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Monday, November 22, 2010 3:26:05 PM
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x Quarterly Report Pursuant To Section 13 Or 15(d) Of The Securities Exchange Act Of 1934 for the quarterly period ended September 30, 2010
o Transition Report Under Section 13 Or 15(d) Of The Securities Exchange Act Of 1934 for the transition period ________to ________
Commission File Number: 333-126748
AULTRA GOLD INC.
(Exact name of small business issuer as specified in its charter)
Nevada 98-0448154
(State or other jurisdiction of incorporation or (IRS Employer Identification No.)
organization)
1980, Sherbrooke Street West, Suite 1100
Montreal, Quebec, H3H 1E8
(Address of principal executive offices)
(514) 931-9990
Issuer's telephone number
Indicate by check mark whether the issuer (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. Yes o? No o
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 preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o
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 o Accelerated filer o
Non-accelerated filer o Smaller Reporting Company x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No o
State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: As of November 15, 2010, the Issuer had 50,000,000 shares of common stock, par value $0.00001 per share, issued and outstanding.
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TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Page
ITEM 1. Consolidated Financial Statements (unaudited) 3
Consolidated Balance Sheets at September 30, 2010 and December 31, 2009 F-2
Consolidated Statements of Operations for the nine months and the three months ended September 30, 2010 and 2009 F-3
Consolidated Statement of Cash Flows for the nine months and three months ended September 30, 2010 and 2009 F-4
Notes to Financial Statements F-6-F-13
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 4
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk 6
ITEM 4. Controls and Procedures 6
PART II. OTHER INFORMATION
ITEM 1 Legal Proceedings 9
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 9
ITEM 3. Defaults Upon Senior Securities 10
ITEM 4. (Removed and Reserved) 10
ITEM 5. Other Information 10
ITEM 6 Exhibits 10
Signatures 11
2
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-Q and Item 310(b) of Regulation S-B, and, therefore, do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows, and stockholders' equity in conformity with generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. Operating results for the nine months and the three months ended September 30, 2010 are not necessarily indicative of the results that can be expected for the year ending December 31, 2010.
As used in this Quarterly Report on Form 10-Q (the “Quarterly Report”), the terms "we", "us", "our", the “Company” and mean Aultra Gold Inc., unless otherwise indicated. All dollar amounts in this Quarterly Report are in U.S. dollars unless otherwise stated.
3
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AULTRA GOLD INC.
An Exploration Stage Company
INDEX TO FINANCIAL STATEMENTS
For the nine months and the three month ended September 30, 2010 and 2009 Page
Balance Sheets as of September 30, 2010 and December 31, 2009 F-2
Statements of Operations for the nine months and the three months ended September 30, 2010, and 2009 F-3
Statements of Cash Flows for the nine month and the three months ended September 30, 2010 and 2009 F-4
Statements of Stockholders’ Equity (Deficit) for the period from inception to September 30, 2010 F-5
Notes to Financial Statements F-6
F-1
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Aultra Gold Inc.
An Exploration Stage Company
Consolidated Balance Sheets
As at September 30, 2010 and twelve months ending December 31, 2009
(Stated in United States Dollars)
September 30, December 31
2010 2009
$ $
A S S E T S
Current Assets
Cash -0- -0-
Accounts receivable and accrued receivables -0- -0-
Total Current Assets -0- -0-
Long term Assets
Long term investment -0- 6,232
Long term receivables -0- 65,485
Mining properties 500,002 100,000
Total long-term assets 500.002 171,717
Total Assets 500,002 171,717
L I A B I L I T I E S A N D S T O C K H O L D E R S’ E Q U I T Y
Current Liabilities
Accounts payable, notes payable and other accrued liabilities 80,843 946,243
Accounts payable related parties (note 4) 111,590
Accounts payable mining properties (note 5) 459,000
Total current liabilities 651,433 946,243
Total Liabilities 651,433 946,243
S TOCK H O L D E R S ’ E Q U I T Y
Common stock, $0.00001 par value, 50,000,000 shares authorized: 50,000,000 shares issued and outstanding (note 6) 50,000 96,147
Accumulated deficit (550,140 ) (1,230,048 )
Additional paid-in capital 348,709 348,709
Total stockholders’ equity (151,431 ) (774,526 )
Total liabilities and stockholders’ equity 500,002 171,717
See notes to financial statements
F-2
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Aultra Gold Inc.
An Exploration Stage Company
Consolidated Statement of Operations
For the three months ending September 30, 2010 and September 30, 2009 and nine month ending September 30, 2010 and September 30, 2009
From inception on January 26, 2005 to September 30, 2010
(Stated in United States Dollars)
For the three months ended For the three months ended For the nine months ended For the nine months ended From inception January 26, 2005 through
September 30, September 30, September 30, September 30, September 30,
2010 2009 2010 2009 2010
$ $ $ $ $
REVENUE 0 0 0 -0- 131
Operating Expenses
Mining property expenditures 10,405 81,857 39,644 160,572 619,791
Consultants and contractors -0- 30,000 -0- 150,000 541,668
Office and administrative (5,555 ) 15,011 24,605 14,736 137,656
Legal and professional 9,016 -0- 87,182 6,000 451,617
Interest expense 0 44,340 -0- 44,340 10,833
Total operating expenses 13,866 171,207 151,431 375,648 1,761,565
Loss from operations (13,866 ) (171,207 ) (151,431 ) (375,648 ) (1,761,434 )
Other Revenues and Expenses
Foreign Exchange Gain -0- -0- -0- -0- 4,154
Gain on Extinguishment of Debt -0- -0- -0- -0- 45,833
Bad debt -0- -0- -0- -0- (97,303 )
Gain on Investment -0- -0- -0- (6,232 ) 1,258,610
Loss for period (13,866 ) (177,439 (151,431 ) (381,880 ) (550,140 )
Deficit – beginning of the period (536,274 ) (1,434,488 (398,709 (1,230,048 -0-
Deficit – end of period (550,140 ) (1,618,157 (550,140 (1,618,157 (550,140 )
Loss per shares – basic and diluted (0.01 ) (0.01 (0.01 (0.01
Weighted Average Number of Shares Outstanding 50,000,000 96,146,668 50,000,000 96,146,668
See notes to financial statements
F-3
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Aultra Gold Inc.
An Exploration Stage Company
Consolidated Statement of Cash Flows
For the three months ending September 30, 2010 and September 30, 2009 and nine month ending September 30, 2010 and September 30, 2009
From inception January 26, 2005 to September 30, 2010
(Stated in United States Dollars)
Three Months Ending Nine Months Ending From inception
Sept 30,
2010 Sept 30,
2009 Sept 30,
2010 Sept 30,
2009 January 26, 2005
to Sept 30, 2010
$ $ $ $ $
Cash flows from operating activities
Loss for the period (13,866 ) (177,439 ) (151,431 ) (381,880 ) (550,140)
Changes in:
Accounts receivables and accrued receivables -0- -0- -0-
Accounts payable and accrued liabilities (13,866 ) (177,439 ) (151,431) (381,880) 105,284
Net cash used in operating activities -0- -0- -0- -0- (444,856)
Cash flows from investing activities
Mining property -0- -0- -0- -0-
Investments -0- -0- -0- -0-
Cash used in investing activities -0- -0- -0- -0-
Cash flows from financing activities
Share capital issued -0- -0- -0- -0- 444,856
Net cash received from financing activities -0- 0 -0- 0 444,856
Net increase in cash -0- -0- -0- -0- -0-
Cash – beginning of period -0- -0- -0- -0- -0-
Cash – end of period -0- -0- -0- -0- -0-
See notes to financial statements
F-4
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Aultra Gold Inc.
An Exploration Stage Company
Consolidated Statements of Stockholders’ Equity
From inception January 26, 2005 to September 30, 2010
(Stated in United States Dollars)
See notes to financial statements
Common Stock
Shares Amount Additional Paid-in Capital Accumulated Deficit During Exploration Stage Total Equity (Deficit)
$ $ $ $
Balance, June 30, 2010 50,000,000 50,000 348,709 (536,274) (137,565))
Loss for the Period (13,866) (13,866))
Balance September 30, 2010 50,000,000 50,000 348,709 (550,140) (151,431))
See notes to financial statements
F-5
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Aultra Gold Inc.
An Exploration Stage Company
Notes to Financial Statements
1. Nature of Operations
Aultra Gold, Inc. (the “Company”) was incorporated under the laws of the State of Nevada on January 26, 2005 as Katie Gold Corp. and it was primarily engaged in the acquisition and exploration of mining properties until April 2006. The Company’s fiscal year end is December 31.
On March 21, 2006, a Certificate of Amendment was filed with the Secretary of State in Nevada to change the name of the Company from Katie Gold Corp. to Morningstar Industrial Holdings Corp. At this time, the Company was still engaged in the acquisition and exploration of mining properties.
On April 26, 2006, the Company filed Articles of Merger with the Secretary of State in Nevada to merge with New World Entertainment Corp., a private company incorporated in Nevada. As a result of the merger, the Company changed its business and its name from Morningstar Industrial Holdings Corp. to New World Entertainment Corp.
On December 7, 2006, a Certificate of Amendment was filed with the Secretary of State in Nevada to change the name of the Company from New World Entertainment Corp. to Aultra Gold Inc. The Nevada Secretary of Stated declared the amendment effective on January 18, 2007.
On January 22, 2007, the Company entered into a definitive Share Exchange Agreement (the “Agreement”) with Strategic Minerals Inc., a Nevada corporation, Aultra Gold Inc. (fka Dutch Mining (Canada) Ltd.) (“AGI”), a company formed under the laws of the Province of British Columbia, and certain other shareholders of AGI. Pursuant to the Agreement, which is subject to certain regulatory approval, the Company agreed to acquire 100% of the outstanding equity of AGI from the stockholders of AGI (the “AGI Shareholders”) in exchange for the issuance by the Company to the AGI Shareholders of one share of common stock, $0.001 par value (the “Common Stock”), of the Company for each issued common share of AGI (the “Acquisition”). Therefore, subject to certain regulatory approval, the Company shall be required to issue 24,496,668 shares of Common Stock to the AGI Shareholders (the “Consideration Shares”) and there will be approximately a total of 95,896,668 shares of Common Stock issued and outstanding subsequent to the Acquisition. AGI was incorporated on January 20, 2006 in Canada under the Business Corporations Act of British Columbia. AGI’s main business is acquiring and exploring gold and mineral properties with proven and probable reserves principally located in Nevada and Montana, USA, with the objective of identifying gold and mineralized deposits economically worthy of continued production and/or subsequent development, mining or sale.
On April 26, 2006, the Company filed Articles of Merger with the Secretary of State in Nevada to change its name from Morningstar Industrial Holdings Corp. and underwent a change in management and direction and was involved in the acquisition and licensing of online gaming technologies.
On May 12, 2006, the Company entered into a share exchange agreement with Liverpoole Inc., a privately-owned corporation organized under the laws of Antigua, for the acquisition of all of the issued and outstanding shares of Liverpoole in exchange for 25,000,000 shares of the Company, upon completion of the agreement. In connection therewith, in order to secure the right to enter into such agreement with Liverpoole, the Company entered into an agreement with World Mobile Network Corp., a publicly-held corporation, pursuant to which, upon the completion of the agreement, World Mobile Network Corp. agreed to assign its exclusive right to acquire Liverpoole to the Company in exchange for 20,000,000 shares of the Company. As of December 31, 2006, these agreements were not been finalized.
F-6
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Aultra Gold Inc.
Notes to Financial Statements
September 30, 2010
On March 26, 2010, Aultra Gold, Inc. (the “Company” or the “Registrant”) entered into an Agreement and Plan of Share Exchange (the “Agreement”) with Shamika Gold Inc., a Canadian Corporation (“Shamika”), and certain shareholders of Shamika (the “Shamika Holders”). Pursuant to the Agreement, the Company acquired all of the outstanding shares of Shamika Gold Inc. (the “Shamika Shares”) from the Shamika Holders in exchange for an aggregate of 25,500,000 shares of the Company’s common stock, par value $0.00001 per share (the “Common Stock”) (the “Exchange”). As a result of the Exchange, Shamika and its 99.9% subsidiary Shamika Gold Mining Sprl., a Congolese limited partnership became subsidiaries of the Company. Shamika Gold Mining Sprl. owns a mining exploration concession located on lands in Poko, Province Orientale in the Democratic Republic of Congo and, at the time of the exchange, an option to acquire two mining exploitation permits in Lubutu in the Congo. The 25,500,000 Company shares were issued to the Shamika Holders, of which Shamika Resources Inc. received 24,564,980 shares, on a pro rata basis, on the basis of the shares held by such Shamika Holders at the time of the Exchange.
On March 26, 2010 the former holders of the Shamika Shares acquired 51% of the outstanding shares of our Common Stock. Accordingly, the Exchange represents a change in control. Dutch Gold Resources, Inc. retained 4,950,000 shares of Shamika Gold, Inc. For financial accounting purposes, the acquisition was a reverse acquisition of the Company by Shamika, under the purchase method of accounting, and was treated as a recapitalization with the Shamika as the acquirer. Upon consummation of the Exchange, the Company adopted the business plan of Shamika.
On March 26, 2010, the effective time of the Acquisition, our board of directors and officers was reconstituted by the resignation of: Rauno Perttu from his role as President, Secretary and director, Daniel Hollis from his role as Chief Financial Officer and director, Lance Rosmarin from his role as director, and the appointment of Robert Vivian as President and Chief Executive Officer and Terence Orstlan as Secretary and Director.
Aultra Gold is an exploration-stage company engaged in the business of acquiring and exploring gold and other valuable mineral properties. Our current focus is on the Democratic Republic of Congo but we are actively considering mining opportunities in other countries. At this time our properties consist of two gold exploration projects on lands in the Kibara Metallogenic Belt in the Eastern region of the country. The Company acquires its properties through its subsidiary, Shamika Gold Mining Sprl. Management and administration services in the Congo are provided by Shamika Congo Kalehe Sprl. a related party. Refer to Section 4 Related Party Balances and Transactions for further information about this organization. Application has been made to FINRA to change our name to Shamika2Gold Inc. The Company has directed all personnel in the Congo to ensure that no payments are made to any individuals or organizations who may be involved with the financing of conflict.
2. Significant Accounting Policies
a) Basis of Accounting
These consolidated financial statements are prepared in accordance with generally accepted accounting principles (“GAAP”) in United States. These consolidated financial statements include the accounts of the Company, its wholly owned subsidiary, Shamika Gold Inc. up to the date of its dissolution on August 31, 2010 and its 99.9% subsidiary Shamika Gold Mining Sprl. The Company has elected a December 31 year-end. Summarized below are those policies considered particularly significant to the Company.
F-7
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Aultra Gold Inc.
Notes to Financial Statements
September 30, 2010
a) Going Concern
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The Company’s financial statements are prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business.
b) Use of Estimates
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 the disclosure of any contingent assets and liabilities as at the date of the financial statements, as well as the reported amounts of revenues earned and expenses incurred during the period. Actual results could differ from those estimates.
c) Financial Instruments and Financial Risk
The Company’s financial instruments consists of cash, prepaid expenses, investments, accounts payable and accrued liabilities, the fair values of which approximate their carrying amounts due to the short-term nature of these instruments.
d) Cash
For the purposes of the statement of cash flows, the company considers all funds held in its bank accounts and funds held in trust by third parties as cash.
e) Investment in mining properties
Land and Mining Claims – Land and mining claims are recorded at the lower of cost, less accumulated depletion, or fair value. Costs of developing mining properties (after completion of exploration) are capitalized. Exploration costs are expensed as incurred until the establishment of a commercially minable deposit or reserve which can be economically and legally produced. When a mining property reaches the production stage, the related capitalized costs are amortized using the units of production method on the basis of proven and probable ore reserves. The Company’s mining properties are periodically assessed for impairment of value and any losses are charged to operations at the time of impairment.
f) Impairment of Long-Lived Assets
The Company accounts for long-lived assets pursuant to Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of. The Company evaluates its land and mineral properties, buildings, machinery and equipment and other long-lived assets for impairment at least annually and when indications of possible impairment exist and assesses their recoverability based upon anticipated future cash flows from the asset’s or group of assets’ use or sale. If changes in circumstances lead Company management to believe that any of its long-lived assets may be impaired, the carrying value of long-lived assets are reduced by the estimated excess of the carrying value over the fair value of the assets. Fair value is determined by the discounted future cash flows from the asset or group of assets. No impairment was recognized during the reporting periods.
F-8
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Aultra Gold Inc.
Notes to Financial Statements
September 30, 2010
2. Significant Accounting Policies (continued)
g) Gain or Loss per Share
Basic gain or loss per share is computed by dividing loss attributable to common shareholders by the weighted average number of common shares outstanding during the period.
h) Management’s Estimates
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 dates of the financial statements and the reported amounts of revenues and expenses during the reported periods. Actual results could differ from those estimates.
i) Share Capital
Share capital issued for non-monetary consideration is recorded at an amount based upon fair market value as estimated by management.
j) Comprehensive Income
The Company applies Statement of Financial Accounting Standards No. 130 Reporting Comprehensive Income (SFAS No. 130). Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non owner sources. It includes all changes in equity during a period except from those resulting from investments by owners and distributions to owners.
k) Income taxes
Deferred Income taxes are provided for temporary differences between the financial reporting and tax basis of assets and liabilities using enacted tax laws and rates for the years when the differences are expected to reverse.
l) Stock based compensation
The Company accounts for stock-based compensation in accordance with SFAS No. 123 for “Accounting for stock-based compensation” and related interpretations.
m) Asset retirement obligations
Asset retirement obligations requires recognition of a legal liability for obligations relating to retirement of property, plant and equipment, and arising from the acquisition, construction, development, or normal operation of those assets. Such asset retirement cost, must be recognized at fair value, when a reasonable estimate of fair value can be estimated, in the period in which it is incurred, added to the carrying value of the asset, and amortized into income on a systematic basis over its useful life.
As at the reporting date, the Company does not have any asset retirement obligations.
F-9
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Aultra Gold Inc.
Notes to Financial Statements
September 30, 2010
3. Acquisition of Subsidiary
On January 22, 2007, the Company entered into a definitive Share Exchange Agreement (the “Agreement”) with Strategic Minerals Inc., a Nevada corporation, Aultra Gold Inc. (fka Dutch Mining (Canada) Ltd.) (“AGI”), a company formed under the laws of the Province of British Columbia, and certain other shareholders of AGI. Pursuant to the Agreement, which is subject to certain regulatory approval, the Company agreed to acquire 100% of the outstanding equity of AGI from the stockholders of AGI (the “AGI Shareholders”) in exchange for the issuance by the Company to the AGI Shareholders of one share of common stock, $0.001 par value (the “Common Stock”), of the Company for each issued common share of AGI (the “Acquisition”). Therefore, subject to certain regulatory approval, the Company shall be required to issue 24,496,668 shares of Common Stock to the AGI Shareholders (the “Consideration Shares”) and there will be approximately a total of 95,896,668 shares of Common Stock issued and outstanding subsequent to the Acquisition.
On March 26, 2010, Aultra Gold, Inc. (the “Company” or the “Registrant”) entered into an Agreement and Plan of Share Exchange (the “Agreement”) with Shamika Gold Inc., a Canadian Corporation (“Shamika”), and certain shareholders of Shamika (the “Shamika Holders”). Pursuant to the Agreement, the Company acquired all of the outstanding shares of Shamika Gold Inc. (the “Shamika Shares”) from the Shamika Holders in exchange for an aggregate of 25,500,000 shares of the Company’s common stock, par value $0.00001 per share (the “Common Stock”) (the “Exchange”). As a result of the Exchange, Shamika and its 99.9% subsidiary Shamika Gold Mining Sprl., a Congolese limited partnership became subsidiaries of the Company. Shamika Gold Mining Sprl. owns a mining exploration concession located on lands in Poko, Province Orientale in the Democratic Republic of Congo and, at the time of the exchange, an option to acquire two mining exploitation permits in Lubutu in the Congo. The 25,500,000 Company shares were
issued to the Shamika Holders, of which Shamika Resources Inc. received 24,564,980 shares on a pro rata basis, on the basis of the shares held by such Shamika Holders at the time of the Exchange.
On March 26, 2010 the former holders of the Shamika Shares acquired 51% of the outstanding shares of our Common Stock. Accordingly, the Exchange represents a change in control. Dutch Gold Resources, Inc. retained 4,950,000 shares of Shamika Gold, Inc. For financial accounting purposes, the acquisition was a reverse acquisition of the Company by Shamika, under the purchase method of accounting, and was treated as a recapitalization with the Shamika as the acquirer. Upon consummation of the Exchange, the Company adopted the business plan of Shamika.
Shamika Gold Inc. was dissolved on August 31, 2010 in accordance with the provisions of the Canada Business Corporations Act and its net assets, consisting primarily of its partnership interest in Shamika Gold Mining Sprl., were distributed to Aultra Gold Inc.
4. Related Party Balances and Transactions
As of September 30, 2010, the Company had accounts payable to related parties in the amount of $111,590. $13,496 is payable to Shamika Resources Inc. and $98,094 is payable to Shamika Congo Kalehe Sprl., a subsidiary of Shamika Resources Inc. registered to do business in the Congo, for management and administration services. We are currently unable to repay these amounts.
As more fully described under “Recent Developments”, in April 2010, the Company acquired two mining permits on properties in Lubutu, Congo. Under an option agreement with Shamika Congo Kalehe Sprl., the acquisition of these properties triggers a payment them of $100,00. Such payment is to be made within six months from the closing of our next financing. Furthermore, the agreement provides for the payment to them of a net smelter return of 5.0 %
F-10
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Aultra Gold Inc.
Notes to Financial Statements
September 30, 2010
Of sales with an option at any time to buy down the rate from 5% to 2.5% by paying them $2 million of which $1 million is payable in cash and $1 million in shares.
Shamika Resources Inc. has pledged its 24,564,980 shares in Aultra Gold Inc. against short-term loans of $100,000.
5. Accounts payable mining properties
The amount of $459,000 is payable as a result of the acquisition of two mining permits on properties in Lubutu, as more fully described under Recent Developments. Under the agreement $59,000 should have been paid by July 2, 2010. We have been unable to make this payment and we are therefore in default. We will not be able to repay the amount until we have the funding from our next financing. The terms of repayment of $400,000 are to be negotiated. We intend to negotiate a long-term repayment schedule in line with the development and financing plan for the properties. There can be no assurance that we will be successful in these negotiations. No provision has been made in these accounts for interest, if any, which may be payable on the outstanding amount.
6. Share Capital
a) Details of share capital are as follows:
Authorized: 50,000,000 common shares with a par value of $0.00001 and 10,000,000 preferred shares with a par value of $0.00001
Number of
Shares Amount
$
Issued:
Balance – inception January 26, 2005 - -
Common Shares issued 71,400,000 71,400
Shares issued in lieu of promissory note 10,833,333 10,833
Balance-December 31, 2006 82,233,333 82,233
Restricted common shares issued 24,496,668 24,497
Restricted Common Shares issued for Jungo 50,000 50
Common Shares issued 200,000 200
Shares cancelled (40,833,333 ) (40,833 )
Balance – December 31, 2007 (d) 66,146,668 66,147
Restricted Common Shares issued for Services 30,000,000 30,000
Balance – December 31, 2008 96,146,668 96,147
Balance, December 31, 2009 96,146,668 96,147
Cancellation of Shares (46,146,668) (46,147)
Balance September 30, 2010 50,000,000 50,000
F-11
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Aultra Gold Inc.
Notes to Financial Statements
September 30, 2010
7. Income Taxes
A reconciliation of income taxes at statutory rates is as follows:
September 30, 2010
Net gain for the period $
Total income taxes -0-
Management believes that there may be a Canadian tax charge in relation to the merger transaction, but that this amount will not be material and management has deemed it appropriate not to accrue for this amount at this time.
8. Commitments and Claims
In the course of normal business, we may be subject to the threat of litigation, claims and assessments. Our management believes that unfavorable decisions in any pending procedures or threat of procedures or any amount it might be required to pay will not have a material adverse impact on our financial condition.
On or about April 17, 2007, a lawsuit was filed by 761273 B.C. Ltd., Calderan Ventures Ltd., Scott Kostiuk, William Parkin, Ronald Oliver, Lubomir Palecek and Krista Dayton under the laws of the Province of British Columbia, Canada in the British Columbia Supreme Court for a total amount of $203,311.88. Aultra intends to vigorously defend itself should this action be pursued in the United States. As part of the transaction with Dutch Gold, Dutch Gold indemnified the Company against any claims arising from this claim.
From time to time we may be a defendant and plaintiff in various legal proceedings arising in the normal course of our business. We are currently not a party to any material pending legal proceedings or government actions, including any bankruptcy, receivership, or similar proceedings. In addition, management is not aware of any known litigation or liabilities involving the operators of our properties that could affect our operations. Should any liabilities incurred in the future, they will be accrued based on management’s best estimate of the potential loss. As such, there is no adverse effect on our consolidated financial position, results of operations or cash flow at this time. Furthermore, our management does not believe that there are any proceedings to which any of our directors, officers, or affiliates, any owner of record of the beneficially or more than five percent of our common stock, or any associate of any such director, officer, affiliate, or security holder is a party adverse to our company or has a material interest adverse to us.
As more fully described under Recent Developments, in April 2010, we exercised our right to purchase two mining exploitation permits. Under the agreement, the amount of $100,000 is payable to a related party, Shamika Congo Kalehe Sprl. Payment is due within six months from the closing of our next financing. Furthermore the agreement provides for the payment to them of a net smelter return of 5.0 % of sales with an option at any time to buy down the rate from 5% to 2.5% by paying them $2 million of which $1 million is payable in cash and $1 million in shares
9. Recent Accounting Pronouncements
In February 2007, the Financial Accounting Standards Board (the “FASB”) issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (SFAS 159). SFAS 159 allows the company to choose to measure many financial assets and financial liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. SFAS 159 is effective for fiscal years beginning after November 15, 2007.
F-12
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Aultra Gold Inc.
An Exploration Stage Company
Notes to Financial Statements
September 30, 2010
(Stated in United States Dollars)
The Company is currently evaluating the requirements of SFAS 159 and the potential impact on the Company’s financial statements. In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans – an amendment of FASB Statements No. 87, 88, 106 and 132(R)” (SFAS 158”). SFAS 158 requires an employer that sponsors one or more single-employer defined benefit plans to (a) recognize the overfunded or underfunded status of a benefit plan in its statement of financial position, (b) recognize as a component of other comprehensive income, net of tax, the gains or losses and prior service costs or credits that arise during the period but are not recognized as components of net periodic
benefit cost pursuant to SFAS 87, “Employers’ Accounting for Pensions”, or SFAS 106, “Employers’ Accounting for Postretirement Benefits Other Than Pensions”, (c) measure defined benefit plan assets and obligations as of the date of the employer’s fiscal year-end, and (d) disclose in the notes to financial statements additional information about certain effects on net periodic benefit cost for the next fiscal year that arise from delayed recognition of the gains or losses, prior service costs or credits, and transition asset or obligation. SFAS 158 is effective for the Company’s fiscal year ending December 31, 2007. The adoption of SFAS No. 158 is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurement" ("SFAS 157"). The Statement provides guidance for using fair value to measure assets and liabilities. The Statement also expands disclosures about the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurement on earnings. This Statement applies under other accounting pronouncements that require or permit fair value measurements. This Statement does not expand the use of fair value measurements in any new circumstances. Under this Statement, fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the entity transacts. SFAS 157 is effective for the Company for fair value measurements and disclosures made by the Company in its fiscal year beginning on January 1, 2008.
In February 2006, the FASB issued SFAS No. 155, “ Accounting for Certain Hybrid Financial Instruments ”, which amends SFAS No. 133, “ Accounting for Derivative Instruments and Hedging Activities ” and SFAS No. 140. SFAS No. 155 permits fair value measurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation, establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or hybrid financial instruments containing embedded derivatives. The adoption of SFAS No. 155 is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.
11. Subsequent events
On October 15, 2010 the Company authorized the issuance of 23,547,024 shares of common stock in exchange for the retirement and satisfaction of obligations and debt in the principal amount of $301,512, plus any and all accrued interest and fees owed to our former principal stockholder, officer and director Rauno Perttu. Mr. Perttu assigned his rights to receive a number of the shares in independently negotiated transactions.
On November 19, 2010, the Company authorized the issuance of 3,600,000 additional shares of founders’ stock to the principals of its operating companies and members of its Board of Directors including 2,000,000 shares to Robert Vivian, our Chairman, Chief Executive and Financial Officer, and 1,000,000 shares to Terrance Orstlan, our Director, pending the consummation of the amendment of the Company’s Articles of Incorporation to increase its authorized common stock.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our audited Financial Statements and Notes thereto included herein beginning on page F-1.
Certain statements in this Report constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. We intend that such forward-looking statements be subject to the safe harbors created thereby.
References in this Annual Report on Form 10-Q (the “Quarterly Report”) to “we”, “us,” “our,” “the Company,” “Aultra Gold” and “AGI” mean Aultra Gold Inc. and our subsidiaries, unless the context otherwise requires.
Item 1. Description of Business
Description of Aultra Gold, Inc Business
Aultra Gold is an exploration-stage company engaged in the business of acquisition and exploration of gold and other valuable mineral properties with a focus on the Democratic Republic on Congo. At this time our properties consist of two gold exploration projects on lands in the Kibara Metallogenic Belt in the Eastern region of the country. The Company acquires its properties through its subsidiary, Shamika Gold Mining Sprl. Management and administration services in the Congo are provided by Shamika Congo Kalehe Sprl. a related party. Refer to Section 4 Related Party Balances and Transactions for further information about this organization. The Company intends to raise an initial financing of $1,500,000, which we will use to obtain 43-101 geological reports and other appropriate feasibility studies and based on these reports initiate further exploration leading to further financings and development of the properties.
Applications have been made to FINRA to change the name of Aultra Gold Inc to Shamika 2 Gold Inc on upon approval from FINRA, the name change will be announced.
General Overview of Business
Aultra Gold is an exploration-stage company engaged in the business of acquisition and exploration of gold and other valuable mineral properties with a focus on the Democratic Republic on Congo. At this time our properties consist of two gold exploration projects on lands in the Kibara Metallogenic Belt in the Eastern region of the country. The Company acquires its properties through its subsidiary, Shamika Gold Mining Sprl. Management and administration services in the Congo are provided by Shamika Congo Kalehe Sprl. a related party. Refer to Section 4 Related Party Balances and Transactions for further information about this organization. The Company intends to raise an initial financing of $1,500,000, which we will use to obtain 43-101 geological reports and other appropriate feasibility studies and based on these reports initiate further exploration leading to the development of the properties.
Employees
As of September 30, 2010, the Company had two employees.
There is limited historical information about us upon which to base an evaluation of our performance. We are exploration stage company and have had no revenues. We cannot guarantee that we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise.
We have not earned any revenues from our incorporation on January 26, 2005. We do not anticipate earning revenues for the foreseeable future. We have not commenced the exploration stage of our business and can provide no assurance that we will discover economic mineralization on the property, or if such minerals are discovered, that we will enter into commercial production.
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Discussion of mining projects
The following is a summary of our two projects in the Democratic Republic of Congo as follows:
PROJECT-POKO
Exploration permit number 8315 covering an area of 120 mining blocks and 103 sq. kilometers located in Poko, Province Orientale. This property is in the Kilo-Moto Greenstone belt. The greenstone rocks and quartz veins found in this area have a reputation for an abnormally high content of gold and the area is well known for large deposits. The property is largely unexplored but it is accessible by road and by water and it is an excellent prospect for further exploration. Our business plan calls for the preparation of a 43-101 geological report, further exploration based on the recommendations in the report, the conversion to an exploitation permit and the development of the property. The exploration permit has a term of five years with two rights to renew for five years each. We pay an annual permit fee of $3,800 and we must make periodical payments into an environmental fund.
PROJECT-LUBUTU
Two mining exploitation permits numbered 133 and 134 covering 72 mining blocks and 61 sq. kilometers located on lands in Lubutu, Province of Maniema. This location is in the heart of the Kibara Metallogenic Belt approximately 300 kilometers northwest of Lake Kivu. The permits give us the right to develop and exploit the properties for gold and the properties have been in production through artisanal mining. Our business plan envisages feasibility studies to determine the most effective way to put the properties into full scale production and a subsequent financing to enable this to be done. We acquired the properties in April 2010 for $600,000 of which $100,000 is payable to a related party, Shamika Congo Kalehe Sprl., under an option agreement, and $500,000 is payable to a third party. The $100,000 payable to Shamika Congo Kalehe Sprl. is payable within six months from the date of our next financing. The $500,000 to a third party was payable $100,000 by July 2, 2010 and $400,000 longer-term. So far we have only paid the third party $41,000 leaving $59,000 overdue and in default. We will not be able to make this payment until we receive the proceeds of our next financing. The terms of repayment of $400,000 are to be negotiated. We intend to negotiate a long-term repayment schedule in line with our development and financing plan for the properties. There can be no assurance that our plan can be successfully executed and there can be no assurance that we will be able to successfully negotiate the repayment terms that we need. The exploitation permit has a term of thirty years and several rights to renew for fifteen years. Our permits have approximately twenty years to run and we pay annual permit fees of $37,000 for them.
Expenses
The loss for the three months ended September 30, 2010 was $13,866 compared with $171,707 for the three months ended September 30, 2009 and $151,431 for the nine months ended September 30, 2010 compared with $375,648 for the nine months ended September 30, 2009. In each case the loss for the period has decreased as a result of the change in the business. Losses during the three months and nine months ended September 30, 2010 can be attributed to the costs relating to the permits in the Democratic Republic of Congo and the restructuring of the business, whereas the losses in the three months and the nine months ended September 30, 2009 related to the disposition of mining properties to Dutch Gold.
Total expenses for the nine months ended September 30, 2010 were $151,431 made up of mining expenses, which consist mainly of permit fees on the properties in Congo, professional fees, being substantially the cost of restructuring the Corporation following the agreement with Shamika and other expenses.
Liquidity and Capital Resources
At September 30, 2010, our cash was $0. Since our inception on January 20, 2005, to the end of the period ended September 30, 2010, we have incurred losses of $550,140. We attribute our net loss to having no revenues to offset our operating expenses.
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We have no cash flow from operations and do not have cash to meet our current liabilities nor our operational requirements for the next 12 months. In addition we will also be required to raise additional working capital to fund the exploration and development plans as discussed above.
Shamika Congo Kalehe Sprl. a related party has incurred expenses of $98,094 on our behalf. We are currently unable to pay this amount until we receive the funds from our next financing. This amount is included in the balance sheet in the item ‘Accounts payable related parties ’
We have no assurance that future financings will be available to us on acceptable terms. If financing is not available to us on acceptable terms, we may be unable to continue our operations. Should our costs and expenses prove to be greater than we currently anticipate, or should we change our current Plan of Mining Operations in a manner that will increase or accelerate our anticipated costs and expenses, such as through the acquisition of new properties, the depletion of our working capital would be accelerated. To the extent that it becomes necessary to raise additional cash in the future as our current cash and working capital resources are depleted, we will seek to raise it through the public or private sale of debt or equity securities, the procurement of advances on contracts or funding from joint-venture or strategic partners, debt financing or term loans, or a combination of the foregoing. We also may seek to satisfy indebtedness without any cash outlay through the private issuance of debt or equity securities.
We have no assurance that future financings will be available to us on acceptable terms. If financing is not available to us on acceptable terms, we may be unable to continue our operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is not exposed to market risk related to interest rates or foreign currencies.
ITEM 4. CONTROLS AND PROCEDURES.
(a) Evaluation of Disclosure Controls and Procedures
Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. This rule defines internal control over financial reporting as a process designed by, or under the supervision of Company management to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP.
Based on this evaluation, our chief executive officer and principal accounting officer concluded that, as of the end of the fiscal period ending September 30, 2010 our disclosure controls and procedures were not effective to ensure that the information required to be disclosed in reports we submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the applicable rules and forms, and that such information was accumulated and communicated to our chief executive officer and principal accounting officer in a manner that allowed for timely decisions regarding required disclosure.
Management does not expect that our Disclosure Controls and internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management or board override of the control.
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The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
MANAGEMENT'S REPORT 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 CEO and CFO 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: pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; 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 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 September 30 2010 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.
Identified 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 was the 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.
· We omitted to disclose of our “Management’s Annual Report on Internal Control over Financial Reporting” in our initial Annual Report filed on Form 10-K for the fiscal year ended December 31, 2007;
· During 2007, we did not timely file our Quarterly Report on Form 10-Q for the six months ending June 30, 2007 and our Annual Report for year ending December 31, 2007;
· We lack sufficient trained personnel with experience in accounting and financial reporting functions due to the size of our Company and our lack of financial resources to pay such personnel; and
· We do not have a sufficient number of employees to adequately segregate accounting duties to provide for sufficient internal controls.
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These material weaknesses were first identified by management in connection with the preparation and review of our unaudited financial statements as of September 30, 2008 in or about November 2008.
Management also 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.
Management's Remediation Initiatives
In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we have initiated a 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.
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. While we are actively seeking outside members, including candidates with accounting experience, we cannot provide any assurance that we will be successful. Given the size of our company, lack of revenues and current lack of financing to continue with our business, it is unlikely that anyone will agree to join our Board until general economic conditions and our own business prospects improve significantly.
(b) Changes in Internal Controls
During the most recent quarter ended September 30, 2010, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. However, as discussed above, changes have been implemented subsequent to the period covered by this Form 10-Q to add additional controls to correct the material weakness in internal control over financial reporting.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
On or about April 17, 2007, a lawsuit was filed by 761273 B.C. Ltd., Calderan Ventures Ltd., Scott Kostiuk, William Parkin, Ronald Oliver, Lubomir Palecek and Krista Dayton under the laws of the Province of British Columbia, Canada in the British Columbia Supreme Court for a total amount of $ 203,311.88. Aultra has no assets in Canada and intends to vigorously defend itself should this action be pursued in the United States. As part of the transaction with Dutch Gold, Dutch Gold indemnified the Company against any claims arising from this claim.
In the course of normal business, we may be subject to the threat of litigation, claims and assessments. Our management believes that unfavorable decisions in any pending procedures or threat of procedures or any amount it might be required to pay will not have a material adverse impact on our financial condition.
From time to time we may be a defendant and plaintiff in various legal proceedings arising in the normal course of our business. We are currently not a party to any material pending legal proceedings or government actions, including any bankruptcy, receivership, or similar proceedings. In addition, management is not aware of any known litigation or liabilities involving the operators of our properties that could affect our operations. Should any liabilities incurred in the future, they will be accrued based on management’s best estimate of the potential loss. As such, there is no adverse effect on our consolidated financial position, results of operations or cash flow at this time. Furthermore, our management does not believe that there are any proceedings to which any of our directors, officers, or affiliates, any owner of record of the beneficially or more than five percent of our common stock, or any associate of any such director, officer, affiliate, or security holder is a party adverse to our company or has a material interest adverse to us.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On October 15, 2010 the Company authorized the issuance of 23,547,024 shares of common stock in exchange for the retirement and satisfaction of obligations and debt in the principal amount of $301,512, plus any and all accrued interest and fees owed to our former principal stockholder, officer and director Rauno Perttu. Mr. Perttu assigned his rights to receive a number of the shares in independently negotiated transactions.
On November 19, 2010, the Company authorized the issuance of 3,600,000 additional shares of founders’ stock to the principals of its operating companies and members of its Board of Directors including 2,000,000 shares to Robert Vivian, our Chairman, Chief Executive and Financial Officer, and 1,000,000 shares to Terrance Orstlan, our Director, pending the consummation of the amendment of the Company’s Articles of Incorporation to increase its authorized common stock.
The sales of the securities identified above were made pursuant to privately negotiated transactions that did not involve a public offering of securities and, accordingly, we believe that these transactions were exempt from the registration requirements of the Securities Act pursuant to Section 4(2) of the Securities Act and Rule 506 of Regulation D. The agreements executed in connection with this sale contain representations to support the Company’s reasonable belief that the Investor had access to information concerning the Company’s operations and financial condition, the Investor acquired the securities for their own account and not with a view to the distribution thereof in the absence of an effective registration statement or an applicable exemption from registration, and that the Investor are sophisticated within the meaning of Section 4(2) of the Securities Act and are “accredited investors” (as defined by Rule 501 under the Securities Act). In addition, the issuances did not involve any public offering; the Company made no solicitation in connection with the sale other than communications with the Investor; the Company obtained representations from the Investor regarding their investment intent, experience and sophistication; and the Investor either received or had access to adequate information about the Company in order to make an informed investment decision. All of the foregoing securities are deemed restricted securities for purposes of the Securities Act.
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ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. (REMOVED AND RESERVED)
ITEM 5. OTHER INFORMATION.
On October 15, 2010 the Company authorized the issuance of 23,547,024 shares of common stock in exchange for the retirement and satisfaction of obligations and debt in the principal amount of $301,512, plus any and all accrued interest and fees.
On November 19, 2010, the Company authorized the issuance of 3,600,000 additional shares of founders’ stock to the principals of its operating companies and members of its Board of Directors including 2,000,000 shares to Robert Vivian, our Chairman, Chief Executive and Financial Officer, and 1,000,000 shares to Terrance Orstlan, our Director, pending the consummation of the amendment of the Company’s Articles of Incorporation to increase its authorized common stock.
ITEM 6. EXHIBITS.
Exhibit
Number Description of Exhibits
31.1 Certification of Chief Executive Officer and Chief Financial Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
32.1 Certification of Chief Executive Officer and Chief Financial Officer as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
/s/ Robert Vivian
Date: November 22, 2010 Name: Robert Vivian
Title: President and Chief Executive Officer and Interim Financial Officer
(Principal Executive and Accounting Officer)
11
EXHIBIT 31.1
AULTRA GOLD INC.
CERTIFICATION PURSUANT TO SARBANES-OXLEY SECTION 302
I, Robert Vivian, President and Chief Executive Officer and Interim Financial Officer of Aultra Gold Inc., certify that:
1. I have reviewed this quarterly report on Form 10-Q for the period ended September 30, 2010, of Aultra Gold Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant, and we have:
(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
/s/ Robert Vivian
Date: November 22, 2010 Name: Robert Vivian
Title: President and Chief Executive Officer and Interim Financial Officer
(Principal Executive and Accounting Officer)
EXHIBIT 32.1
AULTRA GOLD INC.
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Aultra Gold Inc. (the Company) on Form 10-Q for the period ended September 30, 2010 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Robert Vivian, President, Chief Executive Officer and Interim Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Date: November 22, 2010 /s/ Robert Vivian
Name: Robert Vivian
Title: President and Chief Executive Officer and Interim Financial Officer
(Principal Executive and Accounting Officer)
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
x Quarterly Report Pursuant To Section 13 Or 15(d) Of The Securities Exchange Act Of 1934 for the quarterly period ended September 30, 2010
o Transition Report Under Section 13 Or 15(d) Of The Securities Exchange Act Of 1934 for the transition period ________to ________
Commission File Number: 333-126748
AULTRA GOLD INC.
(Exact name of small business issuer as specified in its charter)
Nevada 98-0448154
(State or other jurisdiction of incorporation or (IRS Employer Identification No.)
organization)
1980, Sherbrooke Street West, Suite 1100
Montreal, Quebec, H3H 1E8
(Address of principal executive offices)
(514) 931-9990
Issuer's telephone number
Indicate by check mark whether the issuer (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. Yes o? No o
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 preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o
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 o Accelerated filer o
Non-accelerated filer o Smaller Reporting Company x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No o
State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: As of November 15, 2010, the Issuer had 50,000,000 shares of common stock, par value $0.00001 per share, issued and outstanding.
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TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Page
ITEM 1. Consolidated Financial Statements (unaudited) 3
Consolidated Balance Sheets at September 30, 2010 and December 31, 2009 F-2
Consolidated Statements of Operations for the nine months and the three months ended September 30, 2010 and 2009 F-3
Consolidated Statement of Cash Flows for the nine months and three months ended September 30, 2010 and 2009 F-4
Notes to Financial Statements F-6-F-13
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 4
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk 6
ITEM 4. Controls and Procedures 6
PART II. OTHER INFORMATION
ITEM 1 Legal Proceedings 9
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 9
ITEM 3. Defaults Upon Senior Securities 10
ITEM 4. (Removed and Reserved) 10
ITEM 5. Other Information 10
ITEM 6 Exhibits 10
Signatures 11
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-Q and Item 310(b) of Regulation S-B, and, therefore, do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows, and stockholders' equity in conformity with generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. Operating results for the nine months and the three months ended September 30, 2010 are not necessarily indicative of the results that can be expected for the year ending December 31, 2010.
As used in this Quarterly Report on Form 10-Q (the “Quarterly Report”), the terms "we", "us", "our", the “Company” and mean Aultra Gold Inc., unless otherwise indicated. All dollar amounts in this Quarterly Report are in U.S. dollars unless otherwise stated.
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AULTRA GOLD INC.
An Exploration Stage Company
INDEX TO FINANCIAL STATEMENTS
For the nine months and the three month ended September 30, 2010 and 2009 Page
Balance Sheets as of September 30, 2010 and December 31, 2009 F-2
Statements of Operations for the nine months and the three months ended September 30, 2010, and 2009 F-3
Statements of Cash Flows for the nine month and the three months ended September 30, 2010 and 2009 F-4
Statements of Stockholders’ Equity (Deficit) for the period from inception to September 30, 2010 F-5
Notes to Financial Statements F-6
F-1
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Aultra Gold Inc.
An Exploration Stage Company
Consolidated Balance Sheets
As at September 30, 2010 and twelve months ending December 31, 2009
(Stated in United States Dollars)
September 30, December 31
2010 2009
$ $
A S S E T S
Current Assets
Cash -0- -0-
Accounts receivable and accrued receivables -0- -0-
Total Current Assets -0- -0-
Long term Assets
Long term investment -0- 6,232
Long term receivables -0- 65,485
Mining properties 500,002 100,000
Total long-term assets 500.002 171,717
Total Assets 500,002 171,717
L I A B I L I T I E S A N D S T O C K H O L D E R S’ E Q U I T Y
Current Liabilities
Accounts payable, notes payable and other accrued liabilities 80,843 946,243
Accounts payable related parties (note 4) 111,590
Accounts payable mining properties (note 5) 459,000
Total current liabilities 651,433 946,243
Total Liabilities 651,433 946,243
S TOCK H O L D E R S ’ E Q U I T Y
Common stock, $0.00001 par value, 50,000,000 shares authorized: 50,000,000 shares issued and outstanding (note 6) 50,000 96,147
Accumulated deficit (550,140 ) (1,230,048 )
Additional paid-in capital 348,709 348,709
Total stockholders’ equity (151,431 ) (774,526 )
Total liabilities and stockholders’ equity 500,002 171,717
See notes to financial statements
F-2
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Aultra Gold Inc.
An Exploration Stage Company
Consolidated Statement of Operations
For the three months ending September 30, 2010 and September 30, 2009 and nine month ending September 30, 2010 and September 30, 2009
From inception on January 26, 2005 to September 30, 2010
(Stated in United States Dollars)
For the three months ended For the three months ended For the nine months ended For the nine months ended From inception January 26, 2005 through
September 30, September 30, September 30, September 30, September 30,
2010 2009 2010 2009 2010
$ $ $ $ $
REVENUE 0 0 0 -0- 131
Operating Expenses
Mining property expenditures 10,405 81,857 39,644 160,572 619,791
Consultants and contractors -0- 30,000 -0- 150,000 541,668
Office and administrative (5,555 ) 15,011 24,605 14,736 137,656
Legal and professional 9,016 -0- 87,182 6,000 451,617
Interest expense 0 44,340 -0- 44,340 10,833
Total operating expenses 13,866 171,207 151,431 375,648 1,761,565
Loss from operations (13,866 ) (171,207 ) (151,431 ) (375,648 ) (1,761,434 )
Other Revenues and Expenses
Foreign Exchange Gain -0- -0- -0- -0- 4,154
Gain on Extinguishment of Debt -0- -0- -0- -0- 45,833
Bad debt -0- -0- -0- -0- (97,303 )
Gain on Investment -0- -0- -0- (6,232 ) 1,258,610
Loss for period (13,866 ) (177,439 (151,431 ) (381,880 ) (550,140 )
Deficit – beginning of the period (536,274 ) (1,434,488 (398,709 (1,230,048 -0-
Deficit – end of period (550,140 ) (1,618,157 (550,140 (1,618,157 (550,140 )
Loss per shares – basic and diluted (0.01 ) (0.01 (0.01 (0.01
Weighted Average Number of Shares Outstanding 50,000,000 96,146,668 50,000,000 96,146,668
See notes to financial statements
F-3
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Aultra Gold Inc.
An Exploration Stage Company
Consolidated Statement of Cash Flows
For the three months ending September 30, 2010 and September 30, 2009 and nine month ending September 30, 2010 and September 30, 2009
From inception January 26, 2005 to September 30, 2010
(Stated in United States Dollars)
Three Months Ending Nine Months Ending From inception
Sept 30,
2010 Sept 30,
2009 Sept 30,
2010 Sept 30,
2009 January 26, 2005
to Sept 30, 2010
$ $ $ $ $
Cash flows from operating activities
Loss for the period (13,866 ) (177,439 ) (151,431 ) (381,880 ) (550,140)
Changes in:
Accounts receivables and accrued receivables -0- -0- -0-
Accounts payable and accrued liabilities (13,866 ) (177,439 ) (151,431) (381,880) 105,284
Net cash used in operating activities -0- -0- -0- -0- (444,856)
Cash flows from investing activities
Mining property -0- -0- -0- -0-
Investments -0- -0- -0- -0-
Cash used in investing activities -0- -0- -0- -0-
Cash flows from financing activities
Share capital issued -0- -0- -0- -0- 444,856
Net cash received from financing activities -0- 0 -0- 0 444,856
Net increase in cash -0- -0- -0- -0- -0-
Cash – beginning of period -0- -0- -0- -0- -0-
Cash – end of period -0- -0- -0- -0- -0-
See notes to financial statements
F-4
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Aultra Gold Inc.
An Exploration Stage Company
Consolidated Statements of Stockholders’ Equity
From inception January 26, 2005 to September 30, 2010
(Stated in United States Dollars)
See notes to financial statements
Common Stock
Shares Amount Additional Paid-in Capital Accumulated Deficit During Exploration Stage Total Equity (Deficit)
$ $ $ $
Balance, June 30, 2010 50,000,000 50,000 348,709 (536,274) (137,565))
Loss for the Period (13,866) (13,866))
Balance September 30, 2010 50,000,000 50,000 348,709 (550,140) (151,431))
See notes to financial statements
F-5
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Aultra Gold Inc.
An Exploration Stage Company
Notes to Financial Statements
1. Nature of Operations
Aultra Gold, Inc. (the “Company”) was incorporated under the laws of the State of Nevada on January 26, 2005 as Katie Gold Corp. and it was primarily engaged in the acquisition and exploration of mining properties until April 2006. The Company’s fiscal year end is December 31.
On March 21, 2006, a Certificate of Amendment was filed with the Secretary of State in Nevada to change the name of the Company from Katie Gold Corp. to Morningstar Industrial Holdings Corp. At this time, the Company was still engaged in the acquisition and exploration of mining properties.
On April 26, 2006, the Company filed Articles of Merger with the Secretary of State in Nevada to merge with New World Entertainment Corp., a private company incorporated in Nevada. As a result of the merger, the Company changed its business and its name from Morningstar Industrial Holdings Corp. to New World Entertainment Corp.
On December 7, 2006, a Certificate of Amendment was filed with the Secretary of State in Nevada to change the name of the Company from New World Entertainment Corp. to Aultra Gold Inc. The Nevada Secretary of Stated declared the amendment effective on January 18, 2007.
On January 22, 2007, the Company entered into a definitive Share Exchange Agreement (the “Agreement”) with Strategic Minerals Inc., a Nevada corporation, Aultra Gold Inc. (fka Dutch Mining (Canada) Ltd.) (“AGI”), a company formed under the laws of the Province of British Columbia, and certain other shareholders of AGI. Pursuant to the Agreement, which is subject to certain regulatory approval, the Company agreed to acquire 100% of the outstanding equity of AGI from the stockholders of AGI (the “AGI Shareholders”) in exchange for the issuance by the Company to the AGI Shareholders of one share of common stock, $0.001 par value (the “Common Stock”), of the Company for each issued common share of AGI (the “Acquisition”). Therefore, subject to certain regulatory approval, the Company shall be required to issue 24,496,668 shares of Common Stock to the AGI Shareholders (the “Consideration Shares”) and there will be approximately a total of 95,896,668 shares of Common Stock issued and outstanding subsequent to the Acquisition. AGI was incorporated on January 20, 2006 in Canada under the Business Corporations Act of British Columbia. AGI’s main business is acquiring and exploring gold and mineral properties with proven and probable reserves principally located in Nevada and Montana, USA, with the objective of identifying gold and mineralized deposits economically worthy of continued production and/or subsequent development, mining or sale.
On April 26, 2006, the Company filed Articles of Merger with the Secretary of State in Nevada to change its name from Morningstar Industrial Holdings Corp. and underwent a change in management and direction and was involved in the acquisition and licensing of online gaming technologies.
On May 12, 2006, the Company entered into a share exchange agreement with Liverpoole Inc., a privately-owned corporation organized under the laws of Antigua, for the acquisition of all of the issued and outstanding shares of Liverpoole in exchange for 25,000,000 shares of the Company, upon completion of the agreement. In connection therewith, in order to secure the right to enter into such agreement with Liverpoole, the Company entered into an agreement with World Mobile Network Corp., a publicly-held corporation, pursuant to which, upon the completion of the agreement, World Mobile Network Corp. agreed to assign its exclusive right to acquire Liverpoole to the Company in exchange for 20,000,000 shares of the Company. As of December 31, 2006, these agreements were not been finalized.
F-6
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Aultra Gold Inc.
Notes to Financial Statements
September 30, 2010
On March 26, 2010, Aultra Gold, Inc. (the “Company” or the “Registrant”) entered into an Agreement and Plan of Share Exchange (the “Agreement”) with Shamika Gold Inc., a Canadian Corporation (“Shamika”), and certain shareholders of Shamika (the “Shamika Holders”). Pursuant to the Agreement, the Company acquired all of the outstanding shares of Shamika Gold Inc. (the “Shamika Shares”) from the Shamika Holders in exchange for an aggregate of 25,500,000 shares of the Company’s common stock, par value $0.00001 per share (the “Common Stock”) (the “Exchange”). As a result of the Exchange, Shamika and its 99.9% subsidiary Shamika Gold Mining Sprl., a Congolese limited partnership became subsidiaries of the Company. Shamika Gold Mining Sprl. owns a mining exploration concession located on lands in Poko, Province Orientale in the Democratic Republic of Congo and, at the time of the exchange, an option to acquire two mining exploitation permits in Lubutu in the Congo. The 25,500,000 Company shares were issued to the Shamika Holders, of which Shamika Resources Inc. received 24,564,980 shares, on a pro rata basis, on the basis of the shares held by such Shamika Holders at the time of the Exchange.
On March 26, 2010 the former holders of the Shamika Shares acquired 51% of the outstanding shares of our Common Stock. Accordingly, the Exchange represents a change in control. Dutch Gold Resources, Inc. retained 4,950,000 shares of Shamika Gold, Inc. For financial accounting purposes, the acquisition was a reverse acquisition of the Company by Shamika, under the purchase method of accounting, and was treated as a recapitalization with the Shamika as the acquirer. Upon consummation of the Exchange, the Company adopted the business plan of Shamika.
On March 26, 2010, the effective time of the Acquisition, our board of directors and officers was reconstituted by the resignation of: Rauno Perttu from his role as President, Secretary and director, Daniel Hollis from his role as Chief Financial Officer and director, Lance Rosmarin from his role as director, and the appointment of Robert Vivian as President and Chief Executive Officer and Terence Orstlan as Secretary and Director.
Aultra Gold is an exploration-stage company engaged in the business of acquiring and exploring gold and other valuable mineral properties. Our current focus is on the Democratic Republic of Congo but we are actively considering mining opportunities in other countries. At this time our properties consist of two gold exploration projects on lands in the Kibara Metallogenic Belt in the Eastern region of the country. The Company acquires its properties through its subsidiary, Shamika Gold Mining Sprl. Management and administration services in the Congo are provided by Shamika Congo Kalehe Sprl. a related party. Refer to Section 4 Related Party Balances and Transactions for further information about this organization. Application has been made to FINRA to change our name to Shamika2Gold Inc. The Company has directed all personnel in the Congo to ensure that no payments are made to any individuals or organizations who may be involved with the financing of conflict.
2. Significant Accounting Policies
a) Basis of Accounting
These consolidated financial statements are prepared in accordance with generally accepted accounting principles (“GAAP”) in United States. These consolidated financial statements include the accounts of the Company, its wholly owned subsidiary, Shamika Gold Inc. up to the date of its dissolution on August 31, 2010 and its 99.9% subsidiary Shamika Gold Mining Sprl. The Company has elected a December 31 year-end. Summarized below are those policies considered particularly significant to the Company.
F-7
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Aultra Gold Inc.
Notes to Financial Statements
September 30, 2010
a) Going Concern
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The Company’s financial statements are prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business.
b) Use of Estimates
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 the disclosure of any contingent assets and liabilities as at the date of the financial statements, as well as the reported amounts of revenues earned and expenses incurred during the period. Actual results could differ from those estimates.
c) Financial Instruments and Financial Risk
The Company’s financial instruments consists of cash, prepaid expenses, investments, accounts payable and accrued liabilities, the fair values of which approximate their carrying amounts due to the short-term nature of these instruments.
d) Cash
For the purposes of the statement of cash flows, the company considers all funds held in its bank accounts and funds held in trust by third parties as cash.
e) Investment in mining properties
Land and Mining Claims – Land and mining claims are recorded at the lower of cost, less accumulated depletion, or fair value. Costs of developing mining properties (after completion of exploration) are capitalized. Exploration costs are expensed as incurred until the establishment of a commercially minable deposit or reserve which can be economically and legally produced. When a mining property reaches the production stage, the related capitalized costs are amortized using the units of production method on the basis of proven and probable ore reserves. The Company’s mining properties are periodically assessed for impairment of value and any losses are charged to operations at the time of impairment.
f) Impairment of Long-Lived Assets
The Company accounts for long-lived assets pursuant to Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of. The Company evaluates its land and mineral properties, buildings, machinery and equipment and other long-lived assets for impairment at least annually and when indications of possible impairment exist and assesses their recoverability based upon anticipated future cash flows from the asset’s or group of assets’ use or sale. If changes in circumstances lead Company management to believe that any of its long-lived assets may be impaired, the carrying value of long-lived assets are reduced by the estimated excess of the carrying value over the fair value of the assets. Fair value is determined by the discounted future cash flows from the asset or group of assets. No impairment was recognized during the reporting periods.
F-8
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Aultra Gold Inc.
Notes to Financial Statements
September 30, 2010
2. Significant Accounting Policies (continued)
g) Gain or Loss per Share
Basic gain or loss per share is computed by dividing loss attributable to common shareholders by the weighted average number of common shares outstanding during the period.
h) Management’s Estimates
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 dates of the financial statements and the reported amounts of revenues and expenses during the reported periods. Actual results could differ from those estimates.
i) Share Capital
Share capital issued for non-monetary consideration is recorded at an amount based upon fair market value as estimated by management.
j) Comprehensive Income
The Company applies Statement of Financial Accounting Standards No. 130 Reporting Comprehensive Income (SFAS No. 130). Comprehensive income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances from non owner sources. It includes all changes in equity during a period except from those resulting from investments by owners and distributions to owners.
k) Income taxes
Deferred Income taxes are provided for temporary differences between the financial reporting and tax basis of assets and liabilities using enacted tax laws and rates for the years when the differences are expected to reverse.
l) Stock based compensation
The Company accounts for stock-based compensation in accordance with SFAS No. 123 for “Accounting for stock-based compensation” and related interpretations.
m) Asset retirement obligations
Asset retirement obligations requires recognition of a legal liability for obligations relating to retirement of property, plant and equipment, and arising from the acquisition, construction, development, or normal operation of those assets. Such asset retirement cost, must be recognized at fair value, when a reasonable estimate of fair value can be estimated, in the period in which it is incurred, added to the carrying value of the asset, and amortized into income on a systematic basis over its useful life.
As at the reporting date, the Company does not have any asset retirement obligations.
F-9
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Aultra Gold Inc.
Notes to Financial Statements
September 30, 2010
3. Acquisition of Subsidiary
On January 22, 2007, the Company entered into a definitive Share Exchange Agreement (the “Agreement”) with Strategic Minerals Inc., a Nevada corporation, Aultra Gold Inc. (fka Dutch Mining (Canada) Ltd.) (“AGI”), a company formed under the laws of the Province of British Columbia, and certain other shareholders of AGI. Pursuant to the Agreement, which is subject to certain regulatory approval, the Company agreed to acquire 100% of the outstanding equity of AGI from the stockholders of AGI (the “AGI Shareholders”) in exchange for the issuance by the Company to the AGI Shareholders of one share of common stock, $0.001 par value (the “Common Stock”), of the Company for each issued common share of AGI (the “Acquisition”). Therefore, subject to certain regulatory approval, the Company shall be required to issue 24,496,668 shares of Common Stock to the AGI Shareholders (the “Consideration Shares”) and there will be approximately a total of 95,896,668 shares of Common Stock issued and outstanding subsequent to the Acquisition.
On March 26, 2010, Aultra Gold, Inc. (the “Company” or the “Registrant”) entered into an Agreement and Plan of Share Exchange (the “Agreement”) with Shamika Gold Inc., a Canadian Corporation (“Shamika”), and certain shareholders of Shamika (the “Shamika Holders”). Pursuant to the Agreement, the Company acquired all of the outstanding shares of Shamika Gold Inc. (the “Shamika Shares”) from the Shamika Holders in exchange for an aggregate of 25,500,000 shares of the Company’s common stock, par value $0.00001 per share (the “Common Stock”) (the “Exchange”). As a result of the Exchange, Shamika and its 99.9% subsidiary Shamika Gold Mining Sprl., a Congolese limited partnership became subsidiaries of the Company. Shamika Gold Mining Sprl. owns a mining exploration concession located on lands in Poko, Province Orientale in the Democratic Republic of Congo and, at the time of the exchange, an option to acquire two mining exploitation permits in Lubutu in the Congo. The 25,500,000 Company shares were
issued to the Shamika Holders, of which Shamika Resources Inc. received 24,564,980 shares on a pro rata basis, on the basis of the shares held by such Shamika Holders at the time of the Exchange.
On March 26, 2010 the former holders of the Shamika Shares acquired 51% of the outstanding shares of our Common Stock. Accordingly, the Exchange represents a change in control. Dutch Gold Resources, Inc. retained 4,950,000 shares of Shamika Gold, Inc. For financial accounting purposes, the acquisition was a reverse acquisition of the Company by Shamika, under the purchase method of accounting, and was treated as a recapitalization with the Shamika as the acquirer. Upon consummation of the Exchange, the Company adopted the business plan of Shamika.
Shamika Gold Inc. was dissolved on August 31, 2010 in accordance with the provisions of the Canada Business Corporations Act and its net assets, consisting primarily of its partnership interest in Shamika Gold Mining Sprl., were distributed to Aultra Gold Inc.
4. Related Party Balances and Transactions
As of September 30, 2010, the Company had accounts payable to related parties in the amount of $111,590. $13,496 is payable to Shamika Resources Inc. and $98,094 is payable to Shamika Congo Kalehe Sprl., a subsidiary of Shamika Resources Inc. registered to do business in the Congo, for management and administration services. We are currently unable to repay these amounts.
As more fully described under “Recent Developments”, in April 2010, the Company acquired two mining permits on properties in Lubutu, Congo. Under an option agreement with Shamika Congo Kalehe Sprl., the acquisition of these properties triggers a payment them of $100,00. Such payment is to be made within six months from the closing of our next financing. Furthermore, the agreement provides for the payment to them of a net smelter return of 5.0 %
F-10
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Aultra Gold Inc.
Notes to Financial Statements
September 30, 2010
Of sales with an option at any time to buy down the rate from 5% to 2.5% by paying them $2 million of which $1 million is payable in cash and $1 million in shares.
Shamika Resources Inc. has pledged its 24,564,980 shares in Aultra Gold Inc. against short-term loans of $100,000.
5. Accounts payable mining properties
The amount of $459,000 is payable as a result of the acquisition of two mining permits on properties in Lubutu, as more fully described under Recent Developments. Under the agreement $59,000 should have been paid by July 2, 2010. We have been unable to make this payment and we are therefore in default. We will not be able to repay the amount until we have the funding from our next financing. The terms of repayment of $400,000 are to be negotiated. We intend to negotiate a long-term repayment schedule in line with the development and financing plan for the properties. There can be no assurance that we will be successful in these negotiations. No provision has been made in these accounts for interest, if any, which may be payable on the outstanding amount.
6. Share Capital
a) Details of share capital are as follows:
Authorized: 50,000,000 common shares with a par value of $0.00001 and 10,000,000 preferred shares with a par value of $0.00001
Number of
Shares Amount
$
Issued:
Balance – inception January 26, 2005 - -
Common Shares issued 71,400,000 71,400
Shares issued in lieu of promissory note 10,833,333 10,833
Balance-December 31, 2006 82,233,333 82,233
Restricted common shares issued 24,496,668 24,497
Restricted Common Shares issued for Jungo 50,000 50
Common Shares issued 200,000 200
Shares cancelled (40,833,333 ) (40,833 )
Balance – December 31, 2007 (d) 66,146,668 66,147
Restricted Common Shares issued for Services 30,000,000 30,000
Balance – December 31, 2008 96,146,668 96,147
Balance, December 31, 2009 96,146,668 96,147
Cancellation of Shares (46,146,668) (46,147)
Balance September 30, 2010 50,000,000 50,000
F-11
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Aultra Gold Inc.
Notes to Financial Statements
September 30, 2010
7. Income Taxes
A reconciliation of income taxes at statutory rates is as follows:
September 30, 2010
Net gain for the period $
Total income taxes -0-
Management believes that there may be a Canadian tax charge in relation to the merger transaction, but that this amount will not be material and management has deemed it appropriate not to accrue for this amount at this time.
8. Commitments and Claims
In the course of normal business, we may be subject to the threat of litigation, claims and assessments. Our management believes that unfavorable decisions in any pending procedures or threat of procedures or any amount it might be required to pay will not have a material adverse impact on our financial condition.
On or about April 17, 2007, a lawsuit was filed by 761273 B.C. Ltd., Calderan Ventures Ltd., Scott Kostiuk, William Parkin, Ronald Oliver, Lubomir Palecek and Krista Dayton under the laws of the Province of British Columbia, Canada in the British Columbia Supreme Court for a total amount of $203,311.88. Aultra intends to vigorously defend itself should this action be pursued in the United States. As part of the transaction with Dutch Gold, Dutch Gold indemnified the Company against any claims arising from this claim.
From time to time we may be a defendant and plaintiff in various legal proceedings arising in the normal course of our business. We are currently not a party to any material pending legal proceedings or government actions, including any bankruptcy, receivership, or similar proceedings. In addition, management is not aware of any known litigation or liabilities involving the operators of our properties that could affect our operations. Should any liabilities incurred in the future, they will be accrued based on management’s best estimate of the potential loss. As such, there is no adverse effect on our consolidated financial position, results of operations or cash flow at this time. Furthermore, our management does not believe that there are any proceedings to which any of our directors, officers, or affiliates, any owner of record of the beneficially or more than five percent of our common stock, or any associate of any such director, officer, affiliate, or security holder is a party adverse to our company or has a material interest adverse to us.
As more fully described under Recent Developments, in April 2010, we exercised our right to purchase two mining exploitation permits. Under the agreement, the amount of $100,000 is payable to a related party, Shamika Congo Kalehe Sprl. Payment is due within six months from the closing of our next financing. Furthermore the agreement provides for the payment to them of a net smelter return of 5.0 % of sales with an option at any time to buy down the rate from 5% to 2.5% by paying them $2 million of which $1 million is payable in cash and $1 million in shares
9. Recent Accounting Pronouncements
In February 2007, the Financial Accounting Standards Board (the “FASB”) issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (SFAS 159). SFAS 159 allows the company to choose to measure many financial assets and financial liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. SFAS 159 is effective for fiscal years beginning after November 15, 2007.
F-12
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Aultra Gold Inc.
An Exploration Stage Company
Notes to Financial Statements
September 30, 2010
(Stated in United States Dollars)
The Company is currently evaluating the requirements of SFAS 159 and the potential impact on the Company’s financial statements. In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans – an amendment of FASB Statements No. 87, 88, 106 and 132(R)” (SFAS 158”). SFAS 158 requires an employer that sponsors one or more single-employer defined benefit plans to (a) recognize the overfunded or underfunded status of a benefit plan in its statement of financial position, (b) recognize as a component of other comprehensive income, net of tax, the gains or losses and prior service costs or credits that arise during the period but are not recognized as components of net periodic
benefit cost pursuant to SFAS 87, “Employers’ Accounting for Pensions”, or SFAS 106, “Employers’ Accounting for Postretirement Benefits Other Than Pensions”, (c) measure defined benefit plan assets and obligations as of the date of the employer’s fiscal year-end, and (d) disclose in the notes to financial statements additional information about certain effects on net periodic benefit cost for the next fiscal year that arise from delayed recognition of the gains or losses, prior service costs or credits, and transition asset or obligation. SFAS 158 is effective for the Company’s fiscal year ending December 31, 2007. The adoption of SFAS No. 158 is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurement" ("SFAS 157"). The Statement provides guidance for using fair value to measure assets and liabilities. The Statement also expands disclosures about the extent to which companies measure assets and liabilities at fair value, the information used to measure fair value, and the effect of fair value measurement on earnings. This Statement applies under other accounting pronouncements that require or permit fair value measurements. This Statement does not expand the use of fair value measurements in any new circumstances. Under this Statement, fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the entity transacts. SFAS 157 is effective for the Company for fair value measurements and disclosures made by the Company in its fiscal year beginning on January 1, 2008.
In February 2006, the FASB issued SFAS No. 155, “ Accounting for Certain Hybrid Financial Instruments ”, which amends SFAS No. 133, “ Accounting for Derivative Instruments and Hedging Activities ” and SFAS No. 140. SFAS No. 155 permits fair value measurement for any hybrid financial instrument that contains an embedded derivative that otherwise would require bifurcation, establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or hybrid financial instruments containing embedded derivatives. The adoption of SFAS No. 155 is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.
11. Subsequent events
On October 15, 2010 the Company authorized the issuance of 23,547,024 shares of common stock in exchange for the retirement and satisfaction of obligations and debt in the principal amount of $301,512, plus any and all accrued interest and fees owed to our former principal stockholder, officer and director Rauno Perttu. Mr. Perttu assigned his rights to receive a number of the shares in independently negotiated transactions.
On November 19, 2010, the Company authorized the issuance of 3,600,000 additional shares of founders’ stock to the principals of its operating companies and members of its Board of Directors including 2,000,000 shares to Robert Vivian, our Chairman, Chief Executive and Financial Officer, and 1,000,000 shares to Terrance Orstlan, our Director, pending the consummation of the amendment of the Company’s Articles of Incorporation to increase its authorized common stock.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our audited Financial Statements and Notes thereto included herein beginning on page F-1.
Certain statements in this Report constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. We intend that such forward-looking statements be subject to the safe harbors created thereby.
References in this Annual Report on Form 10-Q (the “Quarterly Report”) to “we”, “us,” “our,” “the Company,” “Aultra Gold” and “AGI” mean Aultra Gold Inc. and our subsidiaries, unless the context otherwise requires.
Item 1. Description of Business
Description of Aultra Gold, Inc Business
Aultra Gold is an exploration-stage company engaged in the business of acquisition and exploration of gold and other valuable mineral properties with a focus on the Democratic Republic on Congo. At this time our properties consist of two gold exploration projects on lands in the Kibara Metallogenic Belt in the Eastern region of the country. The Company acquires its properties through its subsidiary, Shamika Gold Mining Sprl. Management and administration services in the Congo are provided by Shamika Congo Kalehe Sprl. a related party. Refer to Section 4 Related Party Balances and Transactions for further information about this organization. The Company intends to raise an initial financing of $1,500,000, which we will use to obtain 43-101 geological reports and other appropriate feasibility studies and based on these reports initiate further exploration leading to further financings and development of the properties.
Applications have been made to FINRA to change the name of Aultra Gold Inc to Shamika 2 Gold Inc on upon approval from FINRA, the name change will be announced.
General Overview of Business
Aultra Gold is an exploration-stage company engaged in the business of acquisition and exploration of gold and other valuable mineral properties with a focus on the Democratic Republic on Congo. At this time our properties consist of two gold exploration projects on lands in the Kibara Metallogenic Belt in the Eastern region of the country. The Company acquires its properties through its subsidiary, Shamika Gold Mining Sprl. Management and administration services in the Congo are provided by Shamika Congo Kalehe Sprl. a related party. Refer to Section 4 Related Party Balances and Transactions for further information about this organization. The Company intends to raise an initial financing of $1,500,000, which we will use to obtain 43-101 geological reports and other appropriate feasibility studies and based on these reports initiate further exploration leading to the development of the properties.
Employees
As of September 30, 2010, the Company had two employees.
There is limited historical information about us upon which to base an evaluation of our performance. We are exploration stage company and have had no revenues. We cannot guarantee that we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise.
We have not earned any revenues from our incorporation on January 26, 2005. We do not anticipate earning revenues for the foreseeable future. We have not commenced the exploration stage of our business and can provide no assurance that we will discover economic mineralization on the property, or if such minerals are discovered, that we will enter into commercial production.
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Discussion of mining projects
The following is a summary of our two projects in the Democratic Republic of Congo as follows:
PROJECT-POKO
Exploration permit number 8315 covering an area of 120 mining blocks and 103 sq. kilometers located in Poko, Province Orientale. This property is in the Kilo-Moto Greenstone belt. The greenstone rocks and quartz veins found in this area have a reputation for an abnormally high content of gold and the area is well known for large deposits. The property is largely unexplored but it is accessible by road and by water and it is an excellent prospect for further exploration. Our business plan calls for the preparation of a 43-101 geological report, further exploration based on the recommendations in the report, the conversion to an exploitation permit and the development of the property. The exploration permit has a term of five years with two rights to renew for five years each. We pay an annual permit fee of $3,800 and we must make periodical payments into an environmental fund.
PROJECT-LUBUTU
Two mining exploitation permits numbered 133 and 134 covering 72 mining blocks and 61 sq. kilometers located on lands in Lubutu, Province of Maniema. This location is in the heart of the Kibara Metallogenic Belt approximately 300 kilometers northwest of Lake Kivu. The permits give us the right to develop and exploit the properties for gold and the properties have been in production through artisanal mining. Our business plan envisages feasibility studies to determine the most effective way to put the properties into full scale production and a subsequent financing to enable this to be done. We acquired the properties in April 2010 for $600,000 of which $100,000 is payable to a related party, Shamika Congo Kalehe Sprl., under an option agreement, and $500,000 is payable to a third party. The $100,000 payable to Shamika Congo Kalehe Sprl. is payable within six months from the date of our next financing. The $500,000 to a third party was payable $100,000 by July 2, 2010 and $400,000 longer-term. So far we have only paid the third party $41,000 leaving $59,000 overdue and in default. We will not be able to make this payment until we receive the proceeds of our next financing. The terms of repayment of $400,000 are to be negotiated. We intend to negotiate a long-term repayment schedule in line with our development and financing plan for the properties. There can be no assurance that our plan can be successfully executed and there can be no assurance that we will be able to successfully negotiate the repayment terms that we need. The exploitation permit has a term of thirty years and several rights to renew for fifteen years. Our permits have approximately twenty years to run and we pay annual permit fees of $37,000 for them.
Expenses
The loss for the three months ended September 30, 2010 was $13,866 compared with $171,707 for the three months ended September 30, 2009 and $151,431 for the nine months ended September 30, 2010 compared with $375,648 for the nine months ended September 30, 2009. In each case the loss for the period has decreased as a result of the change in the business. Losses during the three months and nine months ended September 30, 2010 can be attributed to the costs relating to the permits in the Democratic Republic of Congo and the restructuring of the business, whereas the losses in the three months and the nine months ended September 30, 2009 related to the disposition of mining properties to Dutch Gold.
Total expenses for the nine months ended September 30, 2010 were $151,431 made up of mining expenses, which consist mainly of permit fees on the properties in Congo, professional fees, being substantially the cost of restructuring the Corporation following the agreement with Shamika and other expenses.
Liquidity and Capital Resources
At September 30, 2010, our cash was $0. Since our inception on January 20, 2005, to the end of the period ended September 30, 2010, we have incurred losses of $550,140. We attribute our net loss to having no revenues to offset our operating expenses.
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We have no cash flow from operations and do not have cash to meet our current liabilities nor our operational requirements for the next 12 months. In addition we will also be required to raise additional working capital to fund the exploration and development plans as discussed above.
Shamika Congo Kalehe Sprl. a related party has incurred expenses of $98,094 on our behalf. We are currently unable to pay this amount until we receive the funds from our next financing. This amount is included in the balance sheet in the item ‘Accounts payable related parties ’
We have no assurance that future financings will be available to us on acceptable terms. If financing is not available to us on acceptable terms, we may be unable to continue our operations. Should our costs and expenses prove to be greater than we currently anticipate, or should we change our current Plan of Mining Operations in a manner that will increase or accelerate our anticipated costs and expenses, such as through the acquisition of new properties, the depletion of our working capital would be accelerated. To the extent that it becomes necessary to raise additional cash in the future as our current cash and working capital resources are depleted, we will seek to raise it through the public or private sale of debt or equity securities, the procurement of advances on contracts or funding from joint-venture or strategic partners, debt financing or term loans, or a combination of the foregoing. We also may seek to satisfy indebtedness without any cash outlay through the private issuance of debt or equity securities.
We have no assurance that future financings will be available to us on acceptable terms. If financing is not available to us on acceptable terms, we may be unable to continue our operations.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is not exposed to market risk related to interest rates or foreign currencies.
ITEM 4. CONTROLS AND PROCEDURES.
(a) Evaluation of Disclosure Controls and Procedures
Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. This rule defines internal control over financial reporting as a process designed by, or under the supervision of Company management to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP.
Based on this evaluation, our chief executive officer and principal accounting officer concluded that, as of the end of the fiscal period ending September 30, 2010 our disclosure controls and procedures were not effective to ensure that the information required to be disclosed in reports we submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the applicable rules and forms, and that such information was accumulated and communicated to our chief executive officer and principal accounting officer in a manner that allowed for timely decisions regarding required disclosure.
Management does not expect that our Disclosure Controls and internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management or board override of the control.
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The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
MANAGEMENT'S REPORT 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 CEO and CFO 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: pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; 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 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 September 30 2010 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.
Identified 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 was the 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.
· We omitted to disclose of our “Management’s Annual Report on Internal Control over Financial Reporting” in our initial Annual Report filed on Form 10-K for the fiscal year ended December 31, 2007;
· During 2007, we did not timely file our Quarterly Report on Form 10-Q for the six months ending June 30, 2007 and our Annual Report for year ending December 31, 2007;
· We lack sufficient trained personnel with experience in accounting and financial reporting functions due to the size of our Company and our lack of financial resources to pay such personnel; and
· We do not have a sufficient number of employees to adequately segregate accounting duties to provide for sufficient internal controls.
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These material weaknesses were first identified by management in connection with the preparation and review of our unaudited financial statements as of September 30, 2008 in or about November 2008.
Management also 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.
Management's Remediation Initiatives
In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we have initiated a 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.
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. While we are actively seeking outside members, including candidates with accounting experience, we cannot provide any assurance that we will be successful. Given the size of our company, lack of revenues and current lack of financing to continue with our business, it is unlikely that anyone will agree to join our Board until general economic conditions and our own business prospects improve significantly.
(b) Changes in Internal Controls
During the most recent quarter ended September 30, 2010, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. However, as discussed above, changes have been implemented subsequent to the period covered by this Form 10-Q to add additional controls to correct the material weakness in internal control over financial reporting.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
On or about April 17, 2007, a lawsuit was filed by 761273 B.C. Ltd., Calderan Ventures Ltd., Scott Kostiuk, William Parkin, Ronald Oliver, Lubomir Palecek and Krista Dayton under the laws of the Province of British Columbia, Canada in the British Columbia Supreme Court for a total amount of $ 203,311.88. Aultra has no assets in Canada and intends to vigorously defend itself should this action be pursued in the United States. As part of the transaction with Dutch Gold, Dutch Gold indemnified the Company against any claims arising from this claim.
In the course of normal business, we may be subject to the threat of litigation, claims and assessments. Our management believes that unfavorable decisions in any pending procedures or threat of procedures or any amount it might be required to pay will not have a material adverse impact on our financial condition.
From time to time we may be a defendant and plaintiff in various legal proceedings arising in the normal course of our business. We are currently not a party to any material pending legal proceedings or government actions, including any bankruptcy, receivership, or similar proceedings. In addition, management is not aware of any known litigation or liabilities involving the operators of our properties that could affect our operations. Should any liabilities incurred in the future, they will be accrued based on management’s best estimate of the potential loss. As such, there is no adverse effect on our consolidated financial position, results of operations or cash flow at this time. Furthermore, our management does not believe that there are any proceedings to which any of our directors, officers, or affiliates, any owner of record of the beneficially or more than five percent of our common stock, or any associate of any such director, officer, affiliate, or security holder is a party adverse to our company or has a material interest adverse to us.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On October 15, 2010 the Company authorized the issuance of 23,547,024 shares of common stock in exchange for the retirement and satisfaction of obligations and debt in the principal amount of $301,512, plus any and all accrued interest and fees owed to our former principal stockholder, officer and director Rauno Perttu. Mr. Perttu assigned his rights to receive a number of the shares in independently negotiated transactions.
On November 19, 2010, the Company authorized the issuance of 3,600,000 additional shares of founders’ stock to the principals of its operating companies and members of its Board of Directors including 2,000,000 shares to Robert Vivian, our Chairman, Chief Executive and Financial Officer, and 1,000,000 shares to Terrance Orstlan, our Director, pending the consummation of the amendment of the Company’s Articles of Incorporation to increase its authorized common stock.
The sales of the securities identified above were made pursuant to privately negotiated transactions that did not involve a public offering of securities and, accordingly, we believe that these transactions were exempt from the registration requirements of the Securities Act pursuant to Section 4(2) of the Securities Act and Rule 506 of Regulation D. The agreements executed in connection with this sale contain representations to support the Company’s reasonable belief that the Investor had access to information concerning the Company’s operations and financial condition, the Investor acquired the securities for their own account and not with a view to the distribution thereof in the absence of an effective registration statement or an applicable exemption from registration, and that the Investor are sophisticated within the meaning of Section 4(2) of the Securities Act and are “accredited investors” (as defined by Rule 501 under the Securities Act). In addition, the issuances did not involve any public offering; the Company made no solicitation in connection with the sale other than communications with the Investor; the Company obtained representations from the Investor regarding their investment intent, experience and sophistication; and the Investor either received or had access to adequate information about the Company in order to make an informed investment decision. All of the foregoing securities are deemed restricted securities for purposes of the Securities Act.
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ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. (REMOVED AND RESERVED)
ITEM 5. OTHER INFORMATION.
On October 15, 2010 the Company authorized the issuance of 23,547,024 shares of common stock in exchange for the retirement and satisfaction of obligations and debt in the principal amount of $301,512, plus any and all accrued interest and fees.
On November 19, 2010, the Company authorized the issuance of 3,600,000 additional shares of founders’ stock to the principals of its operating companies and members of its Board of Directors including 2,000,000 shares to Robert Vivian, our Chairman, Chief Executive and Financial Officer, and 1,000,000 shares to Terrance Orstlan, our Director, pending the consummation of the amendment of the Company’s Articles of Incorporation to increase its authorized common stock.
ITEM 6. EXHIBITS.
Exhibit
Number Description of Exhibits
31.1 Certification of Chief Executive Officer and Chief Financial Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
32.1 Certification of Chief Executive Officer and Chief Financial Officer as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
/s/ Robert Vivian
Date: November 22, 2010 Name: Robert Vivian
Title: President and Chief Executive Officer and Interim Financial Officer
(Principal Executive and Accounting Officer)
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EXHIBIT 31.1
AULTRA GOLD INC.
CERTIFICATION PURSUANT TO SARBANES-OXLEY SECTION 302
I, Robert Vivian, President and Chief Executive Officer and Interim Financial Officer of Aultra Gold Inc., certify that:
1. I have reviewed this quarterly report on Form 10-Q for the period ended September 30, 2010, of Aultra Gold Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant, and we have:
(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
/s/ Robert Vivian
Date: November 22, 2010 Name: Robert Vivian
Title: President and Chief Executive Officer and Interim Financial Officer
(Principal Executive and Accounting Officer)
EXHIBIT 32.1
AULTRA GOLD INC.
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Aultra Gold Inc. (the Company) on Form 10-Q for the period ended September 30, 2010 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Robert Vivian, President, Chief Executive Officer and Interim Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
Date: November 22, 2010 /s/ Robert Vivian
Name: Robert Vivian
Title: President and Chief Executive Officer and Interim Financial Officer
(Principal Executive and Accounting Officer)
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