Notes
to Unaudited Condensed Consolidated Financial Statements
As
of April 30, 2013
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES AND ORGANIZATION
(A) Basis of Presentation
The accompanying unaudited
condensed consolidated financial statements have been prepared in accordance with the rules and regulations (s-x) of the Securities
and Exchange Commission (the “SEC”) and with the instructions to Form 10-Q. Accordingly, they do not include all the
information necessary for a comprehensive presentation of financial position and results of operations, in accordance with generally
accepted accounting principles.
It is management’s
opinion, however that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary
for a fair financial statements presentation. The results for the interim period are not necessarily indicative of the results
to be expected for the year. The unaudited condensed consolidated financial statements should be read in conjunction with the
consolidated July 31, 2012 financial statements and footnotes thereto included in the Company’s SEC Form 10-K.
Inception Mining, Inc. (formerly known
as Gold American Mining Corp.) (an exploration stage company) was incorporated under the name of Golf Alliance Corporation and
under the laws of the State of Nevada on July 2, 2007. Inception Mining, Inc. is a precious metal mineral acquisition, exploration
and development company. Inception Development, Inc., its wholly owned subsidiary was incorporated under the laws of the State
of Idaho on January 28, 2013.
Golf Alliance Corporation pursued its
original business plan to provide opportunities for golfers to play on private golf courses normally closed to them due to the
membership requirements of the private clubs. During the year ended July 31, 2010, the Company decided to redirect its business
focus toward precious metal mineral acquisition and exploration.
Activities during the exploration stage
include developing the business plan and raising capital.
The Company is in the exploration stage
in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)
Topic No. 915 and SEC Industry Guide No. 7 addressing issues in mining operations.
On March 5, 2010, the Company amended
its articles of incorporation to (1) to change its name to Silver America, Inc. and (2) increased its authorized common stock
from 100,000,000 to 500,000,000.
On June 23, 2010 the Company amended
its articles of incorporation to change its name to Gold American Mining Corp.
On May 17, 2013, the Company amended
its articles of incorporation to change its name to Inception Mining, Inc.
(B) Principles
of Consolidation
The accompanying 2013 and
2012 consolidated financial statements include the accounts of Inception Mining, Inc. and its wholly owned subsidiary, Inception
Development, Inc.(collectively, the “Company”). All intercompany accounts have been eliminated upon consolidation.
(C) Use of Estimates
In preparing financial statements in
conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect
the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial
statements and expenses during the reported period. Significant estimates include valuation of in kind contribution of interest
and services and the valuation of deferred tax assets. Actual results could differ from those estimates.
(D) Cash and Cash
Equivalents
The Company considers all highly liquid
temporary cash investments with an original maturity of three months or less to be cash equivalents. At April 30, 2013 and July
31, 2012, the Company had $0 and $2,926 in cash equivalents.
Inception Mining, Inc. (formerly
known as Gold American Mining Corp. and Subsidiary)
(An Exploration Stage Company)
Notes to Unaudited Condensed Consolidated Financial Statements
As of April 30, 2013
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES AND ORGANIZATION (CONTINUED)
(E) Exploration and Development Costs
Costs of acquiring mining properties
and any exploration and development costs are expensed as incurred unless proven and probable reserves exist and the property
is a commercially mineable property in accordance with FASB Accounting Standards Codification No. 930, Extractive Activities
- Mining. Mine development costs incurred either to develop new gold and silver deposits, expand the capacity of operating mines,
or to develop mine areas substantially in advance of current production are capitalized. Costs incurred to maintain current production
or to maintain assets on a standby basis are charged to operations. Costs of abandoned projects are charged to operations upon
abandonment. The Company evaluates, at least annually, the carrying value of capitalized mining costs and related property, plant
and equipment costs, if any, to determine if these costs are in excess of their net realizable value and if a permanent impairment
needs to be recorded. The periodic evaluation of carrying value of capitalized costs and any related property, plant and equipment
costs are based upon expected future cash flows and/or estimated salvage value.
The Company capitalizes costs for mining
properties by individual property and defers such costs for later amortization only if the prospects for economic productions
are reasonably certain.
Capitalized costs are expensed in the
period when the determination has been made that economic production does not appear reasonably certain.
During the nine months ended April
30, 2013 and 2012, the Company recorded exploration costs of $10,391 and $6,021, respectively.
(F) Property and Equipment
The Company values property and equipment
at cost and depreciates these assets using the straight-line method over their expected useful life. The Company uses a three year
life for office equipment, its only category of property and equipment.
In accordance with FASB Accounting
Standards Codification No. 360, Property, Plant and Equipment, the Company carries long-lived assets at the lower of the carrying
amount or fair value. Impairment is evaluated by estimating future undiscounted cash flows expected to result from the use of
the asset and its eventual disposition. If the sum of the expected undiscounted future cash flow is less than the carrying amount
of the assets, an impairment loss is recognized. Fair value, for purposes of calculating impairment, is measured based on estimated
future cash flows, discounted at a market rate of interest.
There were no impairment losses recorded
during the nine months ended April 30, 2013 and 2012, respectively.
(G) Loss Per Share
Basic and diluted net loss per common
share is computed based upon the weighted average common shares outstanding as defined by FASB Accounting Standards Codification
Topic 260, “Earnings Per Share.” As of April 30, 2013 and 2012 there were 0 and 4,953, respectively, warrants
issued and outstanding that were not included in the computation of earnings per share because their inclusion is anti-dilutive.
(H) Revenue Recognition
The Company recognizes revenue on arrangements
in accordance with FASB Accounting Standards Codification No. 605, Revenue Recognition. In all cases, revenue is recognized only
when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed and collectability
is reasonably assured. The Company has not yet entered into any contractual obligation to deliver ore product or finished metals.
Inception Mining, Inc. (formerly
known as Gold American Mining Corp. and Subsidiary)
(An Exploration Stage Company)
Notes to Unaudited Condensed Consolidated Financial Statements
As of April 30, 2013
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES AND ORGANIZATION (CONTINUED)
(I) Income Taxes
The Company accounts for income taxes
under FASB Codification Topic 740-10-25 (“ASC 740-10-25”). Under ASC 740-10-25, deferred tax assets and liabilities
are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or
settled. Under ASC 740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income
in the period that includes the enactment date.
(J) Stock-Based Compensation
In December 2004, the FASB issued FASB
Accounting Standards Codification No. 718,
Compensation – Stock Compensation
. Under FASB Accounting Standards Codification
No. 718, companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date
fair value and recognize the costs in the financial statements over the period during which employees are required to provide
services. Share-based compensation arrangements include stock options, restricted share plans, performance-based awards, share
appreciation rights and employee share purchase plans. As such, compensation cost is measured on the date of grant at their fair
value. Such compensation amounts, if any, are amortized over the respective vesting periods of the option grant. The Company applies
this statement prospectively.
Equity instruments (“instruments”)
issued to other than employees are recorded on the basis of the fair value of the instruments, as required by FASB Accounting
Standards Codification No. 718. FASB Accounting Standards Codification No. 505,
Equity Based Payments to Non-Employees
defines the measurement date and recognition period for such instruments. In general, the measurement date is when either a (a)
performance commitment, as defined, is reached or (b) the earlier of (i) the non-employee performance is complete or (ii) the
instruments are vested. The measured value related to the instruments is recognized over a period based on the facts and circumstances
of each particular grant as defined in the FASB Accounting Standards Codification.
(K) Business Segments
The Company operates in
one segment and therefore segment information is not presented.
(L) Fair Value of Financial Instruments
The carrying amounts reported in the
balance sheet for prepaids, accounts payable and accrued expenses, accounts payable-related party, notes payable-related party
and loans payable – related party approximate fair value based on the short-term maturity of these instruments. There are
no assets or liabilities that are measured at fair value on a recurring basis.
(M) Recent Accounting Pronouncements
In February 2013, FASB issued Accounting
Standards Update 2013-04, Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which
the Total Amount of the Obligation Is Fixed at the Reporting Date (a consensus of the FASB Emerging Issues Task Force). This guidance
requires an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of
the obligation within the scope of this guidance is fixed at the reporting date. This stipulates that (1) it will include the
amount the entity agreed to pay for the arrangement between them and the other entities that are also obligated to the liability
and (2) any additional amount the entity expects to pay on behalf of the other entities. The objective of this update is to provide
guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements.
The amendments in this update are effective for fiscal periods (and interim reporting periods within those years) beginning after
December 15, 2013. This standard is not expected to have a material impact on the Company’s reported results of operations
or financial position.
In February 2013, FASB issued Accounting
standards update 2013-02, Comprehensive Income Topic 220): Reporting of Amounts Reclassified out of Accumulated Other Comprehensive
Income. This update requires an entity to provide information amount the amount reclassified out of accumulated other comprehensive
income by component. The entity is also required to disclose significant amounts reclassified out of accumulated other comprehensive
income by the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified
to net income in its entirety in the same reporting periods. For other
Inception Mining, Inc.
(formerly known as Gold American Mining Corp. and Subsidiary)
(An Exploration Stage
Company)
Notes to Unaudited Condensed
Consolidated Financial Statements
As of April 30, 2013
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES AND ORGANIZATION (CONTINUED)
(M) Recent Accounting Pronouncements
(continued)
amounts that are not required under
U.S. GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other discourses required
under U.S. GAAP that provide additional detail about those amounts. The objective in this Update is to improve the reporting of
reclassifications out of accumulated other comprehensive income. The amendments in this update should be applied prospectively
for reporting periods beginning after December 15, 2013. This standard is not expected to have a material impact on the Company’s
reported results of operations or financial position.
NOTE 2 PROPERTY AND EQUIPMENT
At April 30, 2013 and July
31, 2012, respectively, property and equipment is as follows:
|
|
April
30, 2013
|
|
|
July
31, 2012
|
|
|
|
(Unaudited)
|
|
|
|
|
Office Equipment
|
|
$
|
3,925
|
|
|
$
|
4,098
|
|
Less: accumulated depreciation
|
|
|
(218
|
)
|
|
|
(1,797
|
)
|
Total Property and Equipment
|
|
$
|
3,707
|
|
|
$
|
2,301
|
|
Depreciation expense for
the nine months ended April 30, 2013 and 2012 and for the period from July 2, 2007 (Inception) to April 30, 2013 was $218, $614
and $12,432 respectively. During the nine months ended April 30, 2013, a former controlling stockholder took the only asset as
payment on an outstanding loan valued at $2,095.
NOTE 3 NOTES PAYABLE
On February 25, 2013, the Company,
its majority shareholder, and its wholly-owned subsidiary, Inception Development Inc. (the “Subsidiary”), entered
into an Asset Purchase Agreement with Inception Resources, LLC, a Utah corporation, pursuant to which the Company purchased the
U.P. and Burlington Gold Mine in consideration of 16,000,000 shares of common stock valued at $160 (valued at par value of $0.00001
because of the entities being under common control), the assumption of promissory notes in the amount of $800,000 and $150,000
and the assignment of a 3% net royalty. The Asset Purchase Agreement closed on February 25, 2013. During the three months ended
April 30, 2013, the first installment payment of $100,000 on these notes was paid. As of April 30, 2013, the outstanding balances
on these notes were $700,000 and $150,000 (See Notes 5(E) and 7).
NOTE 4 NOTES PAYABLE – STOCKHOLDERS
During the nine months ended April
30, 2013, a stockholder loaned or paid expenses on behalf of the Company $171,033 to pay Company expenses. Pursuant to the terms
of the loan, the loan bears interest at8%, unsecured and due on demand (See Note 6). As of April 30, 2013 the outstanding balance
was $171,033 and $3,040 in accrued interest ($5,012 interest expense was recognized during the period).
During the nine months ended April
30, 2013, the former controlling stockholders (prior to the Purchase Agreement) forgave the two loans payable listed below of
$64,408 and $2,244. This was recorded by the Company as contributed capital (See Notes 5(H) and 6), no gain or loss was recognized.
For the nine months ended April 30,
2013, a related party paid expenses of $5,000 on behalf of the Company in exchange for a non-interest bearing loan. As of January
31, 2013 the loan was forgiven and recorded as a contributed capital (See Note 5(H)).
During the year ended July 31, 2012,
the principal stockholder loaned or paid expenses on behalf of the Company $64,408 to pay Company expenses. Pursuant to the terms
of the loan, the loans are non-interest bearing, unsecured and due on demand (See Note 6).
On October 10, 2011, the Company executed an unsecured, non-interest bearing, due on
demand promissory note payable to its During the nine months ended April 30, 2013, the principal stockholder loaned the Company
$27,447 to pay Company expenses. Pursuant to the terms of the loan, the loan is bearing interest of 9%, unsecured and due on September
25, 2013 (See Note 6). As of January 31, 2013 the controlling stockholder forgave $2,447 and $798 in accrued interest. This was
recorded by the Company as contributed capital. On February 25, 2013 the remaining $25,000 was converted to 1,000,000 shares of
common stock at $0.025 per share (See Notes 5(H) and 6), no gain or loss was recognized.
Inception Mining, Inc.
(formerly known as Gold American Mining Corp. and Subsidiary)
(An Exploration Stage
Company)
Notes to Unaudited Condensed
Consolidated Financial Statements
As of April 30, 2013
NOTE 4 NOTES PAYABLE – STOCKHOLDERS (CONTINUED)
On October 10, 2011, the Company executed
an unsecured, non-interest bearing, due on demand promissory note payable to its principal stockholder in the amount of $20,000
encompassing the $18,500 loaned to the Company during the year ended July 31, 2011 and an additional $1,500 loaned on August 22,
2011. Pursuant to the terms of the note, the note is non-interest bearing, unsecured and due on demand. During the nine months
ended April 30, 2013, the former controlling stockholders (prior to the Purchase Agreement) forgave loans of $20,000 and this
was recorded by the Company as contributed capital (See Note 5(H)).
During the year ended July 31, 2011,
the principal stockholder loaned or paid expenses on behalf of the Company $23,484 to pay Company expenses and was repaid $21,240
during the year. Pursuant to the terms of the loan, the loans are non-interest bearing, unsecured and due on demand As of July
31, 2012, the outstanding balance was $2,244 (See Note 6).
During the year ended July 31, 2010,
the principal stockholder loaned the Company $41,915 to pay Company expenses and was repaid $39,274 during the year. There was
$2,641 owed to the principal stockholder as of July 31, 2010 (See Note 6). Pursuant to the terms of the loan, the loans are non-interest
bearing, unsecured and due on demand. The Company repaid the $2,641 to the principal stockholder during the year ended July 31,
2011.
On various dates from 2008 through
2010, the Company received $24,283 from a principal stockholder. Pursuant to the terms of the loan, the loans were non-interest
bearing, were unsecured and due on demand. During the year ended July 31, 2010, the principal stockholder was repaid $21 and then
forgave $24,262 which was recorded by the Company as contributed capital (See Note 5(G) and 6).
During the period ended October 31,
2007 the Company received $3,100 from a principal stockholder. Pursuant to the terms of the loan, the loan bears interest at 8%,
is unsecured and matures on July 31, 2008. The Company repaid $3,100 of a stockholder loan and $60 of accrued interest as of July
31, 2008 (See Note 6).
NOTE 5 STOCKHOLDERS’
EQUITY (DEFICIENCY)
(A) Common Stock
Issued for Cash
On January 25, 2011, the
Company issued 4,000 units, each unit consisted of 1 share of common stock and a warrant to purchase 0.5 shares of common stock
(2,000 warrants) for a total of $200,000 ($50/share). Each warrant is exercisable for a two year period and has an exercise price
of $76 per share. As of April 30, 2013, none of the warrants had been exercised and they are expired.
On September 24, 2010,
the Company issued 2,667 units, each unit consisted of 1 share of common stock and a warrant to purchase 0.5 shares of common
stock (1,333 warrants) for a total of $400,000 ($150/share). Each warrant is exercisable for a two year period and has an exercise
price of $226 per share. As of April 30, 2013, none of the warrants had been exercised and they are expired.
On August 16, 2010, the
Company issued 1,875 units, each unit consisted of 1 share of common stock and a warrant to purchase 0.5 shares of common stock
(938 warrants) for a total of $300,000 ($160/share). Each warrant is exercisable for a two year period and has an exercise price
of $240 per share. As of April 30, 2013, none of the warrants had been exercised and they are expired.
On June 1, 2010, the Company
issued 1,364 units, each unit consisted of 1 share of common stock and a warrant to purchase 0.5 of a share of common stock (682
warrants) for a total of $300,000 ($220/share). Each warrant is exercisable for a two year period and has an exercise price of
$330 per share. As of April 30, 2013, none of the warrants had been exercised and they are expired.
On April 30, 2010, the
Company issued 1,667 shares of common stock for $200,000 ($120/share).
For the year ending July
31, 2008 the Company entered into stock purchase agreements and issued 202,623 shares of common stock for cash of $80,000 ($4/share).
On July 24, 2007, the Company
issued 1,250,000 shares of common stock for $50 ($0.00004/share).
Inception Mining, Inc.
(formerly known as Gold American Mining Corp. and Subsidiary)
(An Exploration Stage
Company)
Notes to Unaudited Condensed
Consolidated Financial Statements
As of April 30, 2013
NOTE 5 STOCKHOLDERS’
EQUITY (DEFICIENCY) (CONTINUED)
(B) In-Kind Contribution
The items listed below
were expensed during the periods in which the transactions took place.
For the nine months ended
April 30, 2013, the former shareholder of the Company contributed $4,419 of accrued interest on behalf of the Company (See Note
6).
For the year ended July
31, 2012, the Company recorded $900 of legal fees as an in kind contribution.
For the year ended July
31, 2012, the shareholder of the Company contributed $3,359 of accrued interest on behalf of the Company (See Note 6).
For the year ended July
31, 2011, the shareholder of the Company contributed $182 of accrued interest on behalf of the Company (See Note 6).
For the year ended July
31, 2010 the shareholder of the Company contributed $4,320 of services on behalf of the Company (See Note 6).
For the year ended July
31, 2010 the shareholder of the Company contributed $627 of in kind contribution of accrued interest on behalf of the Company
(See Note 6).
For the year ended July
31, 2009 the shareholder of the Company contributed $5,760 of services on behalf of the Company (See Note 6).
For the year ended July
31, 2009 the shareholder of the Company contributed $256 of in kind contribution of accrued interest on behalf of the Company
(See Note 6).
For the year ending July
31, 2008 the shareholder of the Company contributed $5,760 of services on behalf of the Company (See Note 6).
For the year ending July
31, 2007 the shareholder of the Company contributed $1,080 of services on behalf of the Company (See Note 6).
(C) Amendments to Articles of Incorporation
On May 17, 2013, the Company
amended its articles of incorporation to change its name to Inception Mining, Inc.
On June 23, 2010, the Company
amended its Articles of Incorporation to change its name to Gold American Mining Corp.
On March 5, 2010 the Company
amended its Articles of Incorporation to increase its authorized common stock from 100,000,000 to 500,000,000 and changed its
name from Golf Alliance Corporation to Silver America Inc.
On July 6, 2007 the Company
amended its Articles of Incorporation to decrease the par value to $0.00001 per share from $0.001 par value.
(D) Return of Common Stock
During 2009, immediately
prior to the forward split, the Company’s sole member of the board of directors, returned 1,025,000 shares of common stock
out of the total of 1,250,000 held by him and were cancelled by the Company.
Inception Mining, Inc.
(formerly known as Gold American Mining Corp. and Subsidiary)
(An Exploration Stage
Company)
Notes to Unaudited Condensed
Consolidated Financial Statements
As of April 30, 2013
NOTE 5 STOCKHOLDERS’
EQUITY (DEFICIENCY) (CONTINUED)
(E) Stock Issued for Mining Rights
and Claim
On February 25, 2013, the
Company and its majority shareholder, entered into an Asset Purchase Agreement with Inception Resources, LLC, a Utah corporation,
pursuant to which Gold American purchased the U.P. and Burlington Gold Mine in consideration of 16,000,000 shares of common stock
valued at $160 (valued at par value of $0.00001 because of the entities being under common control), the assumption of promissory
notes in the amount of $950,000 and the assignment of a 3% net royalty. The Asset Purchase Agreement closed on February 25, 2013
(See Notes 3 and 7).
On July 31, 2011 the Company
issued 2,500 shares of common stock having a fair value of $505,000 ($202/share) in exchange for mining rights (See Note 7).
On April 30, 2011 the Company
issued 2,500 shares of common stock having a fair value of $505,000 ($202/share) in exchange for mining rights (See Note 7).
On December 31, 2010, the
Company issued 500 shares of common stock having a fair value of $101,000 ($202/share) in exchange for mining rights (See Note
7).
On October 31, 2010, the
Company issued 2,500 shares of common stock having a fair value of $505,000 ($202/share) in exchange for mining rights (See Note
7).
On June 30, 2010, the Company
issued 500 shares of common stock having a fair value of $52,000 ($104/share) in exchange for mining rights (See Note 7).
On April 26, 2010, the
Company issued 500 shares of common stock having a fair value of $101,000 ($202/share) in exchange for mining rights (See Note
7).
On April 28, 2010, the
Company issued 2,500 shares of common stock having a fair value of $505,000 ($202/share) in exchange for mining rights (See Note
7).
(F) Stock Issued
for Services
On February 25, 2013 the
Company issued 600,000 shares of common stock having a fair value of $18,000 ($0.03/share) in exchange for legal services. This
transaction was recorded as a prepaid legal fee and will be amortized over the next 12 months (See Note 7).
On February 25, 2013 the
Company issued 50,000 shares of common stock having a fair value of $1,500 ($0.03/share) in exchange for consulting services.
This transaction was recorded as a prepaid consulting fee and will be amortized over the next 12 months (See Note 7).
On February 25, 2013 the
Company issued 200,000 shares of common stock having a fair value of $6,000 ($0.03/share) in exchange for consulting services.
This transaction was expensed upon closing of the asset purchase agreement (See Note 7).
On February 25, 2013 the
Company issued 565,094 shares of common stock having a fair value of $16,952.82 ($0.03/share) in exchange for consulting services.
This transaction was expensed upon closing of the asset purchase agreement (See Note 7).
On February 25, 2013 the
Company issued 250,000 shares of common stock having a fair value of $7,500 ($0.03/share) in exchange for consulting services.
This transaction was recorded as a prepaid consulting fee and will be amortized over the next 12 months (See Note 7).
Inception Mining, Inc.
(formerly known as Gold American Mining Corp. and Subsidiary)
(An Exploration Stage
Company)
Notes to Unaudited Condensed
Consolidated Financial Statements
As of April 30, 2013
NOTE 5 STOCKHOLDERS’
EQUITY (DEFICIENCY) (CONTINUED)
(F) Stock Issued
for Services (Continued)
On February 25, 2013 the
Company issued 250,000 shares of common stock having a fair value of $7,500 ($0.03/share) in exchange for consulting services.
This transaction was recorded as a prepaid consulting fee and will be amortized over the next 12 months (See Note 7).
On February 25, 2013 the
Company issued 500,000 shares of common stock having a fair value of $15,000 ($0.03/share) in exchange for consulting services.
This transaction was recorded as a prepaid consulting fee and will be amortized over the next 12 months (See Note 7).
On February 25, 2013 the
Company issued 100,000 shares of common stock having a fair value of $3,000 ($0.03/share) in exchange for consulting services.
This transaction was recorded as a prepaid consulting fee and will be amortized over the next 12 months (See Note 7).
On February 25, 2013 the
Company issued 100,000 shares of common stock having a fair value of $3,000 ($0.03/share) in exchange for consulting services.
This transaction was recorded as a prepaid consulting fee and will be amortized over the next 12 months (See Note 7).
On February 25, 2013 the
Company issued 150,000 shares of common stock having a fair value of $4,500 ($0.03/share) in exchange for consulting services.
This transaction was recorded as a prepaid consulting fee and will be amortized over the next 12 months (See Note 7).
On May 1, 2011 the Company
issued 50 shares of common stock having a fair value of $1,100 ($22/share) in exchange for consulting services (See Note 7).
On February 1, 2011 the
Company issued 50 shares of common stock having a fair value of $2,400 ($48/share) in exchange for consulting services (See Note
7).
On February 1, 2011 the
Company issued 188 shares of common stock having a fair value of $9,000 ($48/share) in exchange for consulting services (See Note
7).
On January 31, 2011 the
Company issued 50 shares of common stock having a fair value of $2,500 ($50/share) in exchange for consulting services (See Note
7).
On November 1, 2010, the
Company issued 188 shares of common stock having a fair value of $30,000 ($160/share) in exchange for consulting services (See
Note 7).
On August 23, 2010, the
Company issued 50 shares of common stock having a fair value of $8,700 ($174/share) in exchange for consulting services (See Note
7).
On August 1, 2010, the
Company issued 188 shares of common stock having a fair value of $35,250 ($188/share) in exchange for consulting services (See
Note 7).
On May 7, 2010, the Company
issued 188 shares of common stock having a fair value of $48,375 ($258/share) in exchange for consulting services (See Note 7).
(G) Cash contributed
on Company’s behalf
During the year ended July
31, 2010, the principal stockholder forgave loans of $24,262 and this was recorded by the Company as contributed capital (See
Note 4 and 6), and no gain or loss was recorded.
Inception Mining, Inc.
(formerly known as Gold American Mining Corp. and Subsidiary)
(An Exploration Stage
Company)
Notes to Unaudited Condensed
Consolidated Financial Statements
As of April 30, 2013
NOTE 5 STOCKHOLDERS’
EQUITY (DEFICIENCY) (CONTINUED)
(H) Expenses paid
on Company’s behalf
During the nine months
ended April 30, 2013, the former controlling stockholders (prior to the Purchase Agreement) paid $22,544 of accounts payable and
forgave a related party note and loan payable of $91,652 and account payable of $67,500 on the Company’s behalf, The $181,696
was recorded as an in kind contribution of capital (See Notes 3, 4 and 6).
On February 25, 2013 the
former principal stockholder converted $25,000 of the note payable owed into 1,000,000 shares of common stock at $0.025 per share
(See Notes 3 and 6).
During the year ended July
31, 2010, the principal stockholder paid $60,871 of expenses on the Company’s behalf, which was recorded as an in kind contribution
of capital (See Note 6).
(I) Stock Split
On November 21, 2012, the
Company implemented a 200 to 1 reverse stock split. Upon effectiveness of the stock split, each shareholder canceled 200 shares
of common stock for every share of common stock owned as of November 21, 2012. This reverse stock split was effective on February
13, 2013. All share and per share references have been retroactively adjusted to reflect this 200 to 1 reverse stock split in
the financial statements and in the notes to financial statements for all periods presented, to reflect the stock split as if
it occurred on the first day of the first period presented.
On March 5, 2010, the Company
implemented a 50 for 1 forward stock split. Upon effectiveness of the stock split, each shareholder received 50 shares of common
stock for every share of common stock owned as of March 5, 2010. All share and per share references have been retroactively adjusted
to reflect this 50 to 1 forward stock split in the financial statements and in the notes to financial statements for all periods
presented, to reflect the stock split as if it occurred on the first day of the first period presented.
(J) Warrants Issued for Cash
The following tables summarize
all warrant grants for the nine months April 30, 2013 and the related changes during this period are presented below:
|
|
Number
of Options
|
|
|
Weighted
Average Exercise Price
|
|
Stock Warrants
|
|
|
|
|
|
|
|
|
Balance at July 31, 2012
|
|
|
4,271
|
|
|
$
|
182
|
|
Granted
|
|
|
-
|
|
|
|
-
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
Forfeited
|
|
|
(4,271
|
)
|
|
|
(182
|
)
|
Balance at April 30, 2013
|
|
|
-
|
|
|
$
|
-
|
|
Inception Mining, Inc.
(formerly known as Gold American Mining Corp. and Subsidiary)
(An Exploration Stage
Company)
Notes to Unaudited Condensed
Consolidated Financial Statements
As of April 30, 2013
NOTE 5 STOCKHOLDERS’
EQUITY (DEFICIENCY) (CONTINUED)
(J) Warrants Issued for Cash (Continued)
2013
Outstanding Warrants
|
|
|
|
2013
Warrants
Exercisable
|
|
Range
of
Exercise Price
|
|
|
Number
Outstanding
at
April
30,
2013
|
|
|
|
Weighted
Average
Remaining
Contractual
Life
|
|
|
|
Weighted
Average
Exercise Price
|
|
|
|
Number
Exercisable
at
April
30,
2013
|
|
|
|
Weighted
Average
Exercise
Price
|
|
$
|
-
|
|
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
2012 Outstanding
Warrants
|
|
|
|
2012
Warrants Exercisable
|
|
|
Range
of
Exercise Price
|
|
|
Number
Outstanding
at
April
30, 2012
|
|
|
|
Weighted
Average
Remaining
Contractual
Life
|
|
|
|
Weighted
Average
Exercise Price
|
|
|
|
Number
Exercisable
at
April
30, 2012
|
|
|
|
Weighted
Average
Exercise
Price
|
|
$
|
50
- $220
|
|
|
4,953
|
|
|
|
0.63
years
|
|
|
$
|
182
|
|
|
|
4,953
|
|
|
$
|
182
|
|
NOTE 6 RELATED PARTY TRANSACTIONS
During the nine months
ended April 30, 2013, a stockholder loaned the Company $171,033 to pay Company expenses. Pursuant to the terms of the loan, the
loan bears interest at 8%, unsecured and due on demand (See Note 3). As of April 30, 2013 the outstanding balance was $171,033
and $3,040 in accrued interest.
During the nine months
ended April 30, 2013, the former controlling stockholders (prior to the Purchase Agreement) paid $22,544 of accounts payable and
forgave a related party note and loan payable of $91,652 and account payable of $67,500 on the Company’s behalf. The $181,696
was recorded as an in kind contribution of capital (See Notes 3, 4 and 5(H)).
During the nine months
ended April 30, 2013, the principal stockholder loaned the Company $27,447 to pay Company expenses. Pursuant to the terms of the
loan, the loan is bearing interest of 9%, unsecured and due on September 25, 2013 (See Note 3). As of January 31, 2013 the controlling
stockholder forgave $2,447 in loans and $798 in accrued interest. This was recorded by the Company as contributed capital. On
February 25, 2013, the remaining $25,000 was converted to 1,000,000 shares of common stock at $0.025 per share, the value of the
loan (See Notes 5(H)).
For the nine months ended
April 30, 2013, the shareholder of the Company contributed $4,419 of accrued interest on behalf of the Company (See Note 5(B)).
On February 25, 2013, the Company and
its majority shareholder, entered into an Asset Purchase Agreement with Inception Resources, LLC, a Utah corporation, pursuant
to which Gold American purchased the U.P. and Burlington Gold Mine in consideration of 16,000,000 shares of common stock valued
at $160 (valued at par value of $0.00001 because of the entities being under common control), the assumption of promissory notes
in the amount of $950,000 and the assignment of a 3% net royalty. Inception Resources, LLC was an entity owned by and under the
control of a shareholder. This asset purchase was recorded at historical costs of Inception Resources because it was a transaction
between entities under common control. The Asset Purchase Agreement closed on February 25, 2013 (See Notes 3 and 5(E) and 7).
For the year ended July
31, 2012 the shareholder of the Company contributed $3,359 of accrued interest on behalf of the Company (See Note 5(B)).
During the year ended July
31, 2012, the principal stockholder loaned the Company $64,408 to pay Company expenses. Pursuant to the terms of the loan, the
loans are non-interest bearing, unsecured and due on demand (See Note 4).
Inception Mining, Inc.
(formerly known as Gold American Mining Corp. and Subsidiary)
(An Exploration Stage
Company)
Notes to Unaudited Condensed
Consolidated Financial Statements
As of April 30, 2013
NOTE 6 RELATED PARTY TRANSACTIONS (CONTINUED)
During the year ended July
31, 2012, the Company accrued an additional $22,500 to its President for consulting services. The total amount owed to the President
for consulting services is $67,500 as of July 31, 2012 (See Note 5(H)).
On October 10, 2011, the
Company executed an unsecured, non-interest bearing, due on demand promissory note payable to its principal stockholder in the
amount of $20,000 encompassing the $18,500 loaned to the Company during the year ended July 31, 2011 and an additional $1,500
loaned on August 22, 2011. Pursuant to the terms of the note, the loans are non-interest bearing, unsecured and due on demand
(See Note 3).
During the year ended July
31, 2011, the Company paid $52,500 and accrued $37,500 to its President for consulting services.
During the year ended July
31, 2010, the Company paid $22,500 to its President for consulting services.
On various dates from 2008
through 2010, the Company received $24,283 from a principal stockholder. Pursuant to the terms of the loan, the loans were non-interest
bearing, were unsecured and due on demand. During the year ended July 31, 2010, the principal stockholder forgave $24,262 and
this was recorded by the Company as contributed capital (See Note 4 and 5(G)).
During the year ended July
31, 2011, the principal stockholder loaned the Company $23,484 to pay Company expenses and was repaid $21,240 during the year
ended July 31, 2011. Pursuant to the terms of the loan, the loans are non-interest bearing, unsecured and due on demand. As of
July 31, 2011 the outstanding balance of the loans was $20,744 (See Note 4 and 5(B)).
During the year ended July
31, 2010, the principal stockholder loaned the Company $41,915 to pay Company expenses and was repaid $ 39,274 during the year.
There was $2,641 owed to the principal stockholder as of July 31, 2010 (See Note 4). Pursuant to the terms of the loan, the loans
are non-interest bearing, unsecured and due on demand. The Company repaid the $2,641 to the principal stockholder during the year
ended July 31, 2011.
During the period ended
October 31, 2007 the Company received $3,100 from a principal stockholder. Pursuant to the terms of the loan, the loan bears interest
at 8%, is unsecured and matures on July 31, 2008. At October 31, 2007, the Company had recorded $60 of related accrued interest
payable. The Company repaid the $3,100 of a stockholder loan and $60 of accrued interest as of July 31, 2008 (See Note 4).
For the year ended July
31, 2009, the shareholder of the Company contributed $256 of in kind contribution of accrued interest on behalf of the Company
(See Note 5(B)).
For the year ended July
31, 2010, the shareholder of the Company contributed $4,320 of services on behalf of the Company (See Note 5(B)).
For the year ended July
31, 2010, the shareholder of the Company contributed $627 of in kind contribution of accrued interest on behalf of the Company
(See Note 5(B)).
During the year ended July
31, 2010, the principal stockholder paid $60,871 of expenses on Company’s behalf, which was recorded as an in kind contribution
of capital (See Note 5(H)).
As of July 31, 2009, the
shareholder of the Company contributed $5,760 of services on behalf of the Company (See Note 5(B)).
For the year ending July
31, 2008 the shareholder of the Company contributed $5,760 of services on behalf of the Company (See Note 5(B)).
For the year ending July
31, 2007 the shareholder of the Company contributed $1,080 of services on behalf of the Company (See Note 5(B)).
Inception Mining, Inc.
(formerly known as Gold American Mining Corp. and Subsidiary)
(An Exploration Stage
Company)
Notes to Unaudited Condensed
Consolidated Financial Statements
As of April 30, 2013
NOTE 7 AGREEMENTS AND COMMITMENTS
On February 25, 2013, the
Company and its majority shareholder, entered into an Asset Purchase Agreement with Inception Resources, LLC, a Utah corporation,
pursuant to which Gold American purchased the U.P. and Burlington Gold Mine in consideration of 16,000,000 shares of common stock
valued at $160 (valued at par value of $0.00001 because of the entities being under common control), the assumption of promissory
notes in the amount of $950,000 and the assignment of a 3% net royalty. The Asset Purchase Agreement closed on February 25, 2013
(See Notes 3 and 5(E)).
On February 25, 2013, the
Company entered into an employment agreement with an individual to serve as a Director and Chief Executive Officer. This agreement
is for a period of two years. Any compensation is dependent on certain milestones to be met before any compensation will go into
effect.
On February 25, 2013, the
Company entered into an employment agreement with an individual to serve as a Director and Chief Financial Officer. This agreement
is for a period of two years. Any compensation is dependent on certain milestones to be met before any compensation will go into
effect.
On February 25, 2013, the
Company entered into an employment agreement with an individual to serve as a Director and Chief Operating Officer. This agreement
is for a period of two years. Any compensation is dependent on certain milestones to be met before any compensation will go into
effect.
On February 25, 2013, the Company entered
into two retainer agreements with two law firms in exchange for legal services pursuant to which the law firms were issued an
aggregate of 600,000 shares of common stock of the Company in consideration of legal services valued at $18,000. This transaction
was recorded as prepaid legal fees and will be amortized over the next 12 months (See Note 5(F)).
On February 25, 2013 the
Company issued 250,000 shares of common stock having a fair value of $7,500 ($0.03/share) in exchange for consulting services.
This transaction was recorded as a prepaid consulting fee and will be amortized over the next 12 months (See Note 5(F)).
On February 25, 2013 the
Company issued 250,000 shares of common stock having a fair value of $7,500 ($0.03/share) in exchange for consulting services.
This transaction was recorded as a prepaid consulting fee and will be amortized over the next 12 months (See Note 5(F)).
On February 25, 2013 the
Company issued 500,000 shares of common stock having a fair value of $15,000 ($0.03/share) in exchange for consulting services.
This transaction was recorded as a prepaid consulting fee and will be amortized over the next 12 months (See Note 5(F)).
On February 25, 2013 the
Company issued 100,000 shares of common stock having a fair value of $3,000 ($0.03/share) in exchange for consulting services.
This transaction was recorded as a prepaid consulting fee and will be amortized over the next 12 months (See Note 5(F)).
On February 25, 2013 the
Company issued 100,000 shares of common stock having a fair value of $3,000 ($0.03/share) in exchange for consulting services.
This transaction was recorded as a prepaid consulting fee and will be amortized over the next 12 months (See Note 5(F)).
On February 25, 2013 the
Company issued 150,000 shares of common stock having a fair value of $4,500 ($0.03/share) in exchange for consulting services.
This transaction was recorded as a prepaid consulting fee and will be amortized over the next 12 months (See Note 5(F)).
On May 7, 2010 the Company
entered into a share issuance agreement with a non-related party for share subscriptions up to $7,500,000. The subscriber shall
make available to the Company by way of advances up to $7,500,000 until December 31, 2011. This agreement expired on December
31, 2011 and it was not extended. Upon receipt of the advances, the Company shall issue units of the Company at a price equal
to 90% of volume weighted average closing price of the Company (ticket symbol “SILA.OB”) during the 10 previous trading
days according to http://www.nasdaq.com. Each unit consists of one common share of the Company and one half share purchase warrant.
Each whole warrant may be exercised within two years of the date of issuance to the purchaser at a price equal to 150% of subscription
price. For the year ended July 31, 2010 the Company issued 1,364 shares of common stock for cash of $300,000 ($220/share) and
682 warrants at $330 per unit. On September 24, 2010, the Company issued 2,667 units, each unit consisted of 1 share of common
stock and a warrant to purchase 0.5 shares of common stock for a total of $400,000 ($150/share).
Inception Mining, Inc.
(formerly known as Gold American Mining Corp. and Subsidiary)
(An Exploration Stage
Company)
Notes to Unaudited Condensed
Consolidated Financial Statements
As of April 30, 2013
NOTE 7 AGREEMENTS AND COMMITMENTS (CONTINUED)
Each warrant is exercisable
for a two year period and has an exercise price of $226 per share. On August 16, 2010, the Company issued 1,875 units, each unit
consisted of 1 share of common stock and a warrant to purchase 0.5 shares of common stock for a total of $300,000 ($220/share).
Each warrant is exercisable for a two year period and has an exercise price of $240 per share. On January 25, 2011, the Company
issued 4,000 units, each unit consisted of 1 share of common stock and a warrant to purchase 0.5 shares of common stock (2,000
warrants) for a total of $200,000 ($50/share). Each warrant is exercisable for a two year period and has an exercise price of
$76 per share (See Note 5(A) and 5(J)). None of the aforementioned warrants had been exercised as of January 31, 2013 and the
4,952 warrants expired.
On May 7, 2010, the Company
entered into a consulting agreement with an unrelated third party to provide consulting services in exchange for $7,500 per month
and 188 share of Common Stock for every three months while the agreement remains in place. Effective February 1, 2011, the consulting
services fee was reduced to $1,500 per month. For the year ended July 31, 2010 the Company issued 188 shares of common stock with
a fair value of $48,375 and paid $22,500 in consulting fees. For the year ended July 31, 2011, the Company issued 563 shares of
common stock with a fair value of $74,250 and paid $49,500 in consulting fees (See Note 5(F)). This agreement was terminated in
April 2011.
On April 28, 2010, the
Company and four individuals collectively referred to as the “Option or” entered into a mineral property option agreement.
The Company acquired an option to acquire an option to acquire 72% interest in an approximately 245 acres property located in
Clark County, Nevada (the “Property’). To exercise the option the Company shall pay cash, issue common shares of the
Company’s stock and fund exploration and development expenditures on the Property. The cash payments contemplated in the
agreement total $272,000 and are distributed in installments from the date of the agreement through June 30, 2010. The number
of Company’s shares to be issued total 10,000 and are to be distributed in installments from the date of the agreement through
January 31, 2012. The Company is also obligated to fund a minimum of $750,000 and at the Company’s sole discretion up to
$1,000,000 worth of exploration and development on the Property beginning April 30, 2011 and continuing through. As of July 31,
2011, the Company issued 7,500 shares of common stock having a fair value of $1,515,000 (See Note 5(E)) and paid $272,000 in cash
payment.
As part of the $750,000
work commitment, the Company was to provide $400,000 on or before April 30, 2011 and $350,000 on or before July 31, 2012. Finally,
the Company was to issue 2,500 shares on January 31, 2012.
The Company incurred $0
in expenditures during the year ended July 31, 2011, therefore the agreement went into default and terminated as of July 31, 2011.
Therefore, the Company issued the final 2,500 shares of common stock having a fair value of $505,000 as of July 31, 2011 (See
Note 5(E)).
On March 5, 2010, the Company
and Yale Resources Ltd. (“Yale”) (collectively referred to below as the “Parties”), entered into a Binding
Letter of Intent (“LOI”) whereby the Parties agreed to a transaction in which Yale will grant the Company an option
to acquire a 90% undivided interest in an approximately 282.83 hectare property located in Zacatcas State, Mexico (the “Property”).
The Company entered into a definitive agreement on April 26, 2010. A brief description of the material terms and conditions of
the option contemplated by the agreement is set forth below.
To exercise the option the Company
was to pay cash to Yale, issue restricted common shares of Company stock to Yale, and fund exploration and development expenditures
on the Property. The cash payments contemplated under the agreement total $900,000 and are to be distributed in installments from
the date of the LOI through December 30, 2013. The number of Company shares that were to be issued to Yale total 5,000 and to
be distributed in installments from the date of the definitive agreement through December 30, 2013. The Company was also obligated
to fund a total of $2,000,000 worth of exploration and development on the Property beginning June 30, 2011 and continuing through
December 30, 2013, according the following schedule:
●
|
|
Upon signing the letter of intent
the Company paid Yale $10,000 in refundable
deposit
|
●
|
|
Upon signing
of a Definite Agreement the Company paid $10,000 and
issued 500 shares of common stock having a fair value
of $101,000
|
●
|
|
For the year
ended July 31, 2010 the Company paid $20,000 and issued
500 shares of common stock (See Note 6(E)).
|
Upon the execution and
exercise of the option, Yale was to transfer a 90% undivided interest in the property to the Company. Effective February 21, 2012
the option agreement was terminated and no additional payments are due.
Inception Mining, Inc.
(formerly known as Gold American Mining Corp. and Subsidiary)
(An Exploration Stage
Company)
Notes to Unaudited Condensed
Consolidated Financial Statements
As of April 30, 2013
NOTE 7 AGREEMENTS AND COMMITMENTS (CONTINUED)
On August 4, 2010, the Company and
three individuals collectively referred to as the “Optionor” entered into a mineral property option agreement. The
Company acquired a 100% interest in an approximately 178 acres property located in Opodepe Municipality, Sonara Sate, Mexico.
To exercise the option the Company was to pay cash and fund exploration and development expenditures on the Property. The cash
payments contemplated in the agreement totaled $765,000 and were to be distributed in installments from the date of the agreement
through December 31, 2012.
In addition to the above payment schedule
the Company was to pay a 1% royalty as a result of the exploitation activities or a $500,000 lump sum payment upon the Company’s
discretion. Effective December 22, 2010 the agreement has been terminated and no additional payments are due.
On August 23, 2010 the
Company signed a consulting agreement with an unrelated party in exchange for $1,000 per month and 10,000 shares of common stock
every three months. For the year ended July 31, 2011 the Company issued 40,000 shares of common stock with a fair value of $14,700
and incurred $11,000 in consulting fees (See Note 6(F)). This agreement was terminated as of August 1, 2011.
NOTE 8 GOING CONCERN
As reflected in the accompanying
unaudited financial statements, the Company is in the exploration stage with minimal operations, has a net loss since inception
of $4,388,549 and used cash in operations of $1,747,467 from inception. This raises substantial doubt about its ability to continue
as a going concern. The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise
additional capital and implement its business plan. The financial statements do not include any adjustments that might be necessary
if the Company is unable to continue as a going concern.
NOTE 9 SUBSEQUENT EVENTS
On June 1, 2013,
the
Company entered into an advisor consulting agreement with an individual to provide advisory consulting services. This agreement
is for a period of one month. The Company will pay $3,000 and issue 50,000 shares of common stock for these services.
On May 1,
2013,
the Company entered into an investor relations consulting agreement with a consulting company to provide public relations
consulting services. This agreement is for a period of one year. The Company will pay $2,500 for the first three months, $5,000
for the next eight months and $10,000 in the last month. In addition, the Company will issue 150,000 restricted shares of common
stock to the consulting company.