FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 FOR THE FISCAL YEAR ENDED JUNE 30, 2005 OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______________ TO ______________
Commission file number: 000-27791
Nevada 98-0412805
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State or other jurisdiction of I.R.S. Employer Identification No.
incorporation or organization
#1209 - 409 Granville St.
Vancouver, British Columbia V6C 1T2
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(Address of principal executive offices) (Zip Code)
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Issuer's telephone number: 604-687-4150
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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 [X] No [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of the issuer's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [ ]
State issuer's revenues for most recent fiscal year: Nil
State the aggregate market value of the voting and non-voting common equity held by non-affiliates (37,024,725) shares) based on the average bid and asked price as of August 19, 2005 being $.06 per share: $2,221,484.
State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 58,631,552 shares of Common Stock as of August 19, 2005.
Documents Incorporated by Reference: None
NOTE REGARDING FORWARD LOOKING STATEMENTS
Except for statements of historical fact, certain information contained herein constitutes "forward-looking statements," including without limitation statements containing the words "believes," "anticipates," "intends," "expects" and words of similar import, as well as all projections of future results. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results or achievements of the Company to be materially different from any future results or achievements of the Company expressed or implied by such forward-looking statements. Such factors include, but are not limited to the following: the Company's lack of an operating history, the Company's minimal level of revenues and unpredictability of future revenues; the Company's future capital requirements to develop additional property within the defined claim; the risks associated with rapidly changing technology; the risks associated with governmental regulations and legal uncertainties; and the other risks and uncertainties described under "Description of Business - Risk Factors" in this Form 10-KSB. Certain of the Forward-looking statements contained in this annual report are identified with cross-references to this section and/or to specific risks identified under "Description of Business - Risk Factors".
PART 1
ITEM 1. DESCRIPTION OF BUSINESS.
History
Apolo Gold & Energy Inc, (the Company) was incorporated in March 1997 under the laws of the State of Nevada as Apolo Gold Inc., for the purpose of financing and operating precious metals concessions. In May 2005, the Company amended its articles of incorporation to change the name of the Company to Apolo Gold & Energy Inc.
The Company then explored precious metals opportunities in Latin and South America. Shortly thereafter the Company formed a subsidiary, Compania Minera Apologold, C.A. a Venezuela corporation, and on May 18, 1999 the Venezuela subsidiary entered into an agreement with Empresa Proyectos Mineros Goldma, C.A. in Caracas Venezuela, to acquire the diamond and gold mining concession in Southern Venezuela known as Codsa 13, located in the Gran Sabana Autonomous Municipality, State of Bolivar, Venezuela.
On April 19, 2001, the 1999 agreement was amended regarding CODSA 13 and the Company then conducted exploration on the property from May 1, 2001 to July 2001. A combination of poor test results and disagreements with the concession holder resulted in the Company closing the camp on August 6, 2001. A cancellation letter was delivered to Empresa Proyectos Goldma C.A. advising them that the Company was abandoning the Codsa 13 site and terminating the agreement. The Venezuelan subsidiary has been inactive since 2001 and there are no plans to reactivate it.
On April 16, 2002, the Company executed an agreement with Pt. Metro Astatama, of Jakarta, Indonesia, for the mining rights to a property known as Nepal Umbar Picung ("NUP"), which is located west of Bandar Lampung, on the island of Sumatra, Indonesia. NUP has a KP, Number KW. 098PP325, which is a mineral tenement license for both Exploration and Exploitation. All KP's must be held by an Indonesian entity.
The "NUP" is 733.9 hectares in size and Apolo has an 80% interest. These are not crown granted claims, but are claims owned privately by citizens of Indonesia. Apolo is entitled to recover all of its costs re development of the "NUP" including property payments before the partner with 20% can participate. The property owner has worked very closely with Apolo management in regard to development of the property and his assistance has been invaluable.
The total purchase price for "NUP" is $375,000. To date the Company has made payments amounting to $200,000 on the property, with a balance remaining of $175,000. The Company is obligated to make semi-annual payments in March and September each year of $25,000 payment until the balance owing is retired.
The NUP property has characteristics of Indonesian volcanic-hosted, low-sulphidation, ephitermal gold-silver deposit Mio-Pliocene age, hosted within the Sunda magmatic arc and spatially associated with the Sumatra Fault System. The property displays high silver to gold ratios such as most of the Sunda arc deposits. Five hundred kilometers northward, along the same Sumatra Fault is located the richest gold mine in Indonesia, the Lebong Donok. This mine was first put into production in 1896.
Apolo Gold Inc. commenced geology mapping and sampling in the summer of 2002. Previous exploration had been undertaken on the NUP property including trenching, mapping and sampling. Previous workings had identified seven structures that required further evaluation. In July 2002, Apolo Gold Inc engaged the services of Alex Boronowski, P.Geo, F.G.A. to provide a Preliminary Independent Geological Report. This report was received in September 2002 and it recommended a drilling program be carried out to further define the structures. The Company followed up with an Independent Report from Peter Bojtos, P.Eng. to review all existing data, and comment on proposals for moving forward. Mr. Bojtos issued a report in December 2002 that confirmed existing recommendations for drilling.
Upon review of the recommendations, the Company proceeded with an initial drilling program in April 2003 which completed in June 2003. Approximately 500 meters of drilling was completed and an ore zone was identified. While 80,000 tonnes of mineralized rock was identified, it was recommended that a new exploration adit be driven to cross cut both shaft #5 and shaft #4 where good results had previously been identified. The 80,000 tonnes of mineralized rock averaged 8 grams of gold per tonne and 250 grams of silver per tonne.
During the past year, the Company worked extensively on an underground adit and this work continues to this date. Currently the workers are on vacation until the end of August when they will return to the adit. To date approximately 280 feet of crosscutting and drifting has been completed on Vein #1. This work is slow and tedious as most of the work is being done by hand and hand held power drills. The vein consists of very solicified rock and progress has been slow. There is approximately 30 feet remaining to intercept below shaft #4. All drifting on the vein will be sampled every 2 meters. In 2003, 2 diamond drill holes intercepted 2 meters of 64.6 grams gold per tonne, 1,350 grams silver per tonne and 2 meters of 29.6 grams per tonne and 651 grams silver per tonne. Samples taken in Vein #1 to date have averaged 6.75 grams gold per tonne and 303 grams silver per tonne.
As this Camp zone area is open to the South, and to depth, the Company intends to carry out additional drilling in this zone. While the Company is pursuing the vein to the South, it also intends to follow the vein to the North where the vein is known to extend at least 320 meters.
A further drilling program will be undertaken once additional financing is secured, and will continue in the area of drill hold's #3 and #8 to intercept the zone to a further depth of at least 200 meters. This will consist of 12 to 15 drill holes to delineate this zone.
On December 10, 2003, the Company, and its partner PT Metro Astatama, executed an Agreement with PT Karya Bukit Utama of Bandar Lampung, Sumatra for the acquisition of mining rights to a property adjoining the "NUP" called "KBU". PT Karya Bukit Utama holds a permit from the Ministry of Mines and Energy, Republic of Indonesia, in the form of Mining Exploitation Authorization KP Number KW 96 0082 for 28 hectares and KP Number KW 96 PP 0083 for 905.3 hectares.
During the past year, the Company conducted extensive testing and exploration on the KBU, and spent approximately $250,000 including property payments, on this site. On January 10, 2005, the Company advised its partner, Pt. Metro Astatama, that it was terminating the agreement and abandoning the KBU property as its testing results were deemed to be unsatisfactory as it relates to possible development of the KBU and the property payments related to it. Pt. Metro Astatama in turn advised the KBU property owner of Apolo's decision, as required under the terms of the agreement.
It is the intention of the Company to focus its attention on the development of NUP and with additional drilling planned, it hopes to accumulate sufficient data to make a decision regarding production.
Operations
The Company employs approximately 10 people locally at the mine site near Bandar Lampung, Sumatra at the present time. All of these employees are paid the local rate for their services. As well, the Company has a mining consultant working full time at the mine site who offers special mechanical, structural, welding, and general operating skills not found locally. Management of the project is under the direction of the President and CEO, Mr. Levasseur, who spends considerable time at the site and directs all activities regarding the mining and exploration program and the proposed drilling program.
Corporate headquarters are located in Vancouver B.C. where the Company leases space at #1209-409 Granville St. V6C 1T2. The Company also maintains an office in Bandar Lampung, Sumatra.
Principal Markets
The products produced by the Company are sold on world markets at prices established by market forces. These prices are not within the control of the Company.
Government Regulation
The Company is aware of environmental requirements in the operation of a concession. The Company is subject to regular inspections by Government authorities and is also subject to a royalty of 3.5% on production. The Company is comfortable with the requirements and regulations and will abide by them.
Risk Factors
1. The Company has no record of earnings. It is also subject to all the risks inherent in a developing business enterprise including lack of cash flow, and no assurance of recovery of precious metals.
2. The Company's success and possible growth will depend on its ability to recover precious metals, process them, and successfully sell them on world markets. It is dependent upon the market's acceptance of the quality of the product presented for sale.
3. Liquidity and need for additional financing is a concern for the Company. At the present time, the Company does not have sufficient cash to finance its operations if its production schedule is delayed further. The Company is dependent on the ability of its management team to obtain the necessary working capital to operate successfully. There is no assurance that the Company will be able to obtain additional capital as required, or if the capital is available, to obtain it on terms favorable to the Company. The Company may suffer form a lack of liquidity in the future that could impair its production efforts and adversely affect its results of operations.
4. Foreign Operations Risks are significant as its principal business operations will be located in Sumatra, Indonesia. Although management intends to and has abided by all laws of the country, including procurement of all necessary permits, licenses, and other regulatory approvals, the Company has no control over the regulatory climate and the possible changes in laws and regulations. There are no known political issues in South Sumatra where the property is located and the Company is pleased with the level of cooperation needed to develop the project as contemplated.
5. Competition is more in the area of ability to sell at world prices, that the Company cannot control, and the Company competes for access to the world markets with its products.
6. The Company is wholly dependent at the present upon the personal efforts and abilities of its Officers and Directors, who exercise control over the day-to-day affairs of the Company.
7. There are currently 58,631,552 common shares outstanding at August 17, 2005 out of a total authorized capital of 200,000,000 shares. There are 141,368,448 shares of the Company unissued. The Board of Directors has the power to issue such shares, subject to shareholder approval, in some instances. Although the Company presently has no commitments or contracts to issue any additional shares to other persons, it may in the future attempt to issue shares to acquire properties, equipment, or other products, or for corporate purposes. Any additional issuance of shares by the Company from its authorized but unissued shares, would have the effect of diluting the interest of existing shareholders.
8. There are no dividends anticipated by the Company. At the present time, the Company intends to focus on raising additional capital and development of its NUP property in Sumatra.
Company's Office
The Company's administrative headquarters were relocated to #1209-409 Granville St, Vancouver, BC, Canada V6C 1T2 on March 1, 2005, and its telephone number is 604-687-4150. The Company also maintains an office in Bandar Lampung, Sumatra,Indonesia.
ITEM 2 - Description of Property
Location and Title
On April 16, 2002, the Company acquired the mining rights to a gold/silver property from Pt. Napal Umbar Picung known as "NUP". This gold-silver property is located 48 kilometers south west of Bandar Lampung on the Island of Sumatra, Indonesia. This is a 733.9 hectare gold-silver property referred to as KP Number KW. 098PP325. The property has a mineral tenure license for exploration and exploitation and is held in the name of Napal Umbar Picung, a requirement under Indonesian law. The KP is in good standing and has been in existence for 10 years. The property is in good standing and all payments required to date, $200,000, have been made. The total purchase price for mining rights to the NUP property is $375,000 and currently, a balance of $175,000 is outstanding.
On December 10, 2003, the Company and its 20% partner, PT Metro Astatama, acquired the mining rights to a gold/silver property from Pt Karya Bukit Utama of Bandar Lampung, Sumatra. This property is directly adjoining the "NUP" property above and consists of a total of 933.3 hectares over two KP's. As indicated above, work on this property ceased pursuant to Notice to Terminate Agreement issued to Pt. Metro Astatama on January 10, 2005 after a detailed review of results from testing and exploration on this property in 2004 were deemed to be inadequate for further development.
ITEM 3 - Legal Proceedings
The Company is not a party to any pending or threatened litigation and to its knowledge, no action, suit or proceedings has been threatened against its officers and its directors.
ITEM 4 - Submission of Matters to a Vote of Security Holders
The Company held its annual general meeting of shareholders on May 20, 2005 in Vancouver, British Columbia. 45,744,920 shares were present at the meeting by proxy given to management equally 81% of the 56,216,664 eligible to vote at the meeting. At the meeting Management's nominees for director, Martial Levesseur, Robert E. Lee, Robert Dinning and Rodney Kincaid, each received 97% of the votes cast for election. The shareholders also approved an amendment to the Articles of Incorporation to Change the name of the corporation to "Apolo Gold & Energy Inc." and an Amendment to the Articles of Incorporation to authorize a 25,000,000 share class of Preferred Stock. The shareholders also approved the Apolo Gold & Energy Inc., 2005 Stock Option Plan and ratified Williams & Webster, Certified Public Accountants, as Auditors of the Company's Financial Statements.
PART II
ITEM 5 - Market for Common Equity and Related Stockholder Matters
The Company's common stock has been quoted on the National Association of Securities Dealers' Over-the-Counter market since May 17,2000. There is no other public trading market for the Company's equity securities.
The following table summarizes trading in the Company's common stock, as provided by quotations published by the OTC Bulletin Board for the periods as indicated. The quotations reflect inter-dealer prices without retail mark-up, markdown or commission, and may not represent actual transactions.
Quarter Ended High Bid Low Bid ------------- -------- ------- Sept 30, 2004 $0.17 $0.17 Dec 31, 2004 $0.08 $0.07 March 31,2005 $0.08 $0.07 June 30, 2005 $0.08 $0.07 |
As of August 19,2005, there were 51 holders of record of the Company's common stock. That does not include the number of beneficial holders whose stock is held in the name of broker-dealers or banks. As of August 8, 2005, there are 41,212,592 shares in broker/dealer accounts.
The Company has not paid, and, in the foreseeable future, the Company does not intend to pay any dividends.
Equity Compensation Plan Information
During the fiscal year the Company has adopted a 2005 Stock Option Plan, duly approved on February 2, 2005. The Plan provides that the Board shall exercise its discretion in awarding options under the Plan, not to exceed 6,000,000 shares.
The Company still has outstanding options from previous plans adopted. In August, 2000, Stock Option Plan #1 was created for a total of 5,000,000 shares. At the present time there are still 1,500,000 options outstanding and they are held by two directors and an advisor to the board, Mr. Brant Little. Mr. Dinning, a director, has 700,000 stock options, Mr. Kelleway, a director, has 300,000 and Mr Little, a consultant, has 500,000 options. Both Mr. Kelleway and Mr. Little have options at $0.08 per share while the option of Mr. Dinning is at $0.14 per share.
In May, 2002, Stock Option Plan #2 was created for 5,000,000 shares. At the present time there are still 2,100,000 options outstanding and they are equally held by three directors at 700,000 shares each. Mr. Levasseur, Mr. Dinning and Mr. Lee each hold 700,000 shares. The price on these options was $0.09 per share.
In December, 2002, Stock Option Plan #3 was created for 7,500,000 shares. At the present time there are still 250,000 options outstanding and they are held by Mr. Brant Little, consultant. The price on these options was $0.054 per share.
In June, 2004, Stock Option Plan #5 was created for 5,000,000 shares. At the present time, there are still 3,500,000 options outstanding and they are held by Mr. Dinning, 1,000,000, and the balance is held by Mr. Little. The price for Mr. Dinning is $0.16 while the options for Mr. Little are at $0.08 per share.
In May, 2005, at a general shareholders meeting, Stock Option Plan #6 was approved by shareholders who also approved the issuance of 2,000,000 stock options to Mr. Dinning at $0.08 per share.
During the year, options of 1,800,000 to Martial Levasseur and 1,210,000 to Robert Lee were cancelled.
The per share option price for the stock subject to each option shall be as the Board may determine. All options must be granted within ten years from the effective date of the Plan. There is no express termination date for the options although the Board may vote to terminate the Plan.
Plan category Number of securities to Weighted average Number of securities
be issued upon exercise exercise price of remaining available for
of outstanding options, outstanding options, future issuance
warrants and rights warrants and rights
Equity compensation plans
approved by security 2,000,000 0.08 0
holders
Equity compensation plans
not approved by security 7,350,000 0.13 3,230,000
holders
Total 9,350,000 0.13 3,230,000
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The directors in total, hold 6,100,000 of the outstanding options of 9,350,000 at June 30, 2005 and a consultant and advisor to the board holds the remaining 3,250,000 options.
ITEM 6 - Management's Discussion and Analysis of Financial Condition and Results of Operations
General Overview
Apolo Gold & Energy Inc. ("Company") was incorporated in March 1997 under the laws of the State of Nevada. Its objective was to pursue mineral properties in South America, Central America, North America and Asia. The Company incorporated a subsidiary - Compania Minera Apologold, C.A in Venezuela to develop a gold/diamond mining concession in Southeastern Venezuela. Development work was terminated in August 2001, due to poor testing results and the property abandoned. This subsidiary company has been inactive since 2001 and will not be reactivated.
On April 16, 2002, the Company announced the acquisition of the mining rights to a property known as the Napal Gold Property, ("NUP"). This property is located 48 km south-west of Bandar Lampung, Sumatra, Indonesia. The property consists of 733.9 hectares and possesses a Production Permit (a KP) # KW. 098PP325. There has been previous exploration work carried out, consisting of approximately 50 trenches, from 100 feet to 1,000 feet, across the mineralization, and 7 parallel veins have been exposed by trenching across mineralized zones. The Napal Gold Property is in an area in Indonesia with a history of mining activity. Several major mining companies are active in Indonesia where the highlights include; the ability to control mineral rights and their development, low cost operations, and in a country with a history of mining success that encourages foreign investment and redemption of capital.
The terms of the Napal Gold Property call for a total payment of $375,000 US over a six-year period of which a total of $200,000 have been made to date. Payments of $25,000 are due in March and September each year until the total obligation is retired.
In addition to the cash payments, the Company issued 3,000,000 restricted common shares at $0.11 cents per share for a consideration of $330,000 to PT Metro Astatama, who are 20% partners in the project. There is no participation by PT Metro Astatama until the Company recovers all its operating costs, including all property payments.
During the fiscal year ending June 30, 2003, the Company engaged two independent consultants to assist in evaluation of the property and to assist in development of a necessary program to determine values potential operating alternatives.
The Company in the summer of 2002 commenced with mapping and sampling with trenching and sampling of 12 trenches for a total of 1,189 meters (3,900 ft). This was followed up with a drilling project of 500 meters (1,640 ft). Sampling results indicated a large area of good anomalous gold-silver and many lenses of high-grade gold and silver. Over the past 15 years, other companies have carried out drilling of 36 holes totaling 10,000 feet on this property. With the additional work done in the spring and summer of 2003, there are now 43 trenches completed averaging 3 feet wide, 12 feet deep for a total of 12,000 feet of trenching. There were also in excess of 2,000 rock samples sent out for analysis. All trenches, drill holes, and rock samples are from a 5 hectare area on the "NUP" property.
As a result of the work program into the fall of 2003, the Company identified a high-grade zone of about 80,000 tons of gold-silver mineralization which showed in excess of 7 grams gold per ton and in excess of 160 grams of silver per ton.
This area is located approximately 1 Km from the mill site, which is located on the adjoining property known as the "KBU".
On December 10, 2003, the Company, and its partner, PT Metro Astatama, acquired the mining rights to a property directly adjoining the "NUP" property known as the "KBU" property. The property mining rights were acquired from PT Karya Bukit Utama for a down payment of $50,000 plus a payment schedule of $500,000 per year until the balance is retired. On July 14, 2004, an amendment was executed whereby the June 30 and December 15, 2004 payments totaling $400,000 were amended to monthly payments up to February 15, 2005 totaling $400,000. Property payments of $185,000 were made up to December 31, 2004 and on January 10, 2005, the Company advised its partner, Pt Metro Astatama, that it was terminating the agreement, as is its right, because of less than satisfactory testing results during the calendar year 2004. Pt Karya Bukit were accordingly advised, pursuant to the terms of the agreement, of the intention of Apolo Gold to terminate its agreement and abandon the property.
In February, 2005, the Company signed a Letter of Intent with Balmoral Companies of Dublin Ohio wherein Apolo Gold & Energy acquired a 22% interest in the rights to an oil property located in Kazakhstan. Balmoral and its partner ViewPoint Technology Inc have executed an Absolute Assignment of its interest in this property to Apolo in return for a total of 1,500,000 restricted common shares valued at $0.09 each. Each company received 750,000 restricted shares. Balmoral had acquired this interest September 14, 2004 in an agreement with Profit Limited Company of Almaty Kazakhstan. When this agreement was executed, it was the Company's intention to arrange financing and develop the property in Kazakhstan known as "2D in BOZINGEN 28. Blok" near the town of Kizilorda, Kazakhstan. As part of any financing, and as a condition of its agreement with Profit Company Limited, it was necessary that Profit Limited Company provide technical data to Apolo Gold & Energy Inc. This was clearly spelled out in the agreement with Profit. On May 23, 2005, Apolo sent a letter to Profit again requesting the necessary geological information. To date this information has not been received. Accordingly, Apolo Gold & Energy Inc has sent a formal letter to Profit Company Limited terminating the agreement.
On June 28, 2005, the Company executed an Investment Agreement with Dutchess Private Equities Fund, II, LP for up to $10,000,000 in equity financing. Equity financing will be required as the Company advances its development of its NUP property in Sumatra, Indonesia and pursues other mining opportunities. The Company is also pursuing oil and gas opportunities and realizes a need to have the ability to access equity market opportunities. The contemplated financing with Dutchess Private Equities Fund, II,LP will require the filing of a registration statement which the Company will do before the end of August 2005.
On August 19, 2005, the Company signed a Letter of Intent with Atna Resources Ltd of Vancouver BC, Canada regarding the Beowawe Project in Nevada. Under the terms of the Letter of Intent, Apolo Gold & Energy will invest approximately $2,200,000 over a four year period to earn a 55% interest. Should Apolo undertake a bankable feasibility study, its interest will increase to 70%. Under terms of the Letter of Intent, Apolo will have a 30 day window to conduct a preliminary review of data and visit the property to satisfy itself of the viability of proceeding with the project. At that time, the parties will then enter into a Joint Venture Agreement and proceed as specified in the Letter of Intent.
The Company intends to have technical staff review existing data, and visit the site, located north-east of Reno, and advise Atna Resources no later than September 22, 2005 of its intentions. Should the Joint Venture Agreement be executed, the Company will issue to Atna 100,000 restricted common shares of its stock and undertake to spend a minimum of $250,000 in the first year of a four year exploration program. The second year program calls for $350,000, the third year calls for $450,000 and the fourth year calls for $650,000. In addition to this, there are Underlying Agreements calling for annual payments of approximately $110,000 per year.
The Company intends to raise additional capital in order to ensure it has sufficient resources to execute its plans for exploration as outlined above. The Company is exploring loans, equity and joint ventures as possible alternatives. There is no assurance that said funds can be obtained for the program.
The Company currently may not have sufficient funds to carry out its proposed programs and there is no assurance that the necessary funds required will be raised.
Results of Operations - Period From July 01, 2004 to June 30, 2005
REVENUES: The Company had no revenues in the past fiscal year as it focused on continued exploration of the adit on NUP by completing necessary testing, including trenching, sampling, and preparation for further drilling.
During the fiscal year ending June 30, 2005, the Company had exploration costs of 487,108 as compared to 397,395 the previous year. This included the cost of all consultants engaged regarding the development of the property, all property payments, underground adit costs, and the cost of trenching, mapping etc.
EXPENSES: During the year ending June 30 2005, the Company incurred total expenses of $1,018,390, compared to $788,700 the previous year.
These expenses were all related to exploration costs re the Napal Gold Property as well as testing and exploration costs as they relate to the KBU property in Sumatra, Indonesia.
Consulting and professional fees were up this year to $377,235 from $216,796 the previous year.
The Company continues to carefully control its expenses, and intends to seek Additional financing to ensure it has sufficient resources to undertake its production program and continue its exploration and development program on the two properties. There is no assurance that the Company will be successful in its attempts to raise additional capital. The Company is currently negotiating with various parties regarding additional financing. The outcome of this is uncertain at this time.
The Company has no employees in its head office at the present time other than ,its Officers and Directors, and engages personnel through consulting agreements where necessary as well as outside attorneys, accountants and technical consultants. The mine site employs 10 people who are paid weekly in cash as is the custom in Sumatra.
Cash on hand at June 30, 2005 was $3,467 and the Company recognizes it may not have sufficient funds to conduct its affairs. It fully intends to seek financing by way of loans, private placements or a combination of both in the coming months.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its development to date by way of sale of common stock and with loans from a shareholders of the Company. The Company currently has total debts of $268,055,which consists of accounts payable of $20,226, accrued expenses of $93,500 and loans from related parties of $158,871.
At August 17, 2005, the Company had 58,631,552 shares of common stock outstanding and has raised total capital to date of approximately $ 4,750,000.
During the year, the Company raised a total of $90,991 by way of sale of common stock. In comparison, a total of $1,007,500 was raised the previous year. The funds assisted in the underground development of the adit on the NUP property.
The Company is aware that it will require additional capital during the current fiscal year to assist in the development of its property. It intends to seek additional capital by private placement, loans or a combination of both.
INFLATION
Inflation has not been a factor during the fiscal year ending June 30, 2005. While inflationary forces are showing some signs of increasing in the next year, it is not considered a factor in capital expenditures or production activities.
Item 7. Financial Statements.
APOLO GOLD & ENERGY, INC.
TABLE OF CONTENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM 1
FINANCIAL STATEMENTS
Consolidated Balance Sheets 2
Consolidated Statements of Operations 3
Consolidated Statement of Stockholders' Equity (Deficit) 4
Consolidated Statements of Cash Flows 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7
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Board of Directors
Apolo Gold & Energy, Inc.
Vancouver, British Columbia
CANADA
Report of Independent Registered Public Accounting Firm
We have audited the accompanying consolidated balance sheets of Apolo Gold & Energy, Inc. (formerly known as Apolo Gold, Inc.), an expoloration stage company and Nevada corporation, as of June 30, 2005 and 2004, and the related consolidated statements of operations, cash flows, and stockholders' equity (deficit) for the years then ended and for the period from April 16, 2002 (inception of exploration stage) through June 30, 2005. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Apolo Gold & Energy, Inc. as of June 30, 2005 and 2004, and the results of its operations and its cash flows for the years then ended and for the period from April 16, 2002 (inception of exploration stage) through June 30, 2005, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 10 to the financial statements, the Company has no revenues and limited cash. In addition, the Company's significant operating losses raise substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters also are described in Note 10. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Williams & Webster, P.S.
Certified Public Accountants
Spokane, Washington
August 22, 2005
APOLO GOLD & ENERGY, INC.
(Formerly known as Apolo Gold, Inc.)
(An Exploration Stage Company)
CONSOLIDATED BALANCE SHEETS
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June 30, June 30,
2005 2004
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ASSETS
CURRENT ASSETS
Cash $ 3,467 $ 375,385
Receivable from jount venture partner 25,000 --
Prepaid expenses 2,280 6,840
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Total Current Assets 30,747 382,225
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FIXED ASSETS
Mining equipment 86,127 62,491
Less accumlated depreciation (16,767) (4,464)
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69,360 58,027
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TOTAL ASSETS $ 100,107 $ 440,252
=========== ===========
LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 20,226 $ 26,133
Accrued expenses 93,500 --
Accrued payables, related parties 158,871 33,333
----------- -----------
Total Current Liabilities 272,597 59,466
----------- -----------
COMMITMENTS AND CONTINGENCIES -- --
----------- -----------
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, 25,000,000 shares authorized, $0.001
per value, none issued -- --
Common stock, 200,000,000 shares authorized, $0.001
par value; 57,326,552 and 51,969,589 shares
issued and outstanding, respectively 57,326 51,969
Additional paid-in capital 4,746,493 4,286,736
Accumulated deficit prior to exploration stage (1,862,852) (1,862,852)
Deficit accumulated during exploration stage (3,113,457) (2,095,067)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (172,490) 380,786
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 100,107 $ 440,252
=========== ===========
|
The accompanying notes are an integral part of these financial statements.
APOLO GOLD & ENERGY, INC.
(Formerly known as Apolo Gold, Inc.)
(An Exploration Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
---------------------------------------------------------------------------------------------------------
Period from
April 16, 2002
(Inception of
Year Ended Year Ended Exploration Stage)
June 30, June 30, through
2005 2004 June 30, 2005
------------ ------------- --------------
REVENUES $ -- $ -- $ --
------------ ------------ ------------
EXPENSES
Consulting and professional fees 377,235 216,796 872,031
Exploration costs 487,108 397,395 1,643,009
General and administrative expenses 153,116 174,509 420,293
Foreign currency transaction gain (loss) 931 (682) 931
------------ ------------ ------------
TOTAL EXPENSES 1,018,390 788,700 2,935,333
------------ ------------ ------------
LOSS FROM OPERATIONS (1,018,390) (788,700) (2,935,333)
OTHER INCOME (EXPENSE)
Loss on sale of mining equipment -- -- (177,193)
------------ ------------ ------------
LOSS FROM OPERATIONS (1,018,390) (788,700) (3,112,526)
INCOME TAXES -- -- --
------------ ------------ ------------
NET LOSS $ (1,018,390) $ (788,700) $ (3,112,526)
============ ============ ============
NET LOSS PER SHARE, BASIC AND DILUTED $ (0.02) $ (0.02)
============ ============
WEIGHTED AVERAGE NUMBER OF
COMMON STOCK SHARES OUTSTANDING, BASIC AND DILUTED: 54,112,853 47,207,499
============ ============
|
The accompanying notes are an integral part of these financial statements.
APOLO GOLD & ENERGY, INC.
(Formerly known as Apolo Gold, Inc.)
(An Exploration Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
Common Stock Accumulated
-------------------------- Additional Deficit Prior
Number Paid-in Subscriptions to Exploration
of Shares Amount Capital Receivable Stage
------------------------- ------------- -------------- --------------
Balance, June 30, 2001 18,654,580 $ 18,654 $ 1,265,282 $ - $ (1,634,303)
Issuance of common stock for services at an
average of $0.05 per share 2,300,000 2,300 112,700 - -
Cancellation of stock used as payment for debt (3,000,000) (3,000) (32,000) - -
Options exercised as payment for services
at $0.05 per share 700,000 700 34,300 - -
Issuance of common stock for debt retirement
at $0.15 per share 4,421,282 4,422 658,771 - -
Issuance of stock for mining rights 3,000,000 3,000 327,000 - -
Options exercised at $0.07 per common share 2,000,000 2,000 138,000 (70,000) -
Options exercised as payment for services at
$0.11 per common share 20,000 20 2,180 - -
Net loss for the year ended June 30, 2002 - - - - (228,549)
---------- --------- ------------ --------- ------------
Balance, June 30, 2002 28,095,862 28,096 2,506,233 (70,000) (1,862,852)
Options exercised as payment for services
at $0.09 per common share 500,000 500 44,500 - -
Subscriptions received - - - 70,000 -
Options exercised as payment for services
at $0.05 per common share 1,300,000 1,300 67,700 - -
Options exercised for cash of $150,000 and services
at $0.06 per common share 3,400,000 3,400 201,600 - -
Options exercised as payment of legal services
at $0.04 per common share 39,000 39 1,521 - -
---------- --------- ------------ --------- ------------
Balance, June 30, 2003 33,334,862 33,335 2,821,554 - (1,862,852)
Issuance of stock for services at $0.08 per share 600,000 600 47,400 - -
Issuance of stock for debt
at $0.06 per common share 2,348,615 2,348 138,568 - -
Options exercised for cash at
$0.045 per common share 1,111,112 1,111 48,889 - -
Options exercised at $0.05 per share
for subscription receivable 500,000 500 24,500 (25,000) -
Options exercised as payment for services
at $0.05 per share 400,000 400 19,600 - -
Net loss for the year ended June 30, 2003 - - - - -
Foreign currency translation gain - - - - -
------------- ---------- -------------- ------------ ---------------
Balance forward 38,294,589 38,294 3,100,511 (25,000) (1,862,852)
|
The accompanying notes are an integral part of these financial statements.
APOLO GOLD & ENERGY, INC.
(Formerly known as Apolo Gold, Inc.)
(An Exploration Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
(continued)
Accumulated Total
Deficit During Stockholders'
Exploration Equity
Stage (Deficit)
-------------- -------------
Balance, June 30, 2001 $ - $ (350,367)
Issuance of common stock for services at an
average of $0.05 per share - 115,000
Cancellation of stock used as payment for debt - (35,000)
Options exercised as payment for services
at $0.05 per share - 35,000
Issuance of common stock for debt retirement
at $0.15 per share - 663,193
Issuance of stock for mining rights - 330,000
Options exercised at $0.07 per common share - 70,000
Options exercised as payment for services at
$0.11 per common share - 2,200
Net loss for the year ended June 30, 2002 (575,370) (803,919)
---------- ----------
Balance, June 30, 2002 (575,370) 26,107
Options exercised as payment for services
at $0.09 per common share - 45,000
Subscriptions received - 70,000
Options exercised as payment for services
at $0.05 per common share - 69,000
Options exercised for cash of $150,000 and services
at $0.06 per common share - 205,000
Options exercised as payment of legal services
at $0.04 per common share - 1,560
---------- ----------
Balance, June 30, 2003 (575,370) 416,667
Issuance of stock for services at $0.08 per share - 48,000
Issuance of stock for debt
at $0.06 per common share - 140,916
Options exercised for cash at
$0.045 per common share - 50,000
Options exercised at $0.05 per share
for subscription receivable - -
Options exercised as payment for services
at $0.05 per share - 20,000
Net loss for the year ended June 30, 2003 (730,997) (730,997)
Foreign currency translation gain - 682
---------- ----------
Balance Forward (1,306,367) $ (55,414)
|
The accompanying notes are an integral part of these financial statements.
APOLO GOLD & ENERGY, INC.
(Formerly known as Apolo Gold, Inc.)
(An Exploration Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
Common Stock Accumulated
--------------------------- Additional Deficit Prior
Number Paid-in Subscriptions to Exploration
of Shares Amount Capital Receivable Stage
--------------------------- -------------- ------------ ---------------
--------------- ---------- -------------- ------------ ---------------
Balance Forward 38,294,589 38,294 3,100,511 (25,000) (1,862,852)
Options exercised as payment for services 525,000 525 26,875 - -
at $0.05 per common share
Stock subscription paid - - - 25,000 -
Options exercised at $0.06 per share 11,125,000 11,125 696,375 - -
Issuance of stock for services at $0.20 per share 25,000 25 4,975 - -
Issuance of stock for property acquisition at
$0.16 per share 1,000,000 1,000 159,000 - -
Stock issued for cash at $0.30 per share 1,000,000 1,000 299,000 - -
Net loss for the year ended June 30, 2004 - - - - -
Foreign currency translation gain - - - - -
--------------- ---------- -------------- ------------ ---------------
Balance, June 30, 2004 51,969,589 51,969 4,286,736 - (1,862,852)
Options exercised at an average of $0.11 per share 859,000 859 90,132 - -
Issuance of stock for debt at $0.07 per share 1,088,075 1,088 79,245 - -
Issuance of stock for property acquisition at
$0.09 per share 1,500,000 1,500 133,500 - -
Issuance of stock for services at $0.09 per share 200,000 200 23,300 - -
Options exercised as payment for services at
$0.08 per share 1,709,888 1,710 133,580 - -
Net loss for the year ended June 30, 2005 - - - - -
=============== ========== ============== ============ ===============
Balance, June 30, 2005 57,326,552 $ 57,326 $ 4,746,493 $ - $ (1,862,852)
=============== ========== ============== ============ ===============
|
The accompanying notes are an integral part of these financial statements.
APOLO GOLD & ENERGY, INC.
(Formerly known as Apolo Gold, Inc.)
(An Exploration Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
(Continued)
Accumulated Total
Deficit During Stockholders'
Exploration Equity
Stage (Deficit)
-------------- -------------
Balance, June 30, 2003 (1,306,367) (54,732)
Options exercised as payment for services
at $0.05 per common share - 27,400
Stock subscription paid - 25,000
Options exercised at $0.06 per share - 707,500
Issuance of stock for services at $0.20 per share - 5,000
Issuance of stock for property acquisition at
$0.16 per share - 160,000
Stock issued for cash at $0.30 per share - 300,000
Net loss for the year ended June 30, 2004 (788,700) (788,700)
Foreign currency translation gain - (682)
-------------- -------------
Balance, June 30, 2004 (2,095,067) 380,786
Options exercised at an average of $0.11 per share - 90,991
Issuance of stock for debt at $0.07 per share - 80,333
Issuance of stock for property acquisition at
$0.09 per share - 135,000
Issuance of stock for services at $0.09 per share - 23,500
Options exercised as payment for services at
$0.08 per share - 135,290
Net loss for the year ended June 30, 2005 (1,018,390) (1,018,390)
------------ -----------
Balance, June 30, 2005 $ (3,113,457) $ (172,490)
============ ===========
|
The accompanying notes are an integral part of these financial statements.
APOLO GOLD & ENERGY, INC.
(Formerly known as Apolo Gold, Inc.)
(An Exploration Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
---------------------------------------------------------------------------------------------------------
Period from
April 16, 2002
(Inception of
Year Year Exploration Stage)
Ended Ended through
June 30, 2005 June 30, 2004 June 30, 2005
------------- ------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,018,390) $ (788,700) $(3,113,457)
Adjustments to reconcile net loss
to net cash used by operating activities:
Depreciation 12,303 4,464 16,767
Loss on sale of mining equipment -- -- 177,193
Options exercised for services 135,291 27,400 162,691
Stock issued for current debt -- -- 140,916
Stock issued for officer's wages and services -- -- 2,200
Stock issued for professional services 23,500 5,000 247,060
Stock issued for exploration costs 135,000 160,000 645,000
Expenses paid on behalf of Company -- -- 42,610
Decrease (increase) in:
Accounts receivable (25,000) -- (25,000)
Prepaid expenses 4,560 (6,840) (2,280)
Increase (decrease) in:
Accounts payable (5,970) 6,831 4,746
Accrued expenses 88,958 (7,920) 87,693
Accrued payables, related parties 101,138 -- 95,798
----------- ----------- -----------
Net cash used by operating activities (548,610) (599,765) (1,518,063)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets (23,636) (62,491) (86,127)
----------- ----------- -----------
Net cash used by investing activities (23,636) (62,491) (86,127)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from related party loans 24,400 5,270 57,733
Proceeds from borrowings 84,937 -- 84,937
Proceed from subscription receivable -- 25,000 25,000
Proceeds from sale of common stock 90,991 1,007,500 1,438,491
----------- ----------- -----------
Net cash provided by financing activities 200,328 1,037,770 1,606,161
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH (371,918) 375,514 1,971
Cash, beginning of year 375,385 553 1,496
----------- ----------- -----------
Cash, end of year $ 3,467 $ 376,067 $ 3,467
=========== =========== ===========
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid $ -- $ -- $ --
=========== =========== ===========
Income taxes paid $ -- $ -- $ --
=========== =========== ===========
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Common stock issued for services $ 23,500 $ 5,000 $ 247,060
Common stock issued for current debt $ 80,333 $ -- $ 221,249
Common stock issued for exploration costs $ 135,000 $ 160,000 $ 645,000
Note receivable from sale of mining equipment $ -- $ -- $ 45,000
Options exercised for services $ 135,291 $ 27,400 $ 162,691
|
The accompanying notes are an integral part of these financial statements.
APOLO GOLD & ENERGY, INC.
(Formerly known as Apolo Gold, Inc.)
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Apolo Gold & Energy, Inc. formerly known as Apolo Gold, Inc. (hereinafter "the Company") was incorporated in March of 1997 under the laws of the State of Nevada primarily for the purpose of acquiring and developing mineral properties. The Company conducts operations primarily from its offices in Vancouver, British Columbia, Canada. In 1997, the Company formed a subsidiary corporation (Apologold C.A.) in Venezuela, which was originally used to acquire a Venezuelan mining property. The subsidiary had no financial transactions during the years ended June 30, 2004 and 2005.
On April 16, 2002, the Company signed an agreement to enter into a joint venture with PT Metro Astatama, a limited liability corporation, incorporated under the laws of Republic of Indonesia. Upon signing this agreement, the Company entered a new exploration stage and commenced exploration of the Napal Gold Property, not yet under production. See Note 3.
The Company's year-end is June 30.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies 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.
If certain conditions are met, a derivative may be specifically designated as a hedge, the objective of which is to match the timing of gain or loss recognition on the hedging derivative with the recognition of (i) the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk or (ii) the earnings effect of the hedged forecasted transaction. For a derivative not designated as a hedging instrument, the gain or loss is recognized in income in the period of change.
Historically, the Company has not entered into derivatives contracts to hedge existing risks or for speculative purposes. At June 30, 2005 and 2004, the Company has not engaged in any transactions that would be considered derivative instruments or hedging activities.
Expenditures to develop new mines, to define further mineralization in existing ore bodies, and to expand the capacity of operating mines are capitalized and amortized on a units-of-production basis over proven and probable reserves. Should a property be abandoned, its capitalized costs are charged to operations. The Company charges to operations the allocable portion of capitalized costs attributable to properties sold. Capitalized costs are allocated to properties sold based on the proportion of claims sold to the claims remaining within the project area.
At June 30, 2005, the Company had net deferred tax assets calculated at an expected rate of 33% of approximately $1,650,000 principally arising from approximate net operating loss carryforward of $5,000,000 for income tax purposes, which expire in the years 2014 through 2025. As management of the Company cannot determine that it is more likely than not that the Company will realize the benefit of the net deferred tax asset, a valuation allowance equal to the net deferred tax asset has been established at June 30, 2005. The significant components of the deferred tax asset at June 30, 2005 and June 30, 2004 were as follows:
Year ended Year ended June
June 30, 2005 30, 2004
------------- ---------------
Net operating loss carry forward $ 5,000,000 $ 3,960,000
=========== ===========
Deferred tax asset $ 1,650,000 $ 1,347,000
Deferred tax asset valuation allowance $(1,650,000) $(1,347,000)
|
The change in the allowance account from June 30, 2004 to June 30, 2005 was $303,000. The change in the allowance account from June 30, 2003 to June 30, 2004 was $260,271.
The Company accounts for stock issued for compensation in accordance with APB 25, "Accounting for Stock Issued to Employees." Under this standard, compensation cost is the difference between the exercise price of the option and fair market of the underlying stock on the grant date and is recognized when options are exercised. In accordance with Statement of Financial Accounting Standards No. 123, "Accounting for Stock Based Compensation," the Company provides the pro forma effects on net income and earnings per share as if compensation had been measured using the "fair value method" described therein. See Note 7.
In December 2002, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 148, "Accounting for Stock-Based Compensation
- Transition and Disclosure" (hereinafter "SFAS No. 148"). SFAS No. 148 amends
SFAS No. 123, "Accounting for Stock-Based Compensation," to provide alternative
methods of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition, the statement
amends the disclosure requirements of SFAS No. 123 to require prominent
disclosure in both annual and interim financial statements about the method of
accounting for stock-based employee compensation and the effect of the method
used on reported results. The provisions of the statement are effective for
financial statements for fiscal years ending after December 15, 2002. As the
Company accounts for stock-based compensation using the intrinsic value method
prescribed in APB No. 25, "Accounting for Stock Issued to Employees", the
adoption of SFAS No. 148 has had no material impact on the Company's financial
condition or results of operations.
NOTE 3 - MINERAL PROPERTIES
At June 30, 2005, in accordance with the aforementioned agreement, the Company had paid $175,000 in cash and issued 3,000,000 shares of its common stock, with a fair market value of $330,000. An additional $25,000 was paid subsequent to June 30, 2005.
On December 12, 2003, the Company fully executed an agreement with PT Metro Astatama to acquire certain property rights in Southern Sumatra, Indonesia. In exchange for a commitment for future incremental cash payments of $2,500,000 and 3,000,000 shares of the Company's restricted common stock, the Company will receive 933 hectares with production permit numbers KP-96PP0082 and KP-96PP0083 in place. The Company will assume all rights previously granted to PT Metro and will acquire an 80% net profits interest, while PT Metro retains the remaining 20%. This agreement was terminated January 10, 2005.
At June 30, 2005, in accordance with the aforementioned agreement, the Company had paid $300,000 in cash, including $185,000 during the current year and issued 1,000,000 shares of its common stock, with a fair market value of $200,000 at the time of issuance.
The Company has recorded its mineral property costs as exploration expenses because there are no professional engineering studies evidencing proven and probable reserves for its mineral properties.
NOTE 4 - PROPERTY AND EQUIPMENT
In October 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" (hereinafter "SFAS No. 144"). SFAS No. 144 replaces SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." This standard establishes a single accounting model for long-lived assets to be disposed of by sale, including discontinued operations. SFAS No. 144 requires that these long-lived assets be measured at the lower of carrying amount or fair value less cost to sell, whether reported in continuing operations or discontinued operations. The Company adopted SFAS No. 144 during the year ended June 30, 2002.
In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 143, "Accounting for Asset Retirement Obligations" (hereinafter "SFAS No. 143"). SFAS No. 143 establishes guidelines related to the retirement of tangible long-lived assets of the Company and the associated retirement costs. This statement requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived assets. The Company adopted SFAS No. 143 during the year ended June 30, 2002.
Property and equipment are stated at cost. Depreciation is provided using the straight-line method over the estimated useful lives of the assets. The useful lives of property, plant and equipment for purposes of computing depreciation are three to seven years.
Depreciation expense for the year ended June 30, 2005 and 2004 was $12,303 and $4,464, respectively. The Company evaluates the recoverability of property and equipment when events and circumstances indicate that such assets might be impaired. The Company determines impairment by comparing the undiscounted future cash flows estimated to be generated by these assets to their respective carrying amounts. Maintenance and repairs are expensed as incurred. Replacements and betterments are capitalized. The cost and related reserves of assets sold or retired are removed from the accounts, and any resulting gain or loss is reflected in results of operations.
NOTE 5 - COMMON STOCK
In May 2003, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 150, "Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity" (hereinafter "SFAS No. 150"). SFAS No. 150 establishes standards for classifying and measuring certain financial instruments with characteristics of both liabilities and equity and requires that those instruments be classified as liabilities in statements of financial position. Previously, many of those instruments were classified as equity. SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003 and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The adoption of SFAS No. 150 has had no effect on the Company's financial statements.
During the year ended June 30, 2005, options to purchase 1,709,888 shares of common stock at an average price of $0.08 per share were exercised in exchange for services valued at $135,291. Additionally, 859,000 options were exercised to purchase common stock for cash of $90,991.
During the year ended June 30, 2005, the Company issued 1,088,075 common stock shares for payment of $80,333 debt, 1,500,000 common stock shares for property valued at $135,000 and 200,000 shares of common stock for services valued at $23,500. All stock was issued at its fair market value.
During the year ended June 30, 2004, options to purchase 525,000 shares of common stock at $0.05 per share were exercised in exchange for services valued at $27,400 and 11,125,000 options were exercised to purchase common stock for cash of $707,500. The Company issued 1,000,000 shares of common stock as payment for property acquisition worth $160,000 and an additional 1,000,000 shares of common stock were issued for $300,000 cash. The Company paid services of $5,000 with the issuance of 25,000 shares of common stock.
The Company's policy is to issue stock at its fair market value on the date of issuance.
NOTE 6 - 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.
NOTE 7 - COMMON STOCK OPTIONS
The Company has six common stock option plans: the Apolo Gold, Inc. 2000 Stock Option Plan; Apolo Gold, Inc. 2002 Stock Option Plan; Apolo Gold, Inc. 2003 Stock Option Plan; Apolo Gold, Inc. 2004 Stock Option Plan; the 2004 Stock Option Plan #A; and 2005 Stock Option Plan (hereinafter "the Plans") adopted in July 2000, May 2002, November 2002, September 2003, March 2004, and February 2005, respectively. Their purpose is to advance the business and development of the Company and its shareholders by enabling employees, officers, directors and independent contractors or consultants of the Company the opportunity to acquire a proprietary interest in the Company from the grant of options to such persons under the Plans' terms. The Plans provide that the Company's board of directors may exercise its discretion in awarding options under the Plans, not to exceed 5,000,000 for the 2000 Plan, 5,000,000 for the 2002 Plan, 7,500,000 for the 2003 Plan and 15,000,000 for the 2004 and the 2004A Plans. The Board determines the per share option price for the stock subject to each option. All options authorized by each plan must be granted within ten years from the effective date of the Plan.
There is no express termination date for the options, although the Board may vote to terminate the Plan. The exercise price of the options will be determined at the date of grant. The following is a summary of the Company's stock option plans:
Number of
securities
Number of remaining
securities to be Weighted-average available for
issued exercise price future issuance
Equity compensation plans not upon exercise of of outstanding under equity
approved by security holders outstanding options options compensation plans
-------------------------------- --------------------- ------------------ -------------------
2000 stock option plan 1,500,000 $ 0.14 -
2002 stock option plan 2,100,000 $ 0.10 -
2003 stock option plan 250,000 $ 0.05 -
2004 and 2004A stock option
plans 3,500,000 $ 0.16 -
2005 stock option plan 2,000,000 $ 0.09 3,230,000
--------------------- -------------------
Total 9,350,000 3,230,000
===================== ===================
|
The following is a summary of stock option activity:
Number of Shares Weighted Average
Exercise Price
----------------- -------------------
Outstanding at June 30, 2003 5,510,000 $ 0.11
Granted 14,600,000 0.09
Exercised (11,650,000) 0.06
----------------- -------------------
Outstanding at June 30, 2004 8,460,000 0.13
Granted 6,768,888 0.08
Exercised (2,568,888) 0.09
Cancelled (3,310,000) 0.15
----------------- -------------------
Outstanding at June 30, 2005 9,350,000 $ 0.11
================= ===================
Weighted average fair value of options granted during 2005 $ 0.08
=================
|
The Company applies APB Opinion 25 in accounting for its stock option plans. Accordingly, no compensation or consulting costs have been recognized for the plan in fiscal 2005 or 2004. The Company granted 6,768,888 during the year ended June 30, 2005. Of the options issued, 1,709,888 were issued and exercised for services valued at $135,291 and 859,000 were exercised for $90,991 in cash.
The Company granted 14,600,000 during the year ended June 30, 2004. Of the options issued, 525,000 were exercised for payment of services valued at $27,400 and 11,125,000 were exercised for $707,500 in cash.
If compensation or consulting costs had been determined on the basis of fair value pursuant to SFAS No. 123, net loss and earnings per share would have been changed as follows:
Year Ended June Year Ended
30, June 30, 2004
2005
------------------ ---------------
Net Loss:
As reported $ (1,018,361) $ (788,700)
Pro forma $ (1,423,091) $ (2,572,117)
|
Basic and diluted net loss per share:
As reported $ (0.02) $ (0.02)
Pro forma $ (0.03) $ (0.05)
The fair value of each option granted is estimated on the grant date using the Black-Scholes Option Price Calculation. The following assumptions were made in estimating fair value for 2005 and 2004: risk-free interest rate is 4%, volatility is 135.04% and 112%, respectively, and expected life is 1.5 to 5 years.
NOTE 8 - RELATED PARTIES
During the year ended June 30, 2005, a related party paid expenses of $158,871 on behalf of the Company. This amount, which is unsecured and non-interest bearing, is listed as a related party loan in the accompanying balance sheet.
NOTE 9 - COMMITMENTS AND CONTINGENCIES
On June 28, 2005, the Company executed an investment agreement with Dutchess Private Equities Fund, II, LP for up to $10,000,000 in equity financing. Equity financing will be required as the Company advances its development of its NUP property in Sumatra, Indonesia and pursues other mining opportunities. The Company is also pursuing oil and gas opportunities and realizes a need to have the ability to access equity market opportunities.
NOTE 10 - GOING CONCERN
As shown in the financial statements, the Company incurred a net loss of $1,018,361 for the year ended June 30, 2005 and has an accumulated deficit of $4,976,280 since inception of the Company. The Company currently has no operating mining properties, has no revenues, and has limited cash resources.
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 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. See Note 1.
The Company's management believes that it will be able to generate sufficient cash from public or private debt or equity financing for the Company to continue to operate based on current expense projections.
NOTE 11 - SUBSEQUENT EVENTS
On August 19, 2005, the Company signed a letter of intent with Atna Resources Ltd of Vancouver BC, Canada regarding the Beowawe Project in Nevada. Under the terms of the letter of intent, Apolo Gold & Energy will invest approximately $2,200,000 over a four year period to earn a 55% interest. Should Apolo undertake a bankable feasibility study, its interest will increase to 70%. Under terms of the letter of intent, Apolo will have a 30 day window to conduct a preliminary review of data and visit the property to satisfy itself of the viability of proceeding with the project. At that time, the parties will then enter into a joint venture agreement and proceed as specified in the letter of intent.
Subsequent to June 30, 2005, $78,500 of debt was exchanged for 1,305,000 shares of common stock.
Item 8a. Controls and Procedures
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company's Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Company's management, including its Chief Executive Officer / Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of "disclosure controls and procedures" in Rule 13a-14(c). In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
On or about June 30, 2005, the end of the period of this report, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer / Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on the foregoing, the Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective.
There have been no significant changes in the Company's internal controls or in other factors that could significantly affect the internal controls subsequent to the date the Company completed its evaluation.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance With Section 16(a) of the Exchange Act
(a) Directors and Executive Officers
NAME AGE POSITION 1ST YEAR
WITH COMPANY
---- --- -------- ------------
Martial Levasseur 71 Director, President 1997
Robert E. Lee 70 Director 1997
Robert G. Dinning 66 Director, Chief Financial Officer, Secretary 2000
Rodney Kincaid 50 Director 2005
Glenn Kelleway 44 Director 2005
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Business Experience
Martial Levasseur.
Mr. Levasseur is a founder of the Company and has served as its President since inception. Mr. Levasseur's business experience is as follows:
1993-1997 Consultant - La Rock Mining Corp. of Vancouver BC. Studying various
projects for La Rock.
1968-1993 President - Consolidated Silver Tusk Mines Ltd, in the Northwest
Territories. Managed and supervised the exploration and development
of all properties. One mine went into full production. Became Vice
President in 1994 as was busy developing other properties not
related to Consolidated Silver Tusk Mines Ltd.
1972-1993 President of Reako Exploration Ltd, in Vancouver B.C. Supervised
and managed all exploration and drilling projects for Reako, as
well as developing their iron-ore property, and bringing into
production a gold property in British Columbia.
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Robert G. Dinning C.A.
Mr. Dinning is a Chartered Accountant, and a life time member of the Alberta Institute of Chartered Accountants. Mr. Dinning has Operated his own Business and Management Consulting business since 1977, in the forestry, mining, and software/high tech industries. Mr. Dinning has been active as a Director and Officer and consultant in various public companies over the past 35 years. Prior to commencing his consulting business, Mr. Dinning was CFO and Secretary of a large publicly traded broadcast and sports Entertainment Company.
Robert E. Lee.
Dental Surgeon from 1961 until 1991 when he retired from practice.
1993 - 2002 President of La Rock Mining Corp, of Vancouver BC. Handled
all administration and continued assessment of property
known as Brandy Wine. Company now called Auramex Resource
Corp where Mr. Lee currently serves as a director.
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Rodney Kincaid
Mr. Kincaid is a graduate of Tennessee Temple University and the University of Missouri in Business Communication. Since 1989 he has been President and CEO of Balmoral Financial Companies and Viewpoint Technology & Energy Inc, of Columbus Ohio. He has considerable international experience in Central Europe, Asia and North Africa re oil and gas, mining, and technology entities. Mr. Kincaid has significant international experience including successful transactions in the Middle East, Central Asia, and in North African countries such as Egypt and Libya.
Glen Kelleway
Mr. Kelleway was appointed at annual shareholders meeting and possesses a 15 year background in mining and forestry, as well as startup companies in high technology. He brings a financial background to his mining experience.
(b) Significant Employees:
Brant Little, Advisor to the Board.
Mr.Little has been an advisor to the Board for 3 years and brings to the Company 25 years of Investment Banking experience. His experience is primarily related to precious metals resource companies and he has raised in excess of $100 million for various companies during this time.
Committees: Meetings of the Board
The Company does not have a separate Compensation Committee, Audit Committee or Nominating Committee. These functions are done by the Board of Directors meeting as a whole. The Company's Board of Directors held both in person meetings during the fiscal year ended June 30, 2005 and meetings by telephone. All corporate actions by the Board of Directors were unanimously consented to at meetings or in writing after telephone discussion.
Audit Committee
The board of directors has not established an audit committee. The functions of the audit committee are currently performed by the entire board of directors. The Company is under no legal obligation to establish an audit committee and has elected not to do so at this time so as to avoid the time and expense of identifying independent directors willing to serve on the audit committee. The Company may establish an audit committee in the future if the board determines it to be advisable or we are otherwise required to do so by applicable law, rule or regulation.
As the board of directors does not have an audit committee, it therefore has no "audit committee financial expert" within the meaning of Item 401(e) of Regulation S-B. except its chief financial officer. In general, an "audit committee financial expert" is an individual member of the audit committee who:
* understands generally accepted accounting principles and financial statements,
* is able to assess the general application of such principles in connection with accounting for estimates, accruals and reserves,
* has experience preparing, auditing, analyzing or evaluating financial statements comparable to the breadth and complexity to our financial statements,
* understands internal controls over financial reporting, and
* understands audit committee functions.
Board of Directors Independence
None of the Company's directors are "independent" within the meaning of definitions established by the Securities and Exchange Commission or any self-regulatory organization. The Company is not currently subject to any law, rule or regulation requiring that all or any portion of its board of directors include "independent" directors.
Director Nominees
The Company does not have a nominating committee. The board of directors, sitting as a board, selects those individuals to stand for election as members of our board. Since the board of directors does not include a majority of independent directors, the decision of the board as to director nominees is made by persons who have an interest in the outcome of the determination. The board will consider candidates for directors proposed by security holders, although no formal procedures for submitting candidates have been adopted. Until otherwise determined, not less than 90 days prior to the next annual board of directors' meeting at which the slate of board nominees is adopted, the board accepts written submissions that include the name, address and telephone number of the proposed nominee, along with a brief statement of the candidate's qualifications to serve as a director and a statement of why the shareholder submitting the name of the proposed nominee believes that the nomination would be in the best interests of shareholders. If the proposed nominee is not the security holder submitting the name of the candidate, a letter from the candidate agreeing to the submission of his or her name for consideration should be provided at the time of submission. The letter should be accompanied by a resume supporting the nominee's qualifications to serve on the board of directors, as well as a list of references.
The board identifies director nominees through a combination of referrals, including by management, existing board members and security holders, where warranted. Once a candidate has been identified the board reviews the individual's experience and background, and may discuss the proposed nominee with the source of the recommendation. If the board believes it to be appropriate, board members may meet with the proposed nominee before making a final determination whether to include the proposed nominee as a member of management's slate of director nominees submitted for shareholders for election to the board.
Among the factors that the board considers when evaluating proposed nominees are their experience in the information technology industry, knowledge of and experience with and knowledge of and experience in business matters, finance, capital markets and mergers and acquisitions. The board may request additional information from the candidate prior to reaching a determination. The board is under no obligation to formally respond to all recommendations, although as a matter of practice, it will endeavor to do so.
The board received no security holder recommendations for nomination to the board of directors in connection with the 2005 annual meeting of shareholders. There were four director nominees for the 2005 annual meeting of shareholders, all of whom were incumbent directors standing for reelection. In addition, there was one director, Glenn Kelleway, was appointed to the board of directors subsequent to the conclusion of the annual shareholder meeting.
Security Holder Communications with our Board of Directors
The Company provides an informal process for security holders to send communications to our board of directors. Security holders who wish to contact the board of directors or any of its members may do so by writing to Apolo Gold Inc., Suite 1209-409 Granville Street, Vancouver BC, Canada V6C 1T2. Correspondence directed to an individual board member is referred, unopened, to that member. Correspondence not directed to a particular board member is referred, unopened, to the Chairman of the Board.
Code of Ethics
Under the Sarbanes-Oxley Act of 2002 and the Securities and Exchange Commission's related rules, the Company is required to disclose whether it has adopted a code of ethics that applies to the Company's principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions. The Company has adopted a code of ethics that applies to its chief executive officer, chief financial officer and other officers, legal counsel and to any person performing similar functions. The Company has made the code of ethics available and intends to provide disclosure of any amendments or waivers of the code within five business days after an amendment or waiver on the Company's website wwww.apologold.com.
Compliance with Section 16(a) of Securities Exchange Act of 1934 To our knowledge, during the fiscal year ended June 30, 2005 our Directors and Officers complied with all applicable Section 16(a) filing requirements except all three directors did not timely file a Form 4 re granting of Options which were reported on Form 5. This statement is based solely on a review of the copies of such reports that reflect all reportable transactions furnished to us by our Directors and Officers and their written representations that such reports accurately reflect all reportable transactions.
Family Relationships
There is no family relationship between any Director, executive or person
nominated or chosen by the Company to become a Director or executive officer.
Item 10. Executive Compensation
The following table shows for the fiscal years ending June 30, 2005, 2004 and 2003, the compensation awarded or paid by the Company to its Chief Executive Officer. No executive officers of the Company had total salary and bonus exceeding $100,000 during such year.
----------------------------------------------------------------------------------------------------------------
Summary Compensation Table
----------------------------------------------------------------------------------------------------------------
Long Term Compensation
----------------------------------------------------------------------------------------------------------------
Annual Compensation Awards Payouts
-----------------------------------------------------------------------------------------------------------------
Other Annual Securities
Salary Compensation ($) Underlying
Name and Principle Position Year ($) Options (#) All Other Compensation ($)
-----------------------------------------------------------------------------------------------------------------
Martial Levasseur President/CEO 2005 36,000 0 0
-----------------------------------------------------------------------------------------------------------------
Martial Levasseur President/CEO 2004 24,000 1,000,000 Common 0
-----------------------------------------------------------------------------------------------------------------
Martial Levasseur President/CEO 2003 18,000 0 700,000 Common $12,000 paid in
restricted stock.
-----------------------------------------------------------------------------------------------------------------
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Above options for 1,000,000 were cancelled in February, 2005. Above options totaling 700,000 are unexercised as of August 19, 2005.
--------------------------------------------------------------------------------------------------------------
Option Grants in Last Fiscal Year June 30, 2005
--------------------------------------------------------------------------------------------------------------
Individual Grants
--------------------------------------------------------------------------------------------------------------
Name Number of
Common Shares
Underlying
Options % of Total Options Granted in Exercise Price Expiration
Granted (#) Fiscal Year ended June 30, 2005 ($/Sh) Date
--------------------------------------------------------------------------------------------------------------
Robert Dinning, 2,000,000 34.4% $0.08 per Share 02/02/10
CFO, Director
--------------------------------------------------------------------------------------------------------------
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Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option/Values The following table sets forth the number and value of the unexercised options held by each of the Named Executive Officers and Directors at June 30, 2004 and as of June 30, 2005.
---------------------------------------------------------------------------------------------------------------------
Aggregate Option Exercises in Last Fiscal Year and Option Values
---------------------------------------------------------------------------------------------------------------------
Value Number of Securities Underlying
Shares Realized Unexercised Options at FY-End Value of Unexercised In-the
Money
Acquired on at FY-End June 30, 2005 (#) Options at June 30, 2005 (1)
Name Exercise (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
---------------------------------------------------------------------------------------------------------------------
Martial Levasseur 0 0 700,000 Shares/ $0
Pres./CEO, Dir. Exercisable
---------------------------------------------------------------------------------------------------------------------
Robert Dinning, 0 0 4,400,000 Shares/ $0
CFO, Director Exercisable
---------------------------------------------------------------------------------------------------------------------
Robert Lee, 0 0 700,000 Shares/ $0
Secretary, Dir. Exercisable
---------------------------------------------------------------------------------------------------------------------
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(1) Option value based on the difference between the exercise price of unexercised options and the closing sale price of $0.06 per share on August 19, 2005.
Compensation of Directors
Standard Arrangements: The members of the Company's Board of Directors are reimbursed for actual expenses incurred in attending Board meetings.
Other Arrangements: There are no other arrangements.
Employment Contracts and Termination of Employment, And Change-in-control Arrangements
The Company's officer and directors do not have employment agreements.
Termination of Employment and Change of Control Arrangement
There is no compensatory plan or arrangement in excess of $100,000 with respect to any individual named above which results or will result from the resignation, retirement or any other termination of employment with the Company, or from a change in the control of the Company.
Item 11. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners holding five percent or greater of the 58,631,552 shares of common stock outstanding as of August 19, 2005 and of Management assuming the exercise of outstanding options held by management.
Title of Name and Address(1) Position Amount and Nature % of
Class Beneficial Owner of Beneficial Owner Class
-------- ------------------- ---------- ------------------- -------
Common Martial Levasseur Director, CEO 7,917,892 (2) 13.81%
Robert Dinning Director, CFO 5,703,333 (3) 9.95%
Robert Lee Director 2,585,602 (4) 4.51%
Rodney Kincaid Director 1,500,000 (5) 2.62%
Glen Kelleway Director 300,000 (6) 0.51%
Brant Little Consultant 3,600,000 (7) 6.29%
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All officers and Directors
as a Group (3 persons) 21,606,827 37.69%
(1) The Address of the executive officers and directors is that of the Company:
Suite 1209 - 409 Granville Street, Vancouver, B.C. Canada V6C 1T2
(2) Includes 2,753,333 directly in name of Martial Levasseur and 4,464,559 in name Of Van Silver Holdings Inc., a holding company controlled by Martial Levasseur. In addition, Mr. Levasseur holds a stock option for 700,000 common shares, exercisable at $0.09 per share.
(3) Includes a stock option of 700,000 common shares, exercisable at $0.14 per share until July 1, 2007, a stock option for 700,000 common shares,exercisable at $0.09 per share until June 30, 2007, a stock option for 1,000,000 common shares exercisable at $0.16 per share until June 10, 2009,and a stock option for 2,000,000 common shares, exercisable at $0.08 per share until February 2, 2010.
(4) Includes a stock option of 700,000 common shares, exercisable at $0.09 per share until June 30, 2007.
(5) Includes 750,000 restricted common shares in the name of Balmoral Financial Services, and 750,000 restricted common shares in the name of Viewpoint Technology, both companies controlled by Mr. Kincaid.
(6) Holdings consist of a stock option of 300,000 common shares, exercisable at $0.08 per share until May 15, 2010.
(7) Includes 350,000 common shares directly in name of Brant Little and includes a stock option for 250,000 common shares, exercisable at $0.054 per share until Dec 2, 2007, a stock option for 1,000,000 common shares, exercisable at $0.16 Per share until June 10, 2009 and a stock option for 2,000,000 common shares, Exercisable at $0.08 per share until February 2, 2010.
Item 12. Certain Relationships and Related Transactions:
In February, 2005, the Company signed a Letter of Intent with Balmoral Companies of Dublin Ohio wherein Apolo Gold & Energy acquired a 22% interest in the rights to an oil property located in Kazakhstan. Balmoral and its partner ViewPoint Technology Inc. executed an Absolute Assignment of its interest in this property to Apolo in return for a total of 1,500,000 restricted common shares valued at $0.09 each. Each company received 750,000 restricted shares. Rodney Kincaid is the Managing Partner of Balmoral and was elected to the Company's board of directors on May 20, 2005. In May 2005, the Company requested technical data and when none was forthcoming, terminated the agreement in August, 2005. Please see Management's Discussion and Analysis of Financial Condition, starting on page 7.
Item 13. Exhibits and Reports on Form 8-K
A. Exhibits
3.1 Articles of Incorporation (Incorporated by reference from Form 10SB
Registration SEC File # : 000-27791 filed October 25, 1999)
3.2 By-Laws of Corporation (Incorporated by reference from Current Report
on Form 8-K Registration SEC File # : 000-27791 filed May 31, 2005)
3.3 Certificate of Amendment dated May 24, 2005
10.1 NUP ACQUISITION AGREEMENT (Incorporated by reference from Annual
Report on Form 10KSB filed on September 30, 2002
10.2 KBU ACQUISITION AGREEMENT 10.3 Addendum to KBU ACQUISITION AGRREEMENT
14 Code of Ethics
31.1 Sarbanes Oxley Section 302 Certification
31.2 Sarbanes Oxley Section 302 Certification
32.1 Sarbanes Oxley Section 906 Certification
32.2 Sarbanes Oxley Section 906 Certification
B. Reports on Form 8-K:
In May 2005, the Company filed a Current Report on Form 8-K to report the results of its Annual General Meeting of Shareholders, the appointment of Mr. Kelleway to the board of directors and an amendment to the Company's by-laws.
Item 14. Principal Accountant Fees And Services
Williams & Webster PS, Certified Public Accountants, are the Company's independent auditors to examine the financial statements of the Company for the fiscal year ending June 30, 2005. Williams & Webster PS has performed the following services and has been paid the following fees for these fiscal years.
Audit Fees
Williams & Webster PS was paid aggregate fees of approximately $20,000 for the fiscal year ended June 30, 2005 for professional services rendered for the audit of the Company's annual financial statements and for the reviews of the financial statements included in Company's quarterly reports on Form 10QSB during these fiscal years.
Audit -Related Fees
Williams & Webster PS was not paid any additional fees for the fiscal year ended June 30, 2005 for assurance and related services reasonably related to the performance of the audit or review of the Company's financial statements.
Tax Fees
Williams & Webster PS was not paid any aggregate fees for the fiscal year ended June 30, 2005 for professional services rendered for tax compliance, tax advice and tax planning. This service was not provided.
Other Fees
Williams & Webster PS was paid no other fees for professional services during the fiscal year ended June 30, 2005
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: August 25, 2005
/s/ Martial Levasseur
--------------------------------------
Martial Levasseur, President/CEO
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In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Martial Levasseur
------------------------
Martial Levasseur President, Director August 25, 2005
/s/ Robert G. Dinning
------------------------
Robert G. Dinning Chief Financial Officer,
Secretary, Director August 25, 2005
/s/ Robert E. Lee
------------------------
Robert E. Lee Director August 25, 2005
/s/ Rodney Kincaid Director August 25, 2005
------------------------
Rodney Kincaid
/s/ Glenn Kelleway Director August 25, 2005
------------------------
Glenn Kelleway
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Exhibit 3.3
DEAN HELLER
Secretary of State
204 North Carson Street, Suite 1
Carson City, Nevada 89701-4299
(775) 684 5708
Website: secretary of state. biz
ABOVE SPACE IS FOR OFFICE USE ONLY
Important: Read attached instructions before completing form.
Certificate of Amendment to Articles of Incorporation For Nevada Profit Corporations
(Pursuant to NRS 78.385 and 78.390 - After Issuance of Stock)
1. Name of corporation:
APOLO GOLD INC.
2. The articles have been amended as follows (provide article numbers, if available):
Article ONE of the Articles of Incorporation has been amended to read in its entirety as follows: ONE: The name of this corporation is Apolo Gold & Energy Inc.
Article SIX of the Company's Articles of Incorporation has been amended to state as follows:
SIX: The corporation is authorized to issue two (2) classes of shares, to be designated respectively as "Common Shares" and "Preferred Shares". The total number of Common Shares the corporation is authorized to issue is Two Hundred Million (200,000,000) $0,001 par value. The total number of Preferred Shares the corporation is authorized to issue is Twenty Five Million (25,000,000) $0.001 par value. Said Preferred Shares may subsequently receive such designation as may be deemed appropriate by the Board of Directors of the corporation, and the Board of Directors shall have the right to determine or alter the rights, preferences, privileges, and restrictions granted to, or imposed upon said Preferred Shares. Additionally, the Board of Directors shall be empowered to increase or decrease (but not below the number of shares of Common or Preferred Shares then outstanding) the number of shares of any class of shares subsequent to the issue of shares of that class.
3. The vote by which the stockholders holding shares in the corporation
entitling them to exercise at least a majority of the voting power, or such
greater proportion of the voting power as may be required in the case of a
vote by classes or series, or as may be required by the provisions of the *
articles of incorporation have voted in favor of the amendment is:
ONE: 44,596,220/SIX: 20,533,197
4. Effective date of filing (optional):
(must not be later than 90 days after the certificate is filed)
5. Officer Signature (required): /s/ DENNIS BROVARONE, Legal Officer
-----------------------------------
*If any proposed amendment would alter or change any preference or any relative
or other right given to any class or series of outstanding shares, then the
amendment must be approved by the vote, in addition to the affirmative vote
otherwise required, of the holders of shares representing a majority of the
voting power of each class or series affected by the amendment regardless of
limitations or restrictions on the voting power thereof.
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IMPORTANT: Failure to include any of the above information and submit the proper fees may cause this filing to be rejected.
This form must be accompanied by appropriate fees.
See attached fee schedule. Nevada Secretary of State AM
78.385 Amend 2003
Revised on: 11/03/03
Exhibit 31.1
CERTIFICATION
I, Martial Levasseur, certify that:
1. I have reviewed this annual report on Form 10-KSB of Apolo Gold & Energy Inc.
2. Based on my knowledge, this 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 report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;
4. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the small business issuer and 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 small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this 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) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an quarterly report) that has materially affected or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and
5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuers auditors and the audit committee of small business issuer'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 small business issuer'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 small business issuer's internal control over financial reporting.
Date: August 25, 2005 /s/ Martial Levasseur ----------------------- Martial Levasseur President and Chief Executive Officer |
Exhibit 31.2
CERTIFICATION
I, Robert Dinning, certify that:
1. I have reviewed this annual report on Form 10-KSB of Apolo Gold & Energy Inc.
2. Based on my knowledge, this 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 report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;
4. The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the small business issuer and 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 small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this 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) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an quarterly report) that has materially affected or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and
5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuers auditors and the audit committee of small business issuer'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 small business issuer'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 small business issuer's internal control over financial reporting.
Date: August 25, 2005 /s/ Robert Dinning ------------------ Robert Dinning Chief Financial Officer |
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Certification of Chief Executive Officer
In connection with the Annual Report of Apolo Gold & Energy Inc. (the "Company") on Form 10-KSB for the fiscal year ending June 30, 2005 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Martial Levasseur, Chief Executive Officer certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
August 25, 2005 /s/ Martial Levasseur
------------------- -----------------------------------
Martial Levasseur
Chief Executive Officer
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Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Certification of Chief Financial Officer
In connection with the Annual Report of Apolo Gold & Energy Inc., (the "Company") on Form 10-KSB for the fiscal year ended June 30, 2005 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Robert Dinning, Chief Financial Officer certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
August 25, 2005 /s/ Robert Dinning
------------------ -----------------------------------
Robert Dinning
Chief Financial Officer
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