EX-99.1 2 ex99_1.htm FINANCIAL STATEMENTS ex99_1.htm






BLACK MOUNTAIN CAPITAL CORPORATION
(formerly Mercury Partners & Company Inc.)

Second Quarter Report
June 30, 2007























Black Mountain's shares are quoted on the NASD OTC Bulletin Board in the United States under the symbol "BMMUF" and on the TSX Venture Exchange, in U.S. dollars under the symbol "BMM.U".
 
 
 
 
 
NOTICE TO SHAREHOLDERS

Under National Instrument 51-102, Part 4, subsection 4.3 (3)(a), if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.

The accompanying unaudited interim consolidated financial statements of the Company have been prepared by and are the responsibility of the Company’s management.

The Company’s independent auditor has not performed a review of these financial statements in accordance with the standards established by the Canadian Institute of Chartered Accountants for a review of interim financial statements by an entity’s auditor.

















 
 
 
 
BLACK MOUNTAIN CAPITAL CORPORATION
UNAUDITED CONSOLIDATED BALANCE SHEETS
(Expressed in U.S. dollars)
 
   
June 30,
2007
    
December 31,
2006 (1)
  
ASSETS
            
CURRENT
            
Cash and cash equivalents
   $
381,362
     $
446,112
  
Loans, prepaids and receivables (Note 3)
    
139,969
      
-
  
     
521,330
      
448,452
  
                 
Long-term investments, cost
    
104,007
      
-
  
Total assets
   $
625,338
     $
448,452
  
                 
                 
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
                
CURRENT
                
Accounts payable and accrued liabilities
   $
56,684
     $
67,794
  
                 
Loan payable (Note 4)
    
342,936
      
342,936
  
                 
Shareholders' equity
                
Capital stock (Note 6)
                
Authorized
                
          Unlimited number of common shares
                
           Unlimited number of Class A preferred shares
                
Issued and outstanding – 13,533,514 common shares
    
2,899,089
      
2,649,089
  
      Contributed surplus
    
971,859
      
971,859
  
Cumulative translation adjustment
    
352,932
      
377,085
  
Deficit
     (3,998,161 )     (3,960,493 )
Total shareholders’ deficiency
    
225,719
      
37,540
  
Total liabilities and shareholders’ deficiency
   $
625,338
     $
448,452
  

 

The accompanying notes are an integral part of these consolidated financial statements.
(1) Audited
 
 
 
 
 
 
BLACK MOUNTAIN CAPITAL CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in U.S. dollars)


   
Six Months Ended
June 30,
    
Three Months Ended
March 31,
  
   
2007
    
2006
    
2007
    
2006
  
                         
REVENUE
   $
14,161
     $
15,229
     $
2,081
     $
6,604
  
                                 
EXPENSES
                                
Amortization
    
-
      
-
      
-
      
436
  
Directors and management fees
    
2,643
       (846 )    
11,906
      
18,969
  
General and administrative expenses (Note 5)
    
49,186
      
22,115
      
7,424
      
37,594
  
Interest expense
    
-
      
10,971
       (3,078 )    
4,809
  
     
51,829
      
32,240
      
16,252
      
61,808
  
                                 
Loss before other items
     (37,668 )     (17,011 )     (14,171 )     (59,507 )
                                 
OTHER ITEMS
                                
  Write-down of marketable securities
    
-
       (3,871 )    
-
      
-
  
  Gain on sale of long-term investments
    
-
      
13,237
      
-
      
-
  
  Gain on settlement of debt
    
-
      
23,633
      
-
      
-
  
                                 
Net income (loss) for the period
     (37,668 )    
15,983
       (14,171 )     (12,740 )
                                 
Deficit, beginning of the period
     (3,960,493 )     (3,883,627 )     (3,960,493 )     (3,854,904 )
Deficit, end of the period
   $ (3,998,161 )   $ (3,867,644 )   $ (3,974,664 )   $ (3,867,644 )
                                 
Basic and diluted income (loss) per share
   $ (0.003 )    
0.003
     $ (0.002 )   $ (0.002 )
Weighted average number of common shares outstanding
    
11,866,847
      
6,375,503
      
7,940,089
      
6,375,503
  

 






The accompanying notes are an integral part of these consolidated financial statements.
 
 
 
 
 
 
BLACK MOUNTAIN CAPITAL CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in U.S. dollars)


   
Six Months Ended
June 30,
    
Three Months Ended
March 30,
  
   
2007
    
2006
    
2007
    
2006
  
CASH FLOWS FROM OPERATING ACTIVITIES
                        
Net income (loss) for the period                                                                            
   $ (37,668 )   $
15,983
     $ (14,171 )   $ (12,740 )
Items not affecting cash:
                                
Amortization                                                                          
    
-
      
-
      
-
      
-
  
Write-down marketable securities                                                                          
    
-
      
3,876
      
-
      
-
  
Gain on sale of long-term investments                                                                          
    
-
       (13,237 )    
-
      
-
  
Gain on settlement of debt                                                                          
    
-
       (23,633 )    
-
      
-
  
                                 
Changes in current assets and current liabilities:
                                
(Increase) decrease in marketable securities
    
-
      
4,599
      
-
      
4,753
  
(Increase) decrease in loans and receivables
     (139,969 )     (1,560 )    
-
       (2,171 )
Increase (decrease) in accounts payable                                                                          
     (11,110 )     (77,826 )    
-
       (32,868 )
Net cash used in operating activities                                                                               
     (188,747 )     (91,798 )     (14,311 )     (43,026 )
                                 
CASH FLOWS FROM INVESTING ACTIVITIES
                                
Long-term investment purchases/costs
     (104,007 )    
-
      
-
      
-
  
Proceeds on sale of long-term investments
    
-
      
13,272
      
-
      
-
  
Net cash provided by investing activities                                                                               
     (104,007 )    
13,272
      
-
      
-
  
                                 
                                 
CASH FLOWS FROM FINANCING ACTIVITIES
                                
Loans payable
    
-
      
42,994
      
-
      
42,994
  
Issuance of share capital
    
250,000
      
175,000
      
-
      
175,000
  
Net cash provided by financing activities                                                                               
    
250,000
      
217,994
      
-
      
217,994
  
                                 
                                 
Effect of foreign exchange on cash and cash equivalents
     (42,754 )    
17,991
      
6,735
      
5,360
  
                                 
Increase (decrease) in cash                                                                               
     (64,750 )    
157,459
       (7,576 )    
169,608
  
Cash, beginning of the period                                                                               
    
446,112
      
14,392
      
446,112
      
2,243
  
Cash, end of the period                                                                               
   $
381,362
     $
171,851
     $
438,536
     $
171,851
  

 



The accompanying notes are an integral part of these consolidated financial statements.
 
 
 
 
 
BLACK MOUNTAIN CAPITAL CORPORATION
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


These interim consolidated financial statements should be read in conjunction with the Company’s most recent annual consolidated financial statements.

1.  
Basis of Presentation
 
The consolidated financial statements contained herein include the accounts of the Company and its wholly-owned subsidiaries.

The interim period consolidated financial statements have been prepared by the Company in accordance with Canadian generally accepted accounting principles. All financial summaries included are presented on a comparative and consistent basis showing the figures for the corresponding period in the preceding year. The preparation of financial data is based on accounting principles and practices consistent with those used in the preparation of annual consolidated financial statements. Certain information and footnote disclosure normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These interim period statements should be read together with the audited consolidated financial statements and the accompanying notes included in the Company's latest annual report. In the opinion of the Company, its unaudited interim consolidated financial statements contain all adjustments necessary in order to present a fair statement of the results of the interim periods presented.

Certain reclassifications have been made to the prior period financial statements to conform to the current period presentation.


2.  
Organization and Operations

Black Mountain Capital Corporation (the "Company") is organized under the Yukon Business Corporations Act and changed its name from Mercury Partners & Company Inc. on May 2, 2005. The Company currently operates in the financial services industry in Canada, engaging in private equity, merchant banking, consulting activities and asset-based commercial lending.

All amounts are expressed in United States dollars except for certain amounts denoted in Canadian dollars ("CAD$").
 

3.  
Loans, Prepaids and Receivables

   
March 31,
2007
    
December 31, 2006
  
             
Receivables                                                                                      
    
2,340
      
2,340
  
Total                                                                                      
   $
2,340
     $
2,340
  
 
 
 
 

 
4.  
Loan Payable

 
The loan is payable to a private company of a director of the Company and bears interest at 6%.


5.  
General and Administrative Expenses
 
For the three months ended March 31, general and administrative expenses were comprised of the following:
 
   
March 31, 2007
    
March 31, 2006
  
Administration office and travel
   $
1,931
     $
91
  
Consulting fees, salaries and employee benefits
    
-
      
-
  
Non-recoverable GST
    
-
      
1,020
  
Professional fees
    
45,528
      
18,189
  
Regulatory, transfer agent and shareholder communications
    
1,727
      
2,815
  
Total
   $
49,186
     $
22,115
  


6.  
Capital Stock

   
Number of shares
    
Amount
  
Balance, beginning of period                                                                                            
    
11,033,514
     $
2,649,089
  
Private placements                                                                                            
    
2,500,000
      
250,000
  
Balance June 30, 2007 and March 31, 2007                                                                                            
    
13,533,514
     $
2,899,089
  
 
7.        Income (Loss) per Share
 
The weighted average number of common shares outstanding used in determiningincome loss) per share amounts was 11,866,847.
 
8.  
Summary of Securities Issued and Options Granted During the Period
 
During the years ended December 31, 2006, 2005, 2004 and 2003 no stock options were granted, exercised, forfeited or cancelled, nor does the Company have any common shares held in escrow or subject to any pooling agreements.   As at June 30, 2007, there are no stock options remaining.

9.
Related Party Transaction
 
There were no related party transactions for this quarter ending June 30, 2007.

10.
Contingencies

 
Litigation

a)    A statement of claim has been filed against the Company to recover certain oil and gasproperties, which the claimant alleges were sold to it by the former management of theCompany. The Company believes these oil and gas properties were not included as part     of the properties sold to the claimant. The Company has offered to transfer certain of the interests in exchange for a waiver of court costs.

 
 
 
b)    During the year ended December 31, 2003, Cybersurf Corp. (“Cybersurf”) filed astatementof claim alleging that the Company engaged in improper actions during theCompany’sattempt to replace the board of directors of Cybersurf at its annual general meeting held on November 28, 2002. The Company was Cybersurf’s largest shareholder until it sold its investment during the year ended December 31, 2004 for proceeds of $1,125,037 (CAD $1,575,000). During the year ended December 31, 2004, the Company paid a court judgment of $79,003 for costs related to the Company’s legal challenge to the election of directors of Cybersurf at its November 28, 2002 annual general meeting.

        On March 23, 2005, the Company announced it had entered into an agreement to settleand dismiss its litigation with Cybersurf. The Company did not admit to any liability orwrongdoing. Pursuant to the settlement, the Company contributed $601,760 (CAD$725,000) in exchange for a full release of claims and a withdrawal of thecomplaints by Cybersurf. This amount and related legal costs of $699,793 (2005 – $118,827) were recorded as a loss on settlement of lawsuit for the year ended December 31, 2004.

c)            During the year ended December 31, 2005, the Company settled with the AlbertaSecurities Commission (the “ASC”) in respect of an alleged breach of takeover bid rulesand controlpersons’ reporting obligations. Pursuant to the terms of the settlement, the Company paid $40,693 to the ASC to, among other things, mitigate the continuing expense of protracted litigation. This amount and related legal costs of $55,396 were recorded as a loss on settlement of lawsuits for the year ended December 31, 2005.


11.
Directors and Executive Officers at June 30, 2007

Name of Director
Principal Position
Navchand Jagpal                                                                   
President, Secretary and CFO
Greg MacRae                                                                   
Director
Lewis Dillman                                                                   
Director

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