CONDENSED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(An
Exploration Stage Company)
March
31, 2014
(Unaudited)
NOTE
1 – BASIS OF PRESENTATION
These
consolidated financial statements have been prepared in accordance with generally accepted accounting principles for the interim
financial information with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all
of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the
opinion of the Company’s management, all adjustments (consisting of only normal, recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the nine months ended March 31, 2014 are not necessarily indicative
of the results that may be expected for the year ending March 31, 2014.
For
further information, refer to the financial statements and notes thereto included in the Company’s Annual Report on Form
10-K for the year ended June 30, 2013.
The
Company’s fiscal year-end is June 30.
NOTE
2 – ACCOUNTING POLICIES
This
summary of significant accounting policies of Apolo Gold & Energy Inc. is presented to assist in understanding the Company’s
financial statements. The financial statements and notes are representations of the Company’s management, which is responsible
for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United
States of America and have been consistently applied in the preparation of the financial statements. There have been no changes
in accounting policies from those disclosed in the notes to the audited financial statements June 30, 2013.
Consolidation
The
financial statements include the accounts of Apolo Gold & Energy Asia Limited, a 100% owned subsidiary of the Company.
Estimates
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Fair
Value of Financial Instruments and Concentration of Risk
A
fair value hierarchy was established that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority
to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority
to unobservable inputs (Level 3 measurements).
Level
1: classification is applied to any asset or liability that has a readily available quoted market price from an active market
where there is significant transparency in the executed/quoted price.
Level
2: classification is applied to assets and liabilities that have evaluated prices where the data inputs to these valuations are
observable either directly or indirectly but do not represent quoted market prices from an active market.
Level
3: classification is applied to assets and liabilities when prices are not derived from existing market data and requires us to
develop our own assumptions about how market participants would price the asset or liability.
The
fair values of financial instruments, which include cash, accounts payable and accrued liabilities and loans payable to related
parties, were estimated to approximate their carrying values due to the immediate or relatively short maturity of these instruments.
Management does not believe that the Company is subject to significant interest, currency or credit risks arising from these financial
instruments.
Going
Concern
As
shown in the financial statements, the Company incurred a net loss of $150,478 for the period ended March 31, 2014 and has an
accumulated deficit of $7,826,769, no revenues, and limited cash resources as at March 31, 2014.
These
factors indicate that the Company may be unable to continue in existence. The financial statements do not include any adjustments
related to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might
be necessary in the event the Company cannot continue existence. The Company’s management is actively seeking additional
capital and management believes that new properties can ultimately be developed to enable the Company to continue its operations.
However, there are inherent uncertainties in mining operations and management cannot provide assurances that it will be successful
in its endeavors. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Accounting
Pronouncements
Recent
accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC did not, or are
not believed by management to, have a material impact on our present or future financial statements.
NOTE
3 – PREFERRED STOCK
The
Company’s directors authorized 25,000,000 preferred shares with a par value of $0.001. The preferred shares will have rights
and preferences set from time to time by the Board of Directors. As of March 31, 2014 and June 30, 2013, the Company has no preferred
shares issued and outstanding.
NOTE
4 – MINERAL PROPERTY INTERESTS
On
December 11, 2013, the Company acquired a 70% interest in three gold exploration claims in China’s Xinjiang Province.
The
Company issued 6-million shares for the following claims:
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a)
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Gold
Mine Reconnaissance in the West of Daqing Gerry River, Qinghe County, comprising of 7.91 sq km, the claims are valid until
March 27, 2014.
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b)
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Gold
Mine Detailed Survey in the Northwest of Sensha Water Mountain, Heshuo, comprising of 15.8 sq km, the claims are valid until
July 3, 2015.
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c)
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Keler
Nebrack Gold Mine Detailed Survey in Habar County, comprising of 10.28 sq km, the claims are valid until February 20, 2015.
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The
claims are automatically extended for twelve months upon payment of US$10,000 per claim.
NOTE
5 – INVESTMENTS
On
December 23, 2013, the Company acquired a 24% interest in Jiangxi Everenergy New Material Co., Ltd. (“Everenergy”)
The consideration was settled with the Company of 8-million restricted common stocks at a deemed price of $0.375 per share, plus
$1-million in cash. Additionally, on February 19, 2014, the Company acquired an additional 29% interest in Everenergy. The consideration
will be settled with the issue of 11-million restricted common stock at a deemed price of $0.45 per share. As at the date of this
report, the ownership for both acquisitions have not been completed. Consequently, the acquisitions are treated as investment
and no consolidation of the financial statements were adopted.
Everenergy
produces and sells high-quality lithium batteries, cathode materials and relevant precursor materials.
The
acquisition of shares in Everenergy is for investment purposes. Apolo from time to time may dispose of, or acquire, additional
shares of Everenergy.
NOTE
6 – COMMON STOCK
At
a shareholder meeting held October 29, 2010, shareholders authorized an increase in authorized capital from 200,000,000 to 300,000,000
common shares with a par value of $0.001. In addition, shareholders also authorized a share consolidation of 20:1. These financial
statements have been restated retroactively to reflect this share consolidation.
There
were 1,875,000 shares of common stock issued for a cash consideration of $0.08 per share during the period ending September 30,
2013. The shares were issued to a director of the Company.
On
December 1, 2013, the Company issued 100,000 common shares to a consultant pursuant to an administrative consulting services agreement
dated November 16, 2013.
Also
on December 1, 2013, the Company issued 200,000 common shares to a consultant pursuant to an additional administrative consulting
services agreement dated November 16, 2013.
On
December 6, 2013, the Company issued 5,000,000 common shares at a price of $0.20 per share for proceeds of $1 million.
On
December 16, 2013, the Company issued 6,000,000 common shares for three mineral properties.
On
December 23, 2013, the Company issued 8,000,000 common shares to acquire a 24% interest in Everenergy.
On
February 11, 2014, the Company issued 100,000 common shares to a consultant pursuant to an administrative consulting services
agreement dated November 16, 2013.
At
March 31, 2014, there are 27,778,295 common shares issued and outstanding.
There
were no stock options, warrants or other potentially dilutive securities outstanding as at March 31, 2013, June 30, 2013 and September
30, 2012.
NOTE
7 – COMMITMENTS AND CONTINGENCIES
Foreign
Operations
The
accompanying balance sheet at March 31, 2014 includes $3,578 of cash in Canada and $235 in Hong Kong. Although Canada and Hong
Kong (China) are considered economically stable, it is always possible that unanticipated events in foreign countries could disrupt
the Company’s operations.
Compliance
with Environmental Regulations
The
Company’s mining activities are subject to laws and regulations controlling not only the exploration and mining of mineral
properties, but also the effect of such activities on the environment. Compliance with such laws and regulations may necessitate
additional capital outlays affect the economics of a project, and cause changes or delays in the Company’s activities.
Commitments:
The
Company entered in the following contracts during the period:
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On
the November 1, 2013, Company entered into an agreement with a company controlled by the Chief Financial Officer for management
services for a fee of $1,250 per month for a period of one year. The contract allows for additional fees if more than ten
hours per month is needed from the Chief Financial Officer.
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On
September 15, 2013, the Company entered into a consulting services agreement. Under the agreement, the services begin October
1, 2013 and end October 1, 2014. Fees payable under the agreement is HK$80,000 per month (approximately $10,000 per month).
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On
November 16, 2013, the Company entered into a consulting services agreement, for services to begin December 1, 2013 and end
November 30, 2014. Fees payable under the consulting services agreement is $5,000 per month.
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NOTE
8 – RELATED PARTY TRANSACTIONS
The
Company incurred various expenses during the period and reimbursement of these expenses to its Chief Executive Officer amounted
to $61,617 during the nine months ended March 31, 2014 (2013 - $Nil).
The
Company incurred $7,038 (2013 – $Nil) to a company controlled by the Chief Financial Officer for management fees.
Loans
outstanding in the amount of $Nil to its Chief Executive Officer were retired during the nine months ended March 31, 2014.
