UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
x
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
fiscal year ended
March 31,
2009.
or
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
transition period from to
to
Commission
File
Number:
333-142890.
AFFINITY GOLD
CORP.
(Exact
name of registrant as specified in its charter)
Nevada
|
26-4152475
|
(State
or other jurisdiction of incorporation or
organization)
|
(I.R.S.
Employer Identification No.)
|
|
|
7950 Main Street, Suite 217
|
55369
|
Maple Grove, MN
|
(Zip
Code)
|
(Address
of principal executive offices)
|
|
763-424-4754
(Registrant’s
telephone number, including area
code)
|
Securities
registered under Section 12 (b) of the Exchange
Act: None
Securities
registered under Section 12 (g) of the Exchange
Act: None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.
¨
Yes
x
No
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.
¨
Yes
x
No
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
x
Yes
¨
No
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this
chapter) during the preceeding 12 months (or for such shorter period that the
registrant was required to submit and post such files).
¨
Yes
¨
No
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.
x
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer
|
¨
|
|
Accelerated
filer
|
¨
|
Non-accelerated
filer
|
o
(Do not check if a smaller reporting company)
|
|
Smaller
reporting company
|
x
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act).
x
Yes
¨
No
State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common equity, as of the
last business day of the registrant’s most recently completed second fiscal
quarter. 29,700,000 shares (post forward stock split) X $0.00 =
$0.00
APPLICABLE
ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Indicate
by check mark whether the registrant has filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court.
¨
Yes
¨
No
(APPLICABLE
ONLY TO CORPORATE REGISTRANTS)
Indicate
the number of shares outstanding of each of the registrant’s classes of common
stock, as of the latest practicable date.
65,545,875
shares of common stock as of July 1, 2009.
DOCUMENTS
INCORPORATED BY REFERENCE
List
hereunder the following documents if incorporated by reference and the Part of
the Form 10-K (e.g., Part I, Part II, etc.) into which the document is
incorporated: (1) Any annual report to security holders; (2) Any proxy or
information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or
(c) under the Securities Act of 1933.
The
listed documents should be clearly described for identification purposes (e.g.,
annual report to security holders for fiscal year ended December 24,
1980).
Table
of Contents
USE OF NAMES
|
iii
|
|
|
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS
|
iii
|
|
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Part I
|
1
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Item 1. Business
|
1
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Item 1A. Risk Factors
|
4
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Item 2. Properties
|
4
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Item 3. Legal Proceedings
|
5
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Item 4. Submission of Matters to a Vote of
Security Holders
|
5
|
|
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Part II
|
5
|
Item 5. Market For Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity
Securities
|
5
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Item 6. Selected Financial
Data
|
9
|
Item 7. Management’s Discussion and Analysis of
Financial Condition and Results of Operations
|
9
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Item 7A. Quantitative and Qualitative Disclosures
About Market Risk
|
11
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Item 8. Financial Statements and Supplementary
Data
|
12
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Item 9. Changes in and Disagreements with
Accountants on Accounting and Financial Disclosure
|
14
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Item 9A(T). Controls and
Procedures
|
14
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Item 9B. Other Information
|
16
|
|
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Part III
|
17
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Item 10. Directors, Executive Officers, and
Corporate Governance
|
17
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Item 11. Executive
Compensation
|
20
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Item 12. Security Ownership Of Certain Beneficial
Owners And Management And Related Stockholder
Matters
|
23
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Item 13. Certain Relationships And Related
Transactions, and Director independence
|
24
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Item 14. Principal Accountant Fees And
Services
|
24
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|
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Part IV
|
25
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Item 15. Exhibits, Financial
Statements
|
25
|
|
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SIGNATURES
|
27
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Exhibit Index
|
28
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USE
OF NAMES
In this
annual report, the terms “Affinity”, “Company”, “we”, or “our”, unless the
context otherwise requires, mean Affinity Gold Corp. and its subsidiaries, if
any.
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This
annual report on Form 10-K and other reports that we file with the SEC contain
statements that are considered forward-looking
statements. Forward-looking statements give the Company’s current
expectations, plans, objectives, assumptions or forecasts of future
events. All statements other than statements of current or historical
fact contained in this annual report, including statements regarding the
Company’s future financial position, business strategy, budgets, projected costs
and plans and objectives of management for future operations, are
forward-looking statements. In some cases, you can identify
forward-looking statements by terminology such as “anticipate,” “estimate,”
“plans,” “potential,” “projects,” “ongoing,” “expects,” “management believes,”
“we believe,” “we intend,” and similar expressions. These statements
are based on the Company’s current plans and are subject to risks and
uncertainties, and as such the Company’s actual future activities and results of
operations may be materially different from those set forth in the forward
looking statements. Any or all of the forward-looking statements in
this annual report may turn out to be inaccurate and as such, you should not
place undue reliance on these forward-looking statements. The Company
has based these forward-looking statements largely on its current expectations
and projections about future events and financial trends that it believes may
affect its financial condition, results of operations, business strategy and
financial needs. The forward-looking statements can be affected by
inaccurate assumptions or by known or unknown risks, uncertainties and
assumptions due to a number of factors, including:
·
|
dependence
on key personnel;
|
·
|
the
operation of our business; and
|
·
|
general
economic conditions in the United States and Latin
America.
|
These
forward-looking statements speak only as of the date on which they are made, and
except to the extent required by federal securities laws, we undertake no
obligation to update any forward-looking statements to reflect events or
circumstances after the date on which the statement is made or to reflect the
occurrence of unanticipated events. In addition, we cannot assess the
impact of each factor on our business or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from those
contained in any forward-looking statements. All subsequent written
and oral forward-looking statements attributable to the Company or persons
acting on its behalf are expressly qualified in their entirety by the cautionary
statements contained in this annual report.
PART
I
ITEM
1. BUSINESS
Year
of Organization and Corporate History
We were
incorporated as “Syncfeed Inc.” in the State of Nevada on March 27,
2007. Effective February 10, 2009, with the State of Nevada, we
completed a merger with our wholly-owned subsidiary, Affinity Gold
Corp. As a result, we changed our name from “Syncfeed Inc.” to
“Affinity Gold Corp.” to better reflect the intended direction and business of
our Company.
Also
effective February 10, 2009, with the State of Nevada, we effected a thirty (30)
for one (1) forward stock split of our authorized, issued and outstanding common
stock (the “Common Stock”). As a result, our authorized capital
increased from 90,000,000 shares of Common Stock with a par value of $0.001 to
2,700,000,000 shares of Common Stock with a par value of $0.001. Our
issued and outstanding share capital increased from 2,150,000 shares of Common
Stock to 64,500,000 shares of Common Stock.
The name
change and forward stock split took effect on the market at the open of business
on February 13, 2009.
Our
Business
We were
previously engaged in the business of developing, manufacturing, and selling
commercial feed for commercially raised and harvested Chinese Mitten-handed
Crabs. Following a change in control of our Company on January 9,
2009, and subsequent merger with our subsidiary Affinity Gold Corp. and forward
stock split effective February 10, 2009, the Company changed its focus to
mineral exploration concentrating on gold exploration in Peru and Latin
America.
On March
2, 2009, we entered into an asset purchase agreement (the “Asset Purchase
Agreement”) with AMR Project Peru, S.A.C. (“AMR”), a Peruvian
corporation. Pursuant to the Asset Purchase Agreement, we agreed to
pay US$200,000 and to issue 12,000,000 shares of our Common Stock to AMR as
consideration for the acquisition of the mining concession title named the “AMR
Project”. The AMR Project covers 500 hectares represented by the
physical mining concession Certificate No. 7996-2006-INACC-UADA granted to AMR
by the Republic of Peru, National Institute of Concessions and Mining Cadastre
on December 11, 2006, and includes all improvements, structures and equipment on
and used by AMR on such mining concession rights (collectively, the “Mining
Concession Rights”). The Mining Concession Rights are located in the
Inambari River Basin of Puno, Peru. See “
Item 2 – Properties
” below
for a further description of the AMR Project. The foregoing
description of the Asset Purchase Agreement does not purport to be complete and
is qualified in its entirety by reference to the Asset Purchase Agreement, which
was attached as Exhibit 10.1 to the Form 8-K filed on March 11, 2009, which is
incorporated herein by reference.
The
closing of the Asset Purchase Agreement was to occur by April 30, 2009, or on
such earlier or later date as the parties agreed to in advance in
writing.
However,
on April 30, 2009, we entered into an Amendment Agreement (the “Amendment
Agreement”) with AMR, whereby the parties have decided to amend the arrangement
by changing the structure of the arrangement from an asset purchase agreement to
a share exchange agreement resulting in AMR becoming our wholly owned subsidiary
upon closing of the share exchange agreement. In addition, under the
Amendment Agreement, the parties agreed to terminate the Asset Purchase
Agreement so it will no longer have any force and effect. The
foregoing description of the Amendment Agreement does not purport to be complete
and is qualified in its entirety by reference to the Amendment Agreement, which
was attached as Exhibit 10.1 to the Form 8-K filed on May 7, 2009, and which is
incorporated herein by reference.
On May 8,
2009, we entered into a share exchange agreement (the “Share Exchange
Agreement”) with AMR and all the shareholders of AMR, whereby we agreed to
acquire 99.99% of the issued and outstanding shares in the capital of AMR in
exchange for the issuance of 12,000,000 shares of our Common Stock in aggregate
to the shareholders of AMR on a pro rata basis in accordance with each AMR
shareholders’ percentage of ownership in AMR.
The
closing of the Share Exchange Agreement was to be held on June 15, 2009 with the
latest closing date being June 30, 2009, or on such earlier or later closing
date as may be agreed to in advance and in writing by each of the parties to the
Share Exchange Agreement, with any extension of the closing date being a maximum
of 14 days per extension. The foregoing description of the Share
Exchange Agreement does not purport to be complete and is qualified in its
entirety by reference to the Share Exchange Agreement, which was attached as
Exhibit 10.1 to the Form 8-K filed on May 13, 2009, and which is incorporated
herein by reference.
Mr.
Antonio Rotundo, who is the President, CEO, CFO and a director of the Company is
also a major shareholder of AMR along with his father, Mario Rotundo who is the
other major shareholder of AMR.
Since the
closing of the Share Exchange Agreement was not going to occur on or before June
30, 2009, we entered into an Extension Agreement with ARM, Antonio Rotundo and
Mario Rotundo, whereby the closing date has been extended to close on or before
July 14, 2009. The foregoing description of the Extension Agreement
does not purport to be complete and is qualified in its entirety by reference to
the Extension Agreement, which is attached hereto as Exhibit 10.6.
We are an
exploration stage corporation. An exploration stage corporation is
one engaged in the search for mineral deposits or reserves which are not in
either the development or production stage. We intend to focus our
exploration activities on mineral properties in Peru and other regions, which
may result in the acquisition of other entities that own certain mineral rights
or licenses.
There is
no assurance that commercially viable mineral deposits will be found on any
properties we acquire.
Principal
Products
At this
time we do not have any product for sale as we do not own any interests in any
mineral properties and are in the beginning stages of our exploration for such
properties.
Competition
In
identifying and acquiring mineral resource properties, we compete with
many companies possessing greater financial resources and technical
facilities. Competition could adversely affect our ability to
acquire suitable prospects for exploration in the
future.
|
Licenses
Any
development and exploration activities in Peru require permits from various
government authorities, and are subject to federal, state and local laws and
regulations governing prospecting, development, production, exports, taxes,
labor standards, occupational health and safety, mine safety and other
matters. Such laws and regulations are subject to change, can become
more stringent and compliance can therefore become more costly.
Upon
acquiring AMR, we cannot guarantee that we will be able to maintain or obtain
all necessary licenses and permits that may be required to explore and develop
any mineral properties acquired, commence construction, or commence operation of
mining facilities.
Environmental
Laws
Environmental
legislation will affect nearly all aspects of our intended
operations. Compliance with environmental legislation can require
significant expenditures and failure to comply with environmental legislation
may result in the imposition of fines and penalties, clean up costs arising out
of contaminated properties, damages and the loss of important
permits.
Environmental
laws and regulations are evolving in all jurisdictions. We are not
able to determine the specific impact that future changes in environmental laws
and regulations may have on our intended operations and activities, and its
resulting financial position; however, we anticipate that capital expenditures
and operating expenses may increase in the future as a result of the
implementation of new and increasingly stringent environmental
regulation. Further changes in environmental laws, new information on
existing environmental conditions or other events, including legal proceedings
based upon such conditions or an inability to obtain necessary permits could
require increased financial reserves or compliance expenditures or otherwise
have a material adverse effect on us.
Employees
At
present, we have no full-time employees. Mr. Antonio Rotundo, our
President, CEO, CFO and a director of the Company, will devote 100% of his time
or 40 hours per week to our operations. Mr. Corey J. Sandberg, our
current Secretary, Treasurer and a director of Company, will devote 100% of his
time or 40 hours per week to our operations.
Material
Agreements
See
“
Our Business
” above
for a description of the Share Exchange Agreement with AMR and the shareholders
of AMR.
Loan to
AMR
Effective
January 21, 2009, we agreed to loan up to $400,000 to AMR, which is a related
party, to be used to purchase equipment and supplies to conduct exploration and
for other related expenses on the mining concession named “AMR
Project”. We intend to acquire AMR as a wholly owned subsidiary, in
which case, the loan will become an intercompany loan and be dealt with as the
board of directors determine. The loan is non-interest bearing and is
due on April 30, 2010. As of March 31, 2009 the amount of the loan
was $236,000.
Transfer
Agent
We have
engaged Nevada Agency and Trust Company as our stock transfer
agent. Nevada Agency and Trust Company is located at 50 West Liberty
Street, Reno, Nevada 89501.
Available
Information
The
Company’s website is
www.affinitygold.com
, where
information about the Company may be reviewed and obtained. In
addition, the Company’s filings with the Securities and Exchange Commission
(“SEC”) may be accessed at the internet address of the SEC, which is
http://www.sec.gov
. Also,
the public may read and copy any materials that the Company files with at the
SEC’s Public Reference Room at 100 F Street, N.E., Room 1580 Washington, D.C.
20549. The public may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330.
ITEM
1A. RISK FACTORS
As a
“smaller reporting company” (as defined by §229.10(f)(1)), we are not required
to provide the information required by this Item.
ITEM
2. PROPERTIES
We
maintain our corporate offices at 7950 Main Street, Suite #217, Maple Grove,
Minnesota 55369. The Company has entered into the Share Exchange
Agreement with the AMR and the shareholders of AMR to acquire the AMR
Project. See “
Our
Business
” above for a description of the Share Exchange
Agreement.
The
AMR Project
Overview
In late
2005, AMR successfully negotiated and signed an agreement allowing exploration
and development activities to commence on 500 hectares of previously unexplored
land located in Puno, Peru. After making the necessary submissions to
the Peruvian Energy and Mining Sector National Institute of Concessions and
Mining Cadastre in 2007, AMR initiated the first exploration ever done on this
property. Based on initial site assessments, geologic sampling, testing and
assay lab results obtained to date, all indications are that the property
contains high levels of coarse and fine gold mineralization. However,
a geological report in accordance with Industry Guide 7 or Canadian securities
National Instrument 43-101 has not been completed in order to determine if the
mineralization is economically viable for development and
production.
History
Prior to
AMR’s acquisition of mining concession rights for the property there had not
been geological sampling performed to measure for the viability of mining
development and production. Since acquisition of the mining rights, AMR
has performed due diligence on the property including an initial geological
study performed by Dr. Estanislao de la Cruz C., a Geological Engineer and
Professor at University of Lima, Peru. The initial findings contained
in Dr. de la Cruz’ report, which include site assessments, geologic sampling,
multi-element testing and assay lab results, all indicate a strong presence of
gold mineralization. The foregoing description of Dr. Estanislao de
la Cruz C.’s report does not purport to be complete and is qualified in its
entirety by a translated copy of the geological report which was attached as
Exhibit 10.2 to the Form 8-K dated March 2, 2009, and filed on March 11, 2009,
which is incorporated herein by reference.
Geology and
Mineralization
The
deposits of gold-bearing gravels in the Inambari system are the result of the
deposit of detritus from the geologic layer of the east branch of the Eastern
Andes, and they come from the highest parts of these mountains. Because of
its flow volume, the Inambari River is considered among the most important
rivers of the Peruvian jungle. Recent geological studies performed at
the end of the nineteenth and twentieth centuries by the Corps of Mining
Engineers of Peru, now named the Institute of Mining Engineers of Peru,
demonstrate the presence of precious ores with gold near the top of the
list.
Sampling
Method
Employing
a method known as the “Points” method, there were a total of 44 test wells dug
from which samples were drawn. The wells dug measured 2m x 2m x 3m.
It was in this manner in which results obtained yielded average grades of
2.1g/m
3
. Actual
grades ranged from 0.1g/m
3
to
12.0g/m
3
. It
should be noted the lab’s results indicated an array of precious metals
including platinum, titanium, chromium and tungsten. Mineralization
estimates have not been amply substantiated. We anticipate with
additional funding that we will be able to conduct more thorough sampling and
testing in order to prepare a formal geological report on the AMR project to
substantiate AMR’s findings.
Accessibility and
Infrastructure
The
property is located in the Inambari River Basin on the flat plains region at an
altitude greater than 1500’ and accessible by land and air. By land,
the property is accessible in an 8 hour drive from Cuzco, Urcos, Quincemil and
San Lorenzo; or a 10 hour trek from Juliaca, Azangaro and San Gaban. The
property is also accessible by helicopter with only a 1 hour flight from
Lima.
ITEM
3. LEGAL PROCEEDINGS
We are
not a party to any pending legal proceeding. We are not aware of any
pending legal proceeding to which any of our officers, directors, or any
beneficial holders of 5% or more of our voting securities are adverse to us or
have a material interest adverse to us.
ITEM
4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There
were no matters submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of the fiscal
year covered by this report.
PART
II
ITEM
5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES
Market
Information
Our
Common Stock is traded on the Over-the-Counter Bulletin Board (“OTCBB”) under
the symbol “AFYG”. Our Common Stock commenced trading under this
symbol on February 13, 2009, and previously traded under the symbol “SYFD” from
the initial listing date until February 13, 2009, without any trading or
volume.
The
following historical quotations obtained from online sources reflects the high
and low bids for our Common Stock based on inter-dealer prices, without retail
mark-up, mark-down or commission and may not necessarily represent actual
transactions:
Quarter
Ended
|
|
High
($)
|
|
|
Low
($)
|
|
March
31, 2009
|
|
|
3.80
|
|
|
|
2.95
|
|
December
31, 2008
|
|
|
N/A
|
|
|
|
N/A
|
|
September
30, 2008
|
|
|
N/A
|
|
|
|
N/A
|
|
June
30, 2008
|
|
|
N/A
|
|
|
|
N/A
|
|
March
31, 2008
|
|
|
N/A
|
|
|
|
N/A
|
|
December
31, 2007
|
|
|
N/A
|
|
|
|
N/A
|
|
September
30, 2007
|
|
|
N/A
|
|
|
|
N/A
|
|
June
30, 2007
|
|
|
N/A
|
|
|
|
N/A
|
|
March
31, 2007
|
|
|
N/A
|
|
|
|
N/A
|
|
As of
March 31, 2009, our Common Stock closed at a price of $3.20.
Holders
As of
July 1, 2009, there are 65,545,875 shares of our Common Stock issued and
outstanding held by 49 shareholders of record.
Dividend
Policy
We have
never paid any cash dividends and have no plans to do so in the foreseeable
future. Our future dividend policy will be determined by our Board of Directors
and will depend upon a number of factors, including our financial condition and
performance, our cash needs and expansion plans, income tax consequences and the
restrictions that applicable laws and other arrangements then
impose.
Securities
Authorized for Issuance Under Equity Compensation Plans
The
following table sets forth information as of the end of the fiscal year ended
March 31, 2009, with respect to compensation plans (including individual
compensation arrangements) under which equity securities of the Company are
authorized for issuance, aggregated as follows: (i) all compensation plans
previously approved by security holders; and (ii) all compensation plans not
previously approved by security holders.
Plan
category
|
|
Number
of securities to
be
issued upon exercise
of
outstanding options,
warrants
and rights
|
|
|
Weighted-average
exercise
price of
outstanding
options,
warrants
and rights
|
|
|
Number
of securities remaining
available
for future issuance
under
equity compensation
plans
(excluding securities
reflected
in column (a))
|
|
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
Equity
compensation plans approved by security holders
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Equity
compensation plans not approved by security holders
(1)
|
|
|
2,200,000
|
|
|
$
|
0.60
|
|
|
|
2,800,000
|
|
Total
|
|
|
2,200,000
|
|
|
|
|
|
|
|
2,800,000
|
|
Notes:
(1)
|
The
Company’s Board of Directors adopted a stock option plan on February 11,
2009. See below for details of this
plan.
|
On
February 11, 2009, our Board of Directors unanimously approved and adopted a
stock option and incentive plan (the “Stock Option Plan”). The purpose of the
Stock Option Plan is to advance our interests and our shareholders’ interests by
affording our key personnel an opportunity for investment in the Company and the
incentive advantages inherent in stock ownership in the Company. Pursuant to the
provisions of the Stock Option Plan, stock options, stock awards, cash awards or
other incentives (the “Stock Options and Incentives”) will be granted only to
our key personnel, generally defined as a person designated by the Board of
Directors upon whose judgment, initiative and efforts we may rely including any
director, officer, employee, consultant or advisor of the Company.
The Stock
Option Plan is to be administered by our Board of Directors, which shall
determine:
(i)
|
the
persons to be granted Stock Options and
Incentives;
|
(ii)
|
the
fair market value of our shares;
|
(iii)
|
the
exercise price per share of options to be
granted;
|
(iv)
|
the
number of shares to be represented by each option or incentive
award;
|
(v)
|
the
time or times at which options and incentive awards shall be
granted;
|
(vi)
|
the
interpretation of the Stock Option
Plan;
|
(vii)
|
whether
to prescribe, amend and rescind rules and regulations relating to the
Stock Option Plan;
|
(viii)
|
the
term and provisions or each option and incentive award granted (which need
not be identical) and, with the consent of the grantee thereof, modify or
amend such option or incentive
award;
|
(ix)
|
whether
to accelerate or defer (with the consent of the grantee) of the exercise
date of any option or incentive
award;
|
(x)
|
the
person to execute on our behalf any instrument required to effectuate the
grant of an option or incentive award previously granted by the
Board;
|
(xi)
|
whether
to accept or reject the election made by a grantee pursuant to Section 7.5
of the Stock Option Plan; and
|
(xii)
|
all
other determinations deemed necessary or advisable for the administration
of the Stock Option Plan.
|
The Stock
Option Plan provides authorization to the Board of Directors to grant Stock
Options and Incentives to a total number of shares of our Common Stock, not to
exceed five million (5,000,000) shares of our Common Stock as at the date of
adoption by the Board of Directors of the Stock Option Plan.
In the
event an optionee who is a director, officer, employee (employee also
encompasses consultants and advisors where such is appropriate or where such is
intended by the Board or by a particular grant under the Stock Option Plan)
(each an “Employee”) of the Company has his employment terminated by us, except
if such termination is voluntary or occurs due to retirement with the consent of
the Board or due to death or disability, then the option, to the extent not
exercised, shall terminate on the date on which the Employee’s employment by the
Company is terminated. If an Employee’s termination is voluntary or occurs due
to retirement with the consent of the Board, then the Employee may after the
date such Employee ceases to be an Employee of the Company, exercise his option
at any time within three (3) months after the date he ceases to be an Employee
of the Company, but only to the extent that he was entitled to exercise it on
the date of such termination. To the extent that the Employee was not entitled
to exercise the Option at the date of such termination, or if he does not
exercise such option (which he was entitled to exercise) within the time
specified herein, the option shall terminate. In no event may the period of
exercise in the case of incentive options extend more than three (3) months
beyond termination of employment.
In the
event an Employee is unable to continue his employment with us as a result of
his permanent and total disability (as defined in Section 22(e)(3) of the
Internal Revenue Code), he may exercise his option at any time within six (6)
months from the date of termination, but only to the extent he was entitled to
exercise it at the date of such termination. To the extent that he was not
entitled to exercise the option at the date of termination, or if he does not
exercise such option (which he was entitled to exercise) within the time
specified herein, the option shall terminate. In no event may the period of
exercise in the case of an incentive option extend more than six (6) months
beyond the date the Employee is unable to continue employment due to such
disability.
In the
event an optionee dies during the term of the option and is at the time of his
death an Employee who shall have been in continuous status as an Employee since
the date of grant of the option, the option may be exercised at any time within
six (6) months following the date of death by the optionee’s estate or by a
person who acquired the right to exercise the option by bequest or inheritance,
but only to the extent that an optionee was entitled to exercise the option on
the date of death, or if the optionee’s estate, or person who acquired the right
to exercise the option by bequest or inheritance, does not exercise such option
(which he was entitled to exercise) within the time specified herein, the option
shall terminate. In no event may the period of exercise in the case of an
incentive option extend more than six (6) months beyond the date of the
Employee’s death.
Except to
the extent otherwise expressly provided in an award, the right to acquire shares
or other assets under the Stock Option Plan may not be assigned, encumbered or
otherwise transferred by an optionee and any attempt by an optionee to do so
will be null and void. However Stock Options and Incentives granted under this
Stock Option Plan may be transferred by an optionee by will or the laws of
descent and distribution or pursuant to a qualified domestic relations order as
defined by the Internal Revenue Code or Title I of the Employee Retirement
Income Security Act, as amended, or the rules thereunder. Unless assigned in
accordance with the terms of an award, options and other awards granted under
this Stock Option Plan may not be exercised during an optionee’s lifetime except
by the optionee or, in the event of the optionee’s legal incapacity, by his
guardian or legal representative acting in a fiduciary capacity on behalf of the
optionee under state law and court supervision.
Recent
Sales of Unregistered Securities
On March
5, 2009, we issued 760,815 shares of our Common Stock to 11 individuals due to
the closing of our private placement at $0.40 per share for total gross proceeds
of $304,326. We believe that two of the issuances are exempt from registration
under Regulation D Rule 506 and/or Section 4(2) of the Securities Act. We
believe that the remaining issuances are exempt from registration under
Regulation S promulgated under the Securities Act as the securities were issued
to the individuals through offshore transactions which were negotiated and
consummated outside of the United States.
On April
30, 2009, we issued 285,060 shares of our Common Stock to 2 individuals due to
the closing of our private placement at $0.50 per share for total gross proceeds
of $142,530. We believe that the two issuances are exempt from registration
under Regulation S promulgated under the Securities Act as the securities were
issued to the individuals through offshore transactions which were negotiated
and consummated outside of the United States.
On May
27, 2009, we received gross proceeds of $45,240 from one investor for the
subscription of 60,320 (post forward stock split) shares of our Common Stock at
a price of $0.75 per share. When issued, we believe that the issuances will be
exempt from registration under Regulation S promulgated under the Securities Act
as the securities were will be issued to the individual through an offshore
transaction which was negotiated and consummated outside of the United
States.
On June
23, 2009, we received gross proceeds of $100,000 from one investor for the
subscription of 100,000 (post forward stock split) shares of our Common Stock at
a price of $1.00 per share. When issued, we believe that the issuances will be
exempt from registration under Regulation S promulgated under the Securities Act
as the securities were will be issued to the individual through an offshore
transaction which was negotiated and consummated outside of the United
States.
Purchase
of Equity Securities by the Company and Affiliated Purchasers
Not
Applicable.
ITEM
6. SELECTED FINANCIAL DATA
As a
“smaller reporting company” (as defined by §229.10(f)(1)), we are not required
to provide the information required by this Item.
ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
You
should read the following plan of operation together with our financial
statements and related notes appearing elsewhere in this annual report. This
plan of operation contains forward-looking statements that involve risks,
uncertainties, and assumptions. The actual results may differ materially from
those anticipated in these forward-looking statements as a result of certain
factors.
Overview
Affinity
Gold Corporation is a junior mining company engaged in the exploration,
acquisition and development of small and medium sized mining concessions located
within Latin America.
Our core
strategy is to acquire and develop high-grade low-cost gold properties,
conducive to alluvial and open pit mining operations, either through direct
acquisition, joint ventures or partnerships. Pursuant to the Share Exchange
Agreement, we may acquire a 99.99% interest in the AMR Project located in
southeastern Peru east of the Andean Mountains and situated in the Inambari
River Basin. See “
Item 1.
Business – Our Business
” for details of the Share Exchange Agreement and
“Item 2. Properties – The AMR
Project
” for details of the AMR Project.
Plan
of Operations
Our
overall strategy is to target the exploration and acquisition of small and
medium sized mining concessions that allow for economically viable development
and production with minimal net environmental impact when employing industry
best practices. In addition to direct acquisitions, we plan to compliment our
growth through strategic joint ventures and partnerships where and when
appropriate.
We are
targeting small and medium-sized mining concessions for the following
reasons:
1.
|
the
projects become revenue-producing within a relatively short period of
time;
|
2.
|
overall
startup costs are less of a burden;
|
3.
|
once
started, these projects can quickly self-fund future
development;
|
4.
|
environmental
impacts can be managed and minimized;
and
|
5.
|
community
relations and support tend to be easier to build and
maintain.
|
Our
exploration target is to find mineral bodies containing gold. Our success
depends upon finding mineralized material. This will require a determination by
a geological consultant as to whether any of our mineral properties intended to
be acquired contains reserves. Mineralized material is a mineralized body, which
has been delineated by appropriate spaced drilling or underground sampling to
support sufficient tonnage and average grade of minerals to justify
removal.
We
continue to identify strategic acquisitions of additional concession rights
within the area of the AMR Project to ensure progress towards achieving future
growth objectives.
Objectives
We have
the following objectives:
1.
|
to
successfully develop the AMR Project in Peru with initial operations
commencing in the 3
rd
quarter of 2009;
|
2.
|
to
become a 25,000 ounce per year gold producer within the next two
years;
|
3.
|
to
build a significant proven gold reserve base through acquisitions, joint
ventures and partnerships; and
|
4.
|
to
become a dominant holder of mining concessions in Peru for small and
medium size projects containing alluvial gold
reserves.
|
Limited
Operating History; Need for Additional Capital
There is
limited historical financial information about us upon which to base an
evaluation of our performance. We are an exploration stage corporation and have
not generated any revenues from operations. We cannot guarantee we will be
successful in our business operations. Our business is subject to risks inherent
in the establishment of a new business enterprise, including limited capital
resources, possible delays in the exploration of any properties, and possible
cost overruns due to price and cost increases in services.
To become
profitable and competitive, we will conduct research and exploration of any
properties we acquire before we start production of any minerals we may find. If
we don't find mineralized material or we cannot remove mineralized material,
either because we do not have the money to do it or because it is not
economically feasible to do it, we will cease operations and our investors will
lose their investment.
Liquidity
and Capital Resources
Our
registered independent auditors have issued a going concern opinion. This means
that there is substantial doubt that we can continue as an on-going business for
the next 12 months unless we obtain additional capital to pay our bills. This is
because we have not generated any revenues and no revenues are anticipated until
we locate mineral deposits and begin removing and selling minerals. There is no
assurance we will ever reach this point. Accordingly, we must raise cash from
sources other than the sale of minerals found on any properties we acquire. Our
only other source for cash at this time is investments by others in the Company.
We must raise cash to implement our project and stay in business.
We may
not have enough money to complete our planned exploration of the AMR Project in
Peru, or any newly acquired properties. If it turns out that we have not raised
enough money to complete our anticipated exploration programs, we will try to
raise additional funds from private placements or loans. At the present time, we
are in the process of attempting to raise additional money through a private
placement and there is no assurance that we will raise additional money in the
future or that future financings will be available to us on acceptable terms. If
we require additional money and are unable to raise it, we will have to suspend
or cease operations. Equity financing could result in additional dilution to
existing shareholders.
On March
5, 2009, we issued 760,815 (post forward stock split) shares of our Common Stock
to 11 individuals due to the closing of our private placement at $0.40 per share
for total gross proceeds of $304,326.
On April
30, 2009, we issued 285,060 (post forward stock split) shares of our Common
Stock to 2 individuals due to the closing of our private placement at $0.50 per
share for total gross proceeds of $142,530.
On May
27, 2009, we received gross proceeds of $45,240 from one investor for the
subscription of 60,320 (post forward stock split) shares of our Common Stock at
a price of $0.75 per share.
On June
23, 2009, we received gross proceeds of $100,000 from one investor for the
subscription of 100,000 (post forward stock split) shares of our Common Stock at
a price of $1.00 per share.
Results
of Operations
As of
March 31, 2009, our total assets were $264,444; our total liabilities were
$23,079; and, we had cash resources of $28,444.
Net Loss.
We have
incurred net losses for the period from inception to March 31, 2009, of
$1,249,961. $1,144,000 of the net loss amount of $1,249,961 was attributable to
stock-based compensation expense. This condition raises substantial doubt about
our ability to continue as a going concern. Our continuation as a going concern
is dependent on our ability to meet our obligations, to obtain additional
financing as may be required and ultimately to attain profitability. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Net Operating Losses
. As of
March 31, 2009, we had a net operating loss carry forward of approximately
$1,262,555 which will expire beginning in the year 2027.
Revenues
. We have not
generated any revenues to date from our operations.
Off-Balance
Sheet Arrangements
We have
no off-balance sheet arrangements.
ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a
“smaller reporting company” (as defined by §229.10(f)(1)), we are not required
to provide the information required by this Item.
ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
AFFINITY
GOLD CORP.
(A
DEVELOPMENT STAGE COMPANY)
FINANCIAL
STATEMENTS
March
31, 2009
AFFINITY
GOLD CORP.
(A
DEVELOPMENT STAGE COMPANY)
FINANCIAL
STATEMENTS
March
31, 2009
Report
of Independent Registered Public Accounting Firm
|
|
F-1
|
|
|
|
Balance
Sheets as of March 31, 2009 and 2008
|
|
F-2
|
|
|
|
Statements
of Operations for the Years Ended
|
|
|
March
31, 2009 and 2009 and for the Period from
|
|
|
March
27, 2007 (Inception) to March 31, 2009
|
|
F-3
|
|
|
|
Statement
of Stockholders’ Equity (Deficit) as of
|
|
|
March
31, 2009
|
|
F-4
|
|
|
|
Statements
of Cash Flows for the Years Ended
|
|
|
March
31, 2009 and 2009 and for the Period from
|
|
|
March
27, 2007 (Inception) to March 31, 2009
|
|
F-5
|
|
|
|
Notes
to Financial Statements
|
|
F-6 – F-11
|
Maddox
Ungar Sil
berstein,
PLLC
CPAs and
Business
Advisors
Phone
(248) 203-0080
Fax (248)
281-0940
30600
Telegraph Road, Suite 2175
Bingham
Farms, MI 48025-4586
www.maddoxungar.com
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Boards of Directors
Affinity
Gold Corp.
Maple
Grove, MN
We have
audited the accompanying balance sheets of Affinity Gold Corp., a Nevada
Corporation, as of March 31, 2009 and 2008 and the related statements of
operations, stockholders’ equity (deficit), and cash flows for the years then
ended and the period from March 27, 2007 (Inception) to March 31,
2009. These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require
that we plan and perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement. The
Company has determined that it is not required to have, nor were we engaged to
perform, an audit of its internal control over financial
reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An
audit includes examining on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Affinity Gold Corp., as of March
31, 2009 and 2008 and the results of its operations and cash flows for the years
then ended and the period from March 27, 2007 (Inception) to March 31, 2009, in
conformity with accounting principles generally accepted in the United
States.
The
accompanying financial statements have been prepared assuming that Affinity Gold
Corp. will continue as a going concern. As discussed in Note 7 to the
financial statements, the Company has incurred losses from operations, and is in
need of additional capital to grow its operations so that it can become
profitable. These factors raise substantial doubt about the Company’s
ability to continue as a going concern. Management’s plans with
regard to these matters are described in Note 7. The accompanying financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/ Maddox Ungar Silberstein,
PLLC
|
Maddox
Ungar Silberstein, PLLC
Bingham
Farms, Michigan
June 5,
2009
AFFINITY
GOLD CORP.
(A
DEVELOPMENT STAGE COMPANY)
BALANCE
SHEETS
As
of March 31, 2009 and 2008
|
|
2009
|
|
|
2008
|
|
ASSETS
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
|
Cash
and equivalents
|
|
$
|
28,444
|
|
|
$
|
0
|
|
Note
receivable – related party
|
|
|
236,000
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
$
|
264,444
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
|
|
Accrued
expenses
|
|
$
|
21,489
|
|
|
$
|
7,091
|
|
Credit
card payable
|
|
|
1,590
|
|
|
|
0
|
|
Total
Liabilities
|
|
|
23,079
|
|
|
|
7,091
|
|
|
|
|
|
|
|
|
|
|
Stockholders’
Equity (Deficit)
|
|
|
|
|
|
|
|
|
Common
Stock, $.001 par value, 2,700,000,000 shares authorized, 65,260,815 shares
issued and outstanding (90,000,000 authorized; 2,150,000 outstanding –
2008)
|
|
|
65,261
|
|
|
|
2,150
|
|
Preferred
stock, $.001 par value, 10,000,000 shares authorized, no shares issued or
outstanding
|
|
|
0
|
|
|
|
0
|
|
Additional
paid-in capital
|
|
|
1,426,065
|
|
|
|
40,850
|
|
Deficit
accumulated during the development stage
|
|
|
(1,249,961
|
)
|
|
|
(50,091
|
)
|
Total
stockholders’ equity (deficit)
|
|
|
241,365
|
|
|
|
(7,091
|
)
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
$
|
264,444
|
|
|
$
|
0
|
|
See
accompanying notes to financial statements.
AFFINITY
GOLD CORP.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENTS
OF OPERATIONS
For
the Years Ended March 31, 2009 and 2008
Period
from March 27, 2007 (Inception) to March 31, 2009
|
|
Year
ended
March
31, 2009
|
|
|
Year
ended
March
31, 2008
|
|
|
Period
from
March
27,
2007
(Inception)
to
March
31,
2009
|
|
|
|
|
|
|
|
|
|
|
|
REVENUES
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
Professional
fees
|
|
|
61,830
|
|
|
|
45,586
|
|
|
|
111,921
|
|
General
and administrative
|
|
|
4,689
|
|
|
|
0
|
|
|
|
4,689
|
|
Consulting
|
|
|
1,945
|
|
|
|
0
|
|
|
|
1,945
|
|
Stock-based
compensation expense
|
|
|
1,144,000
|
|
|
|
0
|
|
|
|
1,144,000
|
|
TOTAL
OPERATING EXPENSES
|
|
|
1,212,464
|
|
|
|
45,586
|
|
|
|
1,262,555
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
LOSS FROM OPERATIONS
|
|
|
(1,212,464
|
)
|
|
|
(45,586
|
)
|
|
|
(1,262,555
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER
INCOME (EXPENSE)
|
|
|
12,594
|
|
|
|
0
|
|
|
|
12,594
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
LOSS BEFORE PROVISION FOR INCOME TAXES
|
|
|
(1,199,870
|
)
|
|
|
(45,586
|
)
|
|
|
(1,249,961
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROVISION
FOR INCOME TAXES
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
LOSS
|
|
$
|
(1,199,870
|
)
|
|
$
|
(45,586
|
)
|
|
$
|
(1,249,961
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
LOSS PER SHARE:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted
|
|
$
|
(0.02
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED
AVERAGE NUMBER OF SHARES OUTSTANDING
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted
|
|
|
64,617,853
|
|
|
|
64,500,000
|
|
|
|
|
|
See
accompanying notes to financial statements.
AFFINITY
GOLD CORP.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENT
OF STOCKHOLDERS’ EQUITY (DEFICIT)
Period
from March 27, 2007 (Inception) to March 31, 2009
|
|
Common
stock
|
|
|
Additional
paid-in
capital
|
|
|
Deficit
accumulated
during
the
development
stage
|
|
|
Total
|
|
|
|
Shares
|
|
|
Amount
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common stock for cash @ $.001
|
|
|
2,150,000
|
|
|
$
|
2,150
|
|
|
$
|
40,850
|
|
|
$
|
-
|
|
|
$
|
43,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended March 31, 2007
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,505
|
)
|
|
|
(4,505
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
March 31, 2007
|
|
|
2,150,000
|
|
|
|
2,150
|
|
|
|
40,850
|
|
|
|
(4,505
|
)
|
|
|
38,495
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended March 31, 2008
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(45,586
|
)
|
|
|
(45,586
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
March 31, 2008
|
|
|
2,150,000
|
|
|
|
2,150
|
|
|
|
40,850
|
|
|
|
(50,091
|
)
|
|
|
(7,091
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
split, January 21, 2009
|
|
|
62,350,000
|
|
|
|
40,850
|
|
|
|
(40,850
|
)
|
|
|
-
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of stock in private placement
|
|
|
760,815
|
|
|
|
761
|
|
|
|
303,565
|
|
|
|
-
|
|
|
|
304,326
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment
for par value
|
|
|
-
|
|
|
|
21,500
|
|
|
|
(21,500
|
)
|
|
|
-
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
1,144,000
|
|
|
|
-
|
|
|
|
1,144,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the year ended March 31, 2009
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1,199,870
|
)
|
|
|
(55,870
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
March 31, 2009
|
|
|
65,260,815
|
|
|
$
|
65,261
|
|
|
$
|
1,426,065
|
|
|
$
|
(1,249,961
|
)
|
|
$
|
241,365
|
|
See
accompanying notes to financial statements.
AFFINITY
GOLD CORP.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENTS
OF CASH FLOWS
For
the Years Ended March 31, 2009 and 2008
Period
from March 27, 2007 (Inception) to March 31, 2009
|
|
Year
ended
March
31,
2009
|
|
|
Year
ended
March
31,
2008
|
|
|
Period
from
March
27,
2007
(Inception)
to
March
31,
2009
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Net
loss for the period
|
|
$
|
(1,199,870
|
)
|
|
$
|
(45,586
|
)
|
|
$
|
(1,249,961
|
)
|
Adjustments
to Reconcile Net Loss to Net Cash Used in Operating
Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
|
1,144,000
|
|
|
|
0
|
|
|
|
1,144,000
|
|
Changes
in Assets and Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease
in prepaid expenses
|
|
|
0
|
|
|
|
4,000
|
|
|
|
0
|
|
Increase
in accrued expenses
|
|
|
14,398
|
|
|
|
6,586
|
|
|
|
21,489
|
|
Increase
in credit card payable
|
|
|
1,590
|
|
|
|
0
|
|
|
|
1,590
|
|
CASH
FLOWS USED BY OPERATING ACTIVITIES
|
|
|
(39,882
|
)
|
|
|
(35,000
|
)
|
|
|
(82,882
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS USED IN INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Note
receivable – related party
|
|
|
(236,000
|
)
|
|
|
0
|
|
|
|
(236,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from sales of common stock
|
|
|
304,326
|
|
|
|
0
|
|
|
|
347,326
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
INCREASE (DECREASE) IN CASH
|
|
|
28,444
|
|
|
|
(35,000
|
)
|
|
|
28,444
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash,
beginning of period
|
|
|
0
|
|
|
|
35,000
|
|
|
|
0
|
|
Cash,
end of period
|
|
$
|
28,444
|
|
|
$
|
0
|
|
|
$
|
28,444
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
paid
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
Income
taxes paid
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
See
accompanying notes to financial statements.
AFFINITY
GOLD CORP.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO THE FINANCIAL STATEMENTS
March
31, 2009
NOTE
1 – SUMMARY OF ACCOUNTING POLICIES
Nature of
Business
Affinity
Gold Corporation (“Affinity Gold Corp.”), is a development stage mineral
exploration and development company engaged in the acquisition, exploration and
development of gold mineralization properties
internationally. Affinity Gold Corp.’s current focus is gold
exploration in Peru.
Affinity
Gold Corp. was incorporated on January 14
th
, 2009
as a wholly-owned subsidiary of Syncfeed, Inc. On January 20
th
, 2009,
Affinity Gold Corp. and Syncfeed, Inc. approved the merger between the two
companies with Syncfeed, Inc. carrying on as the surviving company under the
name Affinity Gold Corp.
On
February 10
th
, 2009
Affinity Gold Corp. entered into a Leter of Intent to acquire the mining
concession rights from AMR Project Peru, S.A.C. (“AMR”), a Peruvian
corporation. On March 2
nd
, 2009
the Company entered into an asset purchase agreement (“Asset Purchase
Agreement”) with AMR to acquire the mining concession title named “AMR Project”
covering 500 hectares and the physical mining concession certificate as
evidenced by Certificate No. 7996-2006-INACC-UADA granted to AMR by the Republic
of Peru, National Institute of Concessions and Mining Cadastre on December
11
th
,
2006.
Affinity
Gold Corp. currently operates out of its head office in Maple Grove,
Minnesota.
See Note
8.
Basis of
Presentation
The
accompanying financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America and the
rules of the Securities and Exchange Commission (“SEC”).
Basis of
Accounting
The
financial statements have been prepared on the accrual basis of accounting in
conformity with accounting principles generally accepted in the United States of
America. Revenues are recognized as income when earned and expenses
are recognized when they are incurred. The Company does not have significant
categories of cost as its income is recurring with high margins. Expenses such
as wages, consulting expenses, legal and professional fees, and rent are
recorded when the expense is incurred.
AFFINITY
GOLD CORP.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO THE FINANCIAL STATEMENTS
March
31, 2009
NOTE
1 – SUMMARY OF ACCOUNTING POLICIES (continued)
Development Stage
Company
The
accompanying financial statements have been prepared in accordance with the
Statement of Financial Accounting Standards No. 7 ”Accounting and Reporting by
Development-Stage Enterprises”. A development-stage enterprise is one
in which planned principal operations have not commenced or if its operations
have commenced, there has been no significant revenues there from.
Cash and Cash
Equivalents
Affinity
Gold Corp. considers all highly liquid investments with maturities of three
months or less to be cash equivalents. At March 31, 2009 and 2008,
the Company had $28,444 and $-0- of cash.
Fair Value of Financial
Instruments
The
Company’s financial instruments consist of cash and cash equivalents, loans to a
related party, accrued expenses and credit card payables. The carrying amount of
these financial instruments approximates fair value due either to length of
maturity or interest rates that approximate prevailing market rates unless
otherwise disclosed in these financial statements.
Use of
Estimates
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 the financial statements and the
reported amount of revenues and expenses during the reporting
period. Actual results could differ from those
estimates.
Basic loss per
share
Basic
loss per share has been calculated based on the weighted average number of
shares of common stock outstanding during the period. The weighted average
shares outstanding have been cacluated assuming the stock split had occurred at
the beginning of the March 31, 2008 fiscal year.
Recent Accounting
Pronouncements
Affinity
Gold Corp. does not expect the adoption of recently issued accounting
pronouncements to have a significant impact on the Company’s results of
operations, financial position or cash flow.
AFFINITY
GOLD CORP.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO THE FINANCIAL STATEMENTS
March
31, 2009
NOTE
2 – LOAN TO A RELATED PARTY
Effective
January 21, 2009, the Company agreed to loan up to $400,000 to a related party,
AMR Project Peru, S.A.C. to be used to purchase equipment and supplies to
conduct exploration and for other related expenses on the mining
concession named “AMR Project”. The Company intends to acquire AMR
Project Peru, S.A.C. as a wholly owned subsidiary, in which case, the loan will
become an intercompany loan and dealt with as the board of directors
determine. The loan is non-interest bearing and is due on April 30,
2010. As of March 31, 2009 the amount of the loan was
$236,000.
NOTE
3 – ACCRUED EXPENSES
Accrued
expenses at March 31, 2009 and 2008 consisted of the following:
|
|
2009
|
|
|
2008
|
|
Accrued
legal fees
|
|
$
|
13,125
|
|
|
$
|
0
|
|
Accrued
audit fees
|
|
|
6,500
|
|
|
|
7,091
|
|
Accrued
stock transfer fees
|
|
|
1,864
|
|
|
|
0
|
|
Total
Accrued Expenses
|
|
$
|
21,489
|
|
|
$
|
7,091
|
|
NOTE
4 – CAPITAL STOCK
On
January 21, 2009, the Company filed a Certificate of Change to effect a forward
stock split on a basis of 30 new shares for each one old share resulting in the
authorized common shares going from 90,000,000 common shares to 2,700,000,000
common shares (the preferred shares were not affected and remain at 10,000,000
preferred shares) and the issued and outstanding common shares going from
2,150,000 to 64,500,000 shares. The weighted average shares
outstanding have been cacluated assuming the stock split had occurred at the
beginning of the March 31, 2008 fiscal year.
Additionally,
there was a private placement of 760,815 shares for total cash of $304,326 that
took place during the year ended March 31, 2009. There were
65,260,815 shares of common stock issued and outstanding at March 31,
2009.
AFFINITY
GOLD CORP.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO THE FINANCIAL STATEMENTS
March
31, 2009
NOTE
5 – STOCK-BASED COMPENSATION
Effective
January 1, 2006, the Company adopted SFAS No. 123 (revised), "Share-Based
Payment: (SFAS 123(R)) utilizing the modified prospective approach. Prior to the
adoption of SFAS 123(R) we accounted for stock option grant in accordance with
APB Opinion No. 25,
"Accounting for Stock Issued to
Employees,"
and accordingly, recognized compensation expense for stock
option grants using the intrinsic value method.
Under the
modified prospective approach, SFAS 123(R) applies to new awards and to awards
that were outstanding on January 1, 2006 that are subsequently modified,
repurchased or cancelled. Under the modified prospective approach, compensation
cost recognized in the first quarter of fiscal 2006 includes compensation cost
for all share-based payments granted prior to, but not yet vested as of January
1, 2006 based on the grant-date fair value estimated in accordance with the
original provisions of SFAS 123, and compensation cost for all share-based
payments granted subsequent to January 1, 2006 based on the grant-date fair
value estimated in accordance with the provisions of SFAS 123(R). For all
quarters after the first quarter of fiscal 2006, compensation costs recognized
will include the compensation costs for all share-based payments granted based
on the grant date fair value estimated in accordance with the provisions of SFAS
123(R).
The fair
value of each option granted for the year ended March 31, 2009 is estimated on
the date of grant using the Black-Scholes option-pricing model with the
following weighted average assumptions: dividend yield of 0%, expected
volatility of 500%, risk-free interest rate of 1.85% and expected life of 60
months. The Company recognized expense of $1,144,000 on the 1,320,000 options
issued and vested during the year ended March 31, 2009.
NOTE
6 – INCOME TAXES
For the
period ended March 31, 2009, Affinity Gold Corp. has incurred net losses and,
therefore, has no tax liability. The net deferred tax asset generated
by the loss carry-forward has been fully reserved. The cumulative net
operating loss carry-forward is approximately $1,250,000 at March 31, 2009, and
will expire beginning in the year 2027. For income tax purposes,
usage of the net operating losses incurred prior to the merger may be limited on
an annual basis due to the change in control.
The
cumulative tax effect at the expected rate of 34% of significant items
comprising our net deferred tax amount is as follows:
|
|
2009
|
|
Deferred
tax asset attributable to:
|
|
|
|
Net
operating loss carryover
|
|
$
|
425,000
|
|
Valuation
allowance
|
|
|
(425,000
|
)
|
Net
deferred tax asset
|
|
$
|
-
|
|
AFFINITY
GOLD CORP.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO THE FINANCIAL STATEMENTS
March
31, 2009
NOTE
7 – LIQUIDITY AND GOING CONCERN
Affinity
Gold Corp. has incurred operating losses since inception, and has not yet
received revenues from sales of products or services. These factors
create substantial doubt about the Company’s ability to continue as a going
concern. The financial statements do not include any adjustment that
might be necessary if the Company is unable to continue as a going
concern.
The
ability of Affinity Gold Corp. to continue as a going concern is dependent on
the Company generating cash from the sale of its common stock and/or obtaining
debt financing and attaining future profitable
operations. Management’s plans include selling its equity securities
and obtaining debt financing to fund its capital requirement and ongoing
operations; however, there can be no assurance the Company will be successful in
these efforts.
NOTE
8 – SUBSEQUENT EVENTS
On
February 10
th
, 2009
Affinity Gold Corp. entered into a Leter of Intent to acquire the mining
concession rights from AMR Project Peru, S.A.C. (“AMR”), a Peruvian corporation,
changing the business direction to mineral exploration concentrating on gold
exploration in Peru.
On March
2
nd
,
2009 the Company entered into an asset purchase agreement (“Asset Purchase
Agreement”) with AMR to acquire the mining concession title named “AMR Project”
covering 500 hectares and the physical mining concession certificate as
evidenced by Certificate No. 7996-2006-INACC-UADA granted to AMR by the Republic
of Peru, National Institute of Concessions and Mining Cadastre on December
11
th
,
2006.
On April
30
th
, 2009
Affinity Gold Corp. and AMR entered into an amendment agreement (the “Amendment
Agreement”) whereby the parties have decided to amend the arrangement by
changing the structure of the arrangement from an asset purchase agreement to a
share exchange agreement resulting in AMR becoming a wholly-owned subsidiary of
the Company. Under the Amendment Agreement, both parties agreed to
terminate the Asset Purchase Agreement so as to be no longer in
effect.
On May
8
th
,
2009, Affinity Gold Corp. entered into a Share Exchange Agreement (“Share
Exchange Agreement”) with AMR, and all the shareholders of AMR, whereby the
Company has agreed to acquire 99.99% of the issued and outstanding shares in the
capital of AMR in exchange for 12,000,000 shares of the Company in aggregate to
the shareholders of AMR on a pro rata basis in accordance with each AMR
shareholder’s percentage of ownership in AMR.
AFFINITY
GOLD CORP.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO THE FINANCIAL STATEMENTS
March
31, 2009
NOTE
8 – SUBSEQUENT EVENTS (CONTINUED)
On June
12, 2009, our Board of Directors unanimously adopted resolutions approving the
amendment to the articles of incorporation to decrease the authorized common
stock from 2,700,000,000 shares to 250,000,000 shares and recommended that the
Shareholders approve the Amended Articles as set forth in the draft Certificate
of Amendment to the Articles of Incorporation. In connection with the
adoption of these resolutions, the Board of Directors elected to seek the
written consent of the holders of at least a majority of our outstanding shares
in order to reduce associated costs and implement the proposals in a timely
manner.
On June
12, 2009 (the “Record Date”), the Company had 65,545,875 shares of common stock
issued and outstanding with the holders thereof being entitled to cast one vote
per share. Except for the shares of common stock, no other class of voting
securities were outstanding as at the Record Date. The written consent of
shareholders of the Company holding at least 32,772,938 shares of Common Stock
was necessary to approve the Amended Articles. The approval of the
majority shareholders holding in the aggregate 34,800,000 shares of common stock
was obtained on June 19, 2009, by written consent.
On June
29, 2009, the parties to the Share Exchange Agreement entered into an Extension
Agreement to extend the latest closing date 14 days until July 14, 2009.
If the agreement is not closed by that date, then the parties will need to
enter into another Extension Agreement for another 14 day period.
ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
Maddox
Ungar Silberstein, PLLC are our auditors. During the Company's two most recent
fiscal years, there were no disagreements with our auditors which were not
resolved on any matter concerning accounting principles or practices, financial
statement disclosure, or auditing scope and procedure, which disagreements, if
not resolved to the satisfaction of our auditors would have caused them to make
reference to the subject matter of the disagreements in connection with their
reports.
ITEM
9A(T). CONTROLS AND PROCEDURES
Evaluation
of Disclosure Controls and Procedures
Our
management, with the participation of our President, evaluated the effectiveness
of our disclosure controls and procedures as of the end of the period covered by
this report. Based on that evaluation, our President concluded that our
disclosure controls and procedures as of the end of the period covered by this
report were effective such that the information required to be disclosed by us
in reports filed under the Securities Exchange Act of 1934 is: (i) recorded,
processed, summarized and reported within the time periods specified in the
SEC's rules and forms; and (ii) accumulated and communicated to our management,
including our President, as appropriate to allow timely decisions regarding
disclosure. A controls system cannot provide absolute assurance, however, that
the objectives of the controls system are met, and no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if
any, within a company have been detected.
Annual
Report of Management on Internal Control Over Financial Reporting
Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting. Internal control over financial reporting is
defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange
Act of 1934 as a process designed by, or under the supervision of, the company’s
principal executive and principal financial officers and effected by the
company’s board of directors, management and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
accounting principles generally accepted in the United States of America and
includes those policies and procedures that:
|
1.
|
Pertain
to the maintenance of records that in reasonable detail accurately and
fairly reflect the transactions and dispositions of the assets of the
company;
|
|
2.
|
Provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with accounting
principles generally accepted in the United States of America and that
receipts and expenditures of the company are being made only in accordance
with authorizations of management and directors of the company;
and
|
|
3.
|
Provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the company’s assets that
could have a material effect on the financial
statements.
|
Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate. All internal control systems, no matter
how well designed, have inherent limitations. Therefore, even those systems
determined to be effective can provide only reasonable assurance with respect to
financial statement preparation and presentation. Because of the inherent
limitations of internal control, there is a risk that material misstatements may
not be prevented or detected on a timely basis by internal control over
financial reporting. However, these inherent limitations are known features of
the financial reporting process. Therefore, it is possible to design into the
process safeguards to reduce, though not eliminate, this risk.
As of
March 31, 2009, management assessed the effectiveness of our internal control
over financial reporting based on the criteria for effective internal control
over financial reporting established in Internal Control—Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission
("COSO") and SEC guidance on conducting such assessments. Based on that
evaluation, they concluded that, during the period covered by this report, such
internal controls and procedures were not effective to detect the inappropriate
application of US GAAP rules as more fully described below. This was due to
deficiencies that existed in the design or operation of our internal controls
over financial reporting that adversely affected our internal controls and that
may be considered to be material weaknesses.
The
matters involving internal controls and procedures that our management
considered to be material weaknesses under the standards of the Public Company
Accounting Oversight Board were: (1) lack of a functioning audit committee due
to a lack of a majority of independent members and a lack of a majority of
outside directors on our board of directors, resulting in ineffective oversight
in the establishment and monitoring of required internal controls and
procedures; (2) inadequate segregation of duties consistent with control
objectives; and (3) ineffective controls over period end financial disclosure
and reporting processes. The aforementioned material weaknesses were identified
by our Chief Executive Officer in connection with the review of our financial
statements as of March 31, 2009.
Management
believes that the material weaknesses set forth in items (2) and (3) above did
not have an effect on our financial results. However, management believes that
the lack of a functioning audit committee and the lack of a majority of outside
directors on our board of directors results in ineffective oversight in the
establishment and monitoring of required internal controls and procedures, which
could result in a material misstatement in our financial statements in future
periods.
This
annual report does not include an attestation report of our registered public
accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the SEC that permit us to provide
only the management's report in this annual report.
Management’s
Remediation Initiatives
In an
effort to remediate the identified material weaknesses and other deficiencies
and enhance our internal controls, we have initiated, or plan to initiate, the
following series of measures:
|
1.
|
We
plan to create a position to segregate duties consistent with control
objectives and plan to increase our personnel resources and technical
accounting expertise within the accounting function when funds are
available to us; and
|
|
2.
|
We
plan to appoint one or more outside directors to our board of directors
who shall be appointed to an audit committee resulting in a fully
functioning audit committee who will undertake the oversight in the
establishment and monitoring of required internal controls and procedures
such as reviewing and approving estimates and assumptions made by
management when funds are available to
us.
|
Management
believes that the appointment of one or more outside directors, who shall be
appointed to a fully functioning audit committee, will remedy the lack of a
functioning audit committee and a lack of a majority of outside directors on our
Board.
We
anticipate that these initiatives will be at least partially, if not fully,
implemented by December 31, 2009.
Changes
in Internal Control Over Financial Reporting
There
have been no changes in our internal controls over financial reporting that
occurred during our fourth fiscal quarter of the period covered by this annual
report on Form 10-K that have materially affected, or are reasonably likely to
materially affect, our internal controls over financial reporting.
ITEM
9B. OTHER INFORMATION
Effective
January 21, 2009, we agreed to loan up to $400,000 to AMR, which is a related
party, to be used to purchase equipment and supplies to conduct exploration and
for other related expenses on the mining concession named “AMR Project”. We
intend to acquire AMR as a wholly owned subsidiary, in which case, the loan
would become an intercompany loan and be dealt with as the board of directors
determine. The loan is non-interest bearing and is due on April 30, 2010. As of
March 31, 2009 the amount of the loan was $236,000.
On June
12, 2009, our Board of Directors unanimously adopted resolutions approving the
amendment to the articles of incorporation to decrease the authorized common
stock from 2,700,000,000 shares to 250,000,000 shares and recommended that the
shareholders approve the Amended Articles as set forth a draft Certificate of
Amendment to the Articles of Incorporation. In connection with the adoption of
these resolutions, the Board of Directors elected to seek the written consent of
the holders of at least a majority of our outstanding shares in order to reduce
associated costs and implement the proposals in a timely manner.
On June
12, 2009 (the “Record Date”), the Company had 65,545,875 shares of common stock
issued and outstanding with the holders thereof being entitled to cast one vote
per share. Except for the shares of common stock, no other class of voting
securities were outstanding as at the Record Date. The written consent of
shareholders of the Company holding at least 32,772,938 shares of Common Stock
was necessary to approve the amendment to the articles of incorporation. The
approval of the majority shareholders holding in the aggregate 34,800,000 shares
of common stock was obtained on June 19, 2009, by written consent.
Since the
closing of the Share Exchange Agreement was not going to occur on or before June
30, 2009, we entered into an Extension Agreement with ARM, Antonio Rotundo and
Mario Rotundo, whereby the closing date has been extended to close on or before
July 14, 2009.
PART
III
ITEM
10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
Directors,
Executive Officers and Significant Employees
The
following table sets forth certain information regarding the members of our
Board of Directors, executive officers and our significant employees as of March
31, 2009:
Name
|
|
Age
|
|
Positions
and Offices Held
|
Antonio
Rotundo
(1)
|
|
44
|
|
President,
CEO, CFO, and director (former Secretary and Treasurer
)
|
Corey
J. Sandberg
(2)
|
|
35
|
|
Secretary,
Treasurer and director
|
Paul
F. Antoniazzi
(3)
|
|
62
|
|
Director
|
Johnny
Lian Tian Yong
(4)
|
|
43
|
|
Director
|
Yin
Cheng Kong
(5)
|
|
38
|
|
Former
President, CEO, CFO, Secretary, Treasurer and director
|
Wang
Zhao
(6)
|
|
33
|
|
Former
director
|
Notes:
(1)
|
Mr.
Antonio Rotundo was appointed the President, CEO, CFO, Secretary,
Treasurer and a director of our Company on January 8, 2009. Mr. Rotundo
resigned as our Secretary and Treasurer on February 3,
2009.
|
(2)
|
Mr.
Corey J. Sandberg was appointed as a director of our Company on January
29, 2009, and was appointed as our Secretary and Treasurer on February 3,
2009.
|
(3)
|
Mr.
Paul F. Antoniazzi was appointed as a director of our Company on January
29, 2009.
|
(4)
|
Mr.
Johnny Lian Tian Yong was appointed as a director of our Company on March
4, 2009.
|
(5)
|
Mr.
Yin Cheng Kong resigned as our President, CEO, CFO, Secretary and
Treasurer on January 8, 2009 and resigned as a director of our Company on
January 9, 2009.
|
(6)
|
Mr.
Wang Zhao resigned as a director of our Company on January 9,
2009.
|
Family
Relationships
There are
no family relationships between any of the Company’s directors or executive
officers.
Business
Experience
Mr. Antonio Rotundo
(age 44)
is our President, CEO, CFO and a director of Company and was formerly our
Secretary and Treasurer. Mr. Rotundo is a mining professional with over 10 years
of diverse mining, operations and financial experience. From 2005 to present,
Mr. Antonio Rotundo has been the general manager of AMR Project Peru S.A.C. in
Lima, Peru, a mining company focusing on gold exploration in Peru. Mr. Rotundo
is in charge of the day to day operations of AMR and is also closely involved in
the purchasing of equipment, negotiating land contracts and mining concessions,
supervising environmental studies, setting up camps and mining operations and
all related financial functions of AMR. From 2004 to 2005, Mr. Rotundo was the
operation and logistics manager for American Mining in Guyana where he was
responsible for managing the operations of a diamond mine, ordering equipment
and supplies, developing and managing relationships with customers and
suppliers, developing, implementing and managing new accounting and financial
system and staff and payroll. Mr. Rotundo was also an officer and director of
Ram Gold & Exploration Inc. (Pink Sheets: RMGX) from March, 2008, to June,
2008, however, Mr. Rotundo resigned from all positions on June 27, 2008. Mr.
Rotundo is not an officer or director of any other reporting issuer at this
time.
Mr. Corey J. Sandberg
(age 35)
is our Secretary, Treasurer and a director of our Company. Mr. Sandberg has just
under fifteen years of professional experience in both corporate and small
business environments. From 2006, to present, Mr. Sandberg has been an
independent consultant where he has lead business startups, organizational
management and operational improvement initiatives, both strategic and tactical,
for small public and private companies. Prior to becoming an independent
consultant in 2006, Mr. Sandberg spent just under seven years at American
Express Financial Advisors, a subsidiary of American Express, (later spun-off to
become Ameriprise Financial, Inc.). While at American Express, Mr. Sandberg held
both management and leadership positions in predominantly entrepreneurial
environments receiving recognition for challenging the status quo, taking risks
and successfully implementing new ideas that helped with cost savings and
revenue generation. During the last few years before leaving American Express in
late 2005, Mr. Sandberg served in Project Manager and Vendor Relationship
Manager positions. In addition, Mr. Sandberg held the FINRA Series 63, 7 and 24
Securities Licenses as a requirement for the positions he held.
Mr. Sandberg is a graduate of
the University of Minnesota, Twin Cities with a Bachelor of Arts degree in
Japanese Language & Culture. Mr. Sandberg is not an officer or director of
any other reporting issuer at this time.
Mr. Paul F. Antoniazzi
(age
62) is a director of our Company. Mr. Antoniazzi has been active in the mining
industry since 1983. Since 2002, Mr. Antoniazzi has worked as an independent
contractor as the President of Antoniazzi Consulting Ltd. specializing in
environmental and mining projects including: contaminated soils clean up;
asbestos clean up; surface drill projects; and mine decommissioning. Mr.
Antoniazzi is currently on the board of directors of three Canadian listed
mining companies: Opawica Explorations Inc. (TSX: OPW) (since December 2, 1996);
International Kirkland Minerals Inc. (IKI-TSXV) (since November 19, 1997); and
RT Minerals Corp. (C.RTM:CNSX) (since March 9, 2007).
Johnny Lian Tian Yong
(age 43)
is a director of our Company. Mr. Lian is currently the Chairman of JAS
Singapore Group of Companies, a Singapore corporation, that has subsidiary and
affiliate businesses spanning more than 13 countries covering medical and
hospitality services, finance and investments, logistics, human resources and
professional development, green technologies and information technology
services. Mr. Lian has been the Chairman of JAS Singapore Group of Companies
since October 1992. From October 2000 to present, Mr. Lian has been a director
of JAS Medical Screening Centre Pte., Ltd., a Singapore corporation, which
provides health services for the needy and medical screening for Chinese
immigrants, foreign workers and foreign students coming into Singapore. From
June, 1996, to present, Mr. Lian has been a director of JAS Employment Agency
Pte., Ltd., a Singapore corporation, which facilitates the influx of foreign
workers and immigrants applying for work and residence in Singapore. From June,
2004, to present, Mr. Lian has been a director of JAS Plastic Industries Pte.,
Ltd., a Singapore corporation, which is involved in recycling waste plastics
from corporations around the world into useful products. From September, 2005,
to present, Mr. Lian has been a director of JAS Marketing Pte., Ltd., a
Singapore corporation, which provides business consulting concentrating on
establishing trading ties with other companies, cooperation and consensus with
fellow partners in the industry and identifying market threats and
opportunities. From June, 2003, to present, Mr. Lian has been a director of JAS
Technology Pte., Ltd., a Singapore corporation, which is in the business of
remote video surveillance for world-wide locations through Wi-Fi and GPRS, as
well as providing spare marine hardware for commercial and pleasure users of the
sea. From January, 2007, to present, Mr. Lian has been a director of JASTROL
Pte., Ltd., a Singapore corporation, which functions as a gold bullion broker,
dealer and also as a goldsmith in Singapore.
Involvement
in Certain Legal Proceedings
We are
not aware of any material legal proceedings that have occurred within the past
five years concerning any director, director nominee, or control person which
involved a criminal conviction, a pending criminal proceeding, a pending or
concluded administrative or civil proceeding limiting one’s participation in the
securities or banking industries, or a finding of securities or commodities law
violations.
Section
16(a) Beneficial Ownership Reporting Compliance
Our
officers, directors and shareholders owning greater than ten percent of our
shares are not required to comply with Section 16(a) of the Securities Exchange
Act of 1934 because we do not have a class of securities registered under
Section 12 of the Securities Exchange Act of 1934.
Code
of Ethics
As of
March 31, 2009, we had not adopted a Code of Ethics for Financial Executives,
which would include our principal executive officer, principal financial
officer, principal accounting officer or controller, or persons performing
similar functions.
Audit
Committee
We do not
have a separately-designated standing audit committee. The entire Board of
Directors performs the functions of an audit committee, but no written charter
governs the actions of the Board when performing the functions of what would
generally be performed by an audit committee. The Board approves the selection
of our independent accountants and meets and interacts with the independent
accountants to discuss issues related to financial reporting. In addition, the
Board reviews the scope and results of the audit with the independent
accountants, reviews with management and the independent accountants our annual
operating results, considers the adequacy of our internal accounting procedures
and considers other auditing and accounting matters including fees to be paid to
the independent auditor and the performance of the independent
auditor.
The
Company intends to adopt an audit committee in the future.
Nomination
Committee
At the
present time, the Company does not have a nomination committee. The Company
intends to adopt a nomination committee in the future.
When
evaluating director nominees, our directors consider the following
factors:
·
|
the
appropriate size of our Board of
Directors;
|
·
|
our
needs with respect to the particular talents and experience of our
directors;
|
·
|
the
knowledge, skills and experience of nominees, including experience in
finance, administration or public service, in light of prevailing business
conditions and the knowledge, skills and experience already possessed by
other members of the Board;
|
·
|
experience
in political affairs;
|
·
|
experience
with accounting rules and practices;
and
|
·
|
the
desire to balance the benefit of continuity with the periodic injection of
the fresh perspective provided by new Board
members.
|
Our goal
is to assemble a Board that brings together a variety of perspectives and skills
derived from high quality business and professional experience. In doing so, the
Board will also consider candidates with appropriate non-business
backgrounds.
Other
than the foregoing, there are no stated minimum criteria for director nominees,
although the Board may also consider such other factors as it may deem are in
our best interests as well as our stockholders. In addition, the Board
identifies nominees by first evaluating the current members of the Board willing
to continue in service. Current members of the Board with skills and experience
that are relevant to our business and who are willing to continue in service are
considered for re-nomination. If any member of the Board does not wish to
continue in service or if the Board decides not to re-nominate a member for
re-election, the Board then identifies the desired skills and experience of a
new nominee in light of the criteria above. Current members of the Board are
polled for suggestions as to individuals meeting the criteria described above.
The Board may also engage in research to identify qualified individuals. To
date, we have not engaged third parties to identify or evaluate or assist in
identifying potential nominees, although we reserve the right in the future to
retain a third party search firm, if necessary. The Board does not typically
consider shareholder nominees because it believes that its current nomination
process is sufficient to identify directors who serve our best
interests.
ITEM
11. EXECUTIVE COMPENSATION
In this
item, “Named Executive Officer” means:
(i)
|
all
individuals serving as the Company’s principal executive officer or acting
in a similar capacity during the last completed fiscal year (“PEO”),
regardless of compensation level;
|
(ii)
|
the
Company’s two most highly compensated executive officers other than the
PEO who were serving as executive officers at the end of the last
completed fiscal year and whose total compensation exceeds $100,000;
and
|
(iii)
|
up
to two additional individuals for whom disclosure would have been provided
pursuant to paragraph (ii) but for the fact that the individual was not
serving as an executive officer of the Company at the end of the last
completed fiscal year.
|
Summary
Compensation Table
The
following table contains disclosure of all plan and non-plan compensation
awarded to, earned by, or paid to the Company’s Named Executive Officers by any
person for all services rendered in all capacities to the Company and its
subsidiaries during the Company’s fiscal years completed March 31, 2009, and
2008:
Name
and
principal
position
|
|
Year
|
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock
awards
($)
|
|
|
Option
awards
($)
|
|
|
Non-equity
incentive
plan
compensation
($)
|
|
|
Nonqualified
deferred
compensation
earnings
($)
|
|
|
All
other
compensation
($)
|
|
|
Total
($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
Antonio Rotundo
(1)
President,
CEO, CFO & Director
|
|
2009
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
$
|
520,000
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
$
|
520,000
|
|
Yin Cheng Kong
(2)
Former
President, CEO, CFO, Secretary, Treasurer & director
|
|
2009
2008
|
|
|
|
Nil
Nil
|
|
|
|
Nil
Nil
|
|
|
|
Nil
Nil
|
|
|
|
Nil
Nil
|
|
|
|
Nil
Nil
|
|
|
|
Nil
Nil
|
|
|
|
Nil
Nil
|
|
|
|
Nil
Nil
|
|
Notes:
(1)
|
Mr.
Antonio Rotundo was appointed the President, CEO, CFO, Secretary,
Treasurer and a director of our Company on January 8, 2009. Mr. Rotundo
resigned as our Secretary and Treasurer on February 3,
2009.
|
(2)
|
Mr.
Yin Cheng Kong resigned as our President, CEO, CFO, Secretary and
Treasurer on January 8, 2009 and resigned as a director of our Company on
January 9, 2009.
|
Narrative
Disclosure to the Summary Compensation Table
Other
than the issuance of stock options pursuant to our Stock Option Plan, we do not
pay any compensation to our Named Executive Officers at this time. However, we
reserve the right to compensate our Named Executive Officers in the future with
cash, stock, options, or some combination of the foregoing. See “
Item 5. Market for Registrant’s
Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities - Securities Authorized for Issuance Under Equity Compensation
Plans
” for details of the Company’s Stock Option Plan.
Outstanding
Equity Awards at Fiscal Year-End
The
following table contains disclosure concerning unexercised options; stock that
has not vested; and equity incentive plan awards for each Named Executive
Officer outstanding as of the end of the Company’s fiscal year ended March 31,
2009:
|
|
Option
awards
|
|
|
Stock
awards
|
|
Name
|
|
Number
of
securities
underlying
unexercised
options
(#)
exercisable
|
|
|
Number
of
securities
underlying
unexercised
options
(#)
unexercisable
|
|
|
Equity
incentive
plan
awards:
Number
of
securities
underlying
unexercised
unearned
options
(#)
|
|
|
Option
exercise
price
($)
|
|
|
Option
expiration
date
|
|
|
Number
of
shares
or
units
of
stock
that
have
not
vested
(#)
|
|
|
Market
value
of
shares
of
units
of
stock
that
have
not
vested
($)
|
|
|
Equity
incentive
plan
awards:
Number
of
unearned
shares,
units
or
other
rights
that
have
not
vested
(#)
|
|
|
Equity
incentive
plan
awards:
Market
or
payout
value
of
unearned
shares,
units
or
other
rights
that
have
not
vested
($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
Antonio Rotundo
(1)
President,
CEO, CFO & Director
|
|
|
600,000
|
|
|
|
400,000
|
|
|
|
400,000
|
|
|
$
|
0.60
|
|
|
Feb.
11, 2014
|
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
Yin Cheng Kong
(2)
Former
President, CEO, CFO, Secretary, Treasurer & director
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
Notes:
(1)
|
Mr.
Antonio Rotundo was appointed the President, CEO, CFO, Secretary,
Treasurer and a director of our Company on January 8, 2009. Mr. Rotundo
resigned as our Secretary and Treasurer on February 3,
2009.
|
(2)
|
Mr.
Yin Cheng Kong resigned as our President, CEO, CFO, Secretary and
Treasurer on January 8, 2009 and resigned as a director of our Company on
January 9, 2009.
|
See
“
Item 5. Market for
Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities - Securities Authorized for Issuance Under Equity Compensation
Plans
” for details of the Company’s Stock Option Plan.
Retirement
Benefits and Change of Control
Under the
stock option agreements with each of Messrs. Antonio Rotundo, Corey Sandberg and
Paul Antoniazzi, if there is a formal offer for the purchase of the issued and
outstanding shares of the Company, then all of the stock options shall vest
immediately.
Director
Compensation
The
following table discloses the compensation of the directors of the Company for
the Company’s fiscal year ended March 31, 2009 (unless already disclosed
above):
Name
|
|
Fees
earned
or
paid
in
cash
($)
|
|
|
Stock
awards
($)
|
|
|
Option
awards
($)
|
|
|
Non-equity
incentive
plan
compensation
($)
|
|
|
Nonqualified
deferred
compensation
earnings
($)
|
|
|
All
other
compensation
($)
|
|
|
Total
($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
Antonio Rotundo
(1)
|
|
|
See
Above.
|
|
|
|
See
Above.
|
|
|
|
See
Above.
|
|
|
|
See
Above.
|
|
|
|
See
Above.
|
|
|
|
See
Above.
|
|
|
|
See
Above.
|
|
Corey J.
Sandberg
(2)
|
|
|
Nil
|
|
|
|
Nil
|
|
|
$
|
312,000
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
$
|
312,000
|
|
Paul F.
Antoniazzi
(3)
|
|
|
Nil
|
|
|
|
Nil
|
|
|
$
|
312,000
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
$
|
312,000
|
|
Johnny Lian Tian
Yong
(4)
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
Yin Cheng Kong
(5)
|
|
|
See
Above.
|
|
|
|
See
Above.
|
|
|
|
See
Above.
|
|
|
|
See
Above.
|
|
|
|
See
Above.
|
|
|
|
See
Above.
|
|
|
|
See
Above.
|
|
Wang Zhao
(6)
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
|
|
Nil
|
|
Notes:
(1)
|
Mr.
Antonio Rotundo was appointed the President, CEO, CFO, Secretary,
Treasurer and a director of our Company on January 8, 2009. Mr. Rotundo
resigned as our Secretary and Treasurer on February 3,
2009.
|
(2)
|
Mr.
Corey J. Sandberg was appointed as a director of our Company on January
29, 2009, and was appointed as our Secretary and Treasurer on February 3,
2009.
|
(3)
|
Mr.
Paul F. Antoniazzi was appointed as a director of our Company on January
29, 2009.
|
(4)
|
Mr.
Johnny Lian Tian Yong was appointed as a director of our Company on March
4, 2009.
|
(5)
|
Ms.
Yin Cheng Kong resigned as our President, CEO, CFO, Secretary and
Treasurer on January 8, 2009 and resigned as a director of our Company on
January 9, 2009.
|
(6)
|
Mr.
Wang Zhao resigned as a director of our Company on January 9,
2009.
|
Narrative
Disclosure to the Director Compensation Table
On
February 11, 2009, the Board of Directors adopted a stock option and incentive
plan and granted in aggregate 2,200,000 stock options to the following current
directors: Antonio Rotundo – 1,000,000; Corey Sandberg – 600,000; and Paul
Antoniazzi – 600,000. The stock options have an exercise price of $0.60 per
share and an expiry date of five years from the date of grant. The stock options
have vesting provisions of 50% on the date of grant and 10% on the last day of
each month thereafter.
Other
than the issuance of stock options pursuant to our Stock Option Plan, we do not
pay any compensation to our directors at this time. However, we reserve the
right to compensate our directors in the future with cash, stock, options, or
some combination of the foregoing. See “
Item 5. Market for Registrant’s
Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities - Securities Authorized for Issuance Under Equity Compensation
Plans
” for details of the Company’s Stock Option Plan.
ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
The
following table sets forth information as of June 30, 2009 (the “Determination
Date”), with respect to the Company’s directors, Named Executive Officers, and
each person who is known by the Company to own beneficially, more than five
percent (5%) of the Company’s Common Stock, and with respect to shares owned
beneficially by all of the Company’s directors and executive officers as a
group. Common Stock not outstanding but deemed beneficially owned by virtue of
the right of an individual to acquire shares within 60 days is treated as
outstanding only when determining the amount and percentage of Common Stock
owned by such individual. Except as noted, each person or entity has sole voting
and sole investment power with respect to the shares shown.
As of the
Determination Date, there are 65,545,875 (post forward stock split) shares of
Common Stock issued and outstanding.
Name
and Address of
Beneficial
Owner
|
|
Position
|
|
Amount and Nature of
Beneficial
Ownership
|
|
Percent
of
Common
Stock
(1)
|
|
Antonio
Rotundo
|
|
President,
CEO, CFO, and director (former Secretary and Treasurer )
|
|
28,800,000
Direct
|
(2)
|
|
43.2
|
%
|
Corey
J. Sandberg
|
|
Secretary,
Treasurer and director
|
|
1,600,000
Direct
|
(3)
|
|
2.4
|
%
|
Paul
F. Antoniazzi
|
|
Director
|
|
600,000
Direct
|
(4)
|
|
|
(*)
|
Johnny
Lian Tian Yong
|
|
Director
|
|
6,000,000
Direct
|
|
|
9.1
|
%
|
Directors
and Officers as a group (4 persons)
|
|
|
|
37,000,000
|
(5)
|
|
54.6
|
%
|
Notes:
(*)
|
Indicates
less than 1%.
|
(1)
|
Beneficial
ownership of Common Stock has been determined for this purpose in
accordance with Rule 13d-3 under the Exchange Act, under which a person is
deemed to be the beneficial owner of securities if such person has or
shares voting power or investment power with respect to such securities,
has the right to acquire beneficial ownership within 60 days or acquires
such securities with the purpose or effect of changing or influencing the
control of the Company.
|
(2)
|
This
figure includes 27,800,000 shares held directly by Antonio Rotundo and
900,000 stock options which have already vested and 100,000 stock options
which will vest within 60 days of the Determination
Date.
|
(3)
|
This
figure includes 1,000,000 shares held directly by Corey Sandberg and
540,000 stock options which have already vested and 60,000 stock options
which will vest within 60 days of the Determination
Date.
|
(4)
|
This
figure includes nil shares held directly by Paul Antoniazzi and 540,000
stock options which have already vested and 60,000 stock options which
will vest within 60 days of the Determination
Date.
|
(5)
|
This
figure includes 34,800,000 shares owned directly by directors and
executive officers as well as 1,980,000 stock options with have already
vested and 220,000 stock options which will vest within 60 days of the
Determination Date.
|
Securities
Authorized for Issuance Under Equity Compensation Plans
See
“
Item 5. Market For Common
Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
-
Securities Authorized
for Issuance Under Equity Compensation Plans
” above.
ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
There are
no transactions, since the beginning of the Company’s fiscal year ended March
31, 2009, or any currently proposed transaction, in which the Company was or is
to be a participant and the amount involved exceeds $120,000 or one percent of
the average of the Company’s total assets at year end for the last two fiscal
years, and in which any related person had or will have a direct or indirect
material interest except as follows:
Mr.
Antonio Rotundo, our President, CEO, CFO and a director of the Company is also a
major shareholder and the subordinate general manager of AMR. Mr. Mario Rotundo,
Mr. Antonio Rotundo’s father, is a major shareholder of AMR and the general
manager of AMR. Mr. Antonio Rotundo owns 113,156 shares of AMR representing
72.4% of the issued and outstanding shares of AMR and 27,800,000 shares of our
Common Stock representing 42.4% of the issued and outstanding shares of the
Company. Mr. Mario Rotundo owns 43,094 shares of AMR representing 27.6% of the
issued and outstanding number of shares of AMR. Accordingly, Mr. Antonio Rotundo
had a material interest in the Asset Purchase Agreement and the Amendment
Agreement and now has a material interest in the Share Exchange Agreement. The
approximate dollar value of the amount involved in the Share Exchange Agreement
based on the market price of $3.20 as at March 31, 2009, which may not be an
accurate assessment of the fair value, is US$38,400,000 and the approximate
dollar value of Mr. Antonio Rotundo’s interest in the Share Exchange Agreement
is US$27,800,000.
In
addition, effective January 21, 2009, we entered into a loan agreement with AMR
whereby we agreed to loan up to $400,000 to AMR to be used to purchase equipment
and supplies to conduct exploration and for other related expenses on the mining
concession named “AMR Project”. The loan is non-interest bearing and is due on
April 30, 2010 unless AMR becomes our wholly owned subsidiary, in which case the
loan will become an inter-corporate loan. As of March 31, 2009 the amount of the
loan was $236,000.
See
“
Item 1. Business – Our
Business
” above for details of the Asset Purchase Agreement, the
Amendment Agreement, the Share Exchange Agreement and the Extension
Agreement.
Director
Independence
As of the
date of this annual report, our Common Stock is traded on the OTC Bulletin Board
(the “OTCBB”). The OTCBB does not impose on us standards relating to director
independence or the makeup of committees with independent directors, or provide
definitions of independence. However, under the definition of “Independent
Director” as set forth in the NYSE AMEX Company Guide Section 8.03A, we
currently have two of our four directors that would qualify as independent
directors under the definition in the AMEX Company Guide.
ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The
following table discloses the fees billed by our auditor in connection with the
audit of our annual financial statements for the years ended March 31, 2009, and
2008.
Financial
Statements for
Year
Ended March 31
|
|
Audit
Fees
(1)
|
|
|
Audit
Related
Fees
(2)
|
|
|
Tax
Fees
(3)
|
|
|
All
Other Fees
(4)
|
|
2009
|
|
$
|
9,000
|
|
|
$
|
Nil
|
|
|
$
|
Nil
|
|
|
$
|
Nil
|
|
2008
|
|
$
|
10,000
|
|
|
$
|
Nil
|
|
|
$
|
Nil
|
|
|
$
|
Nil
|
|
Notes:
(1)
|
The
aggregate fees billed for the fiscal year for professional services
rendered by the principal accountant for the audit of the Company’s annual
financial statements and review of financial statements included in the
Company’s Form 10-Qs or services that are normally provided by the
accountant in connection with statutory and regulatory engagements for
that fiscal years.
|
(2)
|
The
aggregate fees billed in the fiscal year for assurance and related
services by the principal accountants that are reasonably related to the
performance of the audit or review of the Company’s financial statements
and are not reported in Note 1.
|
(3)
|
The
aggregate fees billed in the fiscal year for professional services
rendered by the principal accountant for tax compliance, tax advice, and
tax planning.
|
(4)
|
The
aggregate fees billed in the fiscal year for the products and services
provided by the principal accountant, other than the services reported in
Notes (1), (2) and (3).
|
Audit
Committee’s Pre-Approval Practice
Section
10A(i) of the Securities Exchange Act of 1934, as amended, prohibits our
auditors from performing audit services for us as well as any services not
considered to be audit services unless such services are pre-approved by our
audit committee or, in cases where no such committee exists, by our board of
directors (in lieu of an audit committee) or unless the services meet certain de
minimis standards.
PART
IV
ITEM
15. EXHIBITS, FINANCIAL STATEMENTS
Exhibits
Exhibit
No.
|
|
Description
of Exhibit
|
3.1
(1)
|
|
Articles
of Incorporation, as amended.
|
3.2
(1)
|
|
Bylaws,
as amended.
|
3.3
(2)
|
|
Articles
of Merger filed with the Secretary of State of Nevada on January 21, 2009,
and which was effective February 10, 2009.
|
3.4
(2)
|
|
Certificate
of Change filed with the Secretary of State of Nevada on January 12, 2009,
and which was effective February 10, 2009.
|
10.1
(3)
|
|
Asset
Purchase Agreement between Affinity Gold Corp. and AMR Project Peru
S.A.C., dated March 2, 2009.
|
10.2
(3)
|
|
Geological
Report prepared by Dr. Estanislao de la Cruz C., dated September
2007.
|
10.3
(4)
|
|
Amendment
Agreement between Affinity Gold Corp. and AMR Project Peru S.A.C., dated
April 30, 2009.
|
10.4
|
|
Loan
Agreement between Affinity Gold Corp. and AMR Project Peru S.A.C., dated
effective January 21, 2009.
|
10.5
(5)
|
|
Share
Exchange Agreement between Affinity Gold Corp., AMR Project Peru S.A.C.
and all the shareholders of AMR Project Peru S.A.C., dated May 8,
2009.
|
10.6
|
|
Extension
Agreement between Affinity Gold Corp., AMR Project Peru S.A.C. and all the
shareholders of AMR Project Peru S.A.C., dated June 29,
2009.
|
31.1
|
|
Certificate
pursuant to Rule 13a-14(a)
|
31.2
|
|
Certificate
pursuant to Rule 13a-14(a)
|
32.1
|
|
Certificate
pursuant to 18 U.S.C. Section 1350
|
32.2
|
|
Certificate
pursuant to 18 U.S.C. Section 1350
|
99.1
|
|
Sample
Stock Option Agreement
|
(1)
|
Previously
filed on Form SB-2 with the SEC via EDGAR on May 11, 2007, and
incorporated herein by reference.
|
(2)
|
Previously
filed on Form 8-K
with the SEC via
EDGAR on February 17, 2009, and incorporated herein by
reference.
|
(3)
|
Previously
filed on Form 8-K
with the SEC via
EDGAR on March 11, 2009, and incorporated herein by
reference.
|
(4)
|
Previously
filed on Form 8-K
with the SEC via
EDGAR on May 7, 2009, and incorporated herein by
reference.
|
(5)
|
Previously
filed on Form 8-K
with the SEC via
EDGAR on May 13, 2009, and incorporated herein by
reference.
|
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Company has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized on this 9
th
day of
July, 2009.
|
AFFINITY
GOLD CORP.
(Registrant)
|
|
By: /s/ Antonio Rotundo
|
|
Antonio
Rotundo
|
|
President,
CEO, CFO & Director
|
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Company and in the
capacities and on the dates indicated:
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/
Antonio Rotundo
|
|
President,
CEO, CFO & Director
|
|
July
9, 2009
|
Antonio
Rotundo
|
|
|
|
|
|
|
|
|
|
/s/
Corey J. Sandberg
|
|
Secretary,
Treasurer & Director
|
|
July
9, 2009
|
Corey
J. Sandberg
|
|
|
|
|
|
|
|
|
|
/s/
Paul Antoniazzi
|
|
Director
|
|
July
9, 2009
|
Paul
F. Antoniazzi
|
|
|
|
|
EXHIBIT
INDEX
Exhibit #
|
|
|
|
Page#
|
|
|
|
|
|
10.4
|
|
Loan
Agreement between Affinity Gold Corp. and AMR Project Peru S.A.C., dated
effective January 21, 2009.
|
|
29
|
10.6
|
|
Extension
Agreement between Affinity Gold Corp., AMR Project Peru S.A.C. and all the
shareholders of AMR Project Peru S.A.C., dated June 29,
2009.
|
|
33
|
31.1
|
|
Certificate
pursuant to Rule 13a-14(a).
|
|
36
|
|
|
|
|
|
31.2
|
|
Certificate
pursuant to Rule 13a-14(a).
|
|
38
|
|
|
|
|
|
32.1
|
|
Certificate
pursuant to 18 U.S.C. Section 1350.
|
|
40
|
|
|
|
|
|
32.2
|
|
Certificate
pursuant to 18 U.S.C. Section 1350.
|
|
41
|
|
|
|
|
|
99.1
|
|
Sample
Stock Option Agreement
|
|
42
|
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