposit may exist on our properties.
Accordingly, we will be dependent on future additional financing in order to
maintain our operations and continue our exploration activities.
4
Plan of Operation / Exploration
All our mineral properties are in the early stages of
exploration. Our plan of operation for the next twelve months beginning November
2007 is to carry out full exploration of mineral properties and acquire other
selective early stage properties in the US or Canada. We intend to primarily
explore for uranium, but if we discover that any of our mineral properties hold
potential for other minerals that our management determines are worth exploring
further, then we will explore for those other minerals.
Our overall planned exploration expenditures for the next
twelve months (beginning November 2007) on our mineral properties, together with
amounts we expect to spend on administrative costs are summarized as
follows:
Description of Expense |
Amount |
Exploration of Simpson Island Claims |
$356,000 |
Payments towards acquisition of the High Park Trails
Property |
$2,900,000 |
Exploration of the High Park Uranium Property and High Park
Trails Property |
$840,000 |
Payment towards acquisition of the Proteus Claims |
$6,300,000 |
Proteus Claims Maintenance fees |
$165,000 |
Exploration of the Proteus Claims |
$800,000 |
Acquisition of further mineral claims |
$440,000 |
Professional Fees |
$60,000 |
Transfer Agent Fees |
$3,000 |
Consulting Expenses |
$120,000 |
General and Administrative Expenses |
$12,000 |
TOTAL |
$11,996,000
|
Simpson Island Property
Our specific plan of exploration for the Simpson Island
Property is as follows:
7
Description of Phase of
Exploration |
Description of Exploration Work Required
|
First Phase of Drilling |
Relocation and re-sampling of old workings associated
with a detailed radiometric survey over known showings. |
Second Phase of Drilling |
If results from the first phase of drilling are good, we
will continue with a second and more intensive drilling phase, which will
include 3,500 feet of diamond drilling to test for mineralization at
depth. |
The anticipated timetable and estimated budget for completion
for each stage of exploration are as follows:
Stage of Exploration
|
Anticipated Timetable for
Completion |
Estimated Cost of Completion
|
First Phase of Drilling |
Fall 2007 |
$104,000 |
Second Phase of Drilling |
Spring 2008 |
$252,000 |
High Park Uranium Property and High Park Trails
Property (the High Park Claims)
Our specific plan of exploration for the High Park Claims is as
follows:
Description of Phase of
Exploration |
Description of Exploration
Work Required
|
First Phase
|
Complete drilling of 25 new holes
to confirm prior exploration results and delineate ore body.
Conduct ground scintillation survey to identify new drilling
targets.
Sample volcanic intrusive.
Undertake a scoping
study to assess feasibility of putting the High Park Uranium Property and
High Park Trails Property into production. As part of this process we This
includes tying up certain surface and mineral rights currently owned by a
Rancher in the area. (Done see press release) Developing a relationship
with the Cotter Corporation to ensure that there is a nearby processing
facility for the uranium ore. Re-drill two small areas of resource to
verify past reserve calculations, commence permitting for bulk sampling.
It is estimated that this will cost approximately $290,000. |
Second Phase
|
Conduct comprehensive drill
program based on first phase results Stake out 25-30 new claims
Conduct survey and drilling evaluation of newly acquired claims
|
7
The anticipated timetable and estimated budget for completion
for each stage of exploration are as follows:
Stage of Exploration
|
Anticipated Timetable for
Completion |
Estimated Cost of Completion
|
First Phase of
Drilling
|
Fall 2007
|
Exploration Equipment
Field & survey work, mapping, project
geologist salary and expenses for 12
months.
25 drill holes at $10 per foot
Permitting, surveying, and
maintenance of claims
|
$100,000
$75,000
$65,000
$50,000
|
|
|
Total Cost of First Phase |
$290,000 |
Second Phase
of
Drilling
|
Fall 2008 or
Spring 2009
|
Comprehensive drilling
program of first phase area
Property leasing and staking
of new claims
Evaluation of newly staked
claims
|
$200,000
$100,000
$250,000
|
|
|
Total Cost of Second Phase |
$550,000 |
Proteus Claims
Our specific plan of exploration for the Proteus Claims is as
follows:
As a result of the large number of claims comprising the
Proteus Claims, we intend to carry out early stage geophysics, mapping and
sampling, and drill programs on certain of the claims to bring them to a level
of knowledge where they can be joint-ventured or sufficient funding raised to
complete feasibility studies.
In particular, over the next 12 months beginning November 2007,
we intend to carry out the following actions with respect to the Proteus Claims
for a total of approximately $800,000:
- Fly an airborne geophysical survey to define limits to potentially
mineralized palaeo-channels and locate surface uranium anomalies.
7
-
Carry out a 3 phase drill program on the Alpha, Beta, Gamma and Elk uranium
claims (which form part of the Proteus Claims), where previous exploration
work has shown the presence of significant uranium mineralization. This
property is in the same geological setting as the nearby Hansen ore-body which
is reported to contain 30 million pounds of U3O8 at 0.02grade. This program is
designed to cost approximately $650,000.
-
Continue to seek out old reports and drill data to enhance the value of the
existing portfolio of properties.
We do not presently have sufficient financing to undertake our
planned exploration program on our mineral properties and there is no assurance
that we will be able to obtain the necessary financing. Our exploration program
is preliminary in nature in that its completion will not result in a
determination that the mineral property contains commercially exploitable
quantities of mineralization. Advanced exploration activities, including the
completion of comprehensive drilling programs, will be necessary before we are
able to complete any feasibility studies on any of our mineral properties. If
our exploration activities result in an indication that the mineral properties
contain a potentially commercially exploitable quantity of uranium or other
mineral ore, then we would attempt to complete feasibility studies on the
property to assess whether commercial exploitation of the property would be
commercially feasible. There is no assurance that commercial exploitation of our
mineral claims would be commercially feasible even if our initial exploration
program shows evidence of uranium mineralization.
Our exploration program will be directed by our management and
will be supervised by our senior geologist, Gerald Park, and our senior
geophysicist, Joseph Anzman. Both Mr. Park and Mr. Anzman are engaged by the
Company as consultants. We will engage contractors to carry out our exploration
programs under Mr. Parks and Mr. Anzmans supervision. We plan to engage
project geologists, geochemical sampling crews and drilling companies as
contractors, depending on the specific exploration program of the property. We
plan to solicit bids from drilling companies prior to selecting any drilling
company to complete a drilling program. We anticipate paying normal industry
rates for core drilling.
Our exploration plans will be continually evaluated and
modified as exploration results become available. Modifications to our plans
will be based on many factors, including: results of exploration, assessment of
data, weather conditions, exploration costs, and the price of uranium and other
mineral resources and available capital. Further, the extent of our exploration
programs that we undertake will be dependent upon the amount of financing
available to us.
Intellectual Property
We have not filed for any protection of our trademark for
Buckingham Exploration. We own the copyright of all of the contents of our
website, www.buckinghamexploration.com, which we are currently developing.
8
Research and Development Expenditures
We have not spent any significant amounts on research and
development activities since our inception.
Acquisition of Plant and Equipment and Other Assets
Apart from our interests in the mineral concessions, we do not
anticipate the sale or acquisition of any material property, plant or equipment
during the next twelve months. Any acquisitions are subject to obtaining
additional financing.
Employees
As of October 17, 2007 we have no part time or full time
employees. Robin Relph, our sole director and President, works part time as an
independent contractor in the areas of business development and management. He
currently contributes approximately 30 hours a week to Buckingham. We currently
engage independent contractors in the areas of accounting, geological, legal,
consulting, marketing, accounting, bookkeeping and other services.
Subsidiaries
As of October 17, 2007, we have one wholly owned subsidiary,
Hyde Park Uranium Inc., a Colorado corporation through which we have acquired
mineral claims in Colorado.
Results of Operations for the three month period ending
August 31, 2007, the three month period ending August 31, 2006 and for the
period from inception on April 4, 2006 until August 31, 2007.
Revenues
Since our inception on April 4, 2006 to August 31, 2007, we had
not yet earned any revenues. As of August 31, 2007, we had an accumulated
deficit of $3,624,244. At this time, our ability to generate any revenues
continues to be uncertain. The auditor's report on our May 31, 2007 financial
statements contains an additional explanatory paragraph which identifies issues
that raise substantial doubt about our ability to continue as a going concern.
Our financial statements do not include any adjustment that might result from
the outcome of this uncertainty.
We anticipate that we will not earn any revenues during the
current fiscal year or in the foreseeable future, as we are presently engaged in
the exploration of our mineral properties. We anticipate that we will incur
substantial losses over the next two years.
9
Expenses
From April 4, 2006 (date of inception) to August 31, 2007, our
total expenses were $3,623,291. The major components of our expenses since
inception consist of: $2,820,125 for impairment of mineral property costs;
general and administrative expenses of $574,746; mineral property costs of
$161,352; professional fees of $164,257, and $2,811 in amortization.
Total expenses for the three months ended August 31, 2007 were
$1,953,853, including $1,475,000 for impairment of mineral property costs;
$346,346 in general and administrative expenses; $158,960 in mineral property
costs; $70,736 in professional fees; and $2,811 in amortization.
This compares to our total expenses for the same three month
period last year, ending August 31, 2006, when we incurred total expenses of
$240,983. These expenses consisted of $200,000 impairment of mineral property
costs; $25,425 in professional fees; $13,166 in general and administrative
expenses; and $2,392 in mineral property costs.
The increase of $1,555,688 in total expenses was mainly due to
our increased business activities for the three months ended August 31, 2007
compared to the same period in 2006 and in particular our acquisition of
additional mineral interests. Since it has not been determined whether there are
proven or probably reserves on the following properties, we recognized
impairment losses of mineral property acquisition costs.
On August 8, 2006, we acquired a 100% interest in two mineral
claims located in the Northwest Territories for consideration of $245,125
payable as $45,125 in cash, and 2,000,000 common shares, with a fair value of
$200,000. We have recognized an impairment loss of $245,125 of mineral property
acquisition costs for the year ended May 31, 2007.
On May 9, 2007, we entered into a purchase agreement with Pikes
Peak Resources, Inc., a British Columbia corporation, for the acquisition of 29
unpatented mining claims located in Teller County, Colorado. The purchase
consideration for the claims is $1,000,000 payable as to $500,000 cash and
5,000,000 shares of the common stock with a fair value of $500,000. Pikes Peak
Resources, Inc. will also receive net returns royalty of 2% of the proceeds of
minerals mined and sold from the claims. We will also reimburse $3,700 to Pikes
Peak Resources, Inc. for the costs of locating the claims. We have an option to
purchase the royalty for $1,000,000 as adjusted for inflation. We have also
agreed to buy back shares of common stock from Pikes Peak Resources, Inc. at
prevailing market price up to $150,000 for any taxes payable by Pikes Peak
Resources, Inc. as a result of the transaction. Pikes Peak Resources, Inc. shall
also have the option to repurchase the claims upon abandonment by us. We have
recognized an impairment loss of $1,100,000 of mineral property acquisition
costs.
10
On August 27, 2007, we entered into an exclusive option
agreement with Proteus Mining Limited for the acquisition of 939 unpatented lode
mining claims located in Colorado. As at August 31, 2007, we have made payments
of $1,375,000 relating to the acquisition of the mining claims and are committed
to a future payment of $6,300,000 and issuance of 2,000,000 of our common shares
prior to November 28, 2007. We have recognized an impairment loss of $1,475,000
of mineral property acquisition costs for the three months ended August 31,
2007.
On July 27, 2007, our wholly owned subsidiary, Hyde Park
Uranium, entered into an exploration agreement with an option to purchase the
High Park Trails Property. Pursuant to the terms of the exploration agreement,
we made an option payment of $100,000 to acquire the surface and mineral estates
over 265 acres on July 27, 2007, with a further payment of $2,900,000 at the end
of a twelve month period to exercise the non-exclusive option to purchase the
property. During the option period, we have full access to the property to
conduct an exploration and drill program to ascertain whether we wish to
exercise our option. We must also pay the seller a production royalty of
approximately 5% of the net returns generated from the exploration of the
property.
Our professional fees consisted primarily of legal, accounting
and auditing fees. Our professional fees increased $45,311 from $25,425 for the
three months ended August 31, 2006 to $70,736 for the three months ended August
31, 2007. The increase in our professional fees is due to additional legal and
auditing services provided.
Our other administrative expenses consist of consulting fees,
foreign exchange loss, mineral property costs, transfer agent and filing fees,
office supplies, travel expenses, rent, communication expenses (cellular,
internet, fax and telephone), office maintenance, courier and postage costs, and
office equipment. Our general and administrative costs for the three months
ended August 31, 2007 were $346,346 compared to $13,166 for the three months
ended August 31, 2006. The increase of $175,998 in general and administrative
costs was due to the increased day to day operation activities.
Net Loss
For the three months ended August 31, 2007 we incurred net loss
of $1,953,879 compared to $240,670 for the same period ended August 31, 2006.
For the period from inception on April 4, 2006 until August 31, 2007, we
incurred net loss of $3,624,244.
The net loss was primarily due to the impairment of mineral
property costs, mineral property costs, legal fees, consulting fees and general
and administrative costs associated with a new company that has not yet earned
any revenues. We expect to continue to incur losses over the next two years.
11
Liquidity and Capital Resources
As of August 31, 2007, we had cash of $189,715 in our bank
accounts and a working capital surplus of $164,697. As of August 31, 2007, our
account payable was $26,084, our accrued liabilities were $24,240 and our total
liabilities were $73,998. Our net loss per share was $0.05 for the three month
period ended August 31, 2007.
Our net loss of $3,624,244 from April 4, 2006 (date of
inception) to August 31, 2007 was mostly funded by a combination of private
placements, and loans. From April 4, 2006 (date of inception) to August 31,
2007, we raised $2,706,925 in cash from the issuance of common stock, the
majority of which $1,575,000 was raised in the three month period ended August
31, 2007. On February 19, 2007, we issued a promissory note in exchange for
proceeds of $23,362 in the form of an unsecured loan, bearing interest at 1% per
month with no repayment terms. As at August 31, 2007, interest expenses of $710
relating to the note were accrued.
We used net cash of $421,895 in operating activities and net
cash of $1,519,976 in investing activities, for the three months ended August
31, 2007. We received net cash of $13,672 from financing activities for the
three month period ended August 31, 2007. For the three month period ended
August 31, 2007, our monthly cash requirement was approximately $614,000 in
operating and investing activities.
We expect that our total expenses will increase over the next
year as we increase our business operations and seek additional mineral
interests. We have not been able to reach the break-even point since our
inception on April 4, 2006 and have had to rely on outside capital resources. We
do not anticipate making any revenues for the next year.
We estimate that over the next 12 months (beginning November
2007) we will spend approximately $11,996,000 in carrying out our business plan,
the details of which are outlined in more detail in the section entitled “Plan
of Operation / Exploration” above. Of the $11,996,000 we need for the
next 12 months, we had $189,715 in cash as of August 31, 2007. On September
18, 2007, we sold a private placement of 650,000 units, at a price of $0.50
per unit, raising a total of $325,000. On October 15, 2007, we sold a private
placement of 500,000 units, at a price of $0.50 per unit, raising a total of
$250,000. We intend to meet the balance of our cash requirements for the next
12 months (approximately $11,230,000) by private placement sales of our equity
securities, loans. Issuances of additional shares will result in dilution to
our existing shareholders
We currently do not have any arrangements in place for the
completion of any further private placement financings and there is no assurance
that we will be successful in completing any further private placement
financings.
12
If we are unable to achieve the necessary additional financing,
then we plan to reduce the amounts that we spend on our exploration activities
and administrative expenses in order to be within the amount of capital
resources that are available to us. Specifically, we anticipate that we would
defer any drilling programs pending our obtaining additional financing. Given
our plan to scale back our operations if we do not achieve additional financing,
we anticipate that our current cash and working capital will be sufficient to
enable us to sustain our operations and our interests in our mineral properties
for the next twelve months. If we are unsuccessful in raising enough money
through future capital raising efforts, we may not continue to our operations or
fully carry out our business plan.
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 is
material to stockholders.
Limited operating history
There is limited historical financial information about us upon
which to base an evaluation of our performance. We are an exploration stage
company and have not generated any revenues. We cannot guarantee we will be
successful in our business operations. Our business is subject to risks inherent
in the establishment of a new business enterprise, including limited capital
resources and possible cost overruns due to price and cost increases in services
and products.
Certain Relationships and Related Party Transactions
During the three months ended August 31, 2007, we paid $30,000
to Robin Relph, our President, CEO and director for his management services.
On May 7, 2007, we granted 2,000,000 stock options to Robin
Relph as compensation for his management services.
Other than as described above, we have not entered into any
transactions with our officers, directors, persons nominated for these
positions, beneficial owners of 5% or more of our common stock, or family
members of these persons wherein the amount involved in the transaction or a
series of similar transactions exceeded the lesser of $120,000 or 1% of the
average of our total assets for the last fiscal years.
13
Critical Accounting Policies
The preparation of financial statements in conformity with U.S.
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 during the
reporting period. Actual results could differ from those estimates. An
accounting policy is considered to be critical if it requires an accounting
estimate to be made based on assumptions about matters that are highly uncertain
at the time the estimate is made, and if different estimates that reasonably
could have been used, or changes in the accounting estimates that are reasonably
likely to occur periodically, could materially impact the financial statements.
Financial Reporting Release No. 60 requires all companies to include a
discussion of critical accounting policies or methods used in the preparation of
financial statements. Note 2 to the financial statements, includes a summary of
the significant accounting policies and methods used in the preparation of our
financial statements. The following is a brief discussion of the more
significant accounting policies and methods used by us.
Mineral Property Costs
Mineral property acquisition costs are initially capitalized
when incurred using the guidance in EITF 04-02, Whether Mineral Rights Are
Tangible or Intangible Assets. We assess the carrying costs for impairment
under SFAS 144, Accounting for Impairment or Disposal of Long Lived Assets at
each fiscal quarter end. When it has been determined that a mineral property can
be economically developed as a result of establishing proven and probable
reserves, the costs then 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. If mineral properties are subsequently
abandoned or impaired, any capitalized costs will be charged to operations.
Long-Lived Assets
In accordance with SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets, the carrying value of
long-lived assets is reviewed on a regular basis for the existence of facts or
circumstances that may suggest impairment. We recognize impairment when the sum
of the expected undiscounted future cash flows is less than the carrying amount
of the asset. Impairment losses, if any, are measured as the excess of the
carrying amount of the asset over our estimated fair value.
ITEM 3. Control and Procedures
(a) Evaluation of disclosure controls and procedures
Our Chief Executive Officer and Chief Financial Officer
evaluated our disclosure controls and procedures (as defined in Rule 13a-14
(c) of the Securities Exchange Act of 1934 (the Exchange Act) as of a date
within 90 days before the filing date of this report and has concluded that as
of the evaluation date, our disclosure controls and
14
procedures are effective to ensure that information we are
required to disclose in reports that we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in the Securities and Exchange Commissions rules and forms.
(b) Changes in internal controls
Subsequent to the date of their evaluation, there were no
significant changes in our internal controls over financial reporting or in
other factors that could significantly affect these controls. There were no
significant deficiencies or material weaknesses in our internal controls so no
corrective actions were taken.
PART II Other Information
ITEM 1. Legal Proceedings
Management is not aware of any legal proceedings contemplated
by any governmental authority or any other party against us. None of our
directors, officers or affiliates is (i) a party adverse to us in any legal
proceedings, or (ii) have an adverse interest to us in any legal proceedings.
ITEM 2. Unregistered Sales of Equity Securities
From June 1, 2007 to October 17, 2007 we made the following
sales of unregistered equity securities:
On August 10, 2007, we issued 3,500,000 units to various non-US
investors in exchange for cash at $0.50 per unit. Each unit consists of one
common share and one, non-transferable warrant, with each warrant to purchase
one common share at an exercise price of $1.00 per share. Each warrant will
expire on the earlier of August 10, 2009, or after five business days after
our common stock trades at least once on the OTC Bulletin Board at a price equal
to or above $1.25 per share for seven consecutive trading days. This issuance
was exempt from registration pursuant to Regulation S of the Securities Act.
On September 18, 2007, we sold a private placement of 650,000
units, at a price of $0.50 per unit, raising a total of $325,000. Each unit
consists of one common share, and one non-transferable warrant to purchase one
common share at an exercise price of $1.00 per share. Each warrant will expire
on the earlier of September 15, 2009, or after five business days after our
common stock trades at least once on the OTC Bulletin Board at a price equal
to or above $1.25 per share for seven consecutive trading days. This issuance
was exempt from registration pursuant to Regulation S of the Securities Act.
15
On October 15, 2007, we sold a private placement of 500,000 units,
at a price of $0.50 per unit, raising a total of $250,000. Each unit consists
of one common share, and one non-transferable warrant to purchase one common
share at an exercise price of $1.00 per share. Each warrant will expire on the
earlier of September 30, 2009, or five business days after our common stock
trades at least once on the OTC Bulletin Board at a price equal to or above
$1.25 per share for seven consecutive trading days. This issuance was exempt
from registration pursuant to Regulation S of the Securities Act.
We completed the offerings of the common stock pursuant to Rule
903 of Regulation S of the Securities Act on the basis that the sale of the
common stock was completed in an "offshore transaction", as defined in Rule
902(h) of Regulation S. We did not engage in any directed selling efforts, as
defined in Regulation S, in the United States in connection with the sale of the
units. Each investor was not a US person, as defined in Regulation S, and was
not acquiring the shares for the account or benefit of a US person.
Each investor was given adequate access to sufficient
information about us to make an informed investment decision. None of the
securities were sold through an underwriter and accordingly, there were no
underwriting discounts or commissions involved. No registration rights were
granted to any of the purchasers.
ITEM 3. Defaults upon Senior Securities
None
ITEM 4. Submission of Matters to a Vote of the Security
Holders
None
ITEM 5. Other Information
On August 27, 2007, we entered into a consulting agreement with
Wingspan Foundation, pursuant to which Wingspan has agreed to provide us with
certain operational, management, financial, and public relations consulting
services. The services will be performed at our satellite office in Cañon
City, Colorado. Pursuant to the consulting agreement, we will pay to Wingspan
a monthly fee of $10,000. In addition to the monthly fee, we granted to Wingspan
1,000,000 options to purchase our common shares at a purchase price of $0.60
per share. The options will expire after August 27, 2009, or 30 days following
the termination of the agreement, whichever is earlier. The term of the agreement
is from June 1, 2007, until May 31, 2008, and is renewable for a period of one
year if we provide written notice to Wingspan by April 30, 2008. The agreement
may be terminated by either party upon 30 days written notice to the other.
16
ITEM 6. Exhibits
(1) |
Included as an exhibit on our Form 8-K filed on August
29, 2007. |
(2) |
Included as an exhibit on our Form 10-KSB filed on
September 4, 2007. |
17
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.
|
Buckingham Exploration Inc. |
|
(Registrant) |
|
|
|
/s/ Robin Relph |
Date: October 22, 2007 |
Robin Relph |
|
Director , President, Chief Executive Officer
|
|
Chief Financial Officer |
|
Principal Accounting Officer
|
18