SOLO INTERNATIONAL, INC. | ||
(Name of small business issuer in its charter) | ||
Nevada
|
68-0680819
|
|
(State of incorporation)
|
(I.R.S. Employer Identification No.)
|
|
871 Coronado Center Drive Suite 200, Henderson, NV 89052 | ||
(Address of principal executive offices) | ||
(702) 330-3285 | ||
(Registrant’s telephone number) |
Yes | [X] | No | [ ] |
Yes | [X] | No | [ ] |
Large Accelerated Filer | [ ] | Accelerated Filer | [ ] | |
Non-Accelerated Filer | [ ] | Smaller Reporting Company | [ X ] |
Yes | [ ] | No | [ X ] |
|
Page
|
|
PART I. FINANCIAL INFORMATION
|
||
|
||
ITEM 1.
|
3 | |
ITEM 2.
|
4 | |
ITEM 3.
|
7 | |
ITEM 4.
|
7 | |
|
||
PART II. OTHER INFORMATION
|
||
|
||
ITEM 1.
|
8 | |
ITEM 1A.
|
8 | |
ITEM 2.
|
8 | |
ITEM 3.
|
8 | |
ITEM 4.
|
8 | |
ITEM 5.
|
9 | |
ITEM 6.
|
9 | |
SIGNATURE | 10 |
Pages | |
F-1 | |
F-2 | |
Consolidated Statements of Changes in Stockholders' Deficiency | F-3 |
F-4 | |
F-5 to F-13 |
June 30,
2013
(unaudited)
|
September 30,
2012
(audited)
|
|||||||
ASSETS
|
||||||||
Current
|
||||||||
Cash
|
$ | 3,323 | $ | 44,561 | ||||
Prepaid expense
|
2,021 | 4,593 | ||||||
Total Current Assets
|
5,344 | 49,154 | ||||||
Total Assets
|
$ | 5,344 | $ | 49,154 | ||||
LIABILTIES AND STOCKHOLDERS’ EQUITY (DEFICIENCY)
|
||||||||
Current liabilities
|
||||||||
Accounts payable and accrued liabilities
|
$ | 63,921 | $ | 29,592 | ||||
Advances from related parties
|
6,417 | 6,417 | ||||||
Convertible promissory notes, net (Note 5)
|
486,206 | 321,421 | ||||||
Total Current Liabilities
|
556,544 | 357,430 | ||||||
STOCKHOLDERS’ EQUITY (DEFICIENCY)
|
||||||||
Common stock: 900,000,000 shares authorized, at $0.001 par value
288,200,000 shares issued and outstanding as at June 30, 2013 and September 30, 2012
|
288,200 | 288,200 | ||||||
Capital in excess of par value
|
48,157 | 8,351 | ||||||
Deficit accumulated during the exploration stage
|
(887,557 | ) | (604,827 | ) | ||||
Total Stockholders’ Equity (Deficiency)
|
(551,200 | ) | (308,276 | ) | ||||
Total Liabilities and Stockholders’ Equity (Deficiency)
|
$ | 5,344 | $ | 49,154 |
Three months ended June 30,
|
Nine months ended June 30,
|
April 30, 2010
(date of inception)
to June 30,
|
||||||||||||||||||
2013
|
2012
|
2013
|
2012
|
2013
|
||||||||||||||||
REVENUE
|
$ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
EXPENSES
|
||||||||||||||||||||
Exploration expense
|
3,877 | - | 17,630 | - | 35,445 | |||||||||||||||
Professional fees
|
6,109 | 8,796 | 40,090 | 54,236 | 116,422 | |||||||||||||||
Management fees
|
7,500 | 7,500 | 22,500 | 22,500 | 52,500 | |||||||||||||||
Impairment on mineral claims
|
- | 20,000 | - | 225,000 | 225,000 | |||||||||||||||
Other general and administrative expenses
|
10,423 | 14,138 | 57,570 | 51,207 | 130,477 | |||||||||||||||
OPERATING LOSS
|
(27,909 | ) | (50,434 | ) | (137,790 | ) | (352,943 | ) | (559,844 | ) | ||||||||||
OTHER INCOME (EXPENSES)
|
||||||||||||||||||||
Interest expenses
|
(25,489 | ) | (58,997 | ) | (144,940 | ) | (116,207 | ) | (327,713 | ) | ||||||||||
NET LOSS
|
$ | (53,398 | ) | $ | (109,431 | ) | (282,730 | ) | (469,150 | ) | (887,557 | ) | ||||||||
Basic and diluted loss per share
|
$ | (0.00 | )* | $ | (0.00 | )* | $ | (0.00 | )* | $ | (0.00 | )* | ||||||||
Weighted average number of shares outstanding, basic and diluted
|
288,200,000 | 290,314,286 | 288,200,000 | 355,556,934 | ||||||||||||||||
|
*
|
Less than $0.01 per share
|
Accumulated
|
||||||||||||||||||||
Deficit
|
||||||||||||||||||||
Capital in
|
During the
|
|||||||||||||||||||
Common Stock
|
Excess of
|
development
|
||||||||||||||||||
Shares
|
Amount
|
Par value
|
Stage
|
Total
|
||||||||||||||||
Balance April 30, 2010
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|||||||||||
Issuance of common shares for cash
|
300,000,000
|
300,000
|
(297,000
|
)
|
-
|
3,000
|
||||||||||||||
Issuance of common shares for cash
|
72,000,000
|
72,000
|
(57,600
|
)
|
-
|
14,400
|
||||||||||||||
Issuance of common shares for cash
|
16,000,000
|
16,000
|
(11,200
|
)
|
-
|
4,800
|
||||||||||||||
Net loss for the period
|
-
|
-
|
-
|
(714
|
)
|
(714
|
)
|
|||||||||||||
Balance, September 30, 2010
|
388,000,000
|
388,000
|
(365,800
|
)
|
(714
|
)
|
21,486
|
|||||||||||||
Net loss for the year ended September 30, 2011
|
-
|
-
|
-
|
(25,360
|
)
|
(25,360
|
)
|
|||||||||||||
Balance, September 30, 2011
|
388,000,000
|
388,000
|
(365,800
|
)
|
(26,074
|
)
|
(3,874
|
)
|
||||||||||||
Beneficial conversion features
|
-
|
-
|
197,176
|
-
|
197,176
|
|||||||||||||||
Valuation of warrants
|
-
|
-
|
57,175
|
-
|
57,175
|
|||||||||||||||
Shares returned
|
(100,000,000
|
)
|
(100,000
|
)
|
100,000
|
-
|
-
|
|||||||||||||
Issuance of common shares for property
|
200,000
|
200
|
19,800
|
-
|
20,000
|
|||||||||||||||
Net loss for the year ended September 30, 2012
|
-
|
-
|
-
|
(578,753
|
)
|
(578,753
|
)
|
|||||||||||||
Balance, September 30, 2012
|
288,200,000
|
288,200
|
8,351
|
(604,827
|
)
|
(308,276
|
)
|
|||||||||||||
Beneficial conversion features
|
-
|
-
|
35,736
|
-
|
35,736
|
|||||||||||||||
Valuation of warrants
|
-
|
-
|
4,070
|
-
|
4,070
|
|||||||||||||||
Net loss for the period ended June 30, 2013
|
-
|
-
|
-
|
(282,730
|
)
|
(282,730
|
)
|
|||||||||||||
Balance, June 30, 2013
|
288,200,000
|
$
|
288,200
|
$
|
48,157
|
(887,557
|
)
|
(551,200
|
)
|
Ninemonths ended June 30, 2013
|
Ninemonths ended June 30, 2012
|
From inception (April30, 2010) to June 30, 2013
|
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
Net loss
|
$ | (282,730 | ) | $ | (469,150 | ) | $ | (887,557 | ) | |||
Interest expense-Amortization on discount of convertible promissory notes
|
109,590 | 99,094 | 265,362 | |||||||||
Impairment on mineral claims
|
- | 225,000 | 225,000 | |||||||||
Adjustment to reconcile net loss to net cash (used in) operating activities:
|
||||||||||||
(Increase) decrease in prepaid expense
|
2,572 | (9,251 | ) | (2,021 | ) | |||||||
Increase (decrease) in accounts payable and accrued liabilities
|
34,330 | 19,174 | 63,922 | |||||||||
Net cash provided by (used) in operating activities
|
(136,238 | ) | (135,133 | ) | (335,294 | ) | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||||
Purchase mineral claims
|
- | (205,000 | ) | (205,000 | ) | |||||||
Net cash used in investing activities
|
- | (205,000 | ) | (205,000 | ) | |||||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||
Advances from related party
|
- | 1,778 | 6,417 | |||||||||
Proceeds from convertible notes payable
|
95,000 | 385,000 | 515,000 | |||||||||
Proceeds from issuance of common stock
|
- | - | 22,200 | |||||||||
Net cash provided by financing activities
|
95,000 | 386,778 | 543,617 | |||||||||
Increase (decrease) in cash during the period
|
(41,238 | ) | 46,645 | 3,323 | ||||||||
Cash, beginning of period
|
44,561 | 32 | - | |||||||||
Cash, end of period
|
$ | 3,323 | $ | 46,677 | $ | 3,323 | ||||||
Supplement cash flow information:
|
||||||||||||
Cash paid for:
|
||||||||||||
Interest
|
$ | - | $ | - | $ | - | ||||||
Taxes
|
$ | - | $ | - | $ | - | ||||||
Non-cash transactions:
|
||||||||||||
Shares issued for acquisition of mineral property
|
$ | - | $ | 20,000 | $ | 20,000 |
i.
|
$50,000 within 2 business days of the execution of the Option Agreement
|
ii.
|
$70,000 within 30 days following the First Option Payment
|
iii.
|
$70,000 within 30 days following the Second Option Payment
|
iv.
|
$15,000 within 30 days following the Third Option Payment
|
(i)
|
Craigstone Ltd. (“Craigstone”)
|
June 30, 2013
|
September 30, 2012
|
Issue Date
|
||||||
Convertible Promissory Note – face value, due on November 4, 2012
|
$
|
100,000
|
$
|
100,000
|
$
|
100,000
|
||
Convertible Promissory Note – face value, due on January 4, 2013
|
115,000
|
115,000
|
115,000
|
|||||
Convertible Promissory Note – face value, due on February 3, 2013
|
85,000
|
85,000
|
85,000
|
|||||
Convertible Promissory Note – face value, due on March 8, 2013
|
35,000
|
35,000
|
35,000
|
|||||
Convertible Promissory Note – face value, due on May 11, 2013
|
25,000
|
25,000
|
25,000
|
|||||
Convertible Promissory Note – face value, due on June 19, 2013
|
25,000
|
25,000
|
25,000
|
|||||
Convertible Promissory Note – face value, due on September 11, 2013
|
35,000
|
35,000
|
35,000
|
|||||
Convertible Promissory Note – face value, due on October 19, 2013
|
15,000
|
15,000
|
||||||
Convertible Promissory Note – face value, due on October 26, 2013
|
15,000
|
15,000
|
||||||
Convertible Promissory Note – face value, due on May 30, 2014
|
15,000
|
15,000
|
||||||
Total convertible promissory note – face value
|
465,000
|
420,000
|
465,000
|
|||||
Less: beneficial conversion feature
|
(13,711)
|
(74,290)
|
(215,439)
|
|||||
Warrant discount
|
(3,665)
|
(24,289)
|
(60,439)
|
|||||
$
|
447,624
|
$
|
321,421
|
$
|
189,122
|
For the three month period
|
For the nine month period
|
|||||||||||||||
June 30,
2013
|
June 30,
2012
|
June 30,
2013
|
June 30,
2012
|
|||||||||||||
Amortization of debt discount
|
$ | 8,467 | $ | 50,227 | $ | 102,729 | $ | 99,094 | ||||||||
Interest at contractual rate
|
11,219 | 8,770 | 33,473 | 17,113 | ||||||||||||
Totals
|
$ | 19,686 | $ | 58,997 | $ | 136,202 | $ | 116,207 |
|
(ii)
|
Adams Ale Inc.
|
June 30, 2013
|
Issue Date
|
|||||||
Convertible Promissory Note – face value, due on February 15, 2014
|
50,000 | 50,000 | ||||||
Total convertible promissory note – face value
|
50,000 | 50,000 | ||||||
Less: beneficial conversion feature
|
(10,914 | ) | (17,473 | ) | ||||
Warrant discount
|
(503 | ) | (806 | ) | ||||
$ | 38,582 | $ | 31,721 |
For the three month period
|
For the nine month period
|
|||||||||||||||
June 30,
2013
|
June 30,
2012
|
June 30,
2013
|
June 30,
2012
|
|||||||||||||
Amortization of debt discount
|
$ | 4,557 | $ | - | $ | 6,862 | $ | - | ||||||||
Interest at contractual rate
|
1,247 | - | 1,877 | - | ||||||||||||
Totals
|
$ | 5,804 | $ | - | $ | 8,739 | $ | - |
Stock Price on Measurement Date
|
$
|
0.0068 ~ 0.135
|
|
Exercise Price of Warrants
|
$
|
0.0051 ~ 0.101
|
|
Term of Warrants (years)
|
3.00
|
||
Computed Volatility
|
125.84% ~ 147.91%
|
||
Annual Dividends
|
0.00
|
%
|
|
Discount Rate
|
0.33 ~ 0.49
|
%
|
June 30, 2013
|
September 30, 2012
|
Warrants
|
Weighted average
exercise price
|
Warrants
|
Weighted average
exercise price
|
|||||||||||||
Outstanding at the beginning of the period
|
962,500
|
$
|
0.069
|
-
|
$
|
-
|
||||||||||
Granted
|
237,500
|
0.024
|
962,500
|
$
|
0.069
|
|||||||||||
Exercised
|
-
|
-
|
-
|
|||||||||||||
Cancelled
|
-
|
-
|
$
|
-
|
||||||||||||
Outstanding at the end of the period
|
1,200,000
|
$
|
0.060
|
962,500
|
$
|
0.069
|
||||||||||
Vested and exercisable at the end of period
|
1,200,000
|
962,500
|
||||||||||||||
Weighted average fair value per share of warrants granted during the period
|
$
|
0.060
|
$
|
0.069
|
Warrants Outstanding
|
Warrants Exercisable
|
|||||||||||||||||
Exercise prices
|
Number
Outstanding
|
Weighted
average
remaining
contractual
life (years)
|
Weighted
average
exercise
price
|
Number
exercisable
|
Weighted
average
remaining
contractual
life (years)
|
Weighted
average
exercise
price
|
||||||||||||
$
|
0.00563 to 0.10
|
1,200,000
|
1.80
|
$
|
0.060
|
1,200,000
|
1.80
|
$
|
0.060
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF OPERATION
|
|
June 30, 2013
$
|
September 30, 2012
$
|
||||||
Current Assets
|
5,344 | 49,154 | ||||||
Current Liabilities
|
556,544 | 357,430 | ||||||
Working Capital (Deficit)
|
(551,200 | ) | (308,276 | ) |
|
June 30, 2013
$
|
June 30, 2012
$
|
||||||
Cash Flows from (used in) Operating Activities
|
(136,238 | ) | (135,133 | ) | ||||
Cash Flows from (used in) Investing Activities
|
- | (205,000 | ) | |||||
Cash Flows from (used in) Financing Activities
|
95,000 | 386,778 | ||||||
Net Increase (decrease) in Cash During Period
|
(41,238 | ) | 46,645 |
Exhibit Number
|
Description of Exhibit
|
Filing
|
3.01
|
Articles of Incorporation
|
Filed with the SEC on October 22, 2010 as part of our Registration Statement on Form S-1.
|
3.01(a)
|
Certificate of Change
|
Filed with the SEC on November 7, 2012 as part of our Current Report on Form 8-K.
|
3.02
|
Bylaws
|
Filed with the SEC on October 22, 2010 as part of our Registration Statement on Form S-1.
|
10.01
|
Service Agreement between Solo International, Inc. and “TIRCARS” Sp. J dated August 30, 2010
|
Filed with the SEC on October 22, 2010 as part of our Registration Statement on Form S-1.
|
10.02
|
Securities Purchase Agreement between Solo International, Inc. and Craigstone Ltd., dated November 4, 2012
|
Filed with the SEC on November 15, 2012 as part of our Current Report on Form 8-K.
|
10.03
|
Option Agreement by and between between Solo International, Inc. and 9228-6202 Quebec Inc., dated November 15, 2012
|
Filed with the SEC on November 23, 2012 as part of our Current Report on Form 8-K
|
10.04
|
Amended Option Agreement by and between 9252-4768 Quebec Inc. and 9228-6202 Quebec Inc. dated December 20, 2012
|
Filed with the SEC on January 3, 2013 as part of our Amended Current Report on Form 8-K/A.
|
10.05
|
Securities Purchase Agreement between Solo International, Inc. and Craigstone Ltd., dated January 10, 2013
|
Filed with the SEC on January 12, 2013 as part of our Current Report on Form 8-K.
|
31.01
|
Certification of Principal Executive Officer Pursuant to Rule 13a-14
|
Filed herewith.
|
31.02
|
Certification of Principal Financial Officer Pursuant to Rule 13a-14
|
Filed herewith.
|
32.01
|
CEO and CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act
|
Filed herewith.
|
101.INS*
|
XBRL Instance Document
|
Filed herewith.
|
101.SCH*
|
XBRL Taxonomy Extension Schema Document
|
Filed herewith.
|
101.CAL*
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
Filed herewith.
|
101.LAB*
|
XBRL Taxonomy Extension Labels Linkbase Document
|
Filed herewith.
|
101.PRE*
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
Filed herewith.
|
101.DEF*
|
XBRL Taxonomy Extension Definition Linkbase Document
|
Filed herewith.
|
Dated: August 19, 2013
|
By:
|
/s/ Michel Plante
|
Name:
|
Michel Plante
|
|
Title:
|
President, Principal Executive Officer & Principal Financial Officer (Principal Accounting Officer)
|
Date: August 19, 2013 | By: | /s/ Michel Plante |
Name: | Michel Plante | |
Title: | Principal Executive Officer |
Date: August 19, 2013 | By: | /s/ Michel Plante |
Name: | Michel Plante | |
Title: | Principal Financial Officer |
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
(2)
|
The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: August 19, 2013
|
By:
|
/s/ Michel Plante
|
|
Name:
|
Michel Plante
|
||
Title:
|
Principal Executive, Financial and Accounting Officer
|
Mineral Property Option Agreement (Tables)
|
9 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
|||||||||
Extractive Industries [Abstract] | |||||||||
Schedule of Cash Payments for Option on Mineral Property |
|
Statements of Operations (Unaudited) (USD $)
|
3 Months Ended | 9 Months Ended | 38 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
|||||||
Income Statement [Abstract] | |||||||||||
REVENUE | |||||||||||
EXPENSES | |||||||||||
Exploration expense | 3,877 | 17,630 | 35,445 | ||||||||
Professional fees | 6,109 | 8,796 | 40,090 | 54,236 | 116,422 | ||||||
Management fees | 7,500 | 7,500 | 22,500 | 22,500 | 52,500 | ||||||
Impairment on mineral claims | 20,000 | 225,000 | 225,000 | ||||||||
Other general and administrative expenses | 10,423 | 14,138 | 57,570 | 51,207 | 130,477 | ||||||
OPERATING LOSS | (27,909) | (50,434) | (137,790) | (352,943) | (559,844) | ||||||
OTHER INCOME (EXPENSES) | |||||||||||
Interest expenses | (25,489) | (58,997) | (144,940) | (116,207) | (327,713) | ||||||
NET LOSS | $ (53,398) | $ (109,431) | $ (282,730) | $ (469,150) | $ (887,557) | ||||||
Basic and diluted loss per share | $ 0.00 | [1] | $ 0.00 | [1] | $ 0.00 | [1] | $ 0.00 | [1] | |||
Weighted average number of shares outstanding, basic and diluted | 288,200,000 | 290,314,286 | 288,200,000 | 355,556,934 | |||||||
|
Common Stock
|
9 Months Ended |
---|---|
Jun. 30, 2013
|
|
Equity [Abstract] | |
Common Stock | 4. COMMON STOCK
The authorized capital of the Company is 900,000,000 common shares with a par value of $ 0.001 per share.
As of June 30, 2013, 288,200,000 common stock shares were issued and outstanding.
|
Common Stock (Details Narrative) (USD $)
|
Jun. 30, 2013
|
Sep. 30, 2012
|
---|---|---|
Equity [Abstract] | ||
Common stock, shares authorized | 900,000,000 | 900,000,000 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares issued and outstanding | 288,200,000 |
Convertible Promissory Notes, Net (Tables)
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9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Convertible Notes Payable, Craigstone |
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Schedule of Debt Discount and Interest accrued in period, Craigstone |
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Schedule of Convertible Notes Payable, Adams Ale |
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Schedule of Debt Discount and Interest accrued in period, Adams Ale |
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Convertible Promissory Notes, Net - Schedule of Debt Discount and Interest accrued in period (Details) (USD $)
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3 Months Ended | 9 Months Ended | ||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Craigstone Ltd. | ||||
Amortization of debt discount | $ 8,467 | $ 50,227 | $ 102,729 | $ 99,094 |
Interest at contractual rate | 11,219 | 8,770 | 33,473 | 17,113 |
[TotalInterestExpense] | 19,686 | 58,997 | 136,202 | 116,207 |
Adams Ale | ||||
Amortization of debt discount | 4,557 | 6,862 | ||
Interest at contractual rate | 1,247 | 1,877 | ||
[TotalInterestExpense] | $ 5,804 | $ 8,739 |
Warrants - Outstanding and Exercisable Warrants (Details) (USD $)
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9 Months Ended | 12 Months Ended |
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Jun. 30, 2013
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Sep. 30, 2012
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Notes to Financial Statements | ||
Exercise Price, minimum | $ 0.00563 | |
Exercise Price, maximum | $ 0.1 | |
Warrants outstanding | ||
Number outstanding | 1,200,000 | |
Weighted average remaining contractual life (years) | 1 year 8 months | |
Weighted average exercise price | $ 0.060 | $ 0.069 |
Warrants Exercisable | ||
Number Exercisable | 1,200,000 | |
Weighted average remaining contractual life (years) | 1 year 8 months | |
Weighted Average Exercise Price | $ 0.060 |
Summary of Significant Accounting Policies
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9 Months Ended |
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Jun. 30, 2013
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Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Interim Financial Statements The accompanying interim unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In our opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Consolidated operating results for the three and nineperiod ended June 30, 2013 are not necessarily indicative of the results that may be expected for the year ending September 30, 2013. For further information, refer to the consolidated financial statements and footnotes thereto included in our Form 10-K Report for the fiscal year ended September 30, 2012 filed with the Securities and Exchange Commission on December 31, 2012.
Basis of Presentation The unaudited interim consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim consolidated financial information and pursuant to the rules and regulations of the SEC. Accordingly; they do not include all the information and footnotes required by GAAP for complete consolidated financial statements. However, management believes that the disclosures made are adequate to make the information not misleading. Management has evaluated subsequent events through the date the financial statements were issued.
Going Concern The consolidated financial statements have been prepared on a going concern basis that assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has incurred losses since inception resulting in an accumulated deficit of $887,557 as of June 30, 2013 and further losses are anticipated in the development of its business raising substantial doubt about the Companys ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand and loans from directors and/or private placement of common stock. These financials do not include any adjustments relating to the recoverability and reclassification of recorded asset amounts, or amounts and classifications of liabilities that might result from this uncertainty.
Cash and Cash equivalents For purposes of Statement of Cash Flows, the Company considers all highly liquid debt instruments purchased with a maturity date of six months or less to be cash equivalents.
Use of Estimates and Assumptions 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 during the period. Actual results could differ from those estimates.
Foreign Currency Translation The Company's functional currency and its reporting currency is the United States dollar.
Fair Value of Financial Instruments The carrying value of cash and accounts payable and accrued liabilities approximates their fair value because of the short maturity of these instruments. Unless otherwise noted, it is managements opinion the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.
Income Taxes The Company follows the liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the estimated tax consequences attributable to differences between the financial statement carrying values and their respective income tax basis (temporary differences). The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
Basic and Diluted Loss Per Share The Company computes loss per share in accordance with ASC-260, Earnings per Share which requires presentation of both basic and diluted earnings per share on the face of the statement of operations. Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. Diluted loss per share is the same as basic loss per share, because the effects of the additional securities, a result of the net loss would be anti-dilutive.
Stock-based Compensation
The Company records stock based compensation in accordance with the guidance in ASC Topic 718, which requires the Company to recognize expenses related to the fair value of its employee stock option awards. This eliminates accounting for share-based compensation transactions using the intrinsic value and requires instead that such transactions be accounted for using a fair-value-based method. The Company recognizes the cost of all share-based awards on a graded vesting basis over the vesting period of the award.
Mineral Property Costs Mineral exploration and development costs are accounted for using the successful efforts method of accounting.
Property acquisition costs - Mineral property acquisition costs are capitalized as mineral exploration properties. Upon achievement of all conditions necessary for reserves to be classified as proved, the associated acquisition costs are reclassified to prove properties
Exploration costs - Geological and geophysical costs and the costs of carrying and retaining undeveloped properties are expensed as incurred.
Impairment of Mineral Properties Unproved mineral properties are assessed at each reporting period for impairment of value, and a loss is recognized at the time of the impairment by providing an impairment allowance. An asset would be impaired if the undiscounted cash flows were less than its carrying value. Impairments are measured by the amount by which the carrying value exceeds its fair value. Because the Company uses the successful efforts method, the Company assesses its properties individually for impairment, instead of on an aggregate pool of costs. Impairment of unproved properties is based on the facts and circumstances surrounding each lease and is recognized based on managements evaluation. Managements evaluation follows a two-step process where (1) recoverability of the carrying value of the asset is reviewed to determine if there is sufficient value recoverable to support the capitalized value at the report date; and, (2) If assets fail the recoverability test, impairment testing is conducted, including the evaluation of various criteria such as: prior history of successful operations; production currently in place and/or future projected cash flows (if any); reserve reports or evaluations from which management can prepare future cash flow analyses; the Companys ability to monetize the asset(s) under evaluation; and, Managements intent regarding future development.
Beneficial Conversion Feature From time to time, the Company may issue convertible notes that may have conversion prices that create an embedded beneficial conversion feature pursuant to the Emerging Issues Task Force guidance on beneficial conversion features. A beneficial conversion feature exists on the date a convertible note is issued when the fair value of the underlying common stock to which the note is convertible into is in excess of the remaining unallocated proceeds of the note after first considering the allocation of a portion of the note proceeds to the fair value of any attached equity instruments, if any related equity instruments were granted with the debt. In accordance with this guidance, the intrinsic value of the beneficial conversion feature is recorded as a debt discount with a corresponding amount to additional paid in capital. The debt discount is amortized to interest expense over the life of the note using the effective interest method. |
Convertible Promissory Note, Net
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Jun. 30, 2013
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Convertible Promissory Note, Net |
5. CONVERTIBLE PROMISSORY NOTE, NET
On November 4, 2011, the Company entered into a Securities Purchase Agreement with Craigstone pursuant to which the Company received $100,000 as a loan from Craigstone in exchange for one (1) Unit consisting of: a Convertible Promissory Note convertible to common stock in whole or in part, at any time and from time to time before maturity at the option of the holder at seventy-five percent (75%) of the average traded price of the common stock for the thirty (30) trading days immediately preceding the conversion date; and a three (3) year Warrant (the Warrant) to purchase two hundred fifty thousand (250,000) shares of the Companys Common Stock exercisable at the lower of : (i) a price of $0.20 per share or (ii) seventy-five percent (75%) of the average traded price of common stock for the thirty (30) trading days immediately preceding the exercise date. The Note earns simple interest accruing at ten percent (10%) per annum and was due on or before the twelfth month anniversary of the date of execution. The due dates were extended as described further herein.
During the fiscal year ended September 30, 2012, the Company entered into additional Securities Purchase Agreements with Craigstone pursuant to which the Company received collectively $320,000 as loans whereby each funding received one (1) Unit consisting of: a Convertible Promissory Note convertible to common stock in whole or in part, at any time and from time to time before maturity at the option of the holder at seventy-five percent (75%) of the average traded price of the common stock for the thirty (30) trading days immediately preceding the conversion date; and a three (3) year Warrant (the Warrant). Collectively under the Securities Purchase Agreements, Craigstone was granted the rights to purchase seven hundred twelve thousand five hundred (712,500) shares of the Companys Common Stock exercisable at the lower of : (i) a price of $0.20 per share or (ii) seventy-five percent (75%) of the average traded price of common stock for the thirty (30) trading days immediately preceding the exercise date. The Notes earn simple interest accruing at ten percent (10%) per annum and were due on or before the twelfth month anniversary of the date of execution. The due dates were extended as described further herein.
During the current nine month period ended June 30, 2013, the Company entered into three additional Securities Purchase Agreements with Craigstone. pursuant to which the Company received a total of $45,000 as loans in exchange for which each agreement receive done (1) Unit consisting of a Convertible Promissory Note convertible to common stock in whole or in part, at any time and from time to time before maturity at the option of the holder at seventy-five percent (75%) of the average traded price of the common stock for the thirty (30) trading days immediately preceding the conversion date; and collectively received a three (3) year Warrant (the Warrant) to purchase one hundred twelve thousand five hundred (112,500) shares of the Companys Common Stock exercisable at the lower of : (i) a price of $0.20 per share or (ii) seventy-five percent (75%) of the average traded price of common stock for the thirty (30) trading days immediately preceding the exercise date. The Notes earn simple interest accruing at ten percent (10%) per annum and is due on or before the twelfth month anniversary of the date of execution.
The beneficial conversion feature resulting from the discounted conversion price compared to market price was valued on the date of grant to be $215,439 on the notes, and $60,439 on the warrants. This value was recorded as a discount on debt and offset to additional paid in capital. Amortization of the discount was respectively $8,467 (2012 - $50,227) and $102,729 (2012 - $99,094) for the three and nine months ended June 30, 2013, which amount has been recorded as interest expense.
Interest expenses:
On January 31, 2013, Craigstone agreed to extend the maturity dates of certain notes due and payable on November 4, 2012, January 4, 2012 and February 3, 2013 for a period of one year or greater so that the respective notes are now due and payable on November 4, 2013, November 4, 2014 and February 3, 2014.
On May 31, 2013, Craigstone agreed to extend the maturity dates of certain notes due and payable on March 8, 2013, May 11, 2013 and June 19, 2013 to March 8, 2014, May 11, 2014 and June 19, 2014.
Effective February 15, 2013, the Company entered into a Securities Purchase Agreement with Adams Ale Inc.(Adams) pursuant to which Adams agreed to undertake a private placement in the amount of $100,000. On May 1, 2013, Adams had not fully funded the private placement, having funded an amount of $50,000 and agreed to convert to a Convertible Promissory Note on the same commercial terms as the Craigstone notes discussed above. The Company agreed to enter into a Securities Purchase Agreement with Adams for the funded amount of $50,000 in exchange for one (1) Unit consisting of: a Convertible Promissory Note convertible to common stock in whole or in part, at any time and from time to time before maturity at the option of the holder at seventy-five percent (75%) of the average traded price of the common stock for the thirty (30) trading days immediately preceding the conversion date; and a three (3) year Warrant (the Warrant) to purchase one hundred twenty-five thousand (125,000) shares of the Companys Common Stock exercisable at the lower of : (i) a price of $0.20 per share or (ii) seventy-five percent (75%) of the average traded price of common stock for the thirty (30) trading days immediately preceding the exercise date. The Note earns simple interest accruing at ten percent (10%) per annum and is due on or before the twelfth month anniversary of the date of execution.
The beneficial conversion feature resulting from the discounted conversion price compared to market price was valued on the date of grant to be $17,473 on the note, and $806 on the warrants. This value was recorded as a discount on debt and offset to additional paid in capital. Amortization of the discount was respectively $4,557 (2012 - $nil) and $6,862 (2012 - $nil) for the three and nine months ended June 30, 2013, which amount has been recorded as interest expense.
Interest expenses:
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Mineral Property
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9 Months Ended | ||||||||||
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Jun. 30, 2013
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Extractive Industries [Abstract] | |||||||||||
Mineral Property Option Agreement | 3. MINERAL PROPERTY
On November 15, 2011, the Company through its wholly-owned Quebec subsidiary, 9252-4768 Quebec Inc., entered into a Property Option Agreement with 9228-6202 Quebec Inc., a Quebec corporation (the “Optionor”). Pursuant to the option agreement, the Company received the exclusive option to acquire an undivided 100% right, title and interest in and to certain mineral claims located in Portland Township, Outaouais, Quebec subject to a royalty reserved to the Optionor. To fully exercise the option and acquire an undivided 100% right, title and interest in and to the Property, the Company was required to: 1) pay an aggregate sum of two hundred and five thousand dollars ($205,000) to Optionor; 2) incur an aggregate of at least sixty-five thousand dollars ($65,000) of expenditures on or with respect to the Property; and 3) issue to Optionor an aggregate number of restricted shares of common stock of the Company equal to twenty thousand US dollars ($20,000). On, November 27, 2012, the Company’s wholly owned subsidiary, 9252-4768 Quebec Inc. entered into a second addendum to the original property option agreement with 9228-6202 Quebec Inc. whereby the parties acknowledged that 9252-4768 Quebec Inc. had earned its 100% right, title and interest in and to certain mineral claims, located in Portland Township, Outaouais, Quebec. The cash payments, expenditures and stock issuance were scheduled to be completed as follows:
Cash Payments:
The Company is required to pay the cash payments to Optionor, all of which have been paid as of June 30, 2013, in the following amounts and by the dates described below:
Expenditures:
During the nine month period ended June 30, 2013, the Company expended a total of $17,630 for exploration expenses.
Stock Issuances:
The Company was required to issue an aggregate number of restricted shares of common stock of the Company equal to twenty thousand US dollars ($20,000) pursuant to the terms and conditions of the Property Option Agreement, The Company was required to issue the shares within 10 days of the completion of the forward split or no later than 90 days of execution of the Property Option Agreement. The Company issued the shares on May 8, 2012 and issued a total of 200,000 shares of common stock at a deemed price of $0.10 per share which was the first trading price of the stock after the completion of the forward split.
The Company made cash payments in the amount of $205,000 and issued a total of 200,000 shares of common stock at a deemed price of $0.10 per share to 9228-6202 Quebec Inc. pursuant to the cash payment and stock payment schedule noted above, which amount was capitalized as option costs on the mineral property as of September 30, 2012. At the close of the period ended September 30, 2012, the Company evaluated the recoverability of the amount paid for the option and determined to impair the amount in full, as the Company is currently in the exploration phase, with no proven or probable reserves having yet been determined.
On November 27, 2012, the Option Agreement was further amended to revise the requirement to expend the $65,000 on exploration expenditures to read that the Optionee has earned its 100% right and interest in the Property for the payment of all expenditures to November 27, 2012 and for allowing the Optionor to utilize a portion of the expenditures expended by the Optionee to apply to certain of the Optionor’s claims. The Company has transfered the title to the Property to its wholly owned subsidiary, 9252-4768 Quebec Inc. |
Advance from Related Parties (Details Narrative) (USD $)
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3 Months Ended | 9 Months Ended | 38 Months Ended | |||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Sep. 30, 2012
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Notes to Financial Statements | ||||||
Monthly compensation, officer | $ 2,500 | |||||
Management fees, paid in period | 7,500 | 7,500 | 22,500 | 22,500 | 52,500 | |
Advances from related parties | $ 6,417 | $ 6,417 | $ 6,417 | $ 6,417 |
Warrants (Details Narrative) (USD $)
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Jun. 30, 2013
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Notes to Financial Statements | |
Warrants issued | 1,200,000 |
Term of Warrant | 3 |
Warrant exercise price 1 | $ 0.20 |
Warrant exercise price 2, as percent of marketing trading price | 75.00% |
Number of days average trading price prior to exercise on which warrant price determined | 30 |
Fair Value Warrants Issued | $ 61,245 |