ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors" that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Our unaudited interim financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles. The following discussion should be read in conjunction with our company's audited financial statements and 10-K for the year ended August 31, 2016 and unaudited interim financial statements and the related notes that appear elsewhere in this quarterly report.
In this quarterly report, unless otherwise specified, all references to "common stock" refer to common shares in the capital of our company and the terms "we", "us" and "our" mean American Paramount Gold Corp.
GENERAL OVERVIEW
We were incorporated under the laws of the State of Nevada on July 20, 2006 under the name Zebra Resources, Inc. At inception, we were an exploration stage company engaged in the acquisition, exploration and development of mineral properties.
On February 26, 2010, Monaco Capital Inc. acquired a controlling interest in our company by purchasing 20,000,000 shares of our common stock in a private transaction.
On March 17, 2010, we effected a 1 old for 2 new forward stock split of our issued and outstanding common stock. As a result, our authorized capital increased from 75,000,000 to 150,000,000 shares of common stock and our issued and outstanding increased from 32,000,000 shares of common stock to 64,000,000 shares of common stock, all with a par value of $0.001.
Also effective March 17, 2010, we changed our name from Zebra Resources, Inc. to American Paramount Gold Corp., by way of a merger with our wholly owned subsidiary American Paramount Gold Corp., which was formed solely for the change of name.
The name change and forward stock split became effective with the Over-the-Counter Bulletin Board at the opening for trading on April 12, 2010 under the stock symbol APGA. Our CUSIP number is 02882T 05.
On April 22, 2010, we entered into a convertible loan agreement with Monaco Capital Inc., wherein Monaco Capital Inc. has agreed to loan our company up to $5,000,000. The loan (and accrued interest) is convertible in whole or in part into common shares of our company at a conversion price of $1.05 and will bear interest at 10% per annum. The principal amount of the loan and accrued interest is due and payable one year from the advancement date. We may at any time during the term of the loan prepay any sum up to the full amount of the loan and accrued interest then outstanding for an additional 10% of such amount. At November 30, 2016, Monaco Capital Inc. has advanced $980,413. Interest relating to the loan totalling $532,362 as at November 30, 2016 was recorded in accrued liabilities.
On July 30, 2010, our directors approved the adoption of the 2010 stock option plan which permits our company to issue up to 6,500,000 shares of our common stock to directors, officers, employees and consultants of our company upon the exercise of stock options granted under the 2012 plan.
On November 28, 2011, the Nevada Secretary of State accepted for filing a Certificate of Change, wherein the corporation amended our Articles of Incorporation to implement a forty (40) for one (1) reverse stock split of our authorized and issued and outstanding common shares such that our company’s authorized capital will be decreased from 150,000,000 shares of common stock with a par value of $0.001 to 3,750,000 shares of common stock with a par value of $0.001 and, correspondingly, its issued and outstanding shares of common stock shall decrease from 64,500,000 shares of common stock to 1,612,500 shares of common stock. No fractional shares shall be issued and fractional shares shall be rounded up. The reverse split was effective at the opening of trading on January 26, 2012.
OUR CURRENT BUSINESS
We are an exploration stage mining company engaged in the identification, acquisition, and exploration of metals and minerals with a focus on gold mineralization.
Both mineral exploration and development involve a high degree of risk and few properties which are explored are ultimately developed into producing mines.
CASH REQUIREMENTS
We intend to search for qualifying exploration properties over the next twelve months. We estimate our operating expenses and working capital requirements for the next twelve month period to be as follows:
ESTIMATED EXPENSES FOR THE NEXT TWELVE MONTH PERIOD
General, administrative, and corporate expenses
|
|
$
|
50,000
|
|
Operating expenses
|
|
$
|
50,000
|
|
Identification of properties of merit
|
|
$
|
50,000
|
|
TOTAL
|
|
$
|
150,000
|
|
At present, our cash requirements for the next 12 months outweigh the funds available. Of the $150,000 that we require for the next 12 months, we had $4,432 in cash as of May 31, 2017. In order to improve our liquidity, we intend to pursue additional equity financing from private investors or possibly a registered public offering. Other than as set out below, we currently do not have any arrangements in place for the completion of any further private placement financings and there is no assurance that we will be successful in completing any further private placement financings. If we are unable to achieve the necessary additional financing, then we plan to reduce the amounts that we spend on our business activities and administrative expenses in order to be within the amount of capital resources that are available to us.
RESULTS OF OPERATIONS - NINE MONTHS ENDED MAY 31, 2017 AND 2016
The following summary of our results of operations should be read in conjunction with our financial statements for the nine months ended May 31, 2017 and 2016 which are included herein.
Our operating results for the nine months ended May 31, 2017 and 2016 are summarized as follows:
|
|
Nine Months
|
|
|
Nine Months
|
|
|
|
Ended
|
|
|
Ended
|
|
|
|
May 31,
|
|
|
May 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
General and administrative
|
|
$
|
99,597
|
|
|
$
|
272,777
|
|
Legal and audit
|
|
|
154
|
|
|
|
28,617
|
|
Foreign exchange
|
|
|
473
|
|
|
|
(6,641
|
)
|
Interest expense
|
|
|
-
|
|
|
|
73,598
|
|
Gain on extinguishment of debt
|
|
|
(37,612
|
)
|
|
|
-
|
|
Net loss from operations
|
|
$
|
(62,612
|
)
|
|
$
|
(368,531
|
)
|
REVENUES
We have not generated revenues since inception and we do not anticipate earning revenues in the near future.
EXPENSES
General and administrative expenses decreased by $173,180 during the nine months ended May 31, 2017 as compared to the nine months ended May 31, 2016.
Legal and audit expenses decreased by $28,463 during the nine months ended May 31, 2017 as compared to the nine months ended May 31, 2016.
LIQUIDITY AND FINANCIAL CONDITION
WORKING CAPITAL
|
|
May 31,
|
|
|
August 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
Current assets
|
|
$
|
4,432
|
|
|
$
|
866
|
|
Current liabilities
|
|
|
1,667,773
|
|
|
|
1,631,920
|
|
Working capital (deficit)
|
|
$
|
(1,663,341
|
)
|
|
$
|
(1,631,054
|
)
|
OPERATING ACTIVITIES
Cash used in operating activities was $26,759 for the nine months ended May 31, 2017.
FINANCING ACTIVITIES
Cash provided by financing activities was $30,325 for the nine months ended May 31, 2017.
CONTRACTUAL OBLIGATIONS
As a "smaller reporting company", we are not required to provide tabular disclosure obligations.
OFF-BALANCE SHEET ARRANGEMENTS
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
APPLICATION OF CRITICAL ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities an disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenue and expenses during the reporting period. Actual results could differ from those estimates.
NET LOSS PER COMMON SHARE
Our company computes net loss per share in accordance with ASC 260, "
Earnings per Share
" and SEC Staff Accounting Bulletin No. 98 (SAB 98). Under the provisions of ASC 260 and SAB 98, basic net loss per share is computed by dividing the net loss available to common stockholders for the period by the weighted average number of shares of common stock outstanding during the period. The calculation of diluted net loss per share gives effect to common stock equivalents; however, potential common shares are excluded if their effect is anti-dilutive. As at May 31, 2017, our company had no potentially dilutive securities.
STOCK-BASED COMPENSATION
The company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with FASB ASC 505-10. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by FASB ASC 505-10.
GOING CONCERN
Our company has incurred a net loss $62,612 for the nine months ended May 31, 2017 and at May 31, 2017 had a deficit accumulated of $5,729,840. Our company has commenced limited operations, raising substantial doubt about our company's ability to continue as a going concern. Our company will seek additional sources of capital through the issuance of debt or equity financing, but there can be no assurance our company will be successful in accomplishing its objectives.
The ability of our company to continue as a going concern is dependent on additional sources of capital and the success of our company's plan. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from the outcome of this uncertainty.
At this time, we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock or through a loan from our directors, shareholders or investors to meet our obligations over the next twelve months. Other than a convertible loan agreement with Monaco Capital Inc., we do not have any further arrangements in place for any future debt or equity financing.