NOTES
TO FINANCIAL STATEMENTS
JUNE
30, 2016
(Stated
in U.S. Dollars)
Organization
The
Company was incorporated in the State of Nevada, U.S.A. on April 21, 2006.
Exploration
Stage Activities
The
Company has been in the exploration stage since its formation and is primarily engaged in the acquisition and exploration of mining
claims. Upon location of a commercial minable reserve, the Company expects to actively prepare the site for its extraction and
enter a development stage. During the fiscal year 2012, the Company entered into an agreement with Mayan Mineral Ltd. to acquire
a resource property in Nevada (Note 4). Currently, the Company is actively looking for other mineral properties for its planned
business operation.
Going
Concern
These
financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America
(“US GAAP”) applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities
and commitments in the normal course of business.
The
general business strategy of the Company is to acquire and explore mineral properties. The continued operations of the Company
and the recoverability of mineral property costs is dependent upon the existence of economically recoverable mineral reserves,
the ability of the Company to obtain necessary financing to complete the development of its properties, and upon future profitable
production. The Company has not generated any revenues or completed development of any properties to date. Further, the Company
has a working capital deficit of $509,727 (June 30, 2015 - $475,134), has incurred losses of $616,787 since inception, and further
significant losses are expected to be incurred in the exploration and development of its mineral properties. The Company will
require additional funds to meet its obligations and maintain its operations. There can be no guarantee that the Company will
be successful in raising the necessary financing. Management’s plans in this regard are to raise equity financing as required.
These
conditions raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements
do not include any adjustments that might result from this uncertainty.
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
|
The
financial statements of the Company have been prepared in accordance with US GAAP. Because a precise determination of many assets
and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the
use of estimates which have been made using careful judgment. Actual results may vary from these estimates. The financial statements
have, in management’s opinion, been properly prepared within reasonable limits of materiality and within the framework of
the significant accounting policies summarized below.
GOLDEN
STAR RESOURCE CORP.
NOTES
TO FINANCIAL STATEMENTS
JUNE
30, 2016
(Stated
in U.S. Dollars)
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
|
The
Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.
There is no cash equivalents as at June 30, 2016 (2015: $nil).
|
b)
|
Mineral
Property Acquisition Payments
|
The
Company expenses all costs incurred on mineral properties to which it has secured exploration rights prior to the establishment
of proven and probable reserves. If and when proven and probable reserves are determined for a property and a feasibility study
prepared with respect to the property, then subsequent exploration and development costs of the property will be capitalized.
The
Company regularly performs evaluations of any investment in mineral properties to assess the recoverability and/or the residual
value of its investments in these assets. All long-lived assets are reviewed for impairment whenever events or circumstances change
which indicate the carrying amount of an asset may not be recoverable.
|
c)
|
Exploration
Expenditures
|
The
Company follows a policy of expensing exploration expenditures until a production decision in respect of the project and the Company
is reasonably assured that it will receive regulatory approval to permit mining operations, which may include the receipt of a
legally binding project approval certificate.
|
d)
|
Asset
Retirement Obligations
|
The
Company has adopted ASC 410, “Accounting for Asset Retirement Obligations”, which requires that an asset retirement
obligation (“ARO”) associated with the retirement of a tangible long-lived asset be recognized as a liability in the
period which it is incurred and becomes determinable, with an offsetting increase in the carrying amount of the associated asset.
The
cost of the tangible asset, including the initially recognized ARO, is depleted, such that the cost of the ARO is recognized over
the useful life of the asset. The ARO is recorded at fair value, and accretion expense is recognized over time as the discounted
liability is accreted to its expected settlement value. The fair value of the ARO is measured using expected future cash flow,
discounted at the Company’s credit-adjusted risk-free interest rate. To date, no significant asset retirement obligation
exists due to the early stage of exploration. Accordingly, no liability has been recorded.
GOLDEN
STAR RESOURCE CORP.
NOTES
TO FINANCIAL STATEMENTS
JUNE
30, 2016
(Stated
in U.S. Dollars)
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
|
|
e)
|
Use
of Estimates and Assumptions
|
The
preparation of financial statements in conformity with United States generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the Date of the financial statements and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
ASC
820, “Fair Value Measurements and Disclosures” requires an entity to maximize the use of observable inputs and minimize
the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent,
objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the
fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes
the inputs into three levels that may be used to measure fair value:
Level
1 - Quoted prices in active markets for identical assets or liabilities;
Level
2 - Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable; and
Level
3 - Unobservable inputs that are supported by little or no market activity, therefore requiring an entity to develop its own assumptions
about the assumptions that market participants would use in pricing.
The
Company’s financial instruments consist principally of cash, accounts payable and accrued liabilities, loan payable and
due to a related party. Pursuant to ASC 820, the fair value of our cash is determined based on “Level 1” inputs, which
consist of quoted prices in active markets for identical assets. The Company believes that the recorded values of all of the other
financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
The
Company’s operations are in Canada, which results in exposure to market risks from changes in foreign currency rates. The
financial risk is the risk to the Company’s operations that arise from fluctuations in foreign exchange rates and the degree
of volatility of these rates. Currently, the Company does not use derivative instruments to reduce its exposure to foreign currency
risk.
GOLDEN
STAR RESOURCE CORP.
NOTES
TO FINANCIAL STATEMENTS
JUNE
30, 2016
(Stated
in U.S. Dollars)
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
|
The
Company accounts for income taxes in accordance with ASC 740, “Accounting for Income Taxes” and ASC 740 -Accounting
for Uncertainty in Income Taxes, which require the liability method of accounting for income taxes. The liability method requires
the recognition of deferred tax assets and liabilities for future tax consequences of temporary differences between the financial
statement basis and the tax basis of assets and liabilities.
|
h)
|
Basic
and Diluted Net Loss per Share
|
The
Company reports basic loss per share in accordance with ASC 260 – “Earnings per Share”. Basic loss per share
is computed using the weighted average number of common stock outstanding during the period. Diluted loss per share is computed
using the weighted average number of common and potentially dilutive common stock outstanding during the period. Diluted loss
per share is equal to basic loss per share because there are no potential dilutive securities.
|
i)
|
Foreign
Currency Translation
|
The
Company’s functional currency is the U.S. dollar. Transactions in foreign currencies are translated into U.S. dollars at
the rate of exchange prevailing at the date of the transaction. Monetary assets and liabilities in foreign currencies are translated
into U.S. dollars at the rate prevailing at the balance sheet date. Non-monetary items are translated at the historical rate unless
such items are carried at market value, in which case they are translated using exchange rates that existed when the value were
determined. Any resulting exchange rate differences are recorded in the statement of operations.
3.
|
RECENT
ACCOUNTING PRONOUNCEMENTS
|
In
June 2014, FASB issued ASU 2014-10, “Development Stage Entities (Top 915)”: Elimination of Certain Financial Reporting
Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation”. The amendments
in this Update remove the definition of a development stage entity from the Master Glossary of the Accounting standards Codification,
thereby removing the financial reporting distinction between development stage entities and other reporting entities from U.S
GAAP. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information
in the statement of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage
entity, (3) disclose a description of the development stage activities in which the entity if engaged, and (4) disclose in the
first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage.
The amendments related to the elimination of inception-to-date information and the other remaining disclosure requirements of
Topic 915 should be applied retrospectively. For public business entities, those amendments are effective for annual reporting
periods beginning after December 15, 2014, and interim periods therein. The Company adopted the amendment for the fiscal year
ended June 30, 2016.
GOLDEN
STAR RESOURCE CORP.
NOTES
TO FINANCIAL STATEMENTS
JUNE
30, 2016
(Stated
in U.S. Dollars)
3.
|
RECENT
ACCOUNTING PRONOUNCEMENTS (Continued)
|
In
August 2014, FASB issued ASU 2014-15, “Presentation of Financial Statements-Going Concern (Subtopic 205-40): Disclosure
of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” The FASB’s objective in issuing
this ASU is to reduce diversity in the timing and content of footnote disclosures. The amendment is effective for the annual period
ending after December 15, 2015 and for annual periods and interim periods thereafter. The adoption has no impact on our financial
position or results of operations.
In
January 2015, the FASB issued ASU 2015-01, Income Statement-Extraordinary and Unusual Items (Subtopic 225-20), Simplifying Income
Statement Presentation by Eliminating the Concept of Extraordinary Items, which eliminates the concept of extraordinary items.
Under this new guidance, entities will no longer be required to separately classify, present and disclose extraordinary events
and transactions. The amendments in this update are effective for annual and interim periods beginning after December 15, 2015.
The adoption has no impact on our financial position or results of operations.
In
February 2015, the FASB issued ASU No. 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis”(“ASU
2015-02”). ASU 2015-02 makes several modifications to the consolidation guidance for variable interest entities (“VIEs”)
and general partners’ investments in limited partnerships, as well as modifications to the evaluation of whether limited
partnerships are VIEs or voting interest entities. It is effective for annual and interim periods beginning after December 15,
2015. The adoption has no impact on our financial position or results of operations.
In
April 2015, FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”). In August
2015, FASB issued ASU 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements
(“ASU 2015-15”). ASU 2015-03 will require that debt issuance costs be presented in the balance sheet as a deduction
from the carrying amount of the debt. ASU 2015-15 allows an entity to present debt issuance costs associated with a revolving
line of credit arrangement as an asset, regardless of whether a balance is outstanding. The recognition and measurement guidance
for debt issuance costs are not affected by ASU 2015-03 or ASU 2015-15. These ASU’s are effective for annual reporting periods
beginning after December 15, 2015, including interim periods within that reporting period, with early adoption permitted. ASU
2015-03 will require the Company to reclassify its deferred financing costs associated with its long-term debt from other assets
to long-term debt on a retrospective basis. The adoption has no impact on the Company’s results of operations or cash flows.
On
March 30, 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which amends ASC Topic 718,
Compensation – Stock Compensation. The ASU simplifies several aspects of the accounting for employee share-based payment
transactions for both public and nonpublic entities, including the following:
|
●
|
Accounting
for income taxes.
|
|
|
|
|
●
|
Classification
of excess tax benefits on the statement of cash flows.
|
|
|
|
|
●
|
The
ASU simplifies several aspects of the accounting for employee share-based payment transactions for both public and nonpublic
entities, including the following: Forfeitures.
|
|
|
|
|
●
|
Statutory
tax withholding requirements.
|
|
|
|
|
●
|
Classification
of awards as either equity or liabilities.
|
|
|
|
|
●
|
Classification
of employee taxes paid on the statement of cash flows when an employer withholds shares for tax-withholding purposes.
|
GOLDEN
STAR RESOURCE CORP.
NOTES
TO FINANCIAL STATEMENTS
JUNE
30, 2016
(Stated
in U.S. Dollars)
3.
|
RECENT
ACCOUNTING PRONOUNCEMENTS (Continued)
|
The
ASU also contains guidance under which nonpublic entities can use the simplified method to estimate the expected term of an award
and make a one-time election to switch from fair value measurement to intrinsic value measurement for liability-classified awards.
ASU
2016-09 is effective for public business entities for annual reporting periods beginning after December 15, 2016, and interim periods
within that reporting period. For all other entities, it is effective for annual periods beginning after December 15, 2017, and
interim periods within annual periods beginning after December 15, 2018. Early adoption will be permitted in any interim or annual
period, with any adjustments reflected as of the beginning of the fiscal year of adoption. The Company is currently assessing
the impact of the adoption of this.
The
Company does not expect that the adoption of other recent accounting pronouncements will have a material impact on its financial
statements.
4.
|
MINERAL
CLAIM INTEREST
|
On
August 15, 2013, the Company entered into a Quitclaim Deed (the “Deed”) with Kee Nez Resources, LLC (“Grantor”),
a Utah limited liability company. Pursuant to the Deed, the Grantor, in consideration of $10 and other valuable consideration,
remise, release, and forever quitclaim unto the Company all of Grantor’s right, title, and interest in and to the GSR group
of unpatented lode mining claims situated in Churchill Country, Nevada. As a result, the Company has obtained title to the GSR
claims in August 2013.
The
Company did not incur further expenditures on the property during the year ending June 30, 2016 (2015: $nil) due to lack of cash.
|
a)
|
On
April 24, 2006, the Company issued 6,000,000 common shares at $0.00001 per share to two founding shareholders.
|
|
|
|
|
b)
|
On
March 28, 2007, the Company closed its public offering and issued additional 1,070,000 common shares at $0.10.
|
|
|
|
|
c)
|
The
Company has not issued any shares during the years ended June 30, 2016 and 2015 and it has no stock option plan, warrants
or other dilutive securities.
|
GOLDEN
STAR RESOURCE CORP.
NOTES
TO FINANCIAL STATEMENTS
JUNE
30, 2016
(Stated
in U.S. Dollars)
6.
|
DUE
TO RELATED PARTIES
|
As
of June 30, 2016, due to related parties balance of $82,959 (2015: $82,959) represents the combination of the following:
|
a)
|
$54,959
(2015: $54,959) owed to a company controlled by a former director and principal shareholder of the Company, for the amount
of office, transfer agent and travel expenses paid by the related party on behalf of the Company. The amount is unsecured,
non-interest bearing and due on demand;
|
|
|
|
|
b)
|
$28,000
(2015: $28,000) owed to a director of the Company, for the amount of office, travel and telephone expenses paid by the related
party on behalf of the Company. The amount is unsecured, non-interest bearing and due on demand.
|
|
|
|
|
c)
|
$38,659
(2015: $14,479) was payable to Dimac Capital (a related party). The amount is unsecured, non-interest bearing and due on demand.
|
Loan
payable consists of the following:
$143,700
(2015: $143,700) was payable to 0787129 B.C. Ltd. (a non-related party) of which $51,272 and $34,827 were the result of the assignment
and transfer from loan payable to ATP Corporate Services Corp. (a non-related party) and Bobcat Development, respectively. The
loan amount is unsecured, non-interest bearing and due on demand.
$57,858
(2015: $57,858) was payable to Bobcat Development (a non-related party). The loan amount is unsecured, non-interest bearing and
due on demand.
A
reconciliation of income tax expense to the amount computed at the statutory rate is as follows:
|
|
2016
|
|
|
2015
|
|
Net loss for the year
|
|
$
|
(29,683
|
)
|
|
$
|
(57,136
|
)
|
Statutory tax rate
|
|
|
34
|
%
|
|
|
34
|
%
|
Computed expected (benefit) income taxes
|
|
|
(10,092
|
)
|
|
|
(19,426
|
)
|
Income tax benefit not recognized
|
|
|
10,092
|
|
|
|
19,426
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Significant
components of deferred income tax assets are as follows:
|
|
2016
|
|
|
2015
|
|
Operating losses carried forward
|
|
$
|
204,000
|
|
|
$
|
197,000
|
|
Valuation allowance
|
|
|
(204,000
|
)
|
|
|
(197,000
|
)
|
|
|
$
|
-
|
|
|
$
|
-
|
|
GOLDEN
STAR RESOURCE CORP.
NOTES
TO FINANCIAL STATEMENTS
JUNE
30, 2016
(Stated
in U.S. Dollars)
8.
|
INCOME
TAXES (Continued)
|
The
Company has incurred operating losses of approximately $601,000 which, if unutilized, will expire through to 2036. Future tax
benefits, which may arise as a result of these losses, have not been recognized in these financial statements, and have been offset
by a valuation allowance. The following table lists the fiscal year in which the loss was incurred and the expiration date of
the operating loss carry forwards:
|
|
Amount
|
|
|
Expiration Date
|
|
|
$
|
30,000
|
|
|
2036
|
|
|
|
57,000
|
|
|
2035
|
|
|
|
54,000
|
|
|
2034
|
|
|
|
125,000
|
|
|
2033
|
|
|
|
107,000
|
|
|
2032
|
|
|
|
88,000
|
|
|
2031
|
|
|
|
13,000
|
|
|
2030
|
|
|
|
22,000
|
|
|
2029
|
|
|
|
68,000
|
|
|
2028
|
|
|
|
37,000
|
|
|
2027
|
Total income tax operating loss carry forward
|
|
$
|
601,000
|
|