ITEM 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations
General Overview
Apolo Gold & Energy Inc. ("Company") was incorporated in March 1997 under the laws of the State of Nevada. Its objective was to pursue mineral properties in South America, Central America, North America and Asia. The Company incorporated a subsidiary - Compania Minera Apologold, C.A in Venezuela to develop a gold/diamond mining concession in Southeastern Venezuela. Project was terminated in August 2001, due to poor testing results and the property abandoned. This subsidiary company has been inactive since 2001 and will not be reactivated.
On April 16, 2002, the Company announced the acquisition of the mining rights to a property known as the Napal Gold Property, ("NUP"). This property is located 48 km south-west of Bandar Lampung, Sumatra, Indonesia. The property consists of 733.9 hectares and possesses a Production Permit (a KP) # KW. 098PP325.
The terms of the Napal Gold Property called for a total payment of $375,000 US over a six-year period of which a total of $250,000 had been made. Subsequent to the year ending June 30, 2008 the Company terminated its agreement on the NUP property and returned all exploration rights to the owner.
On October 29, 2010, shareholders approved an increase in the authorized capital of the Company to 300,000,000 shares of common stock from 200,000,000. In addition to this, shareholders also authorized a share consolidation of 20:1 effective immediately.
During the period ending September 30, 2013, the Company completed the sale of 1,875,000 common shares to a director of the Company for cash in the amount of $0.08 per share for a total consideration of $150,000.
The Company continues to pursue opportunities in the natural resource industry and will consider an investment in any other energy related business in order to create value.
At September 30, 2013, the Company had funds on hand of $33,715.
The Company recognizes that it does not have sufficient funds on hand to finance its operations on an ongoing basis. The Company further recognizes that it is dependent on the ability of its management team to obtain the necessary working capital in order to complete projects started and operate successfully. There is no assurance that the Company will be able to obtain additional capital as required, or if the capital is available, to obtain it on terms favorable to the Company. The Company may suffer from a lack of liquidity in the future that could impair its exploration efforts and adversely affect its results of operations.
Results of Operations
In the three months ended September 30, 2013, the Company incurred a loss of $12,338 vs. a loss of $15,896 for the three months ended September 30, 2012. Consulting and professional fees for the three months ended September 30, 2013 were $6,500 vs. $9,783 for the three months ended September 30, 2012.
General and administrative costs decreased to $5,838 in the three month period ending September 30, 2013 vs. $6,113 in the three month period ending September 30, 2012 as a result of a reduction in costs incurred related to implementation of XBRL procedures as well as additional filing fee related to filing of the 10Q’s and 10K.
Company operations are limited at the present time to seeking out and acquiring a desirable resource project that will be beneficial to shareholders. Expenses during the three month ending September 30, 2013 amounted in total to $12,338 vs. $15,896 in the three month period ending September 30, 2012 as the Company continued its pursuit of a new project.
The Company recognizes that it will require additional capital in order to continue its search for a mineral property or other projects that will be beneficial to the shareholders of the company. There is no assurance at this time that said capital can be raised on terms and conditions acceptable to management.
At September 30, 2013 there were 8,378,295 shares outstanding. This includes the issuance of 1,875,000 common shares at $0.08 per share for total proceeds of $150,000 in the period ending September 30, 2013.The Company at September 30, 2013 had current trade accounts payable of $6,957 compared to $24,922 at June 30, 2013 and $28,800 at September 30, 2012. There are no loans owing to a related party at September 30, 2013, compared to $86,399 owing at June 30, 2013 and $69,872 at September 30, 2012.
Cash on hand at September 30, 2013 amounted to $33,715. The Company is aware that additional financing will be required in order to continue its pursuit of a mineral property opportunity or a comparable opportunity in a related field. There is no assurance that additional funding will be successfully completed.
The Company has no employees other than officers and uses consultants as and when necessary.
LIQUIDITY AND CAPITAL RESOURCES
The Company has limited financial resources at September 30, 2013 with funds on hand of $33,715 vs. $417 at June 30, 2013 and $280 at September 30, 2012.
During the three months ending September 30, 2013, the Company continues to pursue opportunities in the energy sector but the Capital markets make it difficult. The Company continues to pursue opportunities and is in active negotiations at the present time.
The Company has current accounts payable at September 30, 2013 of $6,957 compared to $24,922 at June 30, 2013 and $28,800 at September 30, 2012.
Amounts due to related parties at September 30, 2013 were nil compared to $69,872 at September 30, 2012, and $86,399 at June 30, 2013. While the Company continues to seek out additional capital, there is no assurance that they will be successful in completing this necessary financing. The Company recognizes that it is dependent on the ability of its management team to obtain the necessary working capital required.
While in the pursuit of additional working capital, the Company is also very active in reviewing other resource development opportunities and will continue with these endeavors.
Inflation has not been a factor during the three months ending September 30, 2013.
Item 4. Controls and procedures
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company's Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Company's management, including its Chief Executive Officer / Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of "disclosure controls and procedures" in Rule 13a-15(f). In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purpose in accordance with generally accepted accounting principles.
Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organiations of the Treadway Commission.
Based on this evaluation, management concluded that the Company’s internal control over financial reporting was not effective as of September 30, 2013. The material weakness identified is the lack of segregation of duties due to limited staff.
This change in financial reporting was the result of the former Chairman and CEO, who resigned because of illness. The duties of Chairman and CEO were assumed by the CFO who continued with his duties as CFO in addition to new duties as Chairman and CEO. This change created a lack of segregation of duties.
This weakness may result in a more than remote likelihood that a material misstatement would not be prevented or detected. The Company currently has no active business being conducted.